BUSINESS

BUSINESS

1. OBJECTIVE

   • Survival
   • Profit Maximization
   • Sales Growth

2. Changing Objective

   • survival in the first year may lead to an objective of increasing profit in the second year
   • competitive environment might change
   • Technology change product designs

3. Business Entity In Malaysia

   • Sole Propriety
     • A business that is owned by one person. It may have one or more employees.
     • Legal requirements
       • Keep proper business accounts and records for the Taxing purpose
       • Comply with legal requirements that concern protection of the customer
     • Advantage
       • Total control of the business by the owner.
       • Cheap and easy to start up
       • Keep all the profit
       • Business affairs are private
     • Disadvantage
       • Unlimited liability
       • Difficult to raise finance
       • Can be difficult to enjoy economies of scale
       • problem of continuity if the sole trader retires or dies
   • Partnerships
     • A business where there are two or more owners of the enterprise but not exceeding 20 persons.
     • Advantages
       • Spreads the risk across more people
       • Partner may bring money and resources to the business
       • Increased credibility with potential customers and suppliers
     • Disadvantages
       • Have to share the profits
       • Problems if partners disagree over of direction of business
       • Less control of the business for the individual
       • Disputes over workload
   • Limited Companies
     • A business that is owned by its shareholders, run by directors and most importantly whose liability is limited.
       • Limited liability means that the investors can only lose the money they have invested and no more.
       • A private limited company (SDN. BHD.) might want to become a “public company” ( BHD.)
         • It is also easier to raise money
         • cannot be offered for sale to the general public,
     • Disadvantage
       • Certain financial information must be made available for everyone, competitors and customers included
       • Shareholders in public companies
       • Threat of takeover
     • Shareholders own the company. They buy share??:
       • Shares normally pay dividends
       • Over time the value of the share may increase and so can be sold for a profit
       • If they have enough shares they can influence the management of the company.
   • Franchises
     • A franchise is where a business sells a sole proprietor the right to set up a business using their name.
       • Gucci
       • Tony Romas
       • Family Mart
       • Kfry Restaurant
       • Bonia
     • Advantages
       • Large companies see it as a means of rapid expansion
       • large profits to made
       • Less investment is required at the start-up stage
       • allows people to start and run their own business with less risk
       • franchisee is given support by the franchiser
     • Disadvantage
       • The cost to buy franchise can be very expensive
       • Have to pay a percentage of your revenue to the business you have bought the franchiser from
       • so less flexible.
   • Cooperatives
     • A co-operative is where a number of individuals or businesses work together to achieve a common purpose
       • A retail co-operative is probably the most familiar co-op.
     • dificulties
       • system of one member one vote in some societies
       • banks are not so willing to lend them money
       • Idealistic and ethical aims may not be agreeable with all members
       • many co-operatives may not lead to profits in the long run
     • Stakeholders vs. Shareholders
       • Shareholders hold shares in the company – that is they own part of it
       • Stakeholders have an interest in the company but do not own it

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