Monday, January 31, 2011
Finance
Personal Finance News
January 25, 2011
Retirement: Live Long and Don't Prosper
As the 79-million-strong Baby Boom generation starts hitting age 65, demographers and medical researchers are increasingly at odds over how long they'll live. It's a ...January 14, 2011
What's Behind H&R Block's Free Tax Service
The 2011 tax season is under way and the airwaves are full of a deal that sounds too good to be true: For another month, Americans can visit their local H&R Block ...January 11, 2011
Little Relief for Madoff Victims
It's 4 a.m. and Stephanie Halio, a once-retired 67-year-old, is driving a van up and down the highways of South Florida. Why? Blame Bernie Madoff. Shortly after ...January 9, 2011
Retirement Looms: Time to Get Nervous
Let the retirement parties begin: The oldest members of the 1946-64 demographic wave known as the Baby Boom turn 65 this month. It's up for debate how much that 79 ...December 29, 2010
Malkiel's Random Walk Goes Global
Under normal circumstances, a new, 10th edition of A Random Walk Down Wall Street, the classic investing guide by Princeton University economics professor Burton ...December 23, 2010
Estate Tax Changes May Crimp Charitable Giving
As nonprofits take in holiday gifts, some worry that one key source of their funding—bequests from estates—could get squeezed. The tax law signed by ...December 15, 2010
It's a Great Time to Be Rich
A bonanza of new and extended tax benefits could make it as easy as ever for the rich to stay that way. Under legislation approved by the U.S. Senate on Wednesday, ...December 8, 2010
The Real 'Truth' About Debt and Taxes
The debate around the key contributors to the federal budget deficit—government spending, tax policy, and the national debt—has had more in common with a ...November 14, 2010
Why Retail Investors Still Avoid Stocks
Even as U.S. stocks trade at some of their highest prices in two years, individual investors continue to sell, leaving the buying to larger players like hedge funds ...November 3, 2010
Stock Picks: Bristol-Myers Squibb, Peet's Coffee, Sirius XM
Bristol-Myers Squibb: Soleil Securities maintained a hold rating and $28 price target on shares of Bristol-Myers Squibb (BMY) on Nov. 3. On Nov. 2, Bristol-Myers ...November 2, 2010
Stock Picks: Baker Hughes, Glimcher Realty, WMS Industries
Baker Hughes: Miller Tabak equity analyst Kevin Simpson raised a rating on shares of Baker Hughes (BHI) to buy, from neutral, on Nov. 2, with a price target of $60. On...November 1, 2010
Stock Picks: Edison International, Electronic Arts, Live Nation
Edison International: Wunderlich Securities equity analyst James Dobson maintained a hold rating and $37 price target on shares of Edison International (EIX), owner of...October 31, 2010
Online Brokers Upgrade Retail Investor Tools
(Corrects number of commission-free ETFs offered by Fidelity in 8th paragraph and title of TD Ameritrade's Michael McGrath in 21st paragraph.) Institutional investors ...October 29, 2010
Stock Picks: First Solar, Merck, Microsoft
First Solar: Miller Tabak equity analyst Chris Kettenmann maintained a buy rating and $190 price target on shares of First Solar (FSLR), the world's biggest maker of ...October 28, 2010
Stock Picks: Comcast, Disney, Encore Wire
Comcast: Kaufman Bros. equity analyst Todd Mitchell raised a rating on shares of Comcast (CMCSA) to buy from hold on Oct. 28. He raised a price target on the shares to...October 27, 2010
Stock Picks: ADP, Garmin, RIM
Automatic Data Processing: Standard & Poor's equity analyst Dylan Cathers reiterated a buy rating on shares of Automatic Data Processing (ADP) on Oct. 27. He raised a ...October 26, 2010
Stock Picks: Agrium, Texas Instruments, Waste Management
Agrium: Soleil Securities initiated coverage of shares of Agrium (AGU), Canada's second-largest fertilizer producer, with a buy rating and $100 price target on Oct. ...October 22, 2010
Stock Picks: Amazon.com, Chipotle Mexican Grill, Southwest Airlines
Amazon.com Inc.: Kaufman Bros. equity analyst Mayuresh Masurekar reiterated a hold rating on shares of Amazon.com Inc. (AMZN) on Oct. 22. He raised a price target on ...October 21, 2010
Stock Picks: AT&T, Delta Air Lines, St. Jude Medical
AT&T: Standard & Poor's equity analyst Todd Rosenbluth maintained a strong buy rating on shares of AT&T (T) on Oct. 21. AT&&T, the second-largest U.S. mobile-phone ...October 20, 2010
Stock Picks: eBay, Ford, Goldman Sachs
EBay: BCG Partners equity analyst Colin Gillis maintained a hold rating and $25 price target on shares of eBay(EBAY) on Oct. 20. In a note, Gillis said that when eBay ...Page: 1 2 3
account
- A narrative or record of events.
- A reason given for a particular action or event: What is the account for this loss?
- A report relating to one's conduct: gave a satisfactory account of herself.
- A basis or ground: no reason to worry on that account.
- (Abbr. a/c or acct.)
- A formal banking, brokerage, or business relationship established to provide for regular services, dealings, and other financial transactions.
- A precise list or enumeration of financial transactions.
- Money deposited for checking, savings, or brokerage use.
- A customer having a business or credit relationship with a firm: salespeople visiting their accounts.
- Worth, standing, or importance: a landowner of some account.
- Profit or advantage: turned her writing skills to good account.
To consider as being; deem. See synonyms at consider. See Usage Note at as1.
phrasal verb:account for
- To constitute the governing or primary factor in: Bad weather accounted for the long delay.
- To provide an explanation or justification for: The suspect couldn't account for his time that night.
- To challenge or contest.
- To hold answerable for.
- On credit.
- Because of; for the sake of: "We got married on account of the baby" (Anne Tyler).
- Under no circumstances.
- For oneself.
- On one's own; by oneself: He wants to work on his own account.
Purchase (Accounting) Method
Manner of accounting for a business combination. Under the purchase method, the acquiring corporation records the net assets acquired at the fair market value of the consideration given. Any excess of the purchase price over the fair market value of the net identifiable assets is recorded as goodwill. The acquiring corporation then records periodic charges to income for the depreciation of the excess price over book value of net identifiable assets. Goodwill is subject to an annual impairment test. Note that goodwill already on the books of the acquired company is not brought forth. Net income of the acquired company is brought forth from the acquisition date to year-end. Direct costs of the purchase reduce the fair value of securities issued. Indirect costs are expensed.
Islamic Business and Finance: The Present State and the Way Forward
With around eleven hundred institutions and assets of US $ one trillion, Islamic finance is now an important part of the global financial system. The scope and range of both Islamic finance and business remains to be further explored and scrutinized. Beyond the recurrent financial instabilities, the Islamic system is promising in tackling various other challenges related to government finances, deepening of financial markets, or narrowing the socio economic disparities. Central however to the sustenance and further success of Islamic finance is the need to gear it with Islamic business practices and to strictly observe its original contours of Equity, Justice, and Transparency. The Conference therefore aims at discussing the present state of Islamic business and finance and how and in what way the same can contribute to the stability of and provide opportunities to the national and global economies. In particular, it addresses the following questions:
Business Marketin
Business-to-business marketing (often referred to as B2B) is the development and marketing of services and products to business, governmental, and institutional markets at the local, national, or international level, rather than private retail consumers. The vehicles of business-to-business marketing are fundamentally the same as those that are used to reach the consumer market. They range from traditional methodologies such as newspaper and magazine advertisements, direct mail, catalogs, television and radio marketing, outdoor advertising, sales promotions, and other long-established public relations/advertising media to the relatively new business avenue of the Internet. According to business analysts and participants alike, the World Wide Web is revolutionizing this aspect of the corporate world. In fact, the Internet has already surpassed many traditional marketing avenues for both business-to-business and business-to-consumer marketing, transforming the term "B2B" into one that is practically synonymous with electronic commerce. "What's behind this [tremendous growth]?" asked The Practical Accountant. "The intention is to enable buyers and suppliers to find each other much more easily, and still be able to take a slice of every transaction. That's the basic business model behind the thousands of business-to-business firms that have already started operations."
Business-to-business selling is much different than business-to-consumer marketing in several important respects. The average business buyer, for instance, is more knowledgeable about the merits (price value, ability to meet business needs, etc.) of products and/or services under consideration. Business buyers are also governed by organizational buying behavior, whereas consumer purchases are typically made by individuals or small groups (such as married couples or roommates). Major business purchases, whether of bulk shipments of office supplies, a single major piece of manufacturing equipment, or an ongoing business service (from security and maintenance to accounting and graphic art services) require far more research on the part of the buyer than do retail purchases by individual consumers, both because of their complexity and their price tag. "Many people influence the [business purchase] decision—from the purchasing agent and company president to technical professionals and end-users," noted Robert Bly, president of the Center for Technical Communication. "Each of these audiences has different concerns and criteria by which they judge you." Finally, and most importantly, business-to-business marketing is based on the knowledge—shared by both buyer and seller—that the buyer needs to purchase goods and services merely to keep its operations going. The question is whether the buyer chooses to utilize your company's goods and/or services, or those of one of your competitors. "Most consumer advertising offers people products they might enjoy but don't really need," stated Bly. "But in business-to-business marketing …the business buyer wants to buy. Indeed, all business enterprises must routinely buy products and services that help them stay profitable, competitive, and successful."
Marketing exchanges are an important facet of this explosion in business-to-business activity on the Internet. B2B marketing exchanges are electronic marketplaces that allow companies to place goods and/or services out for bid on the Internet. Any qualified supplier can then bid on the job order. "Some online exchanges allow businesses to search for particular products or suppliers and agree on the terms of transactions online (with actual transactions being conducted offline)," explained Entrepreneur's Melissa Campanelli. "Other exchanges allow complete transactions to take place online. Either way, B2B exchanges make it easy for buyers and sellers worldwide to come together on the Web to do business."
Whatever their form, Internet marketing exchanges can be beneficial to businesses in several specific ways. David Pyke, writing in Supply Chain Management Review, cited process cost savings and unit cost reductions as key bottom-line benefits: "Process costs include developing supplier relationships, handling proposals and quotations, and processing purchase orders. To the extent a company can automate procurement, it saves time, needs fewer people, and makes fewer errors…. Unit cost savings arise when a company solicits bids from multiple suppliers, rather than repeatedly awarding the contract to the same one or two companies…. If a company can attract bids from 25 suppliers rather than 5 and, if suppliers can see the bidding real time, the market appears to approach the economists' ideal of perfect competition." Many experts, however, urge B2B buyers to consider more than the bid price when evaluating suppliers. "Exchanges can be used …to put suppliers against one another," noted Pyke. "If there is a lot of fat in the system, exchanges should create real and long-term supply chain savings." But he warns against taking good suppliers for granted. "A company could restrict the number of bidders or reserve a portion of the volume for select suppliers, even if their prices are slightly higher," he wrote. "The bidding information can be a basis for discussions about price reduction, but it is important that purchasers use exchanges to support their strategy, not to undermine supplier relationships…. Managers should take care not to employ the B2B products in ways that disrupt existing, successful relationships or that create unnecessary confusion in the supply chain." Besides, dropping transaction costs on B2B sites have made it easier for many buyers to avoid making bid price the sole consideration in awarding business. In 1999, for instance, buyers and suppliers were charged an average fee of 12 percent of total transaction; in 2000, average transaction fee dropped to about 4 percent. Some analysts believe that transaction fees may disappear altogether in the future, if exchange owners can instead be compensated with business information about buyers that they can in turn package and sell as a value-added service to suppliers.
Other observers, meanwhile, point to other advantages that can be gained from involvement in B2B exchanges, from exposure to suppliers/buyers that they might not otherwise meet through traditional channels (because of distant location, limited visibilility of other marketing media, etc.) to general networking opportunities. "A trading exchange can be defined as a dynamic electronic marketplace that allows participants to conduct commerce, collaborate on projects and purchases, review industry news and trends, and use information for smart decision making within a trading community," summarized Jay McIntosh in Chain Store Age Executive.
Characteristics of good, reliable B2B exchanges include the following:
bussines education
Business education is a term that encompasses a number of methods used to teach students the fundamentals of business practices. These methods range from formal educational degree programs, such as the Master of Business Administration (MBA), to school-to-work opportunity systems or cooperative education. Business education programs are designed to instill in students the basic theories of management and production. The main goals of business education programs are to teach the processes of decision making; the philosophy, theory, and psychology of management; practical applications; and business start-up and operational procedures.
A tech-prep program is a four-year planned sequence of study for a technical field which students begin in their junior year of high school. The program extends through either two years of college in occupational education, or a minimum two-year apprenticeship. Students who complete the program earn either certificates or Associate degrees. Cooperative education (co-op) is a program which offers students a combination of college courses and work experience related to their majors. Co-op programs are available in a wide range of business disciplines, e.g., information systems, accounting, and sales. Participants enroll in a postsecondary educational program while employed in a related job. Most co-op participants are paid by their employers. The co-op program provides students with the work experience they need to obtain full-time employment after graduation. More than 1,000 postsecondary educational institutions and 50,000 employers participate in co-op programs throughout the United States.
Internships are related closely to co-op programs. The main difference, however, is that those who participate in internship programs are not paid, as internships are designed specifically to provide participants with work experience. Often, interns will complete the program separately from their academic setting, rather than combining the two.
School-to-work opportunity programs focus on career awareness for students. They provide participants with work mastery certificates and furnish them with links to technical colleges. In these programs, all participants have jobs, apprenticeships, or further schooling after finishing high school.
Career academies are occupationally focused high schools that contain "schools within schools." Primarily, they train high school juniors and seniors in such areas as environmental technology, applied electrical science, horticulture, and engineering. In addition to these schools, there are also privately operated business schools that grant certificates to students who complete their programs.
All of these types of business education programs provide participants with career paths for high-skill technical and professional occupations by formally linking secondary and postsecondary education, and by integrating academic and occupational learning. Students who complete such programs gain an advantage over people who concentrate solely on the academic part of business education. Whichever route students use to acquire a basic knowledge of business skills and principles, there exist ample opportunities to prepare them for business careers.
When they face the fact that their competitors' business training might offer them an advantage, many entrepreneurs choose to pursue an MBA in order to even the playing field. The MBA degree offers entrepreneurs a set of sophisticated management tools that can be brought to bear on the challenges lenges of running a small business, including economic analysis, marketing knowledge, strategic planning, and negotiating skills. In addition, a business education can help many small business owners to broaden their viewpoints and recognize trends within their business or industry.
Yet another reason for the increase in entrepreneurs pursuing MBA degrees is that most such programs have become more practical in recent years. In addition to teaching theory, MBA programs are increasingly emphasizing teamwork, hands-on experience, and cross-disciplinary thinking. This approach makes the MBA much more applicable to the entrepreneur's interests and experience.
Further Reading:
Business-to-business selling is much different than business-to-consumer marketing in several important respects. The average business buyer, for instance, is more knowledgeable about the merits (price value, ability to meet business needs, etc.) of products and/or services under consideration. Business buyers are also governed by organizational buying behavior, whereas consumer purchases are typically made by individuals or small groups (such as married couples or roommates). Major business purchases, whether of bulk shipments of office supplies, a single major piece of manufacturing equipment, or an ongoing business service (from security and maintenance to accounting and graphic art services) require far more research on the part of the buyer than do retail purchases by individual consumers, both because of their complexity and their price tag. "Many people influence the [business purchase] decision—from the purchasing agent and company president to technical professionals and end-users," noted Robert Bly, president of the Center for Technical Communication. "Each of these audiences has different concerns and criteria by which they judge you." Finally, and most importantly, business-to-business marketing is based on the knowledge—shared by both buyer and seller—that the buyer needs to purchase goods and services merely to keep its operations going. The question is whether the buyer chooses to utilize your company's goods and/or services, or those of one of your competitors. "Most consumer advertising offers people products they might enjoy but don't really need," stated Bly. "But in business-to-business marketing …the business buyer wants to buy. Indeed, all business enterprises must routinely buy products and services that help them stay profitable, competitive, and successful."
B2b Marketing on the Internet
Traditional means of reaching business customers such as catalogs, direct mail, and convention booths remain an important element of marketing for many companies, and they will continue to be valuable tools. But the business-to-business market was fundamentally transformed by the growth of the Internet in the late 1990s, and e-commerce is widely expected to drive the expansion of the B2B world in the foreseeable future. In fact, many analysts believe that B2B spending on the Internet will quickly eclipse that of business-to-consumer spending in that medium. Gartner Group reported in 1999, for instance, that business-to-business transactions reached $237 million, a figure four times greater than the amount generated by business-to-consumer electronic commerce transactions. And Forrester Research, an Internet consulting firm, claimed that business-to-business e-commerce reached about $406 billion in 2000, and estimated that the figure would increase to about $2.7 trillion by 2004. A 2000 analysis by Jupiter Communications offered an even more optimistic assessment of the business e-commerce scene, predicting that the B2B market will account for more than $6.43 trillion in online trade by 2005. The same study indicated that 35 percent of that money will be attributed directly to business-to-business exchanges (also known as net marketplaces, net markets, B2B auctions, and online trading areas).Marketing exchanges are an important facet of this explosion in business-to-business activity on the Internet. B2B marketing exchanges are electronic marketplaces that allow companies to place goods and/or services out for bid on the Internet. Any qualified supplier can then bid on the job order. "Some online exchanges allow businesses to search for particular products or suppliers and agree on the terms of transactions online (with actual transactions being conducted offline)," explained Entrepreneur's Melissa Campanelli. "Other exchanges allow complete transactions to take place online. Either way, B2B exchanges make it easy for buyers and sellers worldwide to come together on the Web to do business."
Whatever their form, Internet marketing exchanges can be beneficial to businesses in several specific ways. David Pyke, writing in Supply Chain Management Review, cited process cost savings and unit cost reductions as key bottom-line benefits: "Process costs include developing supplier relationships, handling proposals and quotations, and processing purchase orders. To the extent a company can automate procurement, it saves time, needs fewer people, and makes fewer errors…. Unit cost savings arise when a company solicits bids from multiple suppliers, rather than repeatedly awarding the contract to the same one or two companies…. If a company can attract bids from 25 suppliers rather than 5 and, if suppliers can see the bidding real time, the market appears to approach the economists' ideal of perfect competition." Many experts, however, urge B2B buyers to consider more than the bid price when evaluating suppliers. "Exchanges can be used …to put suppliers against one another," noted Pyke. "If there is a lot of fat in the system, exchanges should create real and long-term supply chain savings." But he warns against taking good suppliers for granted. "A company could restrict the number of bidders or reserve a portion of the volume for select suppliers, even if their prices are slightly higher," he wrote. "The bidding information can be a basis for discussions about price reduction, but it is important that purchasers use exchanges to support their strategy, not to undermine supplier relationships…. Managers should take care not to employ the B2B products in ways that disrupt existing, successful relationships or that create unnecessary confusion in the supply chain." Besides, dropping transaction costs on B2B sites have made it easier for many buyers to avoid making bid price the sole consideration in awarding business. In 1999, for instance, buyers and suppliers were charged an average fee of 12 percent of total transaction; in 2000, average transaction fee dropped to about 4 percent. Some analysts believe that transaction fees may disappear altogether in the future, if exchange owners can instead be compensated with business information about buyers that they can in turn package and sell as a value-added service to suppliers.
Other observers, meanwhile, point to other advantages that can be gained from involvement in B2B exchanges, from exposure to suppliers/buyers that they might not otherwise meet through traditional channels (because of distant location, limited visibilility of other marketing media, etc.) to general networking opportunities. "A trading exchange can be defined as a dynamic electronic marketplace that allows participants to conduct commerce, collaborate on projects and purchases, review industry news and trends, and use information for smart decision making within a trading community," summarized Jay McIntosh in Chain Store Age Executive.
Using B2b Exchanges
Before selecting an exchange on which to do business (as either a buyer or seller of business goods and/or services), small business owners and managers should first conduct extensive research to make sure that they are dealing with a reputable exchange that can satisfy their business needs. Industry publications are a good source of information in this regard, as is the Internet itself.Characteristics of good, reliable B2B exchanges include the following:
- It can and does integrate full product catalogs onto the site. "Suppliers don't want to be a line item in a catalog," one analyst told Manufacturing Systems. "Rather, they want rich systems to differentiate themselves, profile customers, and segment prospects."2) It is a well-known site that targets your industry. Suppliers who establish a presence on a B2B marketplace site that sees heavy traffic can save money on advertising and may be able to forgo the expense of establishing and maintaining their own Internet web site. Conversely, buyers want to frequent exchanges that have a variety of suppliers to choose from so that they can better their chances of securing the goods/services they require at an advantageous price.
- It is an innovative site that is responsive to rapidly changing business dynamics, both in your industry and in the larger business world. "The ongoing challenge is to have the people and processes in place to cope with any crisis or development, whether a new trend, market fluctuation, security issue, product shortage, or other situation as they arise," wrote McIntosh. "These cannot be dealt with on an ad hoc basis. However, the more layers put into a trading exchange, the less efficient they can be. In other words, the trading exchange must achieve a delicate balance between efficiency and security to become a viable part of the supply chain."
- Usage is compatible with other current business practices and dovetails with desired buyer/supplier relationships. "A company can concurrently use many different B2B products with many different suppliers" that range from close partners to distant sellers, noted Pyke. "As the B2B industry consolidates, companies will be able to use one product to support multiple styles of relationship."
- Other services provided on the site have value to your company. Many B2B marketplaces provide valuable information to participating companies, including current marketing information and data, industry news, and customer feedback. In addition, technically sophisticated exchanges can provide valuable assistance in closing the sale. "Credit checks are an essential part of commercial transactions, yet very few B2B sites have any kind of support for either party to the transaction, in terms of qualifying buyers and providing credit histories, guarantees, and so forth," noted Jim Seymour in PC Magazine. Ideally, the exchange will have mechanisms in place that will certify business processes, validate transactions, and efficiently resolve disputes between parties.
bussines education
Business education is a term that encompasses a number of methods used to teach students the fundamentals of business practices. These methods range from formal educational degree programs, such as the Master of Business Administration (MBA), to school-to-work opportunity systems or cooperative education. Business education programs are designed to instill in students the basic theories of management and production. The main goals of business education programs are to teach the processes of decision making; the philosophy, theory, and psychology of management; practical applications; and business start-up and operational procedures.
Types of Business Education Programs
Traditional academic business education programs include college courses that teach students the fundamentals of management, marketing, ethics, accounting, and other relevant topics. These have been supplemented in recent years with extensive course offerings in computer skills, e-commerce management, and other elements of the "new economy." Students can earn degrees ranging from an Associate to a Ph.D (Doctor of Philosophy) in business administration. Some programs may consist of classwork only, while others—such as tech-prep and cooperative education programs, internships, and school-to work opportunities—combine academics with on-the-job training.A tech-prep program is a four-year planned sequence of study for a technical field which students begin in their junior year of high school. The program extends through either two years of college in occupational education, or a minimum two-year apprenticeship. Students who complete the program earn either certificates or Associate degrees. Cooperative education (co-op) is a program which offers students a combination of college courses and work experience related to their majors. Co-op programs are available in a wide range of business disciplines, e.g., information systems, accounting, and sales. Participants enroll in a postsecondary educational program while employed in a related job. Most co-op participants are paid by their employers. The co-op program provides students with the work experience they need to obtain full-time employment after graduation. More than 1,000 postsecondary educational institutions and 50,000 employers participate in co-op programs throughout the United States.
Internships are related closely to co-op programs. The main difference, however, is that those who participate in internship programs are not paid, as internships are designed specifically to provide participants with work experience. Often, interns will complete the program separately from their academic setting, rather than combining the two.
School-to-work opportunity programs focus on career awareness for students. They provide participants with work mastery certificates and furnish them with links to technical colleges. In these programs, all participants have jobs, apprenticeships, or further schooling after finishing high school.
Career academies are occupationally focused high schools that contain "schools within schools." Primarily, they train high school juniors and seniors in such areas as environmental technology, applied electrical science, horticulture, and engineering. In addition to these schools, there are also privately operated business schools that grant certificates to students who complete their programs.
All of these types of business education programs provide participants with career paths for high-skill technical and professional occupations by formally linking secondary and postsecondary education, and by integrating academic and occupational learning. Students who complete such programs gain an advantage over people who concentrate solely on the academic part of business education. Whichever route students use to acquire a basic knowledge of business skills and principles, there exist ample opportunities to prepare them for business careers.
Entrepreneurs and the Mba
In the past, many entrepreneurs viewed the Master of Business Administration (MBA) degree as unnecessary to small business success, and some believed that it stifled the creativity that allowed small businesses to develop and grow. Most entrepreneurs counted on their energy, work experience, industry knowledge, and business connections rather than on their formal business education. But in recent years, increasing numbers of entrepreneurs have chosen to pursue an MBA degree. Jay Finegan, writing in Inc., suggested two reasons for this change. First, today's business world often requires small companies to compete for the same customers as much larger, professionally managed corporations. Second, entrepreneurs are finding that even their smaller competitors are likely to be run by MBAs, as more downsized executives decide to start their own companies.When they face the fact that their competitors' business training might offer them an advantage, many entrepreneurs choose to pursue an MBA in order to even the playing field. The MBA degree offers entrepreneurs a set of sophisticated management tools that can be brought to bear on the challenges lenges of running a small business, including economic analysis, marketing knowledge, strategic planning, and negotiating skills. In addition, a business education can help many small business owners to broaden their viewpoints and recognize trends within their business or industry.
Yet another reason for the increase in entrepreneurs pursuing MBA degrees is that most such programs have become more practical in recent years. In addition to teaching theory, MBA programs are increasingly emphasizing teamwork, hands-on experience, and cross-disciplinary thinking. This approach makes the MBA much more applicable to the entrepreneur's interests and experience.
Further Reading:
bussines to bussines markiting
ORGANIZATIONAL BUYING BEHAVIOR
ORGANIZATIONAL BUYING vs. CONSUMER BUYING
Organizational consumers purchase for:
B-to-B marketing
business to business marketing
INDUSTRIAL/ORGANIZATIONAL MARKETS
This manufacturer must also purchase supplies that are not part of the product but are used in running the manufacturing operation. It must purchase computers, printer and photocopier paper, desks and chairs, services to mow the lawn, etc. How is it that this manufacturer makes buying decisions that are similar in nature to household buyers? How is it that this manufacturer makes buying decisions that are different in nature from those of household buyers?
DIFFERENCES IN ORGANIZATIONAL MARKETS
Organizational markets are different in nature from household consumer markets.
DIFFERENCES IN ORGANIZATIONAL TRANSACTIONS
TYPES OF I/O PURCHASES
In a straight rebuy situation, the buyer is likely to periodically apply value analysis and vendor analysis.
BUYING CENTER
Recall that there are often multiple decision makers involved in organizational purchases. This requires that the marketer is aware of the needs of the various constituencies involved in making decisions. Additionally, there can be constituencies in an organization who do not have decision making authority, but who nonetheless might have some influence over the purchase and consumption process.
Note that the idea of the Buying Center is conceptual - there is no such department in any organization!
ORGANIZATIONAL BUYING vs. CONSUMER BUYING
Organizational consumers purchase for:
- further production,
- usage in operating the organization, and/or
- resale to other consumers
- personal,
- family, or
- household use
B-to-B marketing
business to business marketing
INDUSTRIAL/ORGANIZATIONAL MARKETS
- Producer
- manufacturers
- produce tangible products for resale to other consumers - service producers
- produce intangible products
- manufacturers
- Reseller
- wholesalers
- buy or handle merchandise for resale to org’l. users, retailers, and other wholesalers - retailers
- buy or handle merchandise or services for sale to final consumers
- wholesalers
- Government
- federal
- state
- county
- local
- Institutional
- charitable
- educational
- community
- other non-business
This manufacturer must also purchase supplies that are not part of the product but are used in running the manufacturing operation. It must purchase computers, printer and photocopier paper, desks and chairs, services to mow the lawn, etc. How is it that this manufacturer makes buying decisions that are similar in nature to household buyers? How is it that this manufacturer makes buying decisions that are different in nature from those of household buyers?
DIFFERENCES IN ORGANIZATIONAL MARKETS
Organizational markets are different in nature from household consumer markets.
- Use goods for further production, operations, or resale. Household, or final, consumers purchase products for personal consumption.
- Purchase equipment, raw materials, and semifinished goods. Household purchasers almost always purchase finished goods for personal consumption.
- Demand is derived from that of final consumers. If you own a machine shop that makes bushings that are used in washing machine motors, then the demand for your products (bushings) is derived from final consumer demand for washing machines. If the economy is poor, and demand for washing machines is down, then so too will be the demand for washing machine motors and for the bearings that are used in them.
- multiplier effect / accelerator principle: However, there will probably not be a one to one correspondence between these. If retailers find that demand for washing machines is declining, they might be conservative in placing new orders with wholesalers, perhaps ordering slightly less than what they actually believe demand to be. Wholesalers, in seeing their orders decline, might also be conservative in placing orders to manufacturers, ordering slightly less than what they actually believe demand to be. Manufacturers, seeing their orders decline, might order slightly fewer motors, and the motor manufacturers might conservatively order slightly fewer bushings than they actually expect to need. Demand for your bushings might experience wider swings, either up or down, than the changes in demand at the final consumer end of the supply chain. This makes organizational markets, especially if you produce some of the small parts at the beginning of the supply chain, very volatile.
- Can make items themselves. Competition in organizational markets comes not only from suppliers of similar goods and services, but can come from buying organization itself. If it is not happy with the suppliers goods, services, or delivery, then it can choose to make those products itself.
DIFFERENCES IN ORGANIZATIONAL TRANSACTIONS
- Buying specialists are often used. Organizations often employ people who are professional purchasing agents. Just as sales agents are professional specialists at finding organizations that need the products that their employer produces, purchasing agents are specialists are professional specialists at finding what their employer needs. Whatever stereotypes you might have from experiences with salespeople in consumer sales, any negative stereotypes of salesperson behavior probably would not be appropriate in dealing with professional buyers.
- Often use multiple buying responsibility. A household purchaser is often the sole decision maker. Making a sale to an organization, however, often requires selling to several entities within the buying center. For example, you might be the user of a desktop computer at work, but the decision as to what specifications were needed might have been set by someone in the computer department, the decision to buy might have been made by your department manager, bids taken buy taken by someone in the purchasing department, and the final authorization made by the company president.
- Often use multiple suppliers. It is often desirable to have a long term relationship with more than one supplier, even if a second supplier has higher prices for otherwise similar terms and conditions. If problems in quality or delivery are experienced with a supplier, production can still be maintained if the second supplier can be used to replace the first. The ideals of a cozy, trusting relationship that has been promised with strategic alliances in the popular business literature does not always work if it leaves one party vulnerable as a sole supplier or buyer. We also can see reciprocity, whereby if one organization is a supplier for another organization, it might be expected to also be using products made by its customer.
- More likely to require exact specifications. A household purchaser might select a particular model of desktop computer for no other reason than it has a pleasing color. An organizational purchaser is more likely to set specifications regarding processor speed, memory, hard drive size, and such before taking bids on price.
- Often lease equipment and space. As a household consumer, you would probably prefer to own your own car, furniture, and home. These are things that represent personal expression, status, and wealth. Your objectives as a business manager, however, are very different. You might prefer to lease public warehouse space to provide the flexibility to change locations when the market demands, to lease trucks so that you can leave the problems of maintenance and disposition to someone else, etc.
- More frequently employ competitive bidding and negotiation. Household consumers (especially those of us in North America) are more likely to accept as final a price that is placed on a product in a retail setting or to accept a price that is given to us by a service provider. As a business manager, your employer is more likely to require that you accept, say, three bids for a service or to negotiate various terms and conditions associated with product specifications, delivery, and price.
TYPES OF I/O PURCHASES
- Straight Rebuy
- routine purchase
- associated with frequently purchased items
- Modified Rebuy
- routine purchase
- frequent purchase, but buyer does review product specifications or supplier
- New Task
- not routine
- product needs and specifications researched, vendors evaluated
In a straight rebuy situation, the buyer is likely to periodically apply value analysis and vendor analysis.
- value analysis: a periodic review of the qualities of the product for the price
- vendor analysis: a periodic review of the services of the vendor (seller)
BUYING CENTER
Recall that there are often multiple decision makers involved in organizational purchases. This requires that the marketer is aware of the needs of the various constituencies involved in making decisions. Additionally, there can be constituencies in an organization who do not have decision making authority, but who nonetheless might have some influence over the purchase and consumption process.
- Users: If you are a secretary, you might have had the experience of arriving to work one day to find a new typewriter on your desk, whether or not you even wanted it. A salesperson would not call on you if you had no influence over what product was purchased. However, if you and your co-workers submit numerous complaints about missing or problematic features of the new replacements, the salesperson might be faced with a very expensive customer service problem to solve. A user is the end consumer of a product.
- Influencers: Perhaps in this case, the office manager was consulted with regard to features or specifications to set in the purchase of new typewriters. Although the office manager might have no decision making authority with regard to the purchase, whatever specifications that s/he requests could be used without change in making the purchase. A salesperson might need to be aware of these influencers - a special trick is to get the influencer to write a specification list that happens to match the seller's product features! An influencer is someone who has influence over what is purchased.
- Deciders: In this case, some middle manager, ignorant of the needs of secretaries, might have made the decision as to when and what to purchase. The point of this statement is that the marketer or seller must be aware of how it is that decisions are made and often must focus some or all efforts at whomever it is that makes decisions in the organization. Note, however, that decision making authority does not necessarily mean that this person exerts any influence on what is purchased. The company president might be the only person who signs all purchase requisitions, and therefore has ultimate decision authority, but might otherwise merely sign some requisitions without question or involvement. A decider is someone who ultimately has authority if or what to purchase.
- Buyers: The final purchase transaction might be left to a purchasing agent who otherwise has no involvement in decision making. A sales agent for an office equipment supply house might help an organization to decide what brand of typewriters would be best, but that organization could then allow the purchasing agent to find the best deal on that brand, and the best deal with regard to price might come from a competing office supply house. A responsibility of salespeople, then, is often to maintain good, trusting, long term relationships with the purchasing agents in prospective buying organizations, whether or not they have purchased in the past. A buyer is someone who arranges the transaction.
- Gatekeepers: Why do salespeople often give secretaries little gifts of chocolates or flowers or an occasional free lunch? A secretary can be nice or nasty in passing information in either direction. The prospective buyer's secretaries can be helpful in providing names, telephone numbers, and office hours of key members of a buying center in an organization. They can also be helpful in passing messages from the salesperson to members of the organization. A gatekeeper could include anyone in the organization who can control the flow of information.
Note that the idea of the Buying Center is conceptual - there is no such department in any organization!
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