After learning this subject, I understood the role of marketing in business, the function of bank, the function of stock exchange, the types of business units in economic system, the importance of insurance, all of which are vital in the business cycle. For a student who plans to be self-employed (entrepreneurship) or be employed in a business company in the future, having these kinds of knowledge is important and helpful.
As a Chinese proverb goes, "know yourself and know your enemy, hundred battles, hundred win." Having relative knowledge will help you to win a success. So does business.
You are required to identify a country which you think is experiencing slow "Economic Growth". What are the economic problems of the particular country facing?
SYRIA'S ECONOMIC PROBLEMS AND THE SLOW ECONOMIC GROWTH
Today's world is under rapid economic growth, most of the countries are experiencing economic growth, so who can grow faster will get more advantages in improving themselves and compete with other countries, so these countries will grow faster and faster. Those who even improve slower than other countries will face with more and more trouble because of the disadvantage circumstance they are in. Here we take Syria as an example and deeply discuss the problems they are facing with.
"Economic Growth is the increase of per capita gross domestic product (GDP) or other measures of aggregate income, typically reported as the annual rate of change in real GDP", as is defined in Wikipedia. Simply speaking, Economic growth is the process by which a nation's wealth increases over time and GDP is the main way to measure a country's economic growth.
The rate of economic growth is influenced by land, labor, capital and enterprise; they are the 4 main factors of production. Now, let's see why Syria is still experiencing slow economic growth from these 4 factors.
1 LAND
In economics, land comprises all naturally occurring resources whose supply is inherently fixed. Examples are any and all particular geographical locations, mineral deposits, and even geostationary orbit locations and portions of the electromagnetic spectrum. Natural resources are fundamental to the production of all goods, including capital goods. Location values must not be confused with values imparted by fixed capital improvements. Income derived from ownership or control of natural resources is referred to as rent.
As a tangible asset land is represented in accounting as a fixed asset or a capital asset.
Land, particularly geographic locations and mineral deposits, has historically been the cause of much conflict and dispute; land reform programmes, which are designed to redistribute possession and/or use of geographic land, are often the cause of much controversy, and conflicts over the economic rent of mineral deposits have contributed to many civil wars.
Syria is a country with superior natural conditions and has abundant mineral resources, such as oil, natural gas, bitumen and phosphate. The economy of it is mainly based on agriculture, oil, industry and tourism. It is one of the five food exporters in Arab world. Its GDP growth rate was approximately 5% in 2009, according to CIA World Fact book statistics. The two main pillars of the Syrian economy have been agriculture and oil. The main reason which limited the growth of Syria is its agriculture.
Agriculture is greatly influenced by the weather condition. One of the main problems to Syria agriculture is water shortage. About 6.1 million hectares (15.1 million acres) are arable, but the area actually cultivated is about 5.5 million hectares (13.6 million acres), or 30% of the total area. Since only one-third of cultivated land is irrigated, agriculture depends on rainfall, which is uncertain, and in lean years Syria becomes a net importer of wheat and barley; this strains the whole economy and hampers development.
Extension and improvement of irrigation systems could substantially raise agricultural output, but it is both costly and time consuming.
Syrians have long used the Euphrates for irrigation, but, because the major systems were destroyed centuries ago, they make only limited use of the river's flow. In 1984, about 44 percent of irrigated land still used water from wells.
The Fourth Five-Year Plan actually called for irrigating an additional 240,000 hectares by the end of the plan. In 1984, however, Syrian government statistics revealed that only 60,000 hectares were actually being irrigated. Ten years after its inception, the Euphrates irrigation project irrigated only about 10 percent of its long-term goal.
A variety of complex, interrelated problems frustrated realization of targeted irrigation goals. Technical problems with gypsum subsoil, which caused irrigation canals to collapse, proved more troublesome than at first anticipated. Large cost overruns on some of the irrigation projects made them much more expensive than planned and created difficulties in financing additional projects. Moreover, these large irrigation projects required several years before returns on the investments began.
2 LABOR
Having enough labor with good qualification will greatly help the country to construct and develop itself. The labor power in Syria is comparatively adequate, which provided a good support to its economic development in the recent years. But in the course of economic development, the inharmonious elements existed in Syria labor market is increased year after year.
The labor force represents less than one-third of the Syrian population and less than half of the working age population. About 55% of the employed populations are wage earners, followed by self-employed (about 25% of the employed population). The percentage of unpaid workers (mainly engaged in family work) is significant, whilst employers constitute the smallest proportion of the working population.
Syria is facing a mounting youth unemployment problem. Young people aged 10-24 constitute 34.2 percent of the total population of Syria, whereas youth aged 15-24 constitute 22.2 percent. High population growth combined with slow increase in employment opportunities are working to produce a "double squeeze" on the job market, creating rapidly diminishing prospects for the growing number of young entrants.
There is an important gender dimension to the unemployment in Syria, with unemployment rates among young women almost twice as high as those among young men. In addition, 50 percent of young women in Syria (age fifteen to twenty-nine) are neither in the labor force nor in school, suggesting potential barriers to labor market entry.
The structure and capacity of the labor administration do not adequately correspond to the needs of employers, workers or an effectively functioning labor market. This is the result of inadequate human and financial resources, and the ability to initiate and implement the necessary changes to respond and adapt to a rapidly changing market. In addition, effective and sustainable social dialogue with the employers' and workers' organizations on employment matters and industrial relations are not adequate, the social dialogue committee does not have the capacity to prevent disputes, promote collective bargaining and social dialogue.
The employment services are inadequate and there are urgent needs for reform of the public employment services (PES).
Social protection and social safety nets to protect the vulnerable are not targeting the needed population. The existing social safety net is costly and inefficient and the social security system is too old and is facing severe challenges that will compromise its medium-term viability.
3 CAPITAL
Capital is what deals with the dividends and interest of goods that can be produce by other goods. In neoclassical economics, capital, capital goods, or real capital is the factor of production, used to create goods or a service, and that is not itself significantly consumed (though it may depreciate) in the production process. Capital goods may be acquired with money or financial capital. At any moment in time, total physical capital may be referred to as the capital stock, a usage different from the same term applied to a business entity. In a fundamental sense, capital consists of anything that can enhance a person's power to perform economically useful work - a stone or an arrow is capital for a caveman who can use it as a hunting instrument, and roads are capital for inhabitants of a city. As such, capital is an input in the production function.
Human development theory describes human capital as being composed of distinct social, imitative and creative elements:
Social capital is the value of network trusting relationships between individuals in an economy.
Individual capital, which is inherent in persons, protected by societies, and trades labor for trust or money. Close parallel concepts are "talent", "ingenuity", "leadership", "trained bodies", or "innate skills" that cannot reliably be reproduced by using any combination of any of the others above. In traditional economic analysis individual capital is more usually called labor. From the above we can see this kind of capital is insufficient in Syria.
Further classifications of capital that have been used in various theoretical or applied uses include:
Financial capital, which represents obligations, and is liquidated as money for trade, and owned by legal entities. It is in the form of capital assets, traded in financial markets. Its market value is not based on the historical accumulation of money invested but on the perception by the market of its expected revenues and of the risk entailed.
Natural capital, which is inherent in ecologies and protected by communities to support life, e.g., a river that provides farms with water. Water in Syria is really not enough and it has already made a great problem to its economic growth. Moreover, in my personal point of view, the mineral deposit will be a underlying problem to Syria economy for the mineral is limited and it can not rise again in a short time.
Spiritual capital, which refers to the power, influence and dispositions created by a person or an organization's spiritual belief, knowledge and practice.
Infrastructural capital is non-natural support systems (e.g. clothing, shelter, roads, and personal computers) that minimize need for new social trust, instruction, and natural resources. (Almost all of this is manufactured, leading to the older term manufactured capital, but some arises from interactions with natural capital, and so it makes more sense to describe it in terms of its appreciation/depreciation process, rather than its origin: much of natural capital grows back, infrastructural capital must be built and installed.)
4 ENTERPRISE
It refers to the people who are willing to take risk and earned profits. An entrepreneur is a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome. The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to launch a new venture or enterprise and accept full responsibility for the outcome. Jean-Baptiste Say, a French economist, is believed to have coined the word "entrepreneur" in the 19th century - he defined an entrepreneur as "one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labor". The enterprise problem in Syria is less prominent at present, but all the economic elements are internally related, even one of them has some problems, the influence will spread to all of the economic cycle.
Economic is not a separate subject, politic, literature and other factors will influence the economic growth, in another hand, economic growth will influence the other factors as well. The difference is, the 4 main factors of production will directly influence the economic growth while politic as well as literature will influent economic growth through influencing the factors of production.
From the above reasons, we can understand what economic growth is and why Syria is experiencing slow economic growth.
QUESTION 2
Explain the various types of business organizations existing in the private sector.
QUESTION 2
TYPES OF ORGANIZATIONS IN PRIVATE SECTOR
An economy may include several sectors, private sector, public sector and other sectors, each of them will make its own contributions to the economic growth. Nowadays, the organizations in the private sector are playing an important role in the modern business world.
So what is private sector and what are the types of organizations in this sector?
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state. By contrast, enterprises that are part of the state are part of the public sector; private, non-profit organizations are regarded as part of the voluntary sector.
There are mainly six types of organizations in this sector, sole traders, partnership, limited companies, charities, cooperatives and franchise.
1 SOLE TRADER
Sole trader, also known as sole proprietor or individual proprietorship, is a type of business entity that is owned and run by one individual using his or her own capital, skill and intelligence in the management of the business affairs and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's. This means that the owner has no less liability than if they were acting as an individual instead of as a business. It is a "sole" proprietorship in contrast with partnerships.
A sole proprietor may use a trade name or business name other than his or her legal name. In many jurisdictions there are rules to enable the true owner of a business name to be ascertained. In the United States there is generally a requirement to file a doing business as statement with the local authorities. In the United Kingdom the proprietor's name must be displayed on business stationery, in business emails and at business premises, and there are other requirements.
It is a very common type of business and we can easily find it almost everywhere around us. As for me, I always go to eat noodles at a stall owned by one of my mother's friends and sometimes I go to a minimarket owned by a Chinese person to buy a pen or a bottle of water.
Compared to partnership, it has many advantages, such as:
Absolute freedom in decision making. It will greatly benefit a creative businessman to try out new ideas fast, no need to waiting for a long time discussing and thinking about the gains and loses with other people.
All profits go to the sole proprietor. It will benefit a successful business more for it is no need to share the profits with others.
No disclosure of accounts is required. No need to report to other people about the profit you made.
Easy to set up and small capital requirement. The business is easy to form and manage due to its small size and even with one ringgit you can do a business and be your own boss due to its small capital need.
The business may be dissolved easily. The owner's death may cause the business dissolved.
It also faced with many disadvantages such as working long hours, when facing with debts, the owner's personal assets will be taken away…
2 PARTNERSHIP
A partnership is an arrangement where entities and/or individuals agree to cooperate to advance their interests. In the most frequent instance, a partnership is formed between one or more businesses in which partners (owners) co-labor to achieve and share profits or losses.
A partnership is divided to two types which is ordinary partnership and limited partnership. Ordinary partnership is like sole traders that the partners have unlimited liability. The limited partnership, the partners will have limited liability.
The partners of a partnership have to make agreement on the name and business address, name and add of partners, duration, nature of business, capital contribution, provision for salaries or drawings, distribution of profit or losses, methods of resolving conflict, procedure for resolution and other things whether in an oral or written format.
It has some advantages compared to a sole trader:
Partnership can be formed and dissolved easily.
More resources can be brought into the business.
Business risks are spread between the partners.
Decision making process can be done more effectively.
Partners have to pay personal income tax, corporate tax is not applicable.
No disclosure of accounts is required.
The disadvantages are:
Transfer of ownership requires approval of the remaining partners.
Disagreements will occur if most partners hold the same importance in the business.
All partners are liable for business debts and liabilities.
Partnership lifespan is limited-if one of the partners has mental disorder, bankrupt, resign, or dies.
Control over the business is spread among partners.
Profits have to be shared.
3 LIMITED COMPANY
A limited company is a company in which the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. And the former of these, a limited company is limited by shares. Who may become a member of a private limited company is restricted by law and by the company's rules. In contrast anyone may buy shares in a public limited company.
It includes two different types of company-private limited company (Sdn Bhd/Pte Ltd) and public limited company (Bhd/Plc).
4 CHARITIES
A charitable organization is a type of non-profit organization (NPO). The term is relatively general and can technically refer to a public charity (also called "charitable foundation," "public foundation" or simply "foundation") or a private foundation. It differs from other types of NPOs in that its focus is centered around goals of a general philanthropic nature (e.g. charitable, educational, religious, or other activities serving the public interest or common good).
The legal definition of charitable organization (and of charity) varies according to the country and in some instances the region of the country in which the charitable organization operates. The regulation, tax treatment, and the way in which charity law affects charitable organizations also vary.
This kind of organization is non-profit making and it is not belong to any government, such as Red Cross, England and Wales, UHI and so on.
5 COOPERATIVES
A cooperative (also co-operative; often referred to as a co-op) is a business organization owned and operated by a group of individuals for their mutual benefit, for example, famers can form a cooperative to sell their crops and farm animals at a higher price and it is very common in the countryside. Cooperatives are defined by the International Cooperative Alliance's Statement on the Cooperative Identity as autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprises. A cooperative may also be defined as a business owned and controlled equally by the people who use its services or by the people who work there. Cooperative enterprises are the focus of study in the field of cooperative economics.
Members of a cooperative pay membership fees every year and they can get benefit from the cooperative, take the farmers cooperative for example, the member farmers can sell their goods more easily at a good price and they can buy seeds and baby animals at a cheaper price.
6 FRANCHISE
Franchising, a business method that involves licensing of trademarks and methods of doing business, such as:
Chain store, retail outlets which share a brand and central management
An exclusive right, for example to sell branded merchandise
Media franchise, ownership of the characters and setting of a film, video game, book, etc., particularly in North American usage
Franchise offers a 'ready make' business opportunity for those who have the capital and willing to work.
The above six types of organizations in the private sector are the commonly used types of organizations which can be established and managed by a certain person or a certain group of people and they are of great use to the modern economy.
CONCLUSION
Introduction to Business is a subject which introduces students to the world of business and forms a good foundation to enable students to do more advanced business related subjects.
The assignment of this subject mainly examined things related to economic growth and the types of business organizations existing in the private sector, and I really get a deeper understanding of them from searching for the information and finishing the assignment.
In doing the assignment, I did a lot of research and inserted some of my own understanding. Maybe the understanding is incorrect or imperfect, but as my further study and practical work going on, I will have a better and better answer of it, though I don't have to do it as an assignment. Learning is an endless process, I will keep on learning.
