A. P1: Explain the features of two contrasting businesses
In this report, I will be analysing two contrasting businesses through their features. One
business will be Tesco a private sector organisation, whose main aim is to generate and
maximise profit. The other is Save the Children a voluntary sector business also referred to as
‘not for profit,’ whose main is to provide social wealth through charity work and volunteering
for the needy.
Content for report:
- Background information
- Main purpose (vision, aims and objectives)
- Ownership
- Liability
- Sector of business
- Scope of business
A private limited company is private small or large business. A private limited company has a
limited lability and have the acronym “Ltd” following its name, i.e. “Grill Hut Ltd”. A range
of business can set up as an ltd, i.e. restaurant, hairdressers, lawyer etc. The owners of a ltd
are referred to as shareholders, the shareholders need to be invited into the business to
purchase shares- a percentage of the company. Private limited companies compared to sole
traders pay corporation tax (tax deducted from profits made by business) and the setup of a
ltd requires hefty paperwork, time and may require a professional accountant to manage
finances, i.e. taxes, NI contribution etc. However, a ltd provides protection to owners as it is
limited liability, meaning you aren’t liable for debt incurred by the business above your initial
investment, and the business is not prone to outside influence due share ownership being
attainable only through invitation.
A public limited company is business that offers shares to the public vi the stock market, a
first-time share sale is referred to as an IPO (initial public offering). Individuals who
purchase shares of a company through the stock market are now shareholders and have a say
in how the business operates through annual shareholder meetings. Example of Plc is Tesco,
who had their IPO in 1947 with a share price £0.25. The main advantage of a plc is that it
provides access to high capital and opportunity to make acquisitions, which in turn gives a
business a prestigious profile. The drawbacks of a Plc is that once shares are sold it will lead
the business having hundreds of external shareholders, whom the directors will be
responsible for leading to a greater public scrutiny of financial performances and actions.
A sole trader is a business owned and operate by one individual; a sole trader may have
employees working but it is limited number. Sole traders are usually start-ups or small
business, i.e. electricians, photographers, blogger, hairdressers etc. A sole trader has
unlimited liability and pay income taxes on their earnings. The main advantage of sole trader
is quick, simple and cheap to set up. A sole trader too maintains decision power and profits
generated by the business. However, it has the risk of unlimited liability and involves owner
to work long hours and different job roles to keep up with demand.
Partnerships are business owned by 2 or more owners, and are often found in business that
provide professional services, i.e. lawyers and accountancy. A partnership is identified by a
, name, i.e. White & Case (law firm with limited liability partnership). A deed of partnership
has to be signed before setting up and to outline a set rules, profit allocation etc. Certain
partnerships can be limited liability and is covered by limited liability partnerships act 2000.
The main advantageous of partnerships are its simple to set up with a deed of partnership,
shared-decision making and responsibility for debt. However, it can create conflict between
owners on business decisions, involve long hours and there is risk of unlimited liability.
Limited liability means business owners are responsible for debt incurred up to the value of
their initial financial investment in the business. A creditor can only obtain assets and finance
if it belongs to the company. Limited liability applied to certain types of firms, such as
private limited companies. In contrast, in an unlimited liability an owner is personally
responsible for debts incurred by the business, the debt no matter the value has to be paid
through sale of personal assets such as cars, house and savings etc. by creditor.
In this report, I will be analysing two contrasting businesses through their features. One
business will be Tesco a private sector organisation, whose main aim is to generate and
maximise profit. The other is Save the Children a voluntary sector business also referred to as
‘not for profit,’ whose main is to provide social wealth through charity work and volunteering
for the needy.
Content for report:
- Background information
- Main purpose (vision, aims and objectives)
- Ownership
- Liability
- Sector of business
- Scope of business
A private limited company is private small or large business. A private limited company has a
limited lability and have the acronym “Ltd” following its name, i.e. “Grill Hut Ltd”. A range
of business can set up as an ltd, i.e. restaurant, hairdressers, lawyer etc. The owners of a ltd
are referred to as shareholders, the shareholders need to be invited into the business to
purchase shares- a percentage of the company. Private limited companies compared to sole
traders pay corporation tax (tax deducted from profits made by business) and the setup of a
ltd requires hefty paperwork, time and may require a professional accountant to manage
finances, i.e. taxes, NI contribution etc. However, a ltd provides protection to owners as it is
limited liability, meaning you aren’t liable for debt incurred by the business above your initial
investment, and the business is not prone to outside influence due share ownership being
attainable only through invitation.
A public limited company is business that offers shares to the public vi the stock market, a
first-time share sale is referred to as an IPO (initial public offering). Individuals who
purchase shares of a company through the stock market are now shareholders and have a say
in how the business operates through annual shareholder meetings. Example of Plc is Tesco,
who had their IPO in 1947 with a share price £0.25. The main advantage of a plc is that it
provides access to high capital and opportunity to make acquisitions, which in turn gives a
business a prestigious profile. The drawbacks of a Plc is that once shares are sold it will lead
the business having hundreds of external shareholders, whom the directors will be
responsible for leading to a greater public scrutiny of financial performances and actions.
A sole trader is a business owned and operate by one individual; a sole trader may have
employees working but it is limited number. Sole traders are usually start-ups or small
business, i.e. electricians, photographers, blogger, hairdressers etc. A sole trader has
unlimited liability and pay income taxes on their earnings. The main advantage of sole trader
is quick, simple and cheap to set up. A sole trader too maintains decision power and profits
generated by the business. However, it has the risk of unlimited liability and involves owner
to work long hours and different job roles to keep up with demand.
Partnerships are business owned by 2 or more owners, and are often found in business that
provide professional services, i.e. lawyers and accountancy. A partnership is identified by a
, name, i.e. White & Case (law firm with limited liability partnership). A deed of partnership
has to be signed before setting up and to outline a set rules, profit allocation etc. Certain
partnerships can be limited liability and is covered by limited liability partnerships act 2000.
The main advantageous of partnerships are its simple to set up with a deed of partnership,
shared-decision making and responsibility for debt. However, it can create conflict between
owners on business decisions, involve long hours and there is risk of unlimited liability.
Limited liability means business owners are responsible for debt incurred up to the value of
their initial financial investment in the business. A creditor can only obtain assets and finance
if it belongs to the company. Limited liability applied to certain types of firms, such as
private limited companies. In contrast, in an unlimited liability an owner is personally
responsible for debts incurred by the business, the debt no matter the value has to be paid
through sale of personal assets such as cars, house and savings etc. by creditor.
