Starting Your Own Business: Private Limited Liability Company (PLLC)

There are 2 ways of making money. Employment & Self Employment. Nothing is more addictive than a salary. Never take a job if you want to be wealthy. You are rich through what you own not what you earn. To start a company, apply to register your business as a company. Registration is with the government company registry office. Find a local solicitor and ask him to apply for you. This is because you might be unfamiliar with the paperwork. The fee is affordable. The application will require: A brief and general statement of the business that you intend to run. Make it look funky and good. An original name for your proposed company. It cant be a name that currently exists or has previously existed. You have to provide a postal address that is inside Britain. This address is also regarded as your registered office address. If you have to run a business from home, dont advertise otherwise nosy neighbours will report you to the council. Talk to your accountant or solicitor instead about using their business address. After your application is accepted your company becomes legally recognized. You are then required to have separate bank accounts for the company that isnt your personal one. Once your companys turnover exceeds 0.35M/year you must have your company and accounts audited. Simply put a professional accountant looks at your figures and says they are what you say they are. A copy of these accounts has to be sent to the government company registrar.

Advantage of setting up a PLLC

Bankruptcy If you are a sole trader then the bankruptcy court can take your personal belongings to raise the money to pay your creditors. They can label you an undischarged bankrupt. If at a later date you get a job the court can award a part of your salary to be paid to your credit. Currently undischarged bankrupt goes on for 3 years but in April 2004 amendments will reduce the period of time to 1 year. If your business is a company and it gets bankrupt the court appoints a receiver that takes over your company and disposes of its assets so that they can pay your creditors. If the total assets of the company are less than half of what is owed then the debt is halved. If your business is a company then only the company gets bankrupt and put into liquidation. Raising Capital Shares are a way of raising capital. A company can issue shares that will represent ownership of part of the company. To obtain shares investors have to pay for them, helping to raise the necessary capital. Anyone who owns 26% of a companys shares can be part of the board of directors of a company.

Public Companies
These are large companies and the distinguishing character of a public company is that the companys shares can be freely traded in a stock exchange (FTSE, DOW JONES etc) Within the Stock Exchange SE there are 2 types of businesses Market Makers aka Jobbers: They hold a stock of shares in each PLC it deals in. There are about 40-45 Jobbers in the SE. Stock Brokers: They trade shares on behalf of clients and investors. These two form the member firms of the SE. Each member firm has one vote and with this vote they elect an exchange governing body which today is called the Stock Exchange Board of Directors (SEBD). The SEBD have a number of duties they perform on behalf of member firms. To admit new member firms To allow companies to issue shares To regulate markets to retain investors confidence To maintain a compensation fund Investors: Individuals shareholders (minority). Institutional shareholders like Pensions Funds, Insurance Companies, Unit Trusts, Assurance Companies are the major investors/shareholders of PLCs. PLC Shareholders & Directors The British Companies Act states that the shareholders own the company. Each public company has to have a board of directors. This BoD is required to run the company on behalf of the shareholders. The BoD may not elect new directors and may not issue and sell new shares in the company. These actions can only happen by holding a meeting of shareholders at which a resolution is passed. Each year the BoD calls an Annual General Meeting AGM of shareholders. Proxy cards are used. Mergers and Takeovers : Consider company A (Intel) whose directors decide to attempt to buy up company V (Logitech). Intels directors propose to Logitechs board that Intel buys all of Logitech shares at a stated price. If Logitechs board agree, the deal goes through and it is called a Merger. If Logitechs board reject the proposal, then Intel attempts a hostile takeover. Intel obtains a complete list of Logitechs shareholders, from the Companies Registry Office - Company law requires all PLCs to keep an updated list of shareholders available for public inspection. Intel posts an offer to buy Logitech shares to all Logitech shareholders, with a return paid Acceptance slip. There must be a stated closing date for the offer. A shareholder who signs and returns an acceptance slip is bound to comply with the offer, regardless of any subsequent later and better offer. If Intel fails to get over 50% of Logitech shares, then Intels board may decide to make another and higher offer. Otherwise the takeover fails. The board of both Intel and Logitech send Logitech shareholders persuasive letters to get them to accept or reject the offer. This is called the cash offer method. An alternative method of takeover is the share transfer method, which works as follows. Intel board calls an EGM of Intels shareholders and get a resolution passed issuing a large number of new Intel shares. Then, when Intel posts an offer to the Logitech shareholders the offer is for new shares in Intel in return for Logitech shares (not necessarily 1 for 1). This method has enabled relatively smaller companies sometimes to make successful bids for larger companies. It has been used increasingly in recent years.

If Logitechs board intensely dislike the prospect of a takeover by Intel, it can seek out another PLC whose directors they like and persuade them to make a competitive and better bid for Logitechs shares. Such a third company is often called a white knight.

Raising capital
PLCs need on occasions to raise cash to fund re-equipment and modernisation, to fund expansion of the business, to finance development costs of new products, or services, to provide credit to customers, etc, and bad reasons, to fund losses, write off bad debts. Ways of raising capital 1. Borrow from a clearing bank. Easy, high rates of interest, only suitable for short term needs. 2. Long term loans from a merchant bank. Lower rates of interest, but bank may require an equity stake in the project for which the cash is required. 3. With the benefit of financial advice from a merchant bank, issue and sell more shares. The bank will normally underwrite the issue. 4. If only a relatively small increase in the total shares in the company, offer the new shares to existing shareholders as a rights issue. 5. Issue and sell fixed interest shares (bonds). These may be: preference shares, cumulative preference shares, debentures (loan stock), convertible debentures. The latter two normally have some assets of the company mortgaged to them and failure to pay the annual fixed dividend will normally close the company. 6. Beg from the government. If the company is in dire straits with bankruptcy and closure likely, the Govt may step in with funds to avoid possibly a large increase in local unemployment.

Financial Services
1. Clearing banks - Provide an account and a cheque service and make automatic regular payments, such as salaries, for clients. Main source of revenue as short term, high interest lenders. 2. Merchant banks They have several lines of - Providers of capital to businesses, public services, and many overseas governments. Either by providing long term loans arranged with capital providers, or sometimes by taking up an equity share in a clients project. - Financial advisors to company boards of directors on raising finance, arranging issues, and underwriting such issues when sold. - Running venture finance operations whereby risk capital is put up to fund new and small growing enterprises. 3. Insurance companies Provide insurance cover for businesses as well individuals. Policies often sold, not to clients directly, but through Brokers, who are commonly allowed about 20% of the premium paid as commission. Lloyds an insurance market in London in which over a hundred small insurance businesses operate, and by means of brokers collectively insure very large risks started as a marine insurance centre. Now its biggest line business is re-insurance of insurance companies by providing excess of loss policies. 4. Export Credit Guarantee Department Set up years ago by the British government to provide British firms that export goods with special insurance cover that protects them from overseas customers defaulting on payments due.

Intellectual Property and Patents

What is a patent? It is a piece of property, owned by a company or by an individual. It is a legal right to be the sole manufacturer, including marketing, of a specified article, as described in the patent specification. To obtain such a right, applications must be made to the Government Patent Office with a clear statement and description of the article for which a patent is required. The application is granted only if the article is original i.e. an invention. Once granted the patent is valid for 20 years, after which it expires and that article may never be the subject of a patent ever again To obtain a British patent: 1. Write a description of your idea with sketches. 2. Find a patent agent. A lawyer specializing in patent work 3. The patent agent will prepare on your behalf a First application and specification and send it to the Government Patent Office, who will send back, by return post, a dated receipt. This is your Priority Date. 4. No further action is required for 12 months, during which you can develop the invention further and research the market. Once you have your Priority Date you are free to publish the idea, or even start to make and sell the product. As an article can be patented only once, and a patent is granted to the earliest application, you are safe from other attempts to patent your idea. 5. By the end of 12 months, if you wish to proceed, instruct your patent agent to prepare a Final Specification and send to the Patent Office. This final spec may be considerably expanded on the first spec. 6. Patent Office staff conduct a search to see if there is any previous patent which partly or wholly anticipates your invention. If they find anything they will post copies of earlier patents to you, called citing prior art. You may then amend your final spec. if necessary, to distinguish your invention from any earlier patent. 7. Submit your application for examination at the Patent Office. If the examiner rejects it, he must state why, and you are allowed to amend the spec to meet the examiners objections. 8. Application accepted and a British Patent granted. Obtaining foreign patents 1. By applying in each country where protection is required. Under the International Convention on Patents applicants for foreign patents are granted the same priority date for their application as for their original UK application, so long as the applications are made within 12 months of the priority date. 2. By applying for a European patent to the European Patent Office. This gives patent protection over nearly all European countries. It is very expensive. Invalidation of a patent may occur by court order if evidence is shown that knowledge of the invention was in the public domain before the patents priority date. Internal company papers do not constitute the public domain. Employee inventors rights An employer has legal right to the patent of an employees invention, so long as it relates to the employers business at the employees place of work. Registered Trademark Registered trademarks are obtained by applying to the Patent Office. Once granted no one else may use the mark. If renewal fees are paid annually, a registered trademark can be

owned indefinitely. 4/4 Unregistered Trademark No legal right to stop others using it. In rare cases may be of value in actions against a competitor for passing off. Registered Design The appearance of a product may be registered with the Patent Office as a registered design. If the Patent Office accepts the application, then the product is protected legally from close copying. A registered design has a life of 25 years. Original copyright Protects authors and composers from unauthorised copying of their work. This is the oldest form of intellectual property. No formal application needed. To establish copyright over a script or score, mark a copy of it with with the date and the authors name and signature, and a witness name and signature. (Go to the post office and post it to yourself. Make sure this is registered and obtain a receipt from the post office). A copyright lasts for 70 years. An office copyright can be obtained in the same way and it applies to company designs and drawings. Office copyrights last only 10 years. Development / Licensing of a patented design Carry out detail design, manufacture and marketing Carry out detail design and marketing but sub contract manufacture Carry out detail design, but subcontract manufacture and marketing

License the patent rights to a license firm, and not involve oneself directly in the development of the patented design. The following steps are taken: 1. Find a firm that is a likely licensee. Sources of information are the internet, buyers guides, trade journals, trade shows and exhibitions etc. 2. Approach the Marketing Director or Head of the Sales Department as they are always interested in anything that might enhance sales. 3. Ideally show them a working model. If that is not possible a simple written description with excellent illustrations (nothing too technical). Types of license agreement 1. Exclusive license for the whole life of the patent 2. Non exclusive license. Only suitable in certain applications. 3. Exclusive license for a period, usually fairly long, but less than the life of the patent. Potentially the most valuable. Types of license payment 1. Single lump sum. Unusual, and nearly always grossly undervalues the patent 2. Royalty payments based upon annual turnover, i.e. sales. Such license agreements must contain two essential clauses. - A minimum royalty clause which ensures at least some payment to the licensor even if the turnover is low or nothing at all. - An anti-inflation clause to protect the value of the license agreement from erosion by inflation.

Patent Brokers in America When a British inventor is granted an American patent, they are likely to be approached by one or more American Patent brokers. These are not patent agents, but are contact businesses that will find the British inventor licensees in America and arrange the license and payment details, in return for a commission, usually 25% on the license revenue.

Industrial Relations Legislation and history

1871 Passing of the Trade Union Act, whereby Unions were allowed to register with the Government, complying with strict controls regarding organisation and finances, and were given immunity from actions for damages. 1913 Trade Union Act, allowed unions to set up voluntary political funds which members subscribed to if they wished, and which were to support Union sponsored MPs. Such MPs formed a new political party in parliament, called the Labour Party. 1939 45 WWII saw a period of full employment, no strikes and a rise in union membership. Union funds became large. Unions benefited from the rising stock markets of the 1950-1960s. Unions were closed shops. All manual workers unions operated the principle of members. As a Union was always able to expel any member from the Union, it gave huge power to the Union leaders over their members. 1960 79 Period of steeply rising inflation with annual wage claims aimed to keep up the value of earnings. This period saw spells of bitter relations between Government and Trades Unions. 1982 84 Industrial Relations Acts. The main provisions of the act was that unions lost their immunity from actions for damages if a strike was called without holding a ballot first of all affected members and obtaining more than 50% in favour of the proposed strike. Sympathy strikes and picketing at places other than the pickets own place of work were made civil offences and exposed the organising Union to action for damages. The impact of this legislation has been immense. Unions have found that members are averse to voting for strikes of any great length, and have had to restrain their industrial actions in disputes to what their members will support. Additionally, the Acts require Unions to conduct elections for senior officers by postal voting, thus ensuring that most members vote. Closed shops are allowed, but only after a ballot is held at any place of work and over 50% of those affected are in favour. Also a Union is required to hold regular ballots of all its members, maintain its political fund, obtaining 75% in favour.

Industrial Relations Company Scene

Three important concepts:1. Ambivalence the impact of the views of others on the final viewpoint of an individual. 2. Consensus the collective attitude of a group towards an issue which is of consequence to them all (Takes into account the degree of determination about issue). 3. Level of toleration of any group towards matters that affect them, for example wages and conditions at work. Importance of management knowing the level of toleration for the status quo in a workforce, and this is achievable in one of 3 ways, depending on the size of the workforce. These are: 1. In a company where the total number of employees, on one site, is within the Mutual Recognise Group size, then this is true, management can adequately sense the feeling amongst the workforce. MBWA applies. 2. In a company where the workforce is large but the total wages bill is a small part of the total product cost, then a company can afford to avoid industrial trouble by paying generously. 3. However in a company where the work is labour intensive and total wages bill is a large part of the product cost, there is a strong case for welcoming a structure of a trades union shop stewards which can communicate from the lowest levels to top management, about the level of toleration. Managers and Shop Stewards When dealing with demands from, or complaints by, shop stewards in an organisation where there is a unionised workforce, managers should be aware of the following basic rules of good practice. 1. Recognise the shop stewards role. A shop steward is an employee who has been elected by their colleagues to represent them and negotiate on their behalf. When seeing a shop steward, avoid seeing them as an employee, but recognise their role as an elected representative. It is not to the advantage of management if the shop steward feels they have to defend their right to speak for those who elected them. 2. On points of dispute, or demand, negotiate with shop stewards and when agreement has been reached immediately write down what has been agreed and get each person in the negotiations to agree it is correct, and copy to each of them. Then it is managements responsibility to communicate to the affected employees what has been agreed, and not the responsibility of the union. 3. Rogue shop stewards are people who have got themselves elected as shop stewards but then do not fairly represent their colleagues but seek to use their position to stir up as much trouble as they can for management, often grossly exaggerating, and creating imaginary complaints. Such people are rare. Most shop stewards are reasonable. Managing rogue stewards a. Prevention Rogue stewards get in where apathy exists in unions elections and only a handful of members vote at shop stewards elections. Thwart this by allowing shop stewards elections to be held at the workplace and at convenient times. Thus most workers will vote, and rogue stewards are unlikely to be elected. b. Calling his bluff If there is a rogue steward, see if there is a way of

exposing his false representation to his colleagues in a way which does not alienate them, thus increasing the chance of their not re-electing him. 4. Finally, set up with the shop stewards agreed procedures for the handling of complaints and demands, particularly ensuring that management is not exposed to spiralling claims.

Manager Subordinate Relationship

For this relationship to work well, to the satisfaction of both persons three factors need to be taken into account. 1. The objectives, or results, required of the subordinate in his/her work. Good management is when the manager checks from time to time that the subordinate understands fully what the manager requires and the two of them discuss this. Lack of clear understanding about work objectives was so widespread, or so it was thought, in big organisations that the Americans devised the technique called Management by Objectives, or MBO for short, which when applied within a company, required all staff employees to define their work objectives and discuss these with a manager, in the presence of an independent analyst. 2. The decision making allowed the subordinate. All work requires the making of decisions, exercising discretion, judgement, initiative, authority, etc and this is always within limits. Good management is when the manager defines these limits for each subordinate so there is no lack of clarity, and above all, no overlapping areas of decision making. 3. The responsibility of the subordinate to the manager. This is always one of two kinds. Either, responsibility for doing his best, or responsibility for achieving a defined result. The latter is much more preferable both to the manager and subordinate. It is achieved by the manager obtaining from the subordinate a commitment to the desired work result. This is brought about when the subordinate feels he/she has adequate resources.

Maximum Span of Control

Span of control the number of subordinates reporting directly to a manager. The maximum span is the largest number beyond which the managers accountability for all their work begins to break down and beyond which he/she can no longer maintain a close individual relationship with each and every one of them. This maximum varies between 8 and 15 with occasional exceptions above and below this range. The main factor which determines its size is the nature of the work being done by the subordinates, 10 to 12 being most common the primary group size of anthropology. This maximum can be increased at the first level of management by the provision of managers assistants who do much of the managers more time consuming work without detracting from his direct authority over his subordinates. These are commonly found with such titles as supervisor, charge hand, assistant foreman, etc. With such assistants the maximum span of control can be raised to about 25 for skilled workers and up to about 50 for semi-skilled workers, and in excess of 60 for very unskilled work. Structured Conflict

This occurs when two members of staff in an organisation who are not in a manager subordinate relationship but are colleagues both feel and possibly correctly so, that each has to make some decision about or exercise some control over a particular piece of work or activity or a shared resource. Furthermore if each makes the decisions that each wishes to without restraint or consideration, then the two of them impede and obstruct each other. In analysing the outcome of such conflicts, two features of human nature needs to be remembered. 1. We are all naturally possessive about our roles, and especially the authority and decision making element, and resent intrusion into our roles by others, and often very strongly resent this. 2. It is in our nature, when hurt or obstructed, to look for a person to blame, rather than an inanimate situation. Bearing these two points in mind, one can see three possible outcomes of a structured conflict. 1. If the conflict is mild and the two persons involved are not at all pressed or stressed in their work and have easy going natures, then a usual outcome is that the two of them cooperate in a friendly manner and a spirit of give and take, and this resolves the conflict peacefully. 2. If the conflict is severe, then the two persons start resenting each other, criticizing each other, obstructing each other, and open acrimony between them breaks out. This we term built-in quarrel. Such disputes are often and wrongly attributed to personality clashes bringing criticism and disapproval on the two persons. 3. The third possible outcome is that one of the two persons successfully dominates and bullies the other, has it all his own way, and does exactly what he likes with the shared resource, etc. This is usually because of a dominant character in one of them and a very weak submissive character in the other, though sometimes the domination arises from one having the higher rank or status.

Service Giving
An arrangement which regulates and organises work done in an organisation which necessitates directions and instructions laterally between roles where there is not a manager/subordinate relationship. An essential feature of all modern organisations, it works at the simplest level where just two roles and persons are involved and all other scales of magnitude right up to where very big corporations set up service giving subsidiary companies to service other parts of the corporation. Service givers are roles where instruction is placed on the role occupant to do specified work or provide resources to others when so requested. Service receivers are roles where authority is given to call for the provision of stated work or resources. Problems can arise from this type of relationship 1. Confusion over who is accountable for the cost of service given work, with the risk, which often occurs, of the accountability being placed upon the service givers, whereas properly it belongs to the service receivers. This can lead to confusion and the development of unofficial lines of influence and irregular and inefficient use of service given work. 2. Where the above problem is safeguarded against by making all service given work done on a charging basis, shown in the internal book-keeping, then complaints

arise that the charges made are high compared with outside suppliers with pressure from some managers to buy in service given work instead of having an in-house supply. 3. Professionalism. This term refers to the common situation where service given work is done to a standard, and therefore cost, which is in excess, and sometimes greatly in excess, of what the service receiver actually wants. Called thus because in the Civil Service, where it occurs it is often referred to as doing work to a professional standard.

Matrix Organisation
This type of organisation is used where the work of the organisation consists of carrying out specific contracts or projects where the completion by a certain time of each contract or project is all important. In this it is different from organisations where the work is a slow or steady stream of activity. A matrix organisation is comprised of two parts. There are contract managers and resource managers. The former have little permanent staff but each has responsibility for the execution and completion of a contract or project. All the main resources owned, or employed, by the organisation are in the charge of resource managers. A planning function lays out plans by which resource managers supply contract managers with resources, as and when needed, to carry out their work. Should at any time a contract manager find he does not get a resource he needs when he needs it, he hunts round to find it else where and hires it in. Also, if a resource manager finds he has some resource not currently needed he may endeavour to hire it out externally. Examples of where this type of organisation is appropriate are civil engineering companies, structural engineering companies, product development or improvement departments in commercial companies.

The Selection of Project Managers

All jobs have task objectives and these objectives fall into two different categories; Category A tasks have work objectives which are finite in time. They are tasks for which there is an end, a completion after which the task is finished. Completion by a certain time is usually an important part of the task objective. Common examples are Carry out a survey or investigation or contract, prepare a report, execute a project or build something; Complete a production schedule; Achieve a marketing target Category B tasks have work objectives which are continuing; there is no envisaged end to the task; it goes on and on until there is a decision to change the task or stop it or it becomes impossible. The objective in such tasks is to do the work involved to an acceptable standard and to continue doing so. Common examples are Being in charge of, or running a department, office, section workshop etc. Administration tasks; Maintaining a body of knowledge, skills expertise; Resource management generally Jobs where the main tasks fall in the first category are called Type A jobs; e.g. contract manager at a building site; and where the main tasks fall in the second Category are called Type B jobs; e.g. an office manager. Most staff have a preference, some a very strong preference to work in jobs of either Type A or Type B, and they perform best and are motivated when they are matched by the job type. An R&D department needs both to achieve optimum manning and success; Type A for project management and Type B for resource management and technical and scientific

excellence. Matrix organisations provide strong Type A jobs, the project leaders and strong Type B jobs, the functional managers. An essential feature in the selection of project leaders or project managers is finding staff that have a strong preference for Type A tasks.

Payment of Staff
There are four basic approaches to the payment of employed staff which vary widely in form and application. 1. Egalitarian approach. This in its purest form seeks to pay or otherwise reward each person employed in accordance with each persons assessed needs in life. There is absolutely no connection between what an employee does in his/her work and the pay he/she receives. Summed up in the age old phrase From each according to his ability and to each according to his need. This approach is only found in deeply committed charitable, religious and voluntary organisations. However, a partial form of this is widespread in many charities that pay less than commercial pay rates as some degree of commitment to the good cause of the charity is expected from the staff. 2. Performance related pay. Incentive payment schemes for manual production workers, and commission payment to sales staff, are the principal examples. At the top of public companies there are some executives and CEOs who receive profit related bonuses. 3. Pay based on market forces. This appears on the employment scene when there is a chronic shortage of personnel with some particular skill or expertise and employers bid madly against each other to get the limited personnel available, forcing salaries up, sometimes to excessive levels. This can be a very volatile situation as fresh people move into the shortage to fill it, salaries can tumble. 4. Responsibility based bay. This applies to the vast majority of normal employment jobs. The pay is a reflection of the employers view of the responsibility placed upon the employee in carrying out the work. It is responsibility that establishes the pay, rather than the quantity of work or nature of the work. This will be analysed later.

Job Evaluation Methods

When a new job is created, or an existing job is substantially altered, there is a need to decide what pay should be given to the job holder. There are two methods of arriving at this decision which are widely used in commercial and public organisations. 1. Whole job ranking. In its simplest form this consists of placing all jobs in a series of pay grades, and normally there are a certain number of pay steps, usually annual, from the lowest pay point to the highest, in each pay grade. This makes pay decisions become grade decisions, and at once removes the irritation of micro-differentials. In its original and still widely used form, the grade decision for a new job is made by the jobs manager subject only to confirmation by the managers own manager. With greater sophistication of the method, there may be a job evaluation panel that consider a managers recommendations and has power to confirm or amend them. Such a panel may use a job analyst to study the job and present a report. A further help to managers may be provided through the publication of a guide describing typical responsibilities for each grade, and even details of bench mark jobs for each grade to act as illustrations.

2. Multi factor points rating method. This consists of a requirement on managers, when evaluating a new job, to rate the job against each of a number of job characteristics or factors which are published and described in the organisations job evaluation scheme. For each factor the job is awarded points, high or low according to the managers assessment. Not all factors have the same weight. The total score from adding the points by factors is used to determine where the job should be placed in the pay structure. Typical factors might be: responsibility for work, responsibility for resources, knowledge, problem solving, social skills and physical skills.

Promotions and appointments

In deciding on the appointment or promotion of a person to a staff job, the mangers have to consider two important factors and sometimes some others as well. The first of the two essential factors is the applicants knowledge, experience and training which will be needed by someone doing the job. This is not difficult to discover and is a factor which management often focus on heavily even to the exclusion of other factors. The second factor which is essential is the applicants ability to cope adequately with the responsibility in the job. This ability is sometimes called in management text capacity or the capacity of a person in an employment job to perform adequately at a given level of responsibility and without undue stress. This capacity in people varies greatly over a wide scale. In many people who pursue successful careers to advance levels of responsibility, their capacity grows during adult life. The normal and desirable situation is that in any staff job the capacity of the person doing the job is a reasonable match for the responsibility demands of the job. This leads to the person feeling adequately challenged by the job but able to cope. Imbalances can occur. Sometimes the person has a capacity higher than that required by the job. How does that occur? The most common reason amongst young to middle aged staff is that the persons capacity has grown over the years and he/she has outgrown the job. Other reasons are badly made appointments or organisational changes which have reduced the job responsibility. The consequences are boredom and frustration in the person, a tendency to interfere in other jobs, taking up outside interests and activities to use up the unspent capacity. The other imbalance is when the persons capacity is below that required for the responsibility in the job. The most common, and worst, reason is over promotion or bad appointment often arising from too much emphasis on the first essential factor. The result is poor job performance, reluctance to delegate, over attention to detail, avoidance of taking longer term and bigger decisions in the job and stress in the person. A common cause of stress related illness and death.

Pricing & Costing

Pricing requires in-depth marketing skills. Costing Labour Cost & Material Costs

Direct Cost The sum of the above two cost. Unit Cost Direct Cost x Factor (Assumption/Estimates) Marginal Cost The actual expense of making just one more A note on overheads Normally allocated uniformly over all products or services. Use is made of unit cost to establish so called profit or loss. Example Product A turnover 30M profit 10M Product B turnover 20M loss 3M The overhead cost from product B can be reduced and the difference dumped on product A which will make them both profitable. Figures Numerical Data Statement of Fact Assumptions and Estimates