国际商务导论 Fundamentals of Business

1. 国际商务导论Fundamentals of Business Lecture 1: Introduction 当代商务简介

2. What to cover today： • The nature of business • Forms of business ownership • Franchising • Business mission and company profile Exercises

3. company money (capital & profit) products (goods & services) people What is business? market communication countries & cultures conferences, negotiations & trips

4. 1. The nature of business Business is: • the exchange or trade for things people want or need • the production, distribution and sale of goods and services for a profit • a goal-directed behaviour aimed at getting and using productive resources to buy, make, trade, and sell goods and services that can be sold at a profit(Source: Jones, 2007. Introduction to Business:How Companies Create Value for People)

5. land productive resources enterprise capital labor

6. 2. Forms of business ownership Three basic legal (vs. organizational) forms of business ownership： • sole proprietorship (个人)独资企业 • partnership 合伙企业 • company 公司 • Unlimited Liability Company 无限责任公司 • Limited Liability Company (LLC) 有限责任公司 • S corporation S型股份有限公司 • C corporation C型股份有限公司 enterprise > company > corporation

7. 2.1 Factors to be weighed in decision-making • ease of formation • liability for business debts • control over the operation • management expertise available • financial resources available • taxation policies • continuity • legal capacity

8. 2.2 Sole proprietorship advantages & disadvantages D4: lack of continuity If the owner dies or becomes too ill to manage the business, there is no separate legal entity in existence with which the public, creditors, suppliers or employees can deal to ensure the continuity of the business.

9. 2.3 Partnership 2.3.1 Oral vs. written agreement articles of partnership 合伙章程 • names of the partners • name of the partnership • location of the partnership • purposes of the partnership • duration of the partnership • capital contributions by partners • rights and responsibilities of partners • allocation of profits and losses among partners • dissolution (破产清偿) procedures

10. 2.3.2 General partnership 普通合伙企业 vs. limited partnership 有限合伙企业 2.3.3 Advantages & disadvantages

11. 2.4 Company

12. publicly owned companies: established by the government, e.g. the U.S. Postal Service, big 4 banks in China, CNPC, Sinopec, CNOOC • quasi-publicly owned companies: established privately, but operated for public service and with high degree of government regulation and protection, e.g. private schools and hospitals • privately owned companies: established privately and operated for private interests; including the bulk of existing companies

13. profit private companies: established to carry out business for profit-making purposes • non-profit private companies: established for charitable or religious purposes

14. privately held profit private companies:LLC or S corp.; do not publicly offer their stock; owned by one or a few shareholders who normally have family or other close ties and also manage the business • publicly held profit private companies:C corp. (also called LLC by share, public company, publicly traded company, public listed company); publicly offer and freely trade their shares on stock exchanges; owned by a number of unrelated shareholders who do not actively manage the company (passive investors, cf. limited partners); go public, IPO 首次公开募股http://tech.ifeng.com/internet/detail_2013_08/07/28352560_0.shtml

15. 2.4.1 C corporation Proportion of Business Revenue Generated by Each Form of Ownership Proportion of Existing Businesses under Each Form of Ownership

16. 2.4.1.1 Corporate structure and management incorporators/shareholders board of directors president/GM/CEO/managing director other officials owners managers

17. 2.4.1.2 Corporate charter & legal person • Corporate charter 公司章程: a document used to incorporate a business, and filed with the state government • The charter describes important aspects of the corporation, e.g. the name of the firm, the stock issued, and the firm’s operations • Bylaws 公司规章are established to provide general guidelines for managing the firm

18. 2.4.1.3 Advantages & disadvantages A4: continuous life (perpetual continuity) Theoretically, a corporation has a perpetual existence; it continues until dissolved, merged, or terminated for other reasons. D4: agency problem High-level managers may make decisions that are in their best interests, at the expanse of shareholders.

19. 2.4.2 S corporation S 公司 • for United States Federal income tax purposes, an S corporation is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. • has 100 or fewer owners and satisfies other criteria • the owners have limited liability, which may be restricted by various rules • the earnings are distributed to the owners and taxed at the respective personal income tax rate of each owner

20. 2.4.3 Limited liability company (LLC) • not a corporation in nature • a hybrid business entity blending a corporation, a partnership, and even a sole proprietor • has all the favorable features of a typical general partnership, but also offers limited liability for the partners (members) • the primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation. • has fewer restrictions on the number and type of owners and on the liability protection than S corporation

21. 3. Franchising 特许经营 budding period: the early 1900s, filling stations, car dealerships growth period: since the mid-1960s, paralleling the enormous expansion of the fast food industry

22. Three basic types of franchising: • product franchising: licensing for the right to sell trademarked goods purchased from the franchiser and resold by the franchisee, e.g. car dealers, gasoline stations • manufacturing franchising: licensing for the right to produce and distribute products, using supplies purchased from the franchiser, e.g. soft-drink bottling plants • business-format franchising: licensing for the right to open a business using the franchiser’s name and format for doing business, e.g. fast food chains

23. Advantages of franchising: triple benefits of franchising according to the president of the International Franchise Association: “The franchiser wins because he builds a strong foundation for his company. Thefranchisee wins because he can take advantage of the franchiser’s proven business system. And the general public benefits from the consistency of the product or service.”

24. Case study: A Godsend

25. 4. Business mission and company profile 4.1 Business mission/vision -- a brief statement that tells stakeholders and the public why the firm is in business, how it intends to satisfy customer needs, and why it will satisfy their needs better than its competitors

26. Starbucks • Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. • Dell • Dell's mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of: • Highest quality • Leading technology • Competitive pricing • Individual and company accountability • Best-in-class service and support • Flexible customization capability • Superior corporate citizenship • Financial stability Sample mission statements

27. Sample mission statements Nike Our mission for the Nike brand is: To bring inspiration and innovation to every athlete in the world. Alibaba Alibaba Group (Alibaba for short) is a global e-commerce leader basing in China. Alibaba has 7 subsidiary companies, business involving the B2B, C2C, online payments, software service, search engine, online advertising, local living and consumption community etc. Alibaba is committed to building the world‘s leading e-commerce infrastructure and high quality online living platform.

28. 4.2 Company profile • Company history • Founders and/or current top managers • Major line of business • Location and subsidiaries • Markets • Staff size • Production capacity • Annual turnover/sales • Awards

29. Listening: Listen to a presentation delivered by the PR Department Manager of Oracle China and fill in the blanks in the company profile Word bank: headquarters 总部 headcount 员工总数 annual revenue 年收入

30. Oracle China Profile largest • Status: the world’s ____ enterprise software company, ____ global software giant in ____ • Established in: ____ • Headquarters: Redwood Shores, ______ • Headcount: ______ • Annual revenue: ____ • Launched on China’s market in ____ • Oracle China branches: Beijing, Shanghai, Guangzhou, ____ • Services: 9i E-Business platform, E-Business Suite, consulting services, ______, and support services first China 1977 California 42,000 $11 billion 1989 Chengdu education

31. Sample company profile GM http://www.gm.com/corporate/about/company.jsp Ecolab http://www.ecolab.com/CompanyProfile/ Philips English version:http://www.philips.com/about/company/companyprofile.page Chinese version:http://www.philips.com.cn/about/company/companyprofile.page Alibaba English version: http://news.alibaba.com/specials/aboutalibaba/index.html?tracelog=24581_foot_company_info Chinese version: http://page.china.alibaba.com/shtml/about/ali_china1.shtml

32. Exercises 1. Translation 1. 个人独资企业 2. 普通合伙人 3. 有限合伙人 4. 无限责任 5. 营业执照 6. 法人 7. 董事会 8. 股息 9. 公司章程 10. 年报 11. 股东年会 12. 特许经营

33. 2. Find out the business focus of the top 10 franchise brands in 2009 listed by Entrepreneur Magazine

35. 3. Compile the mission statement and/or company profile of a well-renowned MNC currently operating in China 4. Group project: observe and guess the business forms of shops or companies operating on your campus or in Guangzhou, and collect necessary information (e.g. through interviews or Internet surfing) to verify your guessing

36. 5. Supplementary reading Jones’ Chapter 1: “What Is Business?”