Principles of Management Lesson 01 PDF

Principles of Management Lesson 01  I expect you to be prepared for class, which includes reading the required materials, as well as completing any assignments. Be ready to discuss and ask questions about the course content. I expect you t...

Principles of Management Lesson 01  I expect you to be prepared for class, which includes reading the required materials, as well as completing any assignments. Be ready to discuss and ask questions about the course content. I expect you to focus your attention on the class – cell phones should be put away, and laptops/tablets should be used for course-related work only. What I expect from Please be respectful toward others in the class including your friends and me. you? I expect you to be on time for class and not leave early, unless you have discussed the situation with me. In a situation, where you missed a lecture, I expect you to go through the missed lecture before attending the next lecture. Module Outline Assessments Continuous Assessments 50% Group Assignment 20% Group Assignment 30% Final Examination (02-hour paper) 50%  At the end of the session, you will be able to; 1. Identify the nature of Business Learning Organization Outcomes 2. Identify the basic economic problem and need for management 3. Learn the basic functions of Management What is a Business Organization? A business organization is a, group of people working together to satisfy human needs and wants by producing goods and services with a common objective of profit maximization. Principal forms of business organizations Sole proprietorship Partnerships Companies Non – profit making organizations  Sole proprietorships Ownership: Sole proprietorships are businesses owned and operated by a single individual. The owner assumes all responsibilities and liabilities. Easy Setup: They are the simplest form of business to establish, requiring minimal legal formalities and paperwork. Profit Retention: The owner retains all profits generated by the business. Unlimited Liability: The owner has unlimited personal liability for business debts and obligations, risking personal assets. Taxation: Profits are taxed as the personal income of the owner. Sole proprietorships Advantages and Disadvantages of Sole Proprietorship  Sole proprietorships Advantages and Disadvantages of Sole Proprietorship Full Control: The owner maintains Unlimited Liability: The owner is liable for debts, complete control over business lawsuits, and business obligations, risking operations and decisions. personal assets. Ease of Decision-Making: Quick Limited Capital: Difficulty in raising substantial decision-making due to a lack of capital compared to larger business structures. hierarchical structure. Limited Expertise: Sole proprietors may lack Tax Benefits: Potential tax advantages as expertise in various business aspects, impacting business losses can offset personal growth potential. income. Continuity: Business continuity may be uncertain Flexibility: Easy to start, manage, and due to its dependence on the owner's lifespan dissolve as per the owner's discretion and health.  Partnerships Ownership: Partnerships involve two or more individuals sharing ownership, responsibilities, and profits. Types: General partnerships (GP) involve equal management and liability sharing, while limited partnerships (LP) offer limited liability to some partners. Agreement: Partnerships operate based on a partnership agreement detailing roles, responsibilities, profit-sharing, and decision-making. Taxation: Profits are passed through to partners' personal income tax. No legal personality  Partnerships General partnerships Limited partnerships (GP) (LP) Contribute Only contribute capital (assets, capital and expertise to the cash, etc.) partnership Unlimited legal liability (assets Do not manage and cannot are subject to any legal claims) exercise control Limited legal liability (Only contribution, not assets)  Partnerships General partnerships Limited partnerships (GP) (LP) Contribute Only contribute capital (assets, capital and expertise to the cash, etc.) partnership Unlimited legal liability (assets Do not manage and cannot are subject to any legal claims) exercise control Limited legal liability (Only contribution, not assets) Partnerships Advantages and Disadvantages of Partnerships  Partnerships Advantages and Disadvantages of Partnerships Shared Responsibility: Partnerships Unlimited Liability (in General benefit from shared responsibilities, Partnerships): Partners share unlimited skills, and expertise among liability for business debts and partners. obligations. Complementary Skills: Partners can Conflict Risks: Disagreements and bring the business diverse skills, conflicts among partners can affect knowledge, and resources. decision-making and business operations. Capital Access: Easier access to Shared Profits: Profits are divided among capital due to contributions from partners based on the partnership multiple partners. agreement, potentially leading to disputes. Tax Benefits: Profits are taxed as personal income, offering tax Limited Life Span: The business's flexibility. continuity may be affected by a partner's withdrawal, death, or bankruptcy. Limited Liability Company (LLC) These organizations should incorporate under the ‘Companies Act no 07 of 2007’. Ownership: LLCs blend features of partnerships and corporations, offering limited liability to owners (members) while maintaining pass-through taxation. Limited Liability: Members have limited liability, protecting personal assets from business debts and obligations. Flexible Structure: LLCs have flexible management structure and profit distribution among members. Taxation: Profits pass through to members' personal income tax returns. Types of Limited Companies Limited Companies Private Limited Public Limited Companies Companies Private Limited Companies Maximum 50 No shares can be offered shareholders and should for sale to the general consist at least one public director Consent of all The last two words of the shareholders is required name should be read as to transfer shares to a either “(Private) Limited” new shareholder or “(Pvt) Ltd” Public Limited Companies No limit to the maximum No restriction on the number of shareholders Can offer shares for sale transferability of shares, if and should consist at to the general public listed in the CSE. least two directors. The last word of the name should be read as either as “Public Limited Allowed to raise funds by Company” or “PLC” if the issuing debentures company is a listed company. If not the name should be as “Limited” or (‘LTD’) ADVANTAGES ??? DISADVANTAGES ???  Non – profit making organizations NPOs are organizations that focus on specific social causes, serving their members or the public at large. The revenues earned by these organizations often come from donations, fundraising activities, or membership fees. Some may also sell products and services to generate funds to support their objective.  Goal Directed Behavior??? List goals of a business organization. 1…………………………………………………………………………… 2…………………………………………………………………………… 3…………………………………………………………………………… 4…………………………………………………………………………… 5…………………………………………………………………………… 6……………………………………………………………………………  1. A business owned by shareholders. Choose the 2. A business owned when one shareholder best has 99% investment and the other has 1% description of a investment. sole 3. A business owned by one person. proprietorship. 4. A business owned by two or more people. Choose which answer is NOT an advantage of a sole proprietorship. 1. A sole proprietorship can retain all the profits. 2. A sole proprietorship can make all of the hiring decisions. 3. A sole proprietorship can make all of the marketing decisions. 4. A sole proprietorship must pay back all the loans by selling their own assets. Corporations have advantages and 1. Business 2. Shareholder disadvantages. continuity investments Choose which answer is NOT an advantage of a corporation. 3. Limited liability 4. Unlimited liability