Processes Involved In Forming A Design Company
It is vital to be aware of the type of the company or business organization you want to rum before laying down an appropriate design for the company. Among the many factors to consider in the professional design practices of companies is whether the business would be a partnership or a single entity. This would enable the designer to derive the pros and the cons for every identified type before settling on the desired one. However, (Vigneau, Humphreys, and Moon, 2015, pp.469-486) pointed out that the process involves selection of the business name, identifying the location and the factors favouring the geographical area, selecting the type of the corporation, after that appoint the directors, determine the shares, and then obtain a certificate of incorporation.
Concisely, different scholars have highlighted different processes involved in the formation of a design company thus creating an entire confusion on the suitable procedure (Gualini, 2018). Design management is very crucial in a way that can directly influence operational, tactical, and the strategic values in business. Therefore, forming a design company calls for systematic coordination of critical thinking, analysis, and evaluation of business intelligence techniques to ensure a sustainable company is set up with the economic considerations. The types of companies are illustrated below.
The public liability company
For this type of company, their legal existence is separate from its shareholders with limited liability for its members. This implies that the presence of public liability companies does not get affected by the death of its shareholders (Bowker and Chambers, 2015). The formation of this type of company requires a minimum of seven members without the limit on the maximum number the company can have as the shareholders. The pros and cons for the public limited company are outlined below.
The significant advantages of the public limited are the ease of access to capital such as raising the capital shares through the existing and new investors. Another advantage is the liquidity, which provides the ability to the members to sell and buy the shares as well as the opportunity to make acquisitions.
The public limited company has some advantages whereby the value of the company is determined by the financial markets through trading with the company shares thus putting at risk the value of the individual shares as acknowledged by (Kotabe and Kothari, 2016, pp.729-743). The company also has great scrutiny from the public, which could continuously interfere with the operation of the company from time to time. Additionally, once the company is listed on the stock market, it is likely to have shareholders that are more external where the directors are held accountable.
These types of companies entail more than two and less than 50 shareholders and their liability could be limited or unlimited concerning the type of the company. However, the transfer of the shares is limited to only the members where the public cannot subscribe to its debentures and shares, unlike the public limited companies (Vats and Patel, 2017, pp.37-43). The private limited companies are classified into three.
- Limited by Guarantee– in these companies, the members promise to pay a certain fixed among in case of liquidation to counter for the liabilities of the company.
- Limited by shares– in these companies the liability is limited to the face value of the shares held by the members.
- Unlimited liability– in these companies there is no limit on the members’ liability whereby in case of liquidation they might be even required to pay from their personal assets to carter for the liabilities of the company.
Typical design studio hierarchy
The following are some of the pros and cons of private liability companies.
The financial viability of these companies is limited to the shares of the members thus in cases of financial crises, the members would not incur the risk of losing their personal assets except for the unlimited liability private companies.
The shares’ transfer is restricted by the law from transferring shares from the shareholders to non-shareholders without the consent of other members of the company. This has been reported to slow down the decisions on investment due to a long time is taken in transferring the shares (Bocken, Farracho, and Bosworth, 2014, pp.43-57). Another disadvantage of these companies is the difficulties in the access to credit. Most institutions are reluctant in lending financial assets to these companies since the death or bankruptcy of the majority shareholders can lead to termination of the company.
This is the business entity that is registered under a single individual and is referred to as the sole proprietorship. Therefore, the business is under the responsibility of one person whereby all loses and the profits are bared by the owner (Marandi, Bazmi, Ameri, and Vatankhah, 2015, pp.1-7).
The sole proprietor enjoys the benefits and the administrative powers. Another advantage is the faster decision-making and implementation unlike other types of companies.
The owner might be forced to use their personal assets to offset the financial crises of the business. Additionally, the owner bears all the liabilities that may arise in the company.
This is almost similar to the sole proprietorship companies except that more than a single member register the business under their names. The company is also governed by the laws that provide for the division of duties and responsibilities of every member. However, the profits and the losses are shared among the owners concerning the number of their shares in the company.
There is a better chance of making effective decisions unlike in the proprietorship companies due to the group/diverse decision-making acknowledged by (Bower, 2018). The losses are shared among the members thus lessening the burden of liabilities.
Slower decision-making processes unlike in the sole proprietorship companies. Another disadvantage is that the profits are shared among the members or the stakeholders.
This business is almost similar to the partnership except that the partners or the shareholders enjoy the limited liabilities according to the shares they have in the company. Most entrepreneurs have acknowledged this type of company due to its simplicity.
There is the protection of the personal assets by the limited liabilities of the business since they are separate legal entities, flexibility, the corporate ownership, and the members can be designated or non-designated (Sarmento and Renneboog, 2016, pp.94-122).
These companies are known for the extensive documentation required the lack of the legal distinction among the general partners, they exhibit less protection from taxation, the general partners are liable for the other’s actions, and the assets for the general partners are less protected.
The DAC is a new type of company that was enacted in June 2015. Some scholars have defined it as a type of private company that is limited by the shares to perform certain activities that are provided in the company’s constitution or the memorandum of association. Concisely, some have ascertained that it is a private company with the power to conduct the acts only outlined in its own set constitution (Courtney, Hutchinson, and O’Leary, 2016). However, only the companies registered under the Companies Act 2014 or those that have been incorporated under the previous Acts that have granted them the private guarantee.
The design process
They have a constitutional document that entails the memorandum of association. Another feature is the memorandum of association is the set constitution that dictates the jurisdiction of the company’s activities whereby it has a limited liability for the shares. The DAC must have at least 12 directors who can lead up to 149 members. The company must also hold an annual general meeting in case it entails more than two members where it can pass the majority decisions within the constraints of the constitution (Milman, 2017, pp.198-215). The company can also claim the eligibility of the audit exemption.
Conclusion
From the evaluation of the types of companies presented above, the most suitable type of company to go for is the DAC since it accumulates the advantages of the formerly discussed earlier. Additionally, the memorandum of association that is formed as the constitution gives the company a sense of transparency and accountability in its operations (Sinha, 2017).
Importance and functions of a design brief
A design brief is a fundamental tool for the success of a design solution that is embedded in the strategic objectives using the crucial information to arrive at the desired design. (Bhamra and Lofthouse, 2016) denoted that the briefing process should be short and detailed and acquires the directions for the clients and engage them for a high-quality outcome. The importance of the design brief is that it saves the client’s time, money, and eradication of disappointments. It also ensures the clarity, agreement, and an understanding from all the shareholders, offers protection of the designer from shifting the set goals and targets, and the success can be marked with the use of the design brief.
However, when designing a brief, one should ensure that they develop short and precise questions that would enable them to capture the background information of the customers. This would give a clue of the expectations that the clients anticipate being given by your company. Another key item is the questions that guide the client into the giving market analysis information thus hypothetically sizing the new business at a certain position in the market. The brief should also be in such a way that prompts the answers from the clients, which clearly defines the objectives, deliverables, and seek clarification in case something is not clear (Ojasalo and Ojasalo, 2015). The key decision makers should also be recognized in the design brief.
The SLA defines the degree of the services provided to the customers that are negotiated agreement between the client and the business owner. The SLA is vital to the business operation as it identifies the types of services and products being supplied, alerts on the supplementary services being offered, it outlines the costs and the fees for the services, it provides the revisions and additions on the costs of different commodities (Dur, Baccini, and Elsig, 2014, pp.353-375). Additionally, the SLA should include the client representative, their rights, the ethics governing the operations, the third party contracts, out of pocket expenses, and the termination terms of the agreement.
The SLA is related to the design brief in such a way that they both sought to make the life of the customer more comfortable and to prompt them to make more purchase in future. This implies that both the techniques are meant to align the business in a potential marketing position to ensure there is an increase in the sales in a company. Furthermore, these techniques are deployed in professional design to boost the confidence of the clients towards the services and products of the company.
Legal matters cannot be avoided in the design work, as they are the principles that are perceived to guide the consumers of the designed work during their operations (Campbell, 2016). To ensure the client’s needs are met, the designer should be aware of the following aspects. First, the designer should be aware of the relationships and the loyalties among the parties. This ensures that the design is free from the conflicts of interests among the parties but rather utilizes the potential or common interests during the formulation of the policies. For instance, if the design brief and the SLA does not favour a client who could be a significant shareholder for a limited liability company, for instance, the design is most likely to be rejected.
Another legal aspect is the performance warranties (Brauer, 2016). The designer should ensure that they have enough information on the durability of the design so that they allocate a reasonable amount of time for the warranty services. For instance, a design that is warranted a month, which cost the client and is not fragile would require longer periods of time that would enable the client to gain confidence and trust in the design. The aspect of entitlement to change orders is also a critical aspect that the designer should be careful not to fall into its trap. These include the impacts caused by the owner (such as the interference or disruption, scope changes), changed conditions (in essence, force majeure, subsurface obstacles that are unknown), and design problems (such as the errors, ambiguities, and omissions among others). In such cases, the blame will always be reflected back to the designer who could be required to redo the entire design or termination of the design contract to another designer.
The licensing problem is another common problem experienced in designing (Miletzki and Broten, 2017). The designer should be aware of the licensing requirements for the products they are intending to avoid the last minute shock of denial of product licensing due to a few omitted items in the design. The licensing problem could stress out the client who can resolve to do away with the design due to the inconveniences and tediousness in attempts to license the designed products. Therefore, it is upon the designer to understand what their client wants and observe the legal factors in their work to ensure client satisfaction is achieved (Van den Hoven, 2014, pp.3-13).
Visualization technique
The visualization technique is a very essential tool in helping the client to come up with the design brief (Shepherd, 2016). This method utilizes the use of visual graphics and images to present the ideas and facts about the design being made. This could have a series of images from the beginning to the end of the design with or without a brief explanation of the phenomenon in the picture concerning the aspects in the design.
Briefing Process – Functions of a Design Brief, Design Effectiveness
The use of web design in designing a brief is another technique where the relevant questions are fed into the website platform for the client to fill them out. The questions are made simple according to the requirements of an effective design brief. A template can be formulated on the web upon which the client can easily provide their requirements for the design. This can be presented as shown below.
The entries can be easily edited and changed many times to achieve the desired design. They are also simply and easy to understand as they entail simplified information as ascertained by (Haines-Gadd et al., 2015, pp.246-268)
They are sketches and contains minimal information for the entire design. The design brief could be easily misinterpreted by the client in absence of the designer thus require an illustrated before handed over to the client.
References
Bhamra, T. and Lofthouse, V., 2016. Design for sustainability: a practical approach. London: Routledge.
Bocken, N.M.P., Farracho, M., Bosworth, R. and Kemp, R., 2014. The front-end of eco-innovation for eco-innovative small and medium sized companies. Journal of Engineering and Technology Management, 31, pp.43-57.
Bowker, L.N. and Chambers, D.M., 2015. The risk, public liability, & economics of tailings storage facility failures. Earthwork Act.
Brauer, R.L., 2016. Safety and health for engineers. New Jersey: John Wiley & Sons.
Campbell, T.D., 2016. The legal theory of ethical positivism. London: Routledge.
Courtney, T.B., Hutchinson, G.B. and O’Leary, D., 2016. The Law of Companies. New York: Bloomsbury Publishing.
Dür, A., Baccini, L. and Elsig, M., 2014. The design of international trade agreements: Introducing a new dataset. The Review of International Organizations, 9(3), pp.353-375.
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Kotabe, M. and Kothari, T., 2016. Emerging market multinational companies’ evolutionary paths to building a competitive advantage from emerging markets to developed countries. Journal of World Business, 51(5), pp.729-743.
Marandi, M.R., Bazmi, A., Ameri, N. and Vatankhah, B., 2015. Investigating the: sole proprietorship firms in iran and egypt law. Oman Chapter of Arabian Journal of Business and Management Review, 34(2603), pp.1-7.
Miletzki, J. and Broten, N., 2017. Development as freedom. London: Macat Library.
Milman, D., 2017. Regulating close companies in Corporate Law: Towards a more formal recognition?. Common Law World Review, 46(3), pp.198-215.
Ojasalo, K. and Ojasalo, J., 2015. Adapting business model thinking to service logic: an empirical study on developing a service design tool. The Nordic School, 309.
Sarmento, J.M. and Renneboog, L., 2016. Anatomy of public-private partnerships: their creation, financing and renegotiations. International Journal of Managing Projects in Business, 9(1), pp.94-122.
Shepherd, J., 2016. Write and effective design or creative brief.
Sinha, S.N., 2017. A Critical Analysis of the Provisions of Corporate Social Responsibility. IUP Journal of Corporate Governance, 16(3).
Van den Hoven, J., 2014. Responsible innovation: A new look at technology and ethics. In Responsible Innovation 1 (pp. 3-13). New York: Springer, Dordrecht.
Vats, S. and Patel, K., 2017. Ratio Analysis of a Private Limited Company with Relevance to Change in Type of Enterprise-A Case Study of Write Fine Products Pvt. Ltd. Umbragam, Gujarat. Journal of Applied Management-Jidnyasa, 9(2), pp.37-43.
Vigneau, L., Humphreys, M. and Moon, J., 2015. How do firms comply with international sustainability standards? Processes and consequences of adopting the global reporting initiative. Journal of Business Ethics, 131(2), pp.469-486.