Task 1:
Business ownership
ASDA's Ownership
A). ASDA is a public limited company, which is also known as a PLC. An American retailing company called WAL-MART owns ASDA. Its shareholders own the company and this causes the ownership to constantly change, as the shares are constantly bought and sold. Most of the companies' shareholders are generally, old aged pensioners, banks and insurance companies.
Before a PLC can be launched, they must have £50,000 or more and it must have a good financial record and, there must be enough people interested in buying shares in order to have a successful floatation.
Floatation is when a company is on the Stock Exchange and is then launched to the public.
WINES PLUS' Ownership
Wines Plus is a partnership and is run by its owners. A partnership can be of a maximum of 2-20 people. The partners of the business share the responsibilities and risks of the business. Usually, if the partners have different skills, this provides the business with greater aspects as a different range of services can be offered and more profits can be made. Also, in some partnerships, there are also some sleeping partners. These are people that invest money into the business and receive a share of profits made but they don't have a say of how the business should be run.
Before starting the business some partners sign a deed. This deed is called the Deed Of Partnership. This deed states every agreement between the partners and what they have to share between them i.e. they share the profits that are made, the salary they receive and what procedures must be followed if there is a dispute between the partners.
Partnerships are governed by the Partnership Act 1890. This act states, all partners are liable for any debts. Unless a different deed has been drawn up, different terms are put through.
As well as a PLC and Partnership, there are also other types of businesses. There are:
* Franchises
* Private Limited Companies
* Co Operatives
* Sole Traders
Franchise
A Franchise is a business, but it doesn't involve the normal risks of starting of as a sole trader. To sum a franchise up, it is a little business that gradually expands. It's like a growing child. It starts of as a baby (the start of the business) and grows into a man (the end of the business growing). Typical examples of a franchise are, The Body Shop, BSM and Kentucky Fried Chicken.
These are also known as enterprises, as they were run by a franchisee and were given permission by a franchisor (an organisation) who owns their products and services that are being provided.
Usually, the franchisee will gain benefits from the franchisor's enterprise as the franchisor supplies goods/stock and displays for the shop and general advice. The franchisor, will gain the exclusive right to sell in a certain area of land.
The franchisee has the responsibility to run the business every day and keeps most of the profits made. However the franchisee must raise most of the capital on their own and he or she must also pay an initial licence to the franchisor. They must also pay some of the made profits to the franchisor for the use of the franchisors name.
Franchises don't only trade in retailing. The also cover other business areas. They are:
* Goods and services
* Production
* Cable Companies
* Care services
Franchises are also allowed to operate in other businesses as long as they gain permission. An example of this can be a small sweet store trading in a hotel. The franchise (the sweet store) pays rent to the hotel so they can trade.
Private Limited Companies
Private limited companies, are companies that are owned by its owners and don't sell shares to the public. Most private limited companies start off as a small store (or sole trader) and like other businesses; they gradually expand over a period of time. Most private limited businesses are run by family members.
They decide to trade as a private limited company so they can:
* Improve their financial security. The owners are now known as shareholders and are no longer responsible for any debts and liability is now limited - if the business goes bankrupt, the owners don't end up bankrupt.
* Look better to the general public, in terms of security. They aim to show they are safe and don't get attacked by thieves.
Private companies only issue shares to its owners. One share represents the company. If a share holder owns one and a half shares, this could out share (be greater) than other share holders. If a company has owners who want the company to be shared between them, then they must have 50 percent each in shares.
Co Operatives
A Co Operative is a company and each worker in the Co Operative receives equal payment. In most companies like Tesco, each department is paid a different salary i.e. if you work on the clothing department; you earn £4.40 whereas if you work on the meat department you will earn £5.20 (based on an employee who is under 18).
In ASDA however no matter what department you work on, you will earn equal pay (£4.00 under 18 and £5.18 over 18).
This is how a Co Operative works. They will give equal pay no matter where you work. In a Co Operative, there is no boss, everyone is in charge and works in a team.
An example of a successful Co Operative is CWS - Cooperative Wholesale Society. They work as a team and aim to help one another and aim to be a successful working unit.
Sole Trader
A Sole Trader is a business that is run by one person. That one person has total control of the business and decides on what needs to be done to the business and how the business can be improved. They also have the choice if they want to employ people and decide what wage they can be given.
It is usually common for a Sole Trader to use their personal savings as capital to start up their business.
A Sole Trader has total control of their business and is therefore in charge of any debts they encounter. However, if the business is successful, they receive a lot of profit but, they must also pay income tax to the Inland Revenue. Hence them paying tax on their gross profit.
Also, as they are a Sole Trader, they have Unlimited Liability. This means, if the business is unsuccessful, they loose everything. They will loose the business, house and other personal possessions e.g. TV, jewellery, paintings etc.
B). Every business has made an ownership agreement whether it was formally or informally.
Formally is when the ownership agreement was discussed and was then announced e.g. the WAL-MART takeover from ASDA was a formal takeover.
Informally is when the ownership agreement was agreed on the spot. In this case the Wines Plus partnership was agreed when the business was started up.
C). Every Business has a legal status. The legal status is what the company is i.e. ASDA's legal status is a PLC and Wines Plus's legal status is a partnership.
D). Each of the businesses have an owner. In this case, the owners of Wines Plus are the partners and the owners of ASDA are, WAL-MART and the share holders.
Each of the owners has responsibilities in running the businesses.
The Wines Plus owners are responsible for:
* Each others actions. This means if one partner went into debt and died, the other partner(s) would be left to pay them off.
* Every profit made is split 50/50. They must all pay income tax on all their profits.
* Having unlimited liability. If they were limited liability partners, and they had sleeping partners, the sleeping partners are only liable for the amount they invested into the business. But at least one partner (a non sleeping partner) has unlimited liability for debts. If the debts are not paid, they loose all personal possessions e.g. their home.
* Paying the running and start-up costs are easier to pay, as they have all put in money into the business. Expanding the business is also easy to pay for. An example of expansion is John Lewis. They started off as a small partnership but expanded. They have over 34,000 employees and each is classified as a partner and receives shares.
* Partnerships are mainly associated with solicitors, doctors, accountants etc.
As ASDA is a PLC (public limited company) they are owned by the shareholders. They (ASDA) are responsible for:
* Constantly changing its image as they want to attract new shareholders and shares are always being bought and sold. They aim to attract new share buyers. Most of their shareholders are O.A.P (old aged pensioners), banks etc.
* Abiding (listening/following) with the various Companies Acts and abiding by the Stock Exchange.
* If they want to gain extra finance, they can choose from a variety of sources. They can be banks or financial institutions. The other option to raise extra finance could be to issue additional shares.
* They must provide a reason to why they need the money and for how long they need the money. Money raised by shares doesn't need to be paid for. Although there is a limit to how many extra shares can be offered as it all depends on the companies' financial value.
* If one public limited company buys all the shares of a smaller public company this is known as a takeover. An example of a takeover is the WAL-MART ASDA takeover. WAL-MART bought ASDA for £7 billion in 1999 and this made ASDA part of the WAL-MART company. However, if a big plc doesn't buy a smaller plc but they want to expand, they can merge with a company. This means they join together and expand the size of the companies. An example of this is, Glaxo and SmithKline Beecham which happened in 2000.
* The net profit of the company is paid to the shareholders. They are paid in a dividend. A dividend is basically, a share of profits divided among stockholders. The dividend that is paid all depends on how much profit there is in the company and how many reserves there are. The decision of the balance is also important as, the size of the dividend depends if the shareholders might sell, but this also leaves insufficient funds to renew machinery or equipment.
* Other examples of PLC's are Sainsbury's, Marks & Spencer and Tesco.
E). Each business has a type of ownership. Wines Plus's ownership is a partnership and ASDA's ownership is a PLC (public limited company).
Wines Plus has decided to make their business a partnership, as they are a married couple and as a married couple they aim to share everything. They both wanted to be involved in a business they both wanted to run. The husband deals with the paperwork and the wife deals with customers and deciding what special offers their store should offer. (E.g. buy a coke get one free). Also, they wanted to earn a little bit more money and improve their security and running a small shop was the perfect decision/choice.
ASDA has decided to make their ownership a PLC, as they have rival companies like Tesco, Safeways and Sainsbury's. The rival stores are all PLC's and ASDA aims to do their best in order to beat their rivals. ASDA is also a massive business with over 244 stores nationwide.
As well as being a PLC, they are owned by American retailer WAL-MART. WAL-MART own over 1,522 worldwide. (This is based on worldwide supermarkets and excludes discount stores, SAM'S club stores and Neighbourhood Markets).
Task 2:
Industrial and Business Sectors
A). All companies belong ...
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ASDA has decided to make their ownership a PLC, as they have rival companies like Tesco, Safeways and Sainsbury's. The rival stores are all PLC's and ASDA aims to do their best in order to beat their rivals. ASDA is also a massive business with over 244 stores nationwide.
As well as being a PLC, they are owned by American retailer WAL-MART. WAL-MART own over 1,522 worldwide. (This is based on worldwide supermarkets and excludes discount stores, SAM'S club stores and Neighbourhood Markets).
Task 2:
Industrial and Business Sectors
A). All companies belong to a business sector. There are 3 different types of sectors. They are:
* Primary sector
* Secondary sector
* Tertiary sector
No matter what the companies' status, or whether they are in the public or private sector, they operate in one of the three industrial sectors.
The Primary Sector
* The primary sector is all to do with obtaining raw materials. To obtain the raw materials they would have to extract the raw material from their natural mineral. E.g. if you pulled a flower out from soil, the soil would be the natural mineral and the flower the natural material.
Jobs that are involved in the primary sector include farming, fishing, and mining. These are all jobs that involve production work.
The Secondary Sector
* The secondary sector is all to do with, manufacturing the materials. This sector also involves, processing, putting together and construction. An example of the secondary sector is building a house. The primary sector built the bricks; steel etc and the secondary sector are using the materials to put the house together. Jobs that are involved in the secondary sector include electricity, gas, steam and water industries and builders.
The Tertiary Sector
* The tertiary sector is all to do with business services. This sector is all to do with services. This sector is also known as the service sector. The services that are offered in this sector are, public, financial, transport and communication and retailing, distribution, hotels and catering.
The public services are all to do with administration, health, education and personal services. An example of personal services is hairdressing.
The financial services are businesses like, banks, accountants and insurance companies.
The transport and communication service are businesses such as, buses, trains, telephone companies (e.g. O2, BT etc) and television companies. E.g. The BBC and ITV.
The retailing, distribution, hotels and catering service are businesses that include fast food (e.g. McDonalds, Pizza Hut etc), shops and pubs.
ASDA belongs to the Tertiary sector, as it provides a service to the public.
Wines Plus is also in the Tertiary sector, as they provide a service to the general public.
B). An example of how the three sectors operate as a whole can all be put into a food production chart. The chart is shown below.
Raw food is produced The raw food is
in a primary sector then produces into
business e.g. a pig is consumables e.g.
produced in a farm sausages
Now, the processed The processed food is
food is delivered to now sold in retail outlets
retail outlets in the e.g. a butchers shop
tertiary sector
Due to the public creating
high demands, more of the
same products are made,
causing the cycle to start over.
As both of my businesses are in the tertiary sector, there are several other jobs that are involved in the sector.
The tertiary sector is split into 11 sections. Section G, H, I, J, K, L, M, N, O and P/Q.
ASDA and Wines Plus are Section G - Wholesale and retail trade.
Other businesses that are involved in this sector are banks, hotels and schools.
Banks are in section J - Financial services. They are in this section and sector because they provide a service to the public and deal with finances. An example of a bank is Lloyds TSB.
Hotels are in section H - Hotels and restaurants. They are in this section because they provide a service and they also cater for the general public. An example of a hotel is the Copthorne Hotel.
Schools are in section M - Education. They are in this section because they provide a service to the public.
C). The last few popular trends over the past few years in the tertiary sector are:
* Increases to the UK spenditure
* Increase into how much children spend
* Increase in household income
* Expenditure on household consumables (food, drink etc)
* Income and wealth
* Pensioners gross income
* Personal expenditure
* Employment increase via the new deal; age and type of employment
* Description of weekly hours by sex
* Average total income and average taxable pay by gender
With the help of the National Statistics I gained thorough information regarding the past few trends in the Tertiary sector.
There were increase to how much the UK spent because, rate of inflation happens every April and new products and services occur persuading people to try and buy them. This causes a positive effect causing it to constantly grow.
Children spend on average nearly £12 per week. This is based on children aged 7-15. Children mainly in Wales and Scotland spent the most compared to England. In England children spent just above £9 per week. The figures show this is continually rising.
Household income figures increase and decrease. In 1987, figures showed wages and salaries that were paid were high (above 50) but then decreased (down to below 50) and then started to increase in 2000 (back to 50). However, the amount of tax that was deducted increased year after year. Finally the amount of household income that was paid also seemed to increase year by year. The amount that was paid in 2001 was £985 Billion. The figures for each section increased by £93 per year.
Income and wealth figures show that the UK was adjusted for inflation by 6.5 per cent between 2000 and 2001. Figures also show that women working in Great Britain had a median net income of 56 per cent of that of men. This was surveyed between all family types (i.e. this was surveyed from Black, Asian, Christian etc families). The figures also show that figures grew by nearly 10%.
Pensioners gross income was mainly surveyed depending on their age and their pension source (i.e. who issues their pension plan. The Post office, a bank pension scheme etc). It was no surprise coupled pensioners earn more in their pension than single pensioners. This is based on pensioners under 75.
The same thing happened to pensioners above 75. However, they earned fewer benefits.
The figures showed that pension earnings raised nearly £18.
Personal expenditure figures showed that personal expenditure rose by nearly 4.1 per cent. Also full time couples that earnt more than £520 per week on their households compared with part time jobs and unemployed people. Transport almost rose by more than 4%. This was based on an adult who travelled via public transport.
The new deal for people entering employment through the new deal of age and employment was mainly covered by people under the age of 18. Based on their ages, people ages over 18 and 24 showed more people entering employment after university. The figures rise over the years.
Usual weekly hours of work by sex showed males who work over 40 hours earned more money compared to the opposite sex and other working hours per week. This was also based on flat rate and excludes Sunday rate and overtime rate. The table shows a decline in hours but then it increase depending on the hour.
Males seemed to pay more on their income tax. Males who live in Central London have a total average income of £26,000 per year but, pay more tax. Compared to females, females who earn over £16.000 per year, paid less tax. Figures show the table increases as you go further down the table.
D).
(i). In this task I have to select a business and state whether it is following the trends described in the previous task.
As ASDA is a big business, it tries to compete with rival stores such as Tesco, Sainsburys and Safeways. As ASDA has to be aware of how much the average person spends on shopping per year (average shopping per year is over £40,000) and tries to lower prices whenever a new product is introduced. They also try to make working with them a lot easier as a lot of people who are aged 16 try to look for a job when they are on their summer holidays.
They don't tend to follow the trends as they aim to be different from other retailers and offer the best in customer services.
(ii). The trends that are mainly affecting the business in particular are:
* Increase to the UK spenditure
* Increase to how much children spend
* Income and wealth
* Personal expenditure
ASDA is responding to them by, lowering prices, lowering the prices for children's sweets and chocolates, offering money saving schemes (e.g. ROLLBACK) and offering deals on shopping e.g. buy one get one free or buy one get one half price etc.
Task 3:
Business Activities
A). Every business has a main core activity. ASDA has a main core activity of selling food and household consumables. Apart from selling just food and household consumables, they also offer tobacco, alcohol, clothes, newspapers/magazines etc. also, some ASDA stores offer other services. Even though they aren't contracted to be with ASDA, they trade as long as they get authorisation. Businesses that "sell themselves" in the stores are opticians, dry cleaning, photo shops and hairdressers etc.
The reason why ASDA offer these services is because; the customers at ASDA gave them the ideas and told them the rival stores are doing the same. Just recently ASDA Slough asked customers to sign a petition so a pharmacy could be opened. The reason why they want a pharmacy is because, a pharmacy would improve sales. If they can run a pharmacy or not, depends on whether ASDA House says yes, as most ASDA stores have had failed pharmacies.
ASDA aims to be a "one stop shop" for the general public.
If the main core activity of ASDA were to fall, ASDA would be in trouble, as there would be a decline in sales and profits would go down and they would loose their shareholders.
The main business core of Wines Plus is virtually the same as ASDA. Their shop sells food and household consumables. They also offer tobacco, alcohol and newspapers/magazines.
If their main business core were to decline, they to are in trouble and debt. But as they are a limited liability partnership, they will only loose the business.
Wins Pus also aim to be a "one stop shop" for the public around their area.
Both ASDA and Wines Plus aim to be convenient retailers and serve the public and they do this by looking at their main business activity.
B). ASDA and Wines Plus both provide services and products to the general public. They provide products and services through advertisements, word of mouth, displays in the shops and through the media (newspapers, magazines etc).
ASDA is the largest company out of my two businesses with over 244 stores nationwide. ASDA operate through a wide range of specialist services. They include:
* TV shopping - SKY ACTIVE
* Internet shopping
Wines Plus are only a local store and only operate in high street.
ASDA operate both locally and nationwide. They operate locally as they have little stores called ASDA FRESH. These are small grocery stores like Sainsburys Local and Tesco extra. They operate nationally with a variety of superstores that offer a range of goods from:
* Groceries
* Home and Leisure
* Delicatessens
* Rotisseries
* Fish counters
* Coffee shops ( a.k.a Café ASDA)
* George clothing
* Photo shop
* Opticians
* Kiosk (tobacco, newspapers, lotto etc) and other services
Wines Plus only operates locally around South Ealing, and only offers goods ranging from:
* Food
* Household domestics ( e.g. cleaning liquids, scourers etc)
* Newspapers, magazines, lotto etc
C). The trends that apply to both my businesses are increasing. Customers feel that the prices are good and believe the products are good value for money.
In the retail sector, a lot has been happening. There was the WAL-MART takeover form ASDA in 1999 and now there might be the WAL-MART Safeways takeover. This all depends on how much WAL-MART will own in shares. If WAL-MART own too much in shares, the takeover will not happen.
Other factors that influenced the retailing sector and have had an affect on companies like ASDA and Wines Plus are:
* September 11th terrorist attacks
* SARS epidemic (a virus that has been killing people mainly in Southern Asia and some parts of Northern America)
* The war between Britain, America and Iraq
These factors have hit retailers such as ASDA and Wines Plus as there has been a decline in the number of tourists that visit the U.K and the number of tourists has now declined to nearly 20%. (From SKY NEWS)
In Task 2 I mentioned some trends that have occurred in the past few years. The most popular trends that have occurred in ASDA and Wines Plus are:
* Personal expenditure
* Increases to the UK spenditure
* Expenditure on household consumables (food, drink etc)
* Increase into how much children spend
These are the main factors that have recently affected ASDA and Wines Plus. They aim to keep customers and they must keep up to date with the latest in developing trends. They must look at the key factors and recognise what has been increasing and decreasing and see what they can do to make sure their business will do well.
ASDA has just recently decided to change its own brand food labels, packaging to take-away foods and staff uniform. The new uniform, packaging and labels are all designed to make customers aware that ASDA is part of the WAL-MART family and is now going for the WAL-MART colours (blue and green) and aims to do its best to ensure quality food, value for money and persuade people that ASDA is better than any other store.
They issue regular questionnaires and ask what the public could suggest what they can do in order to make the business much better for them to visit and they would like to see.
Profits and shares are another key factor they must consider. They have to see how they can attract new shareholders and customers. If they didn't attract new customers and shareholders and the business declines and continues to, then the business will be closed down.
Task 4:
Location and Its importance
A). Every business has to decide where they have to be located. It is an important decision, as they have to look at how the location can affect the business performance. They must consider several points when locating. As ASDA is a big business, they want to be near customers and they have decided to locate themselves in Telford Drive in Cippenham. They have decided to locate themselves in Telford Drive, as there are a lot of residents that live in Cippenham and, they are near the Slough Trading Estate. Also, a lot of people in the area would want to work for them.
Wines Plus have decided to locate in a high street as it can be a busy area and people who travel by foot in order to get to work or school, pass the shop whilst travelling. This can make the shop profits, as people tend to get thirsty or hungry and decide to get refreshments whilst travelling.
B).
(i). ASDA is located next to an estate which holds a lot flats and is near a school (WESTGATE HIGH SCHOOL) and is near to the Slough Trading Estate. Also, there is a footpath which leads to Windsor.
As ASDA is a retailer, it has rivals which also trade in retailing. Rivals include, Tesco, Safeways and Sainsburys. They need to think of how they can persuade other shoppers to come to them, and consider other factors which can make more successful than their rivals.
ASDA's main rival is Tesco. They offer similar services and aim to give both their customers low prices and the best in shopping deals e.g. buy one get one free etc. They need to think of the ways Tesco has changed over the past few years and how they can make themselves more popular and successful than Tesco. They (ASDA) have considered offering their customers the following points:
* Internet Shopping
* ROLLBACK (Lower prices scheme)
* SMILES (Friendly shopping services)
* SKY ACTIVE shopping. (Shopping via SKY DIGITAL)
* Help with shopping
* Nanny assistants (Looking after your child while your shopping)
* Personal greeter at the entrance
* Help with packing away your shopping
* Loading the shopping into your car/taxi
Wines Plus is located in a high street and this helps them build a lot of profits, as there a lot of people that do a lot of travelling to work, school etc and they tend to get thirsty or hungry. They don't really have many competitors that are near them, but there did used to be one but the owners decide to move out of London and trade in Hammersmith. Competition was great, but the general public preferred Wines Plus as it was 5 minutes away from a local school, it was much cleaner and the prices for food were much cheaper. Wines plus now earn a lot of profits and make enough money to help them financially and improve home security.
(ii). Factors that made ASDA decide to locate in Telford Drive are:
* The general public will be keen on having a job working in a store which is situated near to them.
* Need staff - Doesn't matter if they are unskilled as they will be given training on their working department
* Lots of customers will arrive every day
* Lots of profits will be made as there are residential estates near by. People would prefer to shop to a store which is near them, instead of having to travel to Slough high street or go to Windsor etc
* Less competition in Telford Drive. As there are no other rival stores in Cippenham, ASDA won't have much trouble competing in Cippenham for customers.
* Near to Windsor (the local footpath leading to Windsor is an hour's walk). People can go into ASDA and buy some food and refreshments and go to Windsor (via the footpath) afterwards.
Factors that made the partners of Wines Plus locate in a high street are:
* A primary school is nearby - so children can buy some sweets or drinks before/after school
* A playing field is near by (Gunnersbury Park) - people can buy some food and drinks if they want to go into the playing field. Also local football teams train in the park and buy ice-cream, drinks etc during training breaks.
* Local store, so it can produce lots of profits - people can just go to their store in case they have run out of milk, bread etc instead of travelling to Acton and go to Safeways
* Not much competition
* Near South Ealing tube station
These are the main factors that made both of the businesses locate to where they are now; they had to consider the financial views, competition and where would be the best place to trade.
The trends I have featured in Task 2 (c) are just some of the points they need to consider when they are locating.
They need to think about if people need jobs, how much they can spend per year on shopping, if they do employ people what will their wage be per hour and month etc and how much will the consumables be?
Businesses need to think about the consumers/customers budget and this reflects on how much the prices of some items should be. They need to think about, if the prices were too high, they will loose customers and if the prices were to low, not enough profit will be made and the business will have to close down.
Consumers/customers always look for the lowest possible prices and aim to get their moneys worth and most prefer quality over quantity. The consumers/customers prefer it if the retailers were near them so the businesses have to think about this point as well. If the businesses were far away from the consumers/customers they might decide to go to a rival store. So location is a key factor they need to consider.
On the next page, you will see maps of where both my businesses are located.
(iii). Other relevant factors businesses need to consider are:
* Cost of premises
* Financial help from the government
* How will their suppliers reach them?
* Suppliers and resources
Cost of Premises
The cost of the premises depends on how much the land will cost and where the land is. If the land was in Central London, the land will expect to reach near £120 million due to it being in a prime site. If the location was in the suburbs or outer city regions the land will be cheaper as it won't be in a prime site.
If a shop was due to trade on a high street the land would be a lot more expensive, as shoppers mainly stay on the high street.
Places which have low employment rates are also cheaper unlike areas which have high employment rates. An example of this could be Newbury (Berkshire). Newbury has a high employment rate and this makes it hard to buy land. As employment is high most people would be multi skilled from previous jobs making it hard to locate in Newbury.
In some counties in Britain, they offer "packages". In these packages they offer financial support and in some cases help reduce property rent for small enterprisers. With some packages they offer help with locating to worksites, office complexes, retail centres etc and with the help of these packages they hope to expand the business without the costs increasing.
Financial Help from the Government
In some regions in the UK they have Assisted Areas. Assisted Areas are areas that receive financial help from the Regional Selective Assistance (RSA). They provide employment opportunities, increase competitiveness and prosperity.
In 1998 all European guidelines changed and new Assisted Areas were due to operate from the 1st January 2001.
New proposals were put forward by the Department of Trade and Industry. They included:
* Tier 1 - (maximum) counties like Cornwall, West Wales and Merseyside will receive grants up to 40% and Northern Ireland will also receive assistance.
* Tier 2 - Areas in need of employment, investment and regeneration will receive assistance and will receive 20% of grants.
* Tier 3 - Assistance for Enterprise Grant Areas will be available to businesses that employ over 250 people. This will hopefully encourage the business to expand.
The overall estimated grant that each business will receive in Britain will be, over £785 million and £45 million alone will go to small businesses.
How will their suppliers reach them?
It is important for the businesses to make it easy for the suppliers to reach them so that they can receive their stock. This is something ASDA and Wines Plus need to consider. Businesses usually locate near to a motorway link as this makes it easier for the suppliers reach one destination and then reach another. An example of this is the Co Op superstore in Langley. They are located near the M4 motorway link and this makes it easier for their suppliers reach them and then reach another county.
However, not all suppliers travel by road. Some suppliers choose to travel by rail, air and sea.
A cement company's supplier could choose to use the rail link, an army cargo supplying food and water use helicopters to send supplies and a car factory's suppliers could use, the sea to send supplies such as, car doors, wheels etc.
Suppliers and resources
Most businesses locate near to their suppliers and raw materials. This is the case if:
* A certain material is in a certain part of the country
* The raw materials used are heavy to transport
* The businesses use specialist suppliers for products
Companies like Cement companies use limestone and chalk as their natural resource for their product and they are only found in certain parts of the country.
Coal mines and iron mills are mainly located in Sheffield as they have a high quantity of these products and these are used to help make iron.
Cider is brewed in Somerset. The climate in Somerset favours the apples which helps the apples to grow.
These are just a few examples of why some businesses choose to locate near their suppliers.
C). The main factors that have caused both my businesses to locate where they are now are:
* Near the general public
* They provide a "one stop shopping" environment to the general public
* Near to other rival stores
Both of my businesses have considered these factors and have located to where they are now. They are now both successful in their own ways.
These 3 factors have made the public locate to where they are now and they are the 3 main common factors most businesses consider before trading.
I think these three factors are common to consider as most businesses do tend to be near their rivals but these two businesses didn't locate near to them. They have chosen to locate near to either:
* Housing estates
* High Streets
* Trading estates
They have done this so they can make profits and become popular with the general public and persuade others to but their products and prove they are the better businesses.
Task 5:
The Influence of Stakeholders
A). Every business has stakeholders. Stakeholders are people who have a general interest in a business and influence it in the way it operates. Stakeholders are in all companies.
Anywhere anybody spends money in; they are a consumer and also a stakeholder. This is because they influence the way the business should be run and they buy products in the business.
Examples of stakeholders are:
* Customers
* Employees and managers of the business
* Shareholders
* Local community
* The government
* Pressure groups
Stakeholders in ASDA and Wines Plus are:
* Employees and managers of the businesses
* Customers
* Shareholders
B).
(i). People that are directly affected by the activities of each business are the employees. They have to settle down to new rules and regulations and must abide by them as it is now part of their job. The biggest affect that hit employees around Britain was the WAL-MART takeover from ASDA. New wages, training and rules were introduced and staff all had to adjust to it.
(ii). Those who are less affected but still have an influence on the business are the customers. They do realise the changes of the business but they still have a say on what the business should be like. The shareholders might decide they don't like the changes to the business and might decide to go to a rival business and be one of their shareholders. Consumers are also affected by it as new services might be given and new products will also be introduced into the business.
C). In (A), I gave five examples of stakeholders.
* Customers as stakeholders
* Employees and managers
* Shareholders as stakeholders
* Local community as stakeholders
* The government as a stakeholder
The below bullet points fully describe how customers, employees and managers, shareholders etc are all affected as stakeholders
* Customers as stakeholders - These are people that influence the way the businesses runs. If for example, a group of friends went into a pub and then started to go to another one across the road, the pub owners are more likely to wonder why have they going to another pub? The sales are reflected on the change of business. If more and more people went to another business and left one alone, that business that was left alone may be forced to close down, due to lake of profits.
* Employees and managers - Employees have a different interest in the business. Employees mainly look for, equal opportunities, rate of pay, if the business is safe to work in and if they are treated fairly. Employees also want their employers to allow them time off from work, give them sick pay, issue health and safety in a working area, match the job description and give support for self improvement and study for more qualifications.
Mangers have similar expectations. They want to be treated fairly
and have job security. They also want their staff to think they can
make good decisions and have the respect and trust of their employees.
* Shareholders as stakeholders - Mentioned in the previous tasks, shareholders are people who invest money into a plc company. Shareholders only invest money into a company they think will do well. If the company doesn't do well, the shareholders will back away from the company. They also expect a dividend twice a year. A dividend is money returned for investing money. An example of a dividend is when you put money into a bank. By doing this you receive interest. The interest is the dividend. All shareholders have the decision to attend an AGM meeting. An AGM (annual general meeting) is a meeting full of shareholders and they can speak any opinions they have about the manager's decision of what changes have been made to a business.
* Local community as stakeholders - The local community have interests in the businesses that are near them. They would protest about anything they will consider hazardous such as a nuclear power plant being built just around the corner. Concerns that concern the community are:
- New roads being built
- Noise pollution e.g. the development of terminal 5
- New prison wards i.e. if it wasn't secure prisoners would escape
Communities feel strong about what will happen to their environment. If the community feels strong about something that
will damage their environment they are likely to protest to the
High Court.
* The government as a stakeholder - The government always try to persuade a business to go ahead with the development of their business. Without the government saying yes to businesses there wouldn't be employees. The government are responsible for introducing trade and state laws. The make sure all businesses operate fairly and don't cheat the public out of anything. They (the government) have set up standards. Standards are to help the public. They include Trading Standards, safety standards etc.
D).
(i) Most of the stakeholders in ASDA have changed their interests in the company. The customers haven't really changed their interests on the business, but the employees as stakeholders have changed their interests on the business completely.
They (the employees) have changed their interests on:
* The rates of pay
* Overtime rate
* Rules and regulations
* Legal training
* Appraisal schemes
* Uniform colours and designs
* Shopping hours
The reason why the employees have changed their minds completely is because, WAL-MART is an American company and since the takeover WAL-MART have introduced their rules, uniform, rates of pay etc and this has caused the employees of ASDA to change their mind.
The Wines Plus stakeholders (the customers only) are affected by changes of the shop layout and if there has been any takeovers/mergers etc and if the business closes down.
(ii). Every group of stakeholders has a different type of interest. The number of stakeholders also varies from business to business. The more varied they are, the more active the group is. This also causes other businesses to compete interests among these groups.
If you use my two businesses ASDA and Wines Plus, both of my businesses stakeholders are different.
Both have a limited amount of stakeholders. The stakeholders they have are:
* Customers
* Employees/Managers
* Local community
* The government
Both of the two companies are more interested into listening to their customers views and opinions and also the views and opinions of employees. These two stakeholders have the biggest influence on the businesses.
(iii) ASDA and Wines Plus have responded to the stakeholder's interests by, issuing questioners and ask them regular questions about their shopping trip. They then process these feedbacks and suggest what the main points are, and how they could use points to make their business better.
ASDA and Wines Plus have both added in new facilities and extensions to make their buildings more impressive and to also attract new customers. They have also added in ATM machines (or cash points) and have allowed guide dogs for customers with sight impediment.
ASDA have also introduced "Braille Guns". These are for blind customers. These guns scan the barcode of the products they have picked up and with the help of headphones, a voice is heard detailing the product and price of the product. These have helped blind customers enjoy their shopping trip and continue shopping with them.
E).
(i). Different stakeholders have different type of influences on the business. People want to know what the company does and what they do. They are mainly interested in what the company has to provide to them and who their competitors are. The two main stakeholders my two businesses are:
* Shareholders
* Staff
Using ASDA as a prime example, these two stakeholders determine whether the businesses do well or if the business does badly. The reason being is because, the more staff they have provides a positive reaction to the company. The people that shop in the business notice how many people enjoy working for them and this makes them want to work for them. They (the customers) believe they have been served with respect and kindness and believe working for ASDA is a good thing and everyone is treated fairly and receives respect from everyone that works for them.
Shareholders are also an influence in the public. They have to show they enjoy working for them as; the shareholders of ASDA are the staff. They have to show a positive side to the business and that; ASDA is a business that offers many opportunities.
(ii). Both my businesses have the same stakeholders. The stakeholders have different influences. The stakeholders have different strength of powers.
* Shareholders have the most power
* Staff have the least power
The reason for this is, shareholders determine how well a business does and whether a takeover or merger can happen.
Staff only helps the business gain sales and offer services that are available. They have to offer a service that is friendly and polite and that will help the company gain higher profits. They also help the business when it comes to Trading Standards. Trading Standards issue a "mystery shopper" every 4 weeks and the service given helps the overall score on the business. If the service was good and was above 75% this helps the company gain a good image and this reflects the companies bonus. If the service was poor and was below 60% this means action will be taken to make the company do a lot better in another 4 weeks. This also reflects the bonus.
F). This task involves me looking at a situation that occurred in the recent years and how the business and stakeholders dealt with it.
The most recent one that happened in ASDA was the WAL-MART takeover. It was first considered a dangerous move, as ASDA didn't realise how much they were loosing and then started to fall into debt. WAL-MART then saw this as an opening into the British business industry and bought ASDA for £7 Billion in 1999. This helped ASDA get out of debt and become part of a world wide retailer.
The two main stakeholders of ASDA - staff and shareholders - saw this as a good move as they:
* Still had their job
* Still had shares
* Now able to get discounts and other offers in America and other WAL-MART stores.
The customers as stakeholders did worry about this takeover as they thought they might have to shop with another rival company that issued high prices or thought that a new American company will be changing ASDA's image, products, prices etc with a new American look and change the prices on products.
The staff as stakeholders didn't like the idea of being taken over by an American company as they knew new rules and regulations were going to be introduced and new rates of pay was going to be introduced.
This meant, they were going to loose their overtime pay, Sunday pay, lieu days and double pay for bank holidays.
ASDA now, benefit from new job positions and services introduced into their stores. They include:
* PIM officer - Profits Investment Manager
* Bonus schemes
* Smiles service
* Electric scooters
* Braille guns
These are new services given by WAL-MART and have been passed onto ASDA and have helped them become more successful.
Task 6:
Summary and relevant comparisons
A). In the tasks I have completed in this coursework, I have discussed all I know about the businesses, how they were formed, who the owners are, their legal status etc and have described the trends in the tertiary sector and how the trends affect the businesses performance. I have also described how stakeholders, shareholders, and the location of both businesses affect the business performance.
The main points I had to look at are:
* UK trends for the business sector and activities
* The type of ownership which operates
* Location of the businesses
* Influence of stakeholder groups
These affect the businesses by, flow of profits, flow of customers and where they can get as many customers as they can.
The factors that had the most influence on my two businesses are:
* Where they are located
* How much they make at the end of the week
* What type of liability they have
* If they have any shareholders
* Where their rivals are located
The factors that have the least influence on the businesses are:
* What type of ownership they have
* What type of customers they get
Both my businesses have responded to these factors by, carefully deciding where they are going to be located, where will they make more profits, how many people are willing to work for them and how can they compete with rival retailers.
As you can see on my maps for TASK 4 - location and its importance, the two businesses have located near housing estates and near to schools. This will help them gain more profits and encourage more people to go to them.
They need to consider the importance of how much they will make at the end of the week as this will help them with finances, order more stock, pay company bills, pay wages/salaries and rent of premises.
The type of liability they have is important as they need to think about what could happen to them and what could happen to the business if they couldn't pay off their debts.
Shareholders are important as they can determine if a merger or takeover can happen. In either way without shareholders a plc wouldn't be able to run their business and merge or takeover other businesses.
Finally they need to consider where their rivals are located. They need to think about where they are going to be located and how they can persuade others to go to them and not go to their rivals. They need to also consider how they can offer services that will beat their rivals and offer better products and services. They also need to think about what is located near them (e.g. ASDA is located near a Windsor footpath) and how these can make people go to them and not their competitors.
B). The most interesting points of comparisons are:
* Both of the businesses are nearly the same age
* They offer similar products
* Located to near schools and housing estates
* Both are near Heathrow Airport
The points to where they are different are:
* Different type of business ownership
* ASDA provides a range services - look at Task 3
* One of them has shareholders
* Different liability
They are completely different as all businesses are. Not all businesses are the same. ASDA is known as a nationwide superstore and is part of global retailer so many people have heard of it. Wines Plus are just a basic retailing shop in South Ealing and everyone outside South Ealing wouldn't have heard of them as they are not as big as ASDA.
The size of the business also helps the business get recognised. Take the history of ASDA. It was a little partnership but then expanded into a big plc.
These similarities and differences have happened because, they all aim to be different but at the same time be in competition with each other.
They all aim to make profits and aim to do their best to run their businesses.
Both of the businesses aim to continue expanding, gain more profits, gain more shareholders, beat their rivals and attract new customers.
BIBLIOGRAPHY:
In this coursework I have used several sources of information as help. My sources were:
* Text books - HEINEMANN GNVQ Intermediate Business Studies and National Statistics 2000 edition and 2001 edition
* Internet - www.multimap.com
* Tutor handouts
These are the sources of help I have used to help me in this coursework.