ETR 300 medec 1

Small Business Management

MEDEC UiTM

ETR 300 medec 2

Small Business Management

SESSION OBJECTIVES

At the end of the session, students should be able to:

Differentiate between small and medium-sized business and its characteristics

Understand the importance of management functions in small and medium-sized business

Prepare the organization plan for their proposed business/project

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Definition of SMI

Definition of Small & Medium Sized Business SME is defined as a business that

employs not more than 150 full time workers and annual sales not exceeding RM25 million

-SMIDEC-

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Definition of Small-Sized Business

Small-sized business is defined as a business that employs not more than 50 full-time workers and annual sales not exceeding RM10 million

-SMIDEC-

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Definition of Medium-Sized Business

A medium-sized business is defined as a business that employs more than 50 but less than 150 full- time workers and annual sales volume between RM10 to RM25 million

-SMIDEC-

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Characteristics of a Small Business

Owner-manager Limited resources Agile/Vulnerable to changes Labor intensive than capital

intensive More time spent on operation than

on planning

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Definition of a Business Organization

A business organization comprises of human beings that carry out specific tasks or activities in a coordinated manner for the purpose of achieving the objectives of the organization

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Vision, Mission & Objective Vision – It is the long-term goal of

the organization Mission – It is a statement of

purpose of the organization came into being

Objective – It is the short-term goal of the organization

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Objective – The SMART Concept A good objective should be based

on the SMART concept: S – Specific M – Measurable A – Achievable R – Realistic T – Time-frame

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Management Functions

Planning Organizing Directing/Leading Controlling

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Organizational Inputs

Money or capital Personnel or labor Technology or plant, machinery

and equipment Raw materials or inventory Information

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Planning

Planning involves all activities of formulating company policies and procedures for the purpose of achieving the stated goals in an effective manner

Long term plan – strategic to the company

Short term plan – more on operational issues

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Organizing

Organizing involves activities of dividing and coordinating the tasks and responsibilities into departments, sections or units.

It also involves establishing managerial authority.

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Directing

Directing is a process whereby specific instructions are given to the subordinates to execute the tasks assigned to them

Important issues – unity of command, clarity of instructions, span of control

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Controlling

Controlling involves all activities of measuring and monitoring the actual to the planned performance and taking corrective actions to rectify the discrepancies if needed

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Relationship Between Business Inputs, Functions and Objectives

BusinessInputs

ManagementFunctions

OrganizationalObjectives

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Organizational Structure

Each organization has to be structured according to the purpose and function of the specific organization

The structure should explain the following: The hierarchy Division of task & responsibility Span of control

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Types of Organizational Structure Functional

Finance, Marketing, Operation etc. Divisional

By product By geographical location By customer

Others By shift By number of employees

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Organizational Chart

It is a schematic representation of the organizational structure

It shows: The hierarchy Span of control Intra-relationship Division of jobs and responsibilities

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Manpower Planning Perform job analysis

What task to perform in what order? How critical/difficult is the task? How many workers needed? Job designation?

Develop job description Task and responsibilities of each job

designation Develop job specification

Minimum qualification needed to effectively perform a job

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Manpower Planning Recruitment procedures &

remuneration schedule Specify the recruitment procedures

Hiring Selection Retention

Identify sources of personnel Determine the remuneration scheme

(basic salary, EPF, SOCSO, allowances, commission, etc)

Fringe benefits (holidays, medical, insurance, bonus, maternity, etc)

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Office Planning

Premise - Buy or rent? Buy – What is the cost? Rent – Rental per month/deposit

Cost of renovation List of office equipments &

furniture Quantity and cost per unit Identify the source

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Office Planning

Administrative overheads Salary of administrative personnel Utilities – telephone, electricity &

water, rental of equipment Other expenditures

Office stationeries Business registration fees Misc. expenditures

Office layout plan

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Administrative Budget

Cost of premise Buy/Build – cost of premise Rent – monthly rentals

Renovation cost Total cost of furniture and

equipments Monthly administrative overheads Other expenditures Rental & utilities deposits