This document is for P1 to explain the features of two contrasting businesses. In this document it compares a large supermarket Asda to a small business The Curious Comb. It explains the features of both businesses by identifying what sector they belong in, what type of business they are and giving...
The purpose of this assignment is to
explore the features of different businesses
and what makes it successful. The
businesses that I have chosen is Asda and
The Curious Comb as I need to contrast
these two businesses in order to explore
the difference and similarities. Asda is a large supermarket that sells grocery,
general merchandise, financial services located in Charlton however there is around
631 stores located in the UK. 1 Asda is a British supermarket retailer that was found
in 1949 and wasn’t expanded into the south of England until the 1970s and 1980s. 2
This supermarket was not listed on the London Stock of Exchange until 1999 3when
it was obtained by Walmart. This means Asda is a subsidiary/daughter company
because it is owned or controlled by another company. 4 The Curious Comb is a
hairdresser’s shop (small business with one store) located in Greenwich Peninsula
and the owner of this shop is called Selena who is a level 4 stylist. This store
currently employs six main hair stylists (employees) and all have their speciality. 5
Asda is a public limited company (PLC)6 which means the company can offer shares
of the business to the public and sells their stocks on the London Stock Exchange.
There are requirements which a company must meet before they can become a
PLC- they must have share capital of at least £50,000 and they must have two
shareholders, two directors and a
qualified company secretary. This means
Asda can raise a large amount of cash
quickly by selling shares by being a
public limited company.7 The advantage
of being a PLC for Asda is that they can raise money easily because they can sell
shares on the stock market and can easier to growth and diversify. The
1
https://corporate.asda.com/our-story
disadvantages of Asda becoming a PLC is disagreements over how to run the
company because shareholders own a PLC but directors control it so it is likely that
directors may make decisions that the shareholders disagree with it. Another
disadvantage is threat of take over because allowing the public to buy shares of the
company, there is always the threat that someone will buy enough shares to take
over the whole company. One last disadvantage Asda could get of being a PLC is
that they would find it difficult to pursue objectives other than increasing profit. 8
On the other hand, the ownership of the Curious Comb belongs to the private sector
of a sole trader.9 A sole trader is a business owned and controlled by one person
and are usually small in size e.g. hairdressers, butchers and electricians. This means
The Curious Comb’s owner relies on her own savings, bank loans or loans from
friends and family to finance her business because
that is what a sole trader does in order to
invest/manage their business. The advantage of
being a sole trader is that they can keep all the profit
they make for themselves. This means the owner
Selena10 can run the business as she sees it and
make all the key decisions by herself or with her
employees. Being a sole trader is much easier for
Selena because it is easier to set up as it is legally
the easiest way of all types of ownership. As a result, it means there is less rules and
regulations for The Curious Comb to follow compared to other type of organisation.
The disadvantages of The Curious Comb belonging to the private sector of a sole
trader is that it can be difficult to raise finance due to the reason that sole traders
take on all risks of starting their business and have the disadvantage of unlimited
liability. Unlimited liability means when the debts stays with the business instead of
with the owner. This will happen to The Curious Comb if the owner is being too liable
to the organisation’s debt. This means the personal assets that belongs to The
Curious Comb such as a car or house are at risk of being sold to pay off business
debts. A second disadvantage is that sole traders tend to work for long hours which
8
https://www.informdirect.co.uk/company-formation/public-limited-company-advantages-disadvantages/
9
Questionnaire qustion2
10
Questionnaire question 3
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