Just About Money


Strictly defined, money is anything generally accepted in exchange for goods and services. To be used as a medium of exchange, money must be acceptable, divisible, portable, stable in value, durable, and difficult to counterfeit.

Acceptability: To be effective, money must be readily acceptable for the purchase of goods and services and for the settlement of debts. Acceptability is probably the most important characteristic of money: If people do not trust the value of money, businesses will not accept it as a payment for goods and services, and consumers will have to find some other means of paying for their purchases.

Divisibility: Given the widespread use of quarters, dimes, nickels, and pennies in the United States, it is no surprise that the principle of divisibility is an important one. With barter, the lack of divisibility often makes otherwise preferable trades impossible, as would be an attempt to trade a steer for a loaf of bread. For money to serve effectively as a measure of value, all items must be valued in terms of comparable units—dimes, for a piece of bubble gum, quarters for laundry machines, and dollars (or dollars and coins) for everything else.

Portability: Clearly, for money to function as a medium of exchange, it must be easily moved from one location to the next. Large colored rocks could be used as money, but you couldn’t carry them around in your wallet. Paper currency and metal coins, on the other hand, are capable of transferring vast purchasing power into small, easily carried bundles.

Stability: Money must be stable and maintain its declared face value. The principle of stability allows people who wish to postpone purchases and save their money to do so without fear that it will decline in value. Money declines its value during periods of inflation, when economic conditions cause prices to rise. Thus, the same amount of money buys fewer and fewer goods and services.

Durability: Money must be durable. The crisp new dollar bills you trade at the music store for the hottest new CD will make their way all around town for about 18 months before being replaced. Were the value of an old, faded bill to fall to line with the deterioration of its appearance, the principles of stability and universal acceptability would fail. Although metal coins, due to their much longer useful life, would appear to be an ideal form of money, paper currency is far more portable than metal because of its light weight. Today, coins are used primarily to provide divisibility.

Difficulty to Counterfeit: To remain stable and enjoy universal acceptance, it almost goes without saying that money must be very difficult to counterfeit—that is, to duplicate illegally. Every country takes steps to make counterfeiting difficult. Most use multicolored money, and many use specially watermarked papers that are virtually impossible to duplicate.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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Just about Joint Ventures


Joint ventures (JV) are the waves of the future. There is hardly a Fortune 500 company, active overseas, that does not have at least one JV.

JV represents a higher risk alternative because it requires various levels of direct investment.  A JV involves sharing risks to accomplish mutual enterprise. JVs, incidentally, are the next most common form of entry once a firm moves beyond the exporting stage to a more regular overseas involvement.

JVs provide a mutually beneficial alternative to domestic and foreign businesses to join forces. For both parties, the ventures are a means to share both capital and risk and make use of each other’s technical strength.

JVs, however, are not an unmixed blessing. The major problem in managining joint ventures stems from one cause: there is more than one partner. With patience and flexibility on the part of both partners, JVs can be managed successfully. But one of the partners must play the key, dominant role to steer the business to success.

Widespread interest in JVs is related to:

  1. Seeking market opportunities.
  2. Dealing with rising economic nationalism.
  3. Preempting raw materials.
  4. Risk sharing.
  5. Developing an export base.
  6. Selling technology.

Even a JV with a well-qualified majority foreign partner may provide significant advantages, such as:

  1. Participation in income and growth.
  2. Low cash requirements.
  3. Preferred treatment for the venture.
  4. Easier access to a market and to market information.
  5. Less drain on a company’s managerial resources.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight