Secondly, planning forces top-management and managers to think: If Miss Mary and her managers are involved in planning, which provide a valuable framework for thinking, analysis and creativity. Then the company will enjoy and benefit from it which can be cost saving, time saving, more productive and will be able to break through many barriers through creative and innovative solutions. The planning process actually forces the managers to think for better ideas and pushes the top-management harder to think of implementing those ideas from the managers.
Thirdly, planning provides direction throughout the organization: If Miss Mary is to draft out a plan it will involves activity and actions. These activities and actions will then be broken down from Miss Mary, top management to managers, from managers to supervisors and down the line. Each and every employee including Miss Mary to the production workers will have a role to play and a direction to follow, which in return, will comes back to the organization goals and objectives. Miss Mary need not worry too much if the plan can go astray because the whole process can be systematically monitor and controlled by the immediate superior. In this case it forms a two-way communication channel to ensure that the plans are moving in one single direction.
Once Miss Mary’s company have a plan, then directions would be clear and it will not involve unnecessary activities, time wasting, money wasting and over lapping of job scope which in return can contribute to the company’s productivity and cost effectiveness. Fourthly, planning can ensure proper use and allocation of resources: From planning, Miss Mary’s company can easily identified the strengths and weaknesses of her individual employee and from there she can analysis and plan functional roles and responsibilities for them. This action can lead to the individual manager and supervisor to fully contribute their strengths to the company and without having to display their weaknesses at work. As resources are both useful and scarce it is important to create a competitive advantage by gathering one’s resources and maximising them. Miss Mary must use resources effectively and turn them into growth opportunities to contribute to the company.
Lastly, planning can be psychologically benefiting and rewarding for employees: This is solely a personal comment, as I believe that if an organization is committed in planning, actively involve and striving to keep pace with the market, then the employees will be shown the efforts of survival from the management. The employees will see a long-term job security as they saw all the efforts from the top-management to keep the business going. Miss Mary should protect the interest of her employees and show the need for team members to share similar aspirations. In return, employees might respond with hard work, commitment, loyalty, higher morale and fighting spirit to keep the company going.
Miss Mary should consider this point as her employees might loss trust in her and the top-management as they understand that there’s no planning and direction in Mary’s Fashion right now. Limited liability of shareholders: The liability of its shareholders is limited to the amount remaining unpaid on the shares held and will not be liable to contribute towards payment of the company’s debt beyond the amount of shares held. In case Mary’s fashion goes burst she will not be losing all her wealth, she will only be liable to lose all the share that she held in the company. This will not affect too much on her personal life, as she will still have her personal wealth and belongings like her house, car and personal savings.
Financial Back-up: Being a Private Limited company it is always easier to have loans from banks or other financial companies. Private Limited company sounds and look bigger, stronger and it is essential for Mary’s company to have enough capital and funds to compete with other players and to enjoy growth and expansion without the hold-back of insufficient capital. Employment of expertise and professionals: If Mary’s Fashion is strong in the market and shows potential for growth then it would be logical that employment of expertise and professionals will be a lot easier compare to a sole proprietorship business that have difficulties rasing capital and employing top professionals. An employee will see bigger career advancement and chances to peak with the company that is worth joining. Being Private Limited Company with financial back up and freedom to expand, it will definitely play a part in convincing talents to join the company.
Example: Microsoft CEO Bill Gates sees no activity as more important as meeting young undergraduates to convince them that they should join his company. As each summer, he invites groups to his US $60 million home where he mingles with the young guests, answers their questions, give advice, and reinforces the excitement of a career with his company. (The Straits Times, “Gates Picks The Talents Himself”, August 27,1998) In today’s cutthroat world of business, it pays to arm oneself with top talent. And the boss who knows this stands to win the corporate war. (The Straits Times, “Gates Picks The Talents Himself”, August 27,1998)
Enjoy fast expansion and potential for growth: The result of fast expansion and potential for growth is closely related to the second and third advantages. As Mary’s Fashion have financial back up the company will have the ability to employ expertise and top professionals to run the business. From decisions and knowledge of the professionals Mary’s Fashion will be able to come out with plans for future expansion. An important point to note is that Mary’s Fashion have already reach $3 million turnover in just three years, not forgetting that the growth is achieved without the assistance of financial back up, expertise and professionals in the company. This shows that there are huge potential for growth if all the advantages are blended in, there is certainly a growth in the near future for Mary’s Fashion.
All types of business ownership will have fair share of advantages and disadvantages. The disadvantages of a Private Limited Company are as follows: Firstly, disagreements and differential: If Mary’s Fashion is to be turn into a Private Limited Company then she might face problems like the company actually spend more time and effort to resolve certain issues and sometimes might even lead to voting, that will express the will of the majority. Secondly, involve in more rules and regulations: Company might be involved in stricter rules and regulations when running the fashion business. Thirdly, higher tax rates: Private Limited companies are required to pay higher tax rates which will be seen as a additional cost to company’s expenditure.