ENTREPRENEURSHIP MANAGEMENT
ARIZONA STATE UNIVERSITY
ENT 441 - ENTREPRENEURIAL MANAGEMENT
WEEK 3
3.1. Definition of Management:
Business prospects are a picture of business opportunities and encourage the birth of new
business people, so the level of competition is getting tighter. Tight competition requires
companies to be able to run their companies effectively, efficiently and productively.
Modern management of company resources must be based on the concept of
management. The concept of management includes at least 4 (four) functions, namely:
planning function, organizing function, directing and controlling.
Planning is the beginning of management activities by preparing everything related to the
company and continuing to organize employees and other resources in a way that is consistent
with company goals. Furthermore, for the smooth implementation of company activities, it is
necessary to direct and control.
George R. Terry one of the fathers of management said, management is a distinct process
consisting of planning, organizing, actuating, and controlling, performed to determine and
accomplish states objectives by the use of human beings and other resources. That is,
management is a typical process consisting of planning, organizing, mobilizing and
controlling actions carried out to determine and achieve predetermined goals through the use
of human resources and other resources. Terry's concept is then known as Terry's POAC.
Peter Drucker stated that the job of management is to make people productive. To have
our competitiveness in the international arena, people must have managerial skills.
Gibson and friends (1997: 4) management is a process carried out by one or more
individuals to coordinate various other activities to achieve unbiased results.
According to James A.F. Stonner management is the process of planning, organizing,
directing and supervising the efforts of organizational members and the use of other
organizational resources in order to achieve established organizational goals.
Ricky W. Griffin defines management as a process of planning, organizing, coordinating,
and controlling resources to achieve goals effectively and efficiently.
Meanwhile, according to Oei Liang Lee in Swastha and Ibnu Suktotjo (1993: 82)
management is the science or art of planning, organizing, directing, coordinating and
supervising human power with the help of tools to achieve predetermined goals.
Thus management is the science or art in the process of planning, organizing,
coordinating, and controlling all resources owned to achieve predetermined organizational
goals.
3.2. Elements of Production Factors in Management
1. Man
Humans are very decisive; it is humans who make goals; carry out the process of activities to
achieve predetermined goals; without humans there will be no work process; the central point
(central point) of management.
2. Money
Money is also very important as a medium of exchange and a measure of the value of a
business and usually the size of the company is measured by the amount of money circulation
that occurs.
3. Machines and equipment
Machinery and equipment are as a tool for human work, to facilitate carrying out work,
provide benefits to labor, their use is highly dependent on humans, facilitating the
achievement of human life goals.
4. Methods
Whether or not the goal is achieved depends on how to carry it out or the method, with a good
way of working it will facilitate and facilitate the course of work so that it can achieve the
target or expectations.
5. Materials
Management exists because of human activities together to take care of materials. These
materials are very limited so management is needed to manage them optimally.
6. Market
The market function plays an important role in marketing goods or services produced by
business activities, the market is important to control, for the continuity of the process of
business or industrial activities.
Management Field
While the field of management itself as development continues to progress, currently the field
of management is divided into:
1.
Marketing management
2.
Production and operation management
3.
Personnel management (HR)
4.
Financial management
5.
Administrative management
More details on the points mentioned above will be presented in the following chapters.
Manager
The general definition of a manager is someone who works with or through other people
through coordinating various work activities in an effort to achieve organizational goals.
According to Ruslan (2005: 4-5) there are several characteristics that at least a manager
must have in the current context including;
1.
Able to work under constant pressure.
2.
More use of lisa.n communication.
3.
Providing motivation, enthusiasm, inspiration and encouragement.
4.
Select and develop subordinates.
5.
The art side of management is more prominent
According to Alma (2009: 148-150) there are eight steps that must be passed in order to reach
the top position in one's career path including:
1.
Man works hard (capacity for hardwork).
2.
Good at working with others (getting things done with and through people).
3.
Good appearance.
4.
Self-confidence.
5.
College education.
6.
Ambition drive.
7.
Ability to communicate.
3.3. Management Functions
Below will be explained the definition or meaning of each management function, as follows:
1. Planning function
The planning function is an activity of making company goals and followed by making
various plans to achieve these predetermined goals.
The goals and importance of planning are:
a.
Planning for success.
b.
Provides certainty for the future.
c.
Focusing on the organizational goals that have been created.
d.
The activity process becomes productive, efficient and effective.
e.
Facilitate the control process because there are standards that have been set.
The forms of planning according to Swastha and Sukotjo (1993) are as follows:
a.
Objective
b.
Policy
c.
Strategy
d.
Procedure
e.
Rule
f.
Program
2. Organizing function
The organizing function is an activity of setting up human resources and other physical
resources owned by the company to carry out the plans that have been set and achieve
company goals.
The organizing process according to Ernest Dale in Azis (2006) includes;
a.
Detailing all the tasks or work that must be done to achieve organizational goals.
b.
Organize a division of labor.
c.
Combining the work of organizational members in a logical and efficient manner.
d.
Determining ways to coordinate members of the organization into a harmonious whole.
e.
Monitor the activities of organizations and take adjustments to maintain the level of
organizational effectiveness adjustment efforts to maintain the organization's level of
effectiveness.
3. Directing function
The directing function is a manager's leadership function to increase maximum work
effectiveness and efficiency and create a healthy, dynamic, and other work environment.
The functions of direction include;
a.
Influence others in accordance with our commands.
b.
Rejecting others.
c.
Directing others to do things with quality.
d.
Foster the loyalty of people in the organization.
e.
Providing awareness in the form of responsibility for what people do.
The ways of direction that can be carried out by a leader can be in the form of
orientation (providing information), orders (orders to do something or not to do), delegation
of power (giving some authority to subordinates).
4. Controllingfunction
The control function is an activity of assessing performance based on standards that have been
made and then making changes or improvements if needed.
Control functions include:
a.
Anticipate any deviations or violations
b.
Correct deviations or failures that occur
c.
Creating dynamic and competitive organizational conditions
d.
Increase the responsibility of people in the organization
Azis (2006) explains that there are basically principles in the control function including:
a.
Control should be well planned.
b.
Can reflect the unique nature of the supervised areas.
c.
Reporting of irregularities is done immediately.
d.
Supervision should be flexible, dynamic and economical.
e.
Can ensure corrective action is taken.
f.
Can reflect the working pattern of the organization.
3.4. Levels of Management and Skills Required
An organization has certain levels that are different from one another. There are levels of
organization that are operational or implementation, for example in an industrial activity are
machine operators, there are levels that are strategic such as directors.
Based on these levels of organization, the levels of management can also be
distinguished. Mohammad Halim, and friends (1988: 9) in a company there are three levels of
managers, namely:
1. Top management
Top management is the highest level of management who is the highest executive in the
company who will set the overall goals and strategies of the company. The range of planning
made here is strategic and covers a long-term planning period. For example: President
Director
2. Middlemanagement
Middle managers are management levels that function to direct the activities of the lower
management. Responsible for implementing various policies that have been made by top
management. The planning made here is medium in time.
For example: Section heads, group heads and section heads.
3. Lower management
Lower management is the level of management at the lower level of an organization. At this
level, management functions to direct operational work. When viewed in terms of planning
made at this level, the range of planning made usually only covers the daily time frame.
For example: foremen and so on.
In general, there are 3 (three) types of skills that a manager needs to have, namely:
1.
Technical skill = the ability to use processes, procedures, techniques, tools and methods
as required by the task.
2.
Interpersonal skills (human skills) = the ability to lead, motivate and communicate.
3.
Conceptual skills understand the relationship between tasks and parts of the company,
recognize and solve problems, make strategic decisions.
3.5. Leadership style in business
There are several widely recognized leadership styles including:
1.
Autocratic is centralized power and does not provide space for those led to take an important
role. Usually, the atmosphere of the organization is full of tension, rigid, and always waiting
for orders from leaders or superiors.
2.
Free-rein/Laissez faire is a leadership style that allows staff to do anything related to their
duties. The function of directing leaders to their subordinates is almost non-existent, so that
subordinates become confused and hesitant in making decisions. Subordinates are given very
broad freedom. Indeed, subordinates will be happy because they get freedom but the
drawback is that subordinates do not get direction.
3.
Participative/Democratic is a leadership style that provides space for discussion and dissent
between subordinates and leaders. Subordinates become open and encourage themselves to
innovate and create. Problems that arise are quickly recognized and anticipated by the
leadership. All problems are always discussed.
These three leadership styles can actually be done by someone depending on the
conditions and situation. This means that there is no better or worse leadership style.
Everything can be done. When we use one of the leadership styles depends on the conditions
and situation. Authoritarian leadership style is not always bad. When a leader needs to decide
on a policy that is immediate then an authoritarian style can be done.
Conversely, if there is a policy that can be very important and not immediate in nature
and needs input from others then the democratic leadership style can be done in these
conditions. Including when the laisse fire leadership style is needed because employees feel
restrained and limited so that creativity does not arise then this leadership style is needed and
needs to be done.
Form of Business Entity
4.1. Definition of Business Entity
The choice of the form of business entity is a juridical and economic unit or
organizational unit consisting of production factors that aim to make a profit. Business entities
are economic households that aim to make a profit with production factors.
There are several factors that need to be considered in choosing the form of company
established:
1.
Amount of capital owned or required
2.
Possible additional capital required
3.
Method and extent of supervision
4.
Capital distribution plan
5.
Responsibility determination plan
6.
The size of the risk faced
To establish a business entity, it is necessary to consider the following:
1.
Goods and services to be traded.
2.
Marketing of traded goods and services.
3.
Determination of the cost and selling price of goods and services traded.
4.
Purchase.
5.
Labor needs.
6.
Internal organization.
7.
Purchasing.
8.
Type of business entity selected.
The choice of a type of business entity is influenced by several factors, including:
1.
Business type: plantation, trade, or industry.
2.
The extent of operations or marketing reach to be achieved.
3.
Capital required to start a business.
4.
Desired supervision system.
5.
The degree of risk involved.
6.
The period of operational license granted by the government.
7.
Planned profit.
After knowing the above, we can determine the forms of companies to be established.
The forms include:
1.
Individual Business (PO)
2.
Firm (Fa)
3.
Limited Liability Company (CV)
4.
Limited Liability Company (PT)
5.
State Limited Liability Company (Persero = BUMN)
6.
Regional Company (BUMD)
7.
Public Company (Perum)
8.
Perusahaan Negara Jawatan (Perjan)
9.
Cooperative
10.
Foundation
4.2. Form of Business Entity
Not all business entities are legal entities, so what is the difference between a business entity
that has been incorporated and a business entity that has not been incorporated? The
differences are as follows:
1. Legalized business entity
a.
The legal subject is the business entity itself, because it has become a legal entity which is
also a legal subject besides humans. meaning that third parties can sue the association but
third parties cannot sue each person.
b.
The company's assets are separate from the personal assets of its managers/members. As a
result, if the company is bankrupt, only the company's assets are subject to confiscation (the
personal assets of the management/members remain free from confiscation). So that if there
is a loss / prosecution that leads to payment of compensation / debt repayment, it is only
limited to the company's assets.
Business entities that include legal entities are Limited Liability Company (PT), State
Company (PN = BUMN), Regional Company (PD = BUMD), Cooperative, Perum (General
Company), Perjan (Jawatan Company), Persero, and Foundation.
2. Business entities that are not legal entities
a.
The legal subjects are the people who are the administrators, so not the legal entity itself
because it is not a law so it cannot be a legal subject, so what is sued is the people by third
parties.
b.
The company's assets are united with the personal assets of its managers/members. As a
result, if the company goes bankrupt, the assets of the management/members are also
confiscated. This means that if there is a loss/prosecution that results in the payment of
compensation/debt repayment, the personal assets can be used as collateral. In other words,
personal responsibility for the whole.
Business entities that are not legal entities are individual companies, firms, CVs.
According to Alma (2010: 61) what is meant by the form of a legal entity is a business entity
that has its own assets, separate from the assets of the founders or administrators. The
members are not responsible for assets other than those mentioned in the shares they own.
Cooperative
Cooperatives are a type of business entity consisting of people or cooperative legal
entities. Cooperatives base their activities on the principles of the people's economic
movement based on family principles.
According to Law No. 25 of 1992 Article 5 states the principles of cooperation, namely:
1.
Membership is voluntary and open.
2.
Management is done democratically.
3.
The distribution of Sisa Hasil Usaha (SHU) is carried out fairly in proportion to the
amount of business services of each member (the member's share in the cooperative).
4.
Limited return on capital.
5.
Independence.
6.
Cooperative education.
7.
cooperation between cooperatives.
Types of Cooperatives:
1.
Savings and loan cooperative
2.
Consumer cooperatives
3.
Producer's cooperation
4.
Cooperative marketing
5.
Service cooperatives
State-Owned Enterprises (SOEs)
State-owned enterprises (SOEs) are business entities whose capital is wholly or partly
owned by the government. The status of employees of these business entities is civil servants.
There are 3 types of SOEs, namely Perjan, Perum, and Persero, namely:
1. Perjan
Perjan is a form of state-owned enterprise whose entire capital is owned by the government.
Perjan is service-oriented to the community, so it always loses money. Now there are no state-
owned companies that use the Perjan model because of the high cost of maintaining the
Perjan. Examples of Perjan: PJKA (Perusahaan Jawatan Kereta Api) is now PT KAI
(Persero).
2. Perum
Perum is a revamped company. Its purpose is no longer service oriented but profit oriented.
Just like Perjan, Perum is managed by the state with the status of its employees as civil
servants. However, the company was still losing money even though the status of Perjan was
changed to Perum, so the government was forced to sell some of the Perum shares to the
public (go public) and the status was changed to persero.
3. Persero
Persero is one of the business entities managed by the state or region. Unlike perum or perjan,
the purpose of establishing a persero is first to seek profit and second to provide services to
the public. Its founding capital comes partly or entirely from separated state assets in the form
of shares. Persero is led by a board of directors. Meanwhile, its employees have the status of
private employees. The business entity is written PT in the name of the company (persero).
This company does not receive state facilities.
So from the description above, the characteristics of the company are:
1.
The main objective is to make a profit (commercial).
2.
The capital is partly or wholly derived from separated state assets in the form of shares.
3.
Led by the board of directors.
4.
The employees are private sector employees.
5.
The business entity is written IT (company name) (persero).
6.
Do not obtain State facilities.
A.
Privately Owned Enterprises (BUMS)
Privately-owned enterprises (BUMS) are business entities established and financed by a
person or group of people. Based on the 1945 Pancasila Law Article 33, The areas of business
given to the private sector are managing economic resources that are not vital and strategic or
that do not control the lives of many people. Based on its legal form, private-owned
enterprises are distinguished as follows:
1. Individual Company (PO)
This company is usually owned by an individual, the capital is small and mixed with personal
property, and the establishment is relatively easy.
2. Partnership Company
This partnership company is a company that has (two) or more investors. The establishment is
relatively easy, the capital can be small or medium.
3. Firm
Firma (Fa) is a business entity established by two or more people where each member is fully
responsible for the company. The Firm's capital comes from the founding members and the
profit/profit is distributed to the members in a ratio according to the deed of establishment.
A firm is a civil partnership in a more specialized form, which is established to run a
company, using a common name, and the responsibility of the owners of the firm, commonly
called "allies", is joint and several. Because a firm is an agreement, the owners of the firm, the
allies of the firm, must consist of more than one person.
In a firm, each ally plays an active role in running the company, and in order to run the
company they are responsible on a range basis, namely debts made by one ally will bind the
other allies and vice versa, the repayment of firm debts made by one ally exempts the debts
made by the other allies.
The liability of the allies is not only limited to the capital deposited into the firm, but
also includes all personal assets of the allies. If, for example, the assets of the firm are not
sufficient to pay off the Firm's debts, then the debt repayment must be made from the personal
assets of the allies.
Since a Firm is basically a form of civil partnership, the establishment of a Firm must be done
by agreement. According to Article 22 of the KUHD, the agreement must be in the form of an
authentic notarial deed. Although it must be in an authentic deed, the absence of such a deed
cannot be an excuse to harm a third party.
Thus, a firm can be established by an underhand deed or even an oral agreement, but
in the process of proving in court, for example, the absence of an authentic deed cannot be
used by the allies as an excuse to deny the existence of the firm. After the deed of
establishment of the firm is made, the deed must then be registered at the registrar of the
district court in the jurisdiction where the firm is domiciled.
Characteristics and nature of the Firm:
1.
If there are unpaid debts, then each owner is obliged to pay off with personal property.
2.
Every member of the firm has the right to be a leader.
3.
A member has no right to admit a new member without the permission of another
member.
4.
Firm membership is inherent and valid for life.
5.
A member has the right to dissolve the firm.
6.
Its establishment does not require a deed of incorporation and it is easy to obtain
business credit.
4. Limited Liability Partnership
A Commanditaire Vennoolschap (CV) is a partnership established by 2 or more people. A
limited partnership recognizes 2 terms, namely:
🔾 Active allies are members who lead/operate the company and are fully responsible for the
debts of the company.
🔾 Passive allies/commercial allies are members who only invest in active allies and do not
interfere in operational matters.
company. Passive allies are responsible for the risks incurred up to the limit of the capital
invested. Profits earned from the company are distributed according to the agreement.
CV Traits and Characteristics:
a.
It is difficult to withdraw capital that has been deposited.
b.
Large capital because it was established by many parties.
c.
Easy to get a credit loan.
d.
There are active members who have unlimited responsibilities and passive ones who just
wait for the benefits.
e.
Relatively easy to set up.
f.
The viability of CV companies is uncertain.
5. Limited Liability Company
A limited liability company (PT) is a business entity whose capital is obtained from
the sale of shares. Each shareholder has rights over the company and each shareholder is
entitled to profits (dividends).
Perseroan Terbatas (PT) is a legal entity that is a capital alliance, established based on
an agreement, and conducts business activities with authorized capital which is entirely
divided into shares. As a legal entity, a PT is considered like an individual person who can
perform their own legal actions, has their own assets and can sue and be sued before the court.
If a company wishes to become a PT legal entity, it must follow the procedures for
creation, registration and announcement as stipulated in Law No. 40/2007 on Limited
Liability Companies (FT Law).
As a capital partnership, a PT is established by the founders who each put in capital based on
an agreement. The capital is divided into shares, each of which has a value that together
constitute the capital of the company.
The liability of the founders of a PT is limited to the capital deposited into the PT and
does not include their personal assets. According to the PT Law, PT capital is divided into
authorized capital, issued capital and paid-up capital. Authorized capital is the total capital of
a PT as stated in its deed of establishment, which is the value that indicates the value of the
company. Issued capital is the part of the authorized capital that must be fulfilled/deposited by
each shareholder into the company, while paid-up capital is the issued capital that has actually
been deposited.
To run the company, a PT is equipped with organs that have their respective functions,
namely: General Meeting of Shareholders (GMS), board of directors and board of
commissioners. According to the limited liability company law, the general meeting of
shareholders is a corporate organ that has authority that is not given to the board of directors
or the board of commissioners within the limits specified in the law.
In general, the task of the GMS is to unify company policy. The Board of Directors is
an organ of the company that is authorized and fully responsible for the management of the
company, so that the Board of Directors can represent the company both inside and outside
the court. The duty of the board of commissioners is to supervise the company, both in
general and in particular, including providing advice to the Board of Directors (Legal Access).
Characteristics and Traits of PT:
1.
Liability is limited to capital with no personal property involved.
2.
Large capital and company size.
3.
The survival of a PT company is in the hands of the shareholders.
4.
Can be led by people who do not own shares.
5.
Ownership changes hands easily.
6.
Easy to find labor for employees.
7.
Profits are distributed to shareholders in the form of dividends.
8.
The power of the board of directors is greater than the power of shareholders.
9.
It is difficult to dissolve PT.
10.
Double taxation on income tax/PPH and dividend tax.
B.
Foundation
The establishment of a foundation is done by notarial deed and has the status of a legal entity
after the deed of establishment has been approved by the minister of justice and human rights
or a designated official. The application for the establishment of a foundation can be
submitted to the head of the regional office of the department of justice and human rights.
Human whose working area covers the foundation's domicile. Foundations that have obtained
legalization are announced in the State Gazette of the Republic of Indonesia.
A foundation is a business entity, but not a company as it is not for profit. This business
entity is established for social and legal purposes. A foundation is a business entity
established for social activities or community services. The aim is to provide services such as
health or education or empowerment of the general public and not to seek profit. Capital
comes from donations, waqf, grants, or other donations.
The wealth of the foundation in the form of money, goods, and other assets obtained by
the foundation. Based on this law, it is prohibited to be transferred or distributed directly or
indirectly to the trustees, administrators, supervisors, employees, or other parties who have an
interest in the foundation.
Foundations whose assets come from the state, foreign aid or other parties, or have assets
in the amount specified in the law, their assets must be audited by a public accountant and
their annual reports must be published in an Indonesian language newspaper.
The foundation has organs consisting of trustees, administrators, and supervisors. The
management of wealth and the implementation of the foundation's activities are carried out
entirely by the management. The management is obliged to make an annual report submitted
to the trustees regarding the financial condition and development of the foundation's
activities. The supervisor is in charge of supervising and advising the management in carrying
out the foundation's activities. In carrying out its daily activities, the foundation has organs
consisting of: (1) Trustees, (2) Management and (3) Supervisors.
The provisions, conditions, and establishment of a foundation include:
1.
The foundation is established by one or more people by separating part of the founder's
wealth as initial wealth.
2.
The establishment of a foundation is done by notarial deed and made in Indonesian.
3.
The foundation can be established based on a will.
4.
The foundation obtains the status of a legal entity after the deed of establishment of the
foundation obtains authorization from the material,
5.
The material authority in granting validation of the foundation's deed of establishment
as law is carried out by the head of the regional office of the department of justice and
human rights on behalf of the minister, whose working area covers the foundation's
domicile.
6.
In granting authorization, the head of the office of the department of justice and human
rights may request the consideration of relevant agencies.
The legal act of merging foundations can be done by combining one or more
foundations with other foundations, and resulting in the merged foundation being
dissolved. The foundation can be dissolved because the period stipulated by the articles
of association expires, the objectives set are achieved or not achieved, a court decision
that has obtained legal force.
4.3. Business Merger (business joint)
1. A joint venture is a cooperation between several companies (usually from several
countries) that finance the establishment of a new company in a particular country.
2. A trust is a merger of several companies into one company in which each of the merged
companies merges (functions).
3. Holding companies are companies that have strong financial capabilities so that they
can buy shares of other companies.
4. A syndicate is a collaboration between several parties or persons to carry out a specific
project under a specific agreement.
5. A cartel is a form of alliance between several similar companies under a certain
agreement.
6. Trusty management is a form of cooperation between the owner of the company's
assets with a special agreement to hand over its management to another party.
Business Feasibility Study:
5.1. Definition of Business Feasibility Study
A business feasibility study is a study of whether or not a business project can be implemented
successfully. This definition of success may be interpreted somewhat differently. Some
interpret it in a more limited sense, while others interpret it in a broader sense. The more
limited meaning is mainly used by private parties who are more interested in the economic
benefits of an investment. Whereas from the government, or non-profit organizations, the
definition of profitable can be in a more relative sense. It may consider various factors such as
the benefits to the wider community that can be realized through the absorption of labor, the
utilization of abundant resources in that place, and so on. It can also be related to, for
example, foreign exchange savings or additional foreign exchange needed by the government.
When a person or party sees a business opportunity, the question arises, can the
opportunity be utilized economically? Can we get a reasonable level of profit from the
business? These are the questions that underlie the feasibility study of a business project.
The business projects studied can take the form of giant business projects such as the
construction of nuclear power business projects, to simple business projects such as opening a
photo copy service business, food stalls, food stalls, shops and others. Of course, the bigger
the business project, the wider the impact. This impact can be economic, as well as social. For
this reason, some people supplement the feasibility study with an analysis called cost and
benefit analysis, including all social costs and social benefits. Thus, in general, a business
project feasibility study will involve three aspects, namely:
1.
The economic benefits of the business project to the business project itself (often referred
to as financial benefits). Which means whether the business project is seen as profitable
enough when compared to the risks of the business project.
2.
The economic benefits of the business project to the country in which it is implemented
(often referred to as national economic benefits). Which shows the benefits of the
business project to the macroeconomy of the country.
3.
The social benefits of the business project to the community surrounding the business
project. This is the relatively most difficult study to conduct.
The simpler the business project, the simpler the scope of the study. In fact, there are
many business investment projects that may not have had a formal feasibility study done,
but were later proven to work well anyway.
5.2. Usefulness of Business Feasibility Study (SKU)
The parties that need the business feasibility study report can be explained below:
1. Investor side
If the results of the feasibility study that has been made turn out to be feasible to be
realized, funding can begin to be sought, for example by finding investors or owners of
capital who are willing to invest in the project to be carried out.
2. Creditors
Project funding can also be obtained from banks. The bank needs to review the business
feasibility study that has been made including considering other sides, such as bona fide
and the availability of collateral owned by the company before deciding to provide
credit or not.
3. Company management
Making a business feasibility study can be done by an external party of the company in
addition to being made by the internal company itself. Regardless of who makes it, it is
clear to management that making this proposal is an effort in order to realize a project
idea which ultimately boils down to increasing business in order to increase company
profits.
4. Government and community parties
The business feasibility study that is prepared needs to pay attention to the policies set
by the government because after all, the government can directly or indirectly affect
company policies.
5. For economic development purposes
In preparing a business feasibility study, it is also necessary to analyze the benefits that
will be obtained or the costs that the project will have on the national economy.
5.3. Parties that Need a Feasibility Study (SKU)
The parties with an interest in the results of the feasibility study include:
1. Business owner
The owners of the company are very interested in the results of the feasibility study
analysis that has been made, this is because the owners do not want if the funds conveyed
will experience losses.
2. Creditors
If the money is financed by loan funds from banks or other financial institutions, then
they are also very interested in the results of the feasibility study that has been made.
Banks or other financial institutions do not want their credit or loans to be stuck, because
the business or project is actually not feasible to run.
3. Government
For the government, the importance of a feasibility study is to ascertain whether the
business to be run will provide good benefits to the economy in general.
4. Society at large
For the wider community, the existence of a business, especially for the surrounding
community, will provide benefits such as employment opportunities, both for workers
around the project site and for other communities. Another benefit is the opening of the
area from isolation. The presence of a business will also provide facilities and
infrastructure such as the availability of public facilities such as roads, bridges,
electricity, telephones, hospitals, schools, worship facilities, sports facilities, parks and
other facilities.
5. Management
The results of the business feasibility study are a measure of performance for the
management of the company to carry out what has been assigned. This performance can
be seen from the results that have been achieved, so that the work performance of the
management that runs the business can be seen.
5.4. Stages of Business Feasibility Study (SKU)
The stages in the feasibility study are carried out to facilitate the implementation of the study
and the accuracy of the assessment. There are also stages in conducting a feasibility study that
are commonly carried out as follows:
1. Data and information collection
Collect the necessary data and information as complete as possible, both qualitative
and quantitative in nature. Data and information collection can be obtained from various
reliable sources. For example, from institutions that are authorized to issue them, such as the
Bureau of Statistics. Statistics Center (BPS), Investment Coordinating Board (BKPM),
Capital Market Management Board (BAPEPAM), Bank Indonesia (BI), technical departments
or research institutions both government and private. This data collection can be from primary
data or secondary data with various methods.
2. Perform data processing
After the required data and information have been collected, the next step is to process
the data. Data processing is carried out correctly and accurately with relevant methods.
3. Conduct data analysis
The next step is to analyze data from all aspects of the study, whether it has met the
requirements according to the criteria that are feasible to use. Each type of business has its
own criteria to be considered feasible or not feasible. The eligibility criteria are measured
from each aspect for all aspects that have been carried out.
4. Making decisions
If it has been analyzed with certain criteria and the results of the measurements have
been obtained, then the next step is to make a decision on these results. Make decisions
according to predetermined criteria whether it is feasible or not with a predetermined size
based on the results of previous calculations. If it is not feasible, it should be canceled by
stating the reason.
5. Provide Recommendations
The final step is to provide recommendations to certain parties on the study report that
has been compiled. In providing recommendations given also suggestions and necessary
improvements, if they are still needed, both for the completeness of documents and other
requirements. If a feasibility study result is declared feasible.
5.5. Aspects in Business Feasibility Study (SKU)
There are several aspects that need to be done to make a business feasible. Each aspect does
not stand alone but is interrelated. This means that if one aspect is not fulfilled then necessary
improvements or additions need to be made.
The order in which aspects should be assessed depends on the readiness of the assessor
and the completeness of the available data. Of course, in this case, it is important to consider
which priorities should come first and which should come next. In general, the priorities of
aspects that need to be carried out feasibility studies are as follows:
1. Legal aspects
In this aspect, what will be discussed is the issue of the completeness and validity of company
documents, starting from the form of business entity to the licenses owned. The completeness
and validity of documents is very important, because this is the legal basis that is held if
problems arise in the future. The validity and perfection of documents can be obtained from
the parties that issue or issue the documents.
2. Market and marketing aspects
To assess whether the company that will make an investment in terms of market and
marketing has the desired market opportunity or not. Or in other words, how much market
potential exists for the products offered and how much market share is controlled by
competitors today. Then how the marketing strategy will be carried out, to capture existing
market opportunities. In this case, to determine the size of the real market and the existing
market potential, it is necessary to conduct market research and competitive analysis, either
by going directly to the field or by collecting data from various sources. Then after knowing
the real market and market potential for the existing company (business entity), the marketing
strategy is prepared.
3. Financial aspects
Research in this aspect is carried out to assess what costs will be incurred and how much costs
will be incurred. Then also examine how much income will be received if the project is
carried out. This research includes how long the investment will take to return. Then where
are the sources of financing for the business and what is the prevailing interest rate, so that if
calculated by the investment assessment formula it is very profitable. The assessment method
that will be used later with the Payback period, Net present value, Intyernal rate of return,
Profitability index, Break event points and with other financial ratios.
4. Technical/operational aspects
In this aspect, the location of the business, whether head office, branch, factory or
warehouse, will be investigated. Then the determination of building layouts, machinery and
equipment and room layouts up to further expansion efforts. Research on location includes
various considerations, whether it should be near the market, near raw materials, near labor,
near the government, near financial institutions, close to the port or other considerations. Then
regarding the use of labor-intensive, it will provide employment opportunities, but if labor-
intensive, it will be the opposite.
5. Management/organizational aspects
What is assessed in this aspect is the business managers and the existing
organizational structure. The project will be successful if it is run by people who are
proportional, starting from planning, implementing to controlling it if there are deviations.
Similarly, the organizational structure chosen must be in accordance with the form and
purpose of the business.
6. Social economic aspects
The economic aspect of the research is to see how much influence the project will
have if it is implemented. This influence is mainly on the economy at large and its social
impact on society as a whole. Certain economic impacts include an increase in the income of
the community, both those who work in the factory or the community outside the factory
location. Similarly, there are social impacts such as the availability of facilities and
infrastructure such as roads, bridges, lighting, telephones, water, health centers, education,
sports facilities and worship facilities.
7. Aspects of environmental impact
It is the most needed analysis at this time, because every project that is carried out will
have a very large impact on the surrounding environment, both on land, water and air, which
will ultimately have an impact on the lives of humans, animals and plants around it.
The company is a form of organization required to be able to manage its organization
as well as possible in order to be effective and successful in obtaining optimal company
performance.
