The Global Economy and Business

The United States has been populated by peoples from many different national origins, races, religions, cultures, and languages. Over 50 million people chose to immigrate to the United States between 1820 and 1987. These immigrants believed that the United States offered better opportunities for them and their children than did their countries of origin. In an important sense, the American experience is the story of how these very different peoples, united by their search for a better life, built a country. 

To build a country means to build an economy that is why I think it’s very important to analyze the impact of immigration on American economy, the biggest in the world. So, I would like to create a new category, where I will tell you about immigration and the economy. 

Belarus Computer Industry  

The Research and Development of the component base and architecture of the Belarusian computers was done in a Minsk based Research Institute of Computational Techniques. Nowadays the scientific research association “Cybernetics” of the Academy of Sciences of Belarus is probably dealing with these problems. The computers are assembled also in Minsk in BelABM, the main Belarusian PC and main frame computer manufacturer.  

BelABM is now the partner with Compaq and Fujitsu. It manufactures LANs and PCs. BelABM also is the partner with GlobalOne in telecommunications.  

Laser and Optical Industry of Belarus Let’s just list below the major Belarusian optical enterprises: Lida Optical Plant “Optik” is the second largest optical plant in Europe after Carl Zeiss. In the former Soviet Union it was specifically designed as a mass manufacturer of optical elements. Optical elements such as lenses, prisms, flats, etc., are manufactured here. The idea was that the plant would concentrate on optics while further optic-mechanical enterprises would use its product to assemble objectives and other optic-mechanical devices. The plant is capable of mass production of millions and millions of optical elements. Lately they also started to pool optical fibber, do optical coatings, including photo chromic coats. All major optical plants of the former Soviet Union were the customers of this giant.  

Basically, if you are looking for a cheap supplier of big quantities (millions) of high quality glass and quartz optical elements - Lida “Optik” could be the way to go.  

BelOMO is a major optic-mechanical assembly plant of the former USSR and Belarus now. It is the designer and manufacturer of laser, optoelectronic and optic mechanical instruments. Products include topographic and multispectral photographic equipment, photogrammetric devices, laser devices, optoelectronic sighting devices, and medical equipment based on laser systems. It was set up as a manufacturer of high resolution satellite cameras and is still listed in various space war lists. So there are rather high standards of quality here. As far as peaceful applications, it manufactures objectives, photo cameras, etc. Some of the satellite photos of Russian Sovinformsputnik were done on BelOMOs TK-350 satellite topographic camera with 10 meter ground resolution. The enterprise cooperates with Swedish Latronix. German CARL ZEISS has a joint venture with Smarhon Optical Machine Tool Plant. This plant was the SINGLE supplier of ALL optical plants of the former USSR with optical polishing equipment. They also manufacture industrial vacuum measurement sensors/ electronics.  

Minsk Laser Plant. This is an experimental plant that is manufacturing YAG lasers, laser power supplies, and solid state pumped dye lasers with harmonics generators. Established in 1991, manufacturer of laser rods and laser crystals including alexandrite, Ti-sapphire, forsterite and lanthanum beryllate. Their products could be pretty cool. Other Belarusian institutions related to optics/ lasers are the Institute of Applied Physical Problems, the National Academy of Sciences, the Institute of Applied Optics of National Academy of Sciences, “October” Glass Factory, “Optron” Instrument Manufacturing Plant. Generally, Belarusian Laser and Spectroscopy school is pretty strong.  

Horizont. The TV-production Corporation HORIZONT (Minsk) has more than 40 years of experience in the market. Currently they manufacture color TV-sets; modern equipment for cable and satellite television; office furniture. The company has its own considerable production facilities and qualified personnel for the assembling of modern consumer electronics. HORIZONT Corporation is a state enterprise, including 5 plants and the Design-Centre. They cooperate with such known companies as Philips Semiconductor; Samsung Electronics Co., Ltd.; Siemens AG; Thomson, and many others. The main reasons why it’s good to deal with HORIZONT are the following: - no customs borders with Russia - the location in the centre of Europe - the permission to found a free economic zone on the base of HORIZONT (release from taxes applies to the partners as well) - the availability of the vacant production capacities and qualified personnel - the availability of the Design-Centre – the prospective designer of the future projects. 

When a person starts his own business trying to realize the dream of the whole life usually it has little in common with a franchise business. I mean that in most cases people don’t dream about buying somebody’s idea but want to do something invented personally. So in this situation the prospective businessman usually follows these steps (generalized plan):
1. Create a business plan (including all necessary pre-researches)
2. Calculate the necessary investment
3. Evaluate personal savings
4. Turn for a credit
5. Start a company
 
But when you are buying a franchise you may have two variants of behavior to choose from. Just think this over! If you don’t have a special franchise preference (maybe your friend’s or your relative’s one) you can choose an idea that has the best opportunities to get external financing. In this case your strategy can be something like this:
1. Compare different credit programs (provided by banks, business associations, other financial institutions) and write the list of eligibility criteria.
2. Choose the franchise idea according to those eligibility criteria.
3. Create a business plan (including all necessary pre-researches)
4. Turn for a credit
5. Start a company
 
As I understand in the second variant you have much better opportunities to be financed externally, to start your business faster and to take a loan with lower interest rate and better other conditions. It seems for me that it’s worth of it.

All-Blogs.net

Writing about the SBA loans for new and expanding small franchises I met the list of public goals. It was said that in order to get a bigger credit your company needed to meet some of these goals. Some of them are easy to meet; the others are difficult not only to meet but also to prove that you can do it. But one of them has attracted my attention – when small franchise business is trying not only to earn money or to help in achievement of personal goals of its owner but helps those who can take care of themselves. I’m speaking about those whom we usually call “disadvantaged individuals”. This article is devoted to them and their ability to participate in business and in life in general by entering franchise system.
 
In general there are two different points of view regarding disadvantaged individuals. The first group of people thinks that it’s better not to attract attention to them at all. They say that this will disgrace them and hurt their pride. The people with the opposite opinion believe that we need to do as much as possible to help them; we need to create the special conditions in every sphere of life and business is not exclusion. As for me I’m somewhere in between these two extremes. And speaking about franchise business I think that there must be created some preferences for such group of people. And these preferences have to be results from the obstacles that disadvantaged individuals face.
 
Below I write about that obstacles and the way to decrease the influence of them on the disadvantaged individuals while starting their franchise business.
 
1. Obstacle: Little knowledge in franchise sphere. This problem is divided into the several sub-problems.
1.1. Availability of information about franchise concept in general. Many of that people have very little or even no business knowledge. As most of them have at least one problem concerning communication (reading, watching, hearing and so on) they get the information from doubtful sources – their friends who are not in business, relatives or neighbors. As I think the society has to create some means of information to provide reliable, trustworthy facts about advantages and disadvantages of franchise business, opportunities and special programs for the disadvantaged individuals. These means of information has to be technologically different to cover as many of such people as possible.
1.2. Sufficient background necessary to understand, to manage and to operate a small business franchise company. This obstacle includes not only general information but also real business skills. I want to mention that disadvantaged people are very vulnerable and they may consider ordinary business problems as their personal failure. I think that the role of the society in this case is to help them to avoid those problems. Maybe we can think about some business incubators or services of special consultants for franchises managed by disadvantaged individuals (financed by the money of franchise associations and small business organizations).
 
2. Obstacle: Ability to compete with non-disadvantaged franchisees. This problem can be characterized as psychological even more that economic or medical. Some of such people consider themselves incapable to start something themselves. But if they see the results shown by those who are in worse conditions they can cheer up. I suppose this to be the main role of the society – to show disadvantaged individuals that from business point of view they are absolutely equal to ordinary people. And even more! The statistics proves that people who have health problems in one sphere usually are extremely talented in the other.
And one more statement: being disadvantaged they can better understand the needs and want of other disadvantaged individuals. As a result their business can meet that needs much better; and it’s the first step to better competitiveness.
 
 
3. Obstacle: It’s too expensive as disadvantaged individuals have more expenses to cover in comparison to ordinary people. I agree that this is an obstacle; but on the other hand franchise business can bring them additional money in the form of profit. I think that government has to support (and I know that in many countries it does) the willingness of such people to start their own business as it will help to achieve the long-term goals too. Also I believe that franchisors must include special paragraphs in their franchise programs for disadvantaged individuals buying the license from them to make it cheaper…
 
4. Obstacle: It’s physically difficult for the disadvantaged individuals to collect and to provide all the necessary documents to start-up the franchise business. I think that authorities must pay attention to this problem too. We create special parking slots for such people, help them in the shops and so on. I think that there wouldn’t be any problem for all sides (I mean banks, franchisors, lawyers, local authorities and other institutions) to introduce some light procedures for such groups of people. It’s not only a noble  but also a good economic decision. Will anybody argue?
 
Certainly there are more other obstacles for disadvantaged individuals to start their franchise business. Here I mentioned only the main as I think…

Chemical Industry of Belarus: Belarus has perhaps the most modernized and powerful chemical industry among the CIS states besides Russia. The chemical industry specializes first of all in the processing of Russian oil products going through the pipelines to the west (primarily Germany); synthetic polymers, mineral fertilizers, pharmaceutics, household chemical products.  

Polymer Synthesis in Belarus: Several major Belarusian enterprises are manufacturing polymers, synthetic fibers, polymer film etc. Among such enterprises are “Khimvalakno” (synthetic polyester fibre plant in Grodno); Rudensk plastic manufacturing plant near Miensk; ZIV - Mahilyow Viscose Fibre Plant and “Khimplast” (plastics and polymer manufacturer/ recycler plant) and Mogilev Regenerate Plant (recycling plastic materials).  

Production of Mineral Fertilizers in Belarus: Belarus is the world biggest supplier of potassium mineral fertilizers - the only mineral resource met in abundance in our land. “BelarusKali” is the world’s largest potassium fertilizer manufacturer; “Azot” is a giant enterprise manufacturing nitro-mineral fertilizers and other nitro compounds. It is now a part of the Belarusian Consortium which includes also Khimvolokno, Polymir etc.  

Belarusian Pharmaceutical Industry: it turns out that Belarusian pharmaceutical industry is not so bad. Some foreigners buy antibiotics in packs when in Belarus. Keep in mind that extremely strict former USSR governmental standards on medicine are still operating. Of course, with the disintegration of the industrial network of the CIS the production has fallen and there is a deficit of medicine now in Belarus. Major enterprises are Mogilev plant of medicine and Mogilev plant of veterinary medicine.  

Household Chemical Products from Belarus: there are several plants involved in production of stuff like shampoo, detergents, etc. for example, Brest Chemical Plant of Household Products.  

The Belarusian Semiconductor Industry - one of the main branches of Belarusian economy. During the USSR times Belarus semiconductor industry was taking care of the mass manufacturing of main-stream semiconductor elements, ICs and computer chips. Belarusian enterprises were mostly oriented on consumer electronics and mid-level ICs. The main Belarusian semiconductor consortium - Research and Production Corporation “Integral” - is in fact the largest in Eastern Europe semiconductor Production Company. In fact it consists of 6 plants and 3 design centers providing complete cycle of production of electronic components. The headquarters of “Integral” are located in Dzerzhinsky Plant. “INTEGRAL” Research and Production Corporation was established in 1971 in Minsk, it was the biggest semiconductor manufacturer in the former USSR, both for national economy and for defense needs.  

At present time the Corporation includes five plants and four R&D centers in different regions of the Republic of Belarus. Under new political and economical conditions, “Integral ” make active efforts for conversion and diversification of the range of their products. By extending and updating the new high technology goods of its own design, “Integral” wants to be useful for its customers and tries to solve the difficult problems of keeping its competitiveness, to gain the access to new markets and receive international recognition.  

Production Association RADIOVOLNA concentrates main attention on production of complicated radio electronic devices and electro technical goods for automobile industry. At present time the association enlarges sale markets of car stereo systems, TV sets, radio receivers generators and accessories for diesel engines, electro technical goods for agriculture and cable TV equipment, aspires to be useful to customers constantly producing now qualitative goods.  

Production association RADIOVOLNA has wide opportunities in: 

- Forming production; 

- Mechanical treatment 

- Plastic processing 

- Electroplating and paint coating 

- Production of complicated technological and non-standard equipment on CHARMILLES TECHNOLOGIES machines.  

Belarus Auto Moto Industry. The BELAZ Trade Corporation (BTC) groups of companies have complete range of products and original services; they are the worldwide supplier of haul trucks, road construction machinery, service vehicles & other haulage equipment with the BELAZ trademark. When Belarusians think of something they have accomplished in industry most likely they think about their auto industry, and primarily Minsk Automobile Plant - MAZ.

        

Indeed we could be proud of the machines that are working in all corners of the former USSR - deserts of Middle Asia, polar tundra, Siberian taiga, quarries of the Urals and many countries of the world. German businesses are cooperating with MAZ. Ford has already built a plant in Belarus acknowledging our successes in automobile manufacturing. Czech “Skoda” followed them. Great Britain is considering Belarus as a partner for future cooperation, too.
The Production Association “Minsk Tractor Works”, MTZ, is one of the largest manufacturers of tractors in the world. MTZ Belarus is an association of 6 cooperating Belarusian plants. MTZ Belarus has received 32 international quality certificates. More than 3 Millions of MTZ Belarus tractors successfully operate in over 100 countries around the world all year round in various climate and soil conditions.
           

Currently MTZ manufactures:
-24 different models of ploughing tractors ranging from 50 to 130 h.p.;
- 6 models of small tractors with engine power from 20 to 35 h.p.;
- 8 models of mini-tractors and moto-blocks with engine power ranging from 6 to 12 h.p.;
- 16 models of loaders, forestry, mine and maintenance machines;
- spare parts for the tractors;
- metal processing equipment and other stuff.
  
Gomselmash is one of the largest producers of agricultural machinery in the CIS and Eastern Europe. Gomselmash manufactures fodder -picking combines and multi-functional agricultural machines: mowing machines, machinery complexes for sugar-beet cultivation, tractor trailers, mini-tractors with optional attachments and automobile components.
With metallurgical and preparatory technology, mechanical assembly and instrument production capacity, the largest network of warehouses, their own means of transportation, and the well-qualified staff, Gomselmash is able to undertake a wide range of technical production orders. It is currently seeking new partners interested in investing in joint ventures. Gomselmash is prepared to consider proposals within their field of expertise.
Oil Processing Industry of Belarus: Belarus oil-refining industry changes its structure and proprietorship. From the Belarusian press talks, speeding up privatization in this industry has begun to assume a specific shape. Some governmental structures are working out share-distribution projects for about six major players in the Belarusian oil-refining industry. First, there are companies such as Polimir, Naftan and the 2nd Heat and Power Plant, all of which are situated in northern Belarus. Then there is a Belshina tyre-factory in Bobruisk; Azot in Grodno, they are the biggest producers of caprolactam and mineral fertilizers; and similar plants in Mogilev and Svetlogorsk, which go by the name of Khimvolokno. The two major oil processing plants are in Navapolacak and in Rechitsa. These are relatively modern giants that are currently operating below their full capability because of the drop of oil supplies. Other few names related to this industry are Slavneft (Oil & Gas); Rechitsa Oil Processing plant and Babrujsk Hydrolisys Factory. Navapolacak oil processing plant “Naftan” is the biggest oil processing plant in Europe. Lukoil plans to be a biggest shareholder in Naftan.
 

 

The National Bank has the exclusive right to issue paper money, regulate settlements procedures and manage national reserves.
The National Bank bears full responsibility for the development and implementation of exchange rate policies. These include the setting of procedures for hard currency transactions and monitoring the activities of dealers on this market, including banks.
The National Bank has the right to provide guarantees for loans, including government guarantees for international loans.
The National Bank does not provide crediting to economic entities but to the only institution authorities who give loans to the central and local governments. Under the present law, the total amount of such loans may not exceed two percent of the GNP in that fiscal year.
Under the current legislation, crediting, cash collection and other financial services are provided to economic entities by commercial banks.
Banks receive the status of legal entity after their registration with the National Bank and operate on conditions specified by their licenses.
Banks operate independently, and any state interference in their activities is illegal. The procedures for attracting and use of funds, conducting banking transactions, as well as interest rates and commissions are set by the banks independently.
Banks must comply with the decrees issued by the National Bank and provide the statistics required by the National Bank regulations. In order to promote the stability of banks, the National Bank sets the minimum requirements to the size of the banks’ foundation capital, obligatory guidelines of their economic performance and procedures for ensuring current and deposit accounts.
The National Bank may conduct the refunding of banks as a means of regulating the amount of money in circulation. It may also provide credit aid to solvent banks directed at maintaining their liquidity.
In the event of a systematic violation of the National Bank regulations, loss-making or a situation that may threaten the interests of the bank’s creditors, the Bank is entitled to take every step necessary to amend the situation, which may ultimately include a bankruptcy action in court against the bank in question.
The Bank co-operates with the International Monetary Fund, the World Bank and the European Bank for Reconstruction and Development and has correspondence accounts in foreign banks.
The National Bank participates in the work of international organizations. With the government’s authorization, the Bank makes commitments and conducts operations required by Belarus’ membership status in these organizations.
The National Bank co-operates with foreign banking and financial control institutions. The law enables it to be a member of international banking funds, unions and association. 

Do you have a plastic bank card? Have you ever used any bank serves?
I am sure that your answer will be «yes».
But do you know how the bank system works? Not exactly?
I will try to tell you about it by the example of the National Bank of Belarus.
 

The National Bank of Belarus occupies the central position in the country’s banking system and is accountable to the Parliament. It has the right of legal initiative. The Head of the National Bank is appointed by the President. His deputies and members of the board are appointed by the Presidium of the Parliament.
The National Bank is an independent institution acting within the limits of the legislation and its Charter. The Charter is the subject to approval by the Parliament. The Bank forwards annual reports of its activities to the Parliament.
Institutions of the state my not intervene with the work of the National Bank. The National Bank has no responsibility for the government debt, nor is the government responsible for any liabilities of the National Bank, if otherwise not specified by the legislation.
The National Bank maintains the foundation capital, reserve, and other aspects which serve as collateral for its liabilities.
In cooperation with the government, the National Bank drafts and forwards to the Parliament the guidelines for financial and credit policies for the coming year and reports the implementation of such policies in the previous year.
The National Bank’s efforts are directed at the stability maintaining of the local currency and prices. Its main responsibilities are to develop monetary and credit politics, encourage the liquidity, solvency and stability of the financial system and provide support for government economic policies.
The National Bank regulates inflation chiefly by internationally accepted economic means, such as interest rates, minimal requirements for banking services and activity on the open financial market.
The National Bank acts as a creditor, economic advisor and representative of the government on the financial market. The Bank represents the Republic of Belarus in all international and other organizations in issues of monetary and credit policies and licensing of banking activities.
The National Bank offers banking services to foreign governments, banks and financial institutions. Acting as the representative of Belarus in international organizations, it makes commitments and conducts operations required by the country’s membership status in such organizations. 
Functions of the National Bank:
- monetary, credit and hard currency regulations; monitoring of foreign trade and loan market;
- consulting, crediting and financial representation of the government and local institutions of power, execution of the central and local budgets;
- acting as a central depository;
- registration of banks, their branches and representative offices, monitoring their stability and liquidity operation of the inter-bank settlements system;
- issuing of licenses to financial companies to operate on the financial and hard currency markets;
- maintaining uniform accounting and reporting standards, setting rules and procedures for clearance settlements in the national economy.
 

Another interesting program of the Small Business Administration (SBA) is called the CDC/504 loan program where “CDC” stands for the Certified Development Company. The Certified Development Company is a private nonprofit organization with the main purpose to contribute to the economic development of its community. The organization works with the SBA and privately-owned lending institutions (commercial banks and other financial organizations) to provide financing to small businesses. There are about 270 CDCs in the USA. Each CDC is responsible for a specific geographic area.
 
The main features of the loan are the following:
a) it’s a long-tern loan;
b) the interest rate is fixed during the whole period;
c) there is a limited number of purposes: to acquire real estate,  machinery or equipment for expansion or modernization;
d) in most cases the loan is secured with a senior lien (when provided by privately-owned lender) or with a junior lien (when a loan secured from a CDC and with a full SBA-guaranteed debenture);
e) the borrower has to invest himself not less then 10%.
 
How much a company can get according to this program? It depends on the purposes and job creation factor:
 
1. You will get up to $4,000,000 if you are qualified as a “Small Manufacturer”. A company is considered as small manufacture if its primary business classified in sector 31, 32, or 33 of the North American Industrial Classification System (NAICS); and all of its production facilities are located in the United States.
 
2. You will get up to $2,000,000 if your company’s activity meets at least one of the following public policy goals:
a) Business district revitalization (a strange goal as I think; different people will vary in opinion while explaining the sense of “revitalization”; I can even say that every new company revitalize a business in a district… I don’t like that factor, as it’s not clear to my opinion);
b) Expansion of exports (this factor is a wonderful public goal; every student can explain why export is important for the economy of the district and for the whole country; but one doubt appears in my mind – how will new small business company prove that they are going to expand the export; such statements are based on the international marketing research but small business company – especially a new one – has no money, specialists and other resources to get such research even for one product and for one country… But still I like that factor because it’s economically correct);
c) Expansion of minority business development (Government tries to kill two birds with one stone – to help small business and minority… I like this because it can save some budget money!);
d) Rural development (my comments are the same as to the previous factor);
e) Increasing productivity and competitiveness (oh… one more factor that would be very difficult to prove; especially competitiveness; certainly if you buy a new technology and modern equipment it WILL increase the productivity of the company; but the costs will rise and so on… I’m not sure about this factor);
f) Restructuring because of federally mandated standards or policies (it’s clear and I support this);
g) Changes necessitated by federal budget cutbacks (I like this; when new business creates new jobs in the region or solve some urgent economic or social problems it worth of receiving some support from the Government);
h) Expansion of small business concerns owned and controlled by veterans, especially service-disabled veterans (it’s easy to prove and it’s very noble goal; such people need to know that they can do something for the society, not only society for them; they have a special need to be useful; I really support that goal)
i) Expansion of small business concerns owned and controlled by women (as a woman myself I like this goal… but feminists can say that the Government offend women by this goal: why do they say that women need more help than men…)
 
3. You will get up to $1,500,000 if your project meets the job creation criteria or a community development goal. Generally, your business must create or retain one job for every $50,000 provided by the SBA.

I’m continuing describing the 7(a) Loan Guaranty by the SBA. By the way the strange name of the program is not really so strange. It comes from the legislation, the section 7(a) of the Small Business Act.
 
One of the most important things to learn about this program is guaranty itself. Who provides it? When? Are there any limitations?
1. The SBA doesn’t guaranty the full amount of 7(a) loans. The lender and the SBA share the risk that the borrower will not be able to repay the loan in full. The SBA takes the responsibility to cover the loan payments in the case of payment default. The guaranty doesn’t include imprudent decisions made by the lender or misrepresentation by the borrower.
2. The SBA provides the guaranty that is only available to the lender. It means that according to this program, the borrower remains obligated for the full loan amount due either to the bank or to the government. The program assures the lender that in the event the borrower does not repay his or her obligation and a payment default occurs, the government will reimburse the lender for its loss (up to the percentage of the SBA’s guaranty fixed in the loan agreement).
3. The SBA doesn’t provide guaranties to all small business companies. The applying company needs to understand that the Agency will check both eligibility and being creditworthy. Also they will determine if the company can prove the willingness and ability to pay its debts and whether it abided by the laws of its community. I’ll write more about the factors of eligibility later but here I need to say that any prospective borrower has to understand that the SBA takes into consideration that for some reasons commercial banks and other financial institutions are not willing to lend you money. If means that something is not so good in your idea, or you personal credit history, or something else. Maybe you may think how to improve the situation yourself at first?…
 
(to be continued)