The document discusses various topics related to business including types of business structures (sole proprietorship, partnership, company), franchising, product life cycle, Porter's five forces model, new product development process, pricing strategies (market skimming, market penetration), and strategies against competitors (cost leadership, differentiation, focus strategy).

1. By Suhaili Bin Md Tarmudi
Bachelor Degree of Business Management from UiTM
Currently doing Masters in Management at UTM

2. What is busines?
 Business is an activity done by a person or a group of
people in order to gain profit from selling goods or
providing services activity.

3. Types of business
Type of Business
Sole Proprietorship Partnership Company/Corporations

4. 1.Sole proprietorship
 New company start-up by your own.
 Fully responsible for business flow such as create
regulations,managing accounts,etc.
 Unlimited liability-As a sole owner of the business, a
creditor can make a claim against your personal or
business assets to pay off any debt.

5. Advantages of Sole Proprietorship
 Low cost to start your business
 Direct control of decision making
 All profits will go to you directly

6. Disadvantages of Sole
Proprietorship
 Unlimited liability (if you have business debts,
personal assets would be used to pay off the debt)
 Taxable income(The higher the income,the higher the
tax will be.)
 Lack of continuity for your business.(If the owner have
low commitment and usually absent for personal
purposes)

7. 2.Partnership
 Made up from 2-20 of person.
 Financial resources are combined and put into the
business.
 When establishing a partnership, you should have a
partnership agreement drawn up with the assistance of
a lawyer, to ensure that profit sharing,liability sharing
and factors that can disbanded the partnerships.

8. Advantages of Partnership
 Start-up costs would be shared equally with you and
your partner
 Equal share in the management, profits and assets
 Tax advantage, if income from the partnership is low
or loses money (you and your partner include your
share of the partnership in your individual tax return)

9. Disadvantages of Partnerships
 Unlimited liability (if you have business debts,
personal assets would be used to pay off the debt)
 Slow decision making process(Need to make a
meeting and ask for opinion and permission from
other all members in the partnerships.)
 Difficult to find a good and reliable partner.
 There might be conflict among the members.
 Held responsibility for business decisions made by
partner (for example, contracts that are broken)

10. Companies/Corporations
 Managed by Board of Directors that usually 2-50
person depends on the shareholders.
 Separate entity,company can sue or be sued.
 As a shareholders.A person will not be personally
liable for the debts.
 Need to seek legal advice before make any decision
making process.

11. Advantages of Companies
 Limited liability
 Separate legal entity
 Continuous existence
 Transferable ownerships.

12. Disadvantages of Companies
 A corporation is closely regulated
 More expensive to start the business.
 Extensive corporate records required, including
shareholder and director meetings, and
documentation filed annually with the government
 Possible conflict between shareholders and directors

13. Franchising
 -Franchising is a condition where a business
entity(franchisee)pay a royalty payment in order to use
franchisor products or trademarks.

14. Types of Franchising
 1. Product distribution franchise -licenses the
franchisee to sell specific products under the
manufacturers brand name and trademark through a
selective, limited distribution network.eg:Ferrari
 2. Trade name franchise-franchisee purchases the right
to become identified with the franchisers trade name
without distributing particular products exclusively
under the manufacturers name.eg:Kleenex tissue with
Mickey Mouse cartoon.

15. Types of Franchising
 3. A Pure franchise -franchisee purchases the right to
use all the elements of a fully integrated business
operation as same as franchisor.eg:KFC.

16. Benefits of Franchising
 To Franchisee:
 1. Management Training and Support Program.
 2. Higher chance for success
 3.Proven products and business formats
 To Franchisor:
 1.Get royalty from franchisee
 2.Strengthen the market.
 3.Less competitors.

17. Disadvantages of Franchising
 To franchisee:
 1.Need to pay a lot of money as royalty to franchisor.
 2.Strictly need to follow franchisor systems.
 To franchisor:
 1.Difficult to control.
 2.Trademark are at risk.

18. Product Life Cycle
 Every product are usually not last forever
 A product have its own life cycle start from its launch
until the day the product are no longer receive any
demands.
 Product Life Cycle help to understand a product in
which stage and what strategy are best to apply in each
stages.

19. Product Life Cycle

20.  Introduction – researching, developing and then
launching the product
 Growth – when sales are increasing at their fastest rate
 Maturity – sales are near their highest, but the rate of
growth is slowing down, e.g. new competitors in
market or saturation
 Decline – final stage of the cycle, when sales begin to
fall

21. Introduction Stage
 •New product launched on the market
 •Low level of sales
 Relevant strategies at the introduction stage might
include:
 •Aim – to encourage customer adoption
 •High promotional spending to create awareness and
inform people
 •Either skimming or penetration pricing
 Demand initially from “early adopters”

22. Growth Stage
 •Expanding market but arrival of competitors
 •Fast growing sales
 •Product gains market acceptance
 •The market grows, profits rise but attracts the entry of new
competitors
 Relevant strategies at the growth stage might include:
 •Advertising to promote brand awareness
 •Go for market penetration and (if possible) price leadership
 •Target the early majority of potential buyers
 •Continuing high promotional spending
 •Improve the product - new features, improved styling, more
options

23. Maturity Stage
 •Weaker competitors start to leave the market
 •Prices and profits fall
 There is a wide variety of possible options for a product
that has reached the maturity stage:
 •Product differentiation & product improvements
 •Competitor based pricing
 •Promotion focuses on differentiation
 •Persuasive advertising
 •Intensive distribution
 •Enter new segments
 •Repositioning

24. Decline Stage
 •Falling sales
 •Market saturation and/or competition
 •Decline in profits.
 Potential strategies are:
 •Spending little on marketing the product
 •Price cutting to maintain competitiveness
 •Promotion to retain loyal customers

25. Extension Strategies
 Advertising – try to gain a new audience or remind
the current audience
 Price reduction – more attractive to customers
 Adding value – add new features to the current
product, e.g. video messaging on mobile phones
 Explore new markets – try creating new market
segments such as exporting it abroad.
 New packaging – brightening up old packaging, or
subtle changes such as putting crisps in foil packets or
Seventies music compilations

26. Porter’s Forces Model
Market
Competitors
/Rivalry
Threats of
New
Entrants
Bargaining
Power of
Buyer
Threats of
substitute
products.
Bargaining
Power of
Supplier

27.  1. Threat of New Entrants
 An example is web design, as there are independents
in every location. This is an easy market to enter with
few requirements, other than skills, initiative and
relevant hardware and software. This does mean there
are many new entrants!
 2 . Buyer Power
 An example is the grocery sector since supermarkets
tend to retain power over suppliers due to volume and
price of contracts. They dictate terms, set prices and
can possibly end agreements at any time.

28.  3. Threat of Substitution
 The substitute to all services is DIY. For example
hairdressing or writing a will. Focus is on expertise,
customer service or added value.
 4. Supplier power
 Some sectors have monopolistic (one) or oligopolistic (few)
suppliers, such as utility companies. Sometimes customers
have little choice i.e. where to buy domestic water suppliers
though this is changing.
 5. Competitive rivalry
 These include Estate agents, web design and office
stationary. Many competitors often buy on price.

29. New Product Development
 Step 1: Generating ideas
 Gathering as much idea as possible.Ideas can be
obtained through various sources such as
supplier,customer feedback,or even in a groups such as
focus groups or brainstorming session.
 Step 2: Screening The Idea
 Idea will be filter out.Only the best ideas will be
accepted and shortlisted for further process.

30.  Step 3: Testing The Concept
 Does the consumer understand, need, or want the product or service?
 The organization will analyze whether the idea will be a solution to
solved customer problem and whether the product can be develop or
not and can be market or not.
 Step 4: Business Analytics
 Company will analyze from finance,managing, and also development
of the product based on current organizations situation whether they
will go for it or not.
 During the New Product Development process, build a system of
metrics to monitor progress. Even if an idea doesn’t turn into product,
keep it in the hopper because it can prove to be a valuable asset for
future products and a basis for learning and growth.

31.  Step 5: Market Testings
 Select a few group from overall customer population as
sampling and introduce them with the new
products.Their feedback are really welcome at this
stage.
 Step 6: Product Development
 In this stage,the real product will be produced in mass
production and and the product will be ready to see
the consumers.

32.  Step 7: Commercialize
 The product was commercialize.At this
point,marketing will be really essential in order to
make sure consumers are aware with this new
products
 Step 8: Post Launch Review and Perfect Pricing
 After a few while,the company will need to revise the
pricing since usually the product is sold at
introduction price.Thus,a new pricing strategy will be
needed.

33.  Step 7: Commercialize
 The product was commercialize.At this
point,marketing will be really essential in order to
make sure consumers are aware with this new
products
 Step 8: Post Launch Review and Perfect Pricing
 After a few while,the company will need to revise the
pricing since usually the product is sold at
introduction price.Thus,a new pricing strategy will be
needed.

34. Pricing Strategy
 1.Market Skimming Pricing Strategy
 2.Market Penetration Pricing Strategy

35. Market Skimming Pricing Strategy
 Sold new products at a high price.
 The objectives is to cover the costs as soon as possible
and gain more profits.

36. Market Penetration Pricing
Strategy
The objective is to penetrate the market and gain a
marketshare.
Profits are generally lower than skimming strategy but in
might be more profitable in the long run.

37. Strategy Against Competitor
 1.Cost-Leadership
 2.Differentiation
 3.Focus Strategy

38. Strategy Against Competitor
 1.Cost-Leadership
 Sell products that have same value as competitor at the
lowest price.
 2.Differentiation
 Create or produce a unique product that still doesn’t
exist in the market.
 3.Focus Strategy
 Focusing on niche market where the company are able
to customize products according to customer taste and
preferences.