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Enterprise Types and Legal Structures

2872 words (11 pages) Business Assignment

23rd Nov 2020 Business Assignment Reference this

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Introduction

It is important for a company to evaluate its market and the world in which it works. The task would cover aspects such as various types of enterprises with different purposes along with the following legal structures. The task will also highlight the scope and size of the organisation, as well as the relationship between the different functional departments.

Section 1 - LO1:

Explain different types and purposes of organisation’s; public, private and voluntary sectors and legal structures

There are four main types of sole ownership, corporation, limited liability, and corporate business arrangements. Increasing framework has different implications for business owners and their corporations in terms of tax, profits and responsibility.

The companies working in various sectors are currently facing extreme competition in the marketplace. The economy continues to be overfilled and the level of competition is rapidly rising.

Sector

Purpose of Legal Structure

Private

Private-sector companies are owned and regulated by individuals or groups from people. Private companies ' main purpose is to make money for the director. Private firms are also independent of the government of the country.

Public

This field comprises either private or state-owned companies. The government will take the income from the public companies or it will be reinvested.

Voluntary

 

This sector's organisations are very similar to those of the public. It is made up of groups that aim to fulfil society's demands. Volunteer organisations ' primary purpose is to emphasise community welfare.

Legal Structure

Description

Partnership

This kind of company, along with managerial capital, is easy to start and offers extra financial. Partners will borrow money, hire people, and interact with each other in industry.

Sole Proprietorship

The sole proprietorship companies are not synchronised, and a small amount of start-up costs is required. It is held by a person and profits made are treated as the individual's own revenue.

Limited Liability Company

 

It consists of a group of individuals who offer anonymity to the owners of their personal assets, thus requiring    the owners to be excised. Investment is made by interest rate trade and each participant is responsible.

Limited Partnership

Partners enter a special contract in this arrangement, which allows them to avoid prosecution, allowing partners to pay the same amount of tax.

 

Explain the size and scope of a range of different types of organisation’s

 

Size

Scope

Private Company: Tesco

Tesco is a multinational company and one of the leading retailers throughout the world. The revenue of the company as per the reports of 2017 was£55.9 billion and the operating income was £1,280 million. The net income of the company was £ (54) million and the company has employee strength of more than 476,000 (Tesco plc, 2019).

As a private company, Tesco has immense scope of penetrating into a new market and expand their business even further in an effective manner.

Public Company: Network Rail

 

Network Rail is a national train running body. Network Rail generated revenue of £ 6,580 million, according to the 2017 estimates, and its operating cost was £ 3,192 million. In comparison, the company's net debt is £ 51.2bn and £ 6.634 m in capital spending (Cdn.networkrail.co.uk, 2019).

The organization's reach is regional and local.

Voluntary Company: UNESCO

 

At the end of 2017, UNESCO's total current resources was $771.1 million and the company's total income were $648.4 million. In contrast, the organization's net assets rose from $2.2 million in 2017 to $257.6 million (Unesco.org, 2019).

The organization's range lies all over the globe. The organization's goal is to eliminate people's societal issues and encourage academic value.

LO2:

Explain the relationship between different organisational functions and how they link to organizational objectives and structure

Such an organisation includes different operating divisions such as accounting, revenue, communications, logistics and human resources. The organization's finance division calculates the allocation of the assets needed to carry out the business operations. The production unit, on the other side, determines the business processes required to produce

Therefore, the marketing department is responsible for evaluating the industry customer requirements and presenting the data to the department of operations. It helps the division of activities to manufacture products and services appropriately. The marketing department also articulates the marketing plan that involves the section of customers where the sales depart

Section 2 - LO-3

Identify the positive and negative impacts the macro environment has on business operations, supported by specific examples.

The positive and negative causes of the UK retail industry's economic climate are:

Political

Brexit causes massive negative impact on businesses such as Tesco Plc, such as the political turmoil, contributing to profits in the company. The positive aspect of this issue is that local production units have a better chance of selling their goods around larger retail outlets

Economic

The currency fluctuations in the price of the global pound have an effect on the retail sector, because when the value of the pound decreases, the exports are cheaper and the output costs more.

Social

The ageing population of the UK has a negative impact on the retail industry as it results in lower demand potential resulting in lower profitability.

Nevertheless, the migrant population is on the rise and the retail business is on the rise. In Tesco's case, it can be clearly seen that immigrants are a major part of its clients. (www.retailthinktank.co.uk 2018).

Technological

The positive impact of advancing technology has culminated in online sales of products that have increased sales. Tesco is a prime example of what has contributed to a 5 percent increase in supermarket revenue internet approach. The technology's negative aspect has led to the major issue of brick and mortar closure.

Legal

The negative impact of improved regulation has culminated in retail business houses being prohibited due to strict employment laws from joining such industries. Tesco is currently facing legal action over gender discrimination in conjunction to compensation.

Environmental

The awareness of the environment has a positive impact on the food choices that the retail industry adheres to.

Table1- PESTLE ANALYSIS (Source- created by Muhhamod Rahman)

LO-4

Conduct internal and external analysis of specific organisation’s in order to identify strengths and weaknesses.

SWOT analysis of Tesco Plc is as follows:

Strength

Weakness

The retailer has established online sales

● Varied product line with intense segmentation, with a ton of customer selection under the same roof

● Market leader in the UK market

● Low cost dominance is a major strength

● Local brand awareness along with international brand quality

● The appeal of the latest sustainable product portfolio is growing rapidly (Tesco plc. 2017).

Expansion

● Large overheads in the brick mortar supermarket market

● Highly dependent on sales revenue from the United Kingdom

● Global expansion contributes to less emphasis on product innovation, particularly in the food industry

● Brexit has caused the retailer to be restricted only to the people of the United Kingdom as prime buyers

● From the lofty position of Tesco, there will always be a spectacular view, which ensures that the firm will always have a fantastic view of the situation.

Opportunity

Threat

        Tesco will develop several reward programmes, a "pensioner-oriented scheme" has recently been introduced (Administrator, 2008). This will enable the older generation to engage in buying in Tesco Plc

        The potential of exporting to emerging markets

        Strategic alliances with regional supermarket chains in the UK market will contribute to business expansion

        The introduction of its new range of organic food items to emerging markets (Tesco plc. 2017).

●        Ageing population contributes to a decline in sales

●        Demand is very strong

●        The trend of Brexit is linked with a downturn in profits

●        Court cases ongoing on the part of the company due to various litigation relating to gender-discriminated wages

●        Food industry controls are very large, resulting in high operating costs of Tesco I

●        High tax rates are a major problem that leads to price erosion

Table-2- SWOT ANALYSIS - created by Muhhamod Rahman

Explain how strengths and weaknesses interrelate with external macro factors

The advantages and disadvantage is intertwined with the global economic influences since Brexit's political impact has contributed to the downside that its volume of business has plummeted, because Brexit has caused most customers to leave the country in search of work. The technical innovation macroeconomic trend has enhanced the company's position by having it active in the global online market, which has boosted sales. Technological advancement has also made the presence of brick and mortar stores largely meaningless to the company making them aware that brick and mortar stores contribute to vulnerability associated with high cost consequences. The environmental aspect has contributed to the launch of a new line of organic products that is quickly entering the business, a big advantage for the firm as the future is the organic commodities and suppliers (Tesco plc). The selection of organic fruits and vegetables causes Tesco tremendous costs in the production of the product, but it is also expected to produce huge amounts of money. The firm has also benefited from the absorption of newcomers, although the ageing population effect in society has culminated in a decline in Tesco Plc's profits. The intake by the migrant population has negated one negative social effect of growing generational segmentation of the ageing population. The currency fluctuation often contributes to less costly exports, rendering the company a price leader in the sector. Due to cost leadership, the resilience the organisation holds is a benefit the company gets from currency effect fluctuation.

Conclusion

Once the task is complete, it can be inferred that there are three primarily personal, government and voluntary forms of organisation. These entities serve different purposes and there are four forms of sole proprietorship, corporation, LLC, and joint liability legal structures. The task illustrated the size and scope of different organisations and the interrelationship to achieve business goals between different functional departments. The environmental aspect of the various macro and micro-problems that rock the UK retail industry and affect business firms such as Tesco Plc has a profound impact on retail business. Together with many factors, the Brexit causes massive negative and positive retail impact. In contrast to this, there are other big sectors that have a significant impact on the business, and that is correlated with the organisation seeking to prevent problems.

References

  • Administrator, j. (2008). Tesco to adapt supermarket for pensioners. [online] journallive. Available at: http://www.thejournal.co.uk/news/north-east-news/tesco-adapt-supermarket-pensioners-4500576 [Accessed 15 Jan. 2019].
  • Butler, S. (2018). Tesco beats forecast with 28% rise in annual profitsthe Guardian. Retrieved 15 January 2019, from https://www.theguardian.com/business/2018/apr/11/tesco-reports-28-rise-in-profits-for-last-quarter
  • Cdn.networkrail.co.uk. (2019). [online] Available at: https://cdn.networkrail.co.uk/wp-content/uploads/2018/07/NRL-2018-ARA-Full.pdf [Accessed 15 Jan. 2019].
  • Gondal, U.H. and Shahbaz, M., 2012. Interdepartmental communication increases organizational performance keeping HRM as a mediating variable. Journal of Asian Business Strategy2(6), p.127.
  • Hayter, C.S., 2015. Public or private entrepreneurship. Revisiting motivations and definitions.
  • Managementhelp.org. (2019). Legal Forms and Traditional Structures of Organizations. [online] Available at: https://managementhelp.org/organizations/structures.htm [Accessed 15 Jan. 2019].
  • Osborne, S.P., 2013. Voluntary organizations and innovation in public services. Routledge.
  • Scott, K. (2018). Tesco to face legal action over equal pay claims from 1,000 employees. [online] Employee Benefits. Available at: https://www.employeebenefits.co.uk/issues/february-2018/tesco-equal-pay-claims/ [Accessed 15 Jan. 2019].
  • Seringhaus, F.R. and Rosson, P.J. eds., 2012. Export development and promotion: The role of public organizations. Springer Science & Business Media.
  • Tesco plc. (2017). Organic food sales strongest for over a decade. [online] Available at: https://www.tescoplc.com/news/news-releases/2017/tesco-organic-food-growth/ [Accessed 15 Jan. 2019].
  • Tescoplc. (2019). [online] Available at: https://www.tescoplc.com/media/474793/tesco_ar_2018.pdf [Accessed 15 Jan. 2019].
  • Unesco.org (2019). [online] Unesco.org. Available at: http://www.unesco.org/new/fileadmin/MULTIMEDIA/HQ/BFM/Financial_statements_2017_En.pdf [Accessed 15 Jan. 2019].
  • www.retailthinktank.co.uk (2018).  Retail Think Tank. (2018). How will demographic trends in the UK affect the retail sector | Retail Think Tank. [online] Available at: http://www.retailthinktank.co.uk/whitepaper/how-will-demographic-trends-in-the-uk-affect-the-retail-sector/ [Accessed 15 Jan. 2019].

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