The Big Hit From The Tornado Of American Business Lending And Credit For Consumers

Many business owners in America and those new to incorporating, desire the attractive tax and limited liability business vehicles offered by the many diverse European countries. While countries in the EU have adopted the same monetary policy, their business regulatory environment is left up to each individual country to regulate and legislate. This means that the many countries in the EU offer different attractive advantages to overseas investors in an attempt to bring in much-needed foreign capital.

While on the level this seems great to have so many options available to the American businessman or aspiring business owner, it also lends inherent difficulty in getting up to speed on all the separate regulatory, cultural and business requirements for European corporation formation. With 27 countries in the EU, attempting to become knowledgeable about the vast differences in business Corporation requirements and regulations of all of these culturally diverse countries would be a nightmare.

That's why company formation in Europe should only be sought through the advice of a seasoned and experienced European company formation specialist that employs local attorneys and accountants who live and work in the different EU countries to handle company registration there. These respected business pros conduct their business daily in the countries and city-states where you desire to incorporate, and have up-to-date knowledge of the best possible location to accomplish your business goals and desires.

For instance, they understand that Ireland offers a 0% tax to foreign investors who incorporate there, but there are regulations and stipulations that you must meet. And they can help you decide whether you need to open up a virtual or physical office, and whether the famous trade routes accessible to Spain and Portugal better suit your business needs, or whether owning a respected Swiss business name is better for your unique situation.

A respectable European incorporation firm operating with high integrity will never charge an upfront fee, and will always be happy to answer all your initial questions in a free telephone consultation or live online chat session. And they always employ local accountants and attorneys to ensure you get the speedy and efficient European corporation that you need, while spending the least amount of money. European corporation for the American resident can mean never having to leave your home or business in the United States and to possess a highly respected and vaunted European corporation designation. Contact your European incorporation firm specialist today, and you'll be well on your way to European corporation ownership sooner than you ever thought possible.

Company Formation in Europe for the American Business Owner

Many business owners in America and those new to incorporating, desire the attractive tax and limited liability business vehicles offered by the many diverse European countries. While countries in the EU have adopted the same monetary policy, their business regulatory environment is left up to each individual country to regulate and legislate. This means that the many countries in the EU offer different attractive advantages to overseas investors in an attempt to bring in much-needed foreign capital.

While on the level this seems great to have so many options available to the American businessman or aspiring business owner, it also lends inherent difficulty in getting up to speed on all the separate regulatory, cultural and business requirements for European corporation formation. With 27 countries in the EU, attempting to become knowledgeable about the vast differences in business Corporation requirements and regulations of all of these culturally diverse countries would be a nightmare.

That's why company formation in Europe should only be sought through the advice of a seasoned and experienced European company formation specialist that employs local attorneys and accountants who live and work in the different EU countries to handle company registration there. These respected business pros conduct their business daily in the countries and city-states where you desire to incorporate, and have up-to-date knowledge of the best possible location to accomplish your business goals and desires.

For instance, they understand that Ireland offers a 0% tax to foreign investors who incorporate there, but there are regulations and stipulations that you must meet. And they can help you decide whether you need to open up a virtual or physical office, and whether the famous trade routes accessible to Spain and Portugal better suit your business needs, or whether owning a respected Swiss business name is better for your unique situation.

A respectable European incorporation firm operating with high integrity will never charge an upfront fee, and will always be happy to answer all your initial questions in a free telephone consultation or live online chat session. And they always employ local accountants and attorneys to ensure you get the speedy and efficient European corporation that you need, while spending the least amount of money. European corporation for the American resident can mean never having to leave your home or business in the United States and to possess a highly respected and vaunted European corporation designation. Contact your European incorporation firm specialist today, and you'll be well on your way to European corporation ownership sooner than you ever thought possible.

The Role Of American Business In Education

If we accept the premise that education is a lifetime process then well structured, sustainable business-education partnerships become essential. The average American student attends school for 12 to 14 years. Most of these young people will enter a career in business or industry that will last 30 to 40 years. However, there is almost no communication between the education and business communities during the years of learning and training. The result is that most of the students exiting American schools are unprepared for successful employment.

Bridging this communication gap through business-education partnerships can lead to a successful experience for everyone involved. At an early age students will develop skills, learn to adjust to the demands of the workplace and become better future employees. Men or women in business will derive both personal and financial satisfaction by developing a close relationship with educators. The benefits of partnership are detailed in Facing the Future Together, a book that focuses directly on how-to construct a successful business-education partnership and the mutual benefits that result from this collaboration.

A business person reading this article might have some of the following questions and concerns:

Q. "How would I even begin to navigate the bureaucratic halls of education and get involved?"

A. Actually it's not that difficult. Education works very much like business. Make your initial contact with a decision-maker. Consult Facing the Future Together if you need assistance in developing a plan of partnership. Schedule a meeting with a local school district superintendent. Explain your desire to establish a business-education partnership. After obtaining the superintendent's support, select a school. Ask for an introduction to the school principal. Like business, when you have the support of the education CEO things will happen and you are well on your way to a successful partnership.

Q. "How much money is this going to cost me?"

A. A successful partnership is not about money. The real value of this partnership is the people-to-people relationships it engenders not in the amount of money that changes hands.

Q. I'm not a teacher. I run a business. So what can I offer as a partner for a school?

A. You have a great deal to offer and to gain from this partnership. You and your employees can act as mentors, tutors, career day speakers, demonstrate the latest technology in your business and show how it applies to math, science or English curriculum. You can host field-study trips for students, give them an opportunity to volunteer at your business site or create student internships. Activities like these can motivate and inspire students to perform at higher levels in school in preparation for entering a career.

Traditionally, it is the educator who makes the first move toward partnership. But as we have discussed, this need not be the case. Everyone wins when business-education partnerships are formed.

"Some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon."

-Winston Churchill

As described in the quote from Sir Winston, business in America is an influential and sturdy horse. For most Americans our economic and social well-being is tied closely to the experience of business. We feel more secure when consumer spending and the stock market show growth and unemployment figures are in decline. When business and education are harnessed together in partnership the delivery system for education becomes more efficient and relevant.

Facing the Future Together is written for the business person as well as the educator. Educators are often criticized for having little or no contact with the outside "real" world. Criticism of education by the business community, the media and politicians has often led educators to isolate themselves. But teachers, counselors and administrators should never work in isolation. Students will benefit far more from support derived from partnership with the business community than from criticism by those who may be their future employers.

Business Man Gives Away $50,000,000 to Help American Businesses

Business Training Expert and Entrepreneur Bert Martinez will stop accepting new clients for the rest 2010 and donate $50,000,000 in training programs to help American businesses.

Houston, TX (goarticles) September 25, 2010 -- Bert Martinez, a business development expert, the President of Bert Martinez Communications is celebrating their best year ever by giving away $50,000,000 in training to American businesses.

The goal of this program is to help 50,000 businesses by providing tools and training that they normally would not have access to because of costs. Sometimes the businesses that need the most help have the least amount of access. America's economy needs healthy small businesses and we want to help small to midsized companies to grow their sales permitting them to hire more people, this is our way of stimulating the economy. We have had a very lucky year and this is our way giving back.

Bert Martinez Communications has partnered with sponsors to help facilitate the $50,000,000.00 program. The Level 1 curriculum is perfect for almost any size or type of business from professional services to manufacturing. This is our entry-level program that retails for $2,995, it's an intense curriculum with all the bells and whistles that covers Raising Money, Marketing, Sales, HR, and much more.

Bert Martinez Communications has partnered with sponsors to help facilitate the $50,000,000.00 program. The Level 1 curriculum is perfect for almost any size or type of business from professional services to manufacturing. This is our entry-level program that retails for $2,995, it's an intense curriculum with all the bells and whistles that covers Raising Money, Marketing, Sales, HR, and much more.

Registration Deadline is December 31, 2010, or when the program is full whichever come first. Either way no application will be accepted after December 31, 2010. Registration process has a very simple application and for businesses that would like to be accepted into this free program, details can be found at http://www.bertmartinez.com/training. Please apply soon because space is limited, and we expect to hit our limit very quickly.

Martinez says "As an immigrant from Cuba I feel very humble and grateful to be in America. I'm very fortunate to have experience so much, I have a book deal in the works, we have several offices that exploding, and I've been able to hang around with some of the biggest names in business, all because my family was allowed to come to America."

BertMartinez.com seeks to empower people to discover their personal potential; empower entrepreneurs and business people to discover their business's true wealth; and, deliver our information in an entertaining and effective way that cultivates real understanding and immediate results. We do this through online programs, business consulting, and seminars.

3 Ways of Using American Business Lists to Generate Sales

Some new businesses have difficulty entering the shark-infested waters that is business to business marketing in corporate America. Businesses have needs that require fulfilling. Outsourcing has increased the potential opportunities for business-to-business transactions. Most small and medium sized enterprises looking to enter the business-to-business arena have one thing in common; they focus on a specific niche. When working in specific niches, obtaining information on your consumers is vital. Fortunately, a great deal of information can be obtained from American business lists; lists that are easy to obtain at reasonable rates.

These American business lists can be an excellent launching pad for your product and service. They can act as a matchmaker by pairing your product or service with the ideal corporate consumer. Let's examine 3 ways of using American business lists to generate sales.

Method No. 1 Cold Calling

Many new businesses suffer from poor brand awareness. In today's highly competitive corporate landscape, gaining recognition is an important first step in developing business leads. This is especially so considering the plethora of options available for businesses. Unless you exist in a highly specialized niche that is largely uncontested, your business needs to make itself known to your corporate consumers. Try to leverage on the information you find on your business list and seek out the most viable potential consumers.

Before performing the cold call, you may want to conduct some research. This is especially helpful when approaching large businesses. Understanding their needs can help you in securing a marquee client. At the very least, this research could help you develop a rapport with the business, and can help you develop valuable leads that could sustain you in the future.

Method No. 2 Demonstrations

Conducting a demonstration of your product or service can be an effective way of gaining recognition. Demonstrations allow you to put a face to your business. It provides an air of legitimacy to your product or service and helps to foster trust. Demonstrations are usually preceded by cold calls. Once you obtain the opportunity to present your product and service to your consumer, you come closer to generating your sale.

Do not take the term 'demonstration' literally. Demonstrations can also be in the form of presentations in which you 'hard sell' the merits of your product, service and business.

Method No. 3 Product Trials

Initiating product trials can be the most persuasive way of clinching a deal. This tactic is constantly applied by multi-national companies and can be easily adopted by small and medium sized companies. In addition to creating greater product and service awareness, product trials can also create demand.

Depending on the nature of your product, you may even want to consider sending samples to your potential consumers.

These three methods are just examples of some of the various ways you can use American business lists to your advantage. Be innovative and give businesses a reason to remember you. Using American business lists to source for prospective clients can be effective first step in developing a long-term business relationship.

A Tip For American Business People Dealing With International Trade

A good tip for business people in international trade dealings is relating to your trading partner and understanding their business methods. Giving importance to that will lead you to an axiom in business relationship which is the common knowledge of and interest in language, religion, or ethnicity of your business partner. American business people that would put this into serious consideration would have an edge over others. Before venturing in an international trade, it would be valuable to have a basic knowledge of the formalities that apply to a foreign country one is about to deal with. Observance of cultural etiquette specific to the business partner's country will show respect and care that is seldom expressed in the international business scene.

It is inevitable nowadays, given its size and power in the business world, for the United States to be a trading partner for almost every nation entering in the international trade. American businesses could be more successful in international trade if they directed their efforts to providing a form of cultural training that could go hand in hand with international trade. Perhaps integrating the discipline of Anthropology would helpful. Anthropology is the study of people, their culture and how they function in all facets of society, often with a concentration in one particular part of the world. A person with culturally specific knowledge as well as trade knowledge will be an important asset in being a portal to a foreign company's business and trade methods. Having sufficient cultural knowledge of a foreign country that one is about to deal with would help in understanding their business practices. This will enable one to do business with them more economically and more sensitively, much more so than someone lacking the cultural training. In effect, this will bring in more business opportunities in the future.

This article is made available so that no business company would have the same pitfall as Chevrolet experienced as it marketed its Chevrolet Nova in Mexico. It is a familiar story in the business industry where had the company had a representative who was familiar with the language of Mexico, they would have learned sooner that Nova in Spanish means "no go". If Chevrolet had involved people with knowledge of the customs and language in Mexico when doing business there, they could probably have avoided this mistake, perhaps by simply marketing the car under a different name.

As an American businessman may know what product is important to a specific country, it is clearly useful to note that knowing how that product works in their society and what investments they have in the market that is centered around the product will give the US company a definitive advantage over its competitors. Obviously, further advantage will transpire if a company is willing to invest in the cultural education of their representatives specifically targeting the country with which they are dealing. Chinese businessmen, for example, would most likely prefer a business representative who speaks their language and shows an interest in the cultural attributes of their society.

Some other examples of cultural differences and formalities: In China, it is rude to begin eating before the host picks up his or her chopsticks. In Japan, it is a norm to show respect for the Japanese culture by offering a slight bow when being introduced. And, in Brazil, it is considered very impolite to cut food with the side of the fork; a knife is required to be used at all times. These and millions of other small cultural practices can be observed, exhibiting an interest in the cultural practices of the country and improving business dealings between international business partners. Because of this, a method of cultural training is becoming increasingly important in trade relations, as the world continues to shrink with technological advances in communication. A system of updating business people interested in keeping up with changing trends in the business world is necessary. Basic knowledge of language, religious practices, food, and history is already proven (in this article) to be helpful when interacting in the business world of a country abroad. Now, as the American business will incorporate efforts to become familiar with the specifics of that foreign business, the trade relationship is expected to run suaver.

Will American Businesses Owners Thrive In The Global Economy

The American economy can go either way according to most newspapers and television commentaries. The experts say that we have a 50% chance of going into a recession while some say we have almost no chance. Trying to decipher their confusing messages can be difficult. That leaves most American businesses unsure of what the future holds for them. Are they still going to be able to compete or are they going to suffer a slow and painful decline downwards. The best way to answer that question and determine how to improve the business environment is to look at the American businesses strengths and weaknesses.

Success and failure is all about strengths and weaknesses. When we rationally see the strengths and compare them against the strengths or weaknesses of other countries we can better determine our chances of success. It is almost the same as when you bet on two boxers one of which has endurance and the other one quickness. The one you feel will win depends in part on how you see the situation. If you feel the quickness will take out the opponent in the first few rounds then he is the better bet but if you feel that the two boxers are going the distance then endurance counts.

Looking at the American business world and comparing it to the challengers you can also see better who is going to win in the end. We know that the world is a high-tech place where efficiency and cost matter. The one who produces the cheapest products is likely to win as long as their products have reasonable quality and don't break down often. With Chinese cheap products and America's high quality both countries will need to come closer to the middle.

Strengths of American Businesses:

High Technology: Powerful and growing businesses require email, Internet, cell phones, computers, robots and more. The technological advances of the U.S. are difficult to surpass and few countries even come close. American businesses can grow simply because they can manage different international locations as though they were a block away. Few foreign countries can do this. In addition, America also has the ability to develop and implement modern technology like robotic arms and complex systems that increase productivity.

Power Supply: China is attempting to get its hands on as much natural resources and energy as possible. The U.S. is also doing this but is much further in the game. While the U.S. is moving towards alternative energy supply and thinking beyond fossil fuels China is still trying to accumulate basic energy. American businesses have no problem with black outs, rolling power outages or a lack of energy. This is a benefit because their environment becomes predictable.

Strong Law Enforcement: It may seem silly and out of place but a strong law enforcement system helps to keep the business environment fair and equitable. When businesses can be cheated when making partnerships, employees embezzle and politicians bribed there is lots of risks built into the environment. Businesses want to know there is a deterrent and opportunity to regain what is lost through unfair practices. You will find that China as well as most nations outside of Europe or the U.S. has difficulty curbing crime.

Sound Fiscal Policy & Self Adjusting Markets: American policy makers have been generally concerned with how well the economy is doing. The democratic system allows the population to remove senators, presidents and congressmen out of office when they are not producing results. Therefore, a single politician can complete little damage in a single term. When small mistakes happen the markets can adjust themselves by offering something new that makes money. For example, if people demand companies to reduce pollution then these consumers will gravitate towards clean businesses while leaving the rest of the businesses behind.

Weaknesses of the American Business:

Poor Public Education: The American education system is declining and children are falling behind much of the world in terms of science, languages, math, and more. The advancement of these core subjects are important for the improvement of society as the new high-tech world will need scientists and technology workers like never before. However, as we keep allowing skilled workers to immigrate our school systems are falling behind only because there is little direction and lots of politics.

High Labor Costs: Workers are cheaper then they are in other countries. The problem in the U.S. is that companies aren't getting what they are paying for. The average high school graduate is barely able to grasp the concepts of a manufacturing business let alone work within it while the government raises the minimum wage. A Chinese worker is able to press a button like the American worker but for about 1/10th the cost. Only productivity will make the American worker worth his/her wages.

Taxes: American businesses pay a lot of money in taxes while companies from other countries may pay a lot less. The taxes in American businesses are simply extra overhead that must be pulled from the cost of the product. In a tight economy where people don't want to pay extra the cheaper products (with less tax burden) will win out. Have you ever wondered what happened to the television and radio producers in the U.S.?

International Policy: America has come to mean, "bully" to many people overseas. To thwart America's power is a sign of resolve and fashion. As our politicians continue to play favorites with countries that violate international law, demand compliance with American desires and try and finagle other countries its reputation declines. A bad reputation means that both international businesses and whole countries may not only distrust us but prefer to do business with someone else.

REGULATING THE BUSINESS CYCLE

Because of the severity of the Great Depression, action was taken during the 1930s to both promote recovery and to reduce the likelihood and severity of future business downturns. Legislation known as New Deal programs created federal unemployment insurance, the Social Security system, the Federal Deposit Insurance Corporation (FDIC), and the Securities and Exchange Commission (SEC).

Unemployment insurance provides workers with income when they are laid off. Social Security furnishes some income to retired or disabled persons. These two programs thus provide greater income stability because people retain some purchasing power even when they are no longer working. The FDIC gives consumers confidence in their financial institutions and helps prevent a repeat of the massive withdrawals of funds or bank panic that led to the collapse of several thousand banks during the Great Depression. The SEC helps prevent financial fraud by requiring corporations that publicly trade their stock to report accurate financial information.

Other aspects of New Deal legislation also helped promote economic stability. The New Deal’s National Industrial Recovery Act of 1933 enabled workers to bargain collectively in trade unions. Although not as powerful as they once were, labor unions help prevent spiraling wage declines that have worsened previous downturns. Similarly, government support of crop prices shields farmers from disastrous loss of income. Whether or not these changes represent all or part of the explanation, the fact remains that since the Great Depression all economic contractions have been significantly less severe.

Beyond these structural changes, the government can also engage in direct intervention to counter a recession. Two main counter-cyclical policy options are available: monetary policy and fiscal policy. Economists disagree on the effectiveness of these options.

Monetary policy involves control of the money supply and interest rates by a central bank. In the United States the central bank is known as the Federal Reserve System, or simply the Fed. These controls determine the amount of credit available to businesses and consumers and the cost of that credit. By reducing the rate of money supply growth and allowing interest rates to rise, the Fed reduces the amount of available credit and increases the cost of borrowing in order to slow an economic expansion. This practice is known as contractionary monetary policy. Alternatively, expansionary monetary policy involves increasing the rate of growth in the money supply and lowering interest rates. In this fashion the Fed increases the availability of credit and lowers the cost of borrowing in an effort to stimulate the economy.

Fiscal policy consists of changes in government spending or taxation or both. If the government seeks to constrain an economic expansion by engaging in contractionary fiscal policy, it can lower its purchases of goods and services, reduce the amount of money it spends on social services and subsidies, or increase taxes. Expansionary fiscal policy involves the opposite actions—namely, increases in purchases of goods and services, increases in social service spending and subsidies, or reductions in taxes—in an effort to stimulate production and employment.

In discussing the relative merits of monetary and fiscal policies as counter-cyclical tools, economists often argue over which policy to pursue. Some economists note that changes in monetary policy can be implemented quickly whereas changes in fiscal policy take much longer. The Fed’s Open Market Committee, for example, makes decisions regarding the money supply and interest rates. All that is needed to change monetary policy is a vote by this committee. Fiscal policy, on the other hand, typically requires the approval of both the legislative and executive branches of the federal government. For example, a lowering of taxes needs approval from both the U.S. House of Representatives and Senate as well as the approval of the U.S. president, approvals that sometimes may take longer than a year to secure.

However, many economists also note that it takes fiscal policy less time than monetary policy to have an impact on the economy once a specific action has been implemented. For example, a fiscal-policy reduction in the personal income tax will show up immediately in higher take-home pay for workers. By contrast, consumers and business firms may take awhile before they modify their spending in response to a monetary-policy change, such as a reduction in interest rates. For example, not everyone goes out to buy a new car just because the interest rate on car loans has decreased.

CURRENT TRENDS

Business activities are becoming increasingly global as numerous firms expand their operations into overseas markets. Many U.S. firms, for example, attempt to tap emerging markets by pursuing business in China, India, Brazil, and Russia and other Eastern European countries. Multinational corporations (MNCs), which operate in more than one country at once, typically move operations to wherever they can find the least expensive labor pool able to do the work well. Production jobs requiring only basic or repetitive skills—such as sewing or etching computer chips—are usually the first to be moved abroad. MNCs can pay these workers a fraction of what they would have to pay in a domestic division, and often work them longer and harder. Most U.S. multinational businesses keep the majority of their upper-level management, marketing, finance, and human resources divisions within the United States. They employ some lower-level managers and a vast number of their production workers in offices, factories, and warehouses in developing countries. MNCs based in the United States have moved many of their production operations to countries in Central and South America, China, India, and nations of Southeast Asia.

In the United States, for example, America Online, Inc. (AOL) and Time Warner merged in 2000 to form AOL Time Warner, Inc., (present-day Time Warner Inc.) a massive corporation that brought together AOL’s Internet franchises, technology and infrastructure, and e-commerce capabilities with Time Warner’s vast array of media, entertainment, and news products.
With large mergers and the development of new free markets around the world, major corporations now wield more economic and political power than the governments under which they operate. In response, public pressure has increased for businesses to take on more social responsibility and operate according to higher levels of ethics. Firms in developed nations now promote—and are often required by law to observe—nondiscriminatory policies for the hiring, treatment, and pay of all employees. Some companies are also now more aware of the economic and social benefits of being active in local communities by sponsoring events and encouraging employees to serve on civic committees. Businesses will continue to adjust their operations according to the competing goals of earning profits and responding to public pressures for them to behave in ways that benefit society.

Business Cycle

Business Cycle term used by economists to designate a periodic increase and decrease in an economy’s production and employment.


Ever since the Industrial Revolution of the 1800s, the overall level of production in industrialized capitalist countries has varied from high output and employment to low output and employment. Economists study business cycles because they have a significant impact on all aspects of an economy.
BUSINESS CYCLE CHARACTERISTICS


A business cycle has a period of expansion and a period of contraction. Although each business cycle has its own unique characteristics, all business cycles share certain similarities. For example, in the expansion phase, production increases while employment, wages, and business profits also rise. During the contraction phase of the business cycle, production, employment, wages, and business profits all fall. These phases sometimes go by different names. Expansions are referred to as recoveries, booms, upturns, periods of prosperity, and upswings. Contractions are variously called recessions, downturns, downswings, and liquidations. The word “depression” also applies to business cycle contractions but is normally reserved for the worst or most severe contractions.

All business cycles also have peaks and troughs, words that economists use for the turning points in a business cycle. A peak marks the end of an expansion and the beginning of a contraction, while a trough marks the end of a contraction and the beginning of an expansion.

In the typical business cycle expansion, business firms will exhibit optimism about the economic outlook. They will express this optimism by investing in facilities, thereby expanding their ability to produce goods and services. The firms will also hire more people to work in their stores, factories, and offices. Consumers will also be optimistic during an expansion. Their optimism leads them to increase their purchases, typically resorting to additional borrowing to finance the acquisition of more goods and services.

As the upswing continues, however, obstacles begin to develop that hinder further expansion. For example, production costs may increase, shortages of raw materials may develop, interest rates will start to rise, and prices will begin to increase, or, if already increasing, will start to rise more rapidly. Consumers react to higher prices and higher interest rates by buying less. As purchases begin to lag behind production, business firms begin to accumulate inventories (the merchandise or goods that a company or store has on hand). Producers begin to cut back on investment in facilities and reduce employment. Despite these adjustments, profits fall and further cutbacks are made. The economy now enters the contraction phase of the business cycle.

Several different factors can trigger a recovery from a contraction, including an increase in consumer demand, the depletion of inventories, or government action to stimulate the economy. Although generally slow and uneven at the start, the recovery soon gathers momentum. Production and employment begin to increase again, putting additional purchasing power into the hands of consumers. Investment expands in industries that make goods or machinery for sale to other businesses, rather than directly to consumers—industries that are known as capital goods industries. Optimism returns, old businesses expand, and new businesses are created. A new cycle has started.

Business cycles are important not just for their economic consequences but also for their broader social consequences. Several studies have shown that declines in economic activity coincide with declines in birth rates and increases in death and divorce rates. The higher unemployment rates caused by recessions are also associated with higher suicide rates and higher crime rates.

BUSINESS OPERATIONS

A variety of operations keep businesses, especially large corporations, running efficiently and effectively. Common business operation divisions include (1) production, (2) marketing, (3) finance, and (4) human resource management.
Production

Production includes those activities involved in conceptualizing, designing, and creating products and services. In recent years there have been dramatic changes in the way goods are produced. Today, computers help monitor, control, and even perform work.



Flexible, high-tech machines can do in minutes what it used to take people hours to accomplish. Another important development has been the trend toward just-in-time inventory. The word inventory refers to the amount of goods a business keeps available for wholesale or retail. In just-in-time inventory, the firm stocks only what it needs for the next day or two. Many businesses rely on fast, global computer communications to allow them to respond quickly to changes in consumer demand. Inventories are thus minimized and businesses can invest more in product research, development, and marketing.
Marketing

Marketing is the process of identifying the goods and services that consumers need and want and providing those goods and services at the right price, place, and time. Businesses develop marketing strategies by conducting research to determine what products and services potential customers think they would like to be able to purchase. Firms also promote their products and services through such techniques as advertising and personalized sales, which serve to inform potential customers and motivate them to purchase. Firms that market products for which there is always some demand, such as foods and household goods, often advertise if they face competition from other firms marketing similar products. Such products rarely need to be sold face-to-face. On the other hand, firms that market products and services that buyers will want to see, use, or better understand before buying, often rely on personalized sales. Expensive and durable goods—such as automobiles, electronics, or furniture—benefit from personalized sales, as do legal, financial, and accounting services.
Finance

Finance involves the management of money. All businesses must have enough capital on hand to pay their bills, and for-profit businesses seek extra capital to expand their operations. In some cases, they raise long-term capital by selling ownership in the company. Other common financial activities include granting, monitoring, and collecting on credit or loans and ensuring that customers pay bills on time. The financial division of any business must also establish a good working relationship with a bank. This is particularly important when a business wants to obtain a loan.
Human Resource Management

Businesses rely on effective human resource management (HRM) to ensure that they hire and keep good employees, and that they are able to respond to conflicts between workers and management. HRM specialists initially determine the number and type of employees that a business will need over its first few years of operation. They are then responsible for recruiting new employees to replace those who leave and for filling newly created positions. A business’s HRM division also trains or arranges for the training of its staff to encourage worker productivity, efficiency, and satisfaction, and to promote the overall success of the business. Finally, human resource managers create workers’ compensation plans and benefit packages for employees.

FORMS OF BUSINESS OWNERSHIP

There are a number of different forms of business ownership. These include (1) sole proprietorships, (2) partnerships, (3) corporations, (4) joint ventures, and (5) syndicates.

Sole Proprietorship

The most common form of ownership is a sole


proprietorship—that is, a business owned by one individual. At the beginning of the 21st century, there were more than 17 million sole proprietorships in the United States. These businesses have the advantage of being easy to set up and to dissolve because few laws exist to regulate them. Proprietors, as owners, also maintain direct control of their businesses and own all their profits. On the other hand, owners of proprietorships are personally responsible for all business debts and, because they are constrained by the limits of their personal financial resources, they may find it difficult to expand or increase their profits. For those reasons, sole proprietorships tend to be small, primarily service and retail businesses.

Partnership

A partnership is an association of two or more people who operate a business as co-owners. There are different types of partners. A general partner is active in the operation of a business and is liable for all of its debts. In small businesses with only two or three owners, all typically will be general partners. A limited partner, by contrast, invests in a business but is not involved in its daily operations. Partnerships, like sole proprietorships, are relatively easy to establish. Furthermore, partners can pool financial resources to fund expansion and can divide their duties and responsibilities according to personal expertise and abilities. For example, one partner may be very good at selling, while another has a knack for maintaining good financial records. As with sole proprietorships, however, partnerships may entail substantial financial risks, as all of the general partners are liable for the debts of the business. And unlike proprietorships, disagreements among partners can harm partnership businesses.

Corporation

 A corporation is a legal entity that exists as distinct from the individuals who control and invest in it. As a result, a corporation can continue indefinitely through complete changes of ownership, leadership, and staffing. Current owners can sell their holdings to other individuals or, if they die, have their assets transferred to heirs. This is possible because a corporation creates shares of stock that are sold to investors. One strength of the corporate business structure is that stockholders have limited liability, as opposed to the unlimited liability of general partners, so they cannot lose more than their initial investment. Investors may also easily buy and sell stocks of public corporations through stock exchanges. By offering stock publicly, a corporation enables anyone with some money to buy the stock and become a part-owner of the company. As a result, corporations can more easily raise capital for business expansion than can sole proprietorships and most partnerships.

Investors control a corporation through the election of a managing body, known as a board of directors. In a large corporation, investors collectively decide who will oversee the operation of the enterprise. In turn, the board chooses a president, who decides on the key company personnel and helps formulate company strategy.

Many corporations are highly successful business organizations, with profits far exceeding those of many sole proprietorships and partnerships. However, they traditionally have higher tax burdens than other kinds of businesses. Also, the fees involved in creating and organizing a corporation can be expensive.

Joint Ventures and Syndicates

In joint ventures and syndicates, individuals or businesses cooperate to create a single product or service package. A joint venture is a partnership agreement in which two or more individual- or group-run businesses join together to carry out a single business project. For example, U.S.-based General Motors Corporation and Toyota Motor Corporation, based in Japan, have a joint venture called New United Motor Manufacturing, Inc., created for the purpose of producing cars in California.

A syndicate is an association of individuals or corporations formed to conduct a specific financial transaction such as buying a business. Quite often syndicates are created for the purpose of buying sports franchises. For example, the Miami Heat basketball team and the New York Yankees baseball team are each owned by syndicates of individuals. Each member of these syndicates is also involved in the operation of other businesses.

Business Introduction

Business is an organized approach to providing customers with the goods and services they want. The word business also refers to an organization that provides these goods and services. Most businesses seek to make a profit—that is, they aim to achieve revenues that exceed the costs of operating the business. Prominent examples of for-profit businesses include Mitsubishi Group, General Motors Corporation, and Royal Dutch/Shell Group. However, some businesses only seek to earn enough to cover their operating costs. Commonly called nonprofits, these organizations are primarily nongovernmental service providers. Examples of nonprofit businesses include such organizations as social service agencies, foundations, advocacy groups, and many hospitals.

Business plays a vital role in the life and culture of countries with industrial and postindustrial (service- and information-based) free-market economies such as the United States. In free-market systems, prices and wages are primarily determined by competition, not by governments. In the United States, for example, many people buy and sell goods and services as their primary occupations. In 2001 American companies sold in excess of $10 trillion worth of goods and services. Businesses provide just about anything consumers want or need, including basic necessities such as food and housing, luxuries such as whirlpool baths and wide-screen televisions, and even personal services such as caring for children and finding companionship.

TYPES OF BUSINESSES

There are many types of businesses in a free-market economy. The three most common are (1) manufacturing firms, (2) merchandisers, and (3) service enterprises.

A. Manufacturing Firms

Manufacturing firms produce a wide range of products. Large manufacturers include producers of airplanes, cars, computers, and furniture. Many manufacturing firms construct only parts rather than complete, finished products. These suppliers are usually smaller manufacturing firms, which supply parts and components to larger firms. The larger firms then assemble final products for market to consumers. For example, suppliers provide many of the components in personal computers, automobiles, and home appliances to large firms that create the finished or end products. These larger end-product manufacturers are often also responsible for marketing and distributing the products. The advantage that large businesses have in being able to efficiently and inexpensively control any parts of a production process is known as economies of scale. But small manufacturing firms may work best for producing certain types of finished products. Smaller end-product firms are common in the food industry and among artisan trades such as custom cabinetry.

B. Merchandisers

Merchandisers are businesses that help move goods through a channel of distribution—that is, the route goods take in reaching the consumer. Merchandisers may be involved in wholesaling or retailing, or sometimes both.

A wholesaler is a merchandiser who purchases goods and then sells them to buyers, typically retailers, for the purpose of resale. A retailer is a merchandiser who sells goods to consumers. A wholesaler often purchases products in large quantities and then sells smaller quantities of each product to retailers who are unable to either buy or stock large amounts of the product. Wholesalers operate somewhat like large, end-product manufacturing firms, benefiting from economies of scale. For example, a wholesaler might purchase 5,000 pairs of work gloves and then sell 100 pairs to 50 different retailers. Some large American discount chains, such as Kmart Corporation and Wal-Mart Stores, Inc., serve as their own wholesalers. These companies go directly to factories and other manufacturing outlets, buy in large amounts, and then warehouse and ship the goods to their stores.

The division between retailing and wholesaling is now being blurred by new technologies that allow retailing to become an economy of scale. Telephone and computer communications allow retailers to serve far greater numbers of customers in a given span of time than is possible in face-to-face interactions between a consumer and a retail salesperson. Computer networks such as the Internet, because they do not require any physical communication between salespeople and customers, allow a nearly unlimited capacity for sales interactions known as 24/7—that is, the Internet site can be open for a transaction 24 hours a day, seven days a week and for as many transactions as the network can handle. For example, a typical transaction to purchase a pair of shoes at a shoe store may take a half-hour from browsing, to fitting, to the transaction with a cashier. But a customer can purchase a pair of shoes through a computer interface with a retailer in a matter of seconds.

Computer technology also provides retailers with another economy of scale through the ability to sell goods without opening any physical stores, often referred to as electronic commerce or e-commerce. Retailers that provide goods entirely through Internet transactions do not incur the expense of building so-called brick-and-mortar stores or the expense of maintaining them.

C. Service Enterprises

Service enterprises include many kinds of businesses. Examples include dry cleaners, shoe repair stores, barbershops, restaurants, ski resorts, hospitals, and hotels. In many cases service enterprises are moderately small because they do not have mechanized services and limit service to only as many individuals as they can accommodate at one time. For example, a waiter may be able to provide good service to four tables at once, but with five or more tables, customer service will suffer.

In recent years the number of service enterprises in wealthier free-market economies has grown rapidly, and spending on services now accounts for a significant percentage of all spending. By the late 1990s, private services accounted for more than 21 percent of U.S. spending. Wealthier nations have developed postindustrial economies, where entertainment and recreation businesses have become more important than most raw material extraction such as the mining of mineral ores and some manufacturing industries in terms of creating jobs and stimulating economic growth. Many of these industries have moved to developing nations, especially with the rise of large multinational corporations. As postindustrial economies have accumulated wealth, they have come to support systems of leisure, in which people are willing to pay others to do things for them. In the United States, vast numbers of people work rigid schedules for long hours in indoor offices, stores, and factories. Many employers pay high enough wages so that employees can afford to balance their work schedules with purchased recreation. People in the United States, for example, support thriving travel, theme park, resort, and recreational sport businesses.

FORMS OF BUSINESS OWNERSHIP

There are a number of different forms of business ownership. These include (1) sole proprietorships, (2) partnerships, (3) corporations, (4) joint ventures, and (5) syndicates.

A. Sole Proprietorship

The most common form of ownership is a sole proprietorship—that is, a business owned by one individual. At the beginning of the 21st century, there were more than 17 million sole proprietorships in the United States. These businesses have the advantage of being easy to set up and to dissolve because few laws exist to regulate them. Proprietors, as owners, also maintain direct control of their businesses and own all their profits. On the other hand, owners of proprietorships are personally responsible for all business debts and, because they are constrained by the limits of their personal financial resources, they may find it difficult to expand or increase their profits. For those reasons, sole proprietorships tend to be small, primarily service and retail businesses.

B. Partnership

A partnership is an association of two or more people who operate a business as co-owners. There are different types of partners. A general partner is active in the operation of a business and is liable for all of its debts. In small businesses with only two or three owners, all typically will be general partners. A limited partner, by contrast, invests in a business but is not involved in its daily operations. Partnerships, like sole proprietorships, are relatively easy to establish. Furthermore, partners can pool financial resources to fund expansion and can divide their duties and responsibilities according to personal expertise and abilities. For example, one partner may be very good at selling, while another has a knack for maintaining good financial records. As with sole proprietorships, however, partnerships may entail substantial financial risks, as all of the general partners are liable for the debts of the business. And unlike proprietorships, disagreements among partners can harm partnership businesses.

C. Corporation

A corporation is a legal entity that exists as distinct from the individuals who control and invest in it. As a result, a corporation can continue indefinitely through complete changes of ownership, leadership, and staffing. Current owners can sell their holdings to other individuals or, if they die, have their assets transferred to heirs. This is possible because a corporation creates shares of stock that are sold to investors. One strength of the corporate business structure is that stockholders have limited liability, as opposed to the unlimited liability of general partners, so they cannot lose more than their initial investment. Investors may also easily buy and sell stocks of public corporations through stock exchanges. By offering stock publicly, a corporation enables anyone with some money to buy the stock and become a part-owner of the company. As a result, corporations can more easily raise capital for business expansion than can sole proprietorships and most partnerships.

Investors control a corporation through the election of a managing body, known as a board of directors. In a large corporation, investors collectively decide who will oversee the operation of the enterprise. In turn, the board chooses a president, who decides on the key company personnel and helps formulate company strategy.

Many corporations are highly successful business organizations, with profits far exceeding those of many sole proprietorships and partnerships. However, they traditionally have higher tax burdens than other kinds of businesses. Also, the fees involved in creating and organizing a corporation can be expensive.

D. Joint Ventures and Syndicates

In joint ventures and syndicates, individuals or businesses cooperate to create a single product or service package. A joint venture is a partnership agreement in which two or more individual- or group-run businesses join together to carry out a single business project. For example, U.S.-based General Motors Corporation and Toyota Motor Corporation, based in Japan, have a joint venture called New United Motor Manufacturing, Inc., created for the purpose of producing cars in California.

A syndicate is an association of individuals or corporations formed to conduct a specific financial transaction such as buying a business. Quite often syndicates are created for the purpose of buying sports franchises. For example, the Miami Heat basketball team and the New York Yankees baseball team are each owned by syndicates of individuals. Each member of these syndicates is also involved in the operation of other businesses.

BUSINESS OPERATIONS

A variety of operations keep businesses, especially large corporations, running efficiently and effectively. Common business operation divisions include (1) production, (2) marketing, (3) finance, and (4) human resource management.

A. Production

Production includes those activities involved in conceptualizing, designing, and creating products and services. In recent years there have been dramatic changes in the way goods are produced. Today, computers help monitor, control, and even perform work. Flexible, high-tech machines can do in minutes what it used to take people hours to accomplish. Another important development has been the trend toward just-in-time inventory. The word inventory refers to the amount of goods a business keeps available for wholesale or retail. In just-in-time inventory, the firm stocks only what it needs for the next day or two. Many businesses rely on fast, global computer communications to allow them to respond quickly to changes in consumer demand. Inventories are thus minimized and businesses can invest more in product research, development, and marketing.

B. Marketing

Marketing is the process of identifying the goods and services that consumers need and want and providing those goods and services at the right price, place, and time. Businesses develop marketing strategies by conducting research to determine what products and services potential customers think they would like to be able to purchase. Firms also promote their products and services through such techniques as advertising and personalized sales, which serve to inform potential customers and motivate them to purchase. Firms that market products for which there is always some demand, such as foods and household goods, often advertise if they face competition from other firms marketing similar products. Such products rarely need to be sold face-to-face. On the other hand, firms that market products and services that buyers will want to see, use, or better understand before buying, often rely on personalized sales. Expensive and durable goods—such as automobiles, electronics, or furniture—benefit from personalized sales, as do legal, financial, and accounting services.

C. Finance

Finance involves the management of money. All businesses must have enough capital on hand to pay their bills, and for-profit businesses seek extra capital to expand their operations. In some cases, they raise long-term capital by selling ownership in the company. Other common financial activities include granting, monitoring, and collecting on credit or loans and ensuring that customers pay bills on time. The financial division of any business must also establish a good working relationship with a bank. This is particularly important when a business wants to obtain a loan.

D. Human Resource Management

Businesses rely on effective human resource management (HRM) to ensure that they hire and keep good employees, and that they are able to respond to conflicts between workers and management. HRM specialists initially determine the number and type of employees that a business will need over its first few years of operation. They are then responsible for recruiting new employees to replace those who leave and for filling newly created positions. A business’s HRM division also trains or arranges for the training of its staff to encourage worker productivity, efficiency, and satisfaction, and to promote the overall success of the business. Finally, human resource managers create workers’ compensation plans and benefit packages for employees.

BUSINESS IN A FREE MARKET ECONOMY

The economy of the United States, as well as that of most developed nations, operates according to the principles of the free market. This differs from the economies of Socialist or Communist countries, where governments play a strong role in deciding what goods and services will be produced, how they will be distributed, and how much they will cost (see Socialism; Communism). Businesses in free-market economies benefit from certain fundamental rights or freedoms. All people in free-market societies have the right to own, use, buy, sell, or give away property, thus permitting them to own and operate their own businesses as private, profit-seeking enterprises. Business owners in free markets may choose to run their businesses however they like, within the limits of other, mostly non-business-oriented laws. This right gives businesses the authority to hire and fire employees, invest money, purchase machinery and equipment, and choose the markets where they want to operate. In doing so, however, they may not violate or infringe on the rights of other businesses and people. Free-market businesses also have the right to keep or reinvest their profits.

All free-market economies, however, keep the rights of businesses in check to some degree through laws and regulations that monitor business activities. Such laws vary from country to country, but they generally encourage competition by protecting small businesses and consumers from being hurt by more powerful, large enterprises. For example, in the United States the Sherman Antitrust Act, enacted in 1890, and the Clayton Antitrust Act of 1914 forbid business agreements that impede interstate and most international commerce. The Clayton Antitrust Act also protects against unfair business practices aimed at creating monopolies and guarantees the rights of labor to challenge management practices perceived as unfair. The U.S. Federal Trade Commission Act of 1914 prohibits businesses from attempting to control the prices of its products or services, among other provisions. Other laws prohibit mergers that decrease competition within an industry and require large merging companies to notify the Federal Trade Commission (FTC) for approval.

Time Warner Inc

one of the largest media, entertainment, and Internet companies in the world, formerly known as AOL Time Warner. In 2001 the media company Time Warner merged with online services company America Online. The merger soured, however, and in 2003 the company dropped AOL from its title, although AOL remained a subsidiary. Time Warner was itself the product of a merger in 1989 of publishing giant Time Inc. and Warner Communications Inc., a broad-based entertainment corporation that owned the Warner Bros. motion-picture production company. Time Warner encompasses film, television (TV), music, publishing, online services, and cable systems divisions, and holds investments in numerous other international entertainment and publishing ventures. The company’s headquarters is in New York City.

Time Inc., now a subsidiary company, was founded in 1922. The company’s best-known magazines include Time, Fortune, Life, Sports Illustrated, Money, People, In Style, Entertainment Weekly, Field & Stream, Sunset, Parenting, and Popular Science, some of which are also available online. Time Warner owns several publishing houses, including Warner Books; Little, Brown and Company; Time-Life Books; and Sunset Books.

The Warner Bros. subsidiary was established in 1923 as a film company. Warner Brothers Pictures has been one of the most successful studios in the history of the motion-picture industry. Warner Bros. also operates businesses in many other areas of the entertainment industry. Films and television shows produced by Warner Bros. Television are aired on broadcast TV and on the company’s cable TV channels Home Box Office (HBO) and Cinemax. In 1994 the company debuted The WB Network on broadcast television. Warner Bros. International Television licenses films and TV programs throughout the world. Warner Bros. also owns DC Comics, one of the world’s leading comic book publishers and the creator of Superman, Batman, Wonder Woman, and other famous characters.

In 1991 Warner Bros. launched an American retail merchandising arm—Warner Bros. Studio Stores—to capitalize on its internationally famous animated Looney Tunes characters, such as Bugs Bunny and Daffy Duck. The stores began operations in Europe in 1994. By 2000, Warner Bros. Studio Stores were operating in more than 180 locations worldwide. The stores began failing, however, and in 2001 most were closed.

The Warner Music Group is one of the world’s largest recording and publishing groups. It includes Warner Bros. Records, The Atlantic Group, Elektra Entertainment Group, Warner Music International, and Warner/Chapell. Warner Music Group’s stars include the singers Madonna and Travis Tritt and the rock groups Motley Crüe and Green Day.

In 1996 Time Warner acquired the Turner Broadcasting System from media mogul Ted Turner. The $7.6-billion deal gave Time Warner the world’s largest movie library and control of a number of well-known cable television networks, including Cable News Network (CNN), Turner Network Television (TNT), TBS Superstation, The Cartoon Network, and Turner Classic Movies (TCM). Other businesses Time Warner acquired with the purchase of Turner Broadcasting included motion-picture studios New Line Cinema and Castle Rock Entertainment, Hanna-Barbera Cartoons, and the Atlanta Braves major league baseball team. AOL Time Warner also owns Time Warner Cable, which provides cable television service and high-speed Internet access to customers in the United States.

In 2001 Time Warner merged with Internet giant America Online. The $106-billion deal paired a media empire with the world’s largest online service and marked one of the largest corporate mergers in history. Industry analysts predicted that the new company, named AOL Time Warner, would lead the Internet, media, and entertainment industries.

However, in 2002 the newly merged company began to falter. A slowdown in Internet advertising caused AOL Time Warner to lower its profit forecasts during the year. The company also came under scrutiny by the Securities and Exchange Commission and the Justice Department for the way it calculated advertising revenue. As the company’s stock price continued to decline, some board members raised questions about whether the merger had benefited Time Warner. Some AOL Time Warner executives placed hopes on a suit filed against Microsoft Corporation. The suit sought compensation for damages to Netscape Communications Corporation, which until 2008 produced an Internet browser that competed with Microsoft’s Internet Explorer. Netscape was acquired as part of the merger with AOL. (Encarta Encyclopedia is owned by Microsoft Corporation.)

In 2003 an internal shakeup at the company led AOL cofounder Steve Case to resign as chairman, although he remained on the company’s board of directors until the fall of 2005. Former Time Warner executive Richard Parsons became chairman and chief executive officer of AOL Time Warner. After the two companies merged, AOL officials had assumed most of the leadership positions. As a result of the shakeup, Time Warner executives took the leadership.

In May 2003 AOL Time Warner settled its lawsuit with Microsoft. Microsoft agreed to pay $750 million and to license its Internet Explorer browser to AOL without charge for seven years. Many analysts expected the agreement would effectively end further development of the Netscape business. The settlement also gave AOL nonexclusive rights to license Microsoft software that provides secure downloads of digital music, movies, and other content. Both companies pledged to make their instant-messaging software compatible.

America Online

America Online, Inc., multifaceted computer service company that operates two Internet service providers: America Online (AOL) and CompuServe. The company supplies its subscribers with access to the Internet, electronic mail (e-mail), and other services. Other features of AOL and CompuServe include chat rooms, which allow users to exchange live messages on various topics; electronic versions of popular newspapers and periodicals; software libraries from which users can download sound clips, games, and other programs; and online shopping. The company is based currently in Dulles, Virginia, but plans to move its corporate headquarters to New York City in the spring of 2008. AOL is a subsidiary of media giant Time Warner Inc.
ORIGINS

Company founder Stephen Case grew interested in online computer services in the early 1980s while working as an executive for Pizza Hut. In 1983 he left that company to join an online gaming service named Control Video. In 1985 Case helped reorganize the financially ailing company as Quantum Computer Services Inc. The new company launched Q-Link, an online service for users of Commodore computers. Soon Quantum expanded its service to users of other personal computers.

In 1989 Quantum launched America Online (AOL), a nationwide online service providing news and information in a user-friendly, graphical format. The company charged consumers a monthly fee based on the number of hours spent using the service. In 1991 Quantum changed its name to America Online, Inc., and Case became chief executive officer. The company embarked on an aggressive marketing effort that included mailing thousands of free computer discs to consumers so they could access the service for a free trial.
 GROWTH AND DEVELOPMENT 

Along with rivals CompuServe and Prodigy, America Online helped transform online computing from a domain of the technically savvy to a tool for the masses. AOL played a key role in this shift because its graphical environment appealed to a large audience. Membership grew from 500,000 in December 1993 to 1 million in August 1994. In August 1995 AOL became the world’s largest online service, with more than 3 million members.

The growing popularity of the Internet in the mid-1990s appeared to spell trouble for America Online. Numerous other companies offered users access to the Internet and World Wide Web, which offered many of the services provided by AOL. America Online responded by offering a gateway to the World Wide Web through its service. In addition, America Online signed agreements with AT&T, Inc., Microsoft Corporation, and Netscape Communications Corporation to include access to AOL in some of those companies’ key products and services. America Online also began expanding into Europe and Asia.

In December 1996 the company began offering unlimited usage for a flat monthly fee. By early 1997 membership soared to 8 million users. The unexpectedly rapid growth overwhelmed AOL’s network capacity, forcing the company to offer refunds to subscribers blocked from the service. In 1998 America Online acquired rival CompuServe’s 2.6 million subscribers from telecommunications provider WorldCom as part of a three-way deal. CompuServe’s online service became an America Online subsidiary. In return, America Online sold its high-capacity Internet network to WorldCom.

In 1999 America Online purchased Netscape, the developer of Netscape Navigator, a software tool that allows computer users to browse the Internet using a graphical user interface. Hoping to expand its electronic commerce operations, America Online also forged a strategic alliance with computer manufacturer Sun Microsystems. The company planned to combine Sun’s high-performance servers and workstations, Netscape’s browsing software, and AOL’s consumer-marketing operations.

In January 2000 America Online and entertainment giant Time Warner announced their intention to merge into one company. The $106-billion deal, completed in January 2001, marked one of the largest corporate mergers in history. The new company, AOL Time Warner, became a leader in the Internet, media, and entertainment industries. Within only two years, however, the merger came to be regarded largely as a failure. As the dot-com bubble burst in 2000 and 2001, AOL Time Warner’s stock price fell sharply. The subsequent disclosure that both the Securities and Exchange Commission (SEC) and the U.S. Justice Department were investigating accounting irregularities at AOL further lowered the stock price. In addition, AOL began losing subscribers to competition from telecommunications and cable companies offering high-speed Internet access.

In May 2003 Case resigned as chairman of AOL Time Warner. Other executives from AOL who had assumed top positions in the merged company were replaced with Time Warner executives. In September 2003 the board of directors decided to remove AOL from the name of the company, reverting to Time Warner Inc. In March 2008 AOL ceased offering technical support for Netscape’s Navigator and urged customers to download other browsers.

CURRENT TRENDS

Business activities are becoming increasingly global as numerous firms expand their operations into overseas markets. Many U.S. firms, for example, attempt to tap emerging markets by pursuing business in China, India, Brazil, and Russia and other Eastern European countries. Multinational corporations (MNCs), which operate in more than one country at once, typically move operations to wherever they can find the least expensive labor pool able to do the work well. Production jobs requiring only basic or repetitive skills—such as sewing or etching computer chips—are usually the first to be moved abroad. MNCs can pay these workers a fraction of what they would have to pay in a domestic division, and often work them longer and harder. Most U.S. multinational businesses keep the majority of their upper-level management, marketing, finance, and human resources divisions within the United States. They employ some lower-level managers and a vast number of their production workers in offices, factories, and warehouses in developing countries. MNCs based in the United States have moved many of their production operations to countries in Central and South America, China, India, and nations of Southeast Asia.

In the United States, for example, America Online, Inc. (AOL) and Time Warner merged in 2000 to form AOL Time Warner, Inc., (present-day Time Warner Inc.) a massive corporation that brought together AOL’s Internet franchises, technology and infrastructure, and e-commerce capabilities with Time Warner’s vast array of media, entertainment, and news products.

With large mergers and the development of new free markets around the world, major corporations now wield more economic and political power than the governments under which they operate. In response, public pressure has increased for businesses to take on more social responsibility and operate according to higher levels of ethics. Firms in developed nations now promote—and are often required by law to observe—nondiscriminatory policies for the hiring, treatment, and pay of all employees. Some companies are also now more aware of the economic and social benefits of being active in local communities by sponsoring events and encouraging employees to serve on civic committees. Businesses will continue to adjust their operations according to the competing goals of earning profits and responding to public pressures for them to behave in ways that benefit society.