chapter 2 - beginning consideration
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Entrepreneurship SkillsTRANSCRIPT
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““BEGINNING BEGINNING CONSIDERATIONS”CONSIDERATIONS”
BUSINESS PLAN:BUSINESS PLAN:
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Strategic management Strategic management processprocess Step 1 Develop a clear vision and translate
it into a meaningful mission statement. A clearly defined vision helps a company in A clearly defined vision helps a company in
three ways: direction, decision, peoplethree ways: direction, decision, people The The mission statement addresses another mission statement addresses another
basic question of any basic question of any business venture: “What business venture: “What business are we in?”business are we in?”
Step 2 Assess the company’s strengths and weaknesses. Strengths are positive internal factors that a Strengths are positive internal factors that a
company can draw on to accomplish company can draw on to accomplish its its mission, goals, and objectives.mission, goals, and objectives.
Weaknesses are negative internal factors Weaknesses are negative internal factors that inhibit a company’s that inhibit a company’s ability to accomplish ability to accomplish its mission, goals, and objectivesits mission, goals, and objectives
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Strategic management Strategic management processprocess Step 3 Scan the environment for significant
opportunities and threats facing the business. Opportunities are positive external options Opportunities are positive external options
that a firm can exploit to accomplish its that a firm can exploit to accomplish its mission, goals, and objectives.mission, goals, and objectives.
Negative external forces that inhibit a Negative external forces that inhibit a company’s ability to achieve its mission, goals, company’s ability to achieve its mission, goals, and objectives are referred to as and objectives are referred to as threatsthreats
Step 4 Identify the key factors for success in the business. KSF are the factors that determine a company’s KSF are the factors that determine a company’s
ability to compete successfully in an industry.ability to compete successfully in an industry.
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Strategic management Strategic management processprocess Step 5 Analyze the competition.
Sizing up the competition gives a business Sizing up the competition gives a business owner a more realistic view of the market and owner a more realistic view of the market and his or her company’s position in it.his or her company’s position in it.
Direct competitors offer the same Direct competitors offer the same products and products and services, and customers often compare prices, services, and customers often compare prices, features, and deals from these competitors as features, and deals from these competitors as they shop.they shop.
Significant competitors offer some of the same Significant competitors offer some of the same products and products and services. services.
Indirect competitors offer the same or similar Indirect competitors offer the same or similar products or services only in a small number of products or services only in a small number of areas, but their target customers seldom overlap areas, but their target customers seldom overlap yours.yours.
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Strategic management Strategic management processprocess Step 6 Create company goals and
objectives. Business Business goals are the broad, long-range goals are the broad, long-range
attributes that a business seeks to attributes that a business seeks to accomplish; they tend to be general and accomplish; they tend to be general and sometimes even abstract.sometimes even abstract.
Business Business objectives are more specific targets objectives are more specific targets of performance (specific, measurable, of performance (specific, measurable, assignable, realistic, timely, written down)assignable, realistic, timely, written down)
Step 7 Formulate strategic options and select the appropriate strategies. A A strategy is a road map of the actions an strategy is a road map of the actions an
entrepreneur draws up to achieve a entrepreneur draws up to achieve a company’s mission, goals, and objectives (cost company’s mission, goals, and objectives (cost leadership, differentiation, focus)leadership, differentiation, focus)
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Strategic management Strategic management processprocess Step 8 Translate strategic plans into action
plans. Implementing a strategy successfully requires Implementing a strategy successfully requires
both a process that fits a company’s culture and both a process that fits a company’s culture and the right people committed to making that the right people committed to making that process workprocess work
Step 9 Establish accurate controls. Controlling plans and projects and keeping them Controlling plans and projects and keeping them
on schedule means that an entrepreneur must on schedule means that an entrepreneur must identify and track key performance indicators.identify and track key performance indicators.
The most commonly used indicators of a The most commonly used indicators of a company’s performance are financial measures.company’s performance are financial measures.
Many companies are developing a Many companies are developing a balanced balanced scorecard, a set of multidimensional scorecard, a set of multidimensional measurements (financial and non financial)measurements (financial and non financial)
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““IDENTIFICATION, EVALUATION IDENTIFICATION, EVALUATION & SELECTION”& SELECTION”
BUSINESS BUSINESS OPPORTUNITIESOPPORTUNITIES
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Business opportunities: Identification, Business opportunities: Identification, Evaluation and SelectionEvaluation and Selection
The process of identifying, Evaluating and The process of identifying, Evaluating and selecting the business opportunitiesselecting the business opportunities
Step 1:Identifying the needs and wants of customersStep 1:Identifying the needs and wants of customers
Step 2:Scanning the environment and evaluating of Step 2:Scanning the environment and evaluating of self and the communityself and the community
Step 3: Screening of business opportunitiesStep 3: Screening of business opportunities
Step 4: Selecting a business opportunity and Step 4: Selecting a business opportunity and preparing a business planpreparing a business plan
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Step 1:Identifying the needs and wants of Step 1:Identifying the needs and wants of customers (pg 31)customers (pg 31)
A need is something that is A need is something that is basicbasic in life in life Wants is craving for something that is far Wants is craving for something that is far
better than basic itembetter than basic item When there is more human need and When there is more human need and
wants to be fulfilled, there will be more wants to be fulfilled, there will be more business opportunitiesbusiness opportunities
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Step 2: Scanning the environment and Step 2: Scanning the environment and evaluating of self and the community (pg. 33)evaluating of self and the community (pg. 33)
Market research….Market research…. Environmental scanningEnvironmental scanning
Lead to an idea that can be converted Lead to an idea that can be converted into a business opportunity; micro and into a business opportunity; micro and macro perspectivemacro perspective
Structure of population, income and tastesStructure of population, income and tastes Study of import and export dataStudy of import and export data
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Step 3:Screening of business opportunities Step 3:Screening of business opportunities (pg 39)(pg 39)
Entrepreneurs may found out that there will Entrepreneurs may found out that there will be two or more business opportunitiesbe two or more business opportunities
Screening business opportunities help to Screening business opportunities help to select the best projectselect the best project
Selection process involve 4 factorsSelection process involve 4 factors LegalityLegality Monopolistic power and level of Monopolistic power and level of
competitioncompetition Capital requirementCapital requirement RiskRisk
3 categories of business risk3 categories of business risk Transferred to another party.Transferred to another party. ControlledControlled Cannot be controlledCannot be controlled
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Step 4: Selecting a business opportunity and Step 4: Selecting a business opportunity and preparing a business planpreparing a business plan
Entrepreneur will end up only one business Entrepreneur will end up only one business opportunity opportunity
Go through the next step…… preparing Go through the next step…… preparing business plan.business plan.
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Preparing Business Plan: Things to Preparing Business Plan: Things to considers….considers….
Issue to considers before going into Issue to considers before going into businessbusiness Resource availability; capitalResource availability; capital The opportunity; franchising vs. new The opportunity; franchising vs. new
businessbusiness Choosing the form of business Choosing the form of business
organizations:organizations: Sole proprietorshipSole proprietorship PartnershipPartnership Private limited companyPrivate limited company
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Preparing Business Plan: Things to Preparing Business Plan: Things to considers….considers….
Option for going into business:Option for going into business: Starting new businessStarting new business FranchisingFranchising Buying an existing businessBuying an existing business
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FranchisingFranchising FranchiseFranchise: an arrangement whereby the : an arrangement whereby the
originator of business product or operating originator of business product or operating system permits another business owner to system permits another business owner to sell goods and/or to use the business sell goods and/or to use the business operating system on the originator’s behalfoperating system on the originator’s behalf
FranchisorFranchisor: A business or individual who : A business or individual who own the rights to a particular business own the rights to a particular business franchise system or productfranchise system or product
FranchiseeFranchisee: The business/ person given : The business/ person given contractual permission by the original contractual permission by the original owner to sell productowner to sell product
Business system franchiseBusiness system franchise: Arrangement : Arrangement where franchisor supplies the products with where franchisor supplies the products with guideline given on how the business is to guideline given on how the business is to be run be run
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Advantages VS Disadvantage of Advantages VS Disadvantage of FranchisingFranchising
AdvantagesAdvantages Less learning by Less learning by
mistakemistake Lower failure rateLower failure rate Provide continuing Provide continuing
trainingtraining Purchase goods in Purchase goods in
discountdiscount Easy in raising Easy in raising
capitalcapital
DisadvantagesDisadvantages Not cheapNot cheap Restriction set by Restriction set by
franchisorfranchisor Agreement in Agreement in
contractcontract
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Starting new businessStarting new business
AdvantagesAdvantages Ability to determine Ability to determine
business directionbusiness direction FlexibilityFlexibility Cost minimizationCost minimization New lifestyle goalNew lifestyle goal
DisadvantagesDisadvantages Raising capitalRaising capital Lack of an Lack of an
establishes establishes customer basedcustomer based
Cash flow Cash flow shortagesshortages
Learning curve Learning curve expensesexpenses
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Purchasing an existing businessPurchasing an existing business
Market-based valuationMarket-based valuation Asset- based valuation.Asset- based valuation. Earning-based valuationEarning-based valuation
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FORMS OF BUSINESS FORMS OF BUSINESS ENTITIES , REGULATIONS ENTITIES , REGULATIONS
& BUSINESS SUPPORT & BUSINESS SUPPORT SYSTEMSYSTEM
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FORM OF BUSINESS FORM OF BUSINESS ENTITIES IN MALAYSIAENTITIES IN MALAYSIA
IBusiness Registration
Act (Amendment 1978) & Procedures of
Business Registration 1957
IICompanies Act 1965
IVParliamentary Act or State Government
Enactment
IIICooperation Act 1948
Sole Proprietorship
Business
Partnership Business
Unlimited Company
Limited Company by
Share
Limited Company by Guarantee
Private Limited Company
Foreign Owned
Company
Public Limited Company
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REGULATIONS REGULATIONS
Entrepreneurs need to know & abide by the Entrepreneurs need to know & abide by the procedures & rules governing business procedures & rules governing business entities in Malaysiaentities in Malaysia
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Procedures in RegistrationProcedures in Registration
Sole Proprietorship & PartnershipSole Proprietorship & Partnership At the Business Unit of the Companies At the Business Unit of the Companies
Commission of Malaysia (CCM), Commission of Malaysia (CCM), allowed up to 7 days after the start of its allowed up to 7 days after the start of its operation to be registered.operation to be registered.
Forms (page 53-54)Forms (page 53-54) Search for business nameSearch for business name FORM A FORM A FORM DFORM D FORM A1FORM A1 FORM BFORM B FORM CFORM C
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Cont’dCont’d Private Limited Company, Private Limited Company, requiresrequires: (page 57-: (page 57-
61)61) Memorandum of associationMemorandum of association Articles of associationArticles of association The share capital of a companyThe share capital of a company Members of shareholdersMembers of shareholders Board of directorsBoard of directors SecretarySecretary AuditorsAuditors Registered officeRegistered office Company sealCompany seal Authorization letterAuthorization letter
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Cont’dCont’d Registration for Private limited company Registration for Private limited company
must use the services of a company must use the services of a company secretary to deal with the Companies secretary to deal with the Companies Commission of Malaysia Commission of Malaysia FORM 13AFORM 13A Memorandum of Association & Articles of Memorandum of Association & Articles of
Association:Association: FORM 6FORM 6 FORM 24FORM 24 FORM 44FORM 44 FORM 48AFORM 48A FORM 49FORM 49 Registration feeRegistration fee FORM 9FORM 9
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Among the legal aspects that relate to Among the legal aspects that relate to Malaysian business are:Malaysian business are:
LicenseLicense Business licenseBusiness license Wholesaling licenseWholesaling license Manufacturing licenseManufacturing license Food manufacturing licenseFood manufacturing license Sales tax licenseSales tax license Excise licenseExcise license
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Cont’dCont’d
Permits Permits Foreign workers entry permitForeign workers entry permit Transportation permitTransportation permit
Letters of authorityLetters of authority
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Other procedures to be considered Other procedures to be considered assembling of machinery & equipment:assembling of machinery & equipment:
Pollution controlPollution control Business rightsBusiness rights
Trademark protectionTrademark protection Patent protection Patent protection CopyrightCopyright
Standards & qualityStandards & quality Hire purchase actHire purchase act
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Cont’dCont’d
Worker’s social needsWorker’s social needs Infrastructure needsInfrastructure needs Import & export regulationsImport & export regulations
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BUSINESS SUPPORT SYSTEMBUSINESS SUPPORT SYSTEM
The assistance & services given by the The assistance & services given by the government/private agencies to help government/private agencies to help entrepreneurs to start a new business/to entrepreneurs to start a new business/to develop an existing onedevelop an existing one
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Support Facilities in MalaysiaSupport Facilities in Malaysia
Technical Assistance
Courses, seminars & workshops
Extension Services
ENTREPRENURAdvisory Services
Marketing Assistance
Infrastructure Assistance
Financial Assistance
R & DInformation Assistance