A business can be defined as an organization that provides 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.
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
? ? ? ? ? ? a legal business entity with two or more partners but not exceeding 20 persons partners carry out the business, share the capital, profits and losses Partnerships comprise two or more business partners 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 Active partners: The partners who actively participate in the day- to-day operations of the business are known as active partners. They contribute capital and are also entitled to share the profits of the business. They also share the losses that the business faces. Dormant partners: Those partners who do not participate in the day-to-day activities of the partnership firm are known as dormant or sleeping partners. They only contribute capital and share the profits or bear the losses, if any. Nominal partners: These partners only allow the firm to use their name as a partner. They do not have any real interest in the business of the firm. They do not invest any capital, or share profits and also do not take part in the business of the firm. Minor as a partner: In special cases a minor can be admitted as partner with certain conditions. A minor can only share the profit of the business. In case of loss his liability is limited to the extent of his capital contribution for the business.
cannot sell shares to the public distinguished by the appellation "Sendirian Berhad", shortened to "Sdn Bhd" or "S/B private limited company is limited to 50 members, minimum 2 members A minimum paid-up capital of only RM2 is needed to start a private limited company AMTIS SOLUTION SDN BHD (SDN.BHD.) 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 (BHD) ADVANTAGES DISADVANTAGES Easy to manage because the owner or proprietor can make decisions by himself. Limited source of capital; limit the business activity. All profits will go to the owner.
The future development of the business is limited and depends on the management capability of the owner and the condition of his health. The owner pays income tax based on his total individual income.
The liability of business is unlimited. The owner must be prepared to settle the debt with his personal assets. Flexibility; can react quickly and positively regarding necessary changes in business.
The lifespan of the business depends upon the age of the owner and how efficiently he manages the business. SOLE PROPRIETORSHIP ADVANTAGES DISADVANTAGES Easy to set up with few formalities. Business liabilities are unlimited, which may involve personal assets of all partners of the company. Business risks can be reduced and distributed among partners. In cases of loses, each partners will share the burden. Risks of personal clashes among partners. 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 an agreement otherwise. The responsibilities of managing and handling the business can be divided equally among partners.
If no Letter or Agreement is being made, unethical or misconduct behavior may happen. PARTNERSHIP ADVANTAGES DISADVANTAGES Limited liability
More complicated to set up - legal formalities Can raise capital by selling shares
The profits must be shared The board of director can choose who can buy and who cannot buy share Private Limited Company (sdn. Bhd.) ADVANTAGES DISADVANTAGES Limited liability
More complicated to set up - legal formalities Increase the skill in the business. (Specialisation) Loss of individual control Greater threat of takeover PUBLIC Limited Company (Bhd.) Running a franchise TOPIC 2.1.4 Establishing a new business Buying an existing business 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 High commitment High risk Delayed profitability Limited financing
What type of business should you buy? Finding a business to buy Research the Businesss history and finances Closing the deal
ADVANTAGES DISADVANTAGES 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 Running A Franchise WHAT IS A FRANCHISE? A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location. There are over 120 different types of franchise businesses available today, including automotive, cleaning & maintenance, health & fitness, financial services, and pet- related franchises. An individual who purchases and runs a franchise is called a "franchisee." The franchisee purchases a franchise from the "franchisor." The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases the franchisee must pay an ongoing franchise royalty fee, as well as an up- front, one-time franchise fee to the franchisor. Your business is based on a proven idea. You can use a recognized brand name and trade marks. You benefit from any advertising or promotion by 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. Costs may be higher than you expect. The franchise agreement usually includes restrictions on how you run the business. The franchisor might go out of business, or change the way they do things. Other franchisees could give the brand a bad reputation. Reduced risk means you might not generate vast profits.
FEATURES SOLE TRADER PARTNERSHIP SDN BHD BHD FRANCHISE Number of owners: 1 2 - 20 Unlimited number of shareholders Unlimited number of shareholders
Franchisor owns the name. Franchisee owns the premises Liability of owners: Unlimited Unlimited sleeping partner - limited liability Limited Limited Depends on set up - may be a sole trader, Ltd Capital provided Owner Partners Shareholders Shareholders Franchisee Who gets profits? Owner
Partners may be split according to amount invested Shareholders Shareholders Franchisee Franchisor paid royalties - % of profits Risks: High High Low Low Low Legal Requirements: None None Registration under Companies Act - Memorandum and Articles of Association. Then receive a Certificate of Incorporation PLC also receives Certificate of Trading Depends on set up of business (eg sole trader set up no legal requirements etc) Every Business need a manager to coordinates all business activities. In fact, all the manager do the same tasks in business management such as: Planning Organizing Leading Controlling
The first component of managing is planning.
Planning covers the activity of formulating companys policy and procedure to ensure the attainment of business mission, objectives and how to achieve them
As a manager of the business has to determine his business mission, objectives and device a workable strategy to achieve.
For example, a manager of a new local restaurant will need to have a marketing plan, a hiring plan and a sales plan.
ELEMEN OF PLANNING BUDGET PROGRAM MISSION STRATEGY Emphasizes the achievement of goals To facilitate the evaluation Reduce risks and losses Division of tasks Identify opportunities and threats
Organize means to properly arrange
In Business organizing refers to the activities of designing an organizational structure, dividing and assigning jobs and task among departments sections or units besides handling the infrastructure and operation method.
Managers are responsible for organization of the company and this includes organizing people and resources.
Knowing how many employees are needed for particular shifts can be critical to the success of a company.
Without an organized workplace, employees will see a manager as unprepared and may lose respect for that particular managers supervisory techniques.
Determination of work Division of labor Collect duties Coordinate work The act of getting the job done through other people is referred to in managerial functions as leading.
Leading involves : Assigning of jobs and responsibilities. Motivating employees Providing and receiving feedback.
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 the company objectives.
In other words a manager needs to develop interpersonal and good communication skills to enable him to lead and motivate the workers. Delegates tasks Facilitate communication Motivate employees Coordinate tasks
Controlling is a monitoring function to ensure that activities carried out are on the right track in achieving the goals set out by the business, A manager compares progress against the objectives and targets of the business, and take corrective actions or devices an alternative strategy whenever deviation is found.
Managers need to pay attention to costs versus performance of the organization. For example, if the company has a goal of increasing sales by 5% over the next two months, the manager may check the progress toward the goal at the end of month one.
An effective manager will share this information with his or her employees. This builds trust and a feeling of involvement for the employees.
Accuracy of information Punctuality Avoiding mistakes Reasonable criteria Actions 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
Overview The Organisation The Future The Process Reflections Business Ecosystem Planning is about learning Planning is about increasing the possibilities for the organisation Planning is about discovering how fit the organisation is for its environment Planning is about discovering and telling compelling stories about the future Overview The Organisation The Future The Process Reflections Business Ecosystem Strategic planning is an organizations process of defining 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. Matt H. Evans, matt@exinfm.com If you fail to plan, then you plan to fail be proactive about the future Strategic planning improves performance Counter excessive inward and short-term thinking Solve major issues at a macro level Communicate to everyone what is most important
Step 1 Identify mission, objective and current strategy for organization. Step 2 Environment Analysis Step 3 Identify opportunities and treat Step 4 Analyzed resources and capabilities of business organization Step 5 Identify strength and weakness Step 6 Strategy Development Step 7 Strategy implementation Step 8 Evaluate the output Matt H. Evans, matt@exinfm.com 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)
Matt H. Evans, matt@exinfm.com Address critical performance issues Create the right balance between what the organization is capable of doing vs. what the organization would like to do Cover a sufficient time period to close the performance gap Visionary convey a desired future end state Flexible allow and accommodate change Guide decision making at lower levels operational, tactical, individual Matt H. Evans, matt@exinfm.com Environmental Scan Assessment Background Information Situational Analysis SWOT Strengths, Weaknesses, Opportunities, Threats Situation Past, 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 upstream revise plans PEST analysis is a framework strategy consultant use to scan the external macro environment in which firm operates.
P : Political factor E : Economical factor S : Social factor T : Technological factor
PEST analysis should be performed per country because macro economical can different per continent country or even region. 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 55 SWOT Analysis is a simple but useful framework for analyzing your organization's strengths and weaknesses, as well as the opportunities and threats you face. 2. SWOT Analysis 56 Strengths Weaknesses Opportunities Threats 2. SWOT Analysis SWOT stands for: 57
Strengths - the positive internal attributes of the organisation
Weaknesses - the negative internal attributes of the organisation 2. SWOT Analysis 58 Opportunities - external factors which could improve the organisations prospects
Threats - external factors which could undermine the organisations prospects 2. SWOT Analysis Strategic management the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives 1-59 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 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. 1-60 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 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. 1-61 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall Strategy formulation Strategy implementation Strategy evaluation 1-62 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 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 1-63 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 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. 1-64 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 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 1-65 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall Strategy evaluation reviewing external and internal factors that are the bases for current strategies, measuring performance, and taking corrective actions 1-66 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall a. financial institutions b. management and entrepreneurship c. technology d. location and business space e. marketing f. research and project identification g. information Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 1-67