Chapter 2

Business Management
 SME definition

 A Medium sized business is:

“A business establishment with an annual
sales turnover of between US$10
thousand and US$25 thousand and
which employs not more than 50 full-time
workers”. ( SMIDEC)
 SME definition

 A 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”. (SMIDEC)
 Characteristic of Small
Business
1. Ownership
2. Management
3. Resources
4. Organizational structure
5. Flexibility of change
 Characteristic of Small
Business
1. Ownership – privately owned by individual or
partners, typically registered as a sole
proprietorship, partnership or private limited
(Sdn. Bhd.) company.
2. Management – the business is managed and
operated by the owner(s). The entrepreneur or
founder of the business leads the company,
and acts as both manager and worker. The
development of the business is determined by
the owner. Decision making is mostly done by
the owner.
 Characteristic of Small
Business
3. Resources – A small business often has limited
resources. This is especially true for new start-
ups due to a lack of record in the business to
convince potential investors and bankers.
Thus, it is highly dependent on the ability of the
owner to generate resources.
4. Organizational structure – for a small business,
the structure is often flat and informal. The
owner has to do almost everything and the
workers are normally expected to be able to
function as generalists since there is no clear
demarcation of tasks.
 Characteristic of Small
Business
5. Flexibility of Change –
i. the business has more flexibility to adapt to
changes in the environment due to its size and
informal structure.
ii. It is also vulnerable to development in the
business environment. For instance, any
changes in technology or government policy
might have a great impact on the business
because immediate changes normally require
additional capital or resources. This might
become a constraint to the business to
compete and sustain itself in the market.
Management Functions

 Management functions refer to the

activities of planning, organizing, leading
and controlling of business input.
 Business input refers to the resources
requires to operate a business activity
e.g. capital, manpower, technology and
raw materials.
Management Functions

 Planning
 Organizing
 Leading
 Controlling
 Planning
 Planning is selecting priorities and
results (goals, objectives, etc.) and how
those results will achieved.
 Planning typically includes identifying
goals, objectives, methods, resources
needed to carry out methods,
responsibilities and dates for completion
of tasks.
 Planning
 Deciding what needs to happen in the
future (today, next week, next month,
next year, over the next 5 years, etc.)
and generating plans for action.
 Examples of planning are strategic
planning, business planning, project
planning, staffing planning, advertising
and promotions planning, etc
 Organizing
 Organizing is allocating and configuring
resources to accomplish the preferred
goals and objectives establishing during
the planning processes.
 (Implementation) making optimum use of
the resources required to enable the
successful carrying out of plans.
 Leading
 Leading is establishing direction and
influencing people to follow that direction.
 Exhibiting leadership and motivational
skills in order to encourage others to play
an effective part in achieving plans and
ensure willing participation in the
organization on the parts of workers.
 Controlling
 Coordinating/controlling is monitoring and
adjusting resources and processes to
achieve goals and objectives in a highly
effective and efficient fashion.
 Monitoring, checking progress against
plans, which may need modification
based on feedback.