Business Concepts: Private Limited Companies, Depreciation, and Organizational Structures

Private Limited Company

A company that offers limited liability or legal protection for its shareholders but places certain restrictions on its ownership.

Advantages

• Limited Liability: More people are prepared to risk their money.
• Capital Raising: More capital can be raised as there is no limit on the number of shareholders.
• Control: Control of the company cannot be lost to outsiders.
• Continuity: The business will continue if an owner dies.

Disadvantages

• Profit Sharing: Profits must be shared among a larger number of members.
• Legal Procedures: Complex legal procedures are required to set up the business.
• Restricted Sales: Firms are not allowed to sell shares to the public.

Depreciation: Types and Calculations

The measure of wearing out, consumption, or other reduction in the useful life of a fixed asset.

Possible Causes

• Wear and Tear: Machinery, tools, and equipment suffer from regular use.
• Obsolescence: Changing technology can make assets obsolete.
• Maintenance: Capital goods that are poorly maintained may depreciate quickly.

Straight-Line Method

Depreciation allowance (per time period) = (Original Cost – Residual Value) / Expected Life (years)

Organizational Culture

The personality of an organization. Culture is comprised of the assumptions, values, norms, and tangible signs of organization members and their behaviors.

Case Study: UWP’s culture was inflexible, but effective as orders were ensured to be received and carried out. As a result, the security of the troops was maintained.

Matrix Structure

An organizational structure that facilitates the horizontal flow of skills and information. It is used mainly in the management of large projects or product development processes, drawing employees from different functional disciplines for assignment to a team without removing them from their respective positions.

Note: Matrix management involves the coordination and support of specialist teams within a matrix structure.

Social Marketing

Any commercial marketing technique that brings about changes in the behavior and perception of humans.

External Stakeholders

A party, such as a customer, supplier, or lender, that influences and is influenced by an organization but is not a member of it. Examples: Customers, suppliers, or government.

Cell Production

Adopts a different approach by dividing the workplace into “cells.” Each cell occupies an area on the factory floor and focuses on the production of a “product family” (a group of products requiring a sequence of similar operations).

Advantages

• Space Efficiency: Floor space is released because cells use less space than a linear production line.
• Flexibility: Product flexibility is improved.
• Lead Times: Lead times are cut.
• Resource Handling: Movement of resources and handling time is reduced.