Contemporary Business

Best Business Schools in the World

2011-12-04T23:16:00.001-08:00

Previously on, we mentioned some benefits of studying business. This knowledge could be acquired in formal (such as conventional schools and vocational centres) and/or informal settings (such as in apprenticeship).

See Why Study Business? for details.

Hmmm, our focus here is on traditional Business Schools. Don't get me wrong. I didn't decry informal school settings. In fact, the informal settings in some important ways give traction to the theoretical knowledge acquired in formal settings. For examples through Internships, Industrial Attachments, and Community Service/National Youth Service, among others.

By the way, my old friend (young at heart) called yesterday to share his experiences. The theme of the discussions was on how engaging his Masters' programme in the United States has been. He also spoke on the associated financial costs among other issues. Our joy was that he was getting on fine. The entire details of the conversation is a subject for the future.

Actually, the discussions with him had made this post more compelling.

Back to business schools (B-schools, yep!) ....

Source: Wikipedia Image

Have you ever thought about the best business schools in the world? Personally, I reflected on this a couple of years back and Harvard and Stanford was a sing song. My choice then, was largely based on researches on offline and online media. That was over a decade, though!

I found that most well established investors, entrepreneurs, executives and the likes are Alumni of these B-Schools (Harvard and Stanford).

Interestingly, in more recent times, Harvard and Stanford continually appear on the list of world best business schools.

You would be pleasantly surprised by the outcomes of Business Insider's proprietary ranking of world's best business schools. The criteria . ..

Hear this:

"At the highest levels, moreover, there's only one thing that really differentiates one business school from another: The amount the school will help your future career.

Beyond the curriculum, that breaks down to:

The value of the school's brand (how others perceive the quality of the school), and
The network of contacts you build while you're there

These two things -- a credential that will cause future employers, executives, investors, and journalists to be impressed by you and a high-power social network -- will help your career more than any particular accounting course or case study. And they're part of what you're buying when you elect to spend two years and up to ~$100,000 as a customer of a particular business school."

For the list of 50 world's best business schools, see this: Business Insider's Business Schools Rankings.

Based on my review, I found that most of these B-Schools also made the list on Financial Times Global MBA rankings 2011. Yet, Business Insider's and Financial Times' ranking methodologies differ.

For the list of 100 world-class business schools, see Financial Times Business Schools Rankings (pdf)

See also a chart comparing some of the top schools.

Communism and Socialism as Economic Systems

2011-12-02T22:30:00.001-08:00

Previously, capitalism as an economic system in which private individuals with comparative freedom from external restraints are allowed to own all or most of the means of production and distribution (e.g. land, factories, railroads, and shops) was explained.

Today, let's dig into communism, then socialism....

Communism

Communism is an economic system proposed by 19th century German political philosopher Karl Marx. He saw the inequality in wealth between the capitalists and the labourers in the 1800s, and advocated for a system of government whereby ownership of all economic resources of a country will be among a community of people (or government), hence the term communism. In 1848, Marx wrote “The Communist Manifesto”, wherein he outlined the process. As a result, Marx became known as the father of communism.

Essentially, communist government or state makes all economic decisions, and owns all the major forms of production. In Marx’s mind, government ownership of resources was to be only temporal until a society is matured, however, communism in practice was different or far from Marx theory. Communism involves permanent government control of resources; there is no passing back of ownership to the people.

The former Soviet Union was the first nation to adopt a communist government. Other examples of countries that have adopted communism include Cuba, People’s Republic of China, Vietnam, and Eastern European Countries (Poland, Hungary, and others).

Under this economic system, a central planning committee decides what to be produced, and this decision does not usually reflect the many and varied wants or demands of the populations. For example, if a communist government concentrates resources on the production of defence equipment and de-emphasize consumer goods such as food, clothing and radio, most people are compelled to go without these consumer goods even if they want them. As a result, there is a problem of imbalance due to unmatched supply and demand.

Communist countries typically emphasize capital equipment and military hardware. Consequently, consumer goods are in short supply. Communism, in practise, is no longer a major economic system in the world today. For example, the People Republic of China has liberalized its economy such that in recent times the Chinese government is embracing the market system.

Beyond capitalism and communism. We have socialism.

Socialism

Under this economic system, there is government ownership of primary or top industries, while less crucial businesses are left to private individuals. Socialist governments looked favourably on capitalism because of the wealth it helps creates, but see the government as the central agency that can create a more even distribution of wealth. As a result, private businesses and individuals pay extremely high taxes so that the government can enhance public welfare or promote social programmes.

Most socialist governments often provide many services including retirement benefits, unemployment benefits, health care, transportation, housing and utilities.

In socialist economies the government may control institutions such as communication, transportation, banking, and heavy industries such as steel, oil and gas. Under this system, the government employs a large percentage of the population mainly on political patronage or consideration. As a result, many government concerns are usually inefficient. Because of this inefficiency, socialist countries such as Sweden, Holland, France, and the United Kingdom have liberalized and deregulated their economies. For example, Great Britain has privatised its hitherto state-owned utilities-- Power Gen and British Telecom.

Over the years, the experience of the world has been that none of these three basic economic systems has offered optimum economic conditions. Consequently, the basic economic systems have been merging, such that globally pure forms no longer really exist. There is a mix of government ownership and private enterprise – mixed economy.

If you liked this article, you might also like this Factors Affecting Economic Systems.

Capitalism as an Economic System

2011-12-02T06:21:00.001-08:00

In Business under Various Economic Systems, some salient issues such as

(1) Who will own the means of production?

(2) What will be produced and how will they be produced?

(3) How will the products be distributed?

were highlighted. Now, we're taking an in depth examination. We 're looking at the concepts of Capitalism, Socialism, Communism, and Mixed Economy/Free market Economy

Here we go.....

Capitalism

Capitalism is an economic system in which private individuals with comparative freedom from external restraints are allowed to own all or most of the means of production and distribution (e.g. land, factories, railroads, and shops). Capitalism as an economic system or theory of wealth creation and distribution owes its philosophical origins to 18th century philosophers such as Adam Smith. This Scottish economist is considered the father of capitalism.

In this type of economic system, producers operate under conditions of competition and the forces of demand and supply determine market prices, hence, capitalism is sometimes called the market economy or private enterprise system. Capitalism in its purest form is referred to as "free market capitalism" or "laissez faire", this means a system without government interference in the conduct of businesses.

However, today, no country is purely capitalistic. Often the government sets the regulatory frameworks. For example, in Nigeria, we have such regulatory agencies as Standard Organisation of Nigerian (SON), National Food and Drug Administration Control (NAFDAC), Nigerian Deposit Insurance Company (NDIC), National Universities Commission (NUC), Federal Environmental Protection Agency (FEPA), and Directorate of Petroleum Resources (DPR), among others.

This way, capitalism in which there are increased restraints by government upon business is often called “modified capitalism.” It is also referred to as a mixed economy.

Fundamentally, private property, private enterprise, and freedom of choice characterize capitalism. These three factors, collectively, are frequently called the rights in a free enterprise system or basic freedom of capitalism. By private property, we mean individuals and firms have the right to purchase, own, use, sell, or give away property of all kinds, such as land, buildings, machinery, and equipment. It also implies that business people have the right to the ownership of the profit they hope to realize in the course of providing goods and services.

Private enterprise, as another basic right of a private enterprise system, or as another basic freedom of capitalism pertains to ownership, and shows that business is own by private individuals as opposed to local, state or federal governments. Here, the business owners or management make the judgments and decisions that determine the path the business follows. Under this right, business dealings, if not illegal in nature, are not of public concern.

The third outstanding characteristic of capitalism is freedom of choice. This pertains to the freedom of the individual as a consumer, a worker, and an owner of resources. As business owner, one is free to choose the field of business one will invest, and to manipulate the factors of production to one’s best advantage in the light of the highest measure of profit. As a worker, the individual is at liberty to choose whatever career choice that offers one the best returns for one’s efforts. As a consumer, one is free to make whatever purchase choice, as long as the product is legal.

Capitalism, like any other economic systems, relies on certain inputs to operate effectively. Collectively, these inputs are called the factors of production. They are the resources businesses use to create wealth.

A corollary of capitalism (as a form of economic systems) is communism.

Karl Marx saw the inequality in wealth between the capitalists and the labourers in the 1800s, and advocated for a system of government whereby ownership of all economic resources of a country will be among a community of people (or government), hence the term communism.

How Business Developed Over the Years: An Overview

2011-11-30T22:13:00.001-08:00

Have you ever wondered how the products and services you enjoy/consume where made possible? Have you ever thought about how the stages involved were like centuries ago when the means of production was in its infancy phase or not well developed?

An understanding of how business developed over the years, would largely resolve these and related issues!

Here we go:

Overview of How Business Developed Over the Years

Business is as old as man. It has a prehistoric and long heritage. In a primitive society, people with the use of crude implements provided needed goods and services.

An individual produced mainly for his or her immediate family. It was a period of self – sufficiency. With increased population, the desire to produce more want satisfying commodities to meet the teeming population of the times became prevalent. In the event of a surplus, the commodity was stored or exchanged for some other commodities. The economy then was basically subsistent.

In the course of time, the increased population was sustained, and coupled with the emergence of the Industrial Revolution in England in the 18th century (around 1750), the business landscapes of nations altered tremendously. The use of machinery has come to largely replace crude tools, especially in developed parts of the world.

Welcome to a civilized era!

Here, people have more opportunities to greater number of goods and services. This is made possible by the efforts of varied numbers of people working independently or together to satisfy their individual needs and wants, as well as those of the organisations they belong.

For our purposes, we are concerned about business in a modern or contemporary society.

Definition of Business

Business is any human activity that aims to provide goods and services (economic and/or social) for the benefits of the individual, group, and society as a whole, within the framework of societal norms. The benefits sustain and improve people standards of living and quality of life.

Next time, we would consider: Why Study Business?

Micro and Macroenvironment of Business

2011-11-05T18:51:00.000-07:00

Broadly speaking, the environment of business is composed of the microenvironment and macroenvironment.

Micro Environment

The microenvironment is also called the operating, competitive or task environment. It consists of sets of forces and conditions that originate with suppliers, distributors, customers, creditors, competitors, and shareholders, as well as trade unions, and the community in which the business operates. These forces, on a daily basis, impact the organisation’s ability to obtain inputs and discharge of its outputs. Factors in the microenvironment are largely within the control of the managers. In this way, organisations can be much more proactive in dealing with the task environment than in dealing with the macro environment.

Forces in the microenvironment result from the actions of four main elements or groups, namely suppliers, distributors, customers, and competitors. These groups affect the manager’s or firm’s ability to produce on a daily, weekly and monthly basis, and thus significantly impact short-term decision making. Let’s examine these main actors.

Suppliers

Suppliers are individuals or organisations that provide (supply) an enterprise with the various inputs (such as raw materials, component parts, or employees) required for production. It is important that the manager ensures a reliable supply of input resources. The effectiveness of the supply system determines the organisation’s long-term survival and growth.

Changes in the nature, numbers, or types of any supplier result in forces that produce opportunities and threats to which the managers must respond if their organisation is to prosper. Another major supplier-related threat that confronts managers pertains to prices of inputs. When supplies bargaining position with an organisation is so strong, they can raise the prices of inputs that they supply the organisation. A supplier’s bargaining position is especially strong if:

(1) The supplier is the source of an input, and
(2) The input is vital to the organisation

In addition to raising prices, suppliers can make operations difficult for an organisation by restricting its access to important inputs. For example, a reduction in government funding in terms of financial resources impact universities. In the same vain, a cut in quota of the supply of crude oil by OPEC member countries affect global consumption of unrefined or refined petroleum.

Distributors

In the microenvironment of business, another group of actors are distributors. Distributors are organisations that help other organisations sell their goods and services to customers. The decisions that managers make on how to distribute products to customers can have an important effect on organisational performance.

The changing nature of distributors and distribution methods can also bring opportunities and threats for managers. If distributors are so large and powerful that they can threaten the organization by demanding that it reduces the prices of its goods and services, then, the manager becomes constrained and challenged. In contrast, the power of the distribution may be weakened if there are many options or alternatives.

Customers

Customers are another group of actors in the operating environment of business. Customers are the individuals and groups that buy the goods and services that an enterprise produces, changes in the numbers and types of customers or changes in customers’ tastes and needs result in opportunities and threats. A forward looking organisation must meet the needs and wants of its customers or exceed the customers’ expectations. The organisation must have a customer orientation to succeed in this competitive, unpredictable and challenging business environment.

Competitors

Competitors are businesses that produce goods and services that are similar to a particular organisation’s goods and services. Put differently, they are organisations that are vying for same customers. Rivalry between competitors is potentially the most threatening force that managers must deal with. A high level of rivalry often results in price competition, and falling prices reduce access to resources and lower profit.

Macro Environment

This environment refers to the wide ranging economic, socio-cultural, political and legal, and technological forces that affect the organisation and its operating environment. These forces originate beyond the firm’s operating situation. The macroenvironment is also called the external or remote environment. The macroenvironment presents threats and opportunities that are often difficult to grapple with (that is, identify and respond to), than with events in the microenvironment.

Economic Forces

The economic forces have significant impact on the success of any organisation. These forces on factors affect the conditions of procurement (buying) and sales market. For example, in Nigeria ( as elsewhere) where the Naira is so devalued relative to foreign currencies (e.g. the dollar and pound), importation of required inputs of production constitutes a major threat to the corporate managers. In the same vein, during periods of unhealthy economic growth occasioned by such factors as inflation, rising unemployment, high interest rates, and high taxes, among others, individuals as well as businesses have problems. This is more serious in the case of emerging enterprises, or new entrants.

Political and Legal Forces

The political and legal forces are paralleled to the social environment. This is because, laws are ordinarily passed following social pressures and problems. In Nigeria, as else where, laws regulating the macro environment include legislations on monetary and fiscal policies, percentage of industrial emission, into the air, safety and health at work, wage and price control. Others are equal employment opportunity, contract of employment, and law of collective bargaining, among others. These regulations influence business operations either positively or negatively.

Legislation on fiscal and monetary policies, for example, might encourage favourable tax reliefs and financial assistance for small-scale industry. The challenge, though, is that considering the nature of our political climate, legislations change at the whims and caprices of political and government leaders. There is political instability in Nigeria, this way, existing legislations change as new political and government leaders emerge. In this light, corporate managers should consider regulations both as threats and opportunities. Besides, political and government leaders, the actions or political activities by pressure groups and lobbying groups should be taken into consideration, when considering investments or projects.

Technological Forces

Technological forces or factors could be said to be the most pervasive in the environment. Technology refers to the application of knowledge base which science provides. It is a well established fact that information and communication technology has revolutionized business operations. Consequently, organisations that apply knowledge that is rapidly changing and complex are highly vulnerable.

These changes bring about new inventions and gradual improvements in methods, in design, in materials, in application, in efficiency, and diffusion into new industries. Corporate managers must adapt or adjust to these changes, in order to survive and prosper in this competitive and challenging business environment. The changes constitute threats and opportunities for any manager.

Socio-cultural Forces

Socio-cultural forces have to do with the attitudes and values of the society, and these to a great extent, shape behaviour. For example, in certain parts of Northern Nigeria (where Sharia Penal Code is “strictly” observed), there are restrictions on the sales and consumption of tobacco, alcoholic liquors and others. A manager in these parts faces unique challenges. He has to undertake deliberate and planned strategy of market segmentation. Similarly, in Southern Nigeria, there are changes in attitude to the issue of environmental degradation or pollution. This has led to frequent restiveness or unrest in the Niger Delta. The challenges before the managers of the multinational oil companies are unimaginable.

Changes in socio-cultural factors also impact the business enterprise in its internal relations with employees within the context of changes in attitude to work changes in political awareness, and cultural norms, among others.

In sum, the impact of the social forces is felt in changing needs, tastes, and preferences of consumers, in relation with employees, and in expectations of society form the company with regard to its social responsibility.

Business Enterprise as a System

2011-10-28T10:04:00.000-07:00

A business enterprise is a system where economic resources (inputs) are processed (throughput) into goods and services (outputs). A business organisation does not exist in a vacuum. As an integral part of the environment, a meaningful inquiry into the business enterprise as a system must incorporate the environment.

Factors that underline the business enterprise as a system include: the input, processing, and output factors as well as feedback and control. Note that the enterprise should be seen as a unified whole. That is, as a coordinated interaction of several departments (subsystems) such as procurement, production, marketing and sales, finance, personnel, and others, working synergistically towards a common purpose or mission.

Here are tips on the components of a business enterprise as a system:

Environment

The business and its environment are mutually interdependent organs, and as such, the organisation can only exist and grow if it produces goods and services that are desired by the environment, and the business operations and results are acceptable to the society. In short, the environment limits and impacts on the nature and success of the organisation. The business environment consists of complex set of forces or actors (some within the enterprise, and some outside of it) that to some degree affect the organisation as it attempts to perform its economic function. And, in turn, the activities of the business enterprise to some extent shape the attitude and expectations of the actors or forces. These actors are collectively called the stakeholders.

Stakeholders are groups or individuals who can affect or are affected by a business. Stakeholders in the business environment are financial institutions, media, customers, labour unions, employees, competitors, and suppliers. Others are government agencies, political groups, shareholders, the community, trade associations, activist groups, and consumer advocate groups.

The enterprise survives and grows when it provides needed goods and services to the environment, and the environment endorses the business’ operations. Recall that the environment is a source of opportunities and threats. Changes in the environment that offer opportunities for managers, include the introduction of new technology, favourable economic environment, opening of foreign markets and favourable government policies. On the other hand, the rise of new competitors, an economic recession, an increase in capital requirement, and shortage of basic raw materials, among others, are considered as threats. The manager’s understanding and appropriate response to these threats and opportunities largely determine the level of organisational performance.

It is important that the business activities should adapt to changing needs and expectations of societal stakeholders. The organisation should act in such a manner that would sustain the mutual interdependence between it and the society. Any unscrupulous act of exploitation of consumers, and adulteration of standard products will usually be opposed by the people. Reaction by the environment might lead to stringent laws and regulations, nationalization (or denationalisation), or cause the organisation to lose the organisation lose its legitimacy. The society will also react to unintended or indirect consequences of business operations (these effects are generally termed as externalities), for example, pollution.

Input

Input consists of economic resources that are put into the system. Examples are men, materials, machinery, land, facilities, energy and information. These economic resources are captured, assembled and organized for processing. The business enterprise gets these economic resources from the environment through the input interface.

Processing

Processing or throughput involves the transformation of economic resources (input) into output. For examples, a university transforms a freshman into an educated individual, a restaurant transforms hungry customers to satisfied customers; a hospital takes patients as inputs and processes them as healthy individuals, and an automobile factory acquires raw materials, tools, equipment, and others, to produce automobile. The processing component yields a value-added to the work-in-progress.

Output

Beyond the input and throughput components is the output. It involves the transfer of elements that are the results of the processing, to their ultimate end-users. Examples are mentioned above – automobile, a healthy individual (university). Generally speaking, output includes products, services, payments, and information. The business enterprise discharges its goods and services (output) through the output interface.

Early on the business enterprise was described as a flow, that is, a continuous process of input - processing - output mechanism. The business organisation as a dynamic system, achieves this through the feedback and control components.

Feedback

Feedback refers to data or information pertaining to the performance of the business enterprise. Management receives information about the performance of the organisation through the information system. Similarly, the feedback loop provides the organisation with the avenue to learn of the environment’s reaction to the output of the enterprise.

Control

Finally, based on the information generated by the feedback component, the managers make necessary adjustments through the control function. The control function involves the comparison of actual results to expected results (for possible corrections) so that the enterprise would move towards the attainment of its goal. It is a continual process of correcting and updating activities in the context of events in the business environment.

To better appreciate the threats and opportunities that shape and direct the firm’s direction and action, we distinguish between the micro and macroenvironment of business.

Natural Systems, Constructed Systems, Cybernetic Systems, Open and Closed Systems

2011-10-27T05:59:00.000-07:00

As an extension of the overview on what is a system, let me give you some insights into the following related concepts:

. Natural Systems
. Constructed Systems
. Cybernetic Systems
. Open and Closed Systems

1.    Natural Systems: Natural systems as the title implies are not man-made. They exist in nature. Natural systems include biological and physical systems. Example of a physical system is the solar system. While the human circulatory, digestive, and respiratory systems are examples of biological systems.

2.    Constructed Systems: Constructed systems unlike natural systems are man-made. Their components are assembled by man. A constructed system may be a physical mechanical device. For example, a technological system of an oil refinery, or data processing system (a computer). The business enterprise as a constructed system consists of social, economic, and political processes as as well as legal and psychological ones.

3.    Cybernetic Systems: Cybernetic systems are self monitoring and self regulating systems. The Thermostat controlled cooling system of refrigerators, found in homes is an example. It automatically monitors and regulates itself to maintain a desired temperature. The business enterprise is another example.

4.    Open and Closed Systems: Open systems interact with other systems in their environments. Business enterprises are examples of open and cybernetic systems. Closed systems, on the other hand, do not interact with other systems in their environments. No organisation or enterprise,though, is completely closed or open. It is more a matter of degree of openness or closeness. Filley, House and Kerr (1976:283), capture this idea succinctly:

Organisations are systems consisting of physical, economic, human, and intangible parts. Since human beings are not total captives of the organisation, in as much that their behaviour is partially determined by their lives apart from the organisation, the organisation cannot be completely closed with respect to its human components. Since availability and value of fund is largely determined by the general economy, the organisation cannot be completely closed with respects to its economic parts. The same can be said with respect to physical(e.g weather) and intangible (e.g patent) parts of the organisation.

Understanding the above-mentioned concepts would help you to appreciate the business enterprise as a system where economic resources are converted into goods and services.

Contemporary Business and Its Environment

2011-10-08T07:36:00.000-07:00

To fully appreciate contemporary or modern business and its environment, it is germane to conceive the enterprise as a subsystem operating in a macrosystem or suprasystem. Contemporary business and its environment describes the concept of a system. It examines the business enterprise as an adaptive and open system within a suprasystem. Further, it highlights the three basic components of all organisational systems. Contemporary business and its environment also considers the micro and macro environment of a business. The actors, forces, players or events inherent in these two classifications are discussed, among others.

Business does not operate in a vacuum. It has roots in a larger society or environment. The business enterprise interacts with the environment through the input and output interfaces – the enterprise accepts (from the environment) resource inputs such as men, materials, machinery, money, and even information, among others, and transforms (processes) them into desired outputs (to the society). For example, the managers of a rubber manufacturing concern, through the useful and effective combination of the disorganised resources of men, materials, money, machinery, minutes and methods, as well as information, produce desired goods such as tyres, rain boots, tubes, and others. Similarly, a University accepts new entrants, as inputs and transform them into educated individuals.

The nature of this interaction between the business organisation and its environment presents the managers with opportunities and threats. It has the potentials of success and failure. Consequently, when we talk of contemporary business and its environment, we are concerned about the complex set of interacting forces in the environment (within and outside of the enterprise) that sustain this mutual relationship or interdependence, in terms of the business survival, prosperity and growth. This way, a meaningful inquiry into the environment in which business operates is crucial.

Here are some tips to help you understand what a system is?

What is a System?

The system concept is an interesting and insightful one. It has been conceptualized in varied ways by many writers, scholars, and even managers. While some viewed a system as “an orderly arrangement according to some common principles or rules,” others defined it as “a plan or method of doing something.” The term system is also conceived as a group of interacting and interdependent components working towards the attainment of a common goal. This means that each component or part has a unique role or function towards the realization of the common goal or aim, and without this common goal, there is no interaction and interdependence. Hence, no goal; no system. To understand a system requires synthesis – “an aggregate understanding of the whole, that is, the concept of seeing both the woods, and the trees or big picture.”

Accordingly, we find examples of a system in the business enterprise, in the biological and physical sciences, among others. In the physical science, we have the solar system – the sun and its planets. In the same vein, in the biological science, we find the circulatory, digestive, central nervous, and respiratory systems. The respiratory system, for example, comprises the nostrils, the pharynx, the larynx, the trachea, the left and right bronchi and the lungs. All these interdependent parts form a unified whole (subsystem) within the human body (a larger system or macrosystem). These unique parts collectively bring about respiration (a common goal). Without respiration, there is no respiratory system.

4 Factors Affecting Economic Systems

2011-10-08T05:51:00.000-07:00

The three economic sytems, capitalism, communism, and socialism have been considered, some what succinctly.
The associated defects of capitalism,communism, and socialism were described.

A number of factors affect the economic system in any given economy. These factors include the following:

1. The Historical Background of the People: This factor pertains to the historical antecedents of the people of a given region or country in terms of their origins, ethics, norms and values as well as their customs and traditions. Any economic system that remarkably impinges on these basic beliefs is very likely to be resisted. For example, the Nigerian people as a result of their circumstances of colonialism, among others, have imbibed, nurtured, and sustained the mindset that one’s position in life is a function of one’s own energy, courage and resourcefulness. That is, one’s level of entrepreneurialism. Based on this economic philosophy, successful businesspeople are regarded highly in their communities. As a result, any economic system that will negate or undermine this economic thinking will be highly rejected by the citizens.

2. The Extent of Wealth and Natural Resources in an Economy: Another factor affecting economic systems is the level of wealth and natural resources in a given economy. Nations rich in timber, mineral deposits, and fertile farmland, among others, naturally support an agricultural and industrial population. This promotes entrepreneurial activities and the accompanying economic system (capitalism). On the other hand, nations possessing inadequate natural endowments pose unique challenges to the government, and in a bid to cater for the general welfare of their citizens, such nations might embrace a more welfaristic system, as the case might be.

3. The Political will of the People: This factor stems from the people’s historical backgrounds. If an economic system is insensitive to the citizens’ political consciousness and sensibilities, dissatisfaction about it might alter the existing economic system, and bring in the process a more welfaristic one.

4. Instability in the Mode of Governance: This factor refers to short-term and frequent transitions among heads of government such that long-term planning and policy implementation in the given economy gets disrupted. As a result, the larger populations might agitate for a change in the existing economic systems.

3 Defects of Socialism

2011-10-08T05:38:00.000-07:00

1. Promotion of Mediocrity: This kind of economic system promotes mediocrity as government positions are filled on political consideration rather than ability. Hence, government operations are inefficient.

2. Lack of Incentive to Hard Work: Another defect of socialism is that it takes away the element of entrepreneurial risks or incentives that motivate business people. This is because, under socialism, people who work hard and prosper must share with those who don’t work so hard or don’t have such well paying jobs.

3. Higher Unemployment Rates: Socialism has failed to create the wealth or jobs characteristics of capitalism. As a result, unemployment rates are comparatively higher in socialist countries.

3 Defects of Communism

2011-10-08T05:30:00.000-07:00

A number of defects are noteworthy in a communist economy.

1. Problem of Unmatched Supply: Because the decision as to what will be produced is not based on the market mechanism, communist government has no way of knowing what to produce. This situation leads to unmatched supply and demand.

2. Too Much Emphasis on Capital Goals: Communist countries promote national goals which might not reflect the wishes and aspirations of the larger populations. For example, most communist economies typically emphasize capital equipment and military hardware as opposed to basic commodities such as food and clothing that touch on the lives of the ordinary citizens. This way, there is the likelihood of short supply of consumer goods, and attendant poverty.

3. Near Absence of Incentives for Hard Work: The workings of this economic system (communism) do not inspire hard work among the working class because the government takes most of the earnings.

So far, communism and capitalism have been examined as the two major economic systems on the opposite extremes of a continuum. The third basic economic system, socialism, combines elements of capitalism and communism.

If you liked this blog, you might like this Defects of Socialism.

10 Defects of Capitalism

2011-10-07T08:31:00.000-07:00

The market economy or capitalism has a number of defects. In analysing these defects it is obvious that some form of government rules and regulations are necessary in order to protect the environment and future generations.

1. Increasing inequality in wealth: As an economic system characterized by the private ownership of the means of production and distribution, there exists the obvious tendency for the increasing inequality in wealth. Because the entrepreneur has the advantage to manipulate the factors of production, especially labour and capital, as he considers best in order to achieve the highest measure of profit. By the end of the day, the capitalist receives a considerable portion of the profits that accrue to the business enterprise, while the labourers or working class, gets comparatively less reward for their efforts. This widens the gulf of economic inequality. However, with the increased recognition of collectively bargaining, this tendency is gradually being checked.

2. Goods and services that have high utility to the ordinary citizens are in short supply or non-existent: In a capitalistic economy profit is the motivation behind all productive endeavours. This way, productive scarce resources could be “wasted” on goods and services that serve no basic purposes, while other goods and services that have high utility to the ordinary citizens are in short supply or non-existent. For example, basic commodities such as pipe-borne water, regular electricity, effective health care, ands others.

3. Monopoly: Another defect of capitalism pertains to monopoly, this is a situation whereby there is only one producer of a commodity in a region or locality. For example, an employer may be the only purchaser in a locality, and if this happens, he would be in a strong position when negotiating rates to pay the individual members of the workforce. Similarly, a seller may be able to exclude competitions, and this further puts consumers in a weaker position. Because given the prevailing circumstances, the consumers cannot go elsewhere.

4. Engenders undue concentration of capitalistic wealth: The market economy engenders undue concentration of capitalistic wealth, which attracts with it a concentration of political power. As a result, greater concern is shown for property rights than for human rights, which touch on the overall welfare of the people.

5. The possibility of the emergence of imperialism: This is because business people only seek raw materials, markets and places to invest their acquired surplus capital. With investments abroad, in the light of threats by their host government, they call on their home government to provide necessary protection and this kind of involvement may lead to war.

6. Distortion of consumer sovereignty: Consumer sovereignty may be distorted by large firms that use heavy or extensive advertising simply to convince consumers that the goods and services that the firms have provided are just what the consumers want. This could lead to purchase dissonance or buyers’ remorse.

7. Possible under-utilization of productive resources: In a capitalistic economy, individuals decide what to produce, consequently, resources may remain unemployed or under-utilized because firms as a whole consider that profit prospects are poor and discouraging in the given situation.

8. Possible overproduction leading to unnecessary business cycle: In a market economy, planning by businesses is on an individual basis. This could lead to over production in certain sectors or industries thereby causing unnecessary business cycles. The cycles result is frequent depressions which contribute to the waste of productive scarce resources, and feeling of insecurity among the workers in the concern industries.

9. Discrimination in employment: Another defect of capitalism pertains to discrimination in employment against women, minorities, and the disabled. This is because the capitalist will enthusiastically prefer inputs (people) that will most probably generate higher productivity.

10. Environmental Damage: Capitalism may lead to environmental damage. Businesses may exploit natural resources, pollute streams and air, among others, without due concern for effective sustainable development. However, in the light of growing awareness and enlightenment among societal stakeholders, businesses are being encouraged to conduct their operations in more socially responsible manners.

This thinking leads us to another basic type of economic system characterized by government ownership of the means of production and distribution, that is, communism.

If you liked this article, you might also like this: Defects of Communism.

Business under Various Economic Systems

2011-10-05T05:46:00.000-07:00

Today we are considering an exciting issue in business: Business under Various Economic Systems.

Yep, Business under Various Economic Systems!

The success of any business is due in part to the economic and political climate under which the business operates, and this in turn, is governed by the prevailing economic system in the given economy or society. When we talk of business under various economic systems,certain salient issues such as

Who owns the means of production;

How the products will be distributed;

How the the scarce resources of a given economy or country are being allocated among the various needs and wants, demand some considerations.

How the scarce resources of a given economy or country are being allocated among the many and varied needs and wants: Along this line, there is a system operating on the market mechanism alone, while at the other, there is a central planning agency. The former is called a market economy, while the latter is referred to as a planned economy. However, a thorough analysis of real world economic systems reveals that there is no pure example of either of these two examples. Most economies, therefore, are mixed.

Who owns the means of production: Is it owned individually, by different corporations, by workers collectively, or by the central government? Here, again, there is no pure example.

Another way to consider the economic systems is to provide answers to these basic economic questions:

(1) Who will own the means of production?

(2) What will be produced and how will they be produced?

(3) How will the products be distributed?

Providing answers to these pertinent questions, understandably, reveals that there are three basic economic systems. These are capitalism, communism and socialism. However, it is worthy of note that, in practice, there is no pure form of any of these basic economic systems.

Interestingly, in the context of the aforestated basic economic questions, an economic system can be seen as a basic guiding rules for allocating a society’s resources to satisfy its citizens’ needs (and wants). Importantly, the economic system in operation in any country depends both on the prevailing circumstances and the historical background of the country.

The next section presents an overview of the economic systems, highlighting, among others, their distinguishing features. It also describes the inputs required by the private enterprise systems (i.e. market economy), and concludes with factors affecting the economic systems.

Why Study Business?

2011-08-09T04:24:00.000-07:00

Now that you know an overview how business developed over the years

It would be appropriate to understand some rationales or motivations for studying business. Like all human endeavours, studying business demands effort, determination and commitment. The rewards reflect in personal and career growth, broaden perspectives and unique advantage, when you want to be your own boss or desire a management position.

Here are a number of rationales for studying business:

1. Career Choice: Studying business offers one the opportunities to think about careers in the areas of business. As one progresses, some areas become of particular interest, and demand investigation. Career fields in business include production, sales, accounting, and marketing, among others. It pays off to have a career direction, prolonged delay might be too costly.

2. Self–Employment: Some individuals may not be comfortable working for someone. Such persons may show considerable entrepreneurial spirit that demands independence; as a result, they embrace self-employment. To be successfully self-employed, one needs knowledge of different areas of business which include personnel, operations, marketing, accounting, finance, and management.

Studying business provides this needed knowledge base.

3. Service to Others: Business does not operate in a vacuum. It is a part of a larger society, and depends on the external environment for resources. This way, the survival of the firm or enterprise, to a considerable extent, is contingent on the nature of the existing relationship with its environment. By studying business one will gain insight into how to maintain a stable relationship with the stakeholders in the society. One learns how to fulfill business' obligations. And one may be able to improve society by providing services such as health care, donations to charities, sponsorship of community events, and participation in community development, among others.

4. Relevance to Everyday Living: By studying business one acquires a better understanding of business realities. This understanding facilitates better-informed decisions as a consumer.

5. Personal Profit and Growth: Another benefit of studying business is the chance of financial gain and psychological growth.

The business world, understandably, is competitive and challenging. It is no place for the risks averse individual. However, the personal profit and growth, psychological and economic, can be exciting. For example, financially, business people are able to make a good living. They possess the wherewithal or resources to acquire life's necessities or luxuries. Psychologically, business people are able to contribute to society by providing meaningful job opportunities. Employers help create and distribute wealth through job opportunities. This fosters a better way of life for others and for themselves, in psychological terms.

If you are looking to study business, here are some world's leading business schools:

Waikato Management School
Oxford Brookes University Business School
Imperial College Business School London
Mansfield University
Bryan College
UCD Quinn School of Business
Other useful resources include:

Business as a field of study and practice is insightful and rewarding. As you gain this knowledge, stay alert to many of its applications.

Over the years, I've developed special interest in business schools (aka b-schools) especially in the contexts of career growth, value added, community development and prospect of future social networking.

Next time, I would show you a list of top Business Schools.

If you liked this blog, you might also like this Business under Various Economic Systems.

Nature of Business

2010-10-28T08:35:00.001-07:00

Hi there, I am Benjamin Atuma welcome to Contemporary Business Ideas.

This blog is designed to give business enthusiasts, practitioners, students, small and large business managers the opportunity to broaden their business horizon. Issues considered include:

Nature and Scope of Business
Environment of Business
Forms of Business Ownership
Corporate Social Responsibility of Business
Entrepreneurship
Small Business
Franchising
International Business
Risk Management and Insurance
Real Estate and Mortgage
Computers
Internet Security Suites/Softwares
Jobs and Classified Advertisements
Business News

The information here will be useful to you in making career and business related decisions. The emphasis is on both theory and practice, and it's structured to be an enjoyable and rewarding experience.

Enjoy!