There is also a great advantage for the founders of the company which is that they are able to keep control of the company provided they do not sell a large extent of their own shares to other people. Therefore the original directors and shareholders of Venetian Ices LTD can as a result stay in touch with the companies processes (providing they do not sell high proportions of their shares).
However in opposition to these advantages there are also many disadvantages which need to be taken into consideration, notably there are many legal requirements which need to be dealt with before the company can exist, in particular, two important documents have to be sent to the registrar of companies. The two documents, and the contents are stated below
Additional disadvantages are that the shares in a private limited company cannot be sold or transferred to anyone else without the consent of the other shareholders. This rule can often make potential buyers reluctant to invest money into the company, as they are incapable of selling their shares quickly in case they require their investment back. One of the most significant disadvantages is that the company cannot offer its shares to the public. Therefore it will not be possible to raise exceedingly large sums of capital to endow back into the business.
Taken as a whole, I feel the option of this type of business is an attractive option to a family business or large partnerships. Apart from immensely huge businesses, I feel that a relatively sized business would receive enough capital to run the company successfully from this business type.
As the business first started in London with Toni Seghini the business was owned by a sole proprietor therefore it was a sole trader business. This is the most frequent form of business organisation. A sole trader owns and often operates the company individually. The option of being a sole trader is the most popular as there is less legal requirements compared to other the options. This means that the sole trader option appears ideal to people looking to start a business for the first time. The few legal requirements of a sole trader business is as follows-
- The owner most register with, and send annual accounts to, the inland revenue or tax office
- The name of the business is significant, in the UK it is sufficient for the owner to put the business name on all the companies letters and important documents, along with having to put a notice in the main office stating who owns the business.
- In some industries, the sole trader must observe certain laws which apply to all firms in that certain industry. These include health and safety laws and obtaining a licence e.g. to sell alcohol.
There are many other advantages of being a sole trader which benefit the owner, to begin with Toni is his own boss, which concludes to him being able to have entire control over the business and there is no need to confer with before making imperative business decisions. Secondly he has the freedom to choose his own holiday dates, hours of work, prices and whom to employ.
Also Toni has the opportunity to develop a close relationship with costumers, which can lead to eventually loyal costumers. Lastly he creates the incentive to work hard as he is able to keep 100% profits, as there is no partners who receive a profit percentage.
However against these advantages there are also disadvantages, some of which are that there is nobody else to discuss business matters with, as he is the singular owner. Another major disadvantage which often deters people to follow into this type of management is that a sole trader has no benefit of Limited liability. This means that the sole traders accounts are not separated from their own personnel accounts. Therefore Toni is fully responsible for any debts the business may have. We call this unlimited liability. If in this case Toni has drowned himself into serious debts, then the people he owes money to (creditors), have the right to force him into selling his assets and personnel possessions to pay them off. Further more, there is also the disadvantage of his own personnel time being taken up in terms of drawing up his accounts and ordering stock to sell, this could tire out Toni and make him become un-motivated to work. An additional worry for Toni in this situation is that if he didn’t have enough capital himself he’d be un-able to receive extra finance from one of his partners, and the bank would be in this situation an hard option as the banks can be often reluctant to invest extra capital to developing businesses.
I would state that the option of taking up a sole trader position would be most suitable to people starting up a new business and people starting up a business which does not need much capital to be successful. Also in this type of retail business personnel and direct contact with costumers is vital, therefore a friendly atmosphere between costumers and owners would be a valuable asset.
The business function I am most concerned with is the personnel department, this department deals with the employees, meaning it controls interviews with new employees, selecting staff for promotion, discipline within the company and who will receive bonuses for working well. As well as these responsibilities the function has the more important job of making sure the company workers are well motivated. They do this in many ways, a few of which are giving job perks e.g. company car, holidays and special bonuses. If however a vacancy occurs within a business, then it is the personnel departments’ responsibility to attract and recruit the most suitable and most qualified staff. If the recruitment process is not completed to the highest degree, then the company could be faced with members of staff who are in capable of doing the job that they were employed to do. Also the personnel department is faced with the difficult job of the dismissal and redundancy making of staff. The reason why some members of staff may be faced with dismissal maybe because the company feel that that certain member of staff is not performing to the complete standards that they wished that member would work at. Or a member may be of a certain old age, where the company feel that that staff member is coming to an end of their career.
Management responsibilities in different departments
Human resources department
- Forecasting staff needs for the business
- Recruiting staff
- Preparing job descriptions and job specifications
- Planning staff training courses
- Interviewing and selecting staff
- Keeping staff records
- Disciplining staff
I am also concerned with the production department as the laws I have to research into may affect the way in which Venetian Ices LTD produce ice cream. They may have to buy new machinery or adjust their equipment, if their equipment is not up to standard. The production function which I am concerned with throughout this course work, is in charge of ordering the raw materials in which the business produces it’s product, this is vital as with-out the raw materials then the business would not be able to process the product or in other words, without the raw material Venetian Ices LTD would not be able to produce their ice cream and therefore will be unable to make a profit. The department is also in charge of designing the product along side the marketing section, the two sections try to work together to provide the best product available. This section of production also works together with the finance department in case of damaged machinery of any new material the business has to purchase, if there are any problems then the production manager would provide listings of new investments needed. The production department also have to work within laws of production, in order to make sure that when they produce their product they are abiding different laws which surround the business. This is an aspect of my coursework which I have to research into, as I have to reveal to the Venetian Ices LTD directors which laws they have to abide by to produce ice cream.
There are three main methods of production, job production, batch production and flow production. Job production is where products are made specifically to order, for example a tailor would make a new suit to match the costumers needs. In this method each order is different, and may or may not be repeated in the same way. Other examples specialist machinery manufacturers who would manufacture a machine for another business to meet particular specification. In this method the costumer is allowed to choose the exact requirements they wish to acquire, which is a distinct advantage. Also workers will proceed to become more motivated, as they get more job satisfaction because employees are not repeating there job over and over again, but instead are doing new requirements every time a new order occurs. However skilled labour is often needed as employees have to be able to meet incalculable costumer requirements. This is not a method used by Venetian Ices LTD as they make many ice cream products for different supermarkets. One product for each market would not recoup enough profit nor meet supply and demand.
Another production method is batch production, this is where similar products are made in blocks or batches. A certain number of another product is made, then another product is made and so on. Examples include when a baker makes one type of bread and then when that order is completed another design of bread is commences. Another example is that when a house design is made acceptable in a certain development area, that design is used several times and after that design is refined with, a new batch of houses is designed. This design is particularly useful as design transformations are easy to complete and progress. Furthermore motivation towards employees is also taken into account as they are not constantly completing the same procedure, but however there is more a variety in job production. For small businesses, this method would bring them to a disadvantage as raw material stock would need to be stored and warehouse space can often consume profits. This method may be used by Venetian Ices LTD in order to see if a new flavour or design fits in well with costumer needs and wants. By only producing only a few amounts of their new products they will be able to test their product on the market without risking high values of cash.
The last production method is the most continuous, the method is called Flow production. This method is often referred as mass production due to the heavy quantity of products being produced. The basic ingredients of the product are put together at separate levels as the pass different sectors of a production line. I.e. as each component moves along the production belt, another piece is added to the overall product. Large product quantities are made within this method and as a result of ‘purchasing economies’ the business may buy materials below the average price of that certain material. By taking advantage of purchasing economies, the business can buy in bulk fore a much lower price, by buying each unit at a cheaper price it gives the business a greater benefit against smaller companies who may not buy in the same bulk amounts, as a result it enables the business to sell its product at a much less price, making their product more favourable in the eyes of the public. However research suggest that workers are hard to motivate under these circumstances, for the work is often boring and then same day in and day out. Another essential disadvantage is that high amounts of capital is needed to set up flow production machinery, which may discourage the directors of a business to venture in to this production method.
The production function has to also choose the location of manufacturing for it is vital that the right selection of location is chosen. Shown below is a diagram of factors affecting the choice of location:
The problem that Venetian Ices LTD have encountered at present is that they are at an uncertainty over what payment system would suit their business to the highest degree. Along with this problem the directors would also like to understand which reward system they can under take in order to show respect and encouragement towards their most efficient employees.
On the legal aspect on the business, the directors of the business would also appreciate me producing a report indicating to them their roles and responsibilities within the business. To accompany this report a leaflet will be produced which identifies the most important laws concerning the production side of producing ice cream.
To solve the problems the business have encounters, I will have to carry out extensive research, making sure I complete all the tasks I have been given. To accomplish the problem regarding the most suitable choice of payment systems, I will research into what actual employees want in terms of payment systems, E.g. wages, salaries, profit sharing and commission. I will have to carry out this research in many ways, the most common situations will include me producing questionnaires, telephoning companies and searching the Internet for information.
My tasks also include me locating the most suitable reward systems that Venetian Ices LTD can offer to their employees. The way I will complete this problem will have to include many similar techniques I will have to complete in order to find the most suitable pay systems e.g. questionnaires and telephoning companies. Another technique I will consider undertaking would be asking relatives and friends of their opinions of the most suitable ways they should be rewarded.
The leagl problem I have been asked to complete will have to be approached rather differently compared to the pay and reward systems. With this problem I will consider searching the web for the most common and important laws concerning the production of ice cream, as well as questioning people qualified in law, over which laws constrain the production of ice cream.
If I successfully complete these problems, then hopefully Venetian Ices LTD will be approaching many advantages. If I explain to Venetian Ices LTD which payment and reward system they should process, then their employees will be well motivated. This is an important aspect of employees, as a well-motivated workforce helps to raise productivity. This ‘motivation’ may also lead to employees having fewer days off work and having less grievances at work which can result in strike action.
The law task has to be accomplished as it is vital for the companies production of ice cream. Therefore, Venetian Ices LTD’s production of ice cream will be legal and safe for both employees and consumers. However if the laws are not made clear to Venetian Ices LTD, then they may occur problems which prevent them from being successful and maybe lead them towards closure. For example, if the standards of food making are not suitable within Venetian Ices factories, then the health authorities once notified may find the company unfit to produce ice cream and therefore stop production and the business making a profit.