Unit 12 Competition
Competition brings out the best in products and the worst in people.
Business compete against each other to sell their products and to increase or defend existing market share. Competition is one of the most critical factor for any business. Competition is a necessary component for our world, because due to competition we get new products that make our lives easier. Every company wants to sell its items and try to improve its position do it better from day to day.
It is no coincidence that this fundamental rule of nature is something that human beings apply to their everyday lives in order to hopefully better understand it. Every day we compete for something whether it is resources, jobs, or sports. This competitive spirit is evident in the way we conduct our businesses, relationships with each other and ourselves, and the tenacity we exhibit towards sports regardless of whether we are playing it or merely watching. The role that competition plays in society is one of being its catalyst. There simply is no other force that gets things moving. For example, in our drive to live and outlive others, we conduct our affairs in a manner that guarantees that not everyone involved gets everything they want. Not everyone wins in the fight for resources. It is this reasoning that drives biologists to say that “competition is a negative interaction that occurs whenever two or more organisms require the same limited resource” (Carson). Every person in the world can define their own limited resource and where those self-defined limited resources intersect, competition will arise.
Unit 13 Banking
Microfinance: financial prospects and challenges
Microcredit banks or microfinance institutions lend sums of money to people in developing countries for small business development. Microfinance is usually understood to entail the provision of financial services to micro-entrepreneurs and small businesses, which lack access to banking and related services due to the high transaction costs associated with serving these client categories. The two main mechanisms for the delivery of financial services to such clients are (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group.
In some regions, for example Southern Africa, microfinance is used to describe the supply of financial services to low-income employees, which is closer to the retail finance model prevalent in mainstream banking.
For some, microfinance is a movement whose object is "a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers." Traditionally, banks have not provided financial services, such as loans, to clients with little or no cash income. Because of these difficulties, when poor people borrow they often rely on relatives or a local moneylender, whose interest rates can be very high. Although much progress has been made, the problem has not been solved yet. The industry has been growing rapidly, and concerns have arisen that the rate of capital flowing into microfinance is a potential risk unless managed well.
Most criticisms of microfinance have actually been criticisms of microcredit. Criticism focuses on the impact on poverty, the level of interest rates, high profits, over indebtedness and suicides. Other criticism includes the role of foreign donors and working conditions in companies affiliated to microfinance institutions, particularly in Bangladesh. The impact of microcredit is a subject of much controversy. Proponents state that it reduces poverty through higher employment and higher incomes. This is expected to lead to improved nutrition and improved education of the borrowers' children. Some argue that microcredit empowers women. In the US and Canada, it is argued that microcredit helps recipients to graduate from welfare programs.
Critics say that microcredit has not increased incomes, but has driven poor households into a debt trap, in some cases even leading to suicide. They add that the money from loans is often used for durable consumer goods or consumption instead of being used for productive investments, that it fails to empower women, and that it has not improved health or education.
The available evidence indicates that in many cases microcredit has facilitated the creation and the growth of businesses. In has often generated self-employment, but it has not necessarily increased incomes after interest payments. In some cases it has driven borrowers into debt traps. There is no evidence that microcredit has empowered women. In short, microcredit has achieved much less than what its proponents said it would achieve, but its negative impacts have not been as drastic as some critics have argued. Microcredit is just one factor influencing the success of small businesses, whose success is influenced to a much larger extent by how much an economy or a particular market grows.