What is the Equity Method? The equity method is the accounting method used by Company A to report on its financial statements the earnings of Company B in which the reporting company holds an ownership interest. The amount included is calculated as: Amount Reported = Earnings of Company B x Ownership Interest of Company A.  What is the Consolidation...

What is Gulati's 3P Framework? The 3 P Model, proposed by Ranjay Gulati, seeks to resolve the tension between employee empowerment and operational discipline. The models consists of the following: PURPOSE - A single shared goal that sums up the "why" of the organization. It provides direction and meaning to everything the company and its employees d...

How is a Business Program Structured? In this article, I break down the structure of business education programs within a college of university.  More specifically, I talk about the types of degrees/certificates and course structure.  I close out by talking about a few important things that every business student should know about business schools, ...

What is the Keynesian Approach to Unemployment and Inflation? Keynesian macroeconomics argues that the solution to a recession is expansionary   fiscal   policy, such as tax cuts to stimulate consumption and investment, or direct increases in government spending that would shift the aggregate demand curve to the right. For example, if aggregate dema...

Duties of a Principal to an Agent? The terms of an agency may be laid out in the agency agreement. Generally, a principal owes the following duties to the agent:  Duty to Compensate,  Duty to Reimburse, and  Duty to Indemnify the Agent.  What is the Duty to Compensate an Agent? An agency relationship may be paid or gratuitous. If the agency agreemen...

Why Secure Website URLs? When starting a business, many people often forget to determine if the name of your business is available for a custom URL (E.g., http://TheBusinessProfessor.com)  Your website is a calling card for your business. People need to be able to easily remember and find your website when looking for a business like yours.    What ...

What is Statistical Significance? Statistical significance refers to the probability that a relationship formed between at least two variables is because of something specific, and not by chance or a mere coincidence. Statistical hypothesis testing helps in knowing how statistically significant outcome of a data set is. It gives a p-value that shows...

What are Diseconomies of Scale? Diseconomies of scale is a situation whereby the costs per unit of a company rises as a result of growth in business.  What is the Effect of Disceconomies of Scale? In diseconomies of scale, the expansion of a business creates an increase in the unit cost of production, rather than a decrease in costs of production. T...

What is a Payday Loan? A payday loan refers to a short-term loan in which the lending party gives an extension for high interest loan depending on the income and credit rating of the borrowing party. Such type of borrowing generally involves a chunk of the next months salary or income of the borrower. Such loans, being short-term in nature, carry hi...

What is assignment and delegation of contracts? Assignment is the transfer by one party of her right to receive performance from the other party to the contract. Delegation is the transfer by one party of her duties to perform under a contract. How do you Assign or Delegate a Contract?  The rights under a contract can be assigned or the duties deleg...