Unit 1: Impact of Environmental factors on Business and Human Resource (HR) Flashcards
Relates to learning objectives for unit 1.
What is the definition of:
- Business
- HR
- Human Resource Management (HRM)
Business: General term that describes the use of resources and activities to produce goods or provide services essential in our daily lives to satisfy the needs of our society. An organisation or enterprising entity engaged in commercial, industrial or professional activities. Either a profit organisation that operate to fulfil an economic cause or non-profit organisation that operate to fulfil a charitable mission or social cause.
HR: Department within a business that is responsible for all things worker-related. Which includes HR processes such as recruiting, vetting, selecting, hiring, onboarding, training & development, promoting, compensation, administering employee-benefit programmes and firing employees/independent contractors.
HRM: Management function concerned with issues related to employees. Ensuring satisfaction and maximum contribution of employees with the achievement of organisational objectives.
What are the objectives of a business?
- Economic Objectives:
i) Profit Earning: Every business needs to have profit to survive, expand and diversify. Profits provide a livelihood for the business owner and a rewards for bearing the risk.
ii) Survival: Every business aims to survive in the present moment and exist in the future. Survival is only possible the business revenue covers its costs.
iii) Growth: A business needs to grow and expand to exploit its potential opportunities. Growth is measured in terms of sales volume, number of employees, market share, number of products, stock value and etc.
iv) Demand: A business can exist and grow when it creates and or focus on customers to capture a big market share, i.e. enough people to buy the products or services offered by a business.
v) Innovation: Innovation plays a crucial role in increasing the competitve strength and improving the image of the business, i.e. introduction of new ideas, new methods of producing products or services, etc.
vi) Resources: A business needs resources, i.e. funds to buy machinery, raw materials, employ people and meet day-to-day expenses. As resources are limited, a business has to plan and allocate resources efficiently, e.g employ efficient workers, use machines to its maximum output, minimise wastage of raw materials, etc.
- Social Objectives:
i) Providing Goods & Services at Reasonable Prices: A business should ensure a regular supply of quality products & services at reasonable prices. Supply of inferior quality, unusable or harmful products are detrimental to the survival of business.
ii) Adoption of Fair Trade Practices:
A business should not indulge in anti- social and unfair trade practices like black marketing, hoarding, adulteration, etc. Such practices are illegal and hamper the image of the business community and society.
iii) Community Service:
Many businesses engage in community services, e.g. setting up schools, charitable dispensaries, donating money for social and religious activities, etc. This helps to improve the reputation of the business, while benefitting society.
iv) Obligation to the government:
A business should pay taxes, i.e. income tax, GST (Goods & Service Tax), customs duty, etc. The government needs to use the taxes to support on public welfare and infrastructure development, e.g. funding skilled workers, machines and components, electricity, banking, transport, roads, warehousing, etc. This helps people to earn salaries and businesses to profit. A business should use the tax incentives and other benefits to create employment opportunities and set up industries in backwards areas. A business should also follow the laws of the nation.
v) Paying Fair Return to Investors:
A business should pay shareholders and creditors fairly and on time, in the form of dividends and interest. The business should also keep investors informed about the financial health of the enterprise.
vi) Employment Generation:
A business should create sufficient employment opportunities without any discrimination as to language, religion, sex and etc.
- Human Objectives:
i) Employee Welfare:
A business should provide a healthy and safe working environment to all the employees, including those with disabilities. A business should also implement a fair policy of remuneration and promotion.
ii) Developing Human Resources:
A business should invest in employee development. This will boost business growth; and invariably, economic growth of the nation. HR development can be done by organising skill-building workshops, training and sponsoring other innovative initiatives.
iii) Participative Management:
Encouraging the employees to participate in decision-making process of the business builds up employee accountability, faith and loyalty in an organisation. This also leads to industrial peace, while providing useful information to the organisation. This also leads to industrial peace, while providing useful information to the organisation.
iv) Labour Management Cooperation:
Business owners and managers should make efforts to establish and maintain a healthy employer-employee relationship, i.e. treating employees respectfully and keeping them aware about the latest developments in the organisation by using proper channels of communication to ensure labour management cooperation.
What are the types of industries or sectors?
- Primary Industry:
Refers to businesses involved in the extraction of natural resources.
(e.g. fishing) - Secondary Industry:
Refers to businesses involved in the conversion of raw materials, which are obtained from the primary industries, into manufactured components or finished goods. - Tertiary Industry:
Refers to service industry, with businesses involved in the provision of supporting services to any industry or to final consumer.
Organisations:
- Private Sector Organisations:
The private sector is made up of organisations that are owned and run by private individuals to further their own interest, earn maximum profits and achieve the best possible return on the money they have invested. The scale of business in the private sector ranges from small one-man operated business to large businesses that have thousands of owners (shareholders). - Public Sector Organisations:
The government directly or indirectly owns public sector organisations or state owned enterprises. Providing a range of goods and services to the community.
(e.g. legal system of laws and courts to settle disputes)
In Singapore, the public sector is involved in various economic activities through the following three types of public enterprises:
i) Ministries - Organisations that set the strategic and policy direction for the various sectors under their purview.
ii) Statutory Boards - Organisations established by an Act of Parliament, specialise in carrying out specific plans and policies of the Ministry with higher autonomy.
iii) Government-linked companies – Organisations incorporated under the Companies Act, which are engaged heavily in diverse sectors of the national economy. Most of these companies may be wholly or partially owned by the government.
What are the types of business structures and entities?
- Sole Proprietorship:
A sole proprietorship (the sole trader/proprietoror a “one-man show”) is a type of business owned and controlled by one person only-the simplest, yetriskiest typeof business structurein Singapore.
The common features of a sole proprietorship are as follow:
It is not a separate legal entity from the business owner. The business owner personally owns all assets and liabilities of the business. There is no protection of personal assets from business risks and liabilities.The business owner has unlimited liability. Thus, if the business owner owes money to the creditor, the creditors can go after the business owner’spersonal assets.It can sue or be sued in the owner’s name.It usually ceases to continue if the owner dies.
- Partnership:
i) General Partnership:
A general partnership closely resembles to sole proprietorship. (e.g: graphic design business, one partner could sell accounts, while the other partner create advertisement and marketing strategy.)
The common features are as follow:
It is not a separate legal entity from the business owners.
The partners are personally liable for all the debts and losses of the partnership.
It can sue or be sued in the partners’ names.
If any partner dies or becomes bankrupt, the partnership is automatically dissolved unless parties agreed otherwise in their contract.
ii) Limited Partnership:
A limited partnership differentiates its members as ‘General Partners’ and ‘Limited Partners’. There is no limit on the number of partners, but needs at least one general partner and a limited partner to form this structure.
The common features of a limited partnership are as follow:
The liability of the limited partner(s) is only up to the amount specified in the partnership agreement.
The liability of the general partner(s)is unlimited.
iii) Limited Liability Partnership (LLP):
An LLP gives owners the flexibility of operating as a partnership while having a separate legal identity like a private limited company. The LLP is seen as a body corporate and has a legal personality separated from its partners. The LLP has perpetual succession, which means any change in the partners will not affect its existence, rights or liabilities. Medical partnerships, law, architect and accounting firms are common examples of Limited Liability Partnership.
The common features of a LLP are as follow:
Has separate legal existence from its owners.
Partners of the LLP are not personally liable for any business debts incurred by the LLP.
A partner may, however, be held personally liable for claims from losses resulting from his own wrongful act or omission, but will not be held personally liable for such wrongful acts or omissions of any other partner of the LLP.
Able to acquire and hold property in its name.
- Private Limited Company:
The most preferred type of entity among business owners in Singapore is the Private Limited Company. Its shares are not made available to the public and are held privately. The shareholders must not be more than 50. The names of this type of entities have the suffix ‘Private Limited’ or ‘Pte Ltd’.
> Exempt Private Limited Company (EPC):
A Private Limited Company which is exempted from statutory annual audit. To be an EPC, the business must not have more than 20 shareholders. Any corporate shareholder, meaning no corporation should have beneficial interest in its shares. An annual revenue of more than S$5 million.
The common features of a Pte Ltd and/or Exempt Pte Ltd Company are as follow:
Separate legal entity with limited liability- a private limited company has its own legal identity separate from its shareholders and directors. Thus, the liability of the company’s shareholders is limited to the amount used to purchase shares in the company.
Better tax benefits-better corporate tax rate, no capital gains tax; and once income is taxed at corporate level, dividends are tax-free.
Ease of raising capital to expand business -by issuing additional shares to current shareholders or by bringing in new shareholders without having to change the structure of the business. This is possible with some of the other corporate structures.
Ease of transfer of ownership and perpetual succession -ownership can be transferred easily through the sale of shares. The business existence does not rely on the continued membership of any member. If a shareholder dies or resigns, the business can continue.
Increased credibility - investing time and effort in setting up a company gives potential employees, customers, suppliers, partners and investors the impression that the business is serious and scalable.
- Public Limited Company:
There are two types of public companies in Singapore:
i) A company which raises capital from the public-includes all those companies whose shares are listed on the Singapore Exchange Limited (SGX), either on the mainboard or the secondary board known as Catalist. A company with more than 50 shareholders is a public company even if its shares are not listed.
ii) A company limited by guarantee - commonly used for charities or to serve other national or public interests.
What are the types of business models?
- Manufacturer
- Distributor
- Retailer
- Franchise
- Brick-and-Mortar
- E-Commerce
- High Touch and Low Touch
What are the basic organisational structure and functions of the main departments?
- Production
- Research and Development function
- The Purchasing function
- The Marketing function
- The Human Resources function
- The Accounting and Finance function
What is the analysis of the internal and external environment of a business?
- SWOT:
Internal:
> Strength
> Weaknesses
External:
> Opportunities
> Threats
- PESTLE
> Political
> Economic
> Social
> Technology
> Legal
> Environmental
Describe how the external environment impacts the HR function
- Globalisation:
i) Recruitment
ii) Training
iii) Labour laws
iv) Communication
v) Expatriation - Automation:
i) Increased Efficiency
ii) Less Prone to Errors
iii) Good Experiences of New Candidates
Digital Transformation:
Four key roles:
> Innovator:
Innovative HR teams should focus on three main functions:
i) Hiring people with digital capabilities like design thinking, agility, data orientation, network leadership, etc.
ii) Creating a culture conducive for the workforce to innovate, where people are allowed to fail quickly and often, and learn from each of these lessons.
iii) Training and rewarding employees for moving away from age-old practices and displaying novelty in their approach.
> Driver of Business:
In the digital age, HR plays a key role as a strategic business partner(from a traditional support function) to propel the organisation forward.
> Change Agent:
As a change agent, HR may oversee recruiting, manage training and development programs, or design initiatives to increase workplace diversity.
> Collaborator:
Digital transformation cannot be executed by a single function. It is has to start with the CEO and the senior leadership team. HR needs to be the force that binds the organisation through a common thread of purpose. HR plays a crucial role in bridging the gaps by building diverse talent pools, creating a compelling career architecture for the work force and simplifying the talent processes.
What are the types of business decisions that could affect HR?
- Compliance with Laws and Regulations
- Management Changes
- Leadership Development
- Workforce Training and Development
- Adapting to HR Innovation
- Compensation and Benefits (C&B)
- Recruitment and Retention
- Workplace Diversity
