DISCUSSION ON

Based on the Perspective of Pakistan

ORGANIZATIONAL PLAN
Y a s i r Hussain T u r i
MBA 1431-209002

N a s i r Hussain
MBA 1431-209001

S S Sh a h i d
MBA 1431-2090

M Kashif Jan
MBA 1431-2090
An Organizational Plan is basically a “to do”
list for an organization.
It lists out the plan of work, programs, and organizational
growth over a period of time - six months, a year or five.
The tasks involved, who is responsible for them, and when
they’ll be done.

An Organizational Plan Helps To:

• Set priorities for work
• Make sure tasks get done on time
• Focus on one thing at a time
• Share work among staff, board members & volunteers
• Make goals clear to investors
• Get a handle on big projects by breaking them down
• See the big picture of what organization is doing
 developing the
management
team
•Management’s ability and
•management team to operate
commitment to the new
the business full time at a
venture are significant to
modest salary
investors.
•Drawing out large salaries for
•Investors demand that the
the management team is
management team not
unacceptable to an
operate the business as part
Entrepreneur and considered to
time venture.
be a lack of psychological
commitment to the business
 Legal forms of
Business
Proprietorship form of
business with single owner;
unlimited liability; control over
all decisions; receives all
basiclegal profits
Partnership form of business
forms are with 2 or more individual with
unlimited liability, pooling
resources to own a business.

Corporation form of
business with separate legal
entity, run by stockholders
having limited liability &
regulated by statute
 Factors of the three forms of Business
Formation
Factors Proprietorship Partnership Corporation

No Limitation on
No Limitation on
Ownership Individual number of
Number of partners
stockholders

In general
partnership,
individuals are
Amount of capital
Individual liable for business
contribution is
Liability of Liable for liabilities. In
limit of
Owners business Limited
shareholder’s
Liability Partnership
liability
partners are liable
for capital
contribution
Factors Proprietorship Partnership Corporation

Partnership
Created only by
agreement, legal
statute, Articles of
cost, and minor
incorporation,
filing fees for trade
Costs of filing fees, taxes,
Only Filing Fees name. Limited
Starting and fees for states
for trade name partnership
Business in which
requires more
corporation is
comprehensive
registers to do
agreement, hence
business
higher cost
 Factors Proprietorship Partnership Corporation

Death or
withdrawal of one
partner terminates
partnership unless
partnership
agreement
Greatest form of
stipulates
continuity. Death
otherwise. In
or withdrawal of
Continuity Death dissolves limited partnership
owner(s) will not
of Business the business death or
affect legal
withdrawal of one
existence of
partner has no
business
effect on
continuity. Limited
partners can
withdraw capital
six months after
notice is provided
 Factors Proprietorship Partnership Corporation

General Partner Stockholders can

can transfer sell or buy stock at
his/her interest will. Stocks’
Complete only with consent transfer may be
Transfer-
freedom to sell of all other general restricted by
ability of
or transfer any partners. Limited agreement. In S
interest
part of business partner can sell corporation, stock
interest without may be transferred
consent of general only to an
partners. individual

New Capital raised

Loans or new by sale of stock or
Capital raised
contributions by bonds or by
Capital only by loan or
partners require a borrowing in name
Requiremen increased
change in of Corp. In S Corp.
ts contribution by
partnership only one class of
proprietor.
agreement stock & limited to
75 shareholders
 Factors Proprietorship Partnership Corporation
Majority
All partners have
stockholder(s) have
equal control and
Proprietor most control from
majority rules. In
makes all legal point of view.
Management limited
decision and Day-to-day control
Control partnership, only
can act in hands of
the general
immediately management who
partners control
may not be major
the business.
stockholders.
Proprietor Depends on
Shareholders can
Distribution responsible and partnership
share in profits by
of profits receives all agreement and
receipt of
and losses profits and investment by
dividends
losses partners.
With limited
Depends on
Attractive- Depends on liability for
capability of
ness for capability of owners, more
proprietor and
raising partners and attractive as an
success of
capital success of business investment
business
opportunity
Tax Attributes of Forms of Business
Attributes Proprietorship Partnership Corporation

Any year can be

Usually calendar used at
Usually a
Taxable year year but other beginning. Any
calendar year
day may be used changes in
incorporation

Partnership
agreement may
have special
allocation of
income.
All income Pardoners pay No income is
Distribution of
appears on tax on their pro allocated to
profits to owners
owner’s return rata shares stockholders
income on
individual return
even if income
not immediately
distributed
 Attributes Proprietorship Partnership Corporation
Amortizable over Amortizable over
Organization costs Not amortizable
60 months 60 months

$100 dividend
80% of more of
exclusion for Dividend exclusion
dividend received
Dividend received single return and of partnership
may be deducted
$200 on joint passes to partner
(after 12/31/86)
return

Taxed at Capital gain to Taxed at

individual level. A partner will be corporation level.
Capital gain deduction is taxed as a capital After July 1, 1987
allowed for long gain to the the maximum rate
term capital gains partner will be 34%.
Carry back three
Capital losses can years and carry
be used to offset over five years as
Carried forward
Capital losses other income. shore, term
indefinitely
Carried forward capital loss
indefinitely offsetting only
capital gains.
 Attributes Proprietorship Partnership Corporation

Acquisition of
stock for cash
Commencement of Contribution of entails no
business results in property to a immediate taxes.
Initial organization
no additional tax partnership not Transfer if stock
for individuals taxed value greater than
contributed
property

Partnership
investment plus
No losses allowed
Amount of risk share of resources
Limitations on losses except on sale of
may be deducted liability if any. At
deductible for real stock or
except for real risk rules may
estate activities liquidation of
estate activities apply except for
corporation.
real estate
partnership
 Attributes Proprietorship Partnership Corporation

Itemized deduction
Cost of employee
for medical Cost of partner’s
shareholder
expense in excess benefit is not
coverage
of adjusted gross deductible to
deductible as
Medical Benefit income on business as an
business expense
individual’s expense. Possible
if designed for
return. No deduction at
benefits of
deduction for partner level
employee.
insurance premium
 Attributes Proprietorship Partnership Corporation

Limitations on
benefits on
benefits from
defined plans-
lesser of $ 90,000
or 100% of
corporation.
Limitation and
Limitation on
restrictions
Same as for contribution to
Retirement benefits basically same as
corporations defined
regular
contribution
corporation
plans-lesser of $
30,000 or 25% of
compensation
( 15% of
aggregate for
profit-sharing
plans)
 building the
management
team
•Execute the business plan

The team must be able to •Identify fundamental

three
accomplish changes in the business as
they occur
functions:
•Make adjustments to the
plan based on changes in the
environment and market
that will maintain
profitability
 building a successful
organizational
culture
Once legal
form of
organization is
determined, the
entrepreneur will need to The job analysis will be
serving as a guide in
job
prepare a
determining hiring procedures,
description and job training, performance
analysis. appraisal, compensation
program, and job description
and specification.

Job description Specify
the details of the work that is
to be performed and any
special conditions or skill
involved in performing the
job. Job description should
contain a job summary, skills
or experience required, a
summary of the
responsibilities and duties
the authority of the
individual and standards of
performance.
building a successful
organizational
culture
Job specification outlines
the skills and abilities needed
to perform the job including
prior experience. Outlining the
job specification for a trained
employee is easier than for the
untrained people who will be
trained on the job. So the
entrepreneur should focus on
specific qualities that will be
required, such as personality,
physical traits, interest, or
sensory skill.

•Reviewing operating and
capital budgets
•Developing long-term
strategic plans for growth
and expansion
role of the Board of
Directors
•Supporting day to day
activities
•Resolving conflicts among
owners or shareholders
•Ensuring the proper use of
assets or
•Developing a network of
information sources for the
entrepreneurs
 selecting Board
members
• Select individuals who can
work with a diverse group
and will commit to the
venture mission
The member of board
• Select candidates who
members should be understand the market
carefully selected
environment or can
considering the following
contribute important skills
criteria to the new venture’s
achievement of planning
goals

• Select candidates who will

show good judgment in
business decision making
 Board of
Advisors
• Loosely tied to the organizations

• Serve the venture in an advisory

capacity
Uses of Board of Advisors
• Has no legal status
• Formal part of a venture
• Meet less frequently; depending on the
• Outside advisors, such important venture decision
as lawyers, accountants,
ad agencies, etc. • Useful in a family business

• Selection process similar to the BOD

• Compensated per meeting basis or with

stock

• Provide reality check

thank
you