In the name of Allah Almighty the most Merciful and the most Beneficent

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CURRENT BUSINESS AFFAIRS
SPRING SEMESTER 2011 MBA-IV CREDIT HOURS: 3 CONTACT HOURS: 48
INSTRUCTOR CAPTAIN MUNAWWAR AHMAD PN VISITING FACULTY
E-Mail: munawwar1965@gmail.com Contact number: 0301-5299895

DEPARTMENT OF MANAGEMENT SCIENCES BAHRIA UNIVERSITY ISLAMABAD

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Course Description
‡ To introduce the participants to the concepts and methods used in establishing and managing businesses. ‡ It familiarizes the students with a range of business approaches used in the discipline of business administration with an emphasis on approaches commonly used in practical settings.
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Course Objectives
‡ To prepare the students to think critically about theory and practice surrounding basic business concepts, business models and their application. ‡ To study various means of managing local and international businesses. ‡ To appreciate the global and local business governance mechanisms. ‡ To analyze the impact and role of current business environment. ‡ To understand the emerging business models and future business trends. ‡ To comprehend the process of designing, developing and launching new businesses.
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‡ Analyze the impact and role of current business environment.Learning Outcomes On the successful completion of this subject students should be able to: ‡ Evaluate the theoretical and practical aspects of effective business. ‡ Understand the emerging business models and future business trends. 5 . developing and launching new businesses. ‡ Comprehend the process of designing. ‡ Appreciate the global and local business governance mechanisms. ‡ Understand the basic business concepts. ‡ Study various means of managing local and international businesses. business models and their application.

presentations. 6 .Teaching Approaches ‡ A variety of teaching approaches will be utilized including lectures. case studies. ‡ Students will be required to do essential readings for each lecture before hand which will be intimated for each week in the class. ‡ The method employed for the course is substantially interactive. self readings. ‡ Lecture will be delivered using power point presentations and discussions. quizzes and assignments.

Miscellaneous ‡ Discipline Needs no emphasis 5 minute rule ‡ Attendance Minimum 80% ‡ Examinations ± Midterm week-9 ± Final exam week-18 : : 25 Marks 40 Marks ‡ Quiz 3 (2 prior midterm exam and one after midterm exam) : 5 Marks each ‡ Assignments 2 (one prior midterm and one after midterm in the form of case presentation) 10 Marks each : 7 .

Global and transnational strategies ‡ Case presentation by instructor . expectations and material. ‡ Role/Influence of MNCs in global economy ‡ Motivation to Internationalization ‡ Internationalization to transnationalization Week 3 ‡ Building Strategic Capabilities ‡ Goals and means ‡ Multinational. International.Ingvar Kampard and IKEA 8 . objectives.Course Schedule Week 1 ‡ Introduction to course goals. ‡ Introduction to subject ‡ History of Business ‡ Basic concepts and definitions Week 2 ‡ Evolution of Multinational Corporations (MNCs).

Barclays Bank case ‡ Reading: Rethinking emerging market strategies ‡ Introduction to Theories related to Business Approaches ‡ Game Theory. TCE Theory Week 6 ‡ Rise of India and China as dominating business players ‡ Reading: China opts for quantity over quality ‡ Reading: China still manufacturing star 9 . Institutional Theory. WorldCom. Stewardship Theory. AIG. Tyco. Lehman brothers) ‡ Models of Corporate Governance STANFORD Graduate School of Business (Larcker & Tayan report) Week 5 ‡ Doing business in emerging markets .Course Schedule Week 4 ‡ Quiz.1 and Assignment-1 ‡ Global Financial Crises & Political Issues (Enron. Agency Theory. RBV Theory.

Course Schedule Week 7 ‡ Quiz-2 ‡ Local Business Governance Mechanism ‡ Manual of Corporate Governance ‡ Companies Ordinance 1984 Week 8 ‡ Global Business Governance Mechanisms OECD Report ‡ Corporate business ethics and values in modern world 10 .

Let the fun begin What do you understand by CBA? 11 .

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‡ 1185 BC : Trojan War ‡ 1130 BC : Iron used for weapons and tools ‡ 1120 BC : Magnetic compass invented 14 . modern day Iraq. writing was forgotten. ‡ 3100 BC : Work begins on Stonehenge in England ‡ 2575 BC : Work begins on the Great Pyramid at Giza in Egypt ‡ 2000 BC : Bronze age culture ‡ 1200 BC : Greece enters a 400 year "Dark Age". cities abandoned.Timeline of World History ‡ 3500 BC : The wheel is used in Mesopotamia.

650 BC : Earliest coins appear 559 BC : Cyrus the Great becomes king and will lead Persia to form a great empire that will stretch from Egypt to India 431-404 BC : Peloponnesian War between Athens and Sparta 399 BC : Death of Socrates 386 BC : Plato starts "The Academy" in Athens 15 347 BC : Death of Plato ‡ ‡ ‡ ‡ .Timeline of World History ‡ ‡ ‡ ‡ ‡ 1100 BC : Phoenicians develop alphabetic script 1000 BC : Chinese develop gunpowder 776 BC : Olympic games start in Greece.

16 . The Greeks bring coinage into Egypt for the first time ‡ 44 BC : Julius Caesar assassinated ‡ 5 BC-6 AD : Jesus born ‡ AD : Anno Domini.Timeline of World History ‡ 343-339 BC : Aristotle tutor of Alexander the Great ‡ 335 BC : Aristotle starts "The Lyceum" in Athens ‡ 332 BC : Alexander the Great conquers Egypt. The number of years since the time of Jesus Christ ‡ ~ 30 AD : Jesus is crucified ‡ 550 AD : Persians use windmills to power irrigation pumps. ‡ 570 AD : Mohammad (PBUH) is born.

This desecration will be a rallying point for the Crusades to come. ‡ 1144 : Second Crusade started ‡ 1149 : Oxford University is founded in Oxford. In 1099 they succeed.Timeline of World History ‡ 710 : Mohammad Bin Qasim invades Sindh and Punjab through Indus River starting from Debel ‡ 1009 : An army led by Caliph al-Hakim destroys the church of the Holy Sepulchre in Jerusalem. ‡ 1024 : The Chinese issue the first paper money ‡ 1095 : Pope Urban II calls for the First Crusade to protect the Christian pilgrims from attack. England 17 .

Birth of Mughal Empire ‡ 1602 : United East India Company (Verenigde OostIndische Compagnie ).Timeline of World History ‡ 1206 : Genghis Khan leads the Mongol armies building the largest known land empire. ‡ 1526 : Babur invades India. The Communist Manifesto ‡ 1869 : Suez Canal opens ‡ 1903-04 : Russo-Japanese War 18 . a landmark in economic development (Spice trade) ‡ 1848 : Karl Marx and Fredrick Engels publish a little pamphlet. or the VOC founded. stretching from the Pacific Ocean to the Black Sea ‡ 1498 : Captain Vasco da Gama becomes the first European to travel to India via sea. This was the first multinational joint-stock company.

Timeline of World History ‡ 1914-1918 : Germany declares war on France starting the "war to end all wars". WW-I ‡ 1929-37 : US Great Depression ‡ 1939-45 : World War-II Emergence of Capitalists and Socialists blocks ‡ 1944 : Bretton Woods Accord : Birth of IMF ‡ 1947 : Division of Sub-Continent 19 .

‡ The United Nations Monetary Fund convened in Bretton Woods. New Hampshire. towards the end of World War II.S. the British Pound was the dominant world currency by which most currencies were compared. 20 . and thus damaged it s standing. France and 41 other allied nations. ‡ The Bretton Woods Accord established the policy of pegging currencies against the U.Bretton Woods Accord-1944 ‡ The Bretton Woods Accord was established in 1944. ‡ Up until WWII. with representatives from the United States. ‡ It set fixed exchange rates for major currencies and subsequently established the International Monetary Fund (IMF). dollar in order to stabilize the global economy. ‡ During World War II the Nazis undertook a major counterfeiting effort against the British Pound. Great Britain.

dollar from a failed currency after the stock market crash of 1929 to benchmark currency by which most other international currencies were compared. dollar to the price of gold at $35.Bretton Woods Accord-1944 ‡ In contrast. other major currencies were pegged to it and allowed to fluctuate no more than 1% on either side of the set standard. ‡ The Bretton Woods Accord governed currency relationships until the early 1970 s when a floating exchange rate system was adopted.S. ‡ The U.com) 21 . economy was thriving. ‡ The first element of the Bretton Woods Accord was to peg the U. using the Gold Standard. 2010 at www. When a currency s exchange rate would approach the limit on either side of this standard the respective nation s central bank would intervene to bring the exchange rate back into the accepted range. (TradersLog. dollar.S.S.00 an ounce.traderslog.S. WWII transformed the U. and the United States emerged as a world economic power. ‡ With this benchmark anchoring the U.

Example are Cuba. North Korea . Examples are USA. Germany etc (pal. 2010 at www. UK. ‡ The property is privately owned by individuals in a capitalistic society.com) An economic system in which the basic means of ‡ Socialism : production are primarily owned and controlled collectively. Japan. whereas. in socialistic societies it is state owned and controlled.authorstream. Libya.Capitalism Vs Socialism ‡ Capitalism : An economic and social system in which private individuals or business firms maximizes their profits by owning the means of production through a complex network of prices and markets.com) ‡ The ideology behind former is competition with priority on profit making with unregulated economy. Myanmar etc (pal. 2010 at www. Whereas.authorstream. on the other hand the ideology is cooperation with precedence for protection of society truly incorporating the concept of equality while regulating the economy. Canada. 22 . South Korea. usually by government under some system of central planning. France.

‡ Marx turned away from philosophy in his mid-twenties. whose works inspired the foundation of many communist regimes in the twentieth century. ‡ Marx sees the historical process as proceeding through a necessary series of modes of production. ‡ Marx's theory of historical materialism is centered around the idea that various forms of society rise and fall as they progress and develop on human productive power. towards economics and politics. ‡ He talks of different stages of human society as how it evolved step by step. ‡ He talks of economic evolution and materialism whereas prior Marx German philosophy was very idealistic. characterized by class struggle which then culminates in communism. 23 .Karl Marx Theory of Historical Materialism (1818-1883) ‡ Karl Marx is best known not as a philosopher but as a revolutionary communist.

‡ However Marx refused to speculate in detail about the nature of communism. and was not the realization of a predetermined moral ideal.Karl Marx ‡ Marx's economic analysis of capitalism in his famous series of writings.24 . ‡ The analysis of history and economics come together in Marx's prediction of the inevitable economic breakdown of capitalism. arguing that it would arise through historical processes. to be replaced by communism. the German philosophy revolved around idealist metaphysics advocated by Hegel in his philosophy. is based on his version of the labour theory of value that includes the analysis of capitalist profit as the extraction of surplus value from the exploited people. Das Capital. ‡ Prior Marx.

the originator of the human society. ‡ Hegal says that reasoning is becoming and has not become perfect. ‡ This Great Spirit is not the god but a force that pushes the non-materialistic force of human beings to interact with each other. where soul becomes separate from the body and becomes Great Spirit. Human beings have great potential of reasoning and when eventually human beings rational for reasoning will be realized so they will become perfect and will become part of Great Spirit. ‡ Great Spirit is also not brain but instead is the mental faculties and particularly the faculty of reasoning. 25 . the creator.Karl Marx ‡ Hegal philosophy talks of Great Spirit. ‡ This is also similar to Hinduism.

‡ Food is required for survival. ‡ Marx's theory of historical materialism says that one must understand the history of human society in the materialistic perspective. clothing and shelter.e. The German Ideology).Karl Marx ‡ Marx therefore developed the basic concept of historical materialism in his book. clothing is used for covering up and protecting from weather so as to avoid decease and shelter is required for living purposes. Ideology therefore needs to be questioned and needs to be get rid off as it allows stronger elements in the society to exploit the weaker segment of the society. "Die Deutsche Ideologie" (1846. ‡ Marx defined ideology as a set of ideas that people believe in. ‡ The basis of human society is the existence of the basic material needs i. it is termed as negative as it tilts people to agree on it. 26 . food.

Karl Marx ‡ Human beings fulfilled these basic needs by interacting and exploring the environment. ‡ They organized themselves into tribes and distributed the labour for increasing efficiency and share each other needs. ‡ This complexity gave rise to special cadre of people resulting into culture and traditions of a society. From here emerged the division of labour. 27 . ‡ Human beings then elaborated their needs and developed many wants leading to desires. ‡ As per Marx the more we have advanced from subsistence the more we have moved away from society and heading towards destruction. which in term made the division of labour more complex.

These are those relationships which one develops or has with his parents. values. colleagues and deals with love. ‡ Economic structure or relationship of Production. 28 . children. all those relationships of people to people which do not fall into the above two categories. ‡ Super structure or ideology and social consciousness.Karl Marx ‡ Karl Marx therefore identifies three forces of production as follows: ‡ Infrastructure. intimacy. ± Technology or techniques that have evolved over the period of time. affection. it is the relationship of people with people and relationship of people with things that come about either at the actual site of production or at the site where goods are being distributed or at that site when people are contesting and disputing for the acquisition of goods/products. family members. hatred and so on. which forms the basis of production and is used by a community to make goods so as to fulfill the materialistic needs of the society and constitutes following: ± Natural resources. ± Human beings themselves.

‡ It is because of these self destruct mechanisms that the earlier modes of production have become extinct and the human society is heading towards from the capitalist mode towards the last mode of production and that is the socialist mode of production. 29 . ‡ Accordingly he has divided the evolution of human society into six distinct phases known as modes of production.Karl Marx ‡ Based on the three forces of production Marx has advanced his theory of historical materialism. ‡ He describes that every mode of production has ingrained germs of destruction for itself.

Karl Marx ‡ Modes of Production ± The Primitive mode of Production ± Ancient mode of Production ± Germanic mode of Production ± Feudal mode of Production ± Capitalist mode of Production ± Socialist mode of Production ‡ Class (same type of economic resources) ± Haves ± Haves not ‡ Neo-Marxist Perspective 30 .

rubies. textiles. ‡ India internationally famous for cotton. Delhi. silk. 31 . sapphires. tortoise shells. Bombay etc. ‡ Ibn Batuta (14th century) described teeming markets of big cities. carpets. trade and industry since ancient times due stable political & economic policies mainly because of Muslim rulers. Lahore. ivory. pearls.Indian Trade ‡ General prosperity. ‡ During the Mughal era the European traders used to employ local artisans at the manufacturing centres set up by them at various places in India. Hardwood furniture with carvings. ornamental work on diamonds.

sugar. spices. precious stones. wool ‡ Exports were . porcelain. dry fruits. perfumes and scented oils. knives. gold-embroidered cloth caps. glassware. bronze.Indian Trade Abundance of rice and sugar Well maintained roads River routes on Indus and Ganges India s exports far exceeded her imports both in number and volume ‡ Imports were . ivory. scissors. wines. silk. clay pots. iron. raw silk. sandalwood. horses. diamonds & other precious gems and coconuts ‡ ‡ ‡ ‡ 32 . velvets. indigo. oils. satin. guns. pans.

‡ Cambay was also home to an affluent mercantile community. ‡ The Multanis who were Hindus and the Khurasanis who were Muslim foreigners controlled the trade with Central and West Asia. Many of these Multanis and Khurasanis settled in Delhi where they lived luxurious lives. 33 .Indian Trade ‡ 300 ports to facilitate the movement of goods ‡ Shipbuilding industry flourished in coastal towns ‡ The Gujarati and Marwari businessmen who controlled the trade between the coastal towns and North India were extremely wealthy and spent large sums for the construction of temples.

‡ Not only did it cripple the indigenous manufactures. . horses. The export of Indian textiles to England was totally banned. from England. ‡ The victory of the English over the Nawab of Bengal at the Battle of Plassey in 1757 marked a turning point in the fortunes of the country. ‡ The Company increasingly monopolised the foreign trade in India thereby reducing the mercantile community to bankruptcy. ‡ It prevented merchants from Asian countries from coming to the eastern provinces for trading purposes.Decline in Indian Trade ‡ The rise of the British East India Company in the mid 18th century dealt a fatal blow to the prosperity of the country. ‡ The Company imposed heavy duties on both imports and exports. but also it started importing various items such as cloth. 34 utensils. etc.

. the Central American Free Trade Agreement was signed. It includes the United States and the Dominican 35 Republic. ‡ 2002: EC was transformed into the European Union (EU). ‡ 1994 : The North American Free Trade Agreement (NAFTA) took effect ‡ 1994 : The GATT (General Agreement on Tariffs & Trade) Marrakech Agreement specified formation of the WTO. through introducing the Euro ‡ 2007 : EC thus created this way a real single market between 13 member states ‡ 2005. ‡ 1995 : World Trade Organization (WTO) was created to facilitate free trade.Time Line ‡ 1992 : European Union lifted barriers to internal trade in goods and labour.World . which accomplished the Economic and Monetary Union (EMU) in 2002. by mandating mutual Most Favoured Nation (MFN) trading status between all signatories.

They have a small catering business. ‡ Work : Work that is part of your job. ‡ Company : A commercial organization such as company. After doing his MBA. ‡ Responsibility : Something that concerns a particular person or organization. ‡ Important Matters ‡ a commercial or industrial enterprise and the people who constitute it ‡ the activity of providing goods and services involving financial. It s been a pleasure doing business with you. shop/store or factory. My private life is non of your business. Is the trip to Rome business or pleasure? The amount of work done by a company. Business was bad.Business-Definition ‡ Trade : The activity of making. She has set up in business as a hairdresser. selling or supplying goods or services for money. Her job was to drum up (increase) business. work. or trade in which a person is engaged 36 . It is the business of the police to protect the community. buying. commercial and industrial aspects ‡ The occupation. The business was booming. he went into business with his brother.

Business Setup in Pakistan ‡ There are three main forms of business in Pakistan. Sole Proprietorship b. Company incorporation (Local & Foreign) 37 . Partnership c. defined as follows: a.

No formal procedure or formality is required for setting up a sole proprietary concern in Pakistan nor prior registration of it is required from any government authority or department. 38 . an individual on his/her own account carries out the business or profession.Sole Proprietorship In a Sole Proprietorship business in Pakistan. The business assets of the sole proprietor are legally treated as his own.

However. Also the individual income of the partners is subject to income tax at the usual rates. 39 . partnerships are classified into: ± Registered firms and Un-registered firms.Partnership ‡ A Partnership in Pakistan is a business entered into by a formal agreement between two or more persons or corporations carrying on a business in common. a partner s right to a share of the partnership income may be received in trust for another person. income tax is levied on the firm s income and the partners are not liable to pay tax on the shares of profit received from the unregistered firm(s). The interest of a partner is transferable only with the prior consent of the other partner(s). The capital for a Partnership is provided by the partners who are liable for the total debts of the firms and who share the profits and losses of the business concern according to the terms of the partnership agreement. ‡ For unregistered firms. ‡ Partnership in Pakistan (other than banking companies) are generally limited in size to twenty partners. ‡ For taxation purposes in Pakistan. ‡ The income of the registered firm is subject to super tax before distribution to the partners.

corporations proprietorships and partnerships.Corporation ‡ The most common form of business organization ‡ Chartered by a state ‡ Given many legal rights as an entity separate from its owners ‡ Incorporation. the process of becoming a corporation ± Gives the company separate legal standing from its owners ± Protects those owners from being personally liable in the event that the company is sued ± Provides companies with a more flexible way to manage their ownership structure ± Different tax implications for corporations ‡ In these respects. differ from sole 40 .

1984 ‡ Can have share capital or can be formed without share capital ‡ Any three or more persons associated for any lawful purpose may. form a public company ‡ Any one or more persons so associated may. 1984 in respect of registration.Company ‡ A legal entity formed under the Companies Ordinance. by subscribing their names to a memorandum of association and complying with the requirements of Companies Ordinance. form a private company ‡ Limited Company ± Company Limited by Shares ± Company Limited by Guarantee ‡ Unlimited Company 41 . in like manner.

Company Limited by Shares ‡ The liabilities of its members in a Company Limited by Shares are limited to the extent of their shares in the paid-up capital of the company. These companies may further be classified as Public Limited Companies and Private Limited Companies ‡ Public Limited Companies in Pakistan can be formed by at least three persons by subscribing their names to the Memorandum and Articles of Association of the company. If only one member forms a Private Company in Pakistan. 42 . ‡ Private Limited Companies in Pakistan as above said may be formed by one or more persons by subscribing their names to the Memorandum and Articles of Association of the company. it is called a Single Member Company. The word Limited is used as the last word of its name.

‡ A Company Limited by Guarantee is usually formed on a non profit basis . 43 .Company Limited by Guarantee ‡ Company Limited by Guarantee in Pakistan means a company having the liability of its members limited by memorandum to such amounts as the members may respectively undertake to contribute to the assets of the company in the event of its winding up. ‡ Companies Limited by Guarantee in Pakistan use the words (Guarantee) Limited as the last words of their names.

Unlimited Company in Pakistan ‡ Unlimited Company means a company having unlimited liability of its members 44 .

if any ± Limits the number of its members to fifty not including persons who are in the employment of the company ± Prohibits any invitation to the public to subscribe for the shares 45 . by its articles. ± Restricts the right to transfer its shares.Private company ‡ A company which.

Public company ‡ A company which has issued securities through an offering (IPO). and which are now traded on the open market ‡ Means a company which is not a private company 46 .

or Holding company ‡ A company shall be deemed to be another's holding company if that other is its subsidiary 47 .Subsidiary ‡ A company or body corporate shall be deemed to be a subsidiary of another if that other company or body corporate directly or indirectly controls. beneficially owns or holds more than fifty per cent of its voting securities or otherwise has power to elect and appoint more than fifty per cent of its directors.

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