JUNE BUSINESS P2

FORMS OF OWNERSHIP

NPO

  • NPO’s do make money but they do not make a profit.

  • Any money raised by the non-profit company must end with NPC.

  • The name of the company should end with NPC

ADVANTAGES:

DISADVANTAGES:

  • Need professional assistance to set this up.

  • Does not generate enough capital to cover their expenses.

  • They are not allowed to pay bonuses to members.

  • Creating a non-profit company takes time/effort/money.

PERSONAL LIABILITY COMPANIES

  • This is a private company that is mainly used by ‘associations’ such as lawyers, engineers and accountants.

CHARACTERISTICS:

  • The board of a personal liability company must comprise of at least one director.

  • The companies are identified as INC or Incorporated.

  • It has a separate legal personality and shareholders limited liability.

  • A personal liability company is required to give 10 business days notice for shareholder meetings.

ADVANTAGES:

  • The life span of a personal liability company is continuous.

  • Directors of the personal liability company are not compelled to attend the Annual General Meeting(AGM).

  • The Act imposes personal liability on directors who are knowingly part of reckless or fraudulent business.

  • Audited financial statements are optional.

DISADVANTAGES:

  • Difficult and expensive to establish.

  • Large management structures can result in decision-making taking time.

  • Not allowed to sell shares to the public.

  • Directors may act in their own interest, not in the company’s best interest.

SOLE TRADER

CHARACTERISTICS:

  • Owned and managed by one person.

  • Assets and profits belong to the owner.

  • No separation between the business and the owner.

  • The owner is held legally responsible for the debts of the business when the business is facing legal action.

ADVANTAGES:

  • The owner can simply start doing business anytime they want.

  • Business is run as the owner sees fit.

  • The assets and profits of the business belong to the owner.

  • The owner makes all decisions that affect the business.

DISADVANTAGES:

  • The business cannot continue to exist if the owner dies or retires.

  • Cash flow is often a problem.

  • Capital is limited to the amount of money the owner has access to.

  • The oner is responsible for all debts incurred by the business.

DIFFERENCES BETWEEN PUBLIC COMPANY AND PERSONAL LIABILITY

PUBLIC COMPANY

PERSONAL LIABILITY

Ends with Ltd.

Ends with Inc.

Shares are freely transferable.

Shares are not freely transferable.

Minimum 3 directors.

Minimum 1 director

Annual financial statements need to be audited and published.

Annual financial statements need not to be audited.

ADVANTAGES OF A PRIVATE COMPANY

  • More opportunities to pay less taxation.

  • Good long-term growth opportunities.

  • Has continuity.

  • It is a legal person and can sign contracts in its own name.

AVENUES FOR AQUIRING BUSINESS BUSINESSES

WHAT IS OUTSOURCING?

  • Outsourcing is the business practice of hiring a party outside a company to perform services that were traditionally performed in-house by staff.

  • Companies use outsourcing to cut labour costs, and to reduce overhead expenses such as expenses for technology and equipment.

ADVANTAGES AND DISADVANTAGES OF OUTSOURCING

ADVANTAGES

DISADVANTAGES

Will provide continuity during periods of high staff turnover.

The loss of management control over the task may affect the staff and can lead to frustration.

Allows businesses to focus on important business activities.

There are often hidden costs in outsourcing.

The business can focus on its vision, goals and to apply its staff more effectively in its core business.

An outsourcing company can go bankrupt which could greatly affect the business.

On-site outsourcing will bring people with a certain skill set into the company and existing employees can collaborate with them to gain new skills.

It could be risky to share information about payroll, medical records or any other confidential information with an outsourcing company.

FRANCHISING ADVANTAGES AND DISADVANTAGES

ADVANTAGES

DISADVANTAGE

Forms of financing that aren’t available to the public are available to franchises.

Sometimes difficult to sell a franchise or terminate a contract.

Purchasing a franchise can be cheaper than starting your own business.

The start-up cost could be quite high.

Reduced long-term financial risk.

The brand can get a bad reputation through other franchises.

Businesses are able to use a recognized brand name and registered trademark.

There are often restrictions in the agreement in terms of how you can run the business.

CONTRACTUAL IMPLICATIONS

CONTRACTUAL IMPLICATIONS OF FRANCHISING

  • Policies that govern the product and services.

  • Royalties and dates of payment.

  • The form of ownership that the franchise will use.

  • Operation specifications like marketing strategy and pricing.

CONTRACTUAL IMPLICATIONS OF OUTSOURCING

  • The responsibilities and rights of both parties.

  • The length or duration of the contract.

  • A confidentiality clause to protect privileged information.

CONTRACTUAL IMPLICATIONS OF LEASING

  • The right to occupy an asset, e.g. a property.

  • The right to use the asset, e.g. a delivery van.

  • The responsibility to keep the asset in good order or condition.

  • The responsibility of paying fees or rent in time.

LEASING

  • A lease is a contract outlining the terms under which one party agrees to rent goods, such as equipment and technology, owned by another party.

  • It allows the user (lessee) to make use of an asset and guarantees the property owner or landlord (the lessor) regular payments for a specified period in exchange.

CREATIVE THINKING

PROBLEM SOLVING TECHNIQUES

DELPHI TECHNIQUE

  • The Delphi technique is used to solve new and complex problems.

  • A panel of experts who never meet each other face-to-face, comes up with creative solutions to problems without having to sit through long, drawn-out meetings.

FORCE FIELD ANALYSIS

  • Force Field Analysis is used for decision-making, especially when implementing change management.

  • The analysis involves identifying the advantages and disadvantages of a decision for change.

ROUTINE THINKING

  • Is associated with the left brain function where the focus is on logical thought and a methodical way of doing things.

  • It is where consistent, normal thinking is applied to a specific situation.

  • No new ideas or thought patterns are generated.

  • Doing things the same way will lead to the same results because past decisions are used to solve current problems.

CREATIVE THINKING

  • Is associated with the right brain function where new ideas are generated.

  • The focus is on being creative, using one’s imagination, art and music awareness to find solutions to unique challenges.

  • This process is used to come up with new ideas to solve problems in a way that is unusual and different from how things had been done before.

  • This results in exploring innovative ideas and different ways of doing things in order to obtain better results.

BENEFITS OF CREATIVE THINKING

  • Creative thinking will lead to the improved participation of staff members, which will ensure a generation of new ideas.

  • Businesses will be able to solve complex problems.

  • Managers will be inspired to lead their team more effectively.

  • Staff morale will be improved.

STRESS AND CRISIS AND CHANGE MANAGEMENT

EXTERNAL CAUSES OF STRESS/CHANGE IN THE WORKPLACE

  • Social factors, for example. Poverty/unemployment/HIV AND AIDS.

  • Legal factors, for example. the passing of new laws.

  • Market factors, for example. new firms entering the market and introducing new products.

  • Economic factors, for example. an increase in inflation rate.

WAYS TO MANAGE STRESS

  • Be aware of what they require in order to complete their daily tasks at work.

  • Ensure that effective time management strategies are practiced.

  • Try to avoid conflict situations with co-workers.

  • Take regular breaks to relax and recharge.

DEFINITION OF CRISIS

  • A crisis is an unforeseen event that can cause major changes in an organisation.

  • It refers to a sudden or potentially disastrous series of events that may occur.

  • It may be any situation that threatens people at home or at work.

STRATEGIES TO DEAL WITH AFFIRMATIVE ACTION

  • Businesses should ensure that they are compliant with affirmative action procedures and that all employees are aware that these are being implemented within the business.

  • All staff should work together and practice mindfulness about their job.

  • Skill levels should be improved so that eligible staff can apply for future positions and promotion within the business.

  • Self-employment opportunities should be explored.

WAYS TO DEAL WITH CHANGE IN THE WORKPLACE

  • Businesses should recognise the differences that manifest when change processes are started and set out to achieve the goal and/or objectives of the process for change.

  • It is important for businesses to capacitate the employees with stress and change management solutions to cope with different situations.

  • Employers should engage employees in the process of change to build trust.

  • Management should adhere to the plan and not move away from it.