Management is a process that is used to accomplish organizational goals; that is, a process that is used to achieve what an organization wants to achieve. An organization could be a business, a school, a city or any governmental entity. Managers are the people to whom this management task is assigned. The role of manager is comprehensive and often very complex. The four key functions of management are: 1) planning, 2) organizing, 3) directing, and 4) controlling. These four key functions of management are applied throughout an organization regardless of whether it is a business, a government agency, a school, or any other commercial enterprise.
2. Is management science or art?
Some would define management as an art, while others would define it as a science. Whether management is an art or a science isn't what is most important. The most important thing is to achieve the goals, which an organization wants to achieve. To be an effective manager, it is necessary to possess many skills. Not all managers have all the skills that would make them the most effective manager. As technology advances and grows, the skills that are needed by managers are constantly changing. Generally, however, managers need to have communication skills, human skills, computer skills, time-management skills, and technical skills.
Communication skills fall into the broad categories of oral and written skills, both of which managers use in many different ways. It is necessary for a manager to orally explain processes and give directions to workers. It is also necessary for managers to give verbal praise to workers. Managers are also expected to conduct meetings and give talks to groups of people. The important part of the oral communication process is listening. Managers are expected to listen to their supervisors and to their workers. A manager who doesn't listen is not a good communicator. Managers are also expected to write reports, letters and memos. All of these must be written in such a way that the recipient can understand what is being said. Good writing requires good grammar and composition skills.
Human skills. Relating to other people is vital in order to be a good manager. The manager must understand different personality types and cultures be able to supervise these workers. Human skills cannot be learned in a classroom; they are best learned by working with people. Computer skills. It is necessary for managers to have computer skills in order to keep up with rapid technology changes. Many of the processes that occur in offices, manufacturing plants and other work environments depend on computers. Although computers can cause headaches, at the same time they have simplified many of the tasks that are performed in the workplace.
Time-management skills The typical manager is a very busy person, so it is important that time be managed effectively. A manager's time is often interrupted by telephone calls, problems with workers and other seemingly uncontrollable factors. It is up to the manager to learn how to manage time so that work can be completed most efficiently. Manager must be willing to prioritize activities, delegate, deal with interruptions and organize work. Technical skills are more closely related to the tasks that are performed by workers. A manager must know what the workers who are being supervised are doing on their jobs. For example, a manager who is supervising accountants' needs to know the accounting processes; a manager who supervises the construction of a home must know the sequence of operations and how to perform them. So, it is possible to say that management is both an art and a science.
3. Do you agree that management has just a control function?
Management does not have just a control function. The four key functions of management
are: 1) planning, 2) organizing, 3) directing, and 4) controlling.
Planning includes setting organizational goals and developing strategies for achieving the
goals of the organization.
Organizing refers to the way the organisation allocates resources and goes about
accomplishing its goals.
Directing is the process most relate to managing. It is supervising, or leading workers to
accomplish the goals of the organization.
The controlling function involves the evaluation activities that managers must perform. It
is the process of determining if the company's goals and objectives are being met.
4. What are the main functions of a manager?
Managers are the people who are thought to achieve the goals of an organization through the key functions of 1) planning, 2) organizing, 3) directing, and 4) controlling. Planning could include setting organizational goals. This is usually done by higher-level managers in an organization. As a part of the planning process, the manager develops strategies for achieving the goals of the organization. Strategic planning is long-range planning that is normally completed by top-level managers in an organization. Short-range or tactical planning is done by lower-level managers, since it is the process of developing very detailed strategies about what needs to be done, who should do it, and how it should be done.
In the process of organising, managers arrange a framework (organizational structure) that links all workers, tasks and resources together so the organization goals can be achieved. Organizational structure is shown by an organizational chart that depicts positions in the organization, usually beginning with the top-level manager (normally the president) at the top of the chart.
Directing involves making assignments, assisting workers to carry out assignments, interpreting organizational policies and informing workers of how well they are performing. The manager must find a way to get workers to perform their jobs effectively and efficiently.
The controlling function involves the evaluation activities that managers must perform. The manager sees if the company's goals and objectives are being met. He also corrects situations in which the goals and objectives are not being met. There are several activities that are a part of the controlling fijnction. Managers must first set standards of performance for workers. These standards are levels of performance that should be met. This standard must be communicated to the workers so they know what is expected of them. After the standards have been set and communicated, it is the manager's responsibility to monitor performance to see that the standards are being met. Whatever the problem, corrective action should be taken by the manager. Of all the skills that a manager needs, none is more important than managing the conflicts that inevitably arise in any organisation. And it is the manager's task to seek a resolution of it. So, managers, at no matter what level of the organization, typically have basic responsibilities: direct employees toward objectives, oversee the work efforts of employees, deal with immediate problems, and report on the progress of work to their superiors. Managers' primary responsibilities are to examine tasks, problems, or opportunities in relationship to the company's short- and long-range goals. They must be quick to identify areas of potential problems, continually search for solutions, and be alert to new opportunities and ways to take advantages of the best ones. How effectively goals and objectives are accomplished depends on how well the company goals are broken down into jobs and assignments and how well these are identified and communicated throughout the organization.
5. What is marketing? One of the areas of management is marketing. Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.
Marketing makes products available where customers want them by transferring the ownership of products to buyers. The entire business organization is involved in a dual process of satisfying customer needs and achieving organizational goals. Implementation of marketing concept begins and ends with marketing information about customers — first to determine what customers need, and later to evaluate how well the firm is meeting those needs.
A market consists of people with their needs, the ability to buy, and the desire and ability to sell. Markets are classified as consumer and industrial markets.
6. What is the aim of marketing?
The main aim of marketing is selling and advertising, but marketing people should be involved not just involved in promotion sales but in all aspects of the marketing mix.
Most people and many managers do not understand the aim of marketing in modern business.
Marketing is two things. First, it is a strategy and set of techniques to sell an organization's products or services. This involves choosing target customers and designing a persuasive marketing mix to get them to buy. The mix may include a range of brands, tempting prices, convenient sales outlets and a battery of advertising and promotions. This concept of marketing as selling and persuasion is by far the most popular idea among both managers and the public.
The second, and by far more important concept of marketing, focuses on improving the reality of what is on offer. It is based on understanding customers' needs and developing new solutions which are better than those currently available. Doing this is not a marketing department problem, but one which involves the whole organization.
For example, for Rover to beat Mercedes for the consumer's choice involves engineering new models, developing lean manufacturing processes, and restructuring its dealer network. Creating company-wide focus on the customer requires the continual acquisition of new skills and technology. Marketing is rarely effective as a business function. As the chief executive of Hewlett Packard put it: 'Marketing is too important to leave to the marketing department.' Such companies understand that everybody's task is marketing. This concept of marketing offering real customer value is what business is all about.
7. What elements does marketing mix include?
A business firm controls four important elements of marketing which are called a marketing mix.
A firm's marketing mix is the combination of the product, the price of the product, the means for its distribution, and the promotion of the product to reach a firm's target market.
A firm can vary its marketing mix by changing any one or more of these ingredients. Thus a firm may use one marketing mix to reach one target market and a second, somewhat different marketing mix, to reach another target market. For example, most automakers produce several different types of vehicles and aim them at different market segments based on age and income.
1) The product ingredient of the marketing mix includes decisions about the product's design, brand name, packaging, warranties, and the like.
2) The pricing ingredient includes both base prices and discounts of various kinds. Pricing decisions are intended to achieve particular goals, such as to maximize profit or even to make room for new models. The rebates offered by automobile manufacturers are a pricing strategy developed to boost low auto sales.
3) The distribution ingredient involves not only transportation and storage but also the selection of intermediaries.
4) The promotion ingredient focuses on providing information to target markets. The major forms of promotion include advertising and publicity.
The "ingredients" of the marketing mix are controllable elements. A firm can vary each of them to suit its organizational goals, marketing goals, and target markets.
“We must be smarter at devising packages of services that our customers want and pricing them attractively. Set the marketing department free to shape new packages. Don't confine it to coming up with cute names for offerings designedly engineers and accountants.” *Peter Martin, 'A second chance for telecoms', Financial Times, 18 December 2001
This sums up the position of marketing in many companies, where it is often seen as a fancy name for selling or advertising. But, as the quote shows, marketing people should be involved not just in promoting sales but in all aspects of the marketing mix:
• product: deciding what products or services to sell in the first place
• prices: selling-prices that are attractive to particular groups of customers (segments) and that are profitable for the company
• place: finding suitable distribution channels to reach these customer groups and
• promotion: all the activities, not just advertising, used to support the product - everything from pre-sales information to after-sales service.
These are the four Ps of the marketing mix, the 'levers' of a company's marketing machine, levers that it can adjust in different ways for different products and different buyers.
Another way of looking at this is from the point of view of customers, with the four Cs. From this perspective, the marketing mix is expressed in terms of:
• customer solution: offering the right product to satisfy particular customer needs
• customer cost: the price paid directly by the customer to buy the product, including the 'price' involved in not buying another product of the same or another type
• convenience: distributing the product in the way most suitable for each type of customer
• communication: exchanging information with the customer. Customers are informed about products through advertising, sales literature and so on, but customers also communicate with the seller, for example through customer helplines. This is a good way for sellers to find out more about customers and their requirements and to change or improve their offer.
Thinking of the marketing mix in these terms helps sellers maintain a customer orientation - a focus on customer needs.
8. What is segmentation of a market?
A segment is a group of customers or potential customers with similar characteristics, needs and requirements.
The purpose for segmenting a market is to allow your marketing/sales program to focus on the subset of prospects that are "most likely" to purchase your offering. If done properly this will help to insure the highest return for your marketing/sales expenditures. Depending on whether you are selling your offering to individual consumers or a business, there are definite differences in what you will consider when defining market segments.
Segmentation, which can be done in various ways, allows marketers to identify and differentiate between the needs of the target groups of customers that make up a particular market. They may offer different products to different segments, or the same product, marketing it in different ways.
A market segment is a group of individuals or organizations within a market that have similar characteristics and needs. The market segmentation approach directs a marketing mix at a segment of a market.
9. Why do companies choose target markets?
A target market is the market at which the material is aimed. A target market is chosen through the market segmentation approach.
The most successful small businesses understand that only a limited number of people will buy their product or service. The task then becomes determining, as closely as possible, exactly who those people are, and 'targeting' the business's marketing efforts and dollars toward them.
You can build a better, stronger business, by identifying and serving a particular customer group – your target market.
You need to understand that people purchase products or services for three basic reasons:
· To satisfy basic needs.
· To solve problems.
· To make themselves feel good.
You need to determine which of those categories your product or service is the solution to, and be prepared to market it accordingly. Your product or service may fit more than one category.
10. What is the purpose of marketing research?
Marketing research (MR) is the activities involved in obtaining information about a particular market, including how much of a product is being sold, who is buying it etc, or information about what they might buy.
Market/marketing research is the collection and analysis of information about consumers, competitors and the effectiveness of marketing programs.
Small business owners use market research to determine the feasibility of a new business, test interest in new products or services, improve aspects of their business, such as customer service or distribution channels, and develop competitive strategies.
In other words, market research allows businesses to make decisions that make them more responsive to customers' needs and increase profits.
While market research is crucial for business startup, it's also essential for established businesses. It's accurate information about customers and competitors that allows the development of a successful marketing plan.
One of the purposes of marketing research is marketing strategy. A marketing strategy is a plan for the best use of an organization 's resources to reach its objectives. Developing a marketing strategy involves selecting and analyzing a target market and creating and maintaining a marketing mix that will satisfy that market.
Market measurement and sales forecasting are used to estimate sales potential and predict product sales in specific market segments. Strategies are then monitored and evaluated through marketing research and marketing information system, which stores and processes internal and external data in a form suitable for marketing decision making.
11. What is taxation?
Taxation is the act or system of charging taxes or money, collected from taxes.
Taxation is the compulsory transfer, usually of money, from the private sector to the government, for public purposes. Taxation is one of the three main sources of government revenue. The government raises the funds it needs to finance its expenses and payments through taxation, charges and borrowings.
Taxation is the imposition of a mandatory levy (ñáîð) on the citizens and/or the businesses of a country by their government. In almost every country, the government derives a majority of its revenues for financing public services from taxation. Most individuals will feel the impact of quite a number of taxes during their lifetimes. In addition, taxes have become a powerful instrument for policy makers around the world to use in attaining economic and social goals. As a result, the system of taxation in the United States and elsewhere has an impact on almost every business and investment decision that is made.
12. What types of taxes do you know?
Tax is an amount of money that you must pay to the government according to your income, property, goods etc, that is used to pay for public services. The three types of taxes are the proportional tax, the progressive tax, and the regressive tax.
A proportional tax imposes the same percentage of taxation on everyone, regardless of income. If the percentage tax rate is constant, the average tax rate is constant, regardless of income. This means that if a person's income goes up, the percentage of total income paid in taxes doesn't change.
The second tax, the progressive tax, imposes a higher percentage rate of taxation on those with higher incomes. Progressive taxes use a marginal tax rate that increases as the amount of taxable income increases. Therefore, the percentage of income paid in taxes increases as income goes up.
The final tax is the regressive tax, which imposes a higher percentage rate of taxation on low incomes than on high incomes. For example, if the state sales tax were 5%, the person with the lower income would pay a greater percentage of their total income in sales tax.
Kinds of Taxes
The two basic kinds of taxes are excise taxes(àêöèçíûé ñáîð) and property taxes.
An excise tax is directly imposed by the law-making body of a government on merchandise, products, or certain types of transactions, including carrying on a profession or business, obtaining a license, or transferring property. It is a fixed and absolute charge that does not depend upon the taxpayer's financial status or the value that the taxed property has to the taxpayer.
An estate tax is a tax that is placed on, and paid by, the estate of a decedent prior to the distribution of the property among the heirs in exchange for the privilege of transferring the property. Individuals who inherit property may be required to pay an inheritance tax on the value of the particular property received. Gift taxes are incurred by an individual who gives another a valuable gift.
Another type of excise tax is a sales tax, which is placed on certain goods and services. Precisely what goods and services are taxed is determined by the individual state legislatures. In some instances, a sales tax placed upon expensive items that are considered luxuries is known as a luxury tax.
A corporate tax is an excise tax imposed upon the privilege of conducting business in the corporate capacity, which provides certain advantages to individuals, such as limited liability. It is measured by the income of the corporation involved.
Other common examples of excise taxes are those imposed upon the processing of meat, tobacco, cheese, and sugar.
A property tax takes the taxpayer's wealth into account, as represented by the taxpayer's income or the property he or she owns. Income tax, for example, is a property tax that is assessed and levied upon the taxpayer's income; property taxes are imposed mainly on real property.
Taxes are also classified as direct and indirect.
A direct tax is one that is assessed upon the property, business, or income of the individual who is to pay the tax.
Conversely indirect taxes are taxes that are levied upon commodities before they reach the consumer who ultimately pay the taxes as part of the market price of the commodity. A common example of an indirect tax is a value-added tax, which is paid on the value added to the product at each stage of production, distribution, and sales.
13. Is there any need for tax reform?
“Russia’s tax system has performed very poorly since its creation in 1991 for a number of reasons. For a start, it is a cumbersome system. Today there are about 30 separate federal taxes and over 170 local and regional taxes. Russia has 89 regional tax offices and 2,639 local tax offices employing over 180,000 tax officials. Yet, evasion is endemic as Russians are not accustomed to paying income taxes, which were unknown under the Tsars and communists. The nominal tax rates are very high, but there are numerous exemptions for a wide range of favourably treated taxpayers. Emergency tax collection involves draconian penalties, but these penalties are applied at the discretion of tax officials, leaving the system open to abuse and corruption. Regional authorities routinely issue guidelines that contradict centrally issued instructions, where the latter exist. In the absence of clear legislation and procedures, tax inspectors have tended to act autonomously, leading to a very uneven treatment of taxpayers. And while tax collection did increase before the current crisis, almost half of all average regional budgetary revenue and expenditure is now in some form of money surrogates, particularly barter.
Not surprisingly, the outcome is a tax system which fails to produce adequate revenue to government. Furthermore, it impedes growth, puts off foreign and domestic capital and drives investment under ground. A major comprehensive tax reform is therefore long overdue and represents the only feasible escape from the current trap.” (Russia's tax reform by Susan Himes and Martine Milliet-Einbinder)
“In 2001 Russia replaced its individual income tax, which had rates up to 30 percent, with a 13 percent flat tax (An income tax having a single rate for all taxpayers regardless of income level and type). In 2002 it cut its corporate tax rate from 35 to 24 percent. Russia's system is not a pure flat tax, as it retains some deductions and narrow provisions. Domestic dividends are taxed at just 9 percent. Russia's tax reforms have been a big success. In recent years, the nation's economy has grown strongly, tax revenues have risen, and tax evasion has fallen.”( The Need for Tax Reform and the Possibility of a Flat Tax for the District of ColumbiaMarch 8, 2006)
14. What is competition?
Competition is a situation in which businesses are trying to be more successful that others by selling more goods and services and making more profit. Three levels of economic competition have been classified. The most narrow form is direct competition (also called category competition or brand competition), where products that perform the same function compete against each other. For example, a brand of pick-up trucks competes with several different brands of pick-up trucks (ïèêàï) . Sometimes two companies are rivals and one adds new products to their line so that each company distributes the same thing and they compete. The next form is substitute competition, where products that are close substitutes(çàìåñòèòåëü) for one another compete. For example, butter competes with margarine, mayonnaise, and other various sauces and spreads. The broadest form of competition is typically called budget competition. Included in this category is anything that the consumer might want to spend their available money on. For example, a family that has $20,000 available may choose to spend it on many different items, which can all be seen as competing with each other for the family's available money. Competition does not necessarily have to be between companies. For example, business writers sometimes refer to "internal competition". This is competition within companies. The idea was first introduced by Alfred Sloan at General Motors in the 1920s. Sloan deliberately created areas of overlap between divisions of the company so that each division would be competing with the other divisions. For example, the Chevy division would compete with the Pontiac division for some market segments. Also, in 1931, Procter & Gamble initiated a deliberate system of internal brand versus brand rivalry. The company was organized around different brands, with each brand allocated resources, including a dedicated group of employees willing to champion the brand. Each brand manager was given responsibility for the success or failure of the brand and was compensated accordingly. This form of competition thus pitted a brand against another brand. Finally, most businesses also encourage competition between individual employees. An example of this is a contest between sales representatives. The sales representative with the highest sales (or the best improvement in sales) over the period of time would gain benefits from the employer. It should also be noted that business and economical competition in most countries is often limited or restricted. Competition often is subject to legal restrictions. For example, competition may be legally prohibited as in the case with a government monopoly or a government-granted monopoly. Or tariffs, subsidies or other protectionist measures may be instituted by government in order to prevent or reduce competition. Depending on the respective economic policy, the pure competition is to a greater or lesser extent regulated by competition policy and competition law. Competition between countries is quite subtle to detect, but is quite evident in the World economy, where countries like the US, Japan, the European Union and the East Asian Tigers each try to outdo the other in the quest for economic supremacy in the global market.
15. Does competition make for (ñïîñîáñòâîâàòü) the success of economy/business?
Top Ten Reasons Businesses Succeed - Jan B. King
1. The experience and skills of the top managers. Over half of business failures are directly related to managerial incompetence.
2. The energy, persistence and resourcefulness (the will to make the business succeed) of the top managers. Many business owners have failed or come close several times before their “instant” success. Don’t give up.
3. A product that is at least a cut above the competition and service that doesn’t get in the way of people buying. There must be a compelling reason to buy; the product is great, the people love to provide service, and the buying experience is easy and fun.
4. The ability to create a “buzz” around the product with aggressive and strategic marketing. Make scarce marketing resources count. Do as much homework about your customers and their choices as you can before investing your marketing dollars.
5. Deal-making skills to sell the product at the highest possible price given your market. It comes down to your customers’ perception of the value of your product and sometimes the power of your personality.
6. The ability to keep developing new products to retain and build a customer base. Consider gradual product development based on improvements to the current product line and sold to the current customer base.
7. Deal-making skills to work with resource suppliers to keep costs low. Keeping costs lower than competitors’ and continuing to look for cost reductions even when the business is profitable is key.
8. The maturity to treat employees, suppliers and partners fairly and respectfully. Trust and respect result in productivity increases in ways that may be difficult to see and quantify.
9. Superior location and/or promotion creating a connection between your product and where it can be obtained. Studies have shown it can take seeing your product or name seven times before a customer is ready to buy.
10. A steady source of business during both good economic times and downturns. Over the long term, develop a product mix that will include winners during good economic times and other winners when times are tough.
16. What is the subject of economy?
An economy is a set of human and social activities and institutions related to the production, distribution, exchange and consumption of goods and services. It is also an organized way a society provides for the wants and needs of its people.
The main people and organizations involved in economic activities are: firms, workers, investors, consumers, States...
Word History: Managing an economy has at least an etymological justification. The word economy can be traced back to the Greek word oikonomos, "one who manages a household," derived from oikos, "house," and nemein, "to manage." From oikonomos was derived oikonomiā, which had not only the sense "management of a household or family" but also senses such as "thrift," "direction," "administration," "arrangement," and "public revenue of a state." The first recorded sense of our word economy, found in a work possibly composed in 1440, is "the management of economic affairs," in this case, of a monastery. Economy is later recorded in other senses shared by oikonomiā in Greek, including "thrift" and "administration." What is probably our most frequently used current sense, "the economic system of a country or an area," seems not to have developed until the 19th or 20th century.
The economy and the factors affecting the economy have spawned (ïîðîæäàòü, âûçûâàòü) one of the largest fields of study in human history - economics. One of the uses of economics is to understand how economies work and what the relations are between the main economic players and institutions.
An economy is usually analyzed in either of two ways.
17. What is the difference of microeconomics and macroeconomics?
Microeconomics examines the economic behavior of individual units (including businesses and households) and their interactions through individual markets, given scarcity and government regulation. Within microeconomics, general equilibrium theory aggregates across all markets, including their movements and interactions toward equilibrium. Microeconomics is a branch of economics that studies how individuals, households, and firms make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold.
Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the supply and demand of goods and services.
One of the goals of microeconomics is to analyze market mechanisms that establish relative prices amongst goods and services and allocation of limited resources amongst many alternative uses. Microeconomics analyzes market failure, where markets fail to produce efficient results, as well as describing the theoretical conditions needed for perfect competition. Significant fields of study in microeconomics include markets under asymmetric information, choice under uncertainty and economic applications of game theory. Also considered is the elasticity of products within the market system.
Macroeconomics - the field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.
Macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. The factors that are studied by macro and micro will often influence each other, such as the current level of unemployment in the economy as a whole will affect the supply of workers which an oil company can hire from, for example.
Macroeconomics since at least the 1960s has been characterized by further micro-based modelling as to rationality of players and efficient use of market information. Today a consensus view is that good macroeconomics has solid microeconomic motivation as to theory and evidence.
Needless to say, the macroeconomy is very complicated and there are many factors that influence it. These factors are analyzed with various economic indicators that tell us about the overall health of the economy.
Macroeconomists try to forecast economic conditions to help consumers, firms and governments make better decisions.
Consumers want to know how easy it will be to find work, how much it will cost to buy goods and services in the market, or how much it may cost to borrow money.
Businesses use macroeconomic analysis to determine if expanding production will be welcomed by the market: will consumers have enough money to buy the products, or will the products sit on shelves and collect dust?
Governments turn to the macroeconomy when budgeting spending, creating taxes, deciding on interest rates and making policy decisions.
Macroeconomic analysis broadly focuses on three things: national output (measured by the GD), unemployment and inflation.
18. What is the present state of Russian economy? Russia's economy Feb 7th 2007 From Economist.com America and the European Union designated (õàðàêòåðèçîâàòü, íàçûâàòü) Russia a market economy in 2002, but dirigisme (äèðèæèçì - òåîðèÿ è ïðàêòèêà ãîñóäàðñòâåííî-ìîíîïîëèñòè÷åñêîãî ðåãóëèðîâàíèÿ âî Ôðàíöèè) continues to play a big role. Although high oil prices helped Russia recover from the economy's systemic collapse in 1998, a glut of oil revenues has allowed Vladimir Putin, Russia's president, to forgo(îòêàçûâàòüñÿ, âîçäåðæèâàòüñÿ îò ÷åãî-ë.) necessary reforms. Infrastructure needs investment, the financial system needs reform and foreign companies face cumbersome (ãðîìîçäêèé, îáðåìåíèòåëüíûé) ground rules. The government's dismemberment (ðàçäåëåíèå íà ÷àñòè) of Yukos, a Russian oil company, has chilled the business climate. And a handful of oligarchs account for some 60% of the Russian stockmarket. Yet the economy has grown strongly for eight years, and increased by just under 7% in 2006. Nevertheless, the glacial pace of reform has left the country's economic outlook increasingly glum.
From Wikipedia, the free encyclopedia
Although half the size of the former Soviet economy, which was second in the world, the economy of Russia includes formidable assets, and Russia is increasingly becoming again an economic superpower. Russia possesses ample supplies of many of the world's most valued natural resources, especially those required to support a modern industrialized economy. It also has a well-educated labor force with substantial technical expertise. At the same time, Soviet-era management practices, a decaying infrastructure, and inefficient supply systems hinder efficient utilization of those resources. For nearly sixty years, the Russian economy and that of the rest of the Soviet Union operated on the basis of a centrally planned economy, viz. state control over virtually all means of production and over investment, production, and consumption decisions throughout the economy. Economic policy was made according to directives from the Communist Party, which controlled all aspects of economic activity. The central planning system left a number of legacies with which the Russian economy must deal in its transition to a market economy.
19. Can Russian market be described by classical economic models?
Ñlassical economics – a system or school of economic thought developed by Adam Smith, Jeremy Bentham, Thomas Malthus, and David Ricardo, advocating minimum governmental intervention, free enterprise, and free trade, considering labor the source of wealth and dealing with problems concerning overpopulation.
Classical economics The dominant theory of economics from the 18th century to the 20th century, when it evolved into NEO-CLASSICAL ECONOMICS. Classical economists, who included Adam SMITH, David RICARDO and John Stuart Mill, believed that the pursuit of individual self-interest produced the greatest possible economic benefits for society as a whole through the power of the INVISIBLE HAND. They also believed that an economy is always in EQUILIBRIUM or moving towards it.
Equilibrium was ensured in the LABOUR market by movements in WAGES and in the CAPITAL market by changes in the rate of INTEREST. The INTEREST RATE ensured that total SAVINGS in an economy were equal to total INVESTMENT. In DISEQUILIBRIUM, higher interest rates encouraged more saving and less investment, and lower rates meant less saving and more investment. When the DEMAND for labour rose or fell, wages would also rise or fall to keep the workforce at FULL EMPLOYMENT.
In the 1920s and 1930s, John Maynard KEYNES attacked some of the main beliefs of classical and neo-classical economics, which became unfashionable. In particular, he argued that the rate of interest was determined or influenced by the speculative actions of investors in BONDS and that wages were inflexible downwards, so that if demand for labour fell, the result would be higher UNEMPLOYMENT rather than cheaper workers.
P.S. Equilibrium. When SUPPLY and DEMAND are in balance. At the equilibrium PRICE, the quantity that buyers are willing to buy exactly matches the quantity that sellers are willing to sell. So everybody is satisfied, unlike when there is DISEQUILIBRIUM. In CLASSICAL ECONOMICS, it is assumed that markets always tend towards equilibrium and return to it in the event that something causes a temporary disequilibrium. GENERAL EQUILIBRIUM is when supply and demand are balanced simultaneously in all the markets in an economy. KEYNES questioned whether the economy always moved to equilibrium, for instance, to ensure FULL EMPLOYMENT.
20. What laws are needed to improve the state of Russian economy?
21. What are the main reasons of unemployment in Russia? Unemployment - the state of being unemployed or not having a job.
Unemployment is measured annually as the percent of the labor force that cannot find a job. The labor force comprises adults who want to work. Uncounted are those who do not seek employment, or who have become discouraged enough to stop looking.
February 18, 2003 PRAVDA.Ru Russia on the Edge of Unemployment Disaster The government presents joyful reports, although the situation gets critical
The Russian Federation State Statistics Committee informs about the reduction of the unemployment level in Russia. As it turns out, the unemployment situation in the country improves. Official documents say so, at least. Nevertheless, the major social department of the government – the Ministry for Labor – projects a considerable growth of unemployment in the nearest future. Power industry reforms, public utilities reforms, railway and metallurgy reforms will deprive hundreds of thousands (if not millions) of Russian people of their jobs. The state has nothing to offer to all those people, who suffer from the stabilization and from the moderate economic growth. There are a lot of doubts about the fact, if there is someone, who is interested in the fates of those people at all. Yet, the State Statistics Committee of Russia keeps providing its joyful calculations.
According to the report from the State Statistics Committee, only 21.6% of Russian people had their income lower than the official living wage during the last quarter of the last year. The official living wage is 1.893 rubles a month, which is a bit more than $50. There were 31.5% of such people in the beginning of 2002. That is why, the Ministry for Labor can report that the number of poor people in Russia reduced by 14.2 million people. The ministry hopes that this index will be an advantage of its work.
By the way, according to the official statistics, the level of hidden unemployment dropped almost 2.7 times over the recent two years. The officials of the Ministry for Labor believe that 92.6-92.8% of the economically active population of the country will have jobs by the year 2005. Although, this assertion contradicts to the forecasts of the same ministry. Various departments of the ministry have probably failed to coordinate their data.
Alexander Pochinok, the incumbent Minister for Labor, promised two years ago that the official number of the poor would be reduced to the level of 17-18 million people by the middle of 2003. However, as the dynamics of the statistic information shows, Pochinok’s words remained only words. The minister failed to work a miracle. The number of the Russian people, whose level of income is lower than the living wage, does not have a tendency for reduction: 31 million people in the first quarter of 2001 and 30.9 million in the beginning of the year 2003. Their number is supposed to grow in the percentage ratio: the State Statistics Committee registered that the Russian population considerably reduced in its number over the last two years.
Ministerial departments often forget to coordinate their data. Last year the State Statistics Committee informed that up to 40 million Russian people suffer from undernourishment on a regular basis. It is obvious at present that the number of hungry people is going to increase in the nearest future.
The Ministry for Labor forecasts nowadays that the registered unemployment level in Russia is likely to grow to 1.5 million people in the coming three years. Metallurgy, railway transport and power industries will provide the basic growth of the unemployment. Ministerial officials forget to mention the coal industry for some reason: oligarchs are about to complete its unification. Officials do not take account of the coming reform in the field of public utilities either.
In connection with the reform of the metallurgical industry, about 150 thousand people will become unemployed, as the specialists of the Ministry for Labor think. Two hundred and thirty-eight thousand people are expected to be fired as a result of the railway transport reform. The power industry reform is to result in the unemployment of 61 thousand people at least. Furthermore, the ministry acknowledges that the number of illegal labor migrators (about three million people) doubles the official number of the unemployed people in the country.
It goes without saying that no population employment departments (not to mention small business or shadow economy) will be able to cope with such a huge mass of people. All those things will eventually result in the fact that the human labor price will drop considerably in Russia as a whole. The employment demand will exceed the unbalanced supply several times. Hundreds of thousands of people will remain unemployed, homeless and hungry.
Does anyone in the Russian government calculated such a development of the social situation? Does anyone at the presidential administration think about who those people are going to vote for at the election? Do Kremlin politicians hope that the worst is going to happen after the parliamentary and the presidential elections? It is hard to answer these questions. The government does not say anything on the subject, while oligarchs keep brushing such questions aside.
On the other hand, Russian large companies come to the realization of the fact that the bitter situation needs to be improved at least a little bit. The Siberian Coal Energetic Company, which got hold of Siberian coal fields, gets rid of the excessive personnel at the moment. This is a logical way for market relations development in Russia: no charity at all. A company will keep only those people, whose labor brings the maximum profit to the company (at the minimum spending, of course). So, the company decided to set up the special stabilization foundation. As the official press release of the company mentioned, the funds of the foundation would help the dismissed people to survive the hard consequences of their dismissal. So-called excessive people will be able to obtain new professions at regional schools. In addition to that, the company launches a program to assist the economic employment of the Krasnoyarsk region. The company is going to offer certain loans to those people, who will wish to start their own businesses after they are fired. Most likely, those loans will go not to the fired people, but to the children and relatives of the company’s managers. On the other hand, an oligarchic company is doing something for its workers, trying to observe some decencies, at least verbally. Dmitry Slobodanuk Translated by Dmitry Sudakov
22. What is ecological management?
Ecological Management - The management of human activities so that ecosystems, their structure, function, composition, and the physical, chemical, and biological processes that shape them, continue at appropriate temporal and spatial scales. Sometimes referred to as ecosystem management or an ecological approach to management.
23. What is the relationship between ecology and economy? Ecological economics is an approach to rather than a branch of economics that addresses the interdependence and co-evolution between human economies and natural ecosystems. Many ecological economists refer to it as a trans-discipline rather than a conventional discipline. It has similarities to green economics and human development theory. These schools also embrace integration among diverse intellectual thoughts, and deem neoclassical economics as myopic and closed-minded; ecological economics seeks greater trans-disciplinary connections to solve complex issues facing humanity.
Concept The objective of ecological economics (EE) is to ground economic thinking and practice in physical reality, especially in the laws of physics (particularly the laws of thermodynamics) and in knowledge of biological systems. It accepts as a goal the improvement of human wellbeing through economic development, and seeks to ensure achievement of this through planning for the sustainable development of ecosystems and societies. It distinguishes itself from neoclassical economics (NCE) primarily by its assertion that economics is a subfield of ecology, in that ecology deals with the energy and matter transactions of life and the earth, and the human economy is by definition contained within this system. In contrast, NCE has historically assumed implicitly (and, more recently, explicitly) that the environment is a subset of the human economy. (In this approach, if nature is valuable to our economies, that is because people will pay for its services: clean air, clean water, encounters with wilderness, etc.) It is largely this assertion which allows for NCE to claim theoretically that infinite economic growth is both possible and desirable. However, this belief disagrees with much of what the natural sciences have learned about the world, and, according to EE, completely ignores the contributions of natural capital to the creation of wealth. (Natural capital can be considered the planetary endowment of scarce matter and energy, along with the complex and biologically diverse ecosystems that provide goods and services directly to human communities: micro- and macro-climate regulation, water recycling, water purification, storm water regulation, waste absorption, pollination, protection from solar and cosmic radiation etc.)
While NCE deals with the efficient allocation of resources, it ignores two other fundamental economic problems: distribution (equity) and the overall optimum scale of the economy. EE also makes a clear distinction between growth (quantitative) and development (qualitative improvement of the quality of life) while arguing that NCE confuses the two. EE challenges the common normative approach taken towards natural resources, claiming that it undervalues natural capital by displaying it as interchangeable with human capital--labor and technology. EE counters this convention by asserting that human capital is instead complementary to and dependent upon natural capital, as human capital inevitably derives from natural capital. From these premises, it follows that economic policy has a fiduciary responsibility to the greater ecological world, and that, by undervaluing the importance of natural capital, sustainable development (as opposed to growth)--which is the only solution to elevating the standard of living for citizens worldwide--will not result. Furthermore, ecological economists point out that, beyond modest levels, increased per capita consumption (the economist's version of "standard of living") does not necessarily lead to improvements in human wellbeing, while this same consumption can have harmful effects on the environment and even on broader societal wellbeing.
It rejects the view of energy economics that growth in the energy supply is related directly to well being, focusing instead on biodiversity and creativity - or natural capital and individual capital, in the terminology sometimes adopted to describe these economically. In practice, ecological economics focuses primarily on the key issues of uneconomic growth and quality of life. Ecological economists are inclined to acknowledge that much of what is important in human well-being is not analyzable from a strictly economic standpoint and suggests interdisciplinarity with social and natural sciences as a means to address this.
History The origination of ecological economics as a specific field per se is credited to ecologist and University of Vermont Professor Robert Costanza, who founded the International Society for Ecological Economics (ISEE) and carried out much of the founding research while at the University of Maryland. His University of Maryland colleague, Herman Daly, who was trained as a conventional economist but who had also studied ecology, was a co-founder and has been a major intellectual contributor to the field. Economist Nicholas Georgescu-Roegen (1906-1994) who was among Daly's teachers at Vanderbilt University, provided ecological economics with a conceptual framework based on the material and energy flows of economic production and consumption. His magnum opus "The Entropy Law and the Economic Process" (1971) has been highly influential. Nobel prize-winning chemist, Frederick Soddy (1877-1956), and economist Kenneth Boulding (1910-1993) are among other intellectual pre-cursors. Furthermore, some key concepts of what is now ecological economics are evident in the writings of E.F. Schumacher, whose 1973 book "Small is Beautiful - A Study of Economics as if People Mattered" was published just a few years before the first edition of Daly's comprehensive and persuasive "Steady-State Economics" (1977). Ecological economics' intellectual ancestry may be traced in large part to political economy, a refinement of early economic theory that includes among its earlier researchers Thomas Malthus, David Ricardo and John Stuart Mill. Mill, in particular, by hypothesizing that the "stationary state" of an economy might be something that could be considered desirable, anticipated later insights of modern ecological economists, without having had their experience of the social and ecological costs of the dramatic post-World War II industrial expansion. CUNY geography professor David Harvey was one of the first to explicitly add ecological concerns to political economic literature. This parallel development in political economy has been continued by analysts such as sociologist John Bellamy Foster.
24. What are the sources of company finance?
Sources of Business Finance There is no escaping the fact that businesses need finance (funds), both in the short term, and long term, to expand, operate or just plain survive. A business represents, in many respects, a continuous flow of money in and out of the company in the form of income and expenditure. It’s important that a business is aware and willing to tap (çä. èñïîëüçîâàòü) every possible source of finance available, particularly at critical stages of the firms development. We can initially segment sources of finance into those internally available to the business, and those that are available externally.
Internal Sources of Funds Profit The business can retain profit (after tax, interest and dividend payments have been deducted), to finance the businesses intended future expenditure.
Depreciation By deducting depreciation from profit, the business makes provision for the eventual replacement of worn-out machinery / plant. This can be seen as a further form of profit retention(ñîõðàíåíèå), and thus an internal source of finance.