Course Title: Introduction to Business in Bangladesh

Course Code: FCC 101

Assignment Two

Submitted to:
Dr. Mohammad Harisur Rahman Howladar
Professor
Department of Management
University of Chittagong

Submitted by:
Richard Stephen Gomes
BBA 1st semester
Student Id: 19302130
Question no: 01

Write short notes on: a) Partnership business

b) Public limited company
c) Private limited company
d) Franchising vs licensing
e) Combination of business

Partnership Business

A partnership is a form of business where two or more people share ownership, as well as the
responsibility for managing the company and the income or losses the business generates. That income
is paid to partners, who then claim it on their personal tax returns – the business is not taxed separately,
as corporations are, on its profits or losses.

In Bangladesh, the relevant law for regulating partnership is the Partnership Act 1932. A partnership
is defined as the relation between persons who have agreed to share the profits of a business carried
on by all or any of them acting for all. The law does not require written partnership agreement between
the partners to form a partnership. A partnership does not also require to be registered; however, an
unregistered partnership has a number of limitations regarding enforcing its rights in any court. A
partnership is considered as a separate legal identity (i.e. separate from its owners) in Bangladesh only
if the partnership is registered. There must be a minimum of 2 partners and maximum of 20 partners.

8 Different Kinds of Partners

(i) Active Partner
(ii) Sleeping or Dormant Partner
(iii) Nominal Partner
(iv) Partner in Profit
(v) Partner by Estoppel or Holding Out
(vi) Secret Partner
(vii) Sub-Partner
(viii) Minor as a Partner
 Pros and Cons of a Partnership Business

Pros

There are several advantages of choosing to structure a business as a partnership, which include:

• Fairly easy to set up and maintain over time

• Partners can pool their resources to fund the company’s start-up
• Partners can share the workload and the rewards of the business’s success
• Being able to offer key employees the potential to one day become a partner in the business can be
a big carrot that encourages them to stay long-term

Cons

Of course, where there are advantages, there are also disadvantages to forming a partnership:

• Where more than one owner exists, there are bound to be differences of opinion that could threaten
the business
• Although partners split any profits the business generates, if the payout is not in sync with each
partner’s contribution to the company, disagreements can erupt
• Unlike corporations, which help to shield owners from liability, partnerships have both joint and
individual liability. That is, all partners are liable for their own actions on behalf of the company as
well as the actions of the other partners.

Filings

There are no annual taxes to be paid, but the partnership does need to issue a K-1 form to all partners
to be included in their personal income tax filings.

The takeaway here? Be careful who you go into business with, because you could be liable for their
actions as they relate to the business.

Tax Requirements
A partnership doesn’t pay tax on its income. Instead, each partner pays tax on the share of net
partnership income each receives.
 Private Limited Company

A private limited company is a company which is privately held for small businesses. The liability of
the members of a Private Limited Company is limited to the amount of shares respectively held by
them. Shares of Private Limited Company cannot be publicly traded.
A private limited company in Bangladesh is a separate legal entity and shareholders are not liable for
the company's debts beyond the amount of share capital they have contributed. According to
the Companies Act 1994, any person (foreign or local) above the age of 18 can register a company in
Bangladesh.

Pros and Cons of a Private Limited Company

Pros
• Liability In case the private limited company has debt and losses, the only liability by the
shareholders is only up to the amount they individually invested. Their personal assets, the
salary earned as an employee of the company, real estate properties, etc. are safe from
liquidation if insolvency occurs.

• Private limited companies are tax efficient because there are many benefits to enjoy.
Companies can take advantage of schemes, rebates and policies. If a company earns a profit of
up to 300,000 SGD, the corporate tax is below 9%. Once it exceeds the said amount, the
corporate tax is at 17%, which is already the limit.

• The fluidity of how you can sell or transfer shares or change stakeholder percentages is a great
advantage especially if you have members who want to retire or passed away. You can also
easily transfer in part or wholly your company to another owner.

• For individuals who need funds, banks and investors are more than willing to lend them money
for starting their business. There are also other means to finance a company. Selling shares,
running a crowdfunding campaign, getting angel investors and venture capital are some of the
ways to obtain funds.
 Cons
• Private limited companies usually have to conform to stricter government laws and regulations
than other types of companies. In Singapore, for example, you have to follow the conditions
written in the Companies Act.

• If ever you feel you need to liquidate your company, you might find it difficult to find buyers
due to the high legal compliance procedures.

• Generally, the cost of setting up a private limited company is greater that the other two You
need to keep meticulous records of all your financial transactions. You also need to generate
Income Statement, Balance Sheet and Statement of Cash Flows annually.

• You must submit records for audit to the income tax department when necessary. Any
diversions in the records can lead to hefty fines and even legal proceedings. Your tax liability
can also sometimes be higher than expectations.

• Most requires private limited companies to have at least one director and one company
secretary. You also need to file Annual Returns and Director’s Reports to the concerned
departments

KEY FACTS ABOUT COMPANY FORMATION Of Private Limited Company

• Directors. Minimum two directors are mandatory. ...

• Shareholders. A private limited company in Bangladesh can have a minimum of 2 and maximum of
50 shareholders. ...
• Authorized Capital. ...
• Paid-up Capital. ...
• Registered Address. ...
• Memorandum and Articles of Association.
Private Limited Company in Bangladesh Taxation

Types of Company Rate of taxes on profit

Private limited company, Non listed company. Non-Resident Company 35%

Publicly traded Listed Company in stock exchanges 25%

Publicly traded bank, insurance and non-Banking Financial institution 40%

Non- Publicly traded bank, insurance and non-Banking Financial institution 42%

Merchant Bank 37.5%

Cigarette Manufacturing Company 45%

Tobacco Product Manufacturing Company 45%

Mobile operator Company 45%

Public Limited Company

A company whose securities are traded on a stock exchange and can be bought and sold by
anyone. Public companies are strictly regulated, and are required by law to publish their complete and
true financial position so that investors can determine the true worth of its stock (shares). Also called
publicly held company.

A public limited company has a minimum of seven members, three directors, with no maximum
number of shareholders. Its shareholders can be any legal person or any individual who is above the
age of 18, qualified by Bangladesh Law.
A public limited company can invite the public to hold shares and is usually registered on a stock
exchange. Public limited company has a minimum of seven members, three directors, with no
maximum number of shareholders. Its shareholders can be any legal person or any individual who is
above the age of 18, qualified by Bangladesh Law. It can raise funds from the public. Aside from
Companies Act 1994, it should also comply with Securities and Exchange Commission Act 1993.

Public limited company advantages:

As a limited company, a plc shares the advantages of a limited company with its private counterpart.
But there are also specific features of a public limited company, many of which reinforce one another,
that give it some unique advantages:

1.Raising capital through public issue of shares

The most obvious advantage of being a public limited company is the ability to raise share capital,
particularly where the company is listed on a recognised exchange.Since it can sell its shares to the
public and anyone is able to invest their money, the capital that can be raised is typically much larger
than a private limited company.It’s also possible that having stock listed on an exchange could attract
investment from hedge funds, mutual funds and other institutional traders.

2.Widening the shareholder base and spreading risk

Offering shares to the public gives the opportunity to spread the risk of company ownership among a
large number of shareholders. This may allow early investors in the company to sell some of their own
shares at a profit while still retaining a substantial stake in the company.Obtaining capital from a wide
range of investors has some advantages over relying on one or two “angel investors”, as many private
companies will choose to do to facilitate growth. While an angel investor may provide a large amount
of capital and expertise, the founders may not be comfortable with the level of influence over the
company’s direction that the angel will often expect.

3.Other finance opportunities

As well as share capital, a public limited company will often find itself in a better position when
looking at other potential sources of finance.The demands of being a public limited company and
maintaining a stock exchange listing, for example, can help to improve a company’s creditworthiness
when issuing corporate debt (and therefore reduces the return the company needs to offer
investors).Banks and other financial institutions may be more willing to extend finance to a public
limited company, particularly one that is listed. The company could also be in a better position to
negotiate favourable interest rates and repayment terms on loans.

4.Growth and expansion opportunities

The value of being able to raise finance is in how it can be employed to serve the business. By having
more finance potentially more readily available and on better terms than a private company, the public
limited company ican be in an advantaged position to:
Pursue new projects, new products or new markets
Make capital expenditure to support and enhance the business
Make acquisitions (whether in cash or by offering shares to the shareholders of the target business)
Fund research and development
Pay off existing debt (or replace existing debt with new debt on better terms)
Grow organically

5.Prestigious profile and confidence

Whether deserved or not, having ‘plc’ at the end of a company name can add standing and prestige.
There is a sense of status about a public limited company that its private company counterpart just
doesn’t quite have, which can affect how the business is viewed. While often more imagined than real,
this perception of being more established, larger or more powerful can affect the behaviour of
customers, suppliers and employees.
More people are likely to be aware of the company if it is public, particularly if it’s listed on a stock
exchange. In that case, it’s more likely to receive attention from the media and investment
professionals. This is effectively free publicity, meaning more people will recognise the company and
its products or services. Better brand recognition can lead to more sales. It may also make you more
visible to valuable potential business partners.
Credibility and confidence are reinforced by:
Operating under a stricter legal regime than private companies in many areas
Higher share capital requirements
Greater transparency (for example, in the required form of accounts)
For listed companies, the indirect endorsement of having their shares listed on a recognised exchange
Again, these factors can affect the behaviour of (potential) shareholders, customers and business
partners.

6.Transferability of shares
The shares of a public limited company are more easily transferable than those in the private
equivalent, meaning shareholders benefit from liquidity. If shares are quoted on a stock exchange,
shareholders and potential shareholders will generally find it easier to transfer shares in the company
– although the market still relies on willing purchasers and sellers being available.
The fact the shareholders are less bound to remain with the company can give them comfort – and
may help the company by making people more willing to invest.
Without restrictions on transferability of shares that often apply in private companies, it’s also easier
to deal with situations like a shareholder’s death, allowing shares to be transmitted in line with the
terms of any will.

7.Exit Strategy
Going public can enhance the options for the founders to exit the business at some point in the future,
if they wish to do so. Both higher transferability of shares and the increased visibility of the business
and its performance may increase the chances of bid interest from potential suitors.

Public limited company disadvantages:

There are some important disadvantages of a public limited company, compared to a private limited
company. These public limited company disadvantages include:

1.More regulatory requirements

To help protect shareholders, the legal and regulatory requirements for a public limited company are
more onerous than for private limited companies. For example, additional restrictions include:
A trading certificate must be obtained from Companies House before the company can trade (there is
no such requirement for a private company)
The need to have at least two directors (only one is required in a private company)
More onerous rules apply concerning loans to directors
A suitably qualified company secretary must be appointed (not required for a private company)
As well as higher transparency around accounts, they must be produced within 6 months of the end of
the financial year (9 months for private companies)
AGMs must be held, whereas in a private company decisions can more often be made by resolution
There are various additional restrictions on the company’s share capital and limits on pre-emption
rights and dividends
If the company’s shares are listed, the company will also need to follow the rules of the market. These
rules, particularly those to be listed on the London Stock Exchange, are demanding.
Understanding and applying these additional rules will consume time and effort that cannot then be
dedicated to growing the business. Appointing staff or advisers – including the required company
secretary – will help but come at a cost.

2.Higher levels of transparency required

Limited companies, whether public or private, have more of their details in the public domain,
available via Companies House, than other business types. But the required level of transparency is
much higher for public companies.
As well as needing to have its accounts audited, public limited companies are generally unable to file
abbreviated accounts, whereas smaller private companies can often do so. The fuller form of accounts
means a public limited company has to disclose more detailed data about the business and its
performance, information which is then available to anyone who wishes to access it.
The accounts of public limited companies are often scrutinised more by analysts and receive more
media commentary.

3.Ownership and control issues

With a private limited company, the shareholders will typically be people known to the directors or
founders. A private company will often be selective over who to admit as a shareholder, ensuring they
support the vision and plans for the business. The use of pre-emption rights can allow existing
shareholders to maintain control over the company when a new share issue is undertaken, a shareholder
dies or wants to transfer their shares.
With a public limited company, it’s much harder to control who is a shareholder of the company, and
who the directors are ultimately accountable to. There is therefore a possibility that the original owners
or directors can lose control of the direction of the company, face disputes or just spend a lot more
time managing shareholder expectations.
Institutional shareholders can wield particularly high levels of influence, often expecting consultation
and adoption of particular policies or standards in return for their investment.

4.More vulnerable to takeovers

At worst, a company can become vulnerable to a hostile takeover if a majority of shareholders agree
to a bid. With shares being freely transferable, a potential bidder can build up a shareholding in
advance of launching a bid attempt.

5.Short-termism
Where a public limited company is listed, there can be added pressure imposed by the market. The
company’s share price represents the value of the company as viewed by the market, and (potential)
investors will usually expect a healthy return. As well as dividends paid from profits, there will be a
desire for the share price to increase.
This level of emphasis on the share price, usually not so immediate a demand in a private company,
can cause the directors to focus almost exclusively on short-term results. They may therefore miss
strategic opportunities or threats, thereby not achieving the best for the business in the long-term.
6.Initial financial commitment is higher

The minimum financial commitment is higher for a public limited company than for a private limited
company. In order to trade, the plc must start with at least £50,000 of nominal share capital, at least
25% of which is paid up. That means at least £12,500 must be committed to the business, whereas in
a private company a single share of (say) £0.01 could be allotted – and not even paid for on issue!

Associated costs of company formation may also be higher, especially if the company’s requirements
are complex. If the company’s shares are to be listed on an exchange, it will typically pay legal and
investment professionals to advise and manage the listing process. There will be other costs associated
with obtaining a listing

Taxation
As per direction of the current budget, a company doing business in Bangladesh has to pay 35%
corporate tax, which is 25% for a publicly traded company while the maximum rate extends up to 45%
for some sectors.

Licensing vs franchising

Licensing refers to an arrangement between licensor and licensee where latter party would acquire the
right to use products and goods where the ownership remains with the licensor whereas Franchising
refers to an arrangement between franchiser and franchisee where the latter will enjoy the ownership
of a business on behalf of the franchiser in lieu of a fee where the processes are closely controlled by
franchisor therefore it is generally seen that licensing is for products and goods whereas the franchising
model is used more in service providing industry.
 Comparative Table

Basis Licensing Franchising

Business Model Deals with Products & Goods Deals with providing Services

Ownership of the ultimate product is Ownership of the business is with

with the licensee, he only buys the right the franchisee, he purchases the
Ownership to use a certain patented / original right to run the same business on
product of licensor in exchange of behalf of the franchisor in
royalty exchange of fees

Stricter compliance requirements

governed by Companies laws &
Standard agreement governed by
Legal regulations other federal laws of international
contracts law between the parties
business (if dealing with a party
outside the country)

Franchisor gets access to the

Licensor gets Vertical integration in the
geographically diversified
market without heavy capital
marketplace without
investment & enhances its brand value
Advantages compromising on brand value.
Licensee gets access to market relying
Franchisee gets continual support
on a strong brand & eliminating
from the franchisor to extend an
competition
already successful business.

The heavy initial investment by

the franchisee to meet the quality
Disadvantages
Licensor does not have control over the standards of the franchisor. The
ultimate use of its intellectual property degree of autonomy is very less
rights. for the franchisee in the
operational matters of the
business
 Licensing refers to an arrangement between licensor and licensee where latter party would acquire
the right to use products and goods where the ownership remains with the licensor whereas Franchising
refers to an arrangement between franchiser and franchisee where the latter will enjoy the ownership
of a business on behalf of the franchiser in lieu of a fee where the processes are closely controlled by
franchisor therefore it is generally seen that licensing is for products and goods whereas the franchising
model is used more in service providing industry.

Combination of business

A business combination is a transaction in which the acquirer obtains contro of another business (the
acquiree). ... When there is a business consolidation, the acquirer thereafter reports consolidated
results that combine its own financial statements with those of the acquiree

Types of business combination

When the nature of work is the basis of combination, it is named as a type of business of
combination. On this basis, there is four main division of business combination.

1. Horizontal combination
2. Vertical combination
3. Circular combination
4. Diagonal combination

Advantages And Disadvantages Of Business Combination

The main objective of business combination is to eliminate cut-throat competition and secure the
advantages of large scale production.
Following are the advantages of business combination.

1. Competition between and among the companies will be eliminated.

2. Amount of capital can be increased by combining business.

3. Establishment and management cost can be reduced.

4. Benefits of large scale production can be secured.

5. Operating cost can be reduced by avoiding duplication.

6. Research and development facilities are increased.

7. Monopoly in the market can be achieved.

8. Bulk purchase of materials at reduced price is possible.

9. Stability of the price of goods is maintained.

Following are the disadvantages of business combination

1. Business combination brings monopoly in the market, which may be harmful for the society.

2. The identity of the old company finishes.

3. Goodwill of the old companies decrease.

4. Management of the company becomes difficult.

5. Business combination may result in over-capitalization.

Question no: 2

What factors do you consider for choosing the best form of business to start a new business?
Discuss.

A private limited company is the most advanced, flexible, and scalable type of business incorporation
in Bangladesh. It’s also the most preferred type of Bangladesh business entity for serious entrepreneurs
(as opposed to sole proprietorship or limited liability partnership). For more detailed information about
private limited companies, refer to company registration in Bangladesh guide.

WHY ENTREPRENEURS PREFER PRIVATE LIMITED COMPANY:

Separate Legal Entity: A private limited company has its own legal identity, separate from its
shareholders and its directors. It can acquire assets, go into debt, enter into contracts, sue or be sued
in its own name.
Limited Liability: The liability of the shareholders to contribute to the debts of the company is limited
to the amount that they each agreed to contribute as capital to the company.
Perpetual Succession: The Company’s existence does not depend on the continued membership of any
of its shareholders. Ease of transfer of shares or changes in shareholders ensures that company
continues to exist even in the event of death, resignation, or insolvency of shareholders or directors.
Ease of raising capital: You can raise capital for expansion or other purposes by bringing in new
shareholders or issuing more shares to existing shareholders. Investors are more likely to purchase
shares in a company where there usually is a separation between personal and business assets. Also,
most banks prefer to lend money to limited companies.
Credible Image: As an incorporated business entity, it commands a better image than a sole
proprietorship or a partnership firm, and investors will be more willing to become part of the company
as it demonstrates a vision to grow and expand. As a private limited company, your business will be
taken more seriously by your potential clients, suppliers, bankers, and other professionals you will be
dealing with.
Easier transfer of Ownership: Ownership of a company may be transferred, either wholly or partially,
without disrupting operations or the need for complex legal documentation. This can be done through
the selling of all or part of its total shares, or through the issue of new shares to additional investors.
Question no: 3

Discuss the different functions of a business organization.

A typical business organization may consist of the following main departments or functions:
• Production
• Research and Development (often abbreviated to R&D)
• Purchasing
• Marketing (including the selling function)
• Human Resource Management
• Accounting and Finance.

The Production function

The Production function undertakes the activities necessary to provide the organization’s products or
services. Its main responsibilities are:
• production planning and scheduling
• control and supervision of the production workforce
• managing product quality (including process control and monitoring
• maintenance of plant and equipment
• control of inventory
• deciding the best production methods and factory layout.
Close collaboration will usually be necessary between Production and various other functions within
the organization, for example:
• Research and Development, concerning the implications of product design for production
methods and cost
• Marketing, concerning desired product functionality, appearance, quality, durability and so on
• Finance, concerning the availability of funds for purchase of new equipment and the
acceptability of inventory levels.
• Human Resource Management, concerning staff motivation implications of job design and
production methods.
Service organizations
Although many of the principles of good management in a manufacturing environment also apply in
organizations that provide services (rather than manufacture products), service businesses, such as
banking and professional firms of accountants and solicitors, do have a number of distinctive features
which have implications for how they are managed.
 1. Services are less easily standardized than manufactured products and so service quality tends
to be more variable. This makes human resource management and motivation more critical.
2. Services are often ‘intangible’ (i.e., something that cannot be precisely measured or assessed)
and multi-dimensional – what exactly is the ‘service’ being offered by a bank, a private hospital
or educational establishment? This can make attracting customers more difficult as it often
depends on promoting an intangible item.
3. Unlike manufactured products, services cannot be stored, but must be consumed as they are
produced or they are wasted. This creates additional problems matching productive capacity
with customer demand. This is reflected in, for example, the common practice of commercial
airlines offering very cheap flights based on marginal cost to fill empty seats – a plane flying
empty to New York is a service provided but wasted!
4. Ascertaining the cost of individual services is often also problematic, as the cost structure of
many service businesses is such that costs are often shared among different services. This
makes, among other things, pricing and the analysis of profitability of different services more
difficult than with most manufactured goods.

The Research and Development function

The Research and Development (R&D) function is concerned with developing new products or
processes and improving existing products/processes. R&D activities must be closely coordinated with
the organization’s marketing activities to ensure that the organization is providing exactly what its
customers want in the most efficient, effective and economical way.

The Purchasing function

The Purchasing function is concerned with acquiring goods and services for use by the organisation.
These will include, for example, raw materials and components for manufacturing and also production
equipment. The responsibilities of this function usually extend to buying goods and services for the
entire organisation (not just the Production function), including, for example, office equipment,
furniture, computer equipment and stationery. In buying goods and services, purchasing managers
must take into account a number of factors – collectively referred to as ‘the Purchasing Mix’, namely,
Quantity, Quality, Price and Delivery.
• Quantity. Buying in large quantities can attract price discounts and prevent inventory running
out. On the other hand, there are substantial costs involved in carrying a high level of inventory.
• Quality. There will usually be a trade-off between price and quality in acquiring goods and
services. Consequently, Production, R&D and Marketing Functions will need to be consulted to
determine an acceptable level of quality which will depend on how important quality is as an
attribute of the final product or service of the organisation.
• Price. Other things being equal, the purchasing manager will look for the best price deal when
procuring goods and services, although price must be considered in conjunction with quality and
supplier reliability, in order to achieve best value, rather than lowest price only.
 • Delivery. The time between placing an order and receiving the goods or services, the lead time,
can be critical for production planning and scheduling and also has implications for inventory
control. Suppliers must therefore be evaluated in terms of their reliability and capability for on
time delivery.
In short, the ‘purchasing mix’ can be considered as making sure that the organisation has the right
amount, of the right quality, at the right price, in the right place at the right time!

The Marketing function

Marketing is concerned with identifying and satisfying customers needs at the right price. Marketing
involves researching what customers want and analysing how the organisation can satisfy these wants.
Marketing activities range from the ‘strategic’, concerned with the choice of product markets (and
how to compete in them, for example, on price or product differentiation) to the operational, arranging
sales promotions (e.g., offering a 25 per cent discount), producing literature such as product catalogues
and brochures, placing advertisements in the appropriate media and so on. A fundamental activity in
marketing is managing the Marketing Mix consisting of the ‘4Ps’: Product, Price, Promotion and
Place.
• Product. Having the right product in terms of benefits that customers value.
• Price. Setting the right price which is consistent with potential customers’ perception of the value
offered by the product.
• Promotion. Promoting the product in a way which creates maximum customer awareness and
persuades potential customers to make the decision to purchase the product.
• Place. Making the product available in the right place at the right time – including choosing
appropriate distribution channels.
In order to be successful, a business enterprise must either have a lower price than its competitors, or
a product that is in some way superior – or both! A competitive strategy based on low price is known
as a cost leadership strategy. A competitive strategy based on developing a superior product is known
as a differentiation strategy.
The historical evolution of marketing
Several writers (e.g., Harrison, 1978) have argued (and it is now widely accepted among management
theorists and practitioners) that there have been three distinct eras in the history of advanced capitalist
countries, such as the UK, which have affected the status, role and responsibilities of the Marketing
function. These were:
1. The Production Era (pre–1930). This refers to a period of time during which products (and
services) were relatively scarce (thereby constraining consumer choice) and the most important
function of business was that of production. Marketing, in so far as it existed, was considered
the least important function.
2. The Sales Era (1930–50). This refers to an era characterised by a shift in emphasis of business
management from the production function to that of selling. With continued industrial
development and innovations, many new consumer oriented products became available and a
much more competitive selling environment resulted. This made it necessary to seek out
customers and make significant use of advertising, promotion and personal selling.
 3. The Marketing Era (1950–present). This period marked another significant change in the
attitude of senior management towards the status and responsibilities of marketing. This change,
referred to by many writers as the Marketing Concept (Kotler, 1967), meant a departure from
the previous concept of marketing as being the sales function of a business, to one where
marketing had a much greater responsibility in total company policy formation and operation.
Under the Marketing Concept, marketing was placed at the beginning of the process of
determining the products (services) which were needed by the market, the price at which they
should be sold and the way in which they were to be distributed.

The Human Resources function

The Human Resources function is concerned with the following:
• Recruitment and selection. Ensuring that the right people are recruited to the right jobs.
• Training and development. Enabling employees to carry out their responsibilities effectively and
make use of their potential.
• Employee relations. Including negotiations over pay and conditions.
• Grievance procedures and disciplinary matters. Dealing with complaints from employees or
from the employer.
• Health and Safety matters Making sure employees work in a healthy and safe environment.
• Redundancy procedures Administering a proper system that is seen to be fair to all concerned
when deciding on redundancies and agreeing redundancy payments.
Organisations are dependent on their employees. Consequently, their recruitment and selection require
careful management.
In recent years, the Human Resources function has attained a more important status as there has
developed an increasing need (especially in service organisations) to ‘get the most’ from employees,
in terms of customer service, for the benefit of the organisation.

The Accounting and Finance function

The Accounting and Finance function is concerned with the following:
• Financial record keeping of transactions involving monetary inflows or outflows.
• Preparing financial statements (the income statement, balance sheet and cash flow statement) for
reporting to external parties such as shareholders. The financial statements are also the starting
point for calculating any tax due on business profits.
• Payroll administration Paying wages and salaries and maintaining appropriate income tax and
national insurance records.
• Preparing management accounting information and analysis to help managers to plan, control
and make decisions.