CHAPTER 1: UNDERSTANDING BUSINESS FUNDAMENTALS

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CHAPTER 1: UNDERSTANDING BUSINESS FUNDAMENTALS by Mind Map: CHAPTER 1: UNDERSTANDING BUSINESS FUNDAMENTALS

1. DEFINITION

2. 1. VISION: the reason for the business organization's existence

3. assistance and services provided by the Malaysian government or private agencies to help entrepreneurs start a new business or develop an existing one

4. to provide direction and guidance for all business

5. having unlimited legal liability

6. provide suitable business location equipped with all types of facilities including utilities

7. WHAT IS BUSINESS?

7.1. An organization under one management, set up for the purpose of earning profits by providing goods and services for sale in markets.

8. BUSINESS GOALS

8.1. DEFINITION OF GOALS

8.1.1. an objective that a business hopes and plans to achieve

8.2. PURPOSE OF GOAL SETTING

8.2.1. to assist in the allocation of resources

8.3. 3. OBJECTIVE: specific statements that explain in detail on how to accomplish the mission

8.3.1. to define the corporate culture

8.3.1.1. 2. MISSION: indicates the way how a business will achieve its purposes

8.4. TYPES OF GOALS

8.5. formulated by the higher level management group in a business organization

8.6. LEVELS OF GOALS

8.6.1. LONG-TERM GOALS

8.6.1.1. set for a long period of time (5 years and above)

8.6.2. INTERMEDIATE GOALS

8.6.2.1. set by middle managers of a business

8.6.2.2. set for period 1-5 years

8.6.3. SHORT-TERM GOALS

8.6.3.1. set by first line managers

8.6.3.2. set for 1 year and less

8.7. helps managers to assess the business performance

8.8. ROLES OF BUSINESS

8.8.1. provide goods and services

8.8.2. provide employment

8.8.3. helping the country to increase the growth rate

8.8.4. helping to protect the environment

9. FUNCTIONS OF BUSINESS

9.1. to preserved knowledge

9.2. to serves the needs of customers

9.3. to provide career

9.4. to help country development

9.5. to growth of economy

9.6. to serves society

10. FORMS OF BUSINESS OWNERSHIP

10.1. SOLE PROPRIETORSHIP

10.1.1. CHARACTERISTICS

10.1.1.1. simplest form of business ownership

10.1.1.2. owned by one person

10.1.1.3. does not need to be operated by one person solely - instead it can have large number of employees

10.1.1.4. usually in small size

10.1.1.5. largest number of business in most countries

10.1.2. DISADVANTAGES

10.1.2.1. entirely responsible for debts and risk

10.1.2.2. unlimited personal liability

10.1.2.3. limited access of capital

10.1.2.4. limited skills and capabilities

10.1.2.5. feeling of isolation

10.1.2.5.1. ADVANTAGES

10.1.2.6. short life of business

10.2. PARTNERSHIP

10.2.1. DEFINITION

10.2.1.1. an association of two or more persons to act as co-owners of a business for a profit

10.2.2. TYPES OF PARTNERSHIP

10.2.2.1. GENERAL PARTNERSHIP

10.2.2.1.1. responsible for the business operation and receive a salary

10.2.2.1.2. each partner can enter into contracts on behalf of all the others

10.2.2.1.3. share the profits and losses of the business

10.2.2.1.4. if one partner withdraws, he has to give notice to creditors, customers and suppliers in order to avoid future liability

10.2.2.1.5. responsible for the debts of the enterprise

10.2.2.1.6. a general partner would take an active role in managing business

10.2.2.2. they can lose the capital but they are not required to pay partnership debts

10.2.2.3. partners are not legally liable for debts beyond the amount they invested

10.2.2.4. LIMITED PARTNERSHIP

10.2.2.4.1. not liable for the partnership debts

10.2.2.4.2. their personal properties will not be affected to cover the partnership's unpaid liabilities

10.2.2.4.3. share the profit and loss of the firm

10.2.3. their liability for the debts of partnership is limited to the capital they have put in

10.2.4. easy and low set-up costs

10.2.4.1. may or may not participate in managing the business

10.2.5. ADVANTAGES

10.2.5.1. able to raise more capital

10.2.5.2. tax advantages

10.2.5.3. combined business skills and knowledge

10.2.5.4. retention of profits

10.2.5.5. losses are shared

10.2.6. DISADVANTAGES

10.2.6.1. lack of continuity

10.2.6.2. difficulty in raising large sum of capital

10.2.6.3. bound by the act of one partner

10.2.6.4. at least one partner has unlimited liability

10.3. CORPORATION

10.3.1. DEFINITION

10.3.1.1. most complex form of business

10.3.1.2. a legal entity separate from its constituent members

10.3.1.3. formed by several persons who are able to own property, draw contracts and employ people

10.3.2. TYPES OF CORPORATIONS UNDER THE CORPORATION ACT 1965

10.3.2.1. LIMITED BY SHARES

10.3.2.1.1. member's personal liabilities are limited to the par value of their shares

10.3.2.1.2. it can be

10.3.2.2. LIMITED BY GUARANTEE

10.3.2.2.1. member's liability is limited based on a certain amount that has been agreed by its members as stipulated in the 'Memorandum of Association' in the event company goes bankrupt

10.3.2.2.2. not used for commercial undertakings instead for trade associations, charitable bodies and professional bodies

10.3.2.2.3. if any profits are made, it will not be distributed to its members - it will be reinvested to achieve its goal and not solely for making profit

10.3.2.3. UNLIMITED CORPORATION

10.3.2.3.1. members would have unlimited liability

10.3.2.3.2. not often used for many business undertaking

10.3.3. ADVANTAGES

10.3.3.1. limited liability

10.3.3.2. easy to raise capital through sale of shares

10.3.3.3. able to transfer ownership

10.3.3.4. relative permanence of existence

10.3.3.5. increase expertise and skills

10.3.3.6. able to delegate authority

10.3.4. DISADVANTAGES

10.3.4.1. activities limited by law

10.3.4.2. costly incorporation process

10.3.4.3. high taxation

10.3.4.4. loss of control by the founder

10.3.4.5. extensive governmental regulations and reports required

11. BUSINESS SUPPORT SYSTEM

11.1. TYPES OF BUSINESS SUPPORT SYSTEM

11.1.1. TECHNICAL ASSISTANCE

11.1.1.1. assist entrepreneur in improving their production methods and developing systematic management process

11.1.2. FINANCIAL ASSISTANCE

11.1.2.1. financial facilities or accommodation is provided by financial institution for an entrepreneur to start and perform a business

11.1.3. MARKETING ASSISTANCE

11.1.3.1. provide assistance to entrepreneur in distributing and marketing their products in domestic and foreign markets

11.1.4. INFRASTRUCTURE ASSISTANCE

11.1.5. INFORMATION PROVIDERS

11.1.5.1. information assistance is offered to an entrepreneur in the form of business opportunities, statistic discovery, research and development and technological development

11.1.6. RESEARCH AND DEVELOPMENT

11.1.6.1. research and analysis include project possibilities, marketing research and research on technology

11.1.6.2. training provided to entrepreneur to help them possess the right skills in managing their business

11.1.7. TRAINING, SEMINAR AND WORKSHOP