Question Tag: Rules

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  • 5 Marks

BCL – Nov 2016 – L1 – Q4b – Alternative Forms and Constitutions of Business Organisations

List applicable rules in a partnership in the absence of a contrary agreement.

List FIVE applicable rules in a partnership in the absence of a contrary agreement.

The following rules apply in a partnership in the absence of a contrary agreement:

  1. Equal Sharing: All partners shall be entitled to share equally in the capital and profits of the firm and shall contribute equally towards the losses sustained by the firm.
  2. Indemnification: The firm shall indemnify every partner in respect of payments made and personal liabilities incurred by them in the ordinary and proper conduct of the business of the firm or in or about anything necessarily done for the preservation of the business or property of the firm.
  3. Interest on Advances: Any actual payment or advance beyond the amount of capital which a partner has agreed to subscribe shall be entitled to interest at the rate of five percent per annum from the date of payment or advance.
  4. Participation in Management: Every partner may take part in the management of the business of the firm.
  5. No Remuneration: No partner shall be entitled to remuneration for acting in the firm’s business.

(5 points at 1 mark each = 5 marks)

  • 10 Marks

BMIS – May 2017 – L1 – Q5b – Introduction to business strategy

Explain key concepts related to strategic planning, including strategy, policies, procedures, budgets, and rules.

Question:

Strategic planning has been defined as the process of setting objectives for the organisation and laying down the policies which are to govern the acquisition, usage, and disposal of the resources used to achieve those objectives.

Required: Explain the following:

i) Strategy
ii) Policies
iii) Procedures
iv) Budget
v) Rules
(10 marks)

i) Strategy:
A strategy is a course of action that includes the specification of all the resources required to achieve a specific objective. It is concerned with the overall direction of an organization. Strategy formulation is the responsibility of the top management of an organization.
(2 marks)

ii) Policies:
Policies are general statements or understandings that provide guidelines for management decision-making. They allow managers to exercise their discretion and freedom of choice within certain limits. An example of a policy might be that the staff of the purchasing department of an organization should not accept gifts from suppliers, subject to certain exceptions.
(2 marks)

iii) Procedures:
Procedures are sequences of required actions or activities for performing specific tasks. They exist at all levels of an organization, though they are more extensive at the lower levels. Procedures result in efficiency and standardization of work.
(2 marks)

iv) Budget:
A budget is a formal statement of expected results set out in numerical terms and summarized in monetary values. It is a plan for carrying out certain activities with specified resources within a given period of time to achieve certain goals. A budget is a numerical statement and tends to ignore qualitative aspects of planning and achievement.
(2 marks)

v) Rules:
Rules prescribe a specific, definite action that should be taken in a given situation. They do not allow for deviations or exceptions, unlike policies, which are general guidelines that allow the exercise of some management discretion. An example of a rule might be that employees with access to a telephone must not use it for personal calls.
(2 marks)

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