Emotions and the Economy - Research Paper Example

? Starting a Business Number} Introduction The current economic climate is less than business friendly given the large amount of market competition and the pervasive recession. In this situation businesses that are firmly grounded with decades of business operation history are far more secure than new businesses. In order to create a new business in this hostile market scenario it is important to keep quite a few considerations in mind that span the length and breadth of conventional business facets. For any business to take off fiscal consecrations are critical in order to provide enough liquidity. However a number of other factors merit attention too such as development of products and services such that market competition is firmly dealt with. Moreover new businesses need to consider how positions would be manned in the new business along with the development, training and retention mechanisms. Similarly if the business is working in a unique sector it may be necessary to recruit human resources from existing businesses without violating ethical or legal norms. Similar attention to detail must be paid to the facet of marketing without which there would be little point in creating products or services. Only effective marketing to the appropriate target market segment could ensure that the product or service is being consumed as intended. A system for support and services may also be required along with marketing and other facets if the business operations require after sales support and services. Ethical and legislative considerations must always be considered no matter what the business size, the market constraints or other restrictions might be. Effective ethical and legislative enforcement mechanisms must be installed in businesses from the top to the bottom to ensure sustainability. Business history proves that large corporations such as Enron and WorldCom came crashing down when legislative requirement and ethical considerations were put into the background. These considerations are presented below in greater detail for a fertilizer manufacturing, marketing and distribution business located in the third world. 2. Considerations 2.1. Product and Services Development One of the most vital aspects of any business is its products or services or a combination of both that are critical to generating revenue. Within a theoretical framework businesses are essentially created in order to generate revenue so the facets of product and services development are vital too. Given the fact that this text will be considering a fertilizer business it is apparent that fertilizer has been developed as a product since the 1930’s so there is little need for research into making urea fertilizer. The current production methods rely largely on using methane through a host of different processes after which urea is created. However these production methods are not continually updated so there is little need for a research mechanism to be in place. Hence the business that would be initiated in order to create urea fertilizer would require equipment and machinery that would convert methane gas into urea but would not necessarily require a research framework. In most given cases large licensors who are attuned to designing and installing new fertilizer complexes are contracted to cover the design and build aspects of the plant. Once the plant is commissioned it is handed over to an operations and maintenance staff who are essential to the product development facet. Therefore in order to start a fertilizer manufacturing business it would be necessary to hire outside contractors who would design and build the plant in the supervision of the principal’s staff. Once the plant goes online, more manning would be required to deal with the production and maintenance aspects. It would be preferable to hire production and maintenance personnel who are previously experienced in dealing with fertilizer plants because certain aspects of a fertilizer plant are safety and business critical. For example failure of a large vessel or compressor due to inexperienced operations staff would lead to loss of life and property. Similarly improper maintenance of machines or equipment could lead to human and material loss. More or less running a petrochemical plant such as a fertilizer plant is about managing risks. These risks cannot be avoided as they are essential such as the creation of ammonia (which is life threatening if living organisms are exposed to it) but these risks can be managed such that they remain in control at all times. 2.2. Fiscal Constraints Businesses such as petrochemical plants often require large fiscal commitments that are of the order of magnitude of a few billion dollars. Recent installations of large fertilizer plants around the world (for QAFCO, Engro etc.) have cost roughly around one to two billion dollars over a total period of around five years. This represents a large amount of finances that are required for continuous supply over a number of years so the financing parties must be able to supply funds in continuity. Generally large projects such as these are funded through consortiums as generating such finance in continuity is not possible for individual financers. Finances of this scale are often generated through a consortium of large international banks such as the IMF, World Bank, Asian Development Bank and private investors as well as existing businesses and the parent company (if applicable). In order to manage the finances for this project a dedicated finance and audit team would be required that would monitor the current state of finances and their expenditure details to ensure transparency and accountability (Berezin, 2005). Moreover the consortium partners would need to be updated as to the state of finances at a set frequency in order to delineate current expenditures and to ask for more funds as appropriate. 2.3. Safety Safety is essential to risk management for businesses both during their construction phases and when these businesses are being managed by operations and maintenance personnel. The involvement of precarious procedures during construction such as the erection of large vessels, massive excavations, introduction of life threatening chemicals, high temperature and pressures all dictate that safety should be a part of the essential organisational culture. However for a business that is just taking off there is little organisational culture or precedent to back up a complete safety system but nonetheless safety is important. In order to deal with this challenge effectively there are two major approaches – new employees should be trained in safety systems before being allowed on plant premises while more senior employees should be sourced from relevant industries with a requisite safety culture. This would ensure that a culture of safety is allowed to develop from all new employees no matter what their age or experience levels are. As mentioned before this is essential to the sustainability of both the construction and the operation effort so separate funding and staffing has to be allocated for safety in order to manage it effectively. 2.4. Human Resources Staffing is essential to any business operation and potentially all business operations required some level of manning. In the case of a fertilizer plant the staffing is broadly divided into two categories – core and support services. The core services for the business include the staffing that is required to keep the plant operational at all times as fertilizer plants are run twenty four hours a day, 365 days a year in order to maximise production levels as equipment and machinery depreciates. Generally the core services teams are composed of the operations and the maintenance staff. While the operations teams keep the plant online and operating on peak loads without causing damage, the maintenance teams are required to keep the plant in functional order. The core teams are supported in their functions by smaller units such as planning, contracting, material supply, warehousing, finance, safety, human resources etc. (McLean, Osman-Gani, & Cho, 2004) The division of labour is rather specialised for petrochemical plants so there is dire need to hire people with relevant qualification and experience only. This can be accomplished through the services of the human resources department which would deal with the overall hiring processes. However in order to ensure that the best people are taken on board it would be necessary to use a system of subjective and objective assessment along with interviews. Moreover a system of compensation would also need to be developed in such a fashion that it is acceptable to the majority of people being hired. 2.5. Support Services As mentioned before a large number of support services would be required to facilitate the operation of the core services teams. The support services would need to be located near the actual plant site and often these plants are located in remote locations where gas has been discovered. Therefore it is often preferable to hire local people to man the support services as these people are easily accessible, need to be paid less than someone coming from the outside and need lower skill sets than the core services teams. Moreover the support services team need to be composed of local people because they understand local cultural peculiarities better and this can often aid in the operation of the overall business. Another aspect is that any business relying on natural resources from a particular geographical region needs to compensate the people living nearby as an ethical responsibility though such stipulations may also be legislated in some regions around the world. Hiring local people ensures that they are justly compensated for the natural resources discovered in their region and this in turn ensures that local opposition to the presence of such plants is minimal. Protesting locals is the last thing required by a starting business as it seriously hampers operations and the overall security climate. Therefore the support services can be used as a constraint to achieve a number of specialised objectives that would ensure smooth functioning of the starting business. 2.6. Marketing The projection of products and services is essential to ensuring their sale within set levels of inventory and this is often accomplished through marketing. It would seem that fertilizer is essentially a requirement of the agriculture sector that must be purchased so it would require little marketing effort but this is not always the case. Instead farmers and growers need to be appraised and guided by the fertilizer manufacturer in order for them to prefer a certain brand of fertilizer over the other. Moreover the inappropriate handling of fertilizer by farmers such as using too much fertilizer or using fertilizer through the wrong technique (throwing in batches instead of dissolving in water and applying) can lead to disastrous crop failures through which the fertilizer brand name would suffer. In order to ensure that farmers are up to date in the actual procedures of using fertilizer the marketing section has to ensure that the farmers are well appraised. Moreover the marketing function has to provide projections to the core services teams to delineate the supply and demand such that the core services teams can then decide on production levels (Dev & Schultz, 2005). 2.7. Ethical and Legislative As mentioned before ethical and legislative compliance mechanisms must be put in place for businesses that are just starting out in order to ensure sustainability. This can be done using internal audit teams as well as ethics training and seminars. Moreover a culture of ethical behaviour must be promoted at all levels to ensure that the business’ overall direction is positive (Frederic, 2002). Only the right ethical decision at all levels in an organisation can ensure the sustainability of that business. 3. Bibliography Berezin, M. (2005). Emotions and the Economy. In N. Smelser, & R. Swedberg, The Handbook of Economic Sociology. Princeton: Princeton University Press. Dev, C. S., & Schultz, D. E. (2005). In the Mix: A Customer-Focused Approach Can Bring the Current Marketing Mix into the 21st Century. Marketing Management 14 (1) . Frederic, R. E. (2002). A Companion to Business Ethics. Massachusetts: Blackwell. McLean, G. N., Osman-Gani, A. M., & Cho, E. (2004). Human resource development as national policy. Advances in Developing Human Resources 6 (3) . Read More