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Chapter 5 Ee

Chapter 5 Ee

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POLICIES, CHALLENGES AND

ISSUES IN
ENTREPRENEURSHIP
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After studying this chapter you should be
ready to describe:
1. The Malaysia‟s plan and the national
industrial policy.
2. Globalization and the economic blocs
(AFTA AND NAFTA).
3. Patterns and intellectual property rights.
4. Issues on merging and takeovers.
5. Issues on ergonomics and
entrepreneurship.
6. Issues on laws and entrepreneurship.

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Ninth Malaysia Plan (RMKe-9)
 Ninth Malaysia Plan's documents encompass
the strategies, programmes and required
allocation to realise the National Mission and
make Malaysia a country that is more
advanced, fair and united.
 RMKe 9's documents also describe the
National Mission as the framework for policy
and implementation which consisted of from
five main core to achieve the objective of
Vision 2020.
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 The transformation of the manufacturing
sector, and sustaining its competitiveness,
remains a major factor in determining the
pace of economic activity in the country.
 For the Ninth Malaysia Plan period (2006-
2010), in meeting a more challenging and
competitive global environment, a crucial
goal will be to upscale the manufacturing
sector towards higher value added activities
and upgrade capacity in the provision of
related services.
 The focus will be on transforming industrial
businesses and complementary services,
especially SMEs, into strong knowledge-
intensive and value-creating entities.
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 The 10th Malaysia Plan (10MP) will be based on a
new economic model to ensure that all efforts
towards economic recovery in the country run
smoothly.
 Minister in the Prime Minister's Department Tan Sri
Nor Mohamed Yakcop said that although 10MP will
take effect only in 2011, the government has
started early planning on the five-year economic
programme to ensure sustainable development.
 Among the areas of focus under the new model will
be to create many more industries to generate
higher income for the people and help them face
future economic challenges as well.
 Among the sectors identified to drive the new
economy were knowledge, skills and creativity
based industries including tourism.

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There are major 4 types of Industrial Policy in
Malaysia, each characterized by the different
objectives:
1. Wealth Redistribution Industrial Policy – that
is aimed at ensuring a fair distribution of
wealth amongst the different races in the
country.
2. Export Promotion Industrial Policy – that is
aimed at promoting the development of
manufacturing industries serving foreign
markets.
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3. Import Substitution Industrial Policy – that
is aimed at promoting the development of
manufacturing industries serving domestic
markets.
4. Response to Globalization Industrial Policy
– that is aimed at coping with new
competition from large foreign firms in
the domestic (primarily services) markets.
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 Globalization (or globalisation) describes an ongoing process
by which regional economies, societies and cultures have
become integrated through globe-spanning networks of
exchange.
 The term is sometimes used to refer specifically to economic
globalization: the integration of national economies into the
international economy through trade, foreign direct
investment, capital flows, migration, and the spread of
technology.
 However, globalization is usually recognized as being driven
by a combination of economic, technological, sociocultural,
political and biological factors.

 The term can also refer to the transnational dissemination of
ideas, languages, or popular culture.



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Globalization has various aspects which affect the world in
several different ways such as:
 Industrial - emergence of worldwide production markets and
broader access to a range of foreign products for consumers
and companies. Particularly movement of material and goods
between and within national boundaries.
 Financial - emergence of worldwide financial markets and
better access to external financing for borrowers. As these
worldwide structures grew more quickly than any
transnational regulatory regime, the instability of the global
financial infrastructure dramatically increased, as evidenced
by the financial crises of late 2008.
 Economic - realization of a global common market, based on
the freedom of exchange of goods and capital. The
interconnectedness of these markets, however meant that an
economic collapse in any one given country could not be
contained.
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 Political - some use "globalization" to mean the creation of a
world government which regulates the relationships among
governments and guarantees the rights arising from social
and economic globalization. Politically, the United States has
enjoyed a position of power among the world powers, in part
because of its strong and wealthy economy.
 Informational - increase in information flows between
geographically remote locations. Arguably this is a
technological change with the advent of fibre optic
communications, satellites, and increased availability of
telephone and internet. Language - the most popular
language is English.

◦ About 35% of the world's mail, telexes, and cables are in
English.
◦ Approximately 40% of the world's radio programs are in
English.
◦ About 50% of all Internet traffic uses English.
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 Competition - Survival in the new global business market
calls for improved productivity and increased competition.
Due to the market becoming worldwide, companies in various
industries have to upgrade their products and use technology
skillfully in order to face increased competition.

 Ecological - the advent of global environmental challenges
that might be solved with international cooperation, such as
climate changes, cross-boundary water and air pollution,
over-fishing of the ocean, and the spread of invasive species.
Since many factories are built in developing countries with
less environmental regulation, globalism and free trade may
increase pollution. On the other hand, economic development
historically required a "dirty" industrial stage, and it is argued
that developing countries should not, via regulation, be
prohibited from increasing their standard of living.


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 Cultural - growth of cross-cultural contacts; advent of new
categories of consciousness and identities which embodies
cultural diffusion, the desire to increase one's standard of
living and enjoy foreign products and ideas, adopt new
technology and practices, and participate in a "world culture".
Some bemoan the resulting consumerism and loss of
languages. Also see Transformation of culture.
◦ Spreading of multiculturalism, and better individual access to cultural
diversity (e.g. through the export of Hollywood and Bollywood movies).
Some consider such "imported" culture a danger, since it may supplant the
local culture, causing reduction in diversity or even assimilation. Others
consider multiculturalism to promote peace and understanding between
peoples.
◦ Greater international travel and tourism. WHO estimates that up to
500,000 people are on planes at any time.
◦ Greater immigration, including illegal immigration
◦ Spread of local consumer products (e.g., food) to other countries (often
adapted to their culture).
◦ Worldwide sporting events such as FIFA World Cup and the Olympic
Games.


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 Social - development of the system of non-governmental
organisations as main agents of global public policy,
including humanitarian aid and developmental efforts.
 Technical
◦ Development of a global telecommunications infrastructure
and greater transborder data flow, using such technologies
as the Internet, communication satellites, and wireless
telephones.
◦ Increase in the number of standards applied globally; e.g.,
copyright laws, patents, and world trade agreements.
 Legal/Ethical
◦ The creation of the international criminal court and
international justice movements.
◦ Crime importation and raising awareness of global crime-
fighting efforts and cooperation.
◦ The emergence of Global administrative law.

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 ASEAN Free Trade Area (AFTA) is a trade bloc agreement by
the Association of Southeast Asian Nations supporting local
manufacturing in all ASEAN countries.
 AFTA is a collective effort by ASEAN member countries to
reduce/eliminate tariffs on intra-ASEAN trade. The purpose
was to develop greater trade and industrial linkages among
ASEAN member countries.
 The AFTA agreement was signed on 28 January 1992 in
Singapore. When the AFTA agreement was originally signed,
ASEAN had six members, namely, Brunei, Indonesia, Malaysia,
Philippines, Singapore and Thailand. Vietnam joined in 1995,
Laos and Myanmar in 1997 and Cambodia in 1999. AFTA now
comprises the ten countries of ASEAN. All the four latecomers
were required to sign the AFTA agreement in order to join
ASEAN, but were given longer time frames in which to meet
AFTA's tariff reduction obligations.

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 The primary goals of AFTA seek to:
 Increase ASEAN's competitive edge as a production base in
the world market through the elimination, within ASEAN, of
tariffs and non-tariff barriers; and
 Attract more foreign direct investment to ASEAN.

What is the mechanism to realise AFTA?

AFTA has been realised through the Common Effective
Preferential Tariff (CEPT) Scheme. Under the CEPT:
 Import duties among member countries will be reduced to
between 0-5% by the full implementation of AFTA in 2010

 Elimination of quantitative restrictions (import permit, quota)
& other non-tariff barriers (NTBs) among ASEAN Member
Countries

 Progressive transfer of products into the CEPT Scheme based
on each ASEAN member's capacity and capability.


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 The North American Free Trade Agreement or
NAFTA is an agreement signed by the governments
of the United States, Canada, and Mexico creating a
trilateral trade bloc in North America.
 The agreement came into force on January 1, 1994.
It superseded the Canada-United States Free Trade
Agreement between the U.S. and Canada.
 The goal of NAFTA was to eliminate barriers to
trade and investment between the USA, Canada and
Mexico.
 The implementation of NAFTA on January 1, 1994,
brought the immediate elimination of tariffs on
more than one half of US imports from Mexico and
more than one third of US exports to Mexico.

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Intellectual Property Protection
 Intellectual Property:
◦ Is any product of human intellect that is intangible
but has value in the marketplace.
◦ It is called “intellectual” property because it is the
product of human imagination, creativity, and
inventiveness.
 Importance
◦ Traditionally, businesses have thought of their
physical assets, such as land, buildings, and
equipment as the most important.
◦ Increasingly, however, a company‟s intellectual
assets are the most important.

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 Intellectual property protection in
Malaysia comprises of patents,
trademarks, industrial designs,
copyright, geographical indications and
layout designs of integrated circuits.
 Malaysia is a member of the World
Intellectual Property Organization
(WIPO) and a signatory to the Paris
Convention and Berne Convention which
govern these intellectual property
rights.

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 In addition, Malaysia is also a signatory to
the Agreement on Trade Related Aspects of
Intellectual Property Rights (TRIPS) signed
under the auspices of the World Trade
Organization (WTO).
 Malaysia provides adequate protection to
both local and foreign investors. Malaysia's
intellectual property laws are in
conformance with international standards
and has been reviewed by the TRIPs Council
periodically.
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Not properly identifying
all of their
intellectual property
Not fully recognizing
the value of their
intellectual property
Not legally protecting
the intellectual property
that needs protecting
Not using their
intellectual property as
part of their overall
plan for success
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 The Patents Act 1983 and the Patents
Regulations 1986 govern patent protection
in Malaysia.
 An applicant may file a patent application
directly if he is domicile or resident in
Malaysia.
 A foreign application can only be filed
through a registered patent agent in
Malaysia acting on behalf of the applicant.
 A patent does not give its owner the right
to make, use, or sell an invention: rather,
the right granted is only to exclude others
from doing so.


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 Similar to legislations in other countries, an
invention is patentable if it is new, involves an
inventive step and is industrially applicable.
 In accordance with TRIPS, the Patents Act stipulates
a protection period of 20 years from the date of
filing of an application.
 Under the Act, the utility innovation certificate
provides for an initial duration of ten years
protection from the date of filing of the application
and renewable for further two consecutive terms of
five years each subject to use.
 The owner of a patent has the right to exploit the
patented invention, to assign or transmit the
patent, and to conclude a licensed contract.
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 Trademark
◦ A trademark is any word, name, symbol, or device
used to identify the source or origin of products or
services and to distinguish those products or
services from others.
◦ Trademarks also provide consumers with useful
information.
 For example, consumers know what to expect
when they see an Abercrombie & Fitch store.
 Think how confusing it would be if any retail
store could use the name Abercrombie & Fitch.
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Name is
trademarked
Symbol is trademarked
Slogan is trademarked
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 Trade mark protection is governed by the
Trade Marks Act 1976 and the Trade Marks
Regulations 1997.
 The Act provides protection for registered
trade marks and service marks in Malaysia.
 Once registered, no person or enterprise
other than its proprietor or authorised users
may use them. Infringement action can be
initiated against abusers.
 The period of protection is ten years,
renewable for a period of every ten years
thereafter. The proprietor of the trade mark
or service mark has the right to deal or assign
as well as to license its use.
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 Copyrights
◦ A copyright is a form of intellectual property
protection that grants to the owner of a work of
authorship the legal right to determine how the
work is used and to obtain the economic benefits
from the work.
◦ A work does not have to have artistic merit to be
eligible for copyright protection.
 As a result, things such as operating manuals and
sales brochures are eligible for copyright
protection.
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Literary works
Computer software
Pantomimes and
choreographic works
Musical compositions
Dramatic works
Pictorial, graphic, and
sculptural works
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 The Copyright Act 1987 provides
comprehensive protection for copyrightable
works.
 The Act outlines the nature of works eligible
for copyright (which includes computer
programs), the scope of protection, and the
manner in which the protection is accorded.
 There is no registration of copyright works.
 Copyright protection in literary, musical or
artistic works is for the duration of the life of
the author and 50 years after his death. In
sound recordings, broadcasts and films,
copyright protection is for 50 years after the
works are first published or made.
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 A unique feature of the Act is the inclusion
of provisions for its enforcement. The
amendment of the Copyright Act 1987,
which was enforced on 1 October 2003
confers power of arrest (including arrest
without warrant) to enforcement officers of
the Ministry of Domestic Trade and
Consumer Affairs.
 This special team of officers of the MDTCA
is appointed to enforce the Act and is
empowered to enter premises suspected of
having infringing copies and to search and
seize infringing copies and contrivances.

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 In business or economics a merger is a
combination of two companies into one larger
company.
 Classifications of mergers
◦ Horizontal merger - Two companies that are in direct
competition and share similar product lines and
markets. .
◦ Vertical merger - A customer and company or a supplier
and company. Think of a cone supplier merging with an
ice cream maker.
◦ Market-extension merger - Two companies that sell the
same products in different markets.
◦ Product-extension merger - Two companies selling
different but related products in the same market.
◦ Conglomeration - Two companies that have no common
business areas.
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 An acquisition, also known as a takeover or a
buyout, is the buying of one company (the
„target‟) by another.
 An acquisition may be friendly or hostile.


The companies cooperate in negotiations


The takeover target is unwilling to be
bought or the target's board has no prior
knowledge of the offer





Friendly
Hostile
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 Acquisition usually refers to a purchase of a
smaller firm by a larger one.
 Sometimes, however, a smaller firm will
acquire management control of a larger or
longer established company and keep its
name for the combined entity. This is
known as a reverse takeover.
 Achieving acquisition success has proven to
be very difficult, while various studies have
showed that 50% of acquisitions were
unsuccessful.
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 The word ERGONOMICS comes for two Greek
words, "ERGON" and "NOMOS". "ERGON" means
work and "NOMOS" means natural law or rule.
So, Ergonomics is "Natural Law or Rule of
Work".
 Ergonomics is the science of designing the
job, equipment, and workplace to fit the
worker. Proper ergonomic design is necessary
to prevent repetitive strain injuries, which can
develop over time and can lead to long-term
disability.


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 The International Ergonomics Association
(IEA) defined ergonomics (or human factors)
as "the scientific discipline concerned with
the understanding of interactions among
humans and other elements of a system,
and a profession that applies theory,
principles, data and methods to design in
order to optimize human well-being and
overall system performance".
 Ergonomics is employed to fullfill the two
goals of health and productivity. It is
relevant in the design of such things as safe
furniture and easy-to-use interfaces to
machines.

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 Ergonomics can be classified into three main
areas: Physical Ergonomics, Cognitive
Ergonomics and Organizational Ergonomics.



Physical ergonomics
Cognitive ergonomics
Organizational
ergonomics
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 Physical ergonomics: is concerned with human anatomical,
anthropometric, physiological and biomechanical
characteristics as they relate to physical activity. (Relevant
topics include working postures, materials handling,
repetitive movements, workplace layout, safety and health.)
 Cognitive ergonomics: is concerned with mental processes,
such as perception, memory, reasoning, and motor response,
as they affect interactions among humans and other elements
of a system. (Relevant topics include mental workload,
decision-making, skilled performance, human-computer
interaction, human reliability, work stress and training as
these may relate to human-system design.)
 Organizational ergonomics: is concerned with the
optimization of socio technical systems, including their
organizational structures, policies, and processes.(Relevant
topics include communication, work design, design of
working times, teamwork, community ergonomics,
cooperative work, new work paradigms, virtual organizations,
telework, and quality management.

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 Entrepreneurs must learn quickly that there
are many legal issues they must face in
setting up and running a new business,
establishing a nonprofit organization,
bringing a product to market, or financing
the venture.
 The Malaysian business laws, rules and
regulations follow closely that of United
Kingdom and Australia.

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 The principal law that governs corporate
entities is the Companies Act, 1965.
 All companies whether private or public must
be registered with the Registrar of
Companies. Once registered, they are
subjected to the Company Laws, Rules &
Regulations. As for partnerships, they are
regulated by the Partnership Act.
 The Contract Act governs most business
transactions and contractual agreements
between mutual parties. It helps to settle
trade disputes, disagreements and decide on
degree of damages.

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 Malaysia is practicing open economy. Many of our
biz people are exporting globally and at the same
time foreign investors are investing heavily in
Malaysia.
 Our government has established proper Trade
Mark laws to protect the trade marks and brand
names of companies and products,
 Patent laws to protect the designs and inventions
of entrepreneurs and stringent
 Copyright laws to protect the intellectual
properties of the creator, designer or writer.
 If an individual is not able to pay its debts, the
creditor has rights to sue him for bankruptcy. All
the procedures of making an individual bankrupt
is govern by the Bankruptcy Laws and
Regulations.

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