Analysis of the Critical Elements Required in Running a Business - TZ Limited - Case Study Example

Heading: Business Your name: Course name: Professors’ name: Date Introduction The process of operating and running a business involves lot of procedures and processes which require strategy. As a result, one has to come up with a formulation and evaluation checklist. The formulation and evaluation of business are important tasks that are undertaken for purposes of auditing, shareholder value and meeting business requirements. This essay is going to analyze the critical elements required in running a business and how these elements have been implemented by an Australian company. Critical Evaluation TZ Limited is a company incorporated in Australia that deals in technology products with presence in different markets. The company has been in operation since 1986 when the company was formed to sell intelligent fasteners and since then the company has grown through different challenges and successes. For businesses such as TZ Limited, there are certain business elements and requirements that must be met to ensure the business grows and overcomes challenges within the business environment. Some of the key elements that must be formulated and evaluated within businesses include; a) Financing: The TZ limited operates in a competitive industry that requires a lot of financing especially in relation to innovation. As a result, the company has met certain capital and financing requirements. For instance, the company is listed in the ASX (Australian Stock Exchange) and thus it must maintain the capital requirements set by the regulator. Moreover, the company can make use of position in the ASX to fund its activities through rights issues, bonds and loans against its business. For instance, in the year 2008 the company has secured a $ 24 million funding from hedge fund QVT (Hill, 2009). b) Legal framework: Companies must operate within a set legal framework and this includes all laws governing on business within the different jurisdictions. In the case of TZ limited, the company has been legally registered in Australia and other regions including the United Kingdom, United States and Ukraine. For instance, some laws such the Australian Corporations Act has been enacted as part of the company’s legal framework (Lawson, 2010). In the case of TZ Limited the company has ensured it meets all these legal regulations and it has gone ahead to patent its technology and products based on internationally recognized intellectual property rights. c) Labour requirements: Businesses must adhere to laws and regulations which look into the welfare, remuneration, hiring and firing employees. TZ limited has implemented and met all the labour laws in the regions it operates from. Having a good labour framework ensures that companies can produce over a long period of time without problems or interruptions (Porter, 2012). d) Internal controls: Companies should have an organizational framework that looks into the operation and running of the organization. These controls include finance control, audits and human resources which look into the interests of shareholders. TZ limited has implemented internal controls but they were weak and thus, the company has been faced with challenges of fraud. For instance, in the year 2008 the company’s shareholders were dissatisfied with the board of directors and thus there was need for replacing the board (Hatten, 2011). Weak internal controls within the company allowed for funds amounting to around $ 17 million being lost in unclear circumstances. Moreover, for listing on the ASX requires that companies meet certain internal controls such disclosure of finance records. Most of the internal controls are meant to fulfil regulations set by regulators such as meeting environmental laws, protection of information or import and export laws (Bidgoli, 2011). e) External evaluation: It is important for companies to engage external experts in different fields such as finance, IT or health to undertake several tasks such as auditing or occupational health or information technology consultancies. For instance, in the case of TZ Limited the company must consult auditors or external evaluators so as to meet the regulation for financial disclosure meant for public companies. Having external evaluation is very important in ensuring the businesses run legally and meet organizational strategies (Hill, 2009). f) Technology: In the current business environment, it is vital for businesses and organizations to leverage on technological systems in the process of undertaking business activities. TZ limited is a technology company and thus, it has implemented smart business systems which they have used on communication, selling and innovation in terms of control over their distributed operations located in different global locations (Stokes, 2010). g) Innovation: Companies such as TZ limited who have business in the technology sector should have a strong bias on innovation as the key driver of their business. This would make the company more competitive in a fast paced sector. In terms of innovation, TZ Limited has patented the technology of intelligence fasteners and this allows their technology to be protected against intellectual property rights theft. Recommendations Based on the evaluation on the important aspects that mark a business, we saw that TZ limited had not undertaken some of the business elements in a proper manner. As a result, the company should undertake some changes to make the company more competitive and expand to more regions. Some of these recommendations are listed below; a) Merger: TZ Limited should consider merging with a bigger technology company so as to expand its financial base and ensure more finances are available for the company. Moreover, mergers ensure the company can leverage on shared technologies in expanding its business. Moreover, a merger will allow the company to expand its business offering and products while it will leverage on a bigger market and vertical integration (Gitman, 2010). This should spur the growth of TZ Limited which has been in operation for over 20 years. b) Shareholding Structure: The Company should also change its shareholding structure so as to allow for more independence and input from external shareholders and individuals. As a result, the company’s major shareholder such as the founder Dickory Rudduck could allow the company to take a different strategy in terms of technological direction and organizational strategy (Panneerselvam, 2007). Having a company with diverse shareholding allows for a broader strategy that is vigorous and competitive within the business field. c) Internal Controls: TZ Limited has been faced with challenges of weak internal controls that it allowed the company to lose a lot of financial resources. As a result, the company should invest in the implementation of stronger internal controls. For instance, the company could invest in better financial and IT systems (Hatten, 2011). This will allow the company to come out stronger in the process of auditing and other controls. Moreover, in terms of strategy the company inculcate a policy that ensures directors do not have direct interest in the activities of the company. Internal policy should also focus on having scheduled and proper fiscal management with proper controls and levels of accountability (Lawson, 2010). This is because prudent fiscal management and protection of data is important in ensuring the company runs properly. d) Eternal Advisory: As per the requirements of ASX and regulators in regions such as Australia and the United States, TZ Limited should engage external consultants to ensure they overcome challenges related to poor fiscal control, data protection and regulative compliance. For instance, the company tried listing in the NASDAQ but failed since it had not met the required financial reporting standards. As a result, the company should hire consultants and experts in the different fields to ensure that the company gets right all the regulative policies and tighten on internal controls proper systems and policies (Knowles, 2011). Moreover, the external advisory companies should not have direct interest in the company as was the case in the past whereby directors had interest in an accounting firm leading to poor financial reporting. e) Dedicated outsourcing: TZ Limited should outsource the production of its fasteners to cheaper production destinations such as China or Thailand. This would allow the company to focus on innovation, marketing and selling as the core functions of the company. Consequently, this would reduce regulative pressure on the company on issues such as labour, listing and meeting legal framework (Griffin, 2012). Consequently, this would reduce costs on the company spends on technology, production and other HR issues. f) Intellectual Property rights licensing: Since the TZ Limited has developed intelligent fasteners based on unique technology the company has licensed and patented its products and technology. This places the company in unique position whereby the company could sell the rights to other third party technology companies earning the company royalties and licensing fees (Bangs, 2009). This would allow the company to earn money that would be used for expansion and acquisition of other companies. Conclusion Operation of a business requires meeting a lot of organizational, governmental and environmental regulations and policies. As a result, a company should adopt a rigorous organizational strategy that tallies with globally accepted business operations and regulations. TZ Limited has undertaken to observe these regulations and elements required within a business environment. Based on the evaluation the company has done its best to meet all the required business elements but no without a few challenges. These challenges include weak internal controls and shareholder structure which the company could strengthen by observing internationally set regulations and accepted business practices. It should improve in the areas of internal controls, production and change in organizational structure. References Bangs, D. (2009). Market Planning Guide. Chicago, IL: Kaplan Publishing. Bidgoli, H. (2011). Handbook of Australian Business and Management. New York, NY: John Wiley & Sons. Gitman, L. (2010). The future of business: the essentials. Mason, OH: South-Western Cengage Learning. Griffin, R. (2012). Fundamentals of management. Mason, OH: John Wiley and Sons. Hatten, T. (2011). Small business management: entrepreneurship and beyond. Mason, OH: South-Western Cengage Learning. Hill, C. & Jones, G. (2009). Strategic management theory: An integrated approach. Stamford, Connecticut: Cengage Learning. Knowles, R. (2011). Small business: an entrepreneur's plan. Toronto: Nelson Education. Lawson, R. (2010). Strategic operations management: The new competitive advantage. London: Routledge. Panneerselvam, R. (2007). Production and operations management. New Delhi: Prentice Hall of India. Porter, M. (2012). Competitive Strategy: Techniques for Analysing Industries and Competitors. New York, NY: The Free Press. Stokes, D. (2010). Small business management and entrepreneurship. Andover: Cengage Learning. Read More