I’ll be off for a holiday.

So there’ll be no update till 2nd Jan 2010.

Merry xmas 2009 and Happy New Year 2010!

Thanks for reading my blog.

The Aims and Objectives of the business

The definition of Objectives give the business a clearly defined target. Plans can be made to achieve these targets. This can motivate the employees. It also enables the business to measure the progress towards to its stated aims. The objectives of Luke are to provide services and have at least one learning center in every city in Malaysia. Luke wants to have one thousand learners in one year time. The learners will be able to master the widespread use of e-mails and other application in half a year.

The aim of Luke Chan is to provide lessons to people, especially older people, on how to use the internet and e-mail after his graduation. He was very inspired with such an idea because he found that there are some of his mother’s friends who are not willing to go back into the workforce and the reason is they are not updated with the widespread use of e-mails and other online applications. For the first step, Luke is planning to open his business in Malaysia and make his learning center the best in Malaysia.

Business Ownership

Since Luke and Eric just graduated and doesn’t have any real experience in running the business, I would recommend Luke to make a partnership in doing his business. Partnership is an unincorporated association of two partners but not more than 20 peoples to share the profits or loses of the business. Partnership is categorized as an unincorporated business under private sector. Partnership dissolved by death, mutual agreement or court orders. [Characteristics of a Partnership [online], 2000-2008] There are 2 other types of business ownership, which is sole proprietorship, public limited and private limited. Sole proprietorship can only have one business owner, while for public limited will need 7 shareholders to run the business and it will cost much more compare to  partnership, which Luke might not have sufficient funds to start the business.

The advantage of having a partnership is that you don’t have to register with your state and pay an often hefty fee, as you do to establish a corporation or limited liability company. And because a  partnership is normally a ” pass through” tax entity (the partners, not the partnership, are taxed unless you specifically elect to be taxed like a corporation) filing income tax returns is easy. Unlike a regular corporation, there is no need to file separate tax returns for the corporate entity and its owners. But given that the business-related acts of one partner legally bind all others, it is essential that you go into business with a partner or partners you completely trust. It is also essential that you prepare a written partnership agreement establishing, among other things, each partner’s share of profits or losses, day-to-day duties and what happens if one partner dies or retires.

A major disadvantage of doing business as a  partnership is that all partners are personally liable for business debts and liabilities (for example, a judgment in a lawsuit). While it’s true that a good insurance policy can do much to reduce lawsuit worries and that many small, savvy businesses don’t have debt problems, it’s also true that businesses which face significant risks in either of these areas should probably organize themselves as a corporation or LLC.

Forces in the Business Environment

Five forces analysis help the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or Strategic Business Unit (SBU) rather than a single product or range of products. For example, Dell would analyze the market for Business Computers i.e. one of its SBU’s.

Porter’s provided a framework that models an industry as being influenced by five forces which are the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes and competitive rivalry. [Porter’s Five Forces[online], 1999-2007]

From my point of view, there are some forces that have a potential to affect Luke’s business. The first force is thread of entry, it has a theory that any firm should be able to enter and exit a market, and id free entry and exit exists, then profits always should be nominal. Example, for Luke’s business, everyone can easily set up this kind of business which caused the thread of entry is high. Example, If the industry profits increase, we would expect additional firms to enter the market and to take the advantages of the high profit levels.

Second forces is the power of suppliers, it means how much influence does a supplier have over a company; since Luke’s want to set up a business which only need to buy computers for one time, and maintain/upgrade it every several years, therefore the suppliers doesn’t really care about Luke, which means that Luke won’t bring any profit to the supplier.

Third forces is the threat of substitutes; a threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. There is a free learning basic IT

provided by the government and every book store must have sell IT books which are the substitutes of Luke’s service. It will decrease the number of people who will register for Luke’s service. Therefore the thread of substitutes to Luke’s business was considered as moderate because people will prefer to have someone teaching them instead reading a book and try to understand what’s the author trying to say.

Forth forces is the competitive rivalry; this is going to be most likely high for Luke’s business where the threat of substitute, power of suppliers exists and also buyers in the market. For a company with high fixed costs (percentage of total cost), they have to sell more products or give more services to cover the costs, due to the market competition.

The Last forces will be the power of buyers, according to Mr. Zainalabidin, the more buyer, the less the bargaining power of buyers which means the more the profit can be made. If a person doesn’t want to use the service there will be another people who will use the service so this makes the price decreasing. Where the more buyer, the more bargaining power of buyers, it is because united consumer society in other words the more buyers in the united consumer society the more bargaining power of buyers. For Luke’s business the power of buyers is going to be very high since the threat of entry and competitive rivalry are high enough. In other words, customers have the  options to choose which learning center suits them the best.

In conclusion, all the 5 forces will bring positive effect and negative effect to Luke’s business.

(Total words: 1.137)

Reference:

• Epstein, F. n.d., The Partnership Advantage – Business Relationships [online],  Available from: http://www.partnershipadvantage.net/business.html [Accessed: 25.10.2009]

• Characteristics of a Partnership [online], 2000-2008, Available from http://www.cliffsnotes.com/WileyCDA/CliffsReviewTopic/Characteristics-of-a-Partnership.topicArticleId-21248,articleId-21185.html, [Accessed 02.11.2009]

• Porter’s Five Forces [online], 1999-2007, Available from http://www.quickmba.com/strategy/porter.shtml, [Accessed 02.11.2009

• Unknown 2009, Partnership vs Limited Company - Liability - Partnership Deeds - Taxation [online],  Available from: http://www.completeformations.co.uk/companyfaqs/business_entities/partnership_vs_company.html [Accessed: 10.11.2009]

• Bible, I 2007, Partnership and Its Charateristics [online],  Available from: http://www.articlesbase.com/business-articles/partnership-and-its-characteristics-266902.html [Accessed: 10.11.2009]

The Aims and Objectives of the business

The definition of Objectives give the business a clearly defined target. Plans can be made to achieve these targets. This can motivate the employees. It also enables the business to measure the progress towards to its stated aims. The objectives of Luke are to provide services and have at least one learning center in every city in Malaysia. Luke wants to have one thousand learners in one year time. The learners will be able to master the widespread use of e-mails and other application in half a year.

The aim of Luke Chan is to provide lessons to people, especially older people, on how to use the internet and e-mail after his graduation. He was very inspired with such an idea because he found that there are some of his mother’s friends who are not willing to go back into the workforce and the reason is they are not updated with the widespread use of e-mails and other online applications. For the first step, Luke is planning to open his business in Malaysia and make his learning center the best in Malaysia.

Business Ownership

Since Luke and Eric just graduated and doesn’t have any real experience in running the business, I would recommend Luke to make a partnership in doing his business. Partnership is an unincorporated association of two partners but not more than 20 peoples to share the profits or loses of the business. Partnership is categorized as an unincorporated business under private sector. Partnership dissolved by death, mutual agreement or court orders. [Characteristics of a Partnership [online], 2000-2008] There are 2 other types of business ownership, which is sole proprietorship, public limited and private limited. Sole proprietorship can only have one business owner, while for public limited will need 7 shareholders to run the business and it will cost much more compare to  partnership, which Luke might not have sufficient funds to start the business.

The advantage of having a partnership is that you don’t have to register with your state and pay an often hefty fee, as you do to establish a corporation or limited liability company. And because a  partnership is normally a ” pass through” tax entity (the partners, not the partnership, are taxed unless you specifically elect to be taxed like a corporation) filing income tax returns is easy. Unlike a regular corporation, there is no need to file separate tax returns for the corporate entity and its owners. But given that the business-related acts of one partner legally bind all others, it is essential that you go into business with a partner or partners you completely trust. It is also essential that you prepare a written partnership agreement establishing, among other things, each partner’s share of profits or losses, day-to-day duties and what happens if one partner dies or retires.

A major disadvantage of doing business as a  partnership is that all partners are personally liable for business debts and liabilities (for example, a judgment in a lawsuit). While it’s true that a good insurance policy can do much to reduce lawsuit worries and that many small, savvy businesses don’t have debt problems, it’s also true that businesses which face significant risks in either of these areas should probably organize themselves as a corporation or LLC.

Forces in the Business Environment

Five forces analysis help the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or Strategic Business Unit (SBU) rather than a single product or range of products. For example, Dell would analyze the market for Business Computers i.e. one of its SBU’s.

Porter’s provided a framework that models an industry as being influenced by five forces which are the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes and competitive rivalry. [Porter’s Five Forces[online], 1999-2007]

From my point of view, there are some forces that have a potential to affect Luke’s business. The first force isthread of entry, it has a theory that any firm should be able to enter and exit a market, and id free entry and exit exists, then profits always should be nominal. Example, for Luke’s business, everyone can easily set up this kind of business which caused the thread of entry is high. Example, If the industry profits increase, we would expect additional firms to enter the market and to take the advantages of the high profit levels.

Second forces is the power of suppliers, it means how much influence does a supplier have over a company; since Luke’s want to set up a business which only need to buy computers for one time, and maintain/upgrade it every several years, therefore the suppliers doesn’t really care about Luke, which means that Luke won’t bring any profit to the supplier.

Third forces is the threat of substitutes; a threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. There is a free learning basic IT

provided by the government and every book store must have sell IT books which are the substitutes of Luke’s service. It will decrease the number of people who will register for Luke’s service. Therefore the thread of substitutes to Luke’s business was considered as moderate because people will prefer to have someone teaching them instead reading a book and try to understand what’s the author trying to say.

Forth forces is the competitive rivalry; this is going to be most likely high for Luke’s business where the threat of substitute, power of suppliers exists and also buyers in the market. For a company with high fixed costs (percentage of total cost), they have to sell more products or give more services to cover the costs, due to the market competition.

The Last forces will be the power of buyers, according to Mr. Zainalabidin, the more buyer, the less the bargaining power of buyers which means the more the profit can be made. If a person doesn’t want to use the service there will be another people who will use the service so this makes the price decreasing. Where the more buyer, the more bargaining power of buyers, it is because united consumer society in other words the more buyers in the united consumer society the more bargaining power of buyers. For Luke’s business the power of buyers is going to be very high since the threat of entry and competitive rivalry are high enough. In other words, customers have the  options to choose which learning center suits them the best.

In conclusion, all the 5 forces will bring positive effect and negative effect to Luke’s business.

(Total words: 1.137)

Reference:

• Epstein, F. n.d., The Partnership Advantage – Business Relationships [online],  Available from:http://www.partnershipadvantage.net/business.html [Accessed: 25.10.2009]

• Characteristics of a Partnership [online], 2000-2008, Available fromhttp://www.cliffsnotes.com/WileyCDA/CliffsReviewTopic/Characteristics-of-a-Partnership.topicArticleId-21248,articleId-21185.html, [Accessed 02.11.2009]

• Porter’s Five Forces [online], 1999-2007, Available fromhttp://www.quickmba.com/strategy/porter.shtml, [Accessed 02.11.2009

• Unknown 2009, Partnership vs Limited Company - Liability - Partnership Deeds - Taxation [online],  Available from:http://www.completeformations.co.uk/companyfaqs/business_entities/partnership_vs_company.html[Accessed: 10.11.2009]

• Bible, I 2007, Partnership and Its Charateristics [online],  Available from:http://www.articlesbase.com/business-articles/partnership-and-its-characteristics-266902.html[Accessed: 10.11.2009]