CHAPTER 2 CHAPTER 2.pdf

8/11/2019 CHAPTER 2 CHAPTER 2.pdf

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CHAPTER 2

PLANNING AND ORGANIZING A BUSINESS


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A business can be defined as an organization thatprovides goods and services to others who want

or need them. It includes every form of trade,

commerce, craftsmanship, occupation,

profession or other activities that is carried out

for the purpose of maximizing profit.

There are four (4) forms of business:

SOLE PROPRIETORSHIP

PARTNERSHIP

PRIVATE LIMITED COMPANY.

PUBLIC LIMITED COMPANY.


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It is owned by one person the simplest business structure

may have any number of employees

requires a small amount of capital to start

with

only Malaysian citizens or permanent

residents can register as an owner

Examples: tailor shops, beauty saloons,restaurants, launderettes and mini market


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a legal business entity with two or morepartners but not exceeding 20 persons

partners carry out the business, share the

capital, profits and losses

Partnerships comprise two or more businesspartners pooling their resources in a business

with a view to profit.

only Malaysian citizens or permanent residents

can register partnerships Personal names or trade names can be used as

business names


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Active partners:The partners who actively participate in the day-to-day operations of the businessare known asactive partners. They contribute capital and are

also entitled to share the profits of the business.They also share the losses that the businessfaces.

Dormant partners:Those partners who do not participate in the

day-to-day activities of the partnership firm areknown as dormant or sleeping partners. Theyonly contribute capital and share the profits orbear the losses, if any.


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Nominal partners:These partners only allow the firm to use theirname as a partner. They do not have anyreal interest in the business of the firm. They do

not invest any capital, or share profits and alsodo not take part in the business of the firm.

Minor as a partner:In special cases a minor can be admitted aspartner with certain conditions. A minor can only

share the profit of the business. In case of losshis liability is limited to the extent of his capitalcontribution for the business.


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cannot sell shares to the publicdistinguished by the appellation

"Sendirian Berhad", shortened to "Sdn

Bhd" or "S/Bprivate limited company is limited to

50 members, minimum 2 members

A minimum paid-up capital of only RM2is needed to start a private limited

company


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AMTIS SOLUTION SDN BHD

(SDN.BHD.)
http://www.google.com.my/imgres?imgurl=http://upload.wikimedia.org/wikipedia/ms/6/6c/Nazalogo.jpg&imgrefurl=http://www.jobstreet.com.my/jobs/2010/7/default/10/1083634.htm%3Ffr%3DJ&usg=__az5Yx0ymsEYLXFtjsg5mNsJD1p4=&h=138&w=161&sz=6&hl=en&start=6&zoom=1&tbnid=k_sMRS65LsKexM:&tbnh=84&tbnw=98&prev=/images%3Fq%3Dnaza%2Bmotor%26hl%3Den%26gbv%3D2%26tbs%3Disch:1&itbs=1http://img.21food.com/userimages/ayamascn/ayamascn$7185330.jpg


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source their capital by selling shares to the

public

distinguished by the appellation "Berhad",

shortened to "Bhd". public limited companies have no member

limit

need a paid-up capital of not less than

RM40mil or RM60mil


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(BHD)


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ADVANTAGES DISADVANTAGES

Easy to set up with fewformalities.

Business liabilities are unlimited,

which may involve personalassets of all partners of thecompany.

Business risks can be reducedand distributed amongpartners. In cases of loses,

each partners will share theburden.

Risks of personal clashes amongpartners.

A lot of ideas, talents, and

skills can be pooled together

for better management.

If any of the partners passes

away or is declared bankrupt,

the business is automatically

dissolved, unless there is anagreement otherwise.

The responsibilities ofmanaging and handling thebusiness can be divided equallyamong partners.

If no Letter or Agreement is

being made, unethical or

misconduct behavior may

happen.

PARTNERSHIP


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Limited liability More complicatedto set up - legalformalities

Can raise capitalby selling shares The profits mustbe shared

The board of

director canchoose who canbuy and who

cannot buy share

Private Limited Company (sdn. Bhd.)


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Limited liability More complicatedto set up - legalformalities

Increase the skillin the business.(Specialisation)

Loss of individualcontrol

Greater threat oftakeover

PUBLIC Limited Company (Bhd.)


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Running a franchise

TOPIC 2.1.4

Establishing a new business

Buying an existing business


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Have A Capital Understand How To Manage Financial Business.

Knowledge About Business Environment

Product / Service / Areas Of Business / Facilities / Marketing

Legal Compliance Business Laws / Business Procedure


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High commitment

High risk

Delayed profitability

Limited financing


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What type of business should you buy?

Finding a business to buy

Research the Businesss history and finances

Closing the deal


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Established Customers Invest a large amount up front,

and will also have to budget for

professional fees for solicitors,

surveyors, accountants etc.

A business plan and marketing

method should already be in

place.

You also need to consider why

the current owner is selling up

and how this might impact the

business

Existing employees should have

experience you can draw on

You may need to honors or

renegotiate any outstanding

contracts the previous

owner leaves in place

A market for the product or

service will have already been

demonstrated.

Think about the feelings of

current staff


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Your business is based on a proven idea.

You can use a recognized brand name and trade

marks.You benefit from any advertising or promotionby the owner of the franchise - the "franchisor".

The franchisor gives you support- usually including

training, help setting up the business, a manual

telling you how to run the business and ongoing

advice.

You usually have exclusive rights in your territory. The

franchisor won't sell any other franchises in the same

region, though there will be competition from other

businesses. Financing the business may be easier. Banks are

sometimes more likely to lend money to a franchise

with a good reputation.

Risk is reduced and is shared by the franchisor.


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Costs may be higherthan you expect.

The franchise agreementusually includes

restrictions on how you run the business.

The franchisor might go out of business, orchange the way they do things.

Other franchisees could give the brand a bad

reputation.

Reduced risk means you might not generatevast profits.


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FEATURES SOLE TRADER PARTNERSHIP SDN BHD BHD FRANCHISE

Number ofowners: 1 2 - 20 Unlimitednumber ofshareholders

Unlimitednumber ofshareholders

Franchisor ownsthe name.Franchisee ownsthe premises

Liability ofowners:

Unlimited Unlimitedsleeping partner- limited liability

Limited Limited Depends on setup - may be asole trader, Ltd

Capital

provided

Owner Partners Shareholders Shareholders Franchisee

Who getsprofits?

Owner Partners maybe splitaccording toamount invested

Shareholders Shareholders FranchiseeFranchisor paidroyalties - % ofprofits

Risks: High High Low Low Low

Legal

Requirements:

None None Registration under Companies Act -

Memorandum and Articles ofAssociation. Then receive aCertificate of Incorporation

PLC also receives Certificate ofTrading

Depends on set

up of business(eg sole traderset up no legalrequirementsetc)


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Every Business need a manager to coordinates allbusiness activities.

In fact, all the manager do the same tasks in

business management such as:

Planning

Organizing

Leading

Controlling


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For example, a manager of a new local

restaurant will need to have a marketing

plan, a hiring plan and a sales plan.


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ELEMEN OF

PLANNING

BUDGET

PROGRAM MISSION

STRATEGY


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Emphasizes the achievement of goals

To facilitate the evaluation

Reduce risks and losses

Division of tasks

Identify opportunities and threats


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Organizemeans to properly arrange

In Business organizing refers to the activities of

designing an organizational structure, dividing andassigning jobsand task among departments sectionsor units besides handling the infrastructure andoperation method.


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Managers are responsiblefor organization of thecompany and this includes organizing people andresources.

Knowing how many employees are needed for

particular shifts can be critical to the success of acompany.

Without an organized workplace, employees will

see a manager as unprepared and may lose respectfor that particular managers supervisorytechniques.


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The act of getting the job done through otherpeople is referred to in managerial functions as

leading.

Leading involves :

Assigning of jobs and responsibilities.

Motivating employees

Providing and receiving feedback.


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In an ideal situation, the manager also serves as

the leader. Managers who want to lead

effectively need to discover what motivates

their employees and inspire them to reach thecompany objectives.

In other words a manager needs to develop

interpersonal and good communication skills toenable him to lead and motivate the workers.


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Delegates tasks

Facilitate communication

Motivate employees

Coordinate tasks


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Controlling is a monitoring functionto

ensure that activities carried out are onthe right track in achieving the goals set

out by the business,


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A manager compares progress against theobjectives and targets of the business,and takecorrective actions or devices an alternativestrategy whenever deviation is found.

Managers need to pay attention to costs versusperformance of the organization. For example,if the company has a goal of increasing sales by5% over the next two months, the manager may

check the progress toward the goal at the endof month one.


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An effective manager will share this

information with his or her employees. This

builds trust and a feeling of involvement for

the employees.


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Planning is not about predicting the future

Planning is not about writing a detailed road

map into the future

Planning is not about a few people writing a

vision statement & then getting buy-in from

everyone else

OverviewThe

Organisation

The

Future

The

ProcessReflections

Business

Ecosystem


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Strategic planningis an organizations process ofdefining its strategy, or direction, and making

decisions on allocating its resources to pursue this

strategy, including its capital and people.

Various business analysis techniques can be used in

strategic planning, including SWOT analysis, PEST

analysis.


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If you fail to plan, then you plan to failbe

proactive about the future

Strategic planning improves performance

Counter excessive inward and short-term thinkingSolve major issues at a macro level

Communicate to everyone what is most important


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Step 1 Identify mission, objective andcurrent strategy for organization.

Step 2 Environment Analysis

Step 3 Identify opportunities and treat

Step 4Analyzed resources and

capabilities of business

organization


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Where are we now? (Assessment)

Where do we need to be? (Gap / Future End

State)

How will we close the gap (Strategic Plan)How will we monitor our progress (Balanced

Scorecard)


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Address critical performance issues

Create the right balance between what the

organization is capable of doing vs. what the

organization would like to doCover a sufficient time period to close the

performance gap

Visionaryconvey a desired future end state

Flexibleallow and accommodate changeGuide decision making at lower levels

operational, tactical, individual


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Environmental Scan

Assessment

Background

Information

Situational Analysis

SWOTStrengths,Weaknesses,

Opportunities,

Threats

SituationPast,

Present and Future

Significant Issues

Align / Fit with

Capabilities

Mission & Vision

Values / Guiding

Principles

Major Goals

Specific Objectives

Performance

Measurement

Targets / Standards of

Performance

Initiatives and

Projects

Baseline Components

Performance

Management

Review Progress

Balanced Scorecard

Take Corrective

Actions

Down to Specifics Evaluate

Where we are Where we want to be How we will do it How are we doing

Gaps

Action Plans

Feedback upstreamrevise plans


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Political Economic Social Technology

Environment

regulation &

protection

Economic growth Income

distribution

Government

research spending

Tax Policies Interest rate &

monetary rate

Demographic,

population growth

rate, age

Industry focus on

technological

effort

International

trade regulation& restrictions

Government

spending

Labor & social

mobility

New inventions &

developments

Competition

regulation

Inflation Rates Fashion , hype Changes in IT

Political stability Stage of business

cycle

Health

consciousness &

welfare

Changes in

Internet

Safety regulations Consumer

confidence

Living conditions Changes in Mobile

Technology

2 SWOT A l i


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SWOTAnalysis is a simple but

useful framework for analyzing

your organization's strengths andweaknesses, as well as the

opportunities and threats you

face.

2. SWOT Analysis


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Strengths

Weaknesses

Opportunities

Threats

2. SWOT Analysis

SWOT stands for:


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Strengths - the positive internal

attributes of the organisation

Weaknesses - the negative internalattributes of the organisation

2. SWOT Analysis


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Opportunities - externalfactors which

could improve the organisations prospects

Threats - externalfactors which could

undermine the organisations prospects

2. SWOT Analysis


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Strategic management

the art and science of formulating, implementing,

and evaluating cross-functional decisions that

enable an organization to achieve its objectives

1-59Copyright 2013 Pearson Education, Inc. publishing as Prentice

Hall


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Strategic management is used synonymously

with the term strategic planning.

Sometimes the term strategic management is

used to refer to strategy formulation,

implementation, and evaluation, with strategic

planning referring only to strategy formulation.


Hall


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A strategic plan is a companys game plan.

A strategic plan results from tough managerial

choices among numerous good alternatives,

and it signals commitment to specific markets,

policies, procedures, and operations.


Hall


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Strategyformulation

Strategyimplementation

Strategyevaluation


Hall


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Strategy formulation

includes developing a vision and mission,

identifying an organizations external opportunities

and threats, determining internal strengths and

weaknesses, establishing long-term objectives,generating alternative strategies, and choosing

particular strategies to pursue


Hall


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Deciding what new businesses to enter,

What businesses to abandon,

How to allocate resources,

Whether to expand operations or diversify,Whether to enter international markets,

Whether to merge or form a joint venture,

How to avoid a hostile takeover.


Hall


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Strategy implementation

requires a firm to establish annual objectives,

devise policies, motivate employees, and allocate

resources so that formulated strategies can be

executed often called the action stage


Hall


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Strategy evaluation

reviewing external and internal factors that are the

bases for current strategies, measuring

performance, and taking corrective actions


Hall


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a. financial institutions

b. management and entrepreneurship

c. technology

d. location and business spacee. marketing

f. research and project identification

g. information

Copyright 2013 Pearson Education, Inc. publishing asPrentice Hall 1-67


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CHAPTER 2 CHAPTER 2.pdf