2.

4 TRAINING
Training involves teaching employees new skills or improving the skills they already
have.
 Costly
 Disruption
Importance
 Productivity
 New technologies (manejo)
 Fewer accidents
 Better to customers’ needs
 Attracting talent
 Motivation (feel valued)
 More chances of being promoted
 Resilience
On the Job training
 Induction (new employees)
 Coaching (supervisor guiding)
 Mentoring (more experienced worker – discusses problems)
 Job rotation (different positions)
 Apprenticeship (with expert – long period)
 In-house courses (own training courses – own workers)
Off the Job training
 Lectures and conferences (verbal and visual presentations – large audiences)
 Vestibule training (prototype environment)
 Simulators (specialized equipment – decisions)
2.6 COMMUNICATION
The transfer of information from one party to another.
 Formal communication (established communication channels)
o Spoken communication
o Written communication
o Electronic communication
Types:
o Vertical communication – Between different
organizational levels. Descending (from top to bottom).
Ascending (from bottom to top)
o Horizontal communication – Between employees of
different departments but at the same hierarchical
level
o Diagonal communication – Between employees from
different departments and different hierarchical levels
Advantages and disadvantages

Advantages Disadvantages
It can increase efficiency, coordination Can delay decision making.
and accuracy
Discipline, order and fewer errors. Reduced initiative and creativity
Document for future reference Cost

 Informal communication (without defined channels – faster)

o Single-strand chain – One employee tells another,
forming a chain.
o Cluster chain – A group of people meet to discuss
o Probability chain – An employee passes on information to
a random person who passes it on to another random
person.
o Gossip chain – One person says something to a group of
employees who then disseminate it to another group of
employees
Advantages and disadvantages

Advantages Disadvantages
Faster Lack of confidentiality
Employee relations Rumors
Alternative means Distortion and conflict.
Barriers to communication
Broken or ineffective communication.

 Cultural barriers
 Linguistic barriers
 Emotional barriers
 Psychological and physiological barriers
 Physical barriers
 Organizational barriers
 Attitude and personality barriers
 Perception barriers
 Technological barriers
 Communications skills of the sender and receiver
 Form (type) of communication

Strategies to overcome communication barriers

3.1 INTRODUCTION TO FINANCE
All companies need money for the different activities they carry out: initial investment,
daily operations, future expansion, etc. Depending on the purpose of the financing,
expenses are classified into:
 Capital expenditures: acquire objects that will last (machinery, buildings...)
o They usually have a high initial cost
o Are long term investments (long term benefits)
 Revenue expenditure: day-to-day running (rent, salaries…)
o Must be covered immediately
o Produce immediate benefits
o They should not be too high, as this would prevent long-term
investments and a sudden crisis.
 3.1 SOURCES OF FINANCING
Two classifications; by time and Internal or External.
Internal
Internal sources of finance involve using money the
business or owner has previously earned (do not have
to be repaid).
Types:
 Personal Funds (money invested by the owner)
o Risk: for the owner: if the business goes
bankrupt, the money will be lost.
o Benefits: + shares  + dividends (profits)  + decision making power
 The sale of assets (something a business owns)
o Disadvantages: oppportunity cost, need more sources of finance
o Benefits: easy if the business wnat to update tech, machinarery, etc.
 Retained profits (savings made by a business)
o Disadvantages: takes time, loss of dividends, disagreement between investor
vs enterpreneur
o Benefits: do not have to be repaid

External
From outside the business, they involve an external stakeholder taking a risk.
Types:
Equity finance: the provider receives
part ownership of the business in
exchange for the finance.
o Advantage: do not have to be
repaid & no interest is
charged.
o Disadvantage: opportunity
cost  loss of control & loss
of portion of future dividends

Business angels
 Venture Capital: financing
(private
individuals) vs that pools resources from a group of investors to fund new businesses. 
Venture  Business Angels: business person who invests their money into new businesses.
capitalists In return, part ownership and a portion of future profits.
(companies)
 Share Capital: money raised through the issue of shares on a stock market.
o Privately held companies ‘go public’ (IPO)  Publicly held Company
 o Shareholders usually receive a portion of the profits earned  dividens.

Debt finance: is money borrowed from a bank or other financial institution. In

exchange for the finance, the business usually pays an interest rate to the lender
o Loan Capital: medium or long-term, often used to buy fixed assets. Businesses
usually provide collateral.
o Overdraft: high-cost, short-term loan, attached to a bank account. Allows the
account holder to withdraw an amount of money that is greater than they
currently hold.
o Trade Credit:  receiving goods and services from a supplier immediately but
paying for them later. Usually 30, 60 or 90 days. No interests.
o Microfinance: financial services to individuals with very limited income and
assets and are not able to get services from traditional banks. Does not usually
require collateral.
Other sources of finance: Sometimes a business needs to increase funding but does not
want to lose ownership or take on debt.

 Crowdfunding: whereby many people, invest small amounts of money to fund a

business or project. Usually need a platform for the exchange
o Peer-to-peer lending, equity crowdfunding, rewards-based
crowdfunding, and donation-based crowdfunding.
 Leasing: renting a fixed asset over a period of time, rather than buying it.
o However, the business does not own the asset.
o The business can always lease the latest model and return the asset when
the business no longer needs it.
o Does not need to worry about maintaining or repairing the equipment
either.
Short-term, medium-term
and long-term finance
Short term: 1 year or less
Medium term: 1 to 5 years
Long term: 5 to 30 years
Short term:

 Bank overdraft (red numbers)

 Trade credit (payment in 30, 60, 90, … days

Medium term:

 Installment Purchase
 Leasing
Long term:

 Bonds
 Capital stock (sale of shares on the stock exchange)
 Grants (to companies in general) and subsidies (to companies of public interest)
 Venture capital
 Business Angels

Factors influencing the choice of financing source

 Time
 Cost (opportunity cost)
 Type of business, profitability and size
 Amount required
 Flexibility
 External factors: inflation, interest rates, ...
 Leverage: ratio between equity and loan capital. Leverage should be sought
under loan capital <<equity capital