BTEC Business & Law Unit 1 Assignment 1
Features contributing to the success of contrasting businesses
Introduction
This report will evaluate the features contributing to the success of two contrasting
businesses. These being Nike, a business that operates in the private sector, and the British
Heart Foundation, a not-for-profit organisation.
P1: Explain the features of two contrasting businesses
Background
Nike was founded by Bill Bowerman and Phil Knight on January 25, 1964, as “Blue Ribbon
Sports”, and became Nike, Inc. in 1971. Knight was a track athlete at the University of
Oregon, where he met Bowerman, the university's track coach. The two men produced the
idea to import high-quality running shoes from Japan and sell them at a lower price than
their competitors. They named the company Nike, after the Greek goddess of victory. The
company initially struggled, but eventually grew to become one of the world's largest and
most successful sportswear brands.
The British Heart Foundation was founded in 1961 by a group of medical professionals and
researchers who were concerned about the growing prevalence of cardiovascular disease in
the UK. They believed that more needed to be done to raise awareness and funding for
research into this area, and so they came together to form the British Heart Foundation. The
organization initially focused on funding research projects and raising awareness about the
importance of heart health, but over time it has expanded its scope to include a range of
initiatives designed to support heart disease patients and their families and is now one of
the largest independent funders of cardiovascular research in the UK.
Ownership
Business ownership refers to having legal control over a business. It gives the owner the
legal right to decide how the company is administered and how it is run. There are three
main types of business ownership: private, public & not-for-profit organisations. In this
report I’ll be focusing on two of these 3 ownerships; private & public business. Private
businesses can be owned by a single person, a small group of people, or a larger group of
people. They can also take on different legal structures, such as a sole proprietorship,
partnership, or limited liability company (LLC). Types of public businesses include a
government department, such as the department for education, and a not-for-profit
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business would include charitable trusts and voluntary organisations such as the WWF and
BHF.
A sole trader is a type of private business ownership, in which a single individual owns and
operates the business. The sole trader is responsible for all aspects of the business,
including making decisions, managing finances, and assuming liability for any debts or legal
issues that may arise. Sole traders have an unlimited liability. Some advantages include
keeping all profits for themselves, having control, and making their own decisions. They also
have operational flexibility, which means they can complete their tasks at their own pace
and on their own time. The disadvantages are that they are unable to discuss their ideas
with someone, and if a problem arises, they will be held personally liable. Furthermore,
some customers may refuse to do business with sole traders. A hairdresser or a newsagent
are two examples of sole traders.
Partnership is the corporation of two or more people working together as partners.
Partnerships have an unlimited liability. Being in a partnership provide you with access to a
broader range of expertise for various aspects of your business, bridging the expertise and
knowledge gap. Another advantage is capital—due to the time and effort required to start a
business, the partners will fund the venture with start-up capital. The more partners there
are, the more cash they can put into the business, allowing for greater flexibility and growth
potential. It also implies increased capability profit, which will be equally distributed
amongst the partners. On the other hand, there are some disadvantages to operating a
company with others. For instance, partnerships are subject to unlimited liability; each
partner bears the same responsibility and financial risk of the company, which can put some
people off starting a joint venture. This can be mitigated by forming a limited liability
company, which benefits from the limited liability advantages of public companies while
also taking advantage of the corporate model's flexibility. Profit sharing is another
disadvantage. Profit sharing requires partners to split profits equally. This can lead to
inconsistency, where stakeholders are not putting in their fair share of effort in the
operation or management of the business but are still profiting from it. Uber and Spotify are
an example of a partnership. Both companies want more users, so Uber riders can create a
Spotify playlist and enjoy their car ride more. As a result, both businesses have satisfied
customers.
Nike is a for-profit, private limited company, which is a type of private business. It is a
business structure in which the company is owned by its shareholders, who are individuals
or entities who own stock in the company. It is not a public company where its shares are
traded on a stock exchange. A private limited company is established by enrolling the
business with Companies House and have limited liability. Nike having limited liability is an
advantage of operating as a private limited company. This means that the personal assets of
the owners and shareholders are protected if the company is sued or incurs debt. Another
advantage is that private limited companies have greater flexibility in terms go how they are
structures and managed, compared to public companies which are subject to stringent
regulations. However, a disadvantage to operating as a private limited company could be
the limited access to capital they have. Nike could have more difficulty raising capital as they
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cannot sell shares of stock to the public. Another disadvantage is that limited companies
incur higher costs than others due to the need to adhere to company law and submit
accounts to Companies House. Limited companies must use documents called
Memorandum of Association and Articles of Association. The expenses can include
accountant fees, charges associated with forming a business, and yearly regulatory costs.
A public limited company (PLC) is a business structure that is publicly traded on a stock
exchange and has issued shares of stock to the general public. As a result, a PLC is owned by
a large number of shareholders, each of whom has the right to vote on certain company
decisions and receives a portion of profits in the form of dividends. A PLC has limited
liability. One of the several advantages of being a PLC is the ability to raise a capital. PLCs
can raise large amounts of capital by selling stock to the public. This then provides the
company with funds to help it grow, develop new products, focus on research and
development, and enter new markets. Another advantage is a PLC has limited liability, so
the personal assets of the shareholders aren’t at risk if the company is sued or incurs debt.
However, a drawback from operating as a PLC is that you could experience a loss of control.
If more than half of a company's shares are sold, shareholders may group together to
become a majority shareholder and influence the company's strategic decisions., which
means that the founders and management team may have less control over the direction of
the company. Furthermore, PLCs are subject to increased regulatory oversight, which can be
burdensome and time-consuming.
A cooperative business is an enterprise that is owned and controlled by a group of
individuals who come together to meet a common economic, social, or cultural need. The
members of a cooperative business typically share the profits or benefits of the enterprise,
and they have a say in how the business is run through a democratic decision-making
process. One of the key advantages of cooperatives are that decisions are typically made
democratically, with each member having a say. Furthermore, cooperatives can provide
economic benefits to its members as they often provide their members with benefits such
as discounted prices on products or services, as well as a share of the profits. However, a
disadvantage is the limited capital. They may have difficulty raising capital as they don’t
have to option of selling shares to outside investors. Another is the democratic decision-
making process can be slow and may lead to conflicts among members.
The British Heart Foundation (BHF) is a registered charity in the UK, or a non-profit
organisation. Charities are organisations that exist to benefit the public and are typically
concerned with issues such as social welfare, religion, education, health, or the arts. They do
not exist to make a profit, and any surplus funds are reinvested in the organisation or used
to further its charitable goals. Not-for-profit organisations come in a variety of forms,
including charities, foundations, and non-governmental organisations (NGOs). The BHF is a
registered charity in the United Kingdom that is primarily supported by donations and
fundraising activities. An advantage of being a charity is the tax benefits. Donations to
charitable organizations are often tax-deductible, which can be an incentive for individuals
and businesses to give. Another is the positive impact on the lives of those they serve and
on society as a whole. However, a disadvantage could be the lack of resources as charitable
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organizations often rely on donations and grants to fund their operations, which can be
unpredictable and may not be sufficient to meet the needs of the organization.
A public business is one that is owned by the government and operated for the general
benefit of the people. A government department is a type of public business. A government
department is a division of a government that is responsible for a specific area of public
policy or administration. Governments are typically organized into various departments or
agencies, each with its own mandate and responsibilities. For example, a country's
government may have a department of education that is responsible for developing and
implementing education policy, or a department of transportation that is responsible for
maintaining and improving the country's transportation infrastructure. Some of the
advantages of government departments include Specialization. Government departments allow
for specialization in specific policy areas, which can lead to more expertise and efficiency in
the development and implementation of policy. However, there are also some
disadvantages to the use of government departments such as bureaucracy. Government
departments can be bureaucratic, with complex rules and procedures that can slow down
the decision-making process and make it difficult for citizens to access services.
A voluntary organization is a non-profit group that is run by volunteers and is not affiliated
with any government or business. Voluntary organizations may be organized around a
specific cause or issue, such as environmental conservation or homelessness, or they may
provide services to a particular group of people, such as children or the elderly. Voluntary
organizations rely on donations and the efforts of volunteers to carry out their work and
achieve their goals. An advantage to voluntary organizations is the cost-effectiveness. Since
voluntary organizations rely on volunteers rather than paid staff, they can often operate
more cost-effectively than other types of organizations. A disadvantage is the limited
resources. Voluntary organizations may struggle to secure funding and may have limited
resources to carry out their work.
Liability
There are two types of liability, limited liability, and unlimited liability. Nike is a publicly
traded corporation, which means it is a separate legal entity from its owners and
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