Creating, Financing, and Marketing a Business, Essay Example

In partnership, there are at least two people who join hands to start a business. The main benefit of partnership is that unlike sole proprietorship in which the owner is responsible for managing the business by himself, partners can share workload among them. In addition, different partners may bring different skills, expertise, and experiences to the partnership and each partner can focus upon the management area in which he/she is good at. Because general partners are more than one, they can raise more start-up capital as compared to the sole proprietor. Another benefit is that general partnership can be set up quickly as compared to certain other business forms such as limited liability companies. One of the drawback of partnership is that business liabilities are not separate from the owners’ liabilities, thus, owners are personally responsible for partnership liabilities (Mintz). Another disadvantage is that the partnership has limited life and doesn’t survive beyond the death of a partner (Coollawyer.com).

There are several funding options available to small businesses. The first source is bank loans and credit lines. The terms of the loans depend upon several factors including the loan amount, duration, credit rating of the business and the covenants it may agree to. The principal is paid back over a fixed period of time including interest. The interest payments have to be paid whether the business is doing well or not, thus, it could significantly lower the business’ liquidity during difficult times. The second source could be venture capital funding. Venture capitalists provide funds for a particular ownership stake. But besides loan, venture capitalists often provide their expertise and experience, too because they have an interest in the success of the business. Thus, venture capital funding may result in some loss of operating freedom for the management (SBA). The third funding source may be issuing equity to the public. Unlike bank loan, equity funds do not have to be repaid back but they do result in loss of ownership stake. In addition, equity owners also become stakeholder in the company’s profits. If a particular individual or group acquire significant equity stake, they may attempt to influence the strategic direction of the business.

Managerial accounting involves measuring, analyzing, interpreting, and communicating information to achieve organizational objectives (Investopedia). Managerial accounting strives to understand operations by studying the activities that are the sources of expenditure and revenues. Thus, managers are able to determine how variations in production levels affect costs and profits and use the information to set optimum performance targets. Once managers have determined the production targets and the relevant costs, it becomes easier for them to estimate and arrange for required resources to support the production activities. This is why the accuracy of budgets depend a lot upon how well the sources of costs and revenues are understood by the management.

4P which stands for Product, Price, Promotion, and Place is a marketing tool to help companies carefully consider some of the most important factors relevant to a new product or service to increase the probability of success. The first component of 4P is product which involves deciding upon a product or service to be offered to the market. The company might have identified a new opportunity or it may believe it can offer better solutions than the ones currently in the market. Apple introduced iPad because it had identified a new opportunity between the smart phones and personal computers and believed that the technology has finally arrived to offer a breakthrough tablet device to consumers. Apple believed that tablet device will offer a convincing alternative to personal computers because it will be portable and more user friendly yet able to perform most of the functions consumers perform on their personal computers. Price refers to the cost of the product or service to the customer. The company may study competitors’ offerings to get an idea of price or it will determine price independently on the basis of production costs and targeted mark-up. Apple chose a price for iPad at which it believed the device will be affordable by most of the customers in the targeted markets yet the price will also enable the company to earn attractive profit margins. Promotion refers to the marketers’ plan to advertise the product. Apple primarily relied on word-of-mouth promotion and buzz marketing because it is one of the most closely-followed companies in the world and also used its website to provide information and tout the product’s distinctive features. Place refers to distribution channels chosen by the marketer. Apple distributed iPad primarily through its online store and company-owned retail establishments before partnering with independent retail companies such as Wal-Mart and Best Buy to boost sales.

Social responsibility and technology are becoming an increasingly important part of companies’ overall marketing policy. This is because consumers are more conscious than ever about the ethical and social conduct of the companies they do business with and moreover, technology has penetrated consumers’ everyday lives in a manner never witnessed before in the history. Thus, the companies had no choice but to evolve as well in order to maintain customer goodwill and strengthen customer loyalty in the face of intense competition. An example of a corporation that has displayed an impressive corporate social responsibility behavior is Target Corporation. Target was named one of the World’s Most Ethical Companies for 2011 by the Ethisphere Institute for its contributions to the communities in which it operates, commitment to diversity, and following high ethical standards in the industry (Minnesota Council of Foundations, 2011). Corporate social responsibility is not only right but also generates economic benefits for the company by increasing customer loyalty and generating positive coverage in the media.

Similarly, technology is everywhere from smart phones to tablet devices to social media. Internet has also created numerous opportunities for marketers such as lower marketing costs, the ability to engage in focused marketing, and two-way interaction with customers through social networking such as Facebook and Twitter. In addition, most of the young consumers have grown up with technology so it is easier to reach them through internet technologies as compared to traditional advertising media including TV, radio, and print media.

References

Coollawyer.com. (n.d.). Gp,LP or Partnership. Retrieved August 13, 2012, from http://www.coollawyer.com/webfront/bizfilings/partnership.php

Investopedia. (n.d.). Managerial Accounting. Retrieved August 13, 2012, from http://www.investopedia.com/terms/m/managerialaccounting.asp#axzz1n8egoYCA

Minnesota Council of Foundations. (2011, March 17). Target Named One of the “World’s Most Ethical Companies”. Retrieved August 13, 2012, from http://www.mcf.org/news/target-most-ethical-2011

Mintz, R. J. (n.d.). General Partnership. Retrieved August 13, 2012, from http://www.rjmintz.com/family-limited-partnership/partnership-types/general-partnerships/

SBA. (n.d.). Venture Capital for Startups & High Growth Technology Companies. Retrieved August 13, 2012, from http://www.sba.gov/content/venture-capital-startups-high-growth-technology-companies