DISCUSSION ON

Based on the PerspectIve of Bangladesh

ORGANIZATIONAL

PLAN

S.M. Al-Amin BBA 027 07837 Arifur Rahman BBA 027 08076 Rizwana Chowdhury BBA 027 08094 Israt Ara Khan BBA 027 07393

An list for an organization.

Organizational Plan is basically a to do

It lists out the plan of work, programs, and organizational growth over a period of time - six months, a year or five. The tasks involved, who is responsible for them, and when theyll be done.

An Organizational Plan Helps To:

Set priorities for work Make sure tasks get done on time Focus on one thing at a time Share work among staff, board members & volunteers Make goals clear to investors Get a handle on big projects by breaking them down See the big picture of what organization is doing

developing the

management
team
Managements ability and commitment to the new venture are significant to investors. Investors demand that the management team not operate the business as part time venture. management team to operate the business full time at a modest salary Drawing out large salaries for the management team is unacceptable to an Entrepreneur and considered to be a lack of psychological commitment to the business

Legal forms of

Business
Proprietorship form of

basic legal

business with single owner; unlimited liability; control over all decisions; receives all profits

forms are

Partnership form of business

with 2 or more individual with unlimited liability, pooling resources to own a business.

Corporation form of
business with separate legal entity, run by stockholders having limited liability & regulated by statute

Factors of the three forms of Business Formation

Factors Proprietorship Partnership Corporation No Limitation on number of stockholders No Limitation on Number of partners In general partnership, individuals are liable for business liabilities. In Limited Partnership partners are liable for capital contribution

Ownership

Individual

Liability of Owners

Individual Liable for business Liability

Amount of capital contribution is limit of shareholders liability

Factors

Proprietorship

Partnership

Corporation

Costs of Starting Business

Partnership agreement, legal cost, and minor filing fees for trade Only Filing Fees name. Limited for trade name partnership requires more comprehensive agreement, hence higher cost

Created only by statute, Articles of incorporation, filing fees, taxes, and fees for states in which corporation is registers to do business

Factors

Proprietorship

Partnership Death or withdrawal of one partner terminates partnership unless partnership agreement stipulates otherwise. In limited partnership death or withdrawal of one partner has no effect on continuity. Limited partners can withdraw capital six months after notice is provided

Corporation

Continuity of Business

Death dissolves the business

Greatest form of continuity. Death or withdrawal of owner(s) will not affect legal existence of business

Factors

Proprietorship

Partnership

Corporation

Transferability of interest

General Partner Stockholders can can transfer sell or buy stock at his/her interest will. Stocks Complete only with consent transfer may be restricted by freedom to sell of all other general or transfer any partners. Limited agreement. In S partner can sell corporation, stock part of business interest without may be transferred consent of general only to an partners. individual New Capital raised by sale of stock or bonds or by borrowing in name of Corp. In S Corp. only one class of stock & limited to 75 shareholders

Capital Requiremen ts

Capital raised only by loan or increased contribution by proprietor.

Loans or new contributions by partners require a change in partnership agreement

Factors

Proprietorship

Partnership All partners have equal control and majority rules. In limited partnership, only the general partners control the business. Depends on partnership agreement and investment by partners. Depends on capability of partners and success of business

Corporation Majority stockholder(s) have most control from legal point of view. Day-to-day control in hands of management who may not be major stockholders. Shareholders can share in profits by receipt of dividends With limited liability for owners, more attractive as an investment opportunity

Management Control

Proprietor makes all decision and can act immediately

Proprietor Distribution responsible and receives all of profits and losses profits and losses Attractiveness for raising capital Depends on capability of proprietor and success of business

Tax Attributes of Forms of Business

Attributes Proprietorship Partnership Usually calendar year but other day may be used Corporation Any year can be used at beginning. Any changes in incorporation Taxable year Usually a calendar year

Distribution of profits to owners

All income appears on owners return

Partnership agreement may have special allocation of income. Pardoners pay tax on their pro rata shares income on individual return even if income not immediately distributed

No income is allocated to stockholders

Attributes Organization costs

Proprietorship Not amortizable $100 dividend exclusion for single return and $200 on joint return Taxed at individual level. A deduction is allowed for long term capital gains

Partnership Amortizable over 60 months Dividend exclusion of partnership passes to partner Capital gain to partner will be taxed as a capital gain to the partner Capital losses can be used to offset other income. Carried forward indefinitely

Corporation Amortizable over 60 months 80% of more of dividend received may be deducted (after 12/31/86) Taxed at corporation level. After July 1, 1987 the maximum rate will be 34%. Carry back three years and carry over five years as shore, term capital loss offsetting only capital gains.

Dividend received

Capital gain

Capital losses

Carried forward indefinitely

Attributes

Proprietorship

Partnership

Corporation Acquisition of stock for cash entails no immediate taxes. Transfer if stock value greater than contributed property

Initial organization

Commencement of business results in no additional tax for individuals

Contribution of property to a partnership not taxed

Limitations on losses deductible for real estate activities

Amount of risk may be deducted except for real estate activities

Partnership investment plus share of resources liability if any. At risk rules may apply except for real estate partnership

No losses allowed except on sale of stock or liquidation of corporation.

Attributes

Proprietorship

Partnership

Corporation

Medical Benefit

Itemized deduction for medical expense in excess of adjusted gross income on individuals return. No deduction for insurance premium

Cost of partners benefit is not deductible to business as an expense. Possible deduction at partner level

Cost of employee shareholder coverage deductible as business expense if designed for benefits of employee.

Attributes

Proprietorship

Partnership

Corporation

Retirement benefits

Limitation and restrictions basically same as regular corporation

Same as for corporations

Limitations on benefits on benefits from defined planslesser of $ 90,000 or 100% of corporation. Limitation on contribution to defined contribution plans-lesser of $ 30,000 or 25% of compensation ( 15% of aggregate for profit-sharing plans)

building the

management
team
Execute the business plan The team must be able to accomplish three Identify fundamental changes in the business as they occur Make adjustments to the plan based on changes in the environment and market that will maintain profitability

functions:

building a successful

organizational culture
Once legal

form of organization is
determined, the entrepreneur will need to prepare a job The job analysis will be serving as a guide in determining hiring procedures, training, performance appraisal, compensation program, and job description and specification.

description and job analysis.

building a successful

organizational culture
Job description Specify
the details of the work that is to be performed and any special conditions or skill involved in performing the job. Job description should contain a job summary, skills or experience required, a summary of the responsibilities and duties the authority of the individual and standards of performance.

Job specification outlines

the skills and abilities needed to perform the job including prior experience. Outlining the job specification for a trained employee is easier than for the untrained people who will be trained on the job. So the entrepreneur should focus on specific qualities that will be required, such as personality, physical traits, interest, or sensory skill.

role of the

Board of Directors

Reviewing operating and capital budgets Developing long-term strategic plans for growth and expansion

Supporting day to day activities Resolving conflicts among owners or shareholders Ensuring the proper use of assets or Developing a network of information sources for the entrepreneurs

selecting

Board members

Select individuals who can work with a diverse group and will commit to the venture mission The member of board

members should be
carefully selected considering the following

criteria

Select candidates who understand the market environment or can contribute important skills to the new ventures achievement of planning goals Select candidates who will show good judgment in business decision making

Board of

Advisors
Loosely tied to the organizations Serve the venture in an advisory capacity

Uses of Board of Advisors

Formal part of a venture Outside advisors, such as lawyers, accountants, ad agencies, etc.

Has no legal status Meet less frequently; depending on the important venture decision Useful in a family business Selection process similar to the BOD Compensated per meeting basis or with stock Provide reality check

thank you