Scott Bader collates information to see if their business is doing well and to see if they are meeting its objectives. They collate information by financials, customer surveys, employee surveys and other key performance indicators on profitability, Health & Safety, environment, and quality.
This is a table of Scott Bader’s financial results of continuing activities.
As you can see from the table Scott Bader are a very successful company with huge turnovers every year. They have a lot of capital and reserves and have very high total assets. In 2000 Scott Bader ended up in a loss of -281 but they obviously took a hold of themselves and did as much as they could to improve as they picked back up the year after. Scott Bader’s turnover gets higher every year yet the operations profit/loss gets lower every year with exception to the loss in 2000 this maybe because they have to give a percentage of their profit to places less fortunate, maybe they did not have enough cash flow to keep the going. Last year Scott Bader’s total assets has risen to a great amount of nearly 64 thousand they are improving their efficiency, though it must be hard because more technology means less employees and it would be hard for them to make people redundant and lose jobs as it is against there principles.
Scott Bader could use profitability ratios to assess how well they are doing. The Gross Profit ratio shows how much gross profit the business has made in relation to its sales figures. This would be very useful for Scott Bader as they could see their profit margin and they would be able to see how much would go into charities and how much will go back into the company.
Return on capital employed ratio, is one of the best measurements of profitability. It compares the profits to the amounts invested in the business by the owners. It is useful because it can be compared to the rate that would be obtained from other investments. Scott Bader could invest into something else or put their money in a savings account. Scott Bader of course has to take into account the amount given to staff and to charities.
WHAT TYPE OF OWNERSHIP IS SCOTT BADER LTD? EXPLAIN THE BENEFITS AND CONSTRAINTS OF THIS TYPE OF OWNERSHIP.
There are various types of ownerships a company could have, the main types of ownership are; A Sole Trader, a Partnership, a Private Limited Companies, Public Limited Companies (PLC) and a Franchise. These are some basic descriptions of each type of ownership.
A sole trader is a one-person business, usually found in trades where only small amounts of finance are required to set up and where there are very few advantages to the existence of larger organisations (e.g. hairdressing, newsagents, market traders). A sole trader faces unlimited liability for his/her debts – this means that there is no legal difference between the business and the owner. Yet they do have the benefit of enjoying all of the profit.
Partnership: To rise above many of the problems of a sole trader, a partnership may be formed. A partnership is a group of individuals and generally there will be between 2 and 20 partners. Each partner is responsible for the debts of the partnership so the company would need to choose their partners well and draw up a contract of responsibilities and rights of each partner. Most partners in a partnership face unlimited liability for their debts. The only exception is in a Limited Partnership. To beat this problem, the partnership may take on as many sleeping partners as they want – these people offer money for the business to use, but they will not have any input on how the business is run. So really, they have purely put the money into the business as an investment. These Sleeping Partners face limited liability for the debts of the partnership.
Private Limited Company: This is a type of incorporated business – where the business has a separate legal identity from the owners. Often private limited companies are small, family run businesses, which are owned by shareholders. Each shareholder in a private limited company must be a part of the business and the shares can never be sold to members of the general public. Each share entitles the owner to 1 vote at the company’s Annual General Meeting (A.G.M.) and also to a share of the company’s profit at the end of the financial year (a dividend). Each shareholder has limited liability for the company’s debts and can, for that reason, only lose the value of they amount the put into the company. The company is run by a Board of Directors (who are elected by the shareholders) and a Chairman heads this. It can be very difficult for a shareholder in a private limited company to sell their shares, since a buyer must be found within the company.
Public Limited Company (P.L.C.): This is the other, much larger, type of joint-stock company and, just like a private limited company, a PLC is an incorporated business, is run by the Board of Directors on behalf of the shareholders and has an A.G.M. at which shareholders vote on certain key issues relating to the company. The main difference between a PLC and a private limited company is that a PLC can sell its shares on the Stock Exchange to members of the general public and can, therefore, raise significantly more finance than a private limited company. It is often the case with a PLC that the owners of the company (shareholders) will wish the PLC to make as much profit as possible, so that the shareholders will receive a very good dividend per share. However, the Board of Directors and the management will often wish to assign some of the PLC' s resources to growth and innovation – this will clash with the shareholders’ desire for maximum profits. This is known as the divorce of ownership and control.
Scott Bader’s ownership is called common ownership. It has no external shareholders, which makes business relationships more sustainable because Scott Bader cannot be taken over - it is totally independent, partnerships can be made long term with customers and suppliers. Its shares are held in a charitable trust and so consequently employees are trustees-in-common of the company’s assets. This unusual structure provides significant further size to the business and employment relationships and our interaction with the wider community. Employees have a greater role to play in the company than just performing their day-to-day role this provides incentives to work harder and good give them a sense of well doing as they are helping others less fortunate than them world, while they are working. The charitable status brings responsibility to the wider community particularly to those less fortunate.
WHAT IS A COMMON OWNERSHIP? The word "common" is used in a similar way to its use in common land and commonwealth. Examples are various forms of national and public ownership, community property, and some forms of cooperative organisation, but it is in fact a wider and more fundamental concept.
Common ownership means that people may possess and manage property, but the community as a whole has the right, if it wishes, to rule on the use of that property, or to restructure it. People are so therefore totally responsible to their fellow citizens for their actions. Common ownership underpins equality, and complements democracy. Democracy is where people can express their wants. Common ownership gives people the power to express these wants and at their own will.
Scott Bader received recognition for this type of ownership when an article was written on “Sharing success: Why Britain needs employee-owners” Andrew Gunn, Head of Finance at Scott Bader says: - ‘We seriously believe that and employee owned companies do not receive the recognition they deserve in the British economy. Instead they are often seen as quaint organisations to be given the occasional pat on the back. … Many trust and employee owned companies are successful durable organisations, which are leaders in their fields…’
There are disadvantages and advantages to a common ownership. The advantages are that, Scott Bader cannot be bought out like PLC’s because the shareholders are the employees and similar to a private limited company nobody outside the company may buy or be sold shares. This is a very big advantage, which gives it a huge benefit over other businesses in its industry because it is makes the company more sustainable and is able to compete with international companies in the resin market. A disadvantage of being in a common ownership is that sacking employees would be very against their principles not only would they not be looking out for the well-being of their employees but they would also lose their share and the bonuses given as a part of their proportional profit. The employees of Scott Bader know they own the business it may make them work harder as their share will increase but it may want the employees to be very involved with the running of the business, as Scott Bader uses a democratic leadership style this make it easier, but decisions will be slower and if employees are not happy in the way the company is run it could cause all sorts of problems. It is probably better to have team leaders to which the employees could share ideas.
As Scott Bader benefit from not having any shareholders because they gain from limited liability, which means that, the owners (the workers) are financially only responsible for the amount they have invested in the company rather than their personal wealth. This means that the firm is insolvent and the maximum creditors can receive its workers’ original investment. In order to protect this right ‘Ltd’ appears after Scott Bader’s name, ‘Scott Bader Company Ltd’ this encourages the workers to invest in the company as they have relatively little risk. There is a disadvantage to Scott Bader not having shareholders they are a small business and can’t raise finances easily having shareholders would mean that they could put in money which could be invested so that the company could grow.
Scott Bader are a smallish company so because they do not produce as much they cannot benefit from economies of scale which cause average costs to be lowering large-scale operations as the cost of producing each unit falls, this therefore meaning that Scott Bader have a disadvantage to competition with lower average cost as the competition will be able to afford lower prices, resulting if demand is elastic in a loss of demand for Scott Bader’s products.
