Re 445: Business Planning and Entrepreneurship: (Bsc. LMV, Refi &PFM) Year IV Semester I

RE 445: BUSINESS
PLANNING AND
ENTREPRENEURSHIP
(BSc. LMV, REFI &PFM)
Year IV Semester I
TOPIC ONE:
INTRODUCTION
1.1 Definition of
entrepreneurship
1.1 Definition of
Entrepreneurship
Before defining the term entrepreneurship
it is important to define a key word
forming part of this terminology. This term
is
an
entrepreneur.
The
word
entrepreneur derives from the French
words, entre, meaning "between"' and
prendrem, meaning to "to take". The word
was originally used to describe people
who take on the risk"' between buyers
and sellers or who "undertake" a task
such as starting a new venture.
1.1 Definition of
Entrepreneurship
Entrepreneur is a therefore defined
as the person who tries to do
something new, visualizes a business
opportunity, organizes the necessary
resources for setting up the business
and bears the risk involved. Thus, an
entrepreneur may be termed as an
innovator, an organizer and a risk
bearer.
1.1 Definition of
Entrepreneurship
The term entrepreneur may be
properly applied to those who
incubate new ideas, start enterprises
based on those ideas, and provide
added value to society based on their
independent initiative.
After understanding who is an
entrepreneur, now let us define the
term entrepreneurship.
1.1 Definition of
Entrepreneurship
Entrepreneurship is the process where
individuals or a group of individuals
risk time and money in pursuit of
opportunities to create value and
grow through innovation regardless of
the resources they currently control.
The term entrepreneurship can also
refers to the functions performed by
an entrepreneur.
1.1 Definition of
Entrepreneurship
In not quite different perspective,
entrepreneurship can be defined as
the process of creating something new
with value by devoting the necessary
time
and
effort,
assuming
the
accompanying financial, psychic, and
social risks, and receiving the resulting
rewards of monetary and personal
satisfaction and independence.
1.2 Characteristics of
Entrepreneurs
In the definitions of who is entrepreneur
and what is entrepreneurship, we met
common and re-occuring terms such as
value, independence, initiative, risk and
resources to mention few. These give a
rough picture of how entrepreneurs look
like. To be very specific, the following are
the characteristics that many people
who are known as entrepreneur shares.
Entrepreneurs
i. Initiative- an entrepreneur must
have an innovative aptitude, pick the
right opportunity, and initiate action.
If he/she does not initiate action at
the right time the opportunity may
be lost. Hence, the ability of an
entrepreneur to take initiative is the
key to the success of the venture to
a great extent.
Entrepreneurs
ii. Wide Knowledge- an entrepreneur
should have wide knowledge of the
economic
and
non-economic
environment of business like the market,
consumer attitudes, technology, etc. In
the
absence
of
such
adequate
knowledge, the decisions taken by him
may be poor and will not contribute to
the profitability of his business in the
long run.
Entrepreneurs
iii. Willingness to assume risk- entering
any venture is full of risks and
uncertainties. In order to deal with
various kinds of risks and uncertainties
efficiently, the entrepreneur should have
willingness
and
necessary
foresightedness to assume risks. The
quantity and quality of risk taking would
determine the quality of business
decisions.
Entrepreneurs
iv. Open mind and optimistic
outlook- an entrepreneur should have
an open mind. He/she must possess a
dynamic and optimistic outlook so as
to predict changes in the business
environment and respond effectively
without delay. Being optimistic enable
the entrepreneur to take initiative in
relation to his business idea.
Entrepreneurs
v. Adaptability/flexibility- the entrepreneur
must be prepared to adapt to the changes
taking place in the system. Any resistance to
change and delay in responding thereto, shall
lead to losing the opportunity of taking
advantage thereof.
vi. Self-confidence- for achieving success in
life, one should have confidence in himself/
herself. A person who lacks confidence can
neither do any work himself/herself nor inspire
others to work.
Entrepreneurs
vii.
Leadership
Qualitiesan
entrepreneur should possess the
qualities of a good leader. He/she
should have the traits of selfdiscipline, presence of mind, sense of
justice, honor and dignity and above
all, a high moral character.
Entrepreneurs
viii. Orientation towards hard workwhile running a business, one problem
or
the
other
may
occur.
The
businessmen has to be vigilant about
these and find solutions thereof as early
as possible. This requires hard work on
the part of the entrepreneur. He has to
put in extra efforts to ensure success of
the enterprise started by him.
1.3 Functions of
Entrepreneur
The functions of an entrepreneur can be
summarized as follows.
i. Conception of an idea: An entrepreneur
is the person with a creative mind who can
identify business opportunities and take
steps for the conversion of ideas into
successful business ventures, and give
them a concrete shape.
ii. Promotion: It is felt that generally an
entrepreneur undertakes the risk of setting
up
1.3 Functions of
Entrepreneur
a small enterprise as a sole proprietor. But,
now-a-days many entrepreneurs have
assumed the role of promoters of large
companies. In fact, promotion may be
undertaken for setting up a new business,
small or large expansion of an existing
business or for combining two or more
business firms. As a promoter, the
entrepreneur has to conduct feasibility
studies, decide to the form of organization,
1.3 Functions of
Entrepreneur
assemble the required funds and
people, and give a concrete shape to
the business proposition.
iii. Innovation: An entrepreneur is also
seen as an innovator who tries to
develop new technology, products and
markets. The entrepreneur uses his
creative abilities to do new things and
exploit opportunities in the market.
1.3 Functions of
Entrepreneur
iv. Bearer of risks and uncertainty:
You know that starting of a new business
venture involves good amount of risk
and uncertainty. To start with, it is the
entrepreneur who assumes risks and is
prepared for the losses that may arise
because of unforeseen situations in
future. In fact, it is his willingness to take
risks that helps him to take initiatives in
doing new things or trying new methods
of production.
1.3 Functions of
Entrepreneur
v. Arranging necessary capital:
Arranging funds is one of the biggest
hurdles in setting up a new
entrepreneur.
It
is
he/she,
himself/herself who has to provide
the initial capital (otherwise known
as risk capital or seed capital) for
starting the ventures.
1.4 Role of
Entrepreneurship in the
Economy
It is beyond reasonable doubt that

entrepreneurship
is
essential
for
economic development in a country like
Tanzania and anywhere in the world.
Entrepreneurs are regarded as the prime
movers of innovations and act as key
figures in economic development of a
country. Specifically entrepreneurship
serve the following roles in the economy.
1.4 Role of
Economy
i. Helps the formation of capital by bringing

together the savings and investments of
people;
ii.
Provides
large-scale
employment
opportunities
and
increases
the
purchasing power of the people;
iii.
Promotes
balanced
regional
development in the country;
iv. Helps in reducing concentration of
economic power (power to own the factor
of production in a few hands).
1.4 Role of
Economy
v. Helps availability of new products and

services at higher quality.
vi. Helps introduction of new technology,
vii. Improvement in the standard of
living- by adopting latest innovations in the
production of wide variety of goods and
services in large scale that too are at lower
cost.
viii. Promotes country's export tradeEntrepreneurs produce goods and services in
large scale for the purpose of earning huge
amount of foreign exchange from export.
1.4 Role of
Economy
ix. Induces backward and forward

Linkages- this is due to the fact some
entrepreneurs demand raw materials from
other firms (backwards linkages)
and
others
supply firms to other firms
(forwards linkages) hence creation of
revenues and growth among firms.
x. Facilitates overall development- The
total
effects
of
various
roles
of
entrepreneurship is overall economic
development of a country.
1.4 Challenges facing

entrepreneurship in a
country like Tanzania
i. Limited source of funds- most of financial

institutions offers loans to those already have
a business. Some demand colaterals which
may not be available to entreprenuer.
ii. High
cost
of
capital-microcredit
institutions the major source of financing
entrepreneurs offer loans at very higher
interest rates.
iii.Lack of enterprising culture-many people
prefer to save their money in foreign banks
rather than investing in income generating
activities.
1.4 Challenges facing

entrepreneurship in a
country like Tanzania
iv. Competition from big companies

v. Stringent conditions imposed by
foreign markets on products coming
from third world countries.
vi. Limited production capacity
vii. Lack of enough support
1.4 Small Business/

Small To Medium
Enterprises (SMES)
1.4.1 Definition of SMES

SMEs is any acronym used to represent
different types of business, namely small
and
medium enterprises. Below and
above small and medium enterprises, are
micro and large enterprises respectively.
The SMEs/MSEs cover non-farm economic
activities mainly manufacturing, mining,
commerce and services.
There is no
universally accepted definition of SME.
Different countries use various measures
of size depending on their level of
development

The commonly used yardsticks are
total number of employees, total
investment and sales turnover.
In the context of Tanzania, micro
enterprises are those engaging up to
4 people, in most cases family
members
or
employing
capital
amounting up to Tshs.5.0 million. The
majority of micro enterprises fall
under the informal sector.

Small
enterprises
are
mostly
formalized undertakings engaging
between 5 and 49 employees or with
capital investment from Tshs.5 million
to Tshs.200 million.
Medium enterprises employ between
50 and 99 people or use capital
investment from Tshs.200 million to
Tshs.800 million.

This definition should not only be
based on quantitative characteristics
of the enterprises, but should also
take into account the difference
between sectors.

Small business in one sector does not
mean small in another sector. For example
200 million in construction sector can be
very small level of investments, however
the same amount of investment in Poultry
farming can be seen as a very large
business. From the above facts, then a
small business is the one which is
independently owned and operated for
profit and it is not dominant in its field.
1.4.2 Profile of SMES

i. Distribution of Small Business
Sector in Tanzania
Distribution by Size-the Tanzanian
economy
is
characterized
by
a
relatively small large firm segment
and a very large small firm segment.
The large firm segment is made up
mainly of subsidiaries or franchisees of
multinational companies and a few
formerly state-owned companies.

Distribution of Small firms by SubSector, Gender and Geographical
Area-Research shows that the size of each
sector is growing each after year. For
example wholesale, retail trade, repair of
motor
vehicles
(55.4%),
(26.4),
Accommodation and food service activities
(26.4) and Manufacturing (13.6). This
number and distribution is changing year
after year. See the table in the next slide
for distribution by sector and by gender.

distribution by sector

distribution by gender
1.4.2 Profile of SMESregional distribution

The regional distribution of small
business sectors indicated that the
numbers of trade, manufacturing, and
service enterprises are higher in rural
areas than in Dar es Salaam, other urban
areas, and Zanzibar.
The highest
business densities were found in Mbeya
(46%) and Dar es Salaam (45%), and the
lowest in Kagera (14%) and Manyara
(17%).

The regional distribution of small
business sectors indicated that the
numbers of trade, manufacturing, and
service enterprises are higher in rural
areas than in Dar es Salaam, other urban
areas, and Zanzibar.
The highest
business densities were found in Mbeya
(46%) and Dar es Salaam (45%), and the
lowest in Kagera (14%) and Manyara
(17%).

ii. Salient Characteristics
Specifically the SMEs in Tanzania can be
divided into relatively homogeneous
categories that have the following
characteristics.

Micro/subsistence
Micro 1
Micro2
Small
Cashewnuts
processing, detergent
making
Informal
catering
Batik
making
Flour
processin
g, Tour
agencies
1.4.3 The Role and

Significance of the SME
Sector in Tanzania
The MSE sector is one of the leading

employers (next only to peasant
agriculture) in Tanzania. It is estimated
that there are over three million
enterprises in the sector, employing
more than 5.2 million people. The SME
sector is considered to have the
brightest potential for making the
highest contributions to employment
growth and increased incomes.
1.4.3 The Role and

Significance of the MSE
Sector
in
Tanzania
Employment in the sector is growing at
10 per cent per annum.

Operators are able to generate between
2.5 and 10 times the minimum earnings
of civil servants. The MSEs have also
shown great potential for creating
wealth. Their aggregate contribution to
national income is estimated at between
35 per cent and 40 per cent of GDP.
1.4.3 The Role and

Significance of the MSE
Sector
in
Tanzania
The MSE sector is an arena where the
poor may not only make out a living, but

also get most of their goods and services
at prices they can afford.
Over 90 per cent of operators get credit,
training,
information,
water
and
sanitation from the sector. In Dar es
Salaam, the capital city, over 90 per cent
of poor communities get water and
sanitation services from the MSE sector.
1.4.3 Enabling
Environment for Micro
and Small Enterprise
The factors for enabling environment for

enterprise can be divided into the macro
environment, micro environment and the
immediate
MSE
facilitation
(meso)
environment.
a. Macro Environment
Tax policies and regulations
Good tax regime-the tax regime which
is oriented to SME rather than the
current
1.4.3 Enabling
and
Small
Enterprise
situation where they are oriented to the
large-scale sector. Existence of provisions

for tax exemptions not only for large
businesses but also for SMEs.
Provision of knowledge on the tax
system. This is due to the fact that here
are a large number of taxes and levies.
For example there are 27 different taxes
and levies that apply to various
businesses and a certain level of
knowledge is required.
1.4.3 Enabling
and
Small
Enterprise
Abolishing
weakness
on
tax
assessment. The tax assessment and
collection system lacks transparency and
predictability, creating opportunities for
tax officials to exhort bribes from small
business operators. Some business
people report that they have to conceal
or even worse, avoid growth, because
otherwise tax officials may demand
unrealistically high taxes and bribes and
will harass.
1.4.3 Enabling
and
Small
Enterprise
Economic trends
Absence of Inflation- this is due to
the fact that inflation has huge impact
on entrepreneurship as in inflation period,
the value of wealth decreases and the
purchase power of people declines.
Therefore, consumers tighten their belts
and there are fewer opportunities for
entrepreneurs. So the absence of inflation
is a grace to the entrepreneur.
1.4.3 Enabling
and
Small
Enterprise
Low interest rates-this is due to the fact
that high interest rates limits the amount of

capital that a company can raise. Especially
for SMEs, if they can not receive adequate
working capital, they are likely to die off
quickly during the start time.
Employment related issues-Employment
impacts on the entrepreneurship process.
High employment rates mean that there are
less people opting for self-employment,
1.4.3 Enabling
Small
Enterprise
asand
a result, the competition between these
SMEs will become less. At the same time
because of this high unemployment and
limited earnings, markets are naturally
limited.
Good
Business
Registration
and
Licensing
Absence
of business
registration and
licensing process which is unduly complicated
and time-consuming because of excessive
bureaucracy and in some cases because of
demands for bribes by officials.
1.4.3 Enabling
and
Small
Enterprise
The government has started taking some
initiatives to improve the situation.
Various agencies have been set up to
facilitate the process of investing in
businesses. These include the Business
Registration and Licensing Authority
(BRELA) and Tanzania Investment
Centre (TIC). Unfortunately however,
these organizations mainly target large
enterprises. Furthermore these are
centralized in Dar es Salaam.
1.4.3 Enabling
and
Small
Enterprise
Availability of enough information on
these agencies. The current situation is

that most of SMEs lack information about
the existence of these agencies and, in any
case, most womens businesses are just
too small to be served by these agencies.
Development of Enterprise Cultureproviding entrepreneurship knowledge and
training. Encouraging people to start small
business and invest in different sector.
1.4.3 Enabling
and
Small
Enterprise
b. MICRO ISSUES
Owners/managers/ employees capabilitiesattitudes, knowledge, skills/exposure.
Strategies for and management for growth
such
as
diversification,
product
differentiation, etc.
Networking both locally and internationally,
SUPPORT AND DEVELOPMENT
SERVICES FOR MSE PROMOTION--Read!!!!!!!!!!!!!!!!!!!
1.4.4 Issues in Starting

and Developing Business
in Tanzania
a.
Initiative
for
starting
and
growing business
There are wide ranges of reasons as
to why people choose to engage in
business. For example in the case of
women entrepreneurs, the following
are motives for starting and growing
new
businesses.
These
are
categorized into push and pull factors.

in Tanzania

in Tanzania
b. Incidence of Growth
Growth from the micro to medium scale is
extremely rare. Data on growth rates in
Tanzania is not available. However, in
neighboring Kenya it has been reported
that this type of enterprise growth is
mostly limited to the transition from
employing 1-3 person to employing 10
persons. Growth to above 10 employees is
quite rare.

in Tanzania
The situation is likely to be worse in
Tanzania where, due to historical reasons,
the private sector is at a much lower level of
development compared to Kenya. By
contrast, many small business operators run
multiple enterprises simultaneously. Some
people run over 10 different types of
businesses at a very small scale. The sector
is dominated by informal micro enterprises
with an extremely low incidence of

in Tanzania
graduation to formal small and
medium size. The enterprises remain
marginal
players,
creating
and
sustaining low quality jobs and
unable to effectively contribute to
economic competitiveness, exports,
tax revenue and economic growth.

in Tanzania
c. Factors associated with fast
growth
Better macro economics situation
Favorable market environment
Experience and high management
skills,
Innovation and
Good management
TOPIC 2: COMPANY
FORMATION AND
INCORPORATION
2.1 Meaning of company
2.1 Meaning of Company

A company can be defined as an
association of two or more persons for any
lawful purpose, by subscribing their names
to a memorandum of association and
otherwise complying with the requirements
of the Act in respect of registration.
Company is among the forms of business
units carried out in different parts of the
world,
other
forms
being
sole
trade/proprietorships, partnerships and cooperatives.

A company is corporate body i.e it is
created under law and has an entity
of its own, quite separate from the
members that comprise it.
It is a legal entity which can enter
into contracts, incur liabilities, sue
others, be sued by others and do
anything for which it has been
formed.

A company is corporate body i.e it is
created under law and has an entity
of its own, quite separate from the
members that comprise it.
It is a legal entity which can enter
into contracts, incur liabilities, sue
others, be sued by others and do
anything for which it has been
formed.
2.2 Types of Companies
We have major two types of companies. These are:i. Statutory Companies- which are companies
whose formation and control is vested under
parliamentary control.
ii.Registered Companies- which is a company
registered by the registrar of companies for
example Business Registration and Licensing
Agency (BRELA) in Tanzania and Registrar of
Companies-Kenya, or The Uganda Registration
Services Bureau in Uganda.
There are different types of registered companies.
These includes:i. Limited Companies-These are companies
whose liability of members is

limited (i.e each shareholder is only liable
to the extent of the value of shares he
holds. This means that in case of business
failure, the members are not required by
the law to contribute fully to the assets of
the firm (business estate) from the property
of their private estates. These types of
companies are further classified as:
A company limited by shares- where the
liability for members is limited to the
nominal amount of the shares they take, as
stated by the memorandum. This applies to
companies formed for trade or gain.

A company limited by guaranteeswhere the liability for members is limited
to the amount they have agreed to
contribute to the assets of the company
in the event of the winding up of the
company as stated by the memorandum.
Companies formed for purposes other
than trade e.g charitable organizations
and professional institutions may form
this type.

ii. Unlimited Companies
The liability of the members is not limited
which imply that in case of business
failure, the members are required by the
law to contribute fully to the assets of the
firm (business estate) from the property
of their own (private estate) in order to
meet companys obligations.
2..2 Types of Companies
iii. Again, registered company may be a public or a

private company.
A ''public company'' is a company limited by shares
or limited by guarantee and having a share capital,
being a company the memorandum of which states
that it is to be a public company.
Public companies are formed when it is desired to go
to the public for funds to expand an existing
business.
They have at least 7 members and unlimited
maximum number. The shares are transferable and
can be offered to the public for subscription. Any
person may subscribe and buy shares in the
company, which may be listed in the stock market
and traded in shares.

A private company A ''private company''
means a company which by its articles
restricts the right to transfer its shares; and
limits the number of its members from two
to fifty (shareholders only not others like
employee), and
Prohibits any invitation to the public to
subscribe for any shares or debentures of
the company.
A private company may be converted to a
public one by merely amending its Articles
of Association, increasing the minimum
2.3 Formation of a
company
Formation of the company start when any two

or more persons, associated for any lawful
purpose subscribe their names to their
memorandum of association (one of key
documents) and otherwise complying with
the requirements of the laws in respect of
registration to form an incorporated company
with or without limited liability.
Another important documents for this exercise,
is the article of association.
The documents must be signed by the
members.
2.1.3.3 Formation of a
company
The documents are to be delivered to the

office of the registrar of companies (for
example in Tanzania is BRELA which
registers companies, among other things)
together with the prescribed fee.
Since the documents have to include the
companys name, it is prudent to check in
advance that proposed name is likely to be
available. No name will be available for your
use if it:a. is the same as a name appearing in the
index of company names;.
2.3 Formation of a
note thatcompany
the similarity which is
Take
being
referred to here includes similarities in
appearance, semantic and phonetic.
i. eg. (semantic) - Simba Investment Limited can
not be registered if there is Lion Investment
Limited.
ii.eg. (phonetic) - Wills Transport Company
Limited can not be registered if there is already
Wheels Transport Company Limited.
b. Too like a name appearing in the index of
company or business names; eg. Tasmania
Company Limited can not be registered if there
is already Tasman Limited.
2.3 Formation of a
company
(c) is undesirable.
Undesirability encompasses many things. These
include if the name:(i)connotes an insult or bad language to the society;
(ii) Suggests a connection with the Government or its
Authorities; Ikulu Company Ltd.??????
(iii) Is offensive or its use will be a criminal offence;
(iv) Consists of a Registered Trade or Service Mark;
(v) Is misleading, that is containing a word which is
contrary to activities of the company, eg.
International while it operates locally only;
2.3 Formation of a
company
(vi) Is suggesting to monopolize a generic

name or name of a country or place, eg.
Tanzania Company Limited or Tanzania
Limited can not be registered.
(vii) Consist of purely personal names only.
(d) has already been reserved in the
Companies Registry by another person
2.3 Formation of a
company
Once a business has been registered with

BRELA, it is required to register with the
nearest office of the Tanzania Revenue
Authority (TRA). A File Number is established
after registration formalities have been
completed.
At this stage the applicant is also required to
apply for TIN (Tax Payers' Identification
Number) with the Tanzania Revenue Authority
The applicant is required also to order a
Common Seal which is to be affixed in
different documents.
2.3 Formation of a
company
If the documents are in order, the registrar

issues a certificate of incorporation and
the company there upon comes into
existence.
In order for the company to start its
activities, it is necessary to have a Trading
License, which is issued by Ministry of
Industry and Trade or the local government
granted after having the respective permits
Other things need to be taken into account
either
before
or
after
incorporation
including:-
2.3 Formation of a
company
Income tax officials to inspect the
office
site of the new company

Apply for PAYE with the Tanzania Revenue
Authority if you have employees.
Have the land and town-planning officer
inspect the premises and obtain his
signature
Have the health officer inspect the
premises and obtain his signature
Apply for VAT certificate with the Tanzania
Revenue Authority.
2.3 Formation of a
company
Register for the workmen's compensation

insurance at the National Insurance
Corporation or other alternative insurance
policy
Obtain registration number at any Social
Security Fund.
Comply with various taxes for example
those in Local Government Authorities,
Have a bank account.
Obtain the necessary permits and
licenses.
2.3 Formation of a
company
Acquire rights towards various utilities

providers
(Water,
Electricity,
telecommunications, internet, posts) in
relation to installation procedure, usage
and bills and related issues).
2.3 Formation of a
company
2.3 Formation of a
company
2.3 Formation of a
company
Some of the necessary documents for

company formation are discussed below.
a. Memorandum of Association- This is the
document that defines the constitution of the
undertaking in its relation to the outside
world. It lays down powers and limitations of
the company and establishes the companys
individual identity. It gives the following
details.
i. Name Clause- This states the name of the
company, with ''public limited company'' as
the last words of the name in the case of a
2.3 Formation of a
company
main and secondary activities intended
all the
to
be undertaken are registered. The statement of a
companys objects in its memorandum serves
double purposes:
It protects the shareholders, who learn from it the
purposes to which their money can be applied.
It protects persons dealing with company, who
can discover from it the extent of the companys
power.
Any act done by the company beyond the powers
indicated in the object clause, is utra vires that is,
beyond the powers of the company and therefore
2.3 Formation of a
company
invalid.
iii. Situation Clause- this gives the name of
the country which the office is situated. It also
indicates other details necessary for locating
the office. The company is governed by the
laws of that country.
iv. Capital Clause- This states the share capital
the company wishes to have. It includes- total
amount of the share capital, the units into
which the capital is divided, types of shares
whether ordinary or preferences, the value of
each share. The total value of all the shares is
2.3 Formation of a
company
Once the memorandum is registered a

company becomes empowered to raise this
amount by selling share. It then referred to as
authorized or registered share capital.
The registration fee is calculated according to
this amount.
v. Liability Clause- there must be a clear
statement that the liability of the company is
limited by its shares or otherwise in the event
of its being wound up
vi. Declaration- This must be signed by not
less than two members in the case of private
2.3 Formation of a
company
seven in the case of a public company, who

declare that they intend to take and pay
for at least one share each.
All
companies
must
prepare
a
memorandum of association.
The memorandum must be in English
2.3 Formation of a
company
b. Articles of Association
This govern the internal structure of the
company. In Tanzania and other East African
countries, the Articles shall be:
(a)in the English language;
(b) printed;
( c) Divided into paragraphs numbered
consecutively; and signed by each subscriber
to the memorandum of association in the
presence of at least one witness, who shall
attest the signature and add his occupation
and postal address.
2.3 Formation of a
company
The articles of association include the

following:i. Members- numbers of members with which
the company proposes to be registered,
ii. Procedures for calling company meeting
e.g general meetings whereby a company
for example shall in each year hold a
general meeting as its annual general
meeting in addition to any other meetings
(extraordinary general meetings) in that
year.
2.3 Formation of a
company
Notice of general meetings,

Proceedings at general meetings, such
as : To have laid before the members the
annual accounts; the directors' report; the
auditors' report; the appointment of
auditors for the period up till the next
general meeting at which accounts are
laid; the re-election of any directors
retiring and seeking re-election in
accordance with any requirement in the
company
(iii) Voting rights of shareholders-e.g every

member shall have one vote or no
member shall be entitled to vote at any
general meeting unless all moneys
presently payable by him to the company
have been paid.
(iv) The number and powers of directors-not
less than two, appointment of attorney by
power of attorney, signing, drawing,
accepting, endorsing; of cheques,
promissory notes, drafts, bills of exchange,
or other negotiable instruments.
company
(v) Disqualifications of directors e.g without

the consent of the company in general
meetings holds any other office of profit
under the company; or becomes of
unsound mind; or resigns his office by
notice in writing to the company.
(vi) Proceedings of directors e.g calling of
directors
meeting,
appointment
of
chairman of board of directors, delegation
of powers, remuneration- the method of
deciding the level of payment of
company
(vii) Appointment of secretary, remuneration,

power, termination of contracts,
(viii) The seal of the company-limit on signing
documents/instruments to which the seal is
affixed especially by a director, secretary or
second director.
(ix) Borrowing powers of the company,
(x) Companys accounts- types of transactions
(e.g all sums of money received and
expended, all sales and purchases of goods
by the company; and all assets and
liabilities of the company), where books
company
to be kept (especially at the registered

office of the company, or other place or
places as the directors think fit), types of
accounts (especially profit and loss
accounts,
balance
sheets,
group
accounts), inspection of the company,
presentation of accounts (in general
meetings), destruction of books of
accounts, e.t.c.
(xi)
Auditing
of
Company
books,
appointment of auditors and their duties,
company
Alteration may be fairly simple. A

meeting of all shareholders is called and
the majority passes a resolution seeking
alteration.
The
resolution
is
then
forwarded to the registrar of companies
and the alteration effected.
Read also personally Share Capital
2.1.3.4 Termination of a
Company
A company may
come to an end in the
following ways:i. By the court (involuntary or forced) ; or

ii.Voluntary
a. Winding up by the Court
A company may be wound up by the court if,
The company has by special resolution
resolved that the company be wound up by
the court;
The company does not commence its
business within a year from its incorporation
or suspends its business for a whole year;
Company
The number of members falls below two;

The company is unable to pay its debts;
The court is of the opinion that it is just and
equitable that the company should be
wound up;
NB: A body corporate may also be wound up
by the court if incorporated outside Tanzania
and carrying on business in Tanzania and
winding
up
proceedings
have
been
commenced in respect of it in the country of
its incorporation or in any other country in
which it has established a place of business.
Company
A company shall be deemed to be

unable to pay its debts (a) failure to pay a creditor
a sum
exceeding fifty thousand shillings or such
other amount as may from time to time
be prescribed in regulations made by the
Minister,
(b) if execution or other process issued on a
judgment, decree or order of any court in
favour of a creditor of the company is
returned unsatisfied in whole or in part; or
Company
(c) if it is proved to the satisfaction of the

court that the company is unable to pay
its debts as they fall due; or
(d) if it is proved to the satisfaction of the
court that the value of the company's
assets is less than the amount of its
liabilities, taking into account the
contingent and prospective liabilities of
the company.
Company
Winding up Procedures
1.Petition against the company filed by a
competent creditor or member of the
company,
2.Once the petition is received the court
appoint Provisional Liquidator and the
company become under administration,
3.Should the performance improve then the
company will continue with operations as
before,
4.Should the performance worsen, then the
company shall be wound up.
Company
Effects of Winding up Order

If deemed that the company is unable to meet
its obligations or by members resolution the
court shall make a winding up order on the
company. The effect is: All employment in the company is terminated
All contracts with the company are terminated
All legal proceedings against the company
stopped
No alteration in the member register
No transfer of company property
Company
No charges or encumbrances can be placed

on company property.
b. Voluntary Winding Up
A voluntary winding up shall be deemed to
commence at the time of the passing of the
resolution for voluntary winding up.
A
company may be wound up voluntarily,
i. When the period, if any, fixed for the
duration of the company by the articles
expires, or the event, if any, occurs, on the
occurrence of which the articles provide that
the company is to be
Company
dissolved, and the company in general

meeting has a resolution requiring the
company to be wound up voluntarily;
ii. If the company resolves by special
resolution that the company be wound up
voluntarily;
iii. If the company resolves by special
resolution to the effect that it cannot by
reason of its liabilities continue its
business, and that it is advisable to wind
up.
Company
Consequences of Voluntary Winding
Up
-Read
Striking Defunct Company off Register
Where the Registrar has reasonable cause to
believe that a company is not carrying on
business or in operation, he or she may send to
the company by post a letter inquiring whether
the company is carrying on business or in
operation.
If, within 30 days of sending the letter, the
Registrar does not receive any answer thereto,
he or she shall within 14 days after the
expiration of that period send to the company by
Company
registered post a letter referring to the

first letter, and stating that no answer
thereto has been received. If an answer
is not received to the second letter
within 30 days from the date thereof, a
notice will be published in the Gazette
with a view to striking the name of the
company off the register.
LECTURE THREE:
COMPANY
MANAGEMENT
3.1 Introduction
3.1 Introduction
Company management is a set of
activities under which managers to the
company create, direct, maintain and
operate
purposive
organization
through systematic, coordinated, cooperative human efforts. It includes
various activities such as Planning,
Organizing, directing, and controlling.
The following are some of the issues
related with company management.
3.2 Designing an
Organogram
An organogram or an organizational
chart refers to the way that an
organization arranges people and jobs so
that its works can be performed and its
goals
be
met.
The
concept
of
organogram can well be understood
through
the
concept
of
departmentalization as one of the
elements of organizational structure
(other
being
span
of
control,
centralization, formalization).
3.2 Designing an
Organogram
Departmentalization is the clustering

of individuals into units and units into
departments and larger units in order
to facilitate achieving organizational
goals. It specifies how employees and
their activities are grouped together.
Determinants of Organogram
Organizations resources
Size of the organization,
Nature of the products,
3.2 Designing an
Organogram
Type of departmentalization
i. Departmentalization by Numbers
Departmentalization
by
number
is
grouping of persons who are to perform
the same duties and putting them under
the superior of a manager in terms of
number. This method is rapidly applying in
army.
Disadvantages or declines reasons
There are many reason of decline of
departmentalization by numbers.
3.2 Designing an
Organogram
i. It has declined due to advance

technology
and
demand
of
specialized and different skills.
ii. Groups composed of specialized
personnel are more efficient than
those based on number.
iii. Departmentalization by number is
useful only at the lowest level of the
organization. Departmentalization by
number fails to produce good results.
3.2 Designing an
Organogram
ii. Departmentalization by Time
It is grouping activities on the basis of
time.
It
is
oldest
form
of
departmentalization and it is generally
used in low level of departmentalization.
It is particularly applied in hospitals and
steel manufacturing enterprise where
continue process of service and
manufacturing is used.
Advantages
i. It is process of working and services
throughout 24 hours.
3.2 Designing an
Organogram
ii. It is continuing service process.
iii. Students can work evening or at
night.
Disadvantages
i. There is lacking supervision at night.
ii.Exhaustion factor.
3.2 Designing an
Organogram
ii. It is continuing service process.
iii. Students can work evening or at
night.
Disadvantages
i. There is lacking supervision at night.
ii.Exhaustion factor.
3.2 Designing an
Organogram
iii. Departmentalization by Function
It is grouping activities on the basis on
function of an enterprise. The basic
enterprise functions are production,
selling,
and
financing.
Functional
departmentalization
is
bases
for
organizing
activities
in
an
organizational structure. It organizes by
function to be performed. The function
reflects the nature of the business.
3.2 Designing an
Organogram
The advantage of this type of grouping
is
obtaining
efficiencies
from
consolidating similar specialties and
people with common skills, knowledge
and orientations together in common
units.
Advantages
i. It is logical reflection of function.
ii.Maintains power of major functions.
iii.Simplifies training.
3.2 Designing an
Organogram
Disadvantages
i. De-emphasis of overall company
objectives.
ii.Reduces coordination between
function.
iii.Slow adoption to change in
environment.
3.2 Designing an
Organogram
3.2 Designing an
Organogram
Departmentalization
vi.
by
geography
is
followed
where
geography marked appear to offer
advantages. Geographic department
most often use in sales and
production, it is not use in finance.
Departmentalization by geographical
regions groups jobs on the basis of
territory or geography. Below is an
example of such kind of structure.
3.2 Designing an
Organogram
3.2 Designing an
Organogram
Advantages
i. It emphasis on local markets and
problems.
ii.Improves coordination in a region.
iii.Better face to face communication.
Disadvantages
i. Increases problem of top management
control.
ii.Requires more persons with general
manager abilities.
3.2 Designing an
Organogram
v. Departmentalization by Customer
Departmentalization by customer groups
jobs on the basis of a common set of
needs or problems of specific customers.
For instance, a plumbing firm may group
its work according to whether it is serving
private sector, public sector, government,
or not-for-profit organizations. A current
departmentalization trend is to structure
work according to customer, using crossfunctional teams.
3.2 Designing an
Organogram
group is chosen from different
This
functions to work together across various
departments to interdependently create
new products or services. For example, a
cross-functional
team
consisting
of
managers from accounting, finance and
marketing is created to prepare a
technology plan.
Advantages
i. Departmentalization by customer
emphasis on customer needs.
ii.It develops experience in customer area
3.2 Designing an
Organogram
Disadvantages
i. It may be difficult to analysis
customer demands.
ii.It requires managers and staff expert
in customer problems.
iii.Customer groups may not always be
clearly defined.
3.2 Designing an
Organogram
vi. Departmentalization by Process
This type of departmentalization is found
in production and operative levels.
Departmentalization by process groups
jobs on the basis of product or customer
flow. Each process requires particular
skills and offers a basis for homogeneous
categorizing of work activities. A patient
preparing for an operation would first
engage in preliminary diagnostic tests,
and then go through the admitting
process, undergo a procedure in surgery
3.2 Designing an
Organogram
receive post operative care, be

discharged and perhaps receive outpatient attention. These services are
each administered by different
departments. The structure is shown
below
3.2 Designing an
Organogram
3.2 Designing an
Organogram
Advantages
i. It simplifies training.
ii. Utilizes special skills.
iii. Uses specialized technology.
Disadvantages
i. Coordination of departments is
difficult.
ii.Responsibility for profit is at the top.
3.2 Designing an
Organogram
vii. Departmentalization by Product
This type of departmentalization used in
organization where more than one
product is producing. In this department
all the sources and authority are placed
under the control of one manager.
Departmentalization
by
product
assembles all functions needed to make
and market a particular product are
placed under one executive.
3.2 Designing an
Organogram
For instance, major department stores
are structured around product groups
such as home accessories, appliances
womans clothing, mens clothing and
children clothing.
Advantages
i. Places attention on production.
ii.Increase growth of product.
iii.Places responsibility for profit at
division level.
3.2 Designing an
Organogram
Disadvantages
i. Requires more persons with general
manager abilities.
ii.Presents
problems
of
top
management control.
3.2 Designing an
Organogram
3.3 STAFFING-meaning
After an organization's structural design is
in place, it needs people with the right
skills, knowledge, and abilities to fill in that
structure. People are an organization's
most important resource, because people
either
create
or
undermine
an
organization's reputation for quality in both
products and service.
Staffing is defined is therefore filling and
keeping filled, positions in the organization
structure
3.3 Staffing-Nature
1. Staffing is an important managerial
function- Staffing function is the most
important managerial act along with
planning,
organizing,
directing
and
controlling. The operations of these four
functions depend upon the manpower
which is available through staffing
function.
2. Staffing is a pervasive activity- As
staffing function is carried out by all
managers and in all types of concerns
where business activities are carried out.
3.3 Staffing-nature
3. Staffing is a continuous activity- This is
because
staffing
function
continues
throughout the life of an organization due to
the transfers and promotions that take place.
4. The basis of staffing function is efficient
management
of
personnelHuman
resources can be efficiently managed by a
system or proper procedure, that is,
recruitment, selection, placement, training
and development, providing remuneration,
etc.
3.3 Staffing-nature
5. Staffing helps in placing right
men at the right job. It can be done
effectively through proper recruitment
procedures and then finally selecting
the most suitable candidate as per the
job requirements.
6. Staffing is performed by all
managers depending upon the nature
of business, size of the company,
qualifications and skills of managers,
3.3 Staffing-purpose
Firstly, the main purpose of staffing is
to put right man on right job. The
objective and purpose of managerial
staffing
is
to
ensure
that
organizational positions are filled by
the qualified personnel, who are able
to willing to occupy them.
3.3 Staffing
Secondly, the purpose / objective of
managerial staffing is to define job,
performance appraisal, training and
development of people.
Thirdly, the purpose/objective of
managerial staffing is matching the
people with job, identifying job
requirement, job design etc.
3.3 Staffing
Situational Factors Affecting Staffing
EXTERNAL FACTORS- Factors in external
environment do affect staffing to various
degrees. These influences can be grouped into
educational (education vs job position), social
cultural (women do not work, maternity), legal
political (do not employ below 18) and
economic opportunities (demand and supply of
labour).
INTERNAL
FACTORSInternal
factors
includes,
Personal
policies
(employee
development?
humanity),
Organizational
climate and Reward system (leadership style?
incentives?).
3.3 Staffing-Process
1. Manpower requirements- The very first
step in staffing is to plan the manpower
inventory required by a concern in order to
match them with the job requirements and
demands. Therefore, it involves forecasting
and determining the future manpower
needs of the concern.
2. Recruitment- Once the requirements are
notified, the concern invites and solicits
applications according to the invitations
made to the desirable candidates.
Recruiting is process of generating a pool
of qualified applicants for organizational
jobs. Recruitment sources are both internal
and external; internal include promoting
from within the organization
while external sources include labor
markets,
e-recruiting
means,
media
sources, competitive recruiting sources,
employment agencies, labor unions, job
fairs and creative recruiting, educational
institutions.
3. Selection- This is the screening step of
staffing in which the solicited applications
are screened out and suitable candidates
are appointed as per the requirements.
Selection is the process of choosing from
among the candidates, from within the
organization
or
from
the
outside
organization the most suitable person for
the current position or for future positions.
4. Orientation and Placement- Once
screening takes place, the appointed
candidates are made familiar to the work
units and work environment through the
orientation programmes. Placement takes
place by putting right man on the right job.
In short, during orientation employees

are made aware about the mission and
vision of the organization, the nature of
operation of the organization, policies
and programmes of the organization.
5. Training and Development- Training is
the process of enhancing the skills,
capabilities and knowledge of employees
for doing a particular job. Training process
moulds the thinking of employees and
leads to quality performance of employees.
It is continuous and never ending in nature.
Training is a part of incentives given to the
workers in order to develop and grow them
within the concern.
5. Training and Development- Training is
the process of enhancing the skills,
capabilities and knowledge of employees
for doing a particular job. Training process
moulds the thinking of employees and
leads to quality performance of employees.
It is continuous and never ending in nature.
Training is a part of incentives given to the
workers in order to develop and grow them
within the concern.
Training is generally given according to the
nature of activities and scope of expansion in
it. Training is generally imparted in two
ways:i. On the job training- On the job training
methods are those which are given to the
employees within the everyday working of a
concern.
ii.Off the job training- Off the job training
methods are those in which training is
provided away from the actual working
condition. It is generally used in case of new
employees.
Along with it, the workers are
developed by providing them extra
benefits of in depth knowledge of
their functional areas
Development also includes giving
them key and important jobs as a
test or examination in order to
analyze their performances.
Importance of training
Training
is
crucial
for
organizational
development and success. It is fruitful to
both employers and employees of an
organization. An employee will become more
efficient and productive if he is trained well.
Training is given on four basic grounds:
i. New candidates who join an organization are
given training. This training familiarize them
with the organizational mission, vision, rules
and regulations and the working conditions .
ii. The existing employees are trained to
refresh and enhance their knowledge.
iii. If any updations and amendments take
place in technology, training is given to
cope up with those changes. For instance,
purchasing a new equipment, changes in
technique
of
production,
computer
impartment. The employees are trained
about use of new equipments and work
methods.
iv. When promotion and career growth
becomes important. Training is given so
that employees are prepared to share the
responsibilities of the higher level job.
The benefits of training can be
summed up as:
i. Improves morale of employeesTraining helps the employee to get job
security and job satisfaction.
The more satisfied the employee is and
the greater is his morale, the more he will
contribute to organizational success and
the lesser will be employee absenteeism
and turnover.
Less supervision- A well trained
employee will be well acquainted with the
job and will need less of supervision. Thus,
there will be less wastage of time and
efforts
Fewer accidents- Errors are likely to
occur if the employees lack knowledge and
skills required for doing a particular job.
The more trained an employee is, the less
are the chances of committing accidents in
job and the more proficient the employee
becomes.
Chances
of
promotionEmployees
acquire skills and efficiency during training.
They become more eligible for promotion.
They become an asset for the organization
Increased productivity- Training
improves efficiency and productivity
of
employees.
Well
trained
employees show both quantity and
quality performance. There is less
wastage of time, money and
resources if employees are properly
trained.
iv. When promotion and career growth
becomes important. Training is given
so that employees are prepared to
share the responsibilities of the
higher level job.
6. Remuneration- It is a kind of
compensation provided monetarily to
the employees for their work
performances.
This
is
given
according to the nature of job- skilled
or unskilled, physical or mental, etc.
Remuneration forms an important
monetary
incentive
for
the
employees.
There are two methods of employee
remuneration: Time Rate Method: Under time rate
system, remuneration is directly linked with
the time spent or devoted by an employee
on the job. The employees are paid a fixed
pre-decided amount hourly, daily, weekly or
monthly irrespective of their output.
Piece Rate Method: It is a method of
compensation in which remuneration is paid
on the basis of units or pieces produced by
an employee. In this system emphasis is
more on quantity output rather than quality
output.
7. Performance Evaluation- In order to
keep a track or record of the behaviour,
attitudes as well as opinions of the
workers towards their jobs. For this
regular assessment is done to evaluate
and supervise different work units in a
concern. It is basically concerning to
know the development cycle and
growth patterns of the employees in a
concern.
8. Promotion and transfer- Promotion
is said to be a non- monetary incentive
in which the worker is shifted from a
higher
job
demanding
bigger
responsibilities as well as shifting the
workers and transferring them to
different work units and branches of the
same organization.
3.3 Staffing-Selection
Process
Selection is the process of choosing from
among the candidates, from within the
organization or from the outside organization
the most suitable person for the current
position or for future positions. It is the
process of putting right men on right job. It is
a procedure of matching organizational
requirements
with
the
skills
and
qualifications of people. Effective selection
can be done only when there is effective
matching. By selecting best candidate for
the required job, the organization will get
quality performance of employees.
Process
Moreover, organization
will face less
of
absenteeism and employee turnover problems.
By selecting right candidate for the required
job, organization will also save time and
money. Proper screening of candidates takes
place during selection procedure. All the
potential candidates who apply for the given
job are tested.
But selection must be differentiated from
recruitment, though these are two phases of
employment
process.
Recruitment
is
considered to be a positive process as it
motivates more of candidates to apply for the
job.
i.
Process
Preliminary Interviews- It is used
to
eliminate those candidates who do not
meet the minimum eligibility criteria laid
down by the organization. The skills,
academic
and
family
background,
competencies and interests of the
candidate are examined during preliminary
interview. Preliminary interviews are less
formalized and planned than the final
interviews. The candidates are given a
brief up about the company and the job
profile; and it is also examined how much
the candidate knows about the company.
Preliminary interviews are also called
screening interviews.
Process
ii. Application blanks- The candidates who

clear the preliminary interview are required
to fill application blank. It contains data
record of the candidates such as details
about age, qualifications, reason for
leaving previous job, experience, etc.
ii. Written Tests- Various written tests
conducted during selection procedure are
aptitude test, intelligence test, reasoning
test, personality test, etc. These tests are
used to objectively assess the potential
candidate. They should not be biased.
Process
iii. Employment Interviews- It is a one to

one interaction between the interviewer
and the potential candidate. It is used to
find whether the candidate is best suited
for the required job or not. But such
interviews consume time and money both.
Moreover the competencies of the
candidate cannot be judged. Such
interviews may be biased at times. Such
interviews should be conducted properly.
No distractions should be there in room.
There should be an honest communication
between candidate and interviewer.
Process
v. Medical examination- Medical tests
are conducted to ensure physical
fitness of the potential employee. It will
decrease
chances
of
employee
absenteeism.
vi. Appointment Letter- A reference
check is made about the candidate
selected and then finally he is
appointed
by
giving
a
formal
appointment letter.
3.3 Staffing Process

There are two methods of employee
remuneration: Time Rate Method: Under time rate
system, remuneration is directly linked with
the time spent or devoted by an employee
on the job. The employees are paid a fixed
pre-decided amount hourly, daily, weekly or
monthly irrespective of their output.
Piece Rate Method: It is a method of
compensation in which remuneration is paid
on the basis of units or pieces produced by
an employee. In this system emphasis is
more on quantity output rather than quality
output.
3.3 Staffing-Principles
There are six principles of staffing
1.
2.
3.
4.
Principle of job definition

Principle of managerial appraisal
Principle of open competition
Principle of management training &
development
5. Principle of training objectives
6. Principle of continuing development
3.4 DIRECTING-Read
3.5 Controlling-meaning
Controlling is measuring and correcting
individuals and organizational performance.
It involves measuring performance against
goals and plans, showing where the
deviations from standards exist and helping
to correct them. In short controlling
facilitates the accomplishment of plans.
Control activity generally relate to the
measurement of achievement. Some means
of controlling like the budget for expenses,
inspection, record of labors-hours lost, are
generally familiar.
3.5 Controlling-Types
i. Preliminary
Sometimes called the feed forward

controls, they are accomplished before a
work activity begins. They make sure that
proper directions are set and that the right
resources are available to accomplish them.
ii. Concurrent
Focus on what happens during the work
process.
Sometimes called steering
controls, they monitor ongoing operations
and activities to make sure that things are
being done correctly.
3.5 Controlling-Types
iii. Post-action
Sometimes called feedback controls, they
take place after an action is completed.
They focus on end results, as opposed to
inputs and activities.
3.5 Controlling-The
process
The basic control process involves

three steps.
i. Establishing standards.
ii.Measuring performance against these
standards.
iii.Correcting variations from standard
and plans correction of deviations.
i. Establishing Standard
Standards are by definition is simply
criteria of performance.
3.5 Controlling-The
process
Standards are the selected points in a

planning
performance
at
which
performance is measured, so that managers
can receive signals about how things are
going.
There are many kinds of standard a: PHYSICAL STANDARDS
Physical standards are non monetary
measurements and common at operating
level where material is used, labor is
employed, services are rendered and
goods-
3.5 Controlling-The process
are produce-they may-reflect quantities

such as labor hours per unit of output, unit
of production per machine hour etc.
Physical standards may also reflect quality
such as hardness , durability , fastness of
color etc.
COST STANDARDS
Cost
standards
are
monetary
measurements and common at the
operating level. Cost standards are widely
used to measure direct and indirect costs
per unit produced, labor cost per unit or per
hour material cost per unit, machine cost
per hour etc.
3.5 Controlling-The
process
CAPITAL STANDARDS
There are varieties of capital standards.
These standards are primarily related to the
balance sheet rather than to the income
statements. Capital standards range from
monetary measurements to physical items.
These standards may be indifferent ratios
such as the ratio of current assets to
current liabilities etc.
REVENUE STANDARDS
Revenue standards arise from attaching
monetary values to sales.
3.5 Controlling-The
process
They may include such standards as average
sales per customer or per sales rep etc.

PROGRAME STANDARDS
Such standards are determined for installing
a variable budget program, for example
program for improving the quality of a sale
force.
INTANGIBLE STANDARDS
Sometime it is difficult to establish

standards for quantitative and qualitative
measurement, especially when human
relationships count in performance.
3.5 Controlling-The
process
It is very difficult to measure human

attitudes,
in
connection
with
individuals loyalty, efficiency, etc. All
this need to be based on intangible
standards.
GOALS AS STANDARDS
Goal can be used as performance
standards. Both in simple in complex
operations quantitative and qualitative
goals
represents
an
important
development in the area of standards.
3.5 Controlling-The
process
ii. Measurement of Performance

It is the second step of control
process. Although such measurement
is not always predictable, but if
standard are appropriately drown
and if means are available for
determining
exactly
what
subordinates
are
doing
then
measurement of performance is fairly
easy.
3.5 Controlling-The
process
iii. Correction of Deviations
It is third and last step of control process.
If performance is measured accurately, it
is easier to correct deviations. Manage
must know exactly where the corrective
measure must be applied. Correction of
deviations is the point at which contact
can be related to the other managerial
factions.
Managers
may
correct
deviations by redrawing their plans or by
modifying their goals or they may correct
deviations by clarification of duties.
3.6 Motivation
This is among the major parts of
directing activities. Motivation is a
general term applying to the entire
class of drives, desire needs similar
forces. To say that managers motivate
their subordinates is to say that they do
those things which they hope will satisfy
these drives and desire and induce the
subordinates to act in a desired manner.
3.6 Motivation
Special Motivational techniques
i. Money- Money is important in form of
wages, stock options, bonuses, company
paid, insurance etc. Money are often more
than monetary value. It can also mean
status or power. If money is to be kind of
motivator then managers must remember
several things. First, money, as money is
likely to be more important to people who
are raising and family. Second, it is quite
true that in most kinds of business and
other enterprises, money is used as mean
of keeping an organization staffed.
3.6 Motivation
Third money becomes dull if salaries of
many managers in a company are
similar. Fourth, if is to be an effective
motivator, people in various positions
must be given salaries and bonuses that
reflect their individual performance. It is
almost certainly true the money can
motivate only if payment is large
relative to persons income.
3.6 Motivation
ii. Participations- The second motivational
technique is increase of awareness and use
of participation. Participation is necessary
for the solution of problems; participation is
a means of recognition. It produces need for
affiliation and acceptance. It gives people a
sense of accomplishment/achievement, but
encouraging participation should not mean
that managers weaken their position. They
should
encourage
participation
of
subordinates on matter and they should
listen carefully but they should make
decision on matters themselves.
3.6 Motivation
3. Quality of Working Life (QWL) An approach of improving working
conditions and productivity and as a
mean of justifying higher pay.
QWL is defined as the favorable
conditions and environments of a
workplace that support and promote
employee satisfaction by providing
them with rewards, job security, and
growth opportunities.
3.6 Motivation
3. Quality of Working Life (QWL) An approach of improving working
conditions and productivity and as a
mean of justifying higher pay.
QWL is defined as the favorable
conditions and environments of a
workplace that support and promote
employee satisfaction by providing
them with rewards, job security, and
3.6 Motivation
The continuous effort to bring
increased
labor-management
cooperation through joint problem
solving to improve organizational
performance
and
employee
satisfaction are key aspects of QWL.
3.6 Motivation-Job Design

Practices That Motivate
i. JOB ROTATION- Job rotation is the
practice of moving employees from
one job to another. The whole idea of
job rotation makes a big difference.
ii.
JOB
ENLARGEMENTJob
enlargement adds tasks to an
existing job. This might involve
combining two or more complete jobs
into one, or just adding one or two
more tasks to an existing job

3. JOB ENRICHMENT- includes the
following.
i. Giving workers more freedom in
deciding about such things as work
methods sequences and acceptance or
rejection of materials
ii.Encouraging participation of
subordinates and interaction between
workers.

iii. Taking steps to see and solve problems of
workers and the welfare of the enterprise.
vi. Giving workers a feeling of personal
responsibility for their work.
v. Giving people feedback on their job
performance.
vi. Involving workers in the analysis and change
of physical aspects of the work environment
such as the layout of the office or plant,
temperature lighting and cleanliness.
3.6 MotivationMotivation
Theory
Early Behavioral Model: "Theory
i. An
X"
and "Theory Y"
The nature of people has been expressed in
two sets of assumptions developed by
Dauglas McGregor and commonly known as
"Theory X" and "Theory Y" McGregor chose
these terms because he wanted natural
terminology. Without any connotation of
being "good or bad".
THEORY X ASSUMPTIONS: The traditional
assumptions about the nature of people in
theory X are:-
3.6 MotivationMotivation Theory
i. Average human beings have an inherent

dislike of work and will avoid it if they can.
ii. Because of this human nature or
characteristic of dislike work most people
must be coerced, controlled, directed and
threatened with punishment to get them
to put forth adequate effort toward the
achievement of organizational objectives
iii. Average human beings prefer to be
directed wish to avoid responsibility have
relatively little ambition and want security
above all.
THEORY Y ASSUMPTIONS: The assumption

of theory Y of Mcgregor as follows:
i. The expenditure of physical effort and mental
effort in work is as natural as play or rest.
ii.External control and the threat of punishment
are not the only means for producing effort
toward organizational objectives. People will
exercise self direction and self control in the
service of objectives to which they are
committed.
iii.The degree of commitment to objective is in
proportion to the size of the rewards
associated with their achievements.
3.6 MotivationTheory
TheMotivation
capacity to exercise
high degree
iv.
of
imagination, ingenuity and creativity in solution of
organizational problem is widely distributed in the
population.
v. Average human being learns under proper
conditions not only to accept responsibility but also
to seek it.
vi. Under the conditions of modern industrial life, the
intellectual potentialities of the average human
being are only partially utilized.
These two sets of assumptions are fundamentally
different theory x is pessimistic, static and rigid.
Theory y is optimistic, dynamic and flexible with an
emphasis on self directions. There is little doubt
that each set of assumption will effect managerial
functions and activities of managers.
3.6 Motivationii. TheMotivation

Hierarchy of Need Theory
Theory
The hierarchy of need theory was presented
by Maslow. Abraham Maslow saw human
needs in the form of hierarchy, ascending
from the lowest to the highest. He concluded
that when one set of needs is satisfied, this
kind of need ceases to be motivators.
The needs placed by Maslow in an ascending
order are these;
Physiological Needs-These are the basic
need necessary for human life. Such as food,
water, warmth, shelter and sleep Maslow said
that until these needs are satisfied to the
degree necessary to maintain life their needs,
will not motivate people.
Theoryare the
Security
or Safety Needs-These
needs to be free of physical danger and of

the fear of losing of job, property, food and
shelter.
Affiliation or Acceptance Needs-Since
people are social beings, they need to
belong to be accepted by other.
Esteem Needs-According to Maslow, once
people begin to satisfy their need to belong
they tend to want to be held in esteem
both by themselves and by others. Esteem
need produces such satisfactions as power,
prestige, status and self confidence.
Theory
Need
for Self ActualizationMaslow regards this as the highest
need in his hierarchy. It is desire to
become what one is capable of
becoming.
Theory
Hygiene Approach to Motivation-
iii.
Frederick
Herzberg
Theory
Of
Motivation
Needs theory of Maslows has been
considerably modified by Frederick Herzberg
and his associates. He grouped the concept
into two factor theory of motivation. In one
group of needs are such things as company
policy and administration, supervision,
working conditions, interpersonal relation,
salary, status, job security and personal life.
Theory
This group referred to as dis-satisfiers, and
not motivators. In other words if they exist
in a work environment in high quantity
and quality they yield no-satisfaction. In
second group, Herzberg listed certain
satisfier and therefore motivators all
related to job content. They include
achievement, recognition, challenging
work , advancement and growth in the
job. There existence will yield feeling of
satisfaction or no satisfaction
Theory
The first group of factors (the
dissatisfiers) will not motivate people in an

organization, dis-satisfaction will arise.
The second group or the job content
factors by Herzberg is real motivators
because they have the potential of
yielding a sense of satisfaction. Clearly
if this theory of motivation is sound,
managers must give considerable
attention to upgrading job content.
3.7 FINANCIAL RESOURCES

Companies often need financial
resources/funding for starting or
continuing
business
operations.
These may include cash money, loan
from banks, trading arrangements or
government grants. Small businesses
typically need start-up funds, while
medium and larger companies may
need funding to expand operations or
purchase competitors. Different types
of funding are usually available based
on the company's size and needs.
3.7 FINANCIAL RESOURCES

Companies may choose to use
traditional funding sources such as
banks and equity investors or apply
for government grants or venture
capital funds. These different
forms of financial resources will
be discussed in the coming
sessions
especially
topic
4Raising capital to finance
company operations.
3.8 COMPANY LIQUIDITY

The term liquidity refers to the ability and
degree to which current assets (stock,
debtors, cash at bank, cash on hand) can be
used to meet companys financial/cash
obligations. Also the ability of an asset to be
converted into cash without a significant
price concession. People dealing with
financial related matters within companies
need to make sure that they maintain
appropriate mix of currents assets. This is
due to the fact that the mix is essential to
both the companies and the outsiders such
as lenders.

To the company cash as the most liquid
though non-earning current assets, is
regarded as the lifeblood of the business
as its availability is quite essential to
enable the firm to be liquid, that is, to
enable the firm to carry out its operations
and to meet its obligations. Inadequacy of
cash or illiquidity may constrain or hinder
the activities of the firm and make it
unable to honour its financial obligations,
which may have adverse consequences to
the firm such as limited

access to lenders who believe that cash
form a cushion against default.
Proper liquidity decision therefore involve
making sure that the firm has adequate
liquidity to meet its transaction,
precautionary,
opportunity
and
compensatory needs. But at the same
time to ensure that unnecessary large
amounts are not kept as idle cash
balance without being invested in
interest-earning investments.
The following are guiding factors that

need to be taken into consideration while
attempting to determine the appropriate
or optimum cash balance:i. The desired liquidity or safety level (one
should consider transaction, contingency
and opportunity needs).
ii.
The
magnitude,
stability
and
predictability of cash flows. The more
unstable and unpredictable are the cash
flows, the more will be the cash balance
and vice versa.

iii. The availability of other liquid assets,
including marketable securities that
can be liquidated or shifted to meet
cash requirements.
iv. The availability and possibility (or
ability) of the company to arrange for
line of credit/overdrafts or getting
other short-term loans/credits.
v. The nature of economic environment,
for instance whether monetary policies
by central bank are easy or tight.

As a result during credit squeeze, banks
may not be ready to extend credit easily
and therefore firms may need to
maintain a relatively high cash balance
and vice versa. Another situation is
related to the level of interest rate
prevailing in money markets, the higher
the interest rates the more the firms will
invest in marketable securities and
banks fixed deposits, other things
remain constant.

vi. The level of compensating balances,
and cash and liquidity ratios required
by banks and other creditors in
loan/credit (and other obligations)
agreements.
vii. The maturity structure of companys
obligations and schedule of major
expenditures.
viii. The efficiency of the firm in its cash
management operations.

In line with those guides are various
tools used in cash management to
assist in determining the cash
balance including Cash Budget, Cash
Flow Statements, Turnover Analysis,
and some Liquidity Ratios (Current
Ratio and Acid-Test Ratio).

i. Liquidity Ratio
It is also called as short-term ratio.
This ratio helps to understand the
liquidity in a business which is the
potential ability to meet current
obligations. This ratio expresses the
relationship between current assets
and current liabilities of the business
concern during a particular period.

ii. Profitability Ratio
Profitability ratio helps to measure
the profitability position of the
business concern. Some of the major
profitability ratios are given below.

iii. Activity Ratios
It is also called as turnover ratio. This
ratio measures the efficiency of the
current assets and liabilities in the
business concern during a particular
period. This ratio is helpful to
understand the performance of the
business concern. Some of the
activity ratios are given below:
3.9 Company Accounts And

Auditing Of Companies
3.9.1 COMPANY ACCOUNTS

In Tanzanias Company Act, No 12 of
2002 this is stated in Section 151-169.
The following are some of important
issues in relation to company accounts.
1. Every company shall keep in
English or Swahili proper books of
account which are sufficient to
show and explain the company's
transactions and are such as to:-

Disclose with reasonable accuracy at

any time, the financial position of the
company, at that time;
Enable the directors to ensure that
any balance sheet, profit and loss
account and cash flow statement
prepared
complies
with
the
requirements of the companys act.

2. The books of account shall in

particular contain: entries from day to day of all sums of
money received and expended by the
company and the matters in respect of
which the receipt and expenditure takes
place;
all sales and purchases of goods by the
company;
The assets and liabilities of the company.

3. The books of account shall be

kept at the registered office of
the company or at such other place
in Tanzania as the directors think fit,
and shall at all times be open to
inspection by the directors.
4. The books of account which a
company is required to keep shall be
preserved for six years from the
date on which they are made up.

5. A company's first accounting period

shall be the period of more than
six months, but not more than
eighteen months, beginning with
the date of its incorporation. Its
subsequent accounting periods shall
be successive periods of twelve
months beginning immediately after
the end of the previous accounting
period.

6. The directors of every company

shall prepare individual accounts
(in case of individual company,
section
153-154)
and
group
accounts
(in
case
of
parent
company having subsidiaries,
section 155-156) for each accounting
period and lay before the company in
general meeting.

7. A parent company is exempt from the

requirement
to
prepare
group
accounts in respect of an accounting
period if it is itself a subsidiary of another
company that does prepare group
accounts. Other issues can be found in
the proceeding sections.
8. Failure to execute most of above
requirements imply offences and
hence liability on conviction to
imprisonment or to a fine or to both

3.9.2 Auditing of Companies

In Tanzanias Company Act, No 12 of 2002
this is stated in Sections 161-164 and 170179. The following are some of important
issues in relation to auditing of company
accounts.
1. Every company shall at each general
meeting at which accounts are laid,
appoint an auditor or auditors to hold
office from the conclusion of that general
meeting until the conclusion of the next
general meeting at which accounts are laid.

2. A private company shall be exempt

from the requirement to appoint an
Auditor in relation to an accounting
period (Read section 171). However a
company is not entitled to the exemption
unless its balance sheet contains a
statement by the Directors (a) that for
the accounting period in question, the
company
satisfied
the
qualifying
conditions in relation to turnover and
gross assets. (b) that the directors
acknowledge their responsibilities for - (i)

(i) ensuring that the company keeps books

of account which comply with the law
and
(ii)preparing accounts which give a true
and fair view of the state of affairs of the
company as at the end of the accounting
period and of its profit and loss for the
accounting period in accordance with
the requirements of law.
3. Shareholders have the rights to request
for audit (section 173).

4. A person or firm shall not be qualified
for appointment as Auditor of a
company unless he, or, in the case of
a firm, every partner in the firm is a
certified public accountant. Also none
of the following persons shall be
qualified for appointment as auditor of
a company; an officer or employee of
the company or a person who is a
partner of or in the employment of an
officer or employee of the company.

5. Every Auditor of a company shall have a
right of access at all times to the books and
accounts and vouchers of the company,
and shall be entitled to require from the
officers of the company such information
and explanation as he thinks necessary for
the performance of the duties of the
Auditors.
6. If the auditors fail to obtain all the
information and explanations which, to the
best of their knowledge and belief, are
necessary for the purposes of their audit,
they shall state that fact in their report.

7. A company's auditors shall, in
preparing their report, carry out such
investigations as will enable them to
form an opinion as to (a) whether
proper accounting records have been
kept by the company and proper returns
adequate for their audit have been
received from branches not visited by
them, and (b) whether the company's
individual accounts are in agreement
with the accounting records and returns.

If the auditors are of opinion that
proper accounting records have not
been kept, or that proper returns
adequate for their audit have not
been received from branches not
visited by them, or if the company's
individual accounts are not in
agreement with the accounting
records and returns, the auditors
shall state that fact in their report.

8. A company's Auditors shall make a
report to the company's members on all
annual accounts of the company of
which copies are to be laid before the
company in general meeting during their
tenure of office. The Auditors 'Report
shall state whether in the Auditors'
opinion the annual accounts have been
properly prepared in accordance with the
law, and in particular whether a true and
fair view is given.

9. The Auditors shall consider whether the
information given in the Directors' Report
for the accounting period for which the
annual accounts are prepared is consistent
with those accounts; and if they are of
opinion that it is not, they shall state that
fact in their Report.
10. The Auditors' Report shall be read before
the company in general meeting and shall
be open to inspection by any member.
11. The Auditors' Report shall state the names
of the Auditors and be signed by them .

12. An Auditor of a company may resign his
office by depositing a notice in writing to
that effect at the company's registered
office. The notice is not effective unless it
is accompanied by the statement of any
circumstances connected with his ceasing
to hold office which he considers should
be brought to the attention of the
members or creditors of the company or,
if he considers that there are no such
circumstances, a statement that there are
none.
LECTURE FOUR:
RAISING
CAPITAL/FUNDS TO
FINANCE COMPANY
OPERATIONS
4.1 Introduction
4.1 Introduction
Once a person has decided on the form of

business to engage on, whether he/she is
having a start up fund or not, thinking or
considering different sources of financing the
business is very crucial and intelligent
decisions. Various stages in the businesss
life cycle may pose different needs for
financing your business.
Funds can be a start up capital
Working Capital- payment to creditors, salary
paid to workers, purchase of raw materials
etc.
4.1 Introduction
For Machinery & equipment

Leasehold improvements
Fixed Assets building, vehicles etc.
Expansion Expenses.
4.2 Forms of Financing

1. Equity Financing
Equity finance is provided by the sale of
ordinary shares to investors. Also known as
security financing. This may be a sale of
shares to new owners, perhaps through the
stock market as a part of a company
seeking a quotation, or it may be a sale of
shares to existing shareholders, for
example by means of a right issue. It
involve the sale of equity shares (ordinary
shares) or preference shares.

Equity Shares- equity Shares also
known as ordinary shares, which
means, other than preference shares.
Equity shareholders are the real
owners of the company.
Preference Shares- it is the shares,
which have preferential right to get
dividend and get back the initial
investment at the time of winding up
of the company.

Advantages
Doesnt have to be repaid
No interest is payable
Ability to raise large amounts of
capital
Improved corporate image
Improved access to future financing
Attracting and retaining key
employees

Disadvantages
Profits will be paid out as dividends
to more shareholders
Dilution of founders ownership
Loss of control
Loss of privacy
Filing expenses
Accountability to shareholders

ii. Bank Loan-Debt Financing
Usually in the form of a loan where the
principal amount borrowed and interest
accumulated on the loan needs to be paid.
There are also a range of opportunities to
secure debt financing such as:
i. Bank loans-borrowings from banks are an
important source of finance to companies.
When a bank makes an advance in lump
sum against some security it is termed as
loan. Bank lending can be both for short
term and long term basis.

Short term lending may be in the form
of:
a)An overdraft- overdraft is an arrangement
with a bank by which a current account
holder is allowed to withdraw more than the
balance to his credit up to a certain limit
without any securities.
b)Cash credit: is an arrangement by which a
bank allows his customer to borrow money
up to certain limit against the security of the
commodity over a short period.

Long-term lending: When the finance
mobilized with large amount and the
repayable over the period will be more
than five years, it may be considered as
long-term sources. Long-term loans from
financial institutions and commercial
banks including mortgage come under
this kind of source of finance. Long-term
source of finance needs to meet the
capital expenditure of the firms such as
purchase of fixed assets,

Other forms of loans
Commercial
Bills:
short
term
loans/advances
with
or
without
securities where the amount must be
paid in full upon reaching expiry.
Loan Programs: short term loans set up
to assist small business with initial start
up expenses.
Trade Credit: deferred payment of
goods and services purchased from a
supplier.

Advantage of debt financing
Enables you to keep your cash on hand to
use as operating capital or for personal
survival during a down period in your
business.
ii. It allows the founders to retain ownership
and control of the company.
iii. Debt financing provides business owners with
a greater degree of financial freedom than
equity financing.
iv. Debt obligations are limited to the loan
repayment period, after which the lender has
no further claim on the business.
i.

iv. Is also easy to administer, as it
generally
lacks
the
complex
reporting
requirements
that
accompany some forms of equity
financing.
v. Debt financing tends to be less
expensive for small businesses over
the long term, though more
expensive over the short term, than
equity financing.

Disadvantage of debt financing
i. Some lenders require collateral which
may not be available.
ii. Higher interest rates
iii. Short repayment periods
iv. It requires a business to make regular
monthly payments of principal and
interest. Very young companies often
experience shortages in cash flow that
may make such regular payments
difficult.

v.
Most lenders provide severe

penalties for late or missed
payments, which may include
charging
late
fees,
taking
possession of collateral, or calling
the loan due early. Failure to make
payments
on
a
loan,
even
temporarily, can adversely affect a
business's credit rating and its
ability to obtain future financing.

vi. Its availability is often limited to
established
businesses.
Since
lenders primarily seek security for
their funds, it can be difficult for
unproven businesses to obtain
loans.
vii. The amount of money small
businesses may be able to obtain
via debt financing is likely to be
limited, so they may need to use
other sources of financing as well.

iii. Sale of assets
A company may decide to sell its assets
in order to raise funds for its operations.
These assets may include those which
are unutilized or those whose value is
low compared to the requirements. The
assets are such as building, motor
vehicles, debtors or land. The company
must take into consideration if there are
any rules and regulations governing the
sale of such properties.

iv. Dividend-refers to cash distribution
made by the company to its shareholders.
Than
being
distributed
to
the
shareholders, the company may decide to
use the dividends for financing its
operations or for further investment. This
is done mainly through the use of
Dividend Reinvestment Plans (DRIPS).
With a new-stock DRIPs the shares come
directly from the company, so there are no
brokerage costs involved.DRIPs allow
shareholders to automatically reinvest
dividend payments in additional shares of
the companys stock.

v. Partnership
Through
partnering
with
another
company, a firm may be in a position to
secure additional money to finance its
operations or further investments.
Among the form of these partnerships is
Venture capital. Venture capital is
money put into an enterprise which may
all be lost if the enterprise fails. In some
countries
there
are
established
institutions referred as Venture Capital
Institutions.


In
this
arrangement,
a
businessman/company starting up a
new business will invest venture
capital of his own, but he will probably
need extra funding from a source other
than his own pocket.
The institution that puts in the money
recognises the gamble inherent in the
funding. There is a serious risk of
losing the entire investment, and it
might take a long time before any
profits and returns materialise.
But there is also the prospect of very

high profits and a substantial return on
the investment. When a company's
directors look for help from a venture
capital institution, they must recognise
that:
i. the institution will want an equity stake
in the company,
ii.it will need convincing that the company
can be successful,
iii.it may want to have a representative
appointed to the company's board, to
look after its interests.
A venture capital organisation will only

give funds to a company that it believes
can succeed, and before it will make any
definite offer, it will want from the
company management: a business plan,
details of how much finance is needed and
how it will be used, the most recent
trading figures of the company, a balance
sheet, a cash flow forecast and a profit
forecast, details of the management team,
with evidence of a wide range of
management skills and details of major
shareholders, etc.

Advantage of Venture capitalists
Venture capitalists usually invest other
peoples money and are professional
investors.
Possibility for getting large amounts of
money
Possibility for high success in your
business.
Disadvantage
Sharing of profits
Less control over the business

Sometimes these investors will not
want to retain its investment in a
business indefinitely, and when it
considers putting money into a
business venture, it will also consider
its exit.
Examples of Venture Capitalist in
Tanzania are Fanisi Venture Capital
Fund and proposed Tanzania Venture
Capital and Private Equity Association
(TAVCA).

vi. Personal savings/finance: money that
you personally invest into the business.
Sources for personal finance
Increase your income - For instance you
can get a part-time job, ask for more hours
at work or ask for a raise, or rent out a room
in your house.
Sell non-essential personal assetsthink of high value assets such as your

second
vehicle,
property,
recreation
equipment,
land,
furniture
and
artwork/collectibles.

Cut expenses or save moneybudget accordingly and reduce
expenses/debt
by
sacrificing
premium
products
for
budget
products or lessen the frequency of
luxury or incidental purchases. Daily
changes can make a big difference.

Advantages of personal finance
Cheapest source of funds
Comes with the least amount of strings
Makes your business more appealing to
potential investors.
Strengthen your ownership in the
business
Give you more incentive to make your
business work
Secrecy

All profit belong to single owner
Capital expansion
Provide you with the freedom and
flexibility to operate your business as
you choose
Disadvantage
of
Personal
Saving/finance
Time consuming
Interfere with family matters
Limited amount can be raised

Limited expansion
Limited business skills

vii. Friends and Relatives- people
that you personally know can also
invest into your business as an
assistance or lend you some money.
Advantage
Absence of impact on your credit
history
No service fees
No interest or very low interest rates

Disadvantage
Funding option which can be a
potential source of conflict within
relationships.
Few individual have such culture of
financing others.
It create a sense of interdependence
to others
It may make you have less control
over your business.

viii. Angel Investors: Angels are private
investors that provide financing to eligible
early-stage
start-up
businesses.
In
addition to their goal of recovering their
investment,
angel
investors
are
interested in helping new ventures to get
off ground and succeed. Angel investors
use different approaches to minimize the
risk of failure: they mostly invest in
businesses they have previous experience
working with and require some equity
control in terms of ownership;

Advantages
They bring their expertise and
network of contacts on the service of
the businesses
They finance, and provide them with
advice to help them succeed.
Disadvantage
Less control over the business
Mostly invest in businesses they have
previous experience working with

ix. Lease Financing - is one of the
popular and common methods of assets
based finance, which is the alternative to
the loan finance. Lease is a contract. A
contract under which one party, the
leaser (owner) of an asset agrees to
grant the use of that asset to another
leaser, in exchange for periodic rental
payments.
Lease
is
contractual
agreement between the owner of the
assets and user of the assets for a
specific period by a periodical rent.

x. Hire Purchase- this method allows a
business to obtain assets without the
need to pay a large lump sum up front
Involves paying an initial deposit and
regular payments for a set period of time
The main difference between hire
purchase and leasing is that with hire
purchase after all repayments have been
made the business owns the asset.
This is a medium-term source of finance.

Advantages
Businesses can have the use of up to
date equipment immediately
Payments are spread over a period of
time which is good for budgeting
Once all repayments are made the
business will own the asset
Disadvantages
This is an expensive method
compared to buying with cash

xi. Mortgage-This is a loan secured on
property
Repaid in instalments over a period of
time typically 25 years
The business will own the property
once the final payment has been made
This is a long-term source of finance
Advantages
Business has the use of the property
Payments are spread over a period of
time which is good for budgeting

Once all repayments are made the
business will own the asset
Disadvantages
This is an expensive method
compared to buying with cash
If business does not keep up with
repayments the property could be
repossessed
4. 3 Internal vs External
Financing
Sources of funds can also be

classified as internal and external
to the organization.
There are five internal sources of
finance:
Owners investment (start up or
additional capital)
Retained profits
Sale of stock
Sale of fixed assets
Debt collection
4.3 Internal vs External

Financing
There are five internal sources of

finance:
Bank Loan or Overdraft
Additional Partners
Share Issue
Leasing
Hire Purchase
Mortgage
Trade Credit
Government Grants
4.3 Factors Affecting Choice

of Source of Finance
The source of finance chosen will

depend on a number of factors:
Purpose what the finance is to be used

for
Time Period how long the finance will
be needed for
Amount how much money the
business needs
Ownership and Size of the business
TOPIC FIVE: TOPIC FIVE:

COMPANY
GROWTH/EXPANSION
5.1 Introduction
5.1 Introduction
Company or firm growth/expansion is the
increase in the size of a firm over time. Firm
growth/expansion is typically measured by
growth of assets or capital employed
turnover, profits and number of employees.
Some firms remain small either by choice or
circumstances; others expand to become
large either in the national or international
context (example Multinationals) through
either/or
internal/organic
growth
and
external growth
5.1 Introduction
(Mergers and Acquisitions - M&As,
Takeovers and Strategic Alliances,
franchising e.g. Coca Cola/McDonald).
This discussion will concentrate on
Mergers and Acquisitions (M&As) as
among the means under which
companies can grow. Before going to
the details of M&As let us see some
forms of growth.
5.2 Types of Growth

a. Natural/Organic/Internal Growth: Is
a mode of business growth that is selfgenerated (expansion from within) rather
than achieved externally through M&As
and takeovers. Organic growth typically
involves a firm improving its market
share by developing new products and
generally outperforming its competitors
(horizontal integration) and through
markets
development
(finding
new
markets for existing products).
5.2 Types of Growth

It may also involve firms expanding
vertically into supply sources and
market outlets (vertical integration) as
well as diversification into new product
areas.
Advantage
i. The advantage of organic growth include

the ability to capitalize on firms existing
core skills and knowledge, use up spare
production capacities and more closely
match available resources to the firms
expansion rate over time.
5.2 Types of Growth

ii. Internal growth may be the only suitable
alternative where M&As is not possible or
where the product is in the early phase of
product life cycle.
Disadvantage
i. The disadvantages of organic growth is
that on relying too extensively on
internally generated resources, firms may
fail to develop acceptable products to
sustain its position in existing markets,
while existing skills and know
5.2 Types of Growth

-how may be too limited to support a
broader-based
expansion
programme.
Firms therefore, often rely on a
combination of internal and external
growth modes to internationalize
their operations and undertake
product/market diversification.
5.2 Types of Growth

b. External Growth: Is a mode of
business growth that involves firms
expanding its activities by Mergers,
takeovers/acquisitions,
strategic
alliances such as franchising or joint
venture rather than through internal
growth. External growth may take
the form of horizontal, vertical or
diversification expansion.
5.2 Types of Growth

Merger and Acquisitions (M&As)
An acquisition is the purchase of some
portion/total of one company by another,
whereas
a
merger
represents
the
absorption of one company by another.
Mergers may be a statutory merger, a
subsidiary merger, or a consolidation.
It can also be horizontal or vertical
merger. Horizontal mergers occur among
peer companies engaged in the same kind
of business, vertical mergers occur among
5.2 Types of Growth

companies along a given value chain-think of
a cone supplier merging with an ice cream
maker, and conglomerates are formed by
companies in unrelated businesses for
example telecommunication company buying
media coy.
a. Classification of mergers
i.
Classified
based
on
endorsement/support
of
parties
management:
A hostile takeover is when the target
company board of directors objects to a
takeover offer-they may decide to be merged.
5.2 Types of Growth

A friendly transaction is when the target
company board of directors endorses
the merger or acquisition offer-more of
acquisition.
5.2 Types of Growth
5.2 Types of Growth
5.2 Types of Growth

In a statutory merger, often referred to
as an acquisition, one company ceases to
exist. All of its assets and liabilities are
subsumed
in
the
acquiring
party
(Company X in diagram).
In a subsidiary merger, the acquired
party becomes a subsidiary of the
acquiring
party
(not
diagrammed).
Serengeti Breweries acquisition by East
Africa Breweries.
5.2 Types of Growth

There are various forms of acquisition
In a stock purchase, the acquirer provides
cash, stock, or combination of cash and stock in
exchange for the stock of the target firm. A
stock purchase needs shareholder approval.
Target shareholders are taxed on any gain.
Acquirer assumes targets liabilities.
In an asset purchase, the acquirer buys the
assets of the target firm, paying the target firm
directly.
An asset purchase may not need
shareholder approval. Acquirer likely avoids
assumption of liabilities.
5.2 Types of Growth

c. Motives for M&A
There are various motives. These are
summarized here below.
5.2 Types of Growth

c. Advantage and disadvantage
Advantage
Generally, external growth allows
firms to expand more rapidly and in
more cost-effective way than internal
growth,
while
augmenting
and
widening firms resource base.
5.2 Types of Growth

Disadvantage
Complications associated with this growth
mode include: Merged or acquired firms
have to be integrated into one controlling
organisation, which may require a major
streamlining of operations and creation of
new management structures. Mergers
create value for the target company
shareholders in the short run. Acquirers
tend to underperform in the long run.
Unemployment problems,
5.3 Growth Directions

Firms may expand in their original lines of
business (horizontal integration), become
vertically integrated or they may expand
into
new
business
activities
(diversification).
The process of growth is initiated and
facilitated by a combination of managerial,
economic, financial and chance factors.
Managerial:
Most
entrepreneurs
ambition is to grow from small to large
business is a key factor here.

One may start alone, but as the firm
grows, one needs assistance of others,
professionals or otherwise, depending on
the nature and size of the business.
Economic: The key here is creating
competitive advantages that are needed
in
the
competitive
market.
The
advantages include economies of scale
and experience. These help firms to lower
costs and maximize profits, ceteris
paribus.

Also innovations and product differentiation
by way of developing new products is
essential for firm growth and expansion.
Financial: Additional financial resources
are essential for growth. This may be
obtained though various ways of financing
a business, including borrowing from the
financial institutions and inter-and intrafirm financing.
Chance or luck factors: This is all about
being in the right place at the right time.

It is about discovering and making
most out of emerging/unfolding
The different rates of growth in
different industries/firms affect the
market structure because growth
determines the number of firms,
which in turn determines the market
structure.
TOPIC
SIX:
BUSINESS
6.1 Introduction
THE
PLAN
6.1 Meaning
A business plan is a document analysing the
objectives,
opportunities,
strategies,
activities, key players and outcome of
business
in
an
integrated
and
comprehensive manner. It is in principle, a
reflection of the entrepreneur and his or her
ability to organize, to think, to manage and
to communicate. In the eyes of a banker or
venture capitalist, one who may invest his
money in the new enterprise, the Business
plan demonstrates on paper the potential
ability of the entrepreneur to compete in the
business arena.
6.2 Why Does One Need

a Business Plan
A business plan serves the following
important objectives:
i. It forces the entrepreneur to look at
his/her business in its entirety and in this
process it is possible to evaluate the
feasibility of business idea. By analysing
every aspect of the business and
projecting financial results, the business
plan provides the promoter entrepreneur
with a basis for deciding whether or not to
proceed with the idea.

a Business Plan
ii. In the course of conducting the background
studies and assessment as inputs into the
business plan, the promoter entrepreneur
learns a lot about products, customers,
competition, regulations, taxes, constraints,
etc. This can compensate for lack of
experience.
iii. Because business planning encourages one
to be specific in thinking about operations,
the business plan becomes an important
tool in the course of managing the business.

a Business Plan
iv. The Business Plan provides a basis for
the financing proposal submitted to
financiers. A well-developed business plan
can be used to solicit funds from banks,
venture capitalists, individuals, etc. The
plan provides an opportunity for the
promoter
to
display
his/her
entrepreneurial
flair/talency
and
managerial talent and to communicate
his/her ideas in a way that is easy for
financiers to understand.

a Business Plan
v. Creates a yardstick by which you
may measure and evaluate changes.
In this regard proper use of a
business plan improves decision
making, efficiency and control and
eventually improves the chances of
success of a business venture.
6.3 When is it useful

i. When starting a business, it is useful to
have a plan of action and an estimate
of profit to show that the idea is
feasible and to minimise mistakes and
wastage of time and resources.
ii. When deciding a strategy to grow a
business, a plan is useful for showing
the financial targets, the actions to be
taken to attain them, the costs that will
be incurred, and how they will be met.
6.3 When is it useful

iii. When seeking financial assistance
at any time from formal sources such
as banks and from equity investors
such as partners. Then a plan is
useful for demonstrating the viability
of the business idea.
6.4 Contents of BP
The business plan would normally contain
the following basic information in various
formats:
i. The owners goal for the enterprise, both
short and long term (vision, mission,
goals and objectives).
ii. A description of products or services to
be offered;
iii. History to date, if existing business or
background to the business idea if a new
business;
6.4 Contents of BP
iv. Description of the market opportunities
identified,
how
they
have
been
identified/validated/confirmed and analysis
of the competitive situation in the sector;
v. Description of the marketing strategies to
be used to release the objectives in light of
the
identified
opportunities
and
competition;
vi. Description of how the business will be
organized, managed and staffed;
Description of the operations(facilities,
inputs, processes, output) envisaged ; and;
6.4 Contents of BP
Projections of financial results (income,
cash flows, balance sheets, key
ratios, etc).
6.4 Selection of a
Business Idea
In order to get a best idea which may

fulfill the objectives of the business plan,
the following issues and steps are crucial.
i. State your business idea, here list 5 ideas
in order of interest
ii. Check Your Skills- to what extent do you
have the skills unique to each business?
Rate each on a scale of 0-3 based on the
following criteria (0=none, 1=limited
skills, 2 =some skills, 3=extensive skills).
6.4 Selection of a
Business Idea
iii. Check Your knowledge of the businesshow much do you know about the area?
Will you have to spend extra time and
money teaching yourself the business?
Will you have to team with another
person or agency because you do not
know the business well enough? Rate
each on a scale of 0-3 based on the
following criteria (0=no knowledge, 1=
indirect knowledge, 2 = limited
knowledge, 3= working knowledge).
6.4 Selection of a
Business Idea
iii. Your knowledge of the businesshow

much do you know about the area? Will
you have to spend extra time and
money teaching yourself the business?
Will you have to team with another
person or agency because you do not
know the business well enough? Rate
each on a scale of 0-3 based on the
following criteria (0=no knowledge, 1=
indirect knowledge, 2 = limited
knowledge, 3= working knowledge.
6.4 Selection of a
Business Idea
iv. Check Your experience in the fieldhave you ever worked in this type of
business before? To what extent is
experience on hands crucial? (0=no
experience, 1= indirect experience, 2
= limited experience, 3= familiar
with business).
v. Easy of Entry- think both of the costs
of entering the business and of the
competitive barriers that might exist.
6.4 Selection of a
Business Idea
For example, a service business that

you can run from your home might be
inexpensive to start, but if several
others are already providing that
service, entry in the field may be
difficult ( 0=crowded field, 1=limited
entry, 2=mix of large and small
competitors, 3=unrestricted entry).
vi. Uniqueness-uniqueness does not
necessarily mean that no one else is
providing the same product or service.
6.4 Selection of a
Business Idea
It may be that no one is providing it

the way you are, or in your area or
packaged in quite the same way. You
are looking for some way to
distinguish your product or service
from others who are already in the
business (0=widely available, 1=few
to several competitors, 2=one to two
competitors, 3=no competitors).
6.4 Selection of a
Business Idea
vii. Total up the numbers
Eliminate any of you ideas that scored

less than a total of 10.
Eliminate any of your ideas that did not
score at least a 2 in every category.
Eliminate any of your ideas that did not
score at least a 3 in the uniqueness
category
6.4 Selection of a
Business Idea
The table below can be used for the

above exercises.
6.4 Selection of a
Business Idea
How many ideas are left?

If the answer is none, then you need to
use the list to identify where you need to
improve and you need to develop a
strategy for raising 1s to2s or 3s
If the answer is more than one, you
have a pleasant dilemma; a choice of
which business to start.
If the answer is one, you may have just
found the business idea/plan that is
perfect for you.
6.5 Contents of a BP
As said earlier the contents of business
plan may be organized in various format.
Among the accepted format is the one
below which will guide us throughout the
discussion.
i. EXECUTIVE SUMMARY
The executive summary should be no longer
than two pages. Prepare it after the plan is
complete, as it summarizes the whole plan
in a nutshell. Make it dynamic and exciting
to generate the readers interest.
Loans officers or investors have read
copious plans and tend to skip through
them if they get bored.
ii. VISION, MISSION, OBJECTIVES, VALUES
Clearly
state
your
Vision,
Mission,
Objectives and Values if any. Mission
statement
describes
your
company
philosophy in a few sentences. A vision
statement describes how you see your
company in the future. Your objectives need
to meet SMART criteria
Think carefully about each one. Study other
mission statements and design one that is
uniquely yours. A mission statement shows
your commitment to the business and its
customers and gives you a written promise
to uphold.
iii. BUSINESS DESCRIPTION
Introduce the business in more detail,
outlining your type of business, giving its
history (if you are purchasing an existing
business) or an outline of the new businesss
products or services.
With an existing business, highlight any
recent special achievements. Include the
general business overview especially where
it fits into the marketplace, what needs it will
fill, and how it will fill those needs.
iv. LEGALITY AND RISKS
Explain the legal framework which support
your business or the legal context in which
the business will operate. This is done in
order to show that your business is legal and
your not going contrary to any legislation.
v. ENVIRONMENT ANALYSIS
Conduct both internal and external

analysis in order to understand
yourself
and
the
external
environment. You can do this through
SWOT and PESDT tools which will
give a picture of your Strength,
Weakness, Opportunity and Threats.
State them in this section.
vii. ESTIMATE OF THE MARKET SIZE
The expectation is that when you prepare a
business plan you had already carried out
some sorts of a research in relation to your
market. In this section state the size of the
market, if you do not have actual size provide
the estimated size.
viii. MARKET TREND AND SALES FORECAST
What is the current situation in relation to this
type of business? Is there any competitor that
threatens you? How is the competitive
situation? Its future?
How do customers behave in this market?
Is there any expectations for the increased
number of customers in the future?
SALES FORECAST
Sales forecast can be made in various
ways. These includes surveys of buyers
intentions, composite of sales force
opinions,
expert
opinion
(dealers,
distributors,
suppliers,
consultants),
market test method (direct market test for
a product), time series analysis, leading
indicators, and statistical demand analysis.
From these ways you can get information which
can help you to get a picture of the future sales.
ix. MARKET SHARE
Your market share is the portion of the total

available market that is being serviced by
your business, but this may depend if the
business is new or old. If you have an existing
business, it may become easier to have a
grasp of your market share. If you intend to
establish a new business, it is also possible to
have a picture of your potential market share.
Market Share can be calculated by using the
formula below:
Market Share= Your Sales/Estimated
X
100
Total Industrial Sales
Where no actual market shares, a general
statement can be given giving a picture of
your market share.
So the answer you will obtain in these
calculations will give a picture of your
expected profitability which may also have a
positive impacts to financial providers/lenders,
partners or venture capitalists.
x. TARGET MARKET
This refers to a well-defined set of

customers whose needs the company
plans to satisfy. Here state your target
market and what is so special in them.
Students?
Workers?
Farmers?,
businesses?
This part is among the most difficult
section and needs real research. You may
allow even about 3-6 pages
for this
important section
xi. CUSTOMERS CHARACTERISTICS
Here define the characteristics of your

customers. This part may also indicate
the extent to which you have innovative
idea. However by defining the customers
characteristics will indicates the extent to
which you are focused and your intent to
solve specific customer problems. Than
these characteristics, explain how/why
they will buy your products/services in
preferences to those of competitors.
xii. COMPETITION
In this part introduce the main

competitors (or near-competitors)
and profile them. Show how their
market shares have evolved and are
likely to move in the future after your
entry/growth. Assess their SWOTs,
place
detailed
information
in
appendices.
xiii. OPERATIONAL/PRODUCTION PLAN
Plan how you will operate your business,
from overhead costs to distribution
channels. You may also state the inputs,
facilities and location of the business.
xiv. MANAGEMENT/ORGANIZATION PLAN
Here indicates how your business will be
managed or organized. Indicates the type
of people who are necessary to run the
business,
their
number,
skills
and
qualifications.
State who will constitute the management,
division of responsibilities between personnel,
organization structure, line of authority and
reporting. Create a table which summarize all
the necessary costs.
xv. FINANCIAL PLAN
The viability of your new venture will
culminate when you prepare projections of
income, expenses, and cash flow, and when
you review how much money you may
require. Even if you are not borrowing money,
projections and cash flows facilitate making
many future decisions.
Present key financial projections of Income and
Expenses (e.g Income Statement), Cash flow
projections, Balance sheets and key accounting
ratios. Work on monthly basis for the first years
projections.
It is essential that all the financial

statements be fully integrated and linked.
Keep this section within four to eight
pages by ensuring that only high-level
financial projections are included in
summary tables. You can place all detail
in Appendices
KEY ASSUMPTIONs
About sales-its expected growth, cost of
sales, days of credit, suppliers payment
days, debtors, owners capital etc.
Important Issues in the Financial Section
i. Income Statement
ii.Projected Balance Sheet
iii.Cash Flow Projections
iv.Break Even Analysis
v. Sensitivity Analysis
vi.Ratio analysis
TOPIC
OF
SEVEN: ELEMENTS
LABOUR
LAW
7.1 Introduction
7.1 Introduction
Labour law defines your rights and
obligations as workers and employers.
The basic subject matter of labour law
can be considered under nine broad
heads:
employment;
individual
employment relationships; wages and
remuneration; conditions of work; health,
safety, and welfare; social security; trade
unions and industrial relations; the
administration of labour law; and special
provisions for particular occupational or
other groups.
7.1 Introduction
In Tanzania, the key labour laws are:
i.
EMPLOYMENT
AND
LABOUR
RELATIONS ACT, 2004 (ERA).
This is an act to make provisions for core
labour
rights,
to
establish
basic
employment standards to provide a
framework for collective bargaining, to
provide
for
the
prevention
and
settlements of disputes, and to provide
for related matters.
7.1 Introduction
ii. LABOUR INSTITUTIONS ACT, 2004.
An Act to make provide for the
establishment of Labour Institutions to
provide for their functions, powers and
duties, and to provide for other matters
related to them.
iii.
EMPLOYMENT
AND
LABOUR
RELATIONS
(CODE
OF
GOOD
PRACTICE) RULES, G.N. NO. 42 OF
2007 and other ERA regulations.
7.1 Introduction
The focus of this discussion will be
the mother act, Employment and
Labour Relations Act. The discussion
will base on a number of selected
issues including those mentioned in
your course outline.
7.2 Fundamental Rights

and Protections
These rights are outlined in the second

part of this act. These relates with:i. Child Labour
No person shall employ a child under the
age of fourteen.
A child of fourteen years of age may only
be employed to do light work, which is
not likely to be harmful to the child's
health and development; and does not
prejudice the child's attendance at school,

and Protections
participation in vocational orientation or
training programmes approved by the
competent authority or the child's
capacity to benefit from the instruction
received.
A child under eighteen years of age shall
not be employed in a mine, factory or as
crew on a ship or in any other worksite
including
non-formal
settings
and
agriculture, where work conditions may
be considered hazardous by the Minister.

and Protections
For the purpose of this subsection, ''ship''

includes a vessel of any description used
for navigation.
Other issues in relation to child labour are
discussed in Section 5 Subsection 4-8.
ii. Forced Labour
Any person who procures, demands or
imposes forced labour, commits an
offence.

and Protections
For the purposes of this section, forced labour

includes bonded labour or any work exacted
from a person under the threat of a penalty
and to which that person has not consented
but does not include(a) Any work exacted under the National
Defence Act, 1966 for work of a purely
military character; Act No. 24 of 1966
(b) Any work that forms part of the normal civic
obligations of a citizen of the United Republic
of Tanzania;

and Protections
(c) Any work exacted from any person as a

consequence of a conviction in a court of
law, provided that the work is carried out
under the supervision and control of a
public authority and that the person is not
hired to, or placed at, the disposal of
private persons;
(d) Any work exacted in cases of an
emergency or a circumstance that would
endanger the existence or the well-being of
the whole or part of the population;

and Protections
(e) Minor communal services performed by

the members of a community in the direct
interest of that community after consultation
with them or their direct representatives on
the need for the services.
iii. Discrimination
Every employer shall ensure that he
promotes
an
equal
opportunity
in
employment and strives to eliminate
discrimination in any employment policy or
practice.

and Protections
An employer shall register, with the Labour

Commissioner, a plan to promote equal
opportunity and to eliminate discrimination in
the work place.
No employer shall discriminate, directly or
indirectly, against an employee, in any
employment policy or practice, on any of the
following grounds: (a) colour; (b) nationality;
(c) tribe or place of origin; (d) race; (c) national
extraction; (f) social origin; (g) political opinion
or religion; (h) sex; (i) gender; (j) pregnancy;
(k)

and Protections
marital status or family responsibility; (1)

disability; (m) HIV/Aids; (n) Age; or (o)
station of life.
Harassment of an employee shall be a
form of discrimination and shall be
prohibited on any one, or combination, of
the grounds prescribed in subsection 4 of
the ERA (2002).
For the avoidance of doubt every
employer shall take positive steps to
guarantee equal remuneration for men
and women for work of equal value.

and Protections
iv. Freedom of Association

Every employee shall have the right (a) to
form and join a trade union; and (b) to
participate in the lawful activities of the
trade union.
No person shall discriminate against an
employee on the grounds that the
employee- (a) exercises or has exercised any
right under this Act or any other written law
administered by the Minister; (b) belongs to
or has belonged to a trade union; or

and Protections
(c) participates or has participated in the

lawful activities of a trade union.
official of an office bearer of a trade union
or federation for representing it or
participating in its lawful activities.
Every employer shall have the right (a) to
form and join an employer's association;
(b) to participate in the lawful activities of
an employers' association,

and Protections

employer on the grounds that the employer(a) exercises or has exercised a right under
the Act; (b) belongs or has belonged to an
employees Association; (c) participates or
has participated in the lawful activities of an
employers' association.
As the rights of trade and unions employers'
associations, every organisation has the
right to-(a) determine its own constitution;

and Protections
(b) plan and organise its administration

and lawful activities; c) join and form a
federation; (d) participate in the lawful
activities of a federation, (e) affiliate
with, and participate in the affairs of any
international workers' organisation or
international employers' organisation or
the International Labour 0rganisation,
and to contribute to, or receive financial
assistance from those organisations.
7.3 Employment
Standard
i. Employment Contract
A contract with an employee shall be of the
following type a) a contract for an
unspecified period of time; (b) a contract
for a specified period of time for
professionals and managerial cadre, (c) a
contract for a specific task.
A contract with an employee shall be in
writing if the contract provides that the
employee is to work outside the United
Republic of Tanzania.
7.3 Employment
Standard
Any employer shall supply an employee,
when
the
employee
commences
employment, with the following particulars
in writing, namely (a) name, age,
permanent address and sex of the
employee; (b) place of recruitment; (c) job
description; (d) date of commencement; (e)
form and duration of the contract; (f) place
of
work;
(g)
hours
of
work;
(h)
remuneration, the method of its calculation,
and details of any benefits or payments in
kind, and (i) any other prescribed matter.
7.3 Employment
Standard
Where there are changes in relation to
any of the above, the employer shall, in
consultation with the employee, revise
the written particulars to reflect the
change and notify the employee of the
change in writing.
ii. Hours of Work
An employer shall not require or permit
an employee to work more than 12
hours in any day.
7.3 Employment
Standard
The maximum number of ordinary days
or hours that an employee may be
permitted or required to work are- (a)
six days in any week; (b) 45 hours in
any week; and (c) nine hours in any day.
An employer shall not require or permit
an employee to work overtime- (a)
except
in
accordance
with
an
agreement; and (b) more than 50
overtime hours in any four week cycle.
7.3 Employment
Standard
An employer shall pay an employee not less

than one and one half times the employee's
basic wage for any overtime worked.
It is prohibited for an employer to require or
permit -(a) pregnant employees to work at
night - i) two months before the expected
date of confinement; or (ii) before that date
if the employee produces a medical
certificate that she is no longer fit to
perform night work; (b) mothers to work at
night -(i) for a period of 2 months after the
date of birth;
7.3 Employment
Standard
(ii) before that date if the mother
requests to work and produces a
medical certificate.
7.4Unfair termination of
employment
Termination of employment includes (i) a
lawful termination of employment under the
common law (ii) a termination by an
employee because the employer made
continued employment intolerable for the
employee; and (iii) a failure to renew a fixed
term contract on the same or similar terms if
there was a reasonable expectation of
renewal; (iv) a failure to allow an employee to
resume work after taking maternity leave
granted under this Act or any agreed
maternity leave;
employment
(v) a failure to re-employ an employee if the
employer has terminated the employment
of a number of employees for the same or
similar reasons and has offered to reemploy one or more of them;
Terminate employment'' has a meaning
corresponding
to
'termination
of
employment'.
It shall be unlawful for an employer to
terminate
the
employment
of
an
employee unfairly.
employment
A termination of employment by an
employer is unfair if employer fails to
prove- (a) that the reason for the
termination is valid; (b) that the
reason is a fair reason
For more issues
related with
termination read sub part e and f of
this Act.

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Re 445: Business Planning and Entrepreneurship: (Bsc. LMV, Refi &PFM) Year IV Semester I

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RE 445: BUSINESS

It is beyond reasonable doubt that

i. Helps the formation of capital by bringing

v. Helps availability of new products and

ix. Induces backward and forward

1.4 Challenges facing

i. Limited source of funds- most of financial

1.4 Challenges facing

iv. Competition from big companies

1.4 Small Business/

1.4.1 Definition of SMES

1.4.1 Definition of SMES

1.4.1 Definition of SMES

1.4.1 Definition of SMES

1.4.1 Definition of SMES

1.4.1 Definition of SMES

1.4.1 Definition of SMES

1.4.2 Profile of SMES

1.4.2 Profile of SMES

1.4.2 Profile of SMES

1.4.2 Profile of SMES

1.4.2 Profile of SMESregional distribution

1.4.2 Profile of SMES

1.4.2 Profile of SMES

1.4.2 Profile of SMES

1.4.2 Profile of SMES

1.4.3 The Role and

The MSE sector is one of the leading

1.4.3 The Role and

10 per cent per annum.

1.4.3 The Role and

poor may not only make out a living, but

The factors for enabling environment for

large-scale sector. Existence of provisions

that high interest rates limits the amount of

these agencies. The current situation is

1.4.4 Issues in Starting

1.4.4 Issues in Starting

1.4.4 Issues in Starting

1.4.4 Issues in Starting

1.4.4 Issues in Starting

1.4.4 Issues in Starting

2.1 Meaning of Company

2.1 Meaning of Company

2.1 Meaning of Company

2.2 Types of Companies

2.2 Types of Companies

2.2 Types of Companies

2.2 Types of Companies

2..2 Types of Companies

iii. Again, registered company may be a public or a

2.2 Types of Companies

Formation of the company start when any two

The documents are to be delivered to the

(vi) Is suggesting to monopolize a generic

Once a business has been registered with

If the documents are in order, the registrar

site of the new company

Register for the workmen's compensation

Acquire rights towards various utilities

Some of the necessary documents for

Once the memorandum is registered a