BTEC National Extended Certificate in Business
Unit 1- Task 1 (P1/P2/P3/M1/M2/D1)
Hafsah Nadeem – 13LPP
Features contributing to the success of contrasting businesses.
Introduction:
The Economic Development Unit have proposed an opportunity in which I am required to research
and collect information for two contrasting businesses and produce a report. In this report I will be
analysing the features that have contributed to the success of two contributed businesses. In this
case I have chosen to research Tesco, a public limited company, and British Red Cross, a charity that
is registered and also non-profitable. The reason I have chosen these two businesses is because they
contrast heavily from what they sell to the type of ownership this business has. ASDA sells products
to customers with the motive of profitability and expansion whereas funds from the British Red
Cross go towards providing care and comfort to those in need. Both of these companies excel and
are the dominant firms in their respective specialism and therefore wiser decisions.
1/A.P1 Explain the features of two contrasting businesses
Ownership and Liability:
Private: Exclusive or individual ownership of an industry, asset or enterprise.
Sole trader- A sole trader also known as a self-proprietorship is a self-employed individual who owns
and runs their business as an individual. It follows a simple business structure in which the individual
is in ownership, runs and owns the entire business. With this responsibility, the owner is responsible
for its assets and profits after tax. As a sole trader, you are allowed to have employees but all the
liabilities fall under the owner’s name and employees are not at risk of losing out on personal assets.
An example of a sole trader-ship could be a local convenience store which is owned by private
individuals who have no partners.
Partnership:
A partnership is an agreement between two or more individuals/businesses or organisations which
come together, negotiate and agree to operate a company. With this, each party will receive the
agreed percentage of profit, have a agreed level of liabilities against the individual party and most of
all equal ownership. There must be at least two parties in order to be considered a partnership.
There are 3 different types of partnership and these are ordinary partnership, limited partnership
and limited liability partnership. An ordinary partnership is where there is no legal entity of the
partnership and does not need to be registered with the government however must undergo HMRC
regulations for tax purposes. A limited partnership is a combination of ordinary and limited partners.
Limited partnerships must register with Companies House but don't generally have to make an
annual return or file accounts. It is limited to the amount of money invested and personal assets
would not be taken into account in the case of bankruptcy. Lastly, a Limited Liability Partnership is
one where there are at least two designated members. Limited liability partnerships are taxed as
partnerships but can utilise the benefits of a being cooperate entity. An example of a partnership
could be GoPro and Red-bull. GoPro and Red-bull both look at thrill seeking, adventurous and
athletic people. Due to the similarities they are considered a great partnership as they are able to
significantly highlight each others qualities and promote sales, leading to successful business
objectives.
Private limited company:
A private limited company is a privately held small business entity that limits owner liability to their
shares, limits the number of shareholders to approximately 50 and restricts them from publicly
1
,BTEC National Extended Certificate in Business
Unit 1- Task 1 (P1/P2/P3/M1/M2/D1)
Hafsah Nadeem – 13LPP
trading their shares. Within a private limited company, the company operates as a distinct legal
entity to their shareholders. This means that all the business assets, liabilities and profits belong to
the company itself. Directors own private limited companies and personal assets are not at risk as
they are considered an employee. Anyone can set up a private limited company and some examples
of sectors that can operate as private limited companies can be hairdressers, driving instructors and
photographers.
Public Limited Company:
Public limited company is a company that is managed by directors and owned by its shareholders. A
public limited company offers shares that are available to the public. A public limited company has
additional regulations such as further admin tax and making their financial reports public therefore
the stake holders have all the information they require in order to invest. In order for a business to
be deemed as a Public Limited Company is that it must have at least two shareholders and have
publicly issued shares of at least £50,000 to the public or an equivalence in euros before they can
publicly trade. The reason they need to be more open about their business is because the company
is listed on the stock market and need to be transparent in order for increased investors and
shareholders.
Cooperative:
A cooperative is a legal entity that is under the ownership of members. This means all decisions
made meet their shared needs. Cooperatives follow 7 key values and ethics such as Open and
voluntary membership is any person who is willing to accept the
responsibilities of being a part of a cooperative. Democratic
member control is up where members have control over setting
policies and making decisions. Members' Economic Participation
is where members are key contributors to the capital of the
cooperative and do not have this money redistributed to them.
Autonomy and Independence where the ownership is
predominantly democratic, reducing the interaction of outside
organisations. Education, training, and information are key
aspects as it prepares members by training them to contribute to the development of the given
cooperative business. Cooperation among cooperatives in which they decide to create structural
changes regionally, nationally, and internationally in order to make the community a better
environment for social and economic sustainability. Concern for Community to create a business
objective of sustainable living.
Limited liability:
Limited liability is a form of legal protection for owners and shareholders preventing individuals from
being personally accountable for any company debts or financial losses.
In order to be a limited liability, it is essential to provide cooperate and
financial information. This is easily fulfilled through several annual filing
requirements and event-driven obligations the submission of
confirmation statements, filing tax returns and annual accounts and
reporting any significant changes in the business. Thereafter, this is
placed on a public record. Legal requirements like being incorporated in
company house, having one share holder and one director above the
2
,BTEC National Extended Certificate in Business
Unit 1- Task 1 (P1/P2/P3/M1/M2/D1)
Hafsah Nadeem – 13LPP
age of 16 and the registered office must be situated in the country of incorporation. Examples of
limited liability companies could be Blackberry, Sony and Nike.
Unlimited liability:
Unlimited liability is where the business owner is liable for any
debt it may incur regarding to the business. With an unlimited
liability, the owner can lose both assets tied to the business as
well as personal assets which makes this type of liability
riskier. If the business falls into debt or they are unable to pay
the baseline costs of running their business, there is no
capped limit as to how much debt the individual/group may have to pay back. However, this type of
liability may be more suited to businesses that don’t want a public record. Having a public record
would show inflows and outflows of a business to reveal profit and loss. This type of liability is more
common for sole traders until they decide to incorporate as they are in sole ownership till that point.
Public: state or public ownership of an industry, asset or enterprise.
Government Department:
A government department is a sector of the UK government that handles particular areas of interest.
Government departments can be ministerial and non-ministerial. Ministerial departments tend to be
politically led by the government minister or otherwise known as the ‘Secretary of state’. Followed
by this, there are junior ministers, civil servants, led by senior civil servants. The senior civil servant is
in charge of general administrative management. Ministerial departments deal with topics that
require a direct political oversight for example Department of Transport. Non-Ministerial
government departments usually cover matters where direct political oversight is inappropriate or
unnecessary. It protects them from political interference and is held by senior civil servants.
Examples of this can be Ofsted or Ofgem intended for regulatory purposes.
Not for profit: A legal entity that doesn’t earn any profit for its owners.
Charitable trust:
A charitable trust is a type of charity run by a small group of people known as trustees. Rather than
electing trustees they are appointed and the membership doesn’t widen across any third party. A
charitable trust is unable to be incorporated meaning it cannot have property in its possession or
enter contacts. The trustees may use income or capital to benefit charities of purposes that are
recognised as charitable law. A charitable trust benefits the individual, the beneficiaries and charity.
In order for the it to be considered a charitable trust there
must be a purpose and it must be for the publics benefit. In
order to be considered a charitable ‘trust’ rather than just a
charity there must not be a wider membership with
democratic value as the trustees are accountable to those
members. An example of a charitable trust may be The
Salvation Army.
Voluntary:
A voluntary organisation is an organisation with the prime motive of creating a social impact rather
than a profit. Individuals running this type of business do not get paid and it is strictly voluntary. This
type of charity ensures all funds raised go towards a certain cause leading to a bigger
3
, BTEC National Extended Certificate in Business
Unit 1- Task 1 (P1/P2/P3/M1/M2/D1)
Hafsah Nadeem – 13LPP
social/developmental impact on those affected by the cause. There are
3 types of organisations. These are non-government organisations
(NGO’s), third sector organisations and civil society organisations. An
NGO is a non governmental organisation legally constituted by natural
or legal ‘people’. An NGO runs independent from any government
intervention, even if it is funded by the government. An example of this
could be Amnesty International. A third sector organisation refers to a range or organisation that
don’t fall under the public or the private sector. These types of charities are generally independent
of the government and it’s driven by values such as history and culture. Lastly, a civil society
organisation is an organisation looking toward uniting people with shared goals and interests as
opposed to generating profits or seeking governing power. A good example of this could be churches
or faith based organisation. A really good overall example of a voluntary charity could be YMCA or
World Vision.
Purposes: the reasons for why a company was initially founded.
Supply of products or services:
A company can have various products and services. This would be dependent on what sector the
business operates in and the scope of that business. For example a local business may not be able to
supply their services to people outside of the local community however a national/international
business have greater opportunity. The business would look at the most easiest and profitable way
to deliver their products or services to consumers. Additionally, this is also dependent on the sector
the business operates in. If a business operates in the primary sector, they are likely to deliver their
services and products mainly to secondary businesses as the product is not fully complete. However,
secondary and tertiary sector businesses are at a greater advantage as they are bale to use the
product from the primary sector and supply it to their consumers. This would also apply for tertiary
and quaternary sector businesses who aim to provide their services to the greater population.
Differences between a for profit and not for profit business:
Profit and not for profit businesses have different motives. Although for profit businesses may have
many goals to acquire, their primary goal is to generate profit and develop effective and efficient
products or services to benefit their consumers. Therefore, companies develop products and
services to optimize their production and overall increase consumption by customers. However, not
for profit organisations differ as their primary goal is dedicated to a social cause or advocating a
particular standpoint.
Another difference between for profit and not for profit organisations is that the target audience is
different from each other. For profit businesses focus their products or services on a particular target
audience. Their target audience may be niche and their products must therefore be suitable for
them in an adequate sense. The reason a for profit business must have a target audience is to
establish a relationship with their consumers and initiate a consistent feedback loop leading to an
increase in revenue. Furthermore, this relationship of a continual feedback loop will allow them to
expand and broaden their products or services which is another key goal for for profit businesses.
However, a not for profit organisation does not look at a target audience. They may be provided
with a general idea of where the money will be used to help people but there is no specific target
audience it has to reach.
Finally, a key difference between for profit and not for profit businesses are the leadership that they
are operation under. For profit businesses have a clear way of leadership whether that a small
4
Unit 1- Task 1 (P1/P2/P3/M1/M2/D1)
Hafsah Nadeem – 13LPP
Features contributing to the success of contrasting businesses.
Introduction:
The Economic Development Unit have proposed an opportunity in which I am required to research
and collect information for two contrasting businesses and produce a report. In this report I will be
analysing the features that have contributed to the success of two contributed businesses. In this
case I have chosen to research Tesco, a public limited company, and British Red Cross, a charity that
is registered and also non-profitable. The reason I have chosen these two businesses is because they
contrast heavily from what they sell to the type of ownership this business has. ASDA sells products
to customers with the motive of profitability and expansion whereas funds from the British Red
Cross go towards providing care and comfort to those in need. Both of these companies excel and
are the dominant firms in their respective specialism and therefore wiser decisions.
1/A.P1 Explain the features of two contrasting businesses
Ownership and Liability:
Private: Exclusive or individual ownership of an industry, asset or enterprise.
Sole trader- A sole trader also known as a self-proprietorship is a self-employed individual who owns
and runs their business as an individual. It follows a simple business structure in which the individual
is in ownership, runs and owns the entire business. With this responsibility, the owner is responsible
for its assets and profits after tax. As a sole trader, you are allowed to have employees but all the
liabilities fall under the owner’s name and employees are not at risk of losing out on personal assets.
An example of a sole trader-ship could be a local convenience store which is owned by private
individuals who have no partners.
Partnership:
A partnership is an agreement between two or more individuals/businesses or organisations which
come together, negotiate and agree to operate a company. With this, each party will receive the
agreed percentage of profit, have a agreed level of liabilities against the individual party and most of
all equal ownership. There must be at least two parties in order to be considered a partnership.
There are 3 different types of partnership and these are ordinary partnership, limited partnership
and limited liability partnership. An ordinary partnership is where there is no legal entity of the
partnership and does not need to be registered with the government however must undergo HMRC
regulations for tax purposes. A limited partnership is a combination of ordinary and limited partners.
Limited partnerships must register with Companies House but don't generally have to make an
annual return or file accounts. It is limited to the amount of money invested and personal assets
would not be taken into account in the case of bankruptcy. Lastly, a Limited Liability Partnership is
one where there are at least two designated members. Limited liability partnerships are taxed as
partnerships but can utilise the benefits of a being cooperate entity. An example of a partnership
could be GoPro and Red-bull. GoPro and Red-bull both look at thrill seeking, adventurous and
athletic people. Due to the similarities they are considered a great partnership as they are able to
significantly highlight each others qualities and promote sales, leading to successful business
objectives.
Private limited company:
A private limited company is a privately held small business entity that limits owner liability to their
shares, limits the number of shareholders to approximately 50 and restricts them from publicly
1
,BTEC National Extended Certificate in Business
Unit 1- Task 1 (P1/P2/P3/M1/M2/D1)
Hafsah Nadeem – 13LPP
trading their shares. Within a private limited company, the company operates as a distinct legal
entity to their shareholders. This means that all the business assets, liabilities and profits belong to
the company itself. Directors own private limited companies and personal assets are not at risk as
they are considered an employee. Anyone can set up a private limited company and some examples
of sectors that can operate as private limited companies can be hairdressers, driving instructors and
photographers.
Public Limited Company:
Public limited company is a company that is managed by directors and owned by its shareholders. A
public limited company offers shares that are available to the public. A public limited company has
additional regulations such as further admin tax and making their financial reports public therefore
the stake holders have all the information they require in order to invest. In order for a business to
be deemed as a Public Limited Company is that it must have at least two shareholders and have
publicly issued shares of at least £50,000 to the public or an equivalence in euros before they can
publicly trade. The reason they need to be more open about their business is because the company
is listed on the stock market and need to be transparent in order for increased investors and
shareholders.
Cooperative:
A cooperative is a legal entity that is under the ownership of members. This means all decisions
made meet their shared needs. Cooperatives follow 7 key values and ethics such as Open and
voluntary membership is any person who is willing to accept the
responsibilities of being a part of a cooperative. Democratic
member control is up where members have control over setting
policies and making decisions. Members' Economic Participation
is where members are key contributors to the capital of the
cooperative and do not have this money redistributed to them.
Autonomy and Independence where the ownership is
predominantly democratic, reducing the interaction of outside
organisations. Education, training, and information are key
aspects as it prepares members by training them to contribute to the development of the given
cooperative business. Cooperation among cooperatives in which they decide to create structural
changes regionally, nationally, and internationally in order to make the community a better
environment for social and economic sustainability. Concern for Community to create a business
objective of sustainable living.
Limited liability:
Limited liability is a form of legal protection for owners and shareholders preventing individuals from
being personally accountable for any company debts or financial losses.
In order to be a limited liability, it is essential to provide cooperate and
financial information. This is easily fulfilled through several annual filing
requirements and event-driven obligations the submission of
confirmation statements, filing tax returns and annual accounts and
reporting any significant changes in the business. Thereafter, this is
placed on a public record. Legal requirements like being incorporated in
company house, having one share holder and one director above the
2
,BTEC National Extended Certificate in Business
Unit 1- Task 1 (P1/P2/P3/M1/M2/D1)
Hafsah Nadeem – 13LPP
age of 16 and the registered office must be situated in the country of incorporation. Examples of
limited liability companies could be Blackberry, Sony and Nike.
Unlimited liability:
Unlimited liability is where the business owner is liable for any
debt it may incur regarding to the business. With an unlimited
liability, the owner can lose both assets tied to the business as
well as personal assets which makes this type of liability
riskier. If the business falls into debt or they are unable to pay
the baseline costs of running their business, there is no
capped limit as to how much debt the individual/group may have to pay back. However, this type of
liability may be more suited to businesses that don’t want a public record. Having a public record
would show inflows and outflows of a business to reveal profit and loss. This type of liability is more
common for sole traders until they decide to incorporate as they are in sole ownership till that point.
Public: state or public ownership of an industry, asset or enterprise.
Government Department:
A government department is a sector of the UK government that handles particular areas of interest.
Government departments can be ministerial and non-ministerial. Ministerial departments tend to be
politically led by the government minister or otherwise known as the ‘Secretary of state’. Followed
by this, there are junior ministers, civil servants, led by senior civil servants. The senior civil servant is
in charge of general administrative management. Ministerial departments deal with topics that
require a direct political oversight for example Department of Transport. Non-Ministerial
government departments usually cover matters where direct political oversight is inappropriate or
unnecessary. It protects them from political interference and is held by senior civil servants.
Examples of this can be Ofsted or Ofgem intended for regulatory purposes.
Not for profit: A legal entity that doesn’t earn any profit for its owners.
Charitable trust:
A charitable trust is a type of charity run by a small group of people known as trustees. Rather than
electing trustees they are appointed and the membership doesn’t widen across any third party. A
charitable trust is unable to be incorporated meaning it cannot have property in its possession or
enter contacts. The trustees may use income or capital to benefit charities of purposes that are
recognised as charitable law. A charitable trust benefits the individual, the beneficiaries and charity.
In order for the it to be considered a charitable trust there
must be a purpose and it must be for the publics benefit. In
order to be considered a charitable ‘trust’ rather than just a
charity there must not be a wider membership with
democratic value as the trustees are accountable to those
members. An example of a charitable trust may be The
Salvation Army.
Voluntary:
A voluntary organisation is an organisation with the prime motive of creating a social impact rather
than a profit. Individuals running this type of business do not get paid and it is strictly voluntary. This
type of charity ensures all funds raised go towards a certain cause leading to a bigger
3
, BTEC National Extended Certificate in Business
Unit 1- Task 1 (P1/P2/P3/M1/M2/D1)
Hafsah Nadeem – 13LPP
social/developmental impact on those affected by the cause. There are
3 types of organisations. These are non-government organisations
(NGO’s), third sector organisations and civil society organisations. An
NGO is a non governmental organisation legally constituted by natural
or legal ‘people’. An NGO runs independent from any government
intervention, even if it is funded by the government. An example of this
could be Amnesty International. A third sector organisation refers to a range or organisation that
don’t fall under the public or the private sector. These types of charities are generally independent
of the government and it’s driven by values such as history and culture. Lastly, a civil society
organisation is an organisation looking toward uniting people with shared goals and interests as
opposed to generating profits or seeking governing power. A good example of this could be churches
or faith based organisation. A really good overall example of a voluntary charity could be YMCA or
World Vision.
Purposes: the reasons for why a company was initially founded.
Supply of products or services:
A company can have various products and services. This would be dependent on what sector the
business operates in and the scope of that business. For example a local business may not be able to
supply their services to people outside of the local community however a national/international
business have greater opportunity. The business would look at the most easiest and profitable way
to deliver their products or services to consumers. Additionally, this is also dependent on the sector
the business operates in. If a business operates in the primary sector, they are likely to deliver their
services and products mainly to secondary businesses as the product is not fully complete. However,
secondary and tertiary sector businesses are at a greater advantage as they are bale to use the
product from the primary sector and supply it to their consumers. This would also apply for tertiary
and quaternary sector businesses who aim to provide their services to the greater population.
Differences between a for profit and not for profit business:
Profit and not for profit businesses have different motives. Although for profit businesses may have
many goals to acquire, their primary goal is to generate profit and develop effective and efficient
products or services to benefit their consumers. Therefore, companies develop products and
services to optimize their production and overall increase consumption by customers. However, not
for profit organisations differ as their primary goal is dedicated to a social cause or advocating a
particular standpoint.
Another difference between for profit and not for profit organisations is that the target audience is
different from each other. For profit businesses focus their products or services on a particular target
audience. Their target audience may be niche and their products must therefore be suitable for
them in an adequate sense. The reason a for profit business must have a target audience is to
establish a relationship with their consumers and initiate a consistent feedback loop leading to an
increase in revenue. Furthermore, this relationship of a continual feedback loop will allow them to
expand and broaden their products or services which is another key goal for for profit businesses.
However, a not for profit organisation does not look at a target audience. They may be provided
with a general idea of where the money will be used to help people but there is no specific target
audience it has to reach.
Finally, a key difference between for profit and not for profit businesses are the leadership that they
are operation under. For profit businesses have a clear way of leadership whether that a small
4
