POLICIES, CHALLENGES AND ISSUES IN ENTREPRENEURSHIP 1.

POLICIES, CHALLENGES AND ISSUES IN

ENTREPRENEURSHIP

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After studying this chapter you should be ready to describe:

1.The Malaysia’s plan and the national industrial policy.

2.Globalisation and the economic blocs (AFTA AND NAFTA).

3.Paterns and intellectual property rights.4.Issues on merging and takeovers.5.Issues on ergonomics and

entrepreneurship.6.Issues on laws and entrepreneurship.

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Ninth Malaysia Plan (RMKe-9) Ninth Malaysia Plan's documents

encompass the strategies, programmes and required allocation to realise the National Mission and make Malaysia a country that is more advanced, fair and united.

RMKe 9's documents also describe the National Mission as the framework for policy and implementation which consisted of from five main core to achieve the objective of Vision 2020.

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The transformation of the manufacturing sector, and sustaining its competitiveness, remains a major factor in determining the pace of economic activity in the country.

For the Ninth Malaysia Plan period (2006-2010), in meeting a more challenging and competitive global environment, a crucial goal will be to upscale the manufacturing sector towards higher value added activities and upgrade capacity in the provision of related services.

The focus will be on transforming industrial businesses and complementary services, especially SMEs, into strong knowledge-intensive and value-creating entities.

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The 10th Malaysia Plan (10MP) will be based on a new economic model to ensure that all efforts towards economic recovery in the country run smoothly.

Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop said that although 10MP will take effect only in 2011, the government has started early planning on the five-year economic programme to ensure sustainable development.

Among the areas of focus under the new model will be to create many more industries to generate higher income for the people and help them face future economic challenges as well.

Among the sectors identified to drive the new economy were knowledge, skills and creativity based industries including tourism.

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There are major 4 types of Industrial Policy in Malaysia, each characterized by the different objectives:

1.Wealth Redistribution Industrial Policy – that is aimed at ensuring a fair distribution of wealth amongst the different races in the country.

2.Export Promotion Industrial Policy – that is aimed at promoting the development of manufacturing industries serving foreign markets.

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3. Import Substitution Industrial Policy – that is aimed at promoting the development of manufacturing industries serving domestic markets.

4. Response to Globalization Industrial Policy – that is aimed at coping with new competition from large foreign firms in

the domestic (primarily services) markets.

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Globalization (or globalisation) describes an ongoing process by which regional economies, societies and cultures have become integrated through globe-spanning networks of exchange.

The term is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.

However, globalization is usually recognized as being driven by a combination of economic, technological, sociocultural, political and biological factors.

The term can also refer to the transnational dissemination of ideas, languages, or popular culture.

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Globalization has various aspects which affect the world in several different ways such as:

Industrial - emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within national boundaries.

Financial - emergence of worldwide financial markets and better access to external financing for borrowers. As these worldwide structures grew more quickly than any transnational regulatory regime, the instability of the global financial infrastructure dramatically increased, as evidenced by the financial crises of late 2008.

Economic - realization of a global common market, based on the freedom of exchange of goods and capital. The interconnectedness of these markets, however meant that an economic collapse in any one given country could not be contained.

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Political - some use "globalization" to mean the creation of a world government which regulates the relationships among governments and guarantees the rights arising from social and economic globalization. Politically, the United States has enjoyed a position of power among the world powers, in part because of its strong and wealthy economy.

Informational - increase in information flows between geographically remote locations. Arguably this is a technological change with the advent of fibre optic communications, satellites, and increased availability of telephone and internet. Language - the most popular language is English.◦ About 35% of the world's mail, telexes, and cables are in

English.◦ Approximately 40% of the world's radio programs are in

English.◦ About 50% of all Internet traffic uses English.

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Competition - Survival in the new global business market calls for improved productivity and increased competition. Due to the market becoming worldwide, companies in various industries have to upgrade their products and use technology skilfully in order to face increased competition.

Ecological - the advent of global environmental challenges that might be solved with international cooperation, such as climate changes, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Since many factories are built in developing countries with less environmental regulation, globalism and free trade may increase pollution. On the other hand, economic development historically required a "dirty" industrial stage, and it is argued that developing countries should not, via regulation, be prohibited from increasing their standard of living.

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Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities which embodies cultural diffusion, the desire to increase one's standard of living and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture". Some bemoan the resulting consumerism and loss of languages. Also see Transformation of culture.◦ Spreading of multiculturalism, and better individual access to

cultural diversity (e.g. through the export of Hollywood and Bollywood movies). Some consider such "imported" culture a danger, since it may supplant the local culture, causing reduction in diversity or even assimilation. Others consider multiculturalism to promote peace and understanding between peoples.

◦ Greater international travel and tourism. WHO estimates that up to 500,000 people are on planes at any time.

◦ Greater immigration, including illegal immigration◦ Spread of local consumer products (e.g., food) to other countries (often

adapted to their culture).◦ Worldwide sporting events such as FIFA World Cup and the

Olympic Games.

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Social - development of the system of non-governmental organisations as main agents of global public policy, including humanitarian aid and developmental efforts.

Technical ◦ Development of a global telecommunications

infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites, and wireless telephones.

◦ Increase in the number of standards applied globally; e.g., copyright laws, patents, and world trade agreements.

Legal/Ethical ◦ The creation of the international criminal court and

international justice movements.◦ Crime importation and raising awareness of global crime-

fighting efforts and cooperation.◦ The emergence of Global administrative law.

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ASEAN Free Trade Area (AFTA) is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries.

AFTA is a collective effort by ASEAN member countries to reduce/eliminate tariffs on intra-ASEAN trade. The purpose was to develop greater trade and industrial linkages among ASEAN member countries.

The AFTA agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. AFTA now comprises the ten countries of ASEAN. All the four latecomers were required to sign the AFTA agreement in order to join ASEAN, but were given longer time frames in which to meet AFTA's tariff reduction obligations.

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The primary goals of AFTA seek to: Increase ASEAN's competitive edge as a production base in

the world market through the elimination, within ASEAN, of tariffs and non-tariff barriers; and

Attract more foreign direct investment to ASEAN.

What is the mechanism to realise AFTA?

AFTA has been realised through the Common Effective Preferential Tariff (CEPT) Scheme. Under the CEPT:

Import duties among member countries will be reduced to between 0-5% by the full implementation of AFTA in 2010  

Elimination of quantitative restrictions (import permit, quota) & other non-tariff barriers (NTBs) among ASEAN Member Countries  

Progressive transfer of products into the CEPT Scheme based on each ASEAN member's capacity and capability.  

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The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of the United States, Canada, and Mexico creating a trilateral trade bloc in North America.

The agreement came into force on January 1, 1994. It superseded the Canada-United States Free Trade Agreement between the U.S. and Canada.

The goal of NAFTA was to eliminate barriers to trade and investment between the USA, Canada and Mexico.

The implementation of NAFTA on January 1, 1994, brought the immediate elimination of tariffs on more than one half of US imports from Mexico and more than one third of US exports to Mexico.

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Intellectual Property Protection Intellectual Property:

◦ Is any product of human intellect that is intangible but has value in the marketplace.

◦ It is called “intellectual” property because it is the product of human imagination, creativity, and inventiveness.

Importance◦ Traditionally, businesses have thought of their

physical assets, such as land, buildings, and equipment as the most important.

◦ Increasingly, however, a company’s intellectual assets are the most important.

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Intellectual property protection in Malaysia comprises of patents, trademarks, industrial designs, copyright, geographical indications and layout designs of integrated circuits.

Malaysia is a member of the World Intellectual Property Organization (WIPO) and a signatory to the Paris Convention and Berne Convention which govern these intellectual property rights.

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In addition, Malaysia is also a signatory to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) signed under the auspices of the World Trade Organization (WTO).

Malaysia provides adequate protection to both local and foreign investors. Malaysia's intellectual property laws are in conformance with international standards and has been reviewed by the TRIPs Council periodically.

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Not properly identifyingall of their

intellectual property

Not fully recognizingthe value of their

intellectual property

Not legally protectingthe intellectual propertythat needs protecting

Not using theirintellectual property as

part of their overall plan for success

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The Patents Act 1983 and the Patents Regulations 1986 govern patent protection in Malaysia.

An applicant may file a patent application directly if he is domicile or resident in Malaysia.

A foreign application can only be filed through a registered patent agent in Malaysia acting on behalf of the applicant.

A patent does not give its owner the right to make, use, or sell an invention: rather, the right granted is only to exclude others from doing so.

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Similar to legislations in other countries, an invention is patentable if it is new, involves an inventive step and is industrially applicable.

In accordance with TRIPS, the Patents Act stipulates a protection period of 20 years from the date of filing of an application.

Under the Act, the utility innovation certificate provides for an initial duration of ten years protection from the date of filing of the application and renewable for further two consecutive terms of five years each subject to use.

The owner of a patent has the right to exploit the patented invention, to assign or transmit the patent, and to conclude a licensed contract.

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Trademark◦A trademark is any word, name, symbol, or device used

to identify the source or origin of products or services and to distinguish those products or services from others.

◦Trademarks also provide consumers with useful information. For example, consumers know what to expect when

they see an Abercrombie & Fitch store. Think how confusing it would be if any retail store

could use the name Abercrombie & Fitch.

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Name is trademarked

Symbol is trademarked

Slogan is trademarked

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Trade mark protection is governed by the Trade Marks Act 1976 and the Trade Marks Regulations 1997.

The Act provides protection for registered trade marks and service marks in Malaysia.

Once registered, no person or enterprise other than its proprietor or authorised users may use them. Infringement action can be initiated against abusers.

The period of protection is ten years, renewable for a period of every ten years thereafter. The proprietor of the trade mark or service mark has the right to deal or assign as well as to license its use.

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Copyrights◦A copyright is a form of intellectual property

protection that grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economic benefits from the work.

◦A work does not have to have artistic merit to be eligible for copyright protection. As a result, things such as operating manuals and

sales brochures are eligible for copyright protection.

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Literary works

Computer software

Pantomimes andchoreographic works

Musical compositions

Dramatic works

Pictorial, graphic, andsculptural works

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The Copyright Act 1987 provides comprehensive protection for copyrightable works.

The Act outlines the nature of works eligible for copyright (which includes computer programs), the scope of protection, and the manner in which the protection is accorded.

There is no registration of copyright works. Copyright protection in literary, musical or

artistic works is for the duration of the life of the author and 50 years after his death. In sound recordings, broadcasts and films, copyright protection is for 50 years after the works are first published or made.

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A unique feature of the Act is the inclusion of provisions for its enforcement. The amendment of the Copyright Act 1987, which was enforced on 1 October 2003 confers power of arrest (including arrest without warrant) to enforcement officers of the Ministry of Domestic Trade and Consumer Affairs.

This special team of officers of the MDTCA is appointed to enforce the Act and is empowered to enter premises suspected of having infringing copies and to search and seize infringing copies and contrivances.

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In business or economics a merger is a combination of two companies into one larger company.

Classifications of mergers◦ Horizontal merger - Two companies that are in direct

competition and share similar product lines and markets.

◦ Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker.

◦ Market-extension merger - Two companies that sell the same products in different markets.

◦ Product-extension merger - Two companies selling different but related products in the same market.

◦ Conglomeration - Two companies that have no common business areas.

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An acquisition, also known as a takeover or a buyout, is the buying of one company (the ‘target’) by another.

An acquisition may be friendly or hostile.

The companies cooperate in negotiations

The takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer

Friendly

Hostile

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Acquisition usually refers to a purchase of a smaller firm by a larger one.

Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover.

Achieving acquisition success has proven to be very difficult, while various studies have showed that 50% of acquisitions were unsuccessful.

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The word ERGONOMICS comes for two Greek words, "ERGON" and "NOMOS". "ERGON" means work and "NOMOS" means natural law or rule. So, Ergonomics is "Natural Law or Rule of Work".

Ergonomics is the science of designing the job, equipment, and workplace to fit the worker. Proper ergonomic design is necessary to prevent repetitive strain injuries, which can develop over time and can lead to long-term disability.

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The International Ergonomics Association (IEA) defined ergonomics (or human factors) as "the scientific discipline concerned with the understanding of interactions among humans and other elements of a system, and a profession that applies theory, principles, data and methods to design in order to optimize human well-being and overall system performance".

Ergonomics is employed to fulfil the two goals of health and productivity. It is relevant in the design of such things as safe furniture and easy-to-use interfaces to machines.

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Ergonomics can be classified into three main areas: Physical Ergonomics, Cognitive Ergonomics and Organizational Ergonomics.

Physical ergonomics

Cognitive ergonomics

Organizational ergonomics

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Physical ergonomics: is concerned with human anatomical, anthropometric, physiological and biomechanical characteristics as they relate to physical activity. (Relevant topics include working postures, materials handling, repetitive movements, workplace layout, safety and health.)

Cognitive ergonomics: is concerned with mental processes, such as perception, memory, reasoning, and motor response, as they affect interactions among humans and other elements of a system. (Relevant topics include mental workload, decision-making, skilled performance, human-computer interaction, human reliability, work stress and training as these may relate to human-system design.)

Organizational ergonomics: is concerned with the optimization of socio technical systems, including their organizational structures, policies, and processes.(Relevant topics include communication, work design, design of working times, teamwork, community ergonomics, cooperative work, new work paradigms, virtual organizations, telework, and quality management.

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Entrepreneurs must learn quickly that there are many legal issues they must face in setting up and running a new business, establishing a non-profit organization, bringing a product to market, or financing the venture.

The Malaysian business laws, rules and regulations follow closely that of United Kingdom and Australia.

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The principal law that governs corporate entities is the Companies Act, 1965.

All companies whether private or public must be registered with the Registrar of Companies. Once registered, they are subjected to the Company Laws, Rules & Regulations. As for partnerships, they are regulated by the Partnership Act.

The Contract Act governs most business transactions and contractual agreements between mutual parties. It helps to settle trade disputes, disagreements and decide on degree of damages. 

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Malaysia is practicing open economy. Many of our biz people are exporting globally and at the same time foreign investors are investing heavily in Malaysia.

Our government has established proper Trade Mark laws to protect the trade marks and brand names of companies and products,

Patent laws to protect the designs and inventions of entrepreneurs and stringent

Copyright laws to protect the intellectual properties of the creator, designer or writer.

If an individual is not able to pay its debts, the creditor has rights to sue him for bankruptcy. All the procedures of making an individual bankrupt is govern by the Bankruptcy Laws and Regulations. 

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Q & A10Q

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