Topik 2: Perniagaan & Persekitaran Business & Environment

Entiti Perniagaan
business entity

Memahami faktor persekitaran

understanding the environmental factors

Menubuhkan perniagaan setting up a

business

Menguruskan perniagaan managing a

business

Business Entity

Business Entity

Sole Proprietorship Partnerships Company

Comparison Between Sole trader and Partnership Sole Trader

1. 2. 3. 4. Member Capital Contribution Liability Act Only one (owner) Amount contributed by the owner Unlimited liability Under no specific act

Partnership
2 or more, but less than 20 By each partner Unlimited liability Under the partnership Act 1961

5.

Legislation

No legal separation between the business entity and the owner (the business debt will be the debt of the owner) No written agreement
Laundry shop, mini market, etc

Same as sole trader

6.
7.

Agreement
Type of business

Written agreement between partners

Accounting firm& law firm

COMPANY
Limited Company

Private Company Ltd

Public Company Ltd

General Characteristics Under Malaysia Company Act 1965 Separate legal entity Legal bodies to own assets, make credit, sign contract, sued and to be sued by court. Set up for the purpose of increasing the shareholder wealth.

The Difference Between Public and Private Ltd Company.

Characteristics 1. Members 2. Issue of share 3. Listing requirement 4. Financial information 5. Managing Public Limited Co Min 2; Max unlimited Public are invited to buy the shares listed Public information Hired group of professional management to run the business Private Limited Co Min 2; Max 50 Shares are not allowed to be sold to public unlisted Have a right not to publish to the public Run by the shareholders or hired a professional management to run the business

6. Liability

Liability limited to the amount invested (separate legal entity)

Telekom Bhd, Tenaga Nasional Bhd, Petronas

Liability limited to the amount invested (separate legal entity)

MEASAT Broadcast Network Systems Sdn Bhd

7. Examples

TYPES OF BUSINESS ACTIVITY

Services

Supply services only accounting firms, legal firms and banks

Supply services & goods saloon Merchandising/trading/retailing Purchase goods in bulks from manufacturer and sell to customers Range from hypermarkets to specialist stores 2 categories of expenses cost of good sold (COGS) - the total cost of merchandise sold during the period operating expenses - expenses incurred in the process of earning sales revenue - eg. Sales salaries, advertising expenses, insurance expenses.

Manufacturing
Manufacturing firm produces goods for sale
by processing raw materials in the factory. Sells these goods either as finished products to a wholesaler, retailer or partly finished products to other manufacturers. 3 elements of costs: Direct Material Cost Direct Labor Cost Overhead cost

Understanding the environmental factors

1.

2.

3.

Politics political power, differences in ideology, social and law stability. may cause power struggle, strong decline in stock price, extensive layoff in workforce and management turmoil. Economy GDP, inflation, unemployment rate, interest rate, financial base and etc. Social social distribution, income distribution, education and attitudes towards work and business.

4.

5.

6.

Technology the changes of technology, future raw material availability, technological development in related areas, operational costs etc. Geographical the plant location will lead to the international tariff base. Competition the entry of competitors into the market and the strategic changes and size of competition.

How to Set up a Business

SWOT Analysis

SW Internal factors
Strengths: Identify the unique strengths of the business Eg; quality, innovation, human resources
Weaknesses : identify the internal weaknesses of the organization Eg; absenteeism rate, lack of capital

OT External factors
Opportunities Exploit the opportunities Eg: Changes in technology, government policy, consumers profiles, economic growth Threats Some external changes that will threaten the business. Eg: sudden changes in technology, economic downturn, stock market crash, war, political turmoil/climate

Internal aspects of business

External aspects of business

Strengths Weaknesses

Opportunities Threats

2. Form an objective
Every new business must form at least one objective. In which it is different compared to other businesses. Eg: Maximization of profit or shareholders wealth.

3. Considering other factors

Location: Is the location is strategic for the type of business being set up? Resources: Are the resources easy to obtain and used by the business? Law: Is this business attached with any kind of a specific law?.

Managing a business

Planning
1. Planning definition- is the process of establishing enterprise objective 2. Types of planning
Long term planning/ strategic planning
planning made by top-level management for a longer period: 3-5 years. Eg.: determination of corporate objective and goals, as well as the development of broad policies and strategies by which they may be achieved.

Middle term/Tactical Planning Planning range 1 3 years

Responsibility of the middle-level management

eg: opening a new branch, introducing a new product

Short term planning/operational

planning by each section or department for the period of less than one year to harmonizing all the planning. planning for less than 1 year to support strategic and tactical plan Eg: management of day-to-day operation, number of workers to be employed.

3. Budget
is an important tool for management planning and control definition: It is the quantitative expressions of long range planning stated in either physical or financial terms or both. Objectives: 1. To fulfill the organizational objectives short run 2. To estimate revenue and expenses 3. To estimate cash inflow and outflow 4. To forecast sales volume that gives break even point 5. To motivate employees 6. Communication tool for employees, external users and management