The Business Environment

Types of Ownership

Sole trader: A business owned and controlled by one person e.g. a window cleaner

Partnerships: A business owned by between 2-20 people. They share knowledge and skills

Private Limited Companies: This business must be registered before it can operate. The shareholders own the business. It is often small and family owned

Public Limited Companies: This business must be registered before it can operate. The shareholders own the business. The shares are sold on the stock exchange – often-large business

Government departments and agencies: E.g. HM Revenue and Customs and Child Protection Agency. These are often ran by civil servants

Worker cooperatives: This is a body that is owned by the people who work for it. Each member buys shares and contributes to decisions

Charitable Trusts: An organisation that is set up to raise funds and support others or a good cause.

Task 1 – Part 1

Type of Ownership:

Charitable Trusts

Definition:

An organisation that is set up to raise funds and to support others and for good causes.

Advantages: 

The advantages of an organisation helping a charitable cause helps out those in need.  Additionally, it also raises awareness of the cause and to get more people involved with helping out.

Disadvantages:

However this does have its disadvantages. Many volunteers don’t get paid for doing charity work, which can affect the well being of those people.  This is because if a person spends many hours doing shifts as their only option for work, at a charity they will not get paid, meaning they will be doing it out of free will and choice. The charity also has to rely on getting volunteers and donations too. Furthermore, some of the profits do have a chance of going to the wrong part of the company. For example, a charity could be getting given loads of donations, however it decides to spend it all on advertisement – not going to the cause of the charity.

§  Examples in business:

§  Cancer Research UK

§  Macmillan

§  British Red Cross Foundation

§  Help for Heroes

§  Age UK

§  Teenage Cancer Trust

Part 2

Type of Ownership:

Sole Trader

Definition:

A business owned and controlled by one person e.g. a window cleaner

Advantages:

Advantages for a business owned and controlled by only one-person means that they are able to make their own decisions. It also means that person can fulfil their passion and create a legacy for him or herself. Many of the hours are flexible too when being their own boss.

Disadvantages:

Having your own business can be very hard work. Another disadvantage is that you could fail, and you might not have anything to back you up.  Additionally, a business owner is required to pay many taxes.

Examples in business:

·      CallyCo

·      Krushr

·      Energy UK

Stakeholders

(- A person, group or organisation that has an interest in the business. Stakeholders can affect of be affected by a business policies, actions and objectives)

Who are stakeholders?

§  Customers

§  Employees

§  Shareholders

§  Suppliers

§  Owners

§  Local and national community

§  Government

§  Employer Associations

§  Trade Unions

The Business Environment

Profit and Not-for-Profit businesses in the Bourne Area:

Profit businesses such as Tesco are owned by private individuals and the profit goes straight to the owner, which is then shared out accordingly. On the other hand, not-for-profit businesses such as Cancer Research UK are charities, which are set up to make a profit, which goes towards the cause of the charity.

Range of Different Businesses:

Location:

Range of businesses: This refers to the variety of different types of business. They are classified in the three ways: where it operates; what the business is trying to achieve; and the sector of business activity

Local businesses: This is when a new business sets up in your local town e.g. Bourne

National business: This is when a business is local and then decides to set up outlets in other parts of the same country

International business: This is when the business decides to open outlets overseas

Global business: This is when the business has set up shops all over the world and different continents.

Sectors:

Primary Sector: This is a business, which extracts raw materials from nature e.g. a forestry business

Secondary Sector: This is a business that transforms raw materials into finished or part-finished goods e.g. a carpenter

Tertiary Sector: This is a business that provides finished goods and services to individuals or businesses e.g. a furniture shop.

Activity:

Manufacturing: This is a business that works in the secondary sector to make goods and parts

Retailing: This is a business, which is owned by private individuals e.g. Tesco

Mendelow’s Matrix

This matrix tends to be completed with concern to the stakeholder impact of an isolated policy.  Mendelow’s matrix describes 4 types of a stakeholder: A, B, C and D. A is classed as ‘minimal effort’, B is ‘keep informed’, C is ‘keep satisfied’ and D is ‘key players’.

	Low	High
Low	Category A – Minimal Effort	Category B – Keep Informed
High	Category C – Keep satisfied	Category D – Key player

Stakeholders:

Shareholders: A shareholder is when a person has bought shares in company. Shareholders gamble with money, and if they think a business is doing well then they will invest lots of shares in that business. If this is successful, then these shares can be sold. However, its not guaranteed that these shares would double, which will mean that person has lost a lot of money.

Employees: An employee is a person who works for a business and gets paid for their work through wages or a salary. An employee would be looking for high levels of pay, good conditions to work in and possible promotions in a good business.

Customers: This is a person who buys specific goods from a business/shop. Customers would be looking for a good range of products from the business, good service from the employees and high quality products.

Suppliers: A supplier is someone who supplies products to certain businesses. This is how businesses get their stock and products. Suppliers look for consistent orders from businesses, good and regular pay and also steady growth.

Owners: An owner is someone who owns something specific, for example, ‘The proud owner of the new television’. An owner would want to see that their share of profits are increasing gradually, adding value to their business.

Local Community: The local community are the people in a certain area near you. These people want the business to strive and succeed, however also open up job employments opportunities.

Government: The government is a group of people who have the authority to make changes upon a country or state. Governments provide lots of employment amongst communities, and they also comply with legislation – health and safety laws.

Trade Union: A trade union is an association of working people in trades, professions and groups of trades. This group tries to protect their rights and interests.

Employer Associations:  An employer’s organization/association is a collection of stakeholders (retailers, manufacturers etc.) These groups try and seek to match the behaviour of their workers companies by negotiating with the government or certain trade unions.