Business Administration Ing. Pavla Řehořová, Ph.D. Phone:

Rules of BUSINESS ADMINISTRATION COURSE 1) All students: Attendance of seminars (x ? absences) Attendance of seminars (x ? absences) => active work at seminars

Rules of BUSINESS ADMINISTRATION COURSE 2) All students: 2 students = 1 semestral project „Firm Establishment“ (and its presentation) (i. e. foundation documents, strategic plan, SWOT analysis, balance sheet, depreciations, production and sale plan …)

Rules of BUSINESS ADMINISTRATION COURSE 3) NISA students: Exam: written test – minimum 60 %

Syllabus: – Legal forms of business – my absence (selfstudy, home preparation) Marketing activities – Organisation structure – Capital and property structure – Cost and Benefits, Cash Flow – Revision lesson – Financing of the enterprise, Future Value of Money – Investment activities – Human resource management, Taxes – Presentation of projects – 1st term of exam

Classification of Business Enterprises

Typology of enterprises Legal forms Legal forms Size of enterprise Size of enterprise Type of production Type of production Sectors and branch of economy Sectors and branch of economy

Size clasification a) Microenterprise:number of employees < 10, assets < 180 mil. CZK or net turnover < 250 mil. CZK b) Small enterprise:number of employees < 50, assets < 180 mil. CZK or net turnover < 250 mil. CZK c) Medium enterprise: number of employees < 250, assets< 980 mil. CZK or net turnover < mil. CZK d) Great enterprise

Size clasification - EU a) Microenterprise:number of employees < 10, assets < 2 mil. EUR or net turnover < 2 mil. EUR b) Small enterprise:number of employees < 50, assets < 10 mil. EUR (in mil. EUR) or net turnover < 10 mil. EUR (in mil. EUR) c) Medium enterprise: number of employees < 250, assets< 43 mil. EUR (in mil.) or net turnover < 50 mil. EUR (in mil. EUR) d) Great enterprise

Enterprise share according to the number of employees Number of employees % of enterprises , , ,7 250 and more 0,2

Type of production Enterprises with production: a)Single-part production – small amount of the same products b)Batch (line) production – production of the same type of product repeating in batches; Size of batch: b1) small b2) medium b3) great c) Continual production – production of great amount of small type of products

Sectors 1.Primary sector (primary production, basic industry, e.g. agriculture, forestry, mining industry) 2.Secondary sector (manufacturing industry, e.g. manufacturing, food, textile) 3.Terciary sector (non-productive enterprises, e.g. trade, transport, banks)

Legal forms 1.Natural person (tradesman, enterpreneur) 2.Corporations 3.Cooperative 4.State enterprises, state organisations 5.Budgetary organisation 6.Contributory organisation 7.Foundation 8.Association 9.Not-for-profit organisation 10. Others

Legal forms Choice of legal form depends on these factors: 1. liability 2. competence to the management 3. number of founders 4. claims to the initiatory capital 5. administrative costingness 6. share in profit/loss 7. financial possibilities 8. tax burden 9. duties of publication

Organisational Structure of Czech Economy Legal form % Total subjects 100 State enterprises 1,65 Corporations13,84 - joint stock companies - joint stock companies1,80 Cooperation1,74 Sole enterpreneur 75,93 Individual farmers 6,84

Types of business organisations a) personalestablished by 2 and more people, partners participate on business, collective company liability - co-partnership - limited partnership b) capitalcapital participation of partners on business, they do not participate personally on business, - limited company – Ltd., - joint-stock company (public limited company – Plc.)

Sequence of establishment of companies 1) Signing of partnership contract 2) Deposit the capital in the bank 3) Application in the licence authority 4) Registration in the Companies register

Natural Person (Sole trader) Simpliest legal form of business organization Simpliest legal form of business organization Proprietor – sole owner of business enterprise and is able to exercise complete control over its operations Proprietor – sole owner of business enterprise and is able to exercise complete control over its operations Sole trader is liable for the debts of business to the full extent of his personal assets Sole trader is liable for the debts of business to the full extent of his personal assets Sole traders are taxed on the individual´s personal income tax return at a progressive rate from 15% Sole traders are taxed on the individual´s personal income tax return at a progressive rate from 15%

Natural Person (Sole trader) Natural person can be only a person who: Natural person can be only a person who: - is older than 18, - is unblemished, - is eligible (competent) to the legal acts, - does not have any tax back-payment. = we distinguish three types of Natural Person = according to these types people need a special licence and different number of working experience years

Ltd Liability of owners together into amount of outstanding deposit Minimum of capital min CZK each partner min CZK Minimum of partners (founders) min. 1, max. 50 Institutions General meeting – highest institution Executives – corporate inst. Advisory board - voluntary Profit/loss sharing according of share of business share Limited liability company ( Společnost s ručením omezeným)

Joint stock company Akciová společnost (Corporation – USA) Legal entity is separate and distinct from the people who are its owners Legal entity is separate and distinct from the people who are its owners It has legal distinction between the corporation and its stockholders It has legal distinction between the corporation and its stockholders There is a separation of roles – stockholders are owners, president and other executives manage the corporation (company) There is a separation of roles – stockholders are owners, president and other executives manage the corporation (company) Company in which each owner has unlimited liability. Joint stock company combines features of a corporation and a partnership Company in which each owner has unlimited liability. Joint stock company combines features of a corporation and a partnership

Joint stock company The process of becoming a corporation, call incorporation, gives the company separate legal standing from its owners and protects those owners from being personally liable in the event when the company is losing (a condition known as limited liability). Incorporation also provides companies with a more flexible way to manage their ownership structure.

Joint stock company Share capital must be at least CZK 2 million. Share capital must be at least CZK 2 million. The company must put at least 20 % of the capital into a reserve fund, which is founded by after-tax profits. The company must put at least 20 % of the capital into a reserve fund, which is founded by after-tax profits. The accounts must be audited annually. The accounts must be audited annually. There must be at least three members on the board of directors, and each member must be a Czech citizen or resident. There must be at least three members on the board of directors, and each member must be a Czech citizen or resident.

Joint stock company Liability of stock holders none Minimum of capital min CZK without tender of stocks min CZK with tender of stocks Minimum of partners (founders) min. 2 natural person or 1 corporate bodies (legal entities) Institutions Shareholder´s meeting Board of directors Advisory board – min. 3 members Profit/loss sharing according of share of nominal value of stock to all stocks

Limited partnership (Komanditní společnost) Liability of owners Complementar– Sole trader, liable for the debts of business to the full extent of his personal assets Commanditist– amount of outstanding deposit Minimum of capital Commanditist minimum CZK Minimum of partners (founders) Profit/loss sharing profit 1 : 1, complementars - the same amount, commanditist - among their deposits loss – complementars the same amount (equal share)

Co - partnership (Veřejná obchodní společnost) Liability of owners together liability for the debts of business to the full extent of personal assets Minimum of capital is not defined Minimum of partners (founders) 2 natural person or 2 corporate bodies (legal entities) Profit/loss sharing equal share

Cooperative (Družstvo) Liability of owners no liability Minimum of capital min CZK Minimum of partners (founders) min. 5 partners or 2 corporate bodies (legal entities) Institutions Member meeting Board of directors – corporate inst. Control commission – 3 members Profit share according to level of member deposit

Seminar Groups – 3-4 people Groups – 3-4 people (German + Polish + Czech) (German + Polish + Czech) Legal forms of enterprises in Germany and Poland Legal forms of enterprises in Germany and Poland Comparison of these forms with Czech system Comparison of these forms with Czech system Capital and personal companies Capital and personal companies