Download A Closer Look at FOP`s

A Closer Look at FOP’s
Objectives
• Examine the influence of green movements on
the modern corporation
• Investigate labor markets and wage setting
• Analyze the role of venture capitalists and
investors in corporation growth
• C2 PO3b , C2 PO1c, C3 PO 2cde, C4 PO2d
•LAND
RESOURCES
• Land that can be used to produce goods and
services
Land Resources
For land to be valuable, it must be useful in
production of goods and services
agricultural land
land with mineral resources
land with access to transport (water, roads)
land with desirable features (scenic, central)
Degradation of the resource comes from
exhaustion of the resource or pollution
Green Movements
• Silent Spring detailed loss of birds due to
chemical pollution during the 1960’s
• Foundation of the Environmental Protection
Agency in 1974 first held the government and
corporations liable for cleaning up
air/water/soil
• Increasing resources prices have forced
corporations to cut waste
• Greenhouse gas producers now trade permits
and carbon offsets in Europe to protect ozone
layer
Green and Globalization
• As Corporations faced stricter laws in USA,
Europe, many moved to Asian and Latin
American countries desperate for jobs.
• Demand for natural resources have driven
many countries to destroy their environments
in order to make money to survive.
•LABOR
• Work performed for wages, salary or
other valuable goods
• Does not include those not seeking/
eligible for work
Labor Markets
• People work in order to satisfy their needs
• In developing and developed countries (the
richest 50%), most people work for other
people’s businesses/corporation
• The value of labor is dependent on
– The population that can do the work (supply)
– The level of demand for the work
– The skill level of individual workers (efficiency)
– The profitability of the good/services
Demographics
• Demos (people) graphia (pictures)
– Demographers study the influence of groups of people
on markets and politics
• Largest living US demographic 50-65 yrs old “Baby Boomers”
– Born 1945-1962, most will leave labor market by 2020
• Smallest US demographic “Generation X”
– Born 1963-1978, oral contraceptives and abortion limited births.
• US Fastest Growing Hispanic Females under 24
– 60% of undergraduate college students are female
– Hispanics passed African Americans for largest minority in 2000
– Spanish language market fastest growing in US.
Labor and Demographics
• Labor is a derived demand, based on demand
for goods and services
– More demand for cars will usually equal higher
wages, which draw labor into higher supply
• Labor supply is relatively inelastic
– Takes years to increase domestic supply
– Many people willing to take lower wages to
remain near family, culture
– Migrants (internal and external) sometimes fill the
gap between labor supply and demand
Skill and Profitability
• The value of labor also depends on the skill involved
in the production process
– Technical/Mechanical Skills require specific training not
easily acquired without apprenticeship
• Auto mechanic, HVAC, PC Repair, Plumber
– Academic/Managerial Skills require refined analytical
skills not easily acquired without intensive study
• Lawyer, Medical doctor, Accountant
– Specialization limits the amount of available labor for
production of any given good/service
Skill and Profitablity
• A highly educated work force is valuable to
employers because
– More educated people are more efficient
• More Productivity=More Profits
– More educated people are more effective
• More accurate work means fewer revisions of work
– More educated people are relatively scarce
• 89% have HS Diploma, 26% Bachelors, 5% Masters
• 3% MD/JD/Dr. Divinity, 1% Ph.D
•THE MORE YOU
LEARN, THE MORE
YOU EARN!!!!!!
•
•
•
•
•
Union Certified Plumber $55,000 yr (avg)
Accountant $44,000 yr (avg)
HVAC Certified Technician $51,000 yr (avg)
Economist $48,000 yr (avg)
Economics Teacher $54,000 (avg)
•CAPITAL
• Money and tools necessary to build, run, maintain and
expand a business
Capital Tools
• Few entrepreneurs can fund all the expenses
of a business, so they must find investors.
• Venture Capital is the money loaned by
investors to entrepreneurs in expectation of a
profit.
– Stock Certificates document partial ownership
• Stockholders can vote on important matters
– Bonds
• IOU’s do not give ownership, but guarantees returns
Stock
• Two Types, Preferred and Common
• Stock= Company Ownership,
• Shares= How many individual pieces of
ownership bought
– Stockholders take same risks as owners
– Preferred Stock gets paid extra, and first
– Common Stock
• Heavily traded
• Possibly millions of small owners
• Stockholders make money through capital
gains and dividends
Profiting from Stock
• Capital Gains refers to net increase in value
– Current Value minus Purchased Value
– “Greater Risk, Greater Reward”
• Capital Gains/Loss can be calculated daily
• Stock is traded on “indices” which average the
value of stock traded second by second
– USA has many major indices
• Dow Jones (New York) covers most major businesses
• NASDAQ (New York) covers technology companies
• The Chicago Board of Exchange covers farm products
Stock Worldwide
• Over 150 countries operate at least one stock
exchange and index
– Tokyo, Japan “Nikkei” Index
– Sydney, Australia “All Ordinaries” Index
– Hong Kong, China “Hang Seng” Index
– Bombay, India “Times Index”
– Berlin, Germany “Deutschland Exchange DAX”
– London, England “Financial Times FTSE”
• Because of time zones, all of these markets trade
before New York begins its day.
Dividends
• As Companies that issue stock make money,
they pay quarterly dividends to stockholders.
• Large, established companies may even pay
dividends when they lose money.
• These kinds of companies are called “Blue
Chips” after the most valuable poker chip
• Dividends are usually reinvested into stock
purchases, ensuring demand.
Bonds
• Governments, Non-Profit Organizations,
Private Corporations and Public Corporations
may issue bonds to raise money for capital
projects like roads, machinery, land purchase
• Bondholders receive periodic interest
– Interest might be simple or compound
• Bonds are rated based on their risk of
repayment in the bond market
– Highest Quality rated AAA
– Ratings go as low as D, “junk bonds”
SEC
• In the United States, the
Securities and Exchange
Commission regulates
corporations, stocks,
bonds and mutual funds
to ensure all companies
report truthful
information
• They detect fraud, prosecute
crimes and protect the public from
financial abuses