This document includes 50 detailed pages of Distinction* graded coursework for Unit 1 - Exploring Business Assignment 1, covering: P1,P2,P3,M1,M2 and D1.
This assignment is on Tesco and Cancer Research UK and can be used as a guide of exactly what you need to include to achieve a Distinction in...
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UNIT 1 - EXPLORING BUSINESS ASSIGNMENT 1 P1, P2, P3, M1, M2, D1 EXAM WITH ACTUAL QUESTIONS AND COMPLETE 100%CORRECT ANSWERS WITH VERIFIED AND WELL EXPLAINED RATIONALES ALREADY GRADED A+ BY EXPERTS |L...
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Business 2016 NQF
Unit 1 - Exploring Business
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EDU REPORT:
Compiled by (Name)
Unit 1 - Assignment 1, Learning aims A and B
Features of Business which contribute to the success of two contrasting businesses
INTRODUCTION:
This report will cover two contrasting businesses. The first business is a FOR-PROFIT
organisation (Tesco) operating in the private sector, the second is a NOT-FOR-PROFIT
organisation (Cancer Research) which is a charitable trust. This report will explore the
features, organisational structures, aims and objectives, stakeholders alongside how Tesco
and Cancer Research UK communicate with their stakeholders and an evaluation of what
makes the two businesses successful, drawing to a conclusion reflecting all areas covered in
the report.
FEATURES OF THE BUSINESSES (A.P1)
In P1 I will firstly cover the features of Tescos which includes, how it is owned, its liability,
shareholders, scope, size, sector, background and growth of the business, I will then repeat
this explanation and analysis for Cancer Research UK. Before I cover the features of these
businesses, I will define the features in detail then link them to each business after.
CORPORATE SECTORS:
Businesses exist in three main sectors, private sector (also addressed as the FOR-PROFIT
sector), where the business is run by private individuals and will aim to maximise profits, the
profits in the private sector are taxed by the government, these taxes are used for the
funding of the public sector. Some private sector businesses combine with the government
to create a public-private partnership where the government helps the private business to
supply essential goods or services to the public. The public sector is owned and run by the
government, they are usual services that benefit society, for example the NHS and
education. The public sector is funded by the taxes of the private sector (and income tax of
the public), without this money they would not be able to operate as they do not generate
any income. The third sector is NOT-FOR-PROFIT which is made up of charities and
voluntary projects also focused at benefitting society, they will still aim to maximise profit,
however this profit is not used to satisfy those who own the business, instead it is reinvested
and ploughed back into the business to fund their activities and help the cause that they are
representing. NOT-FOR-PROFIT organisations are exempt from tax, this means that the
government does not take a percentage of their profits due to the business actively trying to
benefit society and it would cause lots of criticism, this helps them because it means they
can reinvest more money into their work.
OWNERSHIP:
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,In this section I will go into great detail about each ownership type, then later link it to Tesco
and Cancer Research UK and explain how it is suitable for the way they operate.
There are six common types of business ownership which are specific to how they operate
and run. The most common type is a Sole Trader also known as a Sole Proprietorship,
which is the most basic and simple ownership type as it is unincorporated and owned by one
individual who is personally responsible for the businesses debts, profits and liabilities,
meaning that they have unlimited liability and the business is not seen as a separate identity
so the owners personal finances and assets can be used to pay off debts. The Sole Trader is
the most common and basic type of ownership because of the limited paperwork needed to
get it up and running due to its simple legal structure and minimal licences that need to be
acquired in order for it to legally function, however this simple structure carries a large risk
which can make it hard to raise capital as potential lenders, such as banks will be hesitant to
lend money in fear that they will not get it back. An example of a Sole Trader would be a
micro or small business like an electrician with few employees or who is self employed
because this ownership type is suitable for very small businesses, in fact 59% of businesses
in the UK are Sole Traders.
A Partnership is also an unincorporated business which is driven by 2 or more individuals
(usually up to 20), each partner holds a percentage/share of the business, this percentage
determines the sum of profit the partner gets. The partners also share responsibility for the
losses/debts of the business. There are two types of partners; a general partner who is
actively engaging in the business's decisions and bringing new ideas to help improve,
innovate and advance the business, whereas a sleeping partner is an individual who has no
interest in contributing to the business other than making money from their investment. A
typical example of a partnership are dentists as they will commonly go into partnership with
each other sharing expertise and offering private dental services.
The third type of ownership is a Public Limited Company (PLC), the shares are offered to
the public on the stock exchange market and anyone who purchases these shares are
labelled as ‘shareholders’, the more shares an individual has the more influence they have
when making decisions. This can also lead to hostile takeovers where a different
organisation acquires 51% or more of the shares/voting stock giving them full control over
the business. Unlike Sole Traders and Partnerships PLC’s are incorporated, becoming
incorporated is the process of legally proclaiming a corporate entity detached from its
shareholders and owners this requires a lot of paperwork due to the complex structure, a few
examples of the paperwork needed are;
- Form 10
- Form 12
- Memorandum of Association
- Articles of Association
- Supplying Companies House with a set of accounts every year
As the company has a separate legal identity to its owners it gives them limited liability,
which means the owners are not personally accountable for the debts incurred by the
company, they will only lose the capital they have invested.
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,A Private Limited Company (LTD) is very similar to a PLC as it is also incorporated with
limited liability and is owned by shareholders, however the shares are not publicly available
on the stock exchange instead the company will ‘invite’ certain individuals to buy their
shares. Some LTD’s will convert into a PLC by ‘floating’ their shares onto the stock
exchange, this process is called Flotation and it allows companies to raise capital very
quickly which is most commonly used to expand the business. An example of a private
limited company is Netflix as their shares cannot be publicly bought on the stock exchange
market. The LTD ownership type is commonly adopted by larger companies because it is
suitable for a company with many employees and departments.
A Cooperative is controlled by its employees, customers, and local communities rather than
distant shareholders. The members decide where the profits go and have an equal say in
how the business should be run. The biggest example of a cooperative is CO-OP who are a
large retailer, it is owned by individual members rather than investors holding shares.
The last type of business ownership is a Franchise, an established company ‘franchisor’ will
licence the rights to sell under their name to a ‘franchisee’. The Franchisor will offer
equipment, advice and training to the franchisee, and the franchisee will sell
products/services under the franchisor's name, in return the franchisee has to pay a royalty
fee regularly.
LIABILITY:
Unlimited liability -
The owners of the business are personally liable for all debts and money owed by the
business, the owners may not only just lose their investment in the business, they will also
lose their personal assets and finances in order to pay the sum of money that they owe. This
is because the business does not have its own legal identity. Having unlimited liability holds
a greater risk than limited liability and it can be hard to find investors to raise capital. Usually
smaller businesses (SMEs) will have unlimited liability due to the mass paperwork required
to become incorporated and get limited liability, it requires a lot of money and time to
become incorporated and therefore it may not be possible for small businesses to do so. The
ownership types that have unlimited liability are Sole Traders, Partnership and some types of
charities.
Limited liability -
This is where the business has a separate legal identity to its owners/shareholders and if the
business gets into debt the owners are not held personally liable for the debts, instead they
will only lose the money they have invested into the business. It is typical for larger
businesses to have limited liability as it carries a reduced risk and investors are much more
confident in investing and therefore it may be easier for the business to raise capital. A
disadvantage to acquiring limited liability is that to do so it requires a lot of paperwork
however this is not much of a problem to a large businesses as they have certain functional
departments that will deal with the paperwork whereas small businesses may not have this
and will find it difficult to produce all legal documents required to become incorporated and
3
, have limited liability. Businesses can have limited liability in two ways. The first is limited by
shares, this means that the company is owned by shareholders and those shareholders will
only lose the value of the share that they hold (however much money they bought their
shares for and how much they have additionally invested into the business). Some examples
of businesses that are limited by shares are Tescos, Netflix, Amazon and Tesla which fall
under the business ownership types of PLC, LTDs, Cooperative, and Franchises. The
second is limited by guarantee which means that the business is not owned by shareholders
and that there are guarantors who have agreed on a sum of money that they would pay to
the creditor if the business got into debt. An example of a business that is limited by
guarantee are charitable companies such as Cancer Research UK, British Red Cross and
WWF.
BUSINESS SECTORS:
Primary - Businesses that operate here extract raw materials (drilling for oil, mining for
metals), they will then sell them to the secondary sector businesses or use the raw materials
for themselves. An example of this is oil rigs which is a large offshore platform which drills for
oil.
Secondary - The raw materials are manufactured into a suitable product that is sellable and
designed to do a specific job, these businesses will then sell their finished products to
retailers in the tertiary sector. Some examples of businesses that operate in this sector
include Tesla as they manufacture their cars in large factories and building companies.
Tertiary - Retail businesses operate in the tertiary sector as they provide services to
distribute the manufactured goods to customers, this sector also includes general services
such as education, transport, training and tourism. This can be B2B (business to business)
or B2C (business to customer). Some examples of businesses that run in this sector include
Amazon, Tesco, Budgens and Uber.
Quaternary - The quaternary sector coincides with the tertiary sector in some areas. Some
examples are; communications, information services, research and development where
information is sourced from other sectors to develop new products and services.
Some businesses operate in different sectors, for example Tesla operate in the secondary,
tertiary and quaternary sector because they firstly manufacture their cars in factories using
the raw materials supplied by the primary sector, they then also fulfil orders for their cars and
distribute the cars to customers which means that they also operate in the tertiary sector.
They also run in the quaternary sector as they research and develop more efficient electric
motors for example, using scientific research. These sectors allow businesses to be
interdependent, as they are relying on separate businesses in other sectors to supply them
with raw materials to manufacture goods and finished goods to then distribute and sell to
customers.
SCOPE AND SIZE:
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