Chapter 5 – Management of a small Business

From :

Shafiq

Chitra

Barzi

Hasmin

In Malaysia, Small and Medium Enterprise (SMEs) plays as an important role.

Receive much attention since the implementation of the new economic policy (1971 – 1990)

It help the economic development, creating job opportunities, and play as a crucial role in contributing to the prosperity of big and multinational corporation.

The definition of SMEs are different from one country to another.

In Malaysia, the definition that provide by SMIDEC which define SMEs according two main factors, annual sales turnover and number of full time worker.

According to SMIDEC, Small sized business is a business establishment with an annual sales turnover of not more than RM10 million and which employs not more than 50 full time workers.

And a medium sized business is a business establishment with an annual turnover of between RM10 million and RM 25 million and which employs not more than 150 full time workers.

Ownership – owned by individual or partners, typically registered as a sole trader, partnership or private limited company.

Management – managed by the owner, the owner act both as manager and worker, and decision making is mostly done by the owner.

Resources – Small Business often has limited resource.

Origination Structure – The structure usually flat and informal. The owner has to do almost everything.

Flexibility of Change – more flexibility to adapt to change in the environment due to its size and informal structure.

Refer to the activities of planning, organizing, leading and controlling of business input (PLOC)

Business input refers to the resources required to operate a business activity. Capital Manpower Technology Materials

The activity of formulating company’s policy and procedure to ensure the attainment of business mission and objective through the most effective and efficient means.

The entrepreneur has to determine his/her business mission and objective and device workable strategy to achieve them

Business Vision – Long term goal of the business, where business want to go or what it inspires to be.

Business Mission – Statement of purpose or the reason for existence (long term goal of the company but in specified time frame)

Business goals/Objectives – The achievement of business mission and Vision. More specific, stated in a shorter term and have definite time frame

VISIONTo build a workforce of highly skilled,

innovative and disciplined individuals who will operate as one to enhance the efficiency of the hotel industry in its efforts to achieve the goals of Vision 2020 and beyond.

MISSIONAs an official national network for the hotel

industry, the Malaysian Association of Hotels (MAH) will act as a voice of the industry, working as one body to promote, protect, represent and advance the interests of its members.

OBJECTIVESTo unite hotels in Malaysia into one

representative body To promote and foster cooperation between

hotels and all similar businesses within and without the areas of the Association

To protect and advance the interest of all Ordinary Members and Associate Members and secure mutual advantages

To encourage its members to provide quality service, to keep abreast of the changing needs of the travelling public, and to promote good relationships between the industry and the public

To promote international, regional and domestic tourism

To properly arrange Activities of designing an organizational

structure, dividing and assigning jobs and tasks among departments, sections or units beside handling the infrastructure and operation methods.

Business owner would have other people to assist him/her in managing his/her business affectively, he/her will supervises a group of workers to do what needs to be done in order to achieve his/her business objectives.

Thus leading involves :Assigning of jobs and responsibilitiesMotivating employeesProviding and receiving feedback

A monitoring function to ensure that activities carried out are on the right track in achieving the goals set out by the business.

Process of ensuring effective and efficient application of business input.

Early stage – the owner spend most of his/her time on the operation rather than management of the business.

Second Stage – assistance is needed, workers are employed to do some task and they report directly to the owner, However the owner still running most of the business activities.

Third Stage – the business has grown to become more organized, it now has a group of managerial staff to assist in supervising task

As the business continue to grow, the company grow bigger, employs more workers and has multiple managerial levels in the organization structure. At this stage the owner spend most of his/her time on the managerial function, namely, planning, leading, organizing and controlling.

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Various activities which involved: Accounting Personnel Marketing Production Finance

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Social unit which comprises people performing different tasks in a coordinated manner in order to achieve goals

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Tool to organize business inputs:1. Capital2. Manpower3. Technology4. Raw material

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1. Division of work2. Delegation of authority &

responsibility3. Unity of command4. Span of control

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1. Identified activities/jobs 2. Assigned to workers3. Jobs must commensurate with

capability & skills4. Jobs must be meaningful5. Must be monitor

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1. A power given to enable manager to delegate take actions against subordinates

2. Authority must have responsibility to avoid abusing of power but must be within limits

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1. A subordinate should report to only one superior

2. To avoid conflict

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1. Number of workers 2. Determined the effectiveness3. Depends on several factors:

Workers’ competenciesNature of jobWork plan

4.Lower level manager = 8 to 205.Upper level manager = 4 to 8

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1. Refers to job and responsibility assigned to workers

2. Helps to minimize owner’s responsibility

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1. Responsibility and specific tasks can be assigned to individual

2. Well coordinated to achieve goals3. Line structure is most common and

effective to be used4. Based on:

ShiftNumber of workersFunctionsProductRegionsclients

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OWNER/MANAGER

SUPERVISORDAY SHIFT

SUPERVISOR NIGHT SHIFT

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OWNER/MANAGER

SUPERVISOR 1 SUPERVISOR 2 SUPERVISOR 3

20 WORKERS 15 WORKERS 20 WORKERS

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OWNER/MANAGER

PRODUCTIONMANAGER

MARKETINGMANAGER

ADMINMANAGER

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OWNER/MANAGER

MGR PRODUCT A:CHILDREN’S

WEAR

MGRPRODUCT B:

MEN’S WEAR

MGRPRODUCT C:

WOMEN’SWEAR

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OWNER/MANAGER

EASTERNREGION

WESTERNREGION

NORTHERNREGION

SOUTHERNREGION

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OWNER/MANAGER

CLIENT A:LMK SDN BHD

CLIENT B:TASH BERHAD

CLIENT C:NIKPA ENT.

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1. Set goals2. Identify &

summaries3. Gather

activities4. Prepare

controlling mechanism

5. Assign person to lead & provide authority

6. Arrange & create chain of command

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1. Comprises efforts & strategies2. Encompasses strategies3. Ensured that only qualified personnel

are hired4. Reduced risks

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1. A systematic process to:

Identify tasksDetermine skillsKnowledge

2. Helps to determined scope of position

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1. Functions2. Duties3. Responsibility4. Specific tasks5. guidelines

6. Environment7. Specifies tools8. Machinery9. Description10. Functions

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1. State minimum qualifications2. May be specified in terms of:

Education levelExperienceSkillsPersonalityPhysical capability

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1. A process of:a) Searchingb) Identifyingc) Selecting2. Not practical in a small business due of

cost and time

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1. Announce vacancy through printed or electronic media

2. Put any information on the internet

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1. Job application form >gather basic information of

applicants2.Job interview >gain in depth information about

an applicant3.Selection process >evaluate applicants for position

and measure their potential

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1. To develop a good reward system2. Two common components are: a) compensation b) fringe benefits

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1. Refers to monetary reward in various form of pay

2. Main categories of it are: salary wages sales commission bonus allowances EPF SOCSO

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1. Salary = paid to workers on periodical basis

2. Wages = paid to part-time/temporary workers

3. Commission = paid based on percentage of sales generated

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1. EPF = must register by employer2. SOCSO = insurance to protect

employees in case of unexpected incidents at the workplace

3. ALLOWANCES = additional benefits paid to workers and considered as incentives

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1. could be either monetary or non-monetary

2. Monetary usually a bonus paid based on performance

3. Non-monetary includes medical coverage, paid holidays, recreation club membership & sport club membership

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1. EPF = responsible for the implementation, administration and enforcement of the EPF workers act 1991, EPF Regulations 1991 & EPF Procedures 1991

2. Gain some benefits that include: a) retirement b) dividends c) loss income or death d) income tax exemption e) invalidity before age 60 f) survivors in the event of death before

age 60

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1. Responsible for the implementation, administration and enforcement of the Workers Social Safety Act 1969 & Workers Social Safety Regulations 1971

2. Offers 2 scheme which are: >The Employment Injury Scheme >Invalidity Pension Scheme

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Provides protection foremployees in followingcategories:1. Private sector who earn ≤ Rm1250/month2. Labour artisans who earn ≤ Rm1250/month3. Transport workers involved of transport for

passengers/goods4. Labour supervisors5. Housemaid6. Ship workers on vessels that registered in

malaysia