Business Environment

Role of Communication in Conflict!

Yes, it can lead to conflict because of different goals, aims, ideas, beliefs, and actions each employee in the organization take or believe in, that takes place when employees or groups meet together either in business meetings or in their daily working life.

Conflicts occur when two employees’ aims, actions or issues tend to disagree with each other, or when one group disagrees about a certain matter, or if two or more groups tend to have contradictory ideas or actions.  Conflicts might occur between management and employees or between units or employees at the same level.

Conflicts can easily show in a multinational or multicultural organization because of the difference in language, norms, personal style, and other personal characteristic which usually hinder the effective communication and set the stage for conflict.

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Discuss the role that conflict plays in affecting organizational commitment.

Organizational conflict plays a vital role in influencing the employees’ behaviors and their working outcomes, and has a major affect on the organizational commitment of the employees in the company.

Intra-individual conflict is one of the conflicts facing employees in an organization, it occurs when an employee faces different and mutually exclusive goals and roles, or is obstructed from achieving a certain need.

There are three factors of the intra-individual conflict:

  • Role conflict; occurs when an individual faces different and somewhat contradictory expectations from different parties.
  • Goal conflict; occurs when an individual faces the choice between mutually exclusive goals, which could be positive or negative or both.
  • Frustration; occurs when the individual is prevented from ding a desired action or achieving a certain goal.

These three factors of intra-individual conflict are negatively related to commitment, the higher the levels of role conflict, goal conflict and frustration, the lower the levels of commitment.

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Winning is not merely a desirable thing, it’s everything

When business is looking for the secret of success, it should turn to sport
Rosabeth Kanter

For many years I have observed the ups and downs of organisations as well as countries and also life. During up-times it’s clear that confidence swells and people feel they can do anything, which motivates feats of high performance, because confidence is just an expectation of a positive outcome. When I have confidence, I believe that success is possible, and so those with confidence put in the effort to do the work. It’s really the work that produces success.

During downtimes, confidence ebbs. People, organisations and whole countries get depressed, defeatist and they stop trying. The task of leaders is to produce confidence, to motivate performance, and that requires an organisational culture with certain underpinnings and foundations in place that produce a culture of confidence not just for individuals but confidence in the team, confidence in the system and confidence by investors, stakeholders and the public that the organisation will deliver on its promises.

I have studied the difference between sustained success, or what I call “winning streaks”, just like in sports, and perpetual mediocrity or decline, or as I call them, “losing streaks”, again like sports. I have studied this in businesses such as Gillette, Siemens, Seagate Technology, General Electric, Continental Airlines, the BBC. I have studied this in community and government organisations and in whole countries. I have looked at this phenomenon in microcosm in sports teams, where we can draw many lessons that are applicable to business.

First, winning is a whole lot better than losing. Think about it a moment: it’s not just, of course, the obvious, that we all want success in our organisations and all of our endeavours, but it’s also that the very fact that winning, succeeding, produces better behaviour. It produces better behaviour that will help the team or the organisation perform better in the future.

First of all, people are in a better mood and when people are in a good mood they’re attracted to one another, they want to gather, they want to talk over the past performance. Therefore, they get all of the advantages of learning because they are comparing notes: on how did we win that big sale, how did we make the acquisition, how did we accomplish that incredible conference? When they do that, they have the advantage of learning, whereas losers slink off into the corner, don’t want to talk about it and, therefore, have no opportunity to learn. It only reinforces them in their depression.

Winning brings greater resources, investment by external people. It brings better press. Winning provides more opportunities to be part of better networks, to get better deals. Those who are seen as successful often get bigger discounts. They get sponsorship opportunities. They get first crack at the best people. They get invited to receptions or parties or events where they’re going to meet other people, gain business intelligence and, therefore, have an advantage for the next race.

A second lesson about the difference between sustained success and mediocrity or perpetual failure is that winning is boring. That is, winning can lull people into false complacency or overconfidence. Instead of building their confidence that they can go on to the next victory, they become arrogant and, therefore, stop trying, and that’s one of the reasons that winning streaks end or that success comes to an end.
Also, I say that winning is boring because it’s really hard work. It’s not a matter of doing things that are flashy or dramatic. It’s a matter of constant discipline and professionalism all of the time. It was interesting when I talked to some leaders of sports teams. In teams that had sustained high performance, very long winning streaks, including one team that had a record for the only undefeated season in its sport, when we asked the coach “How did you feel about that undefeated season?”, he said: “The interesting thing about that season was that there was nothing interesting about it. All the players did was get up every day, practise hard, then come to work and win games”. They practised all the time and they held themselves accountable for performance. Leaders have to model this.

A third lesson about the difference is that it’s not the talent; it’s the talent in the team. There’s an obsession in organisations today with talent, with individuals. But most people who meet the threshold of talent will either play above their game or below their game, depending on the culture that surrounds them. On winning teams it’s the team, not the talent. Losing teams and declining organisations often have stars but the stars are out for themselves. They’re looking at their own résumés. They’re trying to promote their own careers rather than promoting the team as a whole.

The fourth difference between sustained success and mediocrity is that winners think small as well as thinking big. Of course you want some big goals, but you also need a constant series of small wins in an organisation. You need many people in unexpected places developing ideas that you didn’t even know were there.

The BBC needed a bit of a turnaround in the early 2000s because in the late 1990s it had been losing audience share and there were concerns about its creativity. A new chief executive set in motion a system of brainstorming meetings and other ways to empower people. Under this new environment, a relatively new trainee was given a budget to create a training film for a new orientation programme. Part of the goal in that era was to create one BBC instead of a set of fragmented divisions: radio versus television news versus sport, and so on. So his job was to create a film that would tell people about life in the organisation. He took that budget and made a film that turned out to be the pilot for The Office, the BBC’s biggest hit comedy since John Cleese in Fawlty Towers. Unexpected, and a small win that turned into a big victory.

The fifth difference between winners and losers is that the secret of winning is how you handle losing. What organisations need most is resilience. Every person is subject to what I call Kanter’s law. Kanter’s law says that nearly everything, especially if it’s new and different, can look like a failure in the middle. If we stop, then by definition it’s a failure. If we have the confidence of winners and the culture of the organisation or our team behind us, we can often convert near-misses or near-disasters into opportunities for improvement, and that’s what winners do.

About the Author
–– Rosabeth Moss Kanter is the Ernest L. Arbuckle Professor of Business Administration at Harvard Business School
–– She specialises in strategy, innovation and leadership for change
–– She was Editor of the Harvard Business Review between 1989 and 1992
–– She has written and co-written 16 books, including Confidence: How Winning Streaks & Losing Streaks Begin & End; Men & Women of the Corporation and The Change Masters
–– She co-founded the consulting group Goodmeasure in 1977. It specialises in organisational change and innovation She received the Academy of Management’s Distinguished Career Award in 2001
–– She taught at Yale University and Brandeis University before joining Harvard Business School.

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Business and the Media

·                     News media is a source of information for those in the nonmarket environment of business
      2008 YAEGER CPA Review Business Environment Kit
    • Plays role in setting a firm’s nonmarket agenda
    • Alerts players outside the firm to the firm’s issues and activities
    • Can be used as part of a nonmarket strategy, though ideally media stays neutral
·                     Managers must assess the issues news media is likely to cover
    • Coverage and treatment of issues governed by intrinsic audience interest (AI) and societal significance (SS)
    • Extensive coverage likely on topics that are both high in audience interest and societal significance*
    • Sample topics:
      • High AI/High SS: Health Risks, Individual Rights*
      • Low AI/Low SS: Most Business Issues
      • High AI/Low SS: Weather, Sports
      • Low AI/High SS: Poverty, Politics
·                     On many issues, business is the best and lowest cost source of information for the media
    • Opportunity for managers to cultivate relationships with journalists who cover business on a regular basis
    • Managers should be aware of nonmarket issues and be prepared to address them
·                     Business issues tend to be too complex for television and the general media to cover
    • Given the media’s incentive to report on stories with intrinsic audience interest, complex issues are sometimes oversimplified and over dramatized
·                     Media is guided by professional standards, but a tension exists between those standards and corporate and individual incentives
      How to Make Money with Social Media: An Insider's Guide on Using New and Emerging Media to Grow Your Business
    • Companies motivated by profit considerations
      • Subscription and advertising revenues depend on audience size
    • Journalists motivated by professional recognition
      • Need to be published/air in order to receive recognition; pressure to present newsworthy stories
·                     Discipline for the news media comes in three forms:
    • Professional standards
    • Self-imposed controls established by media organizations
    • Lawsuits
      • Defamation suits: difficult and costly to win
      • New York Times vs. Sullivan: media well protected in cases of lawsuits involving public figures; public figure must prove intention of malice
·                     News media is a principal source of information in a democracy
    • Principal role is to transmit information, not draw conclusions/advocate a position

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Business and the Media

·                     News media is a source of information for those in the nonmarket environment of business
      2008 YAEGER CPA Review Business Environment Kit
    • Plays role in setting a firm’s nonmarket agenda
    • Alerts players outside the firm to the firm’s issues and activities
    • Can be used as part of a nonmarket strategy, though ideally media stays neutral
·                     Managers must assess the issues news media is likely to cover
    • Coverage and treatment of issues governed by intrinsic audience interest (AI) and societal significance (SS)
    • Extensive coverage likely on topics that are both high in audience interest and societal significance*
    • Sample topics:
      • High AI/High SS: Health Risks, Individual Rights*
      • Low AI/Low SS: Most Business Issues
      • High AI/Low SS: Weather, Sports
      • Low AI/High SS: Poverty, Politics
·                     On many issues, business is the best and lowest cost source of information for the media
    • Opportunity for managers to cultivate relationships with journalists who cover business on a regular basis
    • Managers should be aware of nonmarket issues and be prepared to address them
·                     Business issues tend to be too complex for television and the general media to cover
    • Given the media’s incentive to report on stories with intrinsic audience interest, complex issues are sometimes oversimplified and over dramatized
·                     Media is guided by professional standards, but a tension exists between those standards and corporate and individual incentives
      How to Make Money with Social Media: An Insider's Guide on Using New and Emerging Media to Grow Your Business
    • Companies motivated by profit considerations
      • Subscription and advertising revenues depend on audience size
    • Journalists motivated by professional recognition
      • Need to be published/air in order to receive recognition; pressure to present newsworthy stories
·                     Discipline for the news media comes in three forms:
    • Professional standards
    • Self-imposed controls established by media organizations
    • Lawsuits
      • Defamation suits: difficult and costly to win
      • New York Times vs. Sullivan: media well protected in cases of lawsuits involving public figures; public figure must prove intention of malice
·                     News media is a principal source of information in a democracy
    • Principal role is to transmit information, not draw conclusions/advocate a position

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Impact Of The Economy On Business

The economy affects businesses through the following ways:
1.Unemployment
If large numbers of people are unemployed, spending on goods/services will decrease, people who are then unemployed pay less tax and get more social welfare. Then because more social welfare (dole money) is being paid out taxes increase. As a result of taxes increasing people do not wish to buy goods.
2. Interest Rates (IR)
Interest Rate Swaps and Their Derivatives: A Practitioner's Guide (Wiley Finance)IR can be defined as the cost of borrowed money. In India IR are set by the central bank. If IR is low it is good for entrepreneurs to seek loans from financial institutions. Low IR is also important to encourage customers to borrow from banks to buy cars/houses/equipment.
3. Exchange Rates
A drop in the E.R means that other currencies are more expensive. An attractive E.R helps to attract tourists to the country.
High ER            goods being exported become more expensive abroad
                         Imported raw materials become cheaper
Low ER             goods exported become abroad cheaper and therefore easier to sell 
                          Imported raw materials will become dearer.
Note: There is no ER between nations in the Euro zone.
4. Inflation
Is defined as the annual percentage rise in prices from 1 year to the next. Inflation is measured by the CSO. High levels of inflation leads to:
§       Product being more difficult to sell abroad/at home
§       Reduction in profits of  firms
§       Decline in sales of firms
§       Less money available for consumers to buy goods
§       Industrial relations problems, employees will look for pay increases
Note: In India at the moment Inflation levels are high.. WHY?
5. Taxation
Happiness and Economics: How the Economy and Institutions Affect Human Well-Being.Businesses and employees have to pay VAT/PRSI/PAYE/corporation tax, so it is quite clear that the economy impacts on businesses.
High personal employees tax leaves less disposable income for employees to spend
High rates of personal tax leads to employees seeking higher wages
Lower rates of tax – stimulate employees to join company
6. Grants – are given by the government to enable businesses to grow
Economic Growth – if the economy is growing it becomes more wealthy
                                        More money for businesses to expand

IMPACT OF BUSINESSES ON ECONOMY

Business impacts upon the economy in 3 ways
1-   Employment Levels
Shops/pubs/restaurants/supermarkets etc create employment so the following consequences occur as result.
§       Less unemployment benefit being paid out by govt
§       Creation of higher std of living as people have sources of income
§       Profit made in business are usually invested back into the business – more jobs
§       Increases in levels of employment will lead to more jobs for builders/plumbers/carpenters etc.
2. Tax Revenue (TR)
There is an increase in TR for the government through
Unlocking the Secrets of the Fed: How Monetary Policy Affects the Economy and Your Wealth-Creation PotentialVAT – because extra goods/services bought
PAYE –- because of larger work force
Government/economy gain on corporation taxes.
3. Environment
Businesses affect the environment through pollution such as industrial pollution/air pollution/water pollution.
Social costs such as road traffic delays/health risks to workers/noise pollution
Development of Businesses also affects parking problems/litter problems and a distinct lack of green spaces in urban districts.

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Reasons for a Business Plan

Anatomy of a Business Plan: The Step-by-Step Guide to Building a Business and Securing Your Company's FutureDefinition:
A business plan is a document that discusses in detail who is setting up the business, what the product/service is, how it is produced, marketed and financed.

Reasons for setting up a Business Plan

  • To identify who runs the operations of the business
  • To distinguish to potential moneylenders is the business going to be profitable
  • To identify how to raise finance

Sections of a Business Plan

Business Plans Kit For Dummies (For Dummies (Business & Personal Finance))1. Nature of Business: this describes the name of the business, the product being developed and any USP it may have

2. Ownership: this topic briefly identifies the entrepreneur, their history of education, work experience etc.

3. Management breakdown: How business is run (sole trader, partnership, limited company). It also lists who is production manager, marketing manager, financial manager etc. and any key staff in the business.

4. Operations/production: identifies how the business operates, what premises/equipment raw materials is required. It also details what type of production method is used.

5. Marketing: This section describes the market, its size, its competitors, and its target market. It also highlights the USP that the product has as a key method in promoting product. It also details the marketing strategy in the form of marketing mix (4 p’s) that the business has.

6. Financial: This will include figures of

  • Start up costs – premises, equipment
  • Sources of finance -grants, loans,savings
  • Expected profitability – budgets, a forecasted trading profit and loss account.

Ownership Structure
This in mainly broken into three strands:

  • Sole trader
  • Partnership
  • Limited company
Production Options
  • Batch production
  • Mass production
  • Job production

Choosing Financial Options

Factors to consider

  1. Purpose of the finance needed
  2. Amount of money the business needed (i.e.) if small amount needed will a short term loan be sufficient, if large sum needed will a long term loan or investors be adequate
  3. Control – will the business person be comfortable in the knowledge that in order to raise finance he/she may have sacrifice a valuable share of the business

What banks will look for before agreeing a loan

    Writing a Convincing Business Plan (Barron's Business Library)
  1. Purpose of money your looking for 
  2. Your ability to repay
  3. Credit worthiness in any previous dealing with bank
  4. The security you can place against the loan in case of any problem arising on repayments
  5. Business plan that has a detailed description of business model
  6. Feasibility study on the particular product may be seen as being well researched, Evaluation can now be done where banks can make a well-informed decision

Sources of Finance

  1. Long Term – (3+) years
    • Govt grants
    • Equity Investment
    • Long term loans
  2. Medium Term – (1-3) Years
    • Term loans
    • Hire Purchase
    • Leasing
  3. Short term – (0-1) Year
    • Bank overdraft 
    • Accrued expenses
    • Factoring

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Does economic growth inevitably lead to environmental degradation?

A return stroke, cloud-to-ground lightning strike.Image via Wikipedia
Economic growth is neither a necessary nor a sufficient condition for environmental degradation, as the IPAT identity makes clear. However, growth can, and often will, increase degradation pressures, particularly when growth is strongly associated with greater material/resource throughput. For more information on the possible linkages between growth and the environment, see the references on the EKC hypothesis listed in the further reading section, particularly the special issue of the journal Environment and Development Economics in October 1997 (volume 2, part 4), and also of the journal Ecological Economics in May 1998 (volume 25, No. 2).
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Static and Dynamic Efficiency

If other things were equal, would monopoly result in a less efficient allocation of resources than competitive markets?
However, it is also important to compare market structures in terms of their performance over time. We could describe this as dynamic efficiency. Two important dimensions of dynamic efficiency are:
1 innovation in processes of production
2 new product innovation
Two plausible stories can be told here.
(a)Competitive markets have a superior innovative performance because the force of competition encourages firms to innovate to protect their profits, and indeed to survive. Insulation from competition implies that the incentive to innovate is lower for a monopolist.
(b)Monopolistic markets are superior innovators because of
  • superior access to capital resources;
  • less uncertainty and risk in the market, leading to a climate more conducive to innovation;
  • scale economies in research and development activity;
  • the ability to prevent others benefiting from the firm’s own new ideas, which encourages the firm to devote resources to innovation.
The available empirical evidence is not conclusive about which type of market has a superior dynamic performance. It is sometimes claimed that the success of the Japanese and West German manufacturing industries in the 1960s and 1970s is a consequence of competitive industrial structures. But close scrutiny makes it clear that these economies are far from perfectly competitive in the textbook senses, and it is at least as likely that the key to their performances lies in particular (and unique) configurations of cultural, institutional and historical circumstances. Once dynamic efficiency is brought into consideration, the relative merits of competitive and monopolistic markets become very difficult to assess. Moreover, the best market type (from an efficiency viewpoint) may not be perfectly competitive nor pure monopolistic, but rather some intermediate form, such as oligopoly.

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LIMITATIONS OF BARGAINING SOLUTIONS TO EXTERNALITIES AND IMPLICATIONS FOR PUBLIC POLICY

Bargaining solutions to externality problems are unlikely to take place when the number of affected parties is large. Where many people are involved, the costs of bargaining may be so large as to prevent it taking place. Bargaining also requires that the affected parties can be identified. It is easy to think of circumstances where this is either difficult or impossible.

These conditions suggest that bargaining is not likely to be a an effective means of dealing with external effects where the natural environment is concerned. Typically environmental pollution affects a large number of people, and it is often difficult to identify all the affected parties. An additional difficulty arises from the fact that the adverse impacts on the natural environment of many types of economic activity persist over long periods of time. Economic activity today does not only affect those living today, but also imposes external costs on future generations. If people living in the future “matter”, then bargaining solutions require that the interests of future generations be included in the bargaining process. It is difficult to see how this can take.

Bargaining is also unlikely to lead to efficient outcomes where the externalities have the characteristics of public goods. A public goods has a very important property: consumption of the good by one person does not prevent another person also consuming it. Examples include national defence, the services of lighthouses, radio and television transmissions, and public health programmes. In each of these cases, consumption is non-rivalrous in the sense just described.

Public goods often have a second property, that of non-excludability. Once the good is made available to one person, others cannot be excluded from using it. This is true for national defence, lighthouse services and public health schemes. Non-excludability poses severe difficulties for bargaining solutions. The reason for this is the “free-rider” problem. If someone cannot be prevented from consuming a public good and believes that others will pay for its provision there is an incentive to “free-ride” on its provision by others. In a bargaining process, the individual has an incentive to understate his or her willingness to pay. So the true social valuation of a public good will not be revealed in a bargaining process, and as a consequence it is likely to be underprovided.

Many environmental goods and services (such as clean air, ground and water, wilderness areas and ecosystems with extensive biodiversity) are public goods. Environmental protection measures also often fall within the class of public goods. Bargaining is unlikely to lead to optimal amounts of environmental resources or environmental protection.

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