Near East University Faculty Of Economics & Administrative Sciences MAN Introduction To Business Week 2 - Forming a Business Unit Tuğberk KAYA 

TYPES OF BUSINESS

SMALL AND MEDIUM SIZE BUSİNESS (SMSBs) Based on reports prepared by the World Bank: Businesses with fewer than 50 workers are considered as “SMALL” Businesses with workers are considered as “MEDIUM-SIZED”

MANUFACTURING COMPANIES: [tangible assets] Produce commodities (merchandise) like furniture, textile, foods, electronic and chemical goods, etc. Combine resources and raw materials (INPUT) and convert them into finished commodities (OUTPUT) by adding value in the conversation process.

SERVICE COMPANIES: [intangible assets] Produce intangible outputs through direct contact between employees of the firm and customer. Consulting firms, airlines, hotels, law firms, entertainments firms like theatres and cinemas, educational companies and transportation firms, etc.

MARKETING COMPANIES Serve as intermediaries between the manufacturer and customer Their functions (tasks) are stocking, promoting, distributing the commodities Their added value is dependent on the quality of services.

Private business: The primary stimulus of this type is profit. Business with public or Government Ownership: The primary objective of these firms is to provide members of society with necessary services. In most cases this type results when private investors are unwilling to invest due to their fear of a high profitability of failure. Exp: Municipalities.

Mixed Business: ? Foreign Businesses: Pls search for the Law to Promote Foreign Capital Investment (Law No: 6224).

Forming Business Alliances  Yesterday’s enemies are now seen as tomorrow’s partners. The reasons for organizations to make alliances are as follows:  For economies of scope: companies seek economies of scope by sharing their activities and by transferring their capabilities and competencies developed in one business to a new business without significant additional cost.  To gain market power: companies seek to gain market power by making partnership with other companies in local and international markets.

Forming Business Alliances  For financial economies: companies seek financial economies through allocation of their financial resources based on investment partnering with other companies.  To reduce the risks: especially in high technology industries that creates high uncertainty and volatility (instability), or in foreign overseas operations, companies seek alliances to reduce their risks.  To overcome the trade barriers in the restricted and protected markets: companies may seek foreign alliances to overcome the trade entry barriers in the partner’s country.

Strategic Alliances  Companies tend to share their resources, capabilities and core competencies in three ways:  1-Joint ventures: two or more companies create a partnership for specific responsibility with each of the partners typically owning equal shares in the new venture. However, the partnering companies do not lose their identities.

Strategic Alliances  2-Equity strategic alliances: partners own different percentage of equity in the new venture.  3-Non-equity strategic alliances: this type is formed through contract agreements. Those agreements give one of the companies to supply, manufacture or distribute other’s firm’s goods and services without equity sharing.

References  Ebert, R. J. and Griffin, R. W. (2015) Business Essentials. 10 th Edn. Harlow: Pearson Education Limited  Kadri Mirze (2002) Introduction to Business. Istanbul: Literatür Publishing.

Any Questions?