What is business?
Business is doing work for payment (in money or in kind). Every business deal has to have a consideration, i.e.: compensation for value exchanged.
Business activity is lling or trading goods on markets in exchange for other goods or money. The goods have to be scare (knapp). i.e.: wanted/dired/wished for/ prefered and not supplied with shortage (engpass) goods.
Producer goods are tho goods entering production.
What are the basic inputs of production?
•Land: facturies, offices and raw materiels
•Labor: contributions of al people working with their minds and muscels
•Capital: finance stock (raw material in warehou, equipment, tools and machinery,...) •Enterpri: combine all the inputs together and start up and later doing day-to-day operations
Needs are psycho-physiological things!
Market
Is anywhere that buyers and llers get together to exchange information and negotiate deals. Free market capitalism
•All markets are free
•All production capital is private ctor
Oligopolies
A few companies produce one good – becau of economies of scale only very large production volumes can survive.
Large capital requirements
Monopolies
A single firm accounts for all of an industries sales. It is characterized by barriers to entry-factor that prevent new firms form competing equally with the existing firm. Often barriers are technical or legal conditions or one firm controls a natural resource.
Socialism
Is the economic system in which the basic industries are owned by the government or the private ctor under strong control of the government. Such critical, large-scale industries as transportation, communication, utilities, oil, mining, airlines,....
Communsim
Get rid of private producers by nationalizing all production and sales. The determine production levels and prices, a planning bureaucracy.
•Planners don´t know enough details about consumers preferences
•Planner certainly can predict innovations for new products
•Bureaucrats are poor businessmen (no incentives)
Mixed economies
Are economies that u more than one economic system, typically socialsm and capitalism.
Minimize market restrictions:
•Market access for all buyers and llers
•Access to information
•Minimal tariffs, susidies by national arbitary standard什么时候有流星
龙蟠The main reason for minimizing such restrictions is to rai overall welfare (A. Smith). And in particular to ensure competition, becau this lowers prices, improves quality and provides incentives (Anreize) for innovation. Unfortunatly, many markets are oligopolies, becau to achieve economies of scale (Skalenerträge, Grösnvorteile, Kostendegression), only very large production volumes can survive.
Hence, many industries have witnesd massive concentration (die top 4 Autohersteller haben 50%). Hence oligopolies were very common, but then market manipulations (“restraints trade”) coming with cartels (Kartells) and monopolies. Cartels are organized oligopolies which fix prices and allocate markets. The US was first in the world to pass laws forbidding “unreasonable restraints of trade”.
听课感受
US: Sherman Antitrust Act (1890´s) / UK: Antimonopolies / G/A: Kartellgetzgebung Business:
Retailer (Einzelhändler, Detailist)
Wholesaler (Großhändler)
1.sole trader or sole proprietor (Einzelkaufmann)
2.partnership (Personengellschaft)
1.sole trader
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are inexpanisve and easy to found,
only licences (if required) and legal capacity (Geschäftsfähigkeit),
ability to own property and to enter into contracts (Verträge machen).
Advantages:
+ the owner has clear control over business decisions
+ he also earns all the profits.
Disadvantages:
- the owner is fully liable (voll haftbar) for all days financing is generally limited to
personal asts (Vermögenswerte), to mortage loans (Hypotheken) and supplier
credits.
- Finding really skilled emloyees is hard, becau they want to share in profits and
control.
To grow,the sole proprietor has to extend ownership: either take a partner
(Gellschafter) or incorporate (Kapitalges. günden).
2.Partnership
Partnerships are characterized by their identification with specific people, if no more
than about 20% of the partners change over 1-5 years, the partnership doesn´t has to
re-register. This partnerships can last for centuries.
all owners/contributors are fully liable for debts. (Sometimes dormant partners
exist without management functions, but they are also fully liable). In Germany
dormant partners are not allowed.
b.limited partnerships (Kommanditgellschaft)
they have at least one ordinary/general partner (Komplementär) with full
liability and management functions, silent/sleeping partners (Kommanditisten)
with limited liability (beschränkte Haftung) and no management functions.
Advantages: + easy in formation (no complex formationsystem)
capital
of
+
availability
+ flexibility (quick respon of changes becau owners = managers)
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+
relative
Disadvantages: - unlimited liability
-
potential conflicts between partners
- limited life (what if somebody with a share of 51% dies?)
- sharing of profit (not 100% fair)
- not easy to leave
Registering parnerships is done (machen, erledigen) under company law – centrialized in the UK / state by state in the US (most commercial law is state law (Ländergetz)) Unregistered Partnerships:
Can exist, bad on the general law of agency (Vertretungsrecht). This law governs contracts which transfer the of asts or rights by people other then the owners (principals (Auftraggeber)). The urs are agents (Treuhänder, Bevollmächtigte). Ordinary partnerships (and joint ventures) are both: principals and agents.
Limited partnerships are NOT symmetrical in this way, becau silent partners are only principals and not agents.
involve the creation of parate legal entities / personalities (getrennte
Rechtspersönlichkeiten).
Every Corporation has 3 parties:
a)the owners/shareholders (contributors/members) with limited liability
b)the corporation (lead by a board of directors) with unlimited liability and with legal
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c)the managers doing day-to-day operations (gewöhnliche Geschäftstätigkeit).
The corporation is agent of the sharholders, and the managers are agents of the
corporation.
Corporations are parate legal entities, meaning they have legal capacity! i.e. they can own property and enter into contracts. Since shareholders are parated from the
corporation, the law allows them to enjoy limited liability (up to the face /nominal / par value – Nennwert, Pariwert)!
Operational profits (Betriebsgewinne) are tho earned by doing day-to-day operations,
< tho undertaken to fill company goals / object: production, sales, distribution,....
Non-routine (functional) activities are not day-to-day activities, e.g. mergers, aquisitons, changing product lines,...
Corporation (Aktiengellschaft)
Legal business entity, which a life perate from its owners, which limits the owners liability. In the US/UK the president/managing director is on the board of the directors (Aufsichtsrat). In G/A the Generaldirektor is never on the Aufsichtsrat →paration of power! Advantages: + limited liabitlity
+ easy at transforming ownership
+ unlimited life, can rai money by lling new shares of stock Disadvantages: - double taxation of profits
-cost and complexity of formation are high
-more government restrictions
Merger (Fusion)
A horizontal merger results when companies in the same industry merge to reduce costs, expand product offerings or reduce competition.
A vertical merger: a company buys a firm in its same industry that is involved in an earlier or later stage of the production or sales process.
Amalgamation merger: a “dominate” firm swallows another firm, leading to the latter´s disappearence组织理论
Consolitdation merger: both firms disappear and are consolidated info a newly-founded firm.
Pools: are cartels which formally fix prices, allocate markets and they divide up profits ahead of time.
Syndicate, consortium (Arbeitsgemeinschaft): is a partnership between two or more firms to fill a specific job order (Auftrag). E.g.: building bridges,...
Joint ventures (Joint ventures): usually two firms start up a business unit financed and staffed by contributing firms for a limited time to experiment with new markets or new products.
Alliance: also has a narrow nce: two or more business share facilities which are totally owned by one of the partners/members of the alliance.
Unfriendly Takeover (Unfreundliche Übernahme)
The where target management corperates.
Line of command (Befehlsweg)
displays the superior subordinate relationships throuhout the organization.
Board of directors (Verwaltungsrat), Supervisory board (Aufsichtsrat) •Hires and supervis the top managers
•Sets corporate goals and policies
•Speaks for the shareholder
The functions are exactly the same for the G/A supervisory board (Aufsichtsrat)
however, the boards of directors in the US/UK traditionally have top managers (“inside directors”) on them, whereas the supervisory boards in G/A don´t!
Except: auditing – outside directors
Chairman of the board
•Chief spokesman of the company, has the authority to convene meetings
•Sets agenda (Tagesordnung)
•He runs the board meetings and shareholder meetings
•He has to invite everyone, and he has to allow the different people to speak and he has to calm down the situation sometimes.
Chief executive officer
= staff position (Vorstandsvorsitzender)
He is responsible for non-routine decision making (mergers, .... – not day-to-day operations)! Has overall management authority!
President
Line position. In charge of production, sales, distribution, collection, postsales, rvices,.... Responsible for routine decision making, doing day-to-day operations!
Ratifies by laws
That are rules for firms.
Separate legal entities (juristische Person, getrennte Rechtspersönlichkeit)
Entities having legal capacity: standing (Geschäftsfähigkeit) ability to own any property and to enter into contracts.
Austria company
Law requires “paration of power”, i.e. the supervisory board and the management board (Vorstand)
are both required and they must be exclusive to avoid conflict of interests between supervisory and management!
Holding Company (Konzern) / Group
= corporation which holds a controlling stake in an other corporation!
滞雨
- : only managing curities
- : also produce goods
Aquisition
imply 100% purchas of shares or of business units.
Cooperatives (Genosnschaften)
•Separate legal entities (incorporated)
•Shareholders, one vote each
•Not profitoriented
Foundations (Stiftungen)
-incorporated
-no members / no shareholders → executive board
-trustees – filling a goal
-i.e.: Rockefeller – Sherman Antitrust Act
Conglomerate (Mischfirma):
-lling on unrelated markets
-eventually “holding company”
-not very fashionable nowadays
