Business Terms | Business Protocol

Subsidization

November 12, 2007 Kraig Grayson

Subsidies are very helpful as they help to ease the costs of things to consumers, employees, and regular civilians. Some governments subsidize bus fares, employers subsidize the cost of food for their employees, toll operators subsidize the cost of toll fares, and private firms may subsidize the costs associated with running local sports leagues. Subsidization saves those who are benefiting from it a lot of money over time. To underscore the importance of subsidization, think of train fares being $10 per ride to anywhere. The average person may not be able to afford this. So the government may choose to subsidize the costs, paying let’s say $4 per ride. That means commuters would end up paying only $6 out of pocket per ride.

Another example is of a company subsidizing their employees lunch money. Some companies have deals with food places where the employees present a voucher which allows them to pay only a portion of the cost of what they buy. The company foots the rest of the bill. The amount that the vouchers cover varies from company to company. In any case, the benefits of subsidization are appreciated by many of those whom it benefits.

Partnerships

October 20, 2007 Kraig Grayson

A Partnership is an alliance between 2 or more persons to form a business that would be run by all of them. Partnerships are formed for various reasons. For example, if there was a market for yams in Indonesia, then a yam farmer, lawyer, exporter, and a shipper could form a partnership to facilitate the exportation of yams to that country. It would save on the overall costs of getting the goods from the ground to its destination. Profits from the sales of the yams would be shared up amongst all members of the partnership. So, how does that work? Let us break it down a bit here.

The farmer would be responsible for planting and reaping the yams. In the meantime, the lawyer would look about the legal aspect of the business, drafting the Articles of Association and Memorandum of Association for the partnership and getting the company incorporated. The lawyer would also be in charge of drafting the agreement between their company and the company or government of the country where the goods will be shipped. Once set up and the yams are ready, the exporter would arrange for the yams to be picked up and boxed at a warehouse or factory. The shipper’s job would then be to ship the produce off to their destination. When payment is received based on the terms of the contract, all members of the partnership get their cut.

If we look at the issue objectively, if each person involved in the whole chain of events was from a different company, you could just imagine the costs that would be associated with the venture! So partnerships do make sense as they serve the ultimate good of all involved, in both time and money.

Time Added On

October 09, 2007 Kraig Grayson

There are occasions when work is needed to be completed within a specific time frame. However, there are times when unforeseen happenings occur that may delay the completion of the job. These can be anything from a hurricane to a tornado to a fire to flooding, even an earthquake. What we need to realize is that there is no such thing as a perfect project. There will be ups and downs that need to be rectified in order to have a successful completion of any job. If the case occurs where more time is needed to finish a job, then the Time Added On rule would be enforced. It is not really a rule, though, but a common sense approach to the solution of things that may cause a project to be completed later than expected. In short, Time Added On is “the stipulated time extension given for the successful completion of any project or task that may have been otherwise postponed as a result of unexpected events. The stipulated time is not absolute but is relative to each unique case.” That is my definition of Time Added On.

Let us look at an example. Ace Building Co. is contracted by Good Times Hotel to build a 10-story hotel in six months. The project is well underway for completion before the six months have ended, but a hurricane passes through and does some damage to the unfinished structure. What happens in this case is that Ace will need time to first of all repair the damages and then complete the project. Good Times is thereby forced give a Time Added On of one month, a time period they feel is enough for Ace to complete the building. So, in the example, a hurricane predicated the need for added time to complete the project. Time Added On can apply to anything, even school work, house work, or even play time. The bottom line though is that the extra time that is given is based on the seriousness of the reason why a delay occurred, that time being sufficient enough to allow a successful completion of the task or event.

Discriminating Income

October 03, 2007 Kraig Grayson

Discriminating Income is the amount of a consumer’s income that is spent after essentials like food, utilities, and housing and any other prior commitments have been covered. In short, it is the money that is left behind after all the necessary bills and obligations have been taken care of.

Money Laundering

July 08, 2007 Kraig Grayson

Money Laundering has become big business over the past several years. This type of business has been around for centuries, but in more recent times it has taken on an unprecedented dimension due to the global marketplace where businesses now operate in and the available technologies. It has become easier, to an extent, to launder money using various means. The internet has played a pivotal role in this business, giving launderers easy access and means to move their money around. But what is money laundering? Money Laundering is the “washing” of dirty money (money that is obtained by illegal means) by investing it in legitimate business operations or by placing it in financial institutions or other securities where it is “cleaned”. As the term “laundering” suggests, the money is washed, so to speak, i.e. it is made clean by investing it in legal and legitimate business operations.

Money can be laundered through banks; investments; acquisitions; purchase of assets like cars and houses; giving it to charity; over the internet; among other means. A prime example of money laundering is a criminal network obtaining cash through the sale of drugs and then using the money to fund a legitimate business, like a supermarket, or to purchase vehicles. This is with the hope that the money cannot be traced to their drug operations. So it would appear as if the money used to acquire these assets is “clean” as it is being used in operations that are not illegal. Money laundering through financial institutions is also a favourite of wrong doers. That is why such institutions the world over have had to institute policy changes to tackle the problem. In most cases, if cash movements in an account over a certain value and within a short period of time is observed, the fraud squad is called in to investigate. In any case, more and more ingenious ways of laundering money are being found everyday as it is big business.

Money laundering is illegal and those who are caught will be brought before the court of law and fined. Many launderers end up facing many years of jail time. It may seem to be profitable at first but the end result is not as nice.

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Division Of Labour

July 05, 2007 Kraig Grayson

Division of Labour is exactly what it says – labour is divided. As such, the work to be done is shared among two or more persons so as to aid in accomplishing the job in a shorter time, and within budget. Division of labour applies when there is a large, and sometimes small, project that needs to be completed within a certain time frame and which cannot be logically completed by one person. In an instance as this, persons may be assigned different tasks during different stages of the project.

An example of how division of labour can be applied is in a garment factory. Each stage of the production of the garments is handled by different people. This means that there would be a set of persons to measure and cut the material, another set to piece them together, then another set to do the sewing. Then there are the taggers, packers, and loaders who complete the work force. Having the labour divided up like this helps to make the process of manufacturing the garments, from start to finish, more fluid and feasible.

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What Is A Double Cross?

June 08, 2007 Kraig Grayson

Have you ever been double crossed? Do you know someone has done some double crossing? As harmless as it may seem, it is a serious offence under the law. In fact, the person who does the actual double crossing has put himself in danger not only from the ones who he misleads but also from other persons who may not have been directly affected by the action. In retrospect, a Double Cross refers most usually to a betrayal. When you double cross someone, you are suggesting that you are their ally when you are in fact not. The phrase originates from the use of the word cross in the sense of foul play – a deliberate collusion to lose a contest of some kind.

According to Wikipedia, there are two possible situations where the phrase “double cross” can be used:

A competitor participating in the fix who has agreed to throw their game instead competes as usual, against the original intention of their collaborators – one “cross” against another.
Two opposing parties are approached, urging them to throw the game and back the other. Both parties lose out, and the perpetrators benefit by backing a third, winning party.

http://en.wikipedia.org/wiki/Double_cross

The outcome of a double crossing has been at times detrimental for the double crosser. Many movies that are shown on cable and in the theaters, even what is read in the newspapers, shows that may double crossers end up being killed or otherwise harmed by those whom they betrayed.

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Profit Sharing Plans

June 02, 2007 Kraig Grayson

The term Profit Sharing is one that speaks for itself. In its simplest terms it means the sharing of profits amongst individuals or entities to whom the business belongs. Profit Sharing is based upon the premise that once a profit is made in a business venture, it will be shared up in accordance with the percentage holdings, or stake, that each person has in the entity. This can be in any ratio depending on the number of individuals involved and their level of input. A Profit Sharing Plan would outline who gets what amount of the profit that was made.

An example of how Profit Sharing can be applied is as follows: The Mill Mex Mills is owned by 3 partners namely Joe, Moe, and Loe. The company had a startup capital of 1 million dollars. Joe invested $400,000, Moe invested $500,000, and Loe invested $100,000. The ratio of ownership would then be 4:5:1, with Moe having the largest share followed by Joe and then Loe. This means that if Mill Mex Mills makes a profit of $2,000,000:

Joe would get – ($2,000,000 x 4)/10 = $800,000
Moe would get – ($2,000,000 x 5)/10 = $1,000,000
Low would get – ($2,000,000 x 1)/10 = $200,000

So the profit would be shared according to their level of controlling interest in the company.

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Subsidization

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Time Added On

Discriminating Income

Money Laundering

Division Of Labour

What Is A Double Cross?

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