Departmentalization

In a business you must have some sort of structural organization in order to operate. Business structures are to be thought of as a triangle; the tip being top management, corporate CEOs, Presidents, Vice presidents etc and the bottom being more lower level functions such as a sales person, accountant, production worker etc. In a business the departmentalization methods can vary.

 In a functional structure, you group jobs together base on their performance of like activities. For example, you still have your top management near the tip of the triangle but there is a cut off line near the top where functional jobs break out where you'll find marketing, production and staff functions. Functional structure creates an efficient use of resources such as in the jobs and it eliminate redundancies. Specialization is also a benefit because the jobs are grouped together based on their performance of like activities therefore each department is specialized. 

In a divisional structure, you group jobs together on the basis of product, geography, and customers.We still see top management at the tip of the triangle and a divisional breakout near the top. Below the divisional break out we see the categories of product, geography and consumer instead of staff functions. As we move down the triangle we see another break out, this time it is a functional breakout. So this is where we see the functional jobs such as production, marketing, and staff lines. A divisional structure is very responsive and flexible due to its multiple levels of jobs and functions. We also see better functional coordination due to the breakdown of jobs. When we look at the entire triangle we see a lot of division of jobs and functions which helps each department to develop goals. As we move up the triangle we see general managers develop much before they would had they been in a functional structure.

There is no one right way of structuring a business. Certain structures work better for certain companies depending on size, type of business, and foundations of the business. Each structure has it's pros and cons but qualities of each type can make a business of similar nature run completely different if  one is divisional and one is functional.

Works Cited:

Brown, Paul. "Organizing." Management 320. Barry Hall, Fargo. 28 Oct. 2015. Lecture.

Why businesses fail.

Being a student in the business field looking into potential career opportunities I have considered it all. I have considered owning my own business one day and while looking into some statistics I came across a quite alarming one: 8/10 businesses fail within the first 18 months. That's 80%! I was dumbfounded when I read this statistic. I couldn't stand to just leave it at that, I was dying to read into why this was an accurate fact. After researching I found the following results discussing the reasons why:

• Not building a strong relationship with customers. Customers are your business, without a customer base a business does not exist. Many businesses fail to meet customer needs because they fail to maintain a good understanding of their customer.
• No differentiation. What makes your products/services different than what's already out there? Differentiation is a slow but sure killer of a new business.
• Failure to communicate. So lets say you've mastered the differentiation you now need to communicate it to your customers. Customers won't buy things that they have never heard of simply because they don't know it's out there.
• Management failure. If your management fails to complete duties or quits their job you have to step in and fill that position. As a business owner you are the highest manager and overseer of the business. You have to know how to fill each roll if it needs to be filled.
• Unable to make a profit. If you are unable to make a profitable business model your business will surely come crashing down. Minimize your start up costs by limiting your cash outflow. You need to think and move quickly in order to best act on your investment. 

works cited:

Wagner, Eric T. "Why Businesses Fail." Forbes. Forbes Magazine, 12 Sept. 2013. Web. 27 Oct. 2015.

Stocks vs. Bonds for dummies.

Lets say you have hit the point in your finances when you would like to consider investing your money. You have heard of both stocks and bonds but don't really understand the differences between the two and the benefits of both. I am here to tell you in layman's terms what the difference between stocks and bonds is. 

When you purchase stock, you are buying into the company and are part owner of the company. When you purchase bonds you are not purchasing ownership you are just considered a creditor. Stocks have no maturity date while bonds have a predetermined maturity. Stocks however generate variable periodic income and bonds generate fixed periodic income. When you invest in stocks you do not know how many payments you'll receive over the time of ownership. When you invest in bonds you know how many payments you'll receive over the life of the bond. Bonds also have a set end value (par value) that you'll receive at maturity. Stocks do not have a set end value because they do not have a set maturity. Stock's rate of return remains unknown until you sell the stock (hint: buy low sell high). Bond's rate of return is known if it is held to the maturity, this is known as the Yield to Maturity or Yield to Call depending on the type of Bond. 

As you can probably now gather, stocks are a very unpredictable investment therefore posing a higher risk. Bonds are a very predictable investment therefor posing less risk. It seems like Bonds would be an obvious choice when investing money but that is not the case. The higher the risk of investment the higher the potential yield could be. If you are looking for a safe and secure investment, bonds are a great choice. If you are looking for a riskier and potentially higher yield investment, stocks are a good choice. The benefit of bonds vs stocks is that if the company goes bankrupt, you still get your initial investment and promised money where as if you owned stocks, you would be out the money. The benefit of stocks vs bonds is that you have the potential to earn more money over the course of your ownership.

What makes a monopoly?

A monopoly is defined as the exclusive possession or control of the supply or trade in a commodity or service. Monopolies are also illegal in the United States. Although most businesses ideally work toward a monopoly almost never accomplish it and that is a good 
, legally at least. In layman's terms a monopoly is when one business is the only supplier 
(for the most part) of a certain good and has complete control over price. Governments try to eliminate monopolies by enforcing antitrust laws. Antitrust laws are designed to prevent monopolies and monopolistic practice. 

What classifies a monopoly?

• One producer controls supply of a good.
• entry of new producer is highly restricted and/or prevented.
• Price-fixing: company controls price.
• Market share greater than 50%.

Well-known monopolies in history.

• Standard Oil
• Salt Commission
• De Beers
• AT&T
• Cable TV
• Hudson Bay Company

All of these companies at one point have held a monopoly over the market they do business in and have since been split up or no longer exist.

works cited:

Holmes, Alex. "10 Greatest Monopolies." The Ministry of Fear. N.p., 27 Jan. 2009. Web. 22 Oct. 2015.

"Monopoly Definition | Investopedia." Investopedia. N.p., 24 Nov. 2003. Web. 22 Oct. 2015.

Credit Card Chips

We jokingly talk about microchips being programmed into everything nowadays. Well now our credit cards will have microchips programmed in them, we can only imagine what's next. To many consumers confusion, many banks have mailed out new credit and debit cards for consumers to replace their current one. Microchip credit cards are a completely new thing for the United States. 

What does this mean for consumers?

For the most part consumers can go along their merry way buying and using their cards just as before. However, there is a slight learning curve to the new cards. Instead of just swiping a magnetic strip they will simply insert their card to a machine for a couple of seconds and potentially prompted to sign or enter a pin number.

What does this mean for companies?

Retailers reacted quite negatively to this change. For retailers this could mean potentially millions of dollars spent on new machines that are compatible with the new credit cards. For higher end stores that sell more expensive items there is more liability therefore more urgency to get these new devices. 

Why the switch?

The switch to the microchip cards vs. magnetic strip is due to more security. With retailers like target and others having issues with customer security the need for a more secure transaction is needed. The new cards work in a way such that every transaction is given a unique code making it less more difficult for hackers to commit fraud. 

Works cited:

Jones, Charisse. "Ready or Not, It's Credit Card Chip and Dip Time: What You Need to Know." USA Today. Gannett, 01 Oct. 2015. Web. 22 Oct. 2015.

Internships

As a college student eventually seeking a career, the word "internship" has become a very familiar term. Internships are designed to give people hands on experience in a job environment or position. Some majors at schools around the country are now requiring students apply and get an internship before graduation. Internships provide many great benefits. As mentioned before, internships provide hands-on experience. Many employers look for employees that have relevant work experience that internships provide. Internships also provide the opportunity to see and experience many different types of jobs within an organization to give you an idea of what you might want to pursue. As an intern you develop many skills that employers seek. Whether it is the ability to work with others, complete a certain task, you will have developed a multitude of skills. Another benefit of internships are that they push you outside of your comfort zone, often times introducing you to unfamiliar things.

However, internships also have their negative qualities. In the workplace you are often thought of as a student, regardless of your status. You are also tagged with the name 'the intern' in a condescending manner. Your role as an intern can often be confusing because the work you do is very broad making it hard to focus your aim. Lastly, internships don't always have consistent schedules like your typical 9-5 job might.

Personally speaking, I think internships provide great opportunities for learning. Often times internships can lead to jobs within the same company after they are done. Internships can be a crucial part in developing your education and building a good resume.

works cited:
Flecher, Nicola. "Pros & Cons of an Internship..." The Outreach Interns. N.p., 22 Mar. 2013. Web. 22 Oct. 2015.

No-tipping Policy

Could restaurants eliminate customers tipping their servers? There have been some motions from some restauranteurs to eliminate the gratuity act of tipping. Most people go to out for dinner expecting to tip their server around 20% on top of the cost of their meal. This is just the way that Americans dine and have dined for many years. So why change now? Well many restaurants are wanting to support wage equality for all employees including the chefs. Often times Chefs take home less pay than the waiters and waitresses because their pay doesn't include any tips. This seems a little backwards considering Chefs go through culinary school and gain an expert knowledge on cooking through rigorous schooling yet get less take home pay than the servers who have had no professional education in their specific job.
The arguments goes both ways. Many people argue that getting rid of tips in some restaurants could cause much confusion for diners all around.  Many people question how will they know if they should tip or not. In order to eliminate this confusion all restaurants around America will need to go with the no-tipping policy. Diners often times like to show their gratitude toward their servers by giving them a tip and now they won't be able to express that gratitude freely.
Another argument on the other side of the spectrum is anti-tipping. Pilots aren't tipped for landing planes safely, doctors aren't tipped for saving lives, and teachers aren't tipped for giving good lesson plans so why should servers be tipped for just doing their job?
Eliminating tips doesn't necessarily mean that the customers will be saving money. How the restaurants will most likely compensate for the lost revenue will be through price increases on menu items. Not just small price increases either, it will be starting at about 20%. This means a meal that was once $20 will now be at least $24. Getting rid of tipping strips away our American expression of gratitude. It might not be the most sensible systematic way of doing things but its part of American culture.

works cited:
Drew, Kate. "New Wage Inequality Battleground: Stiffing Waiters." CNBC. CNBC, 16 Oct. 2015. Web. 16 Oct. 2015.