Introduction
What I need to do?
In this coursework I need to produce a detailed business report on one
medium–sized or large business. In investigating a chosen Case Study I must
comment and analyze each of the following aspects of the Business:
Objectives
Organization
Structure
Culture
Communication Channels
Quality Assurance and Control
“Adding Value”
I need to examine how these factors interrelate to affect the success of
the business. Also I need to explain how quality assurance and control
systems help the business to add value to its products and services.
As example for my investigation I chose Tesco plc., because Tesco is good
example of public limited company and Tesco – is a most popular
supermarket’s network in UK.
How businesses are classified?
I can classify the business by form, by industrial sector, by ownership, by
objective, by size and by location or market.
Forms of businesses.
SOLE TRADER.
Oldest, simplest, most common form of business easy to set up enterprise.
A sole trader exists where a single person owns a business. This is very
common form of organization. Over recent years, the number of sole traders
has grown significantly. There are several reasons for this trend including
more opportunities to work for firms on consultancy basis and government
support for self-employment. Most sole traders work on their own .
Initial capital – savings or borrowed. Very common in retailing, service
trades.
Advantages:
- Easy to set up with little capital and few legal formalities
- The owner controls the business - quick decision making
- Personal contact with customers
- All profits belong to owner
- Satisfaction, motivation, interest in “Working for yourself”
- Business affairs are private – except far tax returns
Disadvantages:
- Unlimited liability for any loss or debts incurred: owner is
responsible or liable
- Cannot “Buy in bulk” and enjoy “Economies of scale”
- Expansions limited by available capital
- Division of labour is difficult
- Continuity a problem…
Good example of sole trader is T. Regan Plant Hire.
PARTNERSHIP
The minimum membership is two partners and the maximum twenty.
Must be at least one general partner who is fully liable for all debts and
obligations of the practice. “Sleeping partner” – not active. Partnership
exist mainly in the professions – doctors, lawyers, accountants and
surveyors frequently run their organization in the form of partnership.
Partnerships normally operate in local or regional markets, though advanced
in information technology are allowing many professions to offer their
services more widely.
- Easy to set up
- More capital with extra partners
- Division of labour – specialization
- Responsibility can be shared e.g. long working hours redused
- Partners have unlimited liability
- Disagreement can cause problems – no sole decision – maker or owner
- Lack of capital may still hinder expansion
- Profits must be shared among all co-owners
- Problem of continuity
Good example of partnership is Rolls-Royce.
COMPANIES
A company is defined as an association of persons that contributes money
(or equivalent value in goods and assets) to a common stock, employ it in
some trade or business, and share the profit or loss arising out of that
business. Join stock companies are governed by and registered under the
Companies Act 1985. A company has a separate legal identity form its
members and can sue in its own name. There are two types of company: public
companies and private companies. Both require minimum two shareholders, and
there is no upper limit on the number of shareholders. All companies enjoy
the benefit of limited liability. Capital is raised by selling shares.
PRIVATE LIMITED COMPANIES
Shares can be transferred privately. All must agree.Private limited
companies are suitable for small and medium-sized operations. This type of
business organization is particularly suitable for family firms and for
small enterprises involving just a handful of people.
Private limited companies find it easier to attract capital because
investors have the benefit of limited liability and this access to finance
makes it simpler for the business to grow.
- Shareholders have limited liability
- More capital can be raised
- Control of company held within the firm
- Shares are transferable
- Profit are shared out among more people
- Legal procedures…involve time
- Not allowed to cell shares to the public
- Restricts amount of capital raised
- Difficult to find a buyer if shareholder wishes to “leave”
Good example of privet limited company is Littlewoods Ltd.
PUBLIC LIMITED COMPANY
The second type of limited company tends to be larger and is called a
public limited company. There are about 1.2 million registered limited
companies in the UK, but only 1 per cent of them are public limited
companies. However they contribute with far more to national output and
employ far more people than private limited companies.
Good example of public limited company is Tesco plc. which I going to
investigate.
CO-OPERATIVES
Co-operatives are organised on a regional basis. Members can purchase
shares and each member has one vote at the Annual General Meeting, no
matter how many shares are owned. Members elect a board of directors who
appoint managers to run day to day
business. The Co-operative is run in the interests of its customers and
part of any surplus is distributed to members as dividend. Shares are not
sold on the stock exchange, which limits the amount of money that can be
raised.
Good example of co-operative is CRS (Co-operative Retail Society).
CHARITIES
Charities are organisations with very specialised aims. They exist to raise
money for “good” causes and draw attention to the needs of disadvantaged
groups in society. They also rise awareness and pass comment on issues,
such as cold weather payments, which relate to the elderly.
Charities rely on donations for their revenue. They also organise fund
raising events such as fetes, jumble sales, sponsored activities and
ruffles. A number of charities run business ventures. Charities are
generally run according to business principles. They aim to minimise costs,
market themselves and employ staff. Most staff are volunteers, but some of
the larger charities employ professionals. In the larger charities a lot of
administration is necessary to deal with huge quantities of correspondence
and handle charity funds. Provided charities are registered, they are not
required to pay tax. In addition, business can offset any charitable
donations they make against tax. This helps charities when raising funds.
Good example of charity is British Red Cross.
FRANCHISES
A franchise is not a form of business organisation as such, but a way of
managing and growing a business. Franchising covers a variety of
arrangements under which the owner of a businnes idea grants other
individuals or groups to trade using that name or idea. However, it is
important to realise that a franchise can trade as a sole trader, a
partnership or a private limited company. The legal form of business that
is chosen will depend on the capital needed, the degree of risk, the number
of people having a stake in the franchise and the personal preferences of
the owner. The person or organisation selling the idea (the franchisor)
gains a number of advantages from the process of franchising. The
franchisor normally receives a share of the profits generated by the
franchise. Usually the franchisee benefits by being granted rights to an
exclusive territory and support from the franchiser in the form of staff
training, advertising and promotion.
Franchising is a cheap and quick way to set up your own business. By the
year 2004, it is estimated that 70 per cent of all new retail outlets in
the US will be franchises.
Good example of franchise is McDonald’s.
Industrial sectors.
PRIMARY – extractive organisations.
SECONDARY – manufacturing organisations.
TERTIARY – providing-services organisations.
Ownerships.
PUBLIC SECTOR: Civil service, Government departments, Public corporations,
Local Authorities.
PRIVATE SECTOR: Sole traders, Partnerships, Limited companies, Charities,
Co-operatives, Franchises.
Objectives.
- To make a profit
- To “Break – even”
- To provide service
Size.
- Small
- Medium
- Large
Locations
- Local
- Regional
- National
- Multinational
E1
Tesco plc.
History
Tesco was founded in 1924. Over the last seventy years, as the food
retailing market has changed, the company has grown and developed,
responding to new opportunities and pioneering many innovations. Today it
is Britain’s leading food retailer.
The founder of Tesco was Sir Jack Cohen. He used his gratuity from his Army
service in the First World War to start selling groceries in London’s East
End markets in 1919. The brand name of Tesco first appeared on packets of
tea in the 1920s. The name was based on the initials of T.E. Stockwell, a
partner in the firm of tea suppliers, and the first two letters of Cohen.
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