The Key to Successful International Marketing

The Key to Successful International Marketing

The Key to Successful International Marketing is adaptation to the environmental differences that exist from one market to another. Adaptation is a conscious effort on the part of the international marketer to anticipate the influences of both the foreign and domestic uncontrollable environments on a marketing mix and then adjust the marketing mix to minimize the effects. The primary obstacle to success in international marketing is a person’s self-reference criterion (SRC) in making decisions, an unconscious reference to own cultural values, experiences, and knowledge as a basis for decisions. The SRC impedes the ability to assess a foreign market in its true light. When confronted with a set of facts, we react spontaneously on the basis of knowledge assimilated over a lifetime. We seldom stop to think about a reaction, we react. Thus, when faced with a problem in another culture. The tendency is to react instinctively and refer to the SRC for solution. The reaction, however, is based on meanings, values, symbols, and behavior relevant to our own culture and usually different from those of the foreign culture. Such decisions are generally not valid.

To illustrate the impact of the SRC, consider misunderstandings that can occur as the result of the meaning of “personal space” between people of different cultures. In the United States, unrelated individuals keep a certain physical distance between themselves and others when talking or in groups. We do not consciously think about that distance. Your SRC can prevent you from being aware that there are cultural differences or from recognizing the importance of those differences. Thus, you either fail to recognize the need to take action, you discount the cultural differences that exist among countries, or you react to a situation in the way offensive to your hosts. The most effective way to control the influence of the SRC is to recognize its existence in our behavior. While it’s almost impossible for someone to learn every culture in depth and to be sensitive to differences and to ask questions when doing business with another culture can avoid many of the mistakes of international marketing. To avoid errors in business decisions, it’s necessary to make a cross-cultural analysis isolating the SRC influences. The following steps are suggested as a framework for such an analysis............

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The Key to Successful International Marketing

The Key to Successful International Marketing is adaptation to the environmental differences that exist from one market to another. Adaptation is a conscious effort on the part of the international marketer to anticipate the influences of both the foreign and domestic uncontrollable environments on a marketing mix and then adjust the marketing mix to minimize the effects. The primary obstacle to success in international marketing is a person’s self-reference criterion (SRC) in making decisions, an unconscious reference to own cultural values, experiences, and knowledge as a basis for decisions. The SRC impedes the ability to assess a foreign market in its true light. When confronted with a set of facts, we react spontaneously on the basis of knowledge assimilated over a lifetime. We seldom stop to think about a reaction, we react. Thus, when faced with a problem in another culture. The tendency is to react instinctively and refer to the SRC for solution. The reaction, however, is based on meanings, values, symbols, and behavior relevant to our own culture and usually different from those of the foreign culture. Such decisions are generally not valid.

To illustrate the impact of the SRC, consider misunderstandings that can occur as the result of the meaning of “personal space” between people of different cultures. In the United States, unrelated individuals keep a certain physical distance between themselves and others when talking or in groups. We do not consciously think about that distance. Your SRC can prevent you from being aware that there are cultural differences or from recognizing the importance of those differences. Thus, you either fail to recognize the need to take action, you discount the cultural differences that exist among countries, or you react to a situation in the way offensive to your hosts. The most effective way to control the influence of the SRC is to recognize its existence in our behavior. While it’s almost impossible for someone to learn every culture in depth and to be sensitive to differences and to ask questions when doing business with another culture can avoid many of the mistakes of international marketing. To avoid errors in business decisions, it’s necessary to make a cross-cultural analysis isolating the SRC influences. The following steps are suggested as a framework for such an analysis.

First is to define the business problem or goal in terms of the home-country cultural traits, habits, or norms. Second is defined the business problem or goal in terms of the foreign cultural traits, habits, or norms. Make no value judgments. The third step is isolated the SRC influence in the problem and examine it carefully to see how it complicates the problem. The fourth step is redefined the problem without the SRC influence and solve for the optimum business goal situation.

This approach requires an understanding of the culture of each foreign market as well as one’s own culture. Surprisingly, understanding one’s own culture may require additional study since much of the cultural influence on market behavior remains at a subconscious level and isn’t clearly defined.

References:

Philip R. Cateora, International Marketing, 6^th. The Irwin Series in Marketing.

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Environmental Adjustment of International marketing

Environmental Adjustment Needed

In order to adjust and adapt a marketing program to foreign markets, marketers must be able to interpret effectively the influence and impact of each of the uncontrollable environmental elements on the marketing plan for each foreign market in which they hope to do business. In a broad sense, the uncontrollable elements constitute the culture, the difficulty facing the marketer in adjusting to the culture lies in recognizing their impact. In a domestic market the reaction to much of the uncontrollables impact on the marketer’s activities is automatic. We are generally unaware of the various cultural influences that fill our lives. We react in a manner acceptable to our environment. The experiences we have gained throughout life have become second nature and serve as the basic for our behavior. The task of cultural adjustment is perhaps the most challenging and important one confronting international marketers. They must adjust their marketing efforts to cultures to which they are not attuned. In dealing with unfamiliar markets, marketers must be aware of the frames of reference they are using in making their decisions or evaluating the potential of a market, since “adjustment are derived from experience which is the result of the enculturative process.” Once frames of reference are established in human beings, they become important factors in determining or modifying our reactions to situations we will face later, especially if the experience for which precedence in accustomed behavior is lacking.

When a marketer operates in other cultures, marketing attempts nay fall because of unconscious responses based on frames of reference acceptable in one’s own culture but unacceptable in different surroundings. Unless special efforts are made to determine local cultural meanings for every market, the marketer is likely to overlook the significance of certain behaviors or activities and proceed with plans that result in a negative or unwanted response............

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Environmental Adjustment Needed

In order to adjust and adapt a marketing program to foreign markets, marketers must be able to interpret effectively the influence and impact of each of the uncontrollable environmental elements on the marketing plan for each foreign market in which they hope to do business. In a broad sense, the uncontrollable elements constitute the culture, the difficulty facing the marketer in adjusting to the culture lies in recognizing their impact. In a domestic market the reaction to much of the uncontrollables impact on the marketer’s activities is automatic. We are generally unaware of the various cultural influences that fill our lives. We react in a manner acceptable to our environment. The experiences we have gained throughout life have become second nature and serve as the basic for our behavior. The task of cultural adjustment is perhaps the most challenging and important one confronting international marketers. They must adjust their marketing efforts to cultures to which they are not attuned. In dealing with unfamiliar markets, marketers must be aware of the frames of reference they are using in making their decisions or evaluating the potential of a market, since “adjustment are derived from experience which is the result of the enculturative process.” Once frames of reference are established in human beings, they become important factors in determining or modifying our reactions to situations we will face later, especially if the experience for which precedence in accustomed behavior is lacking.

When a marketer operates in other cultures, marketing attempts nay fall because of unconscious responses based on frames of reference acceptable in one’s own culture but unacceptable in different surroundings. Unless special efforts are made to determine local cultural meanings for every market, the marketer is likely to overlook the significance of certain behaviors or activities and proceed with plans that result in a negative or unwanted response.

Cultural conditioning is like iceberg, we are not aware of nine tenths of it. In any study of the market systems of different peoples, their political and economic structures, religions, and other elements of culture, foreign marketers must constantly guard against measuring and assessing the markets against the fixed values and assumptions of their own cultures. They must take specific steps to make themselves aware of the home-cultural reference in their analyses and decision making.

References:

Philip R. Cateora, International Marketing, 6^th. The Irwin Series in Marketing.

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The Marketing Controllables

MARKETING CONTROLLABLES

You know, the marketing controllables represents the area under control of the marketing manager. The successful manager constructs a marketing program designed for optimal adjustment to the uncertainty of the business climate. Mmm… assuming the necessary overall corporate resources, the marketing manager blends price, product, promotion, and channels-of-distribution activities to capitalize on anticipated demand. The controllable elements can be altered in the long run and, usually, in the short run, to adjust to changing market conditions or corporate objectives............

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MARKETING CONTROLLABLES

You know, the marketing controllables represents the area under control of the marketing manager. The successful manager constructs a marketing program designed for optimal adjustment to the uncertainty of the business climate. Mmm… assuming the necessary overall corporate resources, the marketing manager blends price, product, promotion, and channels-of-distribution activities to capitalize on anticipated demand. The controllable elements can be altered in the long run and, usually, in the short run, to adjust to changing market conditions or corporate objectives.

Represented by the outer circles surrounding market controllables are the levels of uncertainty created by the domestic and foreign environments. So, although the marketer can blend a marketing mix from the controllable elements, the uncontrollables are just that and must be actively adapted to since their influence determines the ultimate outcome of the marketing effort.

References:

Philip R. Cateora, International Marketing, 6^th. The Irwin Series in Marketing.

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INSIDE INTERNATIONAL MARKETING

INTERNATIONAL MARKETING DEFINED

International marketing is the performance, in more than one nation, of business activities that direct the flow of a company’s goods and services to consumers of users for a profit. The only difference in the definition of domestic marketing and international marketing activities take place in more than one country. This apparently minor difference accounts for the complexity and diversity found in international marketing operations. Marketing concepts, processes, and principles are universally applicable, and the marketer’s task is the same whether doing business in Dimebox, Texas, or Dar es Salaam, Tanzania. Business’ goal is to make a profit by promoting, pricing, and distributing products for which there is a market. If this is the case, what is the difference between domestic and international marketing?

The answer lies not with difference concepts of marketing but with the environment within which marketing plans must be implemented. The uniqueness of foreign which marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. In short, international marketing is different from domestic marketing because of the different cultural influences involved and their potential impact on the successful implementation of marketing programs.

Competition, legal restraints, government controls, weather, fickle consumers, and any number of other uncontrollable elements can, and frequently do affect the profitable outcome of good, sound marketing plans. Generally speaking, the marketer can’t control or influence these uncontrollable elements but instead must adjust or adapt to them in a manner consistent with a successful outcome. What makes marketing interesting is the challenge of molding the controllable elements of marketing of marketing decisions, such a product, price, promotion, and distribution within the framework of the uncontrollable elements of the marketplace, such competition, politics, laws, consumer behavior, level of technology, and so forth in such a way that marketing objectives are achieved. Even though marketing principles and concepts are universally applicable, the environment within which the marketer must implement marketing plans can change dramatically from country to country. The difficulties created by different environments are the international marketer’s primary concern............

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INTERNATIONAL MARKETING DEFINED

International marketing is the performance, in more than one nation, of business activities that direct the flow of a company’s goods and services to consumers of users for a profit. The only difference in the definition of domestic marketing and international marketing activities take place in more than one country. This apparently minor difference accounts for the complexity and diversity found in international marketing operations. Marketing concepts, processes, and principles are universally applicable, and the marketer’s task is the same whether doing business in Dimebox, Texas, or Dar es Salaam, Tanzania. Business’ goal is to make a profit by promoting, pricing, and distributing products for which there is a market. If this is the case, what is the difference between domestic and international marketing?

The answer lies not with difference concepts of marketing but with the environment within which marketing plans must be implemented. The uniqueness of foreign which marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. In short, international marketing is different from domestic marketing because of the different cultural influences involved and their potential impact on the successful implementation of marketing programs.

Competition, legal restraints, government controls, weather, fickle consumers, and any number of other uncontrollable elements can, and frequently do affect the profitable outcome of good, sound marketing plans. Generally speaking, the marketer can’t control or influence these uncontrollable elements but instead must adjust or adapt to them in a manner consistent with a successful outcome. What makes marketing interesting is the challenge of molding the controllable elements of marketing of marketing decisions, such a product, price, promotion, and distribution within the framework of the uncontrollable elements of the marketplace, such competition, politics, laws, consumer behavior, level of technology, and so forth in such a way that marketing objectives are achieved. Even though marketing principles and concepts are universally applicable, the environment within which the marketer must implement marketing plans can change dramatically from country to country. The difficulties created by different environments are the international marketer’s primary concern.

THE INTERNATIONAL MARKETING TASK

We learn about how the marketer decisions effected by the international marketing task. In this case the international marketer’s task is more complicated than that of the domestic marketer because the international marketer must deal with at least two levels of uncontrollable uncertainty instead of one. Uncertainty is created by the uncontrollable elements of all business environments, but each foreign country in which a company operates adds it own unique uncontrollable. Thus the more foreign markets in which a company operates, the greater the variety of foreign environmental uncontrollable there are to contend with. Frequently, a solution to a problem in country A is not applicable to a problem in country B.

References:

Philip R. Cateora, International Marketing, 6^th. The Irwin Series in Marketing.

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Financial Institutions

INSIDE FINANCIAL INSTITUTIONS

Classification of Financial Institutions

Financial Institutions may be grouped in a variety of different ways. One of the most important distinctions is between depository institutions (commercial banks, savings and loan associations, savings banks and credit union); contractual institutions (insurance companies and pension funds); and investment institutions (investment companies money market funds, and real estate investment trusts). Depository institutions derive the bulk of their loanable funds from deposit accounts sold to the public; contractual institutions attract funds by offering legal contracts to protect the saver against risk (such as an insurance policy or retirement account). Investment institutions sell shares to the public and invest the proceeds in stocks, bonds, and other assets.

Portfolio Decisions

The management of a financial institution is called on daily to make portfolio decisions. That is, deciding what financial assets to buy or sell. A number of factors affect these critical decisions. Mmm… for example, the relative rate of return and risk attached to different financial assets will affect the composition of the institution’s portfolio. Obviously, if management is interested in maximizing profits and has minimal aversion to risk, it will tend to pursue the highest yielding financial assets available, such as corporate bonds and stocks. A more risk-averse institution, on the other hand, is likely to surrender some yield in return for the greater safety available from acquiring government bonds and high-quality money market instruments.

The cost, volatility, and maturity of incoming funds provided by surplus-budget units also has a significant impact on the financial assets acquired by financial institutions. Commercial banks, for example, derive a substantial portion of their funds from checking accounts, which are relatively inexpensive but highly volatile. Such an institution will tend to concentrate its lending activities in short and medium term loans to avoid an embarrassing shortage of cash (liquidity). On the other hand, a financial institution such as pension fund, which receives a stable and predictable inflow of savings, is largely freed from concern over short-term liquidity needs. It’s able to invest heavily in long-term financial assets held with liabilities taken on, is an important guide for choosing those financial assets that a financial institution will hold in its portfolio............

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INSIDE FINANCIAL INSTITUTIONS

Classification of Financial Institutions

Financial Institutions may be grouped in a variety of different ways. One of the most important distinctions is between depository institutions (commercial banks, savings and loan associations, savings banks and credit union); contractual institutions (insurance companies and pension funds); and investment institutions (investment companies money market funds, and real estate investment trusts). Depository institutions derive the bulk of their loanable funds from deposit accounts sold to the public; contractual institutions attract funds by offering legal contracts to protect the saver against risk (such as an insurance policy or retirement account). Investment institutions sell shares to the public and invest the proceeds in stocks, bonds, and other assets.

Portfolio Decisions

The management of a financial institution is called on daily to make portfolio decisions. That is, deciding what financial assets to buy or sell. A number of factors affect these critical decisions. Mmm… for example, the relative rate of return and risk attached to different financial assets will affect the composition of the institution’s portfolio. Obviously, if management is interested in maximizing profits and has minimal aversion to risk, it will tend to pursue the highest yielding financial assets available, such as corporate bonds and stocks. A more risk-averse institution, on the other hand, is likely to surrender some yield in return for the greater safety available from acquiring government bonds and high-quality money market instruments.

The cost, volatility, and maturity of incoming funds provided by surplus-budget units also has a significant impact on the financial assets acquired by financial institutions. Commercial banks, for example, derive a substantial portion of their funds from checking accounts, which are relatively inexpensive but highly volatile. Such an institution will tend to concentrate its lending activities in short and medium term loans to avoid an embarrassing shortage of cash (liquidity). On the other hand, a financial institution such as pension fund, which receives a stable and predictable inflow of savings, is largely freed from concern over short-term liquidity needs. It’s able to invest heavily in long-term financial assets held with liabilities taken on, is an important guide for choosing those financial assets that a financial institution will hold in its portfolio.

Decision on what financial assets to acquire and what sources of funds to draw upon are also influenced by the size of the individual financial institution. Larger institutions frequently can take advantage of greater diversification in their sources and uses of funds. This means that the overall risk of a portfolio of securities can be reduced by acquiring securities from many different borrowers. Similarly, a larger financial institution can contact a broader range of savers and achieve greater stability in its incoming flows of funds. At the same time, through economies of scale (size), larger financial institutions can often sell financial services at lower cost per unit and pass those cost savings along to their customers.

Finally, regulations and competition, two external forces, play major roles in shaping the sources and uses of funds for a financial institution. Because they hold the bulk of the public’s savings and are so crucial to economic growth and investment activity, financial intermediaries are among the most heavily regulated of all business firms. Commercial banks are prohibited from investing in low-quality or highly volatile loans and securities in many countries. Insurance companies and pension funds must restrict any security purchases to those a “prudent person” would most likely choose. Most regulations in this sector pertain to the assets that can be acquired, the adequacy of net worth, and the services that can be offered to the public. Such regulations are designed to promote competition and ensure the safety of the public’s funds.

References:

Peter S. Rose, 2003, Money and Capital Market: Financial Institution and Instruments, A Global Market Place, 8 th. Irwin Mc Graw Hill.

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The Evolution of Financial Transactions

THE EVOLUTION OF FINANCIAL TRANSACTIONS

About Financial Transactions

You know, Financial systems are never static. They change constantly in response to shifting demands from the public, the development of new technology, and changes in laws and regulations. So, Competition in the financial marketplace forces financial institutions to respond to public need by developing better and more convenient financial service. Over time, the global system of financial markets has evolved from simple to more complex ways of carrying out financial transactions. The growth of industrial centers with enormous capital investment needs and the emergence of a huge middle-class of savers have played major roles in the gradual evolution of the financial system.

Whether simple or complex, all financial systems perform at least one basic function. They move scarce funds from those who save and lend or surplus or budget unit to those who wish to borrow and invest (deficit-budget unit). In the process, money is exchanged for financial assets. However, the transfer of funds from saver to borrowers can be accomplished in at least three different ways. We label these methods of funds transfer: (1) direct finance, (2) semi direct finance, and (3) indirect finance. Most financial systems have evolved gradually over time toward greater reliance on indirect finance.

Direct Finance

With the direct financing technique, borrower and lender meet each other and exchange funds in return for financial assets without the help for a third party to bring them together. You engage in direct finance when you borrow money from a friend and give him or her your IOU, or when you purchase stocks or bonds directly from the company issuing them. We usually call the claims arising from direct finance primary securities because they flow directly from the borrower to the ultimate lender or funds.

Direct finance is the simplest method or carrying out financial transactions. However, it has a number of serious limitations. For one thing, both borrower and lender must desire to exchange the same amount of funds at the same time. More important, the lender must be willing to accept the borrower’s IOU, which may be quite risky or slow to mature. Clearly, there must be coincidence of wants between surplus and deficit budget unit in terms of the amount and form of a loan, without that fundamental coincidence, direct finance breaks down.

Another problem is that both lender and borrower must frequently incur substantial information costs simply to find each other. The borrower may have to contact many lenders before finding the one surplus budget unit with just the right amount of funds and a willingness to take on the borrower’s IOU. Not surprisingly, direct finance soon gives way to other methods of carrying out financial transactions as money and capital markets develop............

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THE EVOLUTION OF FINANCIAL TRANSACTIONS

About Financial Transactions

You know, Financial systems are never static. They change constantly in response to shifting demands from the public, the development of new technology, and changes in laws and regulations. So, Competition in the financial marketplace forces financial institutions to respond to public need by developing better and more convenient financial service. Over time, the global system of financial markets has evolved from simple to more complex ways of carrying out financial transactions. The growth of industrial centers with enormous capital investment needs and the emergence of a huge middle-class of savers have played major roles in the gradual evolution of the financial system.

Whether simple or complex, all financial systems perform at least one basic function. They move scarce funds from those who save and lend or surplus or budget unit to those who wish to borrow and invest (deficit-budget unit). In the process, money is exchanged for financial assets. However, the transfer of funds from saver to borrowers can be accomplished in at least three different ways. We label these methods of funds transfer: (1) direct finance, (2) semi direct finance, and (3) indirect finance. Most financial systems have evolved gradually over time toward greater reliance on indirect finance.

Direct Finance

With the direct financing technique, borrower and lender meet each other and exchange funds in return for financial assets without the help for a third party to bring them together. You engage in direct finance when you borrow money from a friend and give him or her your IOU, or when you purchase stocks or bonds directly from the company issuing them. We usually call the claims arising from direct finance primary securities because they flow directly from the borrower to the ultimate lender or funds.

Direct finance is the simplest method or carrying out financial transactions. However, it has a number of serious limitations. For one thing, both borrower and lender must desire to exchange the same amount of funds at the same time. More important, the lender must be willing to accept the borrower’s IOU, which may be quite risky or slow to mature. Clearly, there must be coincidence of wants between surplus and deficit budget unit in terms of the amount and form of a loan, without that fundamental coincidence, direct finance breaks down.

Another problem is that both lender and borrower must frequently incur substantial information costs simply to find each other. The borrower may have to contact many lenders before finding the one surplus budget unit with just the right amount of funds and a willingness to take on the borrower’s IOU. Not surprisingly, direct finance soon gives way to other methods of carrying out financial transactions as money and capital markets develop.

Semidirect Finance

Early in the history of most financial systems, a new form of financial transaction called semidirect finance appears. Some individuals and business firms become securities brokers and dealers whose essential function is to bring surplus and deficit budget units together, thereby reducing information costs.

We must distinguish here between a broker and a dealer in securities. A broker is merely an individual or financial institution who provides information concerning possible purchases and sales of securities. Either a buyer or a seller of securities may contact a broker, whose job is simply to bring buyer and sellers together. A dealer also serves as an intermediary between buyers and sellers, but the dealer actually acquires the seller’s securities in the hope of marketing them at a later time at a favorable price. Dealers take a “position of risk” because, by purchasing securities outright for their own portfolios, they are subject to losses if those securities decline in value.

Semidirect finance is an improvement over direct finance in a number of ways. It lowers the search (information) costs for participants in the financial markets. Frequently, a dealer will split up a large issue of primary securities into smaller units affordable by even buyers of modest means and, thereby, expand the flow of savings into investment. In addition, brokers and dealers facilitate the development of secondary markets in which securities can be offered for resale.

Despite the important contribution of brokers and dealers to the functioning of the global financial system, the semidirect finance approach is not without its limitations. The ultimate lender still winds up holding the borrower’s securities, and, therefore, the lender must be willing to accept the risk and maturity characteristics of the borrower’s IOU. There still must be a fundamental coincidence of wants and needs between surplus and deficit budgeted units for semidirect financial transactions to take place.

Indirect Finance

The limitations of both direct and semidirect finance stimulated the development of indirect finance carried out with the help of financial intermediaries. Financial intermediaries active in today’s global markets include commercial banks, insurance companies, credit unions, finance companies, savings and loan associations, saving banks, pension funds, mutual funds, and similar organizations.

The secondary securities issued by financial intermediaries include such familiar financial instruments as checking and savings accounts, life insurance policies, annuities, and shares in a mutual fund. Moreover, the majority of secondary securities can be acquired in small denominations, affordable by savers of limited means. For the most part, secondary securities are liquid and, therefore, can be converted quickly into cash with little risk of significant loss.

Financial intermediaries accept primary securities from those who need credit and, in doing so, take on financial assets that many savers, especially those with limited funds and limited knowledge of the markets, would find unacceptable. Financial intermediaries overcome inefficiencies or frictions in the financial marketplace and reduce the cost to society of moving information and wealth among households, businesses, and governments, providing access to economies of scale that would otherwise not be available to many units in the economy. Financial intermediaries improve the real world efficiency of the money and capital markets in allocating the daily flow of capital through the global marketplace toward its best possible uses.

References:

Peter S. Rose, 2003, Money and Capital Market: Financial Institution and Instruments, A Global Market Place, 8^th. Irwin Mc Graw Hill.

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Inside Financial Assets

INSIDE FINANCIAL ASSETS

The Creation of Financial Assets

In this post, I’ll tell about financial assets. First step, do you know what a financial asset is? Let me tell you, it is a claim against the income of business firm, household, or unit of government, and represented usually by certificate, receipt, computer record file, or other legal document, and usually created by or related to the lending of money. Mmmm… familiar examples include stock, bonds, insurance policies, futures contracts, and deposits held in a bank or credit union.

Characteristics of financial assets

Financial assets do not provide a continuing stream of services to their owners as a home, an automobile, mmmm… or a washing machine would do. So what I mean is these assets are sought after because they promise future return to their owners and serve as a store of value or that is mean these assets is a purchasing power.

A number of other features make financial assets unique, yeah is right, they cannot be depreciated because they do not wear out like physical goods. Moreover, their physical condition or form usually is not relevant in determining their market value (price). A stock certificate is not more or less valuable, mmm… for example, because of the size or quality of paper it may be printed on because it may be frayed around the edges, or may be because of the type and format of the computer file in which it may appear.

Because financial assets are generally represented by a piece of paper, I mean a certificate or contract or by information stored in a computer, they have little or no value as commodity and their cost of transportation and storage is low. Indeed, the cost of the storage and transfer of funds and other bits of financial information declined sharply in the 1980s and 1990s due to rapid advances in computer and electronic technology, causing financial assets to grow faster than world trade and faster than the growth of the economic system as a whole. Finally, financial assets are fungible, I mean they can easily be changed in form and substituted for other assets the holder desires.

Different Kinds of Financial Assets

Although there are thousands of different financial assets, I assumed they generally fall into four categories: money, equities, debt securities, and derivatives. Any financial asset that is generally accepted in payment for purchases of goods and services is money. Thus checking accounts and currency are financial assets serving as payment media and, therefore, are forms of money. Equities or I can say more commonly known as stock. Equities represent ownership shares in a business firm and, as such, are claims against the firm’s profits and against proceeds from the sale of its assets. We usually further subdivide equities into common stock, which entitles its holder to vote for the members of a firm’s board of directors and, therefore, determine company policy, and preferred stock, which normally carries no voting privileges but does entitle its holder to a fixed share of the firm’s net earnings ahead of its common stockholders............

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INSIDE FINANCIAL ASSETS

The Creation of Financial Assets

In this post, I’ll tell about financial assets. First step, do you know what a financial asset is? Let me tell you, it is a claim against the income of business firm, household, or unit of government, and represented usually by certificate, receipt, computer record file, or other legal document, and usually created by or related to the lending of money. Mmmm… familiar examples include stock, bonds, insurance policies, futures contracts, and deposits held in a bank or credit union.

Characteristics of financial assets

Financial assets do not provide a continuing stream of services to their owners as a home, an automobile, mmmm… or a washing machine would do. So what I mean is these assets are sought after because they promise future return to their owners and serve as a store of value or that is mean these assets is a purchasing power.

A number of other features make financial assets unique, yeah is right, they cannot be depreciated because they do not wear out like physical goods. Moreover, their physical condition or form usually is not relevant in determining their market value (price). A stock certificate is not more or less valuable, mmm… for example, because of the size or quality of paper it may be printed on because it may be frayed around the edges, or may be because of the type and format of the computer file in which it may appear.

Because financial assets are generally represented by a piece of paper, I mean a certificate or contract or by information stored in a computer, they have little or no value as commodity and their cost of transportation and storage is low. Indeed, the cost of the storage and transfer of funds and other bits of financial information declined sharply in the 1980s and 1990s due to rapid advances in computer and electronic technology, causing financial assets to grow faster than world trade and faster than the growth of the economic system as a whole. Finally, financial assets are fungible, I mean they can easily be changed in form and substituted for other assets the holder desires.

Different Kinds of Financial Assets

Although there are thousands of different financial assets, I assumed they generally fall into four categories: money, equities, debt securities, and derivatives. Any financial asset that is generally accepted in payment for purchases of goods and services is money. Thus checking accounts and currency are financial assets serving as payment media and, therefore, are forms of money. Equities or I can say more commonly known as stock. Equities represent ownership shares in a business firm and, as such, are claims against the firm’s profits and against proceeds from the sale of its assets. We usually further subdivide equities into common stock, which entitles its holder to vote for the members of a firm’s board of directors and, therefore, determine company policy, and preferred stock, which normally carries no voting privileges but does entitle its holder to a fixed share of the firm’s net earnings ahead of its common stockholders.

Now, we learn about debt securities include such familiar instruments as bonds, notes, accounts payable, and savings deposits. Mmm… legally, these financial assets entitle their holders to a priority claim over the holders of equities to the assets and income of an individual, business firm, or unit of government. Usually, that claim is fixed in amount and time (maturity) and, depending on the terms of the contract or indenture that accompanies most dept securities, may be backed up by the pledge of specific assets as collateral. Financial analysts usually divide debt securities into two broad classes. Two of them are negotiable, which cannot legally be transferred to another party. Passbook savings accounts and U. S. savings bonds are good examples of nonnegotiable (marketable) debt instrument such as Treasury bonds and corporate notes also bonds.

Finally, derivatives are among the newest kinds of financial assets. These unique financial claims have a market value that is tied to or influenced by the value or return on a related financial instrument, such as stocks (equities) and bonds, notes, and other loans, I mean debt securities. Examples include futures contracts, options, and swaps. As we will see in future chapters, these particular financial assets are often employed to manage risk in the instruments to which they are tied or related.

References:

Peter S. Rose, 2003, Money and Capital Market: Financial Institution and Instruments, A Global Market Place, 8^th. Irwin Mc Graw Hill.

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Financial System In Perspective

Financial System In Perspective

Because now, I writing statement about financial system, so I post about financial system. So Enjoy it. The financial system is the mechanism through which loanable funds reach borrowers. Through the operation of the financial market, money is exchanged for financial claims in the form of stocks, bonds, and other securities. And through the exchange of money for financial claims, the economy’s capacity to produce goods and services is increased. This happens because the global money and capital markets provide the financial resources needed for real investment. A financial claim on an asset that is usually documented by some type of legal representation. Examples include bonds and shares of stock but not tangible assets such as real estate or gold. he Framework addresses general purpose financial statements that a business enterprise (including a state-owned business enterprise) prepares and presents at least annually to meet the common information needs of a wide range of users external to the enterprise. Therefore, the Framework does not necessarily apply to special purpose financial reports such as reports to tax authorities, reports to governmental regulatory authorities, prospectuses prepared in connection with securities offerings, and reports prepared in connection with business combinations. he principal classes of users of financial statements are present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the general public. All of these categories of users rely on financial statements to help them in decision making.

The IASB Frame Work

The Framework addresses general purpose financial statements that a business enterprise (including a state-owned business enterprise) prepares and presents at least annually to meet the common information needs of a wide range of users external to the enterprise. Therefore, the Framework does not necessarily apply to special purpose financial reports such as reports to tax authorities, reports to governmental regulatory authorities, prospectuses prepared in connection with securities offerings, and reports prepared in connection with business combinations............

Here My Full Post:

Financial System In Perspective

Because now, I writing statement about financial system, so I post about financial system. So Enjoy it. The financial system is the mechanism through which loanable funds reach borrowers. Through the operation of the financial market, money is exchanged for financial claims in the form of stocks, bonds, and other securities. And through the exchange of money for financial claims, the economy’s capacity to produce goods and services is increased. This happens because the global money and capital markets provide the financial resources needed for real investment. A financial claim on an asset that is usually documented by some type of legal representation. Examples include bonds and shares of stock but not tangible assets such as real estate or gold. he Framework addresses general purpose financial statements that a business enterprise (including a state-owned business enterprise) prepares and presents at least annually to meet the common information needs of a wide range of users external to the enterprise. Therefore, the Framework does not necessarily apply to special purpose financial reports such as reports to tax authorities, reports to governmental regulatory authorities, prospectuses prepared in connection with securities offerings, and reports prepared in connection with business combinations. he principal classes of users of financial statements are present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the general public. All of these categories of users rely on financial statements to help them in decision making.

The IASB Frame Work

The Framework addresses general purpose financial statements that a business enterprise (including a state-owned business enterprise) prepares and presents at least annually to meet the common information needs of a wide range of users external to the enterprise. Therefore, the Framework does not necessarily apply to special purpose financial reports such as reports to tax authorities, reports to governmental regulatory authorities, prospectuses prepared in connection with securities offerings, and reports prepared in connection with business combinations.

The Framework also concludes that because investors are providers of risk capital to the enterprise, financial statements that meet their needs will also meet most of the general financial information needs of other users. Common to all of these user groups is their interest in the ability of an enterprise to generate cash and cash equivalents and of the timing and certainty of those future cash flows.

The Framework notes that financial statements cannot provide all the information that users may need to make economic decisions. For one thing, financial statements show the financial effects of past events and transactions, whereas the decisions that most users of financial statements have to make relate to the future. Further, financial statements provide only a limited amount of the non-financial information needed by users of financial statements.

References:

Peter S. Rose, 2003, Money and Capital Market: Financial Institution and Instruments, A Global Market Place, 8^th. Irwin Mc Graw Hill.

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Some Free Steps To Making Money Online

Some Free Steps To Making Money Online By Arvinder

This article I found in the name of Arvinder, so I hope this article can usefull for people who read this article, so enjoy your time. The Arvinder:”If you read my previous article you will know that the goal of these articles is to teach you ways to get started making money online without having to spend any money. This is the second in the series and this time we deal with having your own blog”. There are endless ways of making money once you have traffic, and your blog will get you traffic. The income we will be looking at today will come from Google Adsense. There are multiple benefits to having a blog including the low cost (or no cost), the resources that will help you get traffic to your blog and the fact that you can provide your blog as an RSS feed. An RSS feed will allow readers to automatically receive your updates into their RSS reader.

Let's get started with our 6 steps. 1. Set up your blog. You will need to decide what you are going to blog about. You should decide on a theme and name your blog appropriately. There are a number of free ways to set up a blog & to have it hosted for free. We will go with our first blog. Blogger will allow you to set up a blog for free they will host it for free and they will ping search engines every time you update, meaning you will get spidered & found. Visit & click the button on the front page labelled 'create your blog now' then follow the step by step instructions that Blogger provide. Some key settings you will want to get right are: I. 'Host your blog at Blogger' = Yes II. 'Add your blog to our listings' = Yes III. 'Ping ' = Yes IV. 'Publish Site Feed' = Yes 2. Write some content. Before we move any further there has to be some information on the site & that means that you have to make some entries. You can write some of these entries yourself & some can be quotes from sites of interest to your reader that you can post using the Google Toolbar. You can download the Google toolbar for free The toolbar includes a Blogger button............

Here My Full Post:

Some Free Steps To Making Money Online By Arvinder

This article I found in the name of Arvinder, so I hope this article can usefull for people who read this article, so enjoy your time. The Arvinder:”If you read my previous article you will know that the goal of these articles is to teach you ways to get started making money online without having to spend any money. This is the second in the series and this time we deal with having your own blog”. There are endless ways of making money once you have traffic, and your blog will get you traffic. The income we will be looking at today will come from Google Adsense. There are multiple benefits to having a blog including the low cost (or no cost), the resources that will help you get traffic to your blog and the fact that you can provide your blog as an RSS feed. An RSS feed will allow readers to automatically receive your updates into their RSS reader.

Let's get started with our 6 steps. 1. Set up your blog. You will need to decide what you are going to blog about. You should decide on a theme and name your blog appropriately. There are a number of free ways to set up a blog & to have it hosted for free. We will go with our first blog. Blogger will allow you to set up a blog for free they will host it for free and they will ping search engines every time you update, meaning you will get spidered & found. Visit & click the button on the front page labelled 'create your blog now' then follow the step by step instructions that Blogger provide. Some key settings you will want to get right are: I. 'Host your blog at Blogger' = Yes II. 'Add your blog to our listings' = Yes III. 'Ping ' = Yes IV. 'Publish Site Feed' = Yes 2. Write some content. Before we move any further there has to be some information on the site & that means that you have to make some entries. You can write some of these entries yourself & some can be quotes from sites of interest to your reader that you can post using the Google Toolbar. You can download the Google toolbar for free The toolbar includes a Blogger button.

When you visit a site that has something of interest to your readers you can highlight the appropriate text & click the Blogger button. The content will then be added to your blog along with a link back to the site. 3. Once you have some content eg a weeks worth of blogging with 1 or 2 entries for everyday, you can apply for an adsense account. When you sign in to Blogger you will see an invitation to join Adsense. Use this link and apply for an account. You can find out all about Adsense on the Adsense page but basically you get Google ads on your site & get paid if your visitor clicks them. Google will decide what adverts show on your site based on the content it finds within. You need to be aware that Google will decline your application if your site is not considered to have content. Nobody outside of Google knows the precise rules on this. Once you have been accepted you can get some javascript from Google to add to you site. Copy this & then log in to Blogger. Once you have logged into your blog you will see that one of the tabs across the top of the screen is labeled 'Template'. Click this. You will need to know a little bit of HTML to help find the right location to paste your Google code. But with a little experimentation you will find the right place for you. See the resource box at the end of this article for more help. I would suggest that the ads need to be seen when the site loads but should not be too obvious or dominate your site. 4. Write some more content.

Try and keep your content coming at regular intervals as a number of directories will check on your site at regular intervals & the smarter ones will visit on a schedule based on your update schedule. They will probably determine this in the hours after you first submit to them. Which is what we will do next. 5. Submit your site to Blog & RSS directories. Because you are hosting at Blogger, will already be notified when you update your blog. (That means that every time you make a new entry they are automatically notified) You will need to manually submit to the various other directories some of which will require a link on your site to theirs. You can add these links to your template below your Blogger logo.

For a list of directories to get you started 6. Keep writing interesting content. Ideally you want people to come back again and again. As with customers its harder to get a new visitor than to keep existing visitors. So make it interesting, in fact make it so interesting that they can't help but tell all their friends about it also. As with most free ways to make money this will take time to get going, but if you can build a following you will make money.

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