When Robbie Piers decided to expand his business to a partnership. He registered his business and made a contract called a deed of partnership, This states the type of partnership it is, how much capital each has contributed, and how profits and losses will be shared.
Advantages
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The main advantage of a partnership over a sole trader is shared responsibility. This allows for specialisation, where one partner's strengths can complement another's. For example, if a hairdresser were in partnership with someone with a business background one could concentrate on providing the salon service, and the other on handling the finances.
- More people are also contributing capital, which allows for more flexibility in running the business.
- There is less pressure of time on individual partners.
- There is someone to consult over business decisions
Disadvantages
- The main disadvantage of a partnership comes from shared responsibility.
- Disputes can arise over decisions that have to be made, or about the effort one partner is putting into the firm compared with another.
- The distribution of profits can cause problems. The deed of partnership sets out who should get what, but if one partner feels another is not doing enough, there can be dissatisfaction.
- A partnership, like a sole trader, has unlimited liability.
Robbie Piers would eventually want to expand his business into a private limited company.
There are many reasons that may persuade Robbie piers to expand his company even further into a public limited company too:
Advantages
- It’s a larger slice of the market
- To expand / grow
- To expand and take over another company.
- Get more money and profits by selling shares on the stock market
- To build more stores.
Of course he would still have to consider the disadvantages like any company would have to when thinking of expanding.
Disadvantages
- Become too large resulting in poor labour relations.
- Conflict of interest between shareholders and the Board of Directors.
- Possibility of takeover or merger because shares can be bought by anyone.
Public limited companies and private limited companies are very simular but they do have some difference. They both deal with shareholders and the main difference between them is that in a private limited company you have to be invited to become a shareholder. Im a public limited company any member of the public can have a share in your company. Both types of company must audit their accounts, and have them available for inspection. They must indicate their status in their name, usually by using the abbreviation PLC or LTD. This warns their traders that their liability is limited and that debts cannot be recovered from the personal funds of the company shareholders.
All companies need to think of ways in which their business can grow and expand in order to gain custom and profits. Tecsave have intense competition from other supermarket chains and therefore must always be thinking of ways in which they can attract a wider range clientele.
There are many ways in which Tecsave can do this:
- Finding gaps in the market and producing products to fill that gap
- Selling particular products cheaper in order to attract people to the store.
- Building more stores in areas with little supermarkets.
- Creating new products that people cannot buy elsewhere
- Advertising offers and competing offers with other supermarkets
- Providing a specific service that no other supermarkets provide
There may be ways in which a company cannot expand and grow…
Constraints on growth are ways in which the company is unable to grow and expand. Tecsave is a growing company which wants to grow and attract a new clientele. Ways that the company could be stopped from growing are:
- Other companies offering lower prices than Tecsave.
- Rival supermarkets offering deals to undercut Tecsave
- Lack of money to spend on methods of growth
- Lack of customers visiting particular stores
- Own products failing to sell
- Profit margins falling considerably.
In some areas of industry economies of scale has been introduced to lower prices and costs. These results in the company benefiting from a reduction in the average cost per unit. Economies of scale means the bigger you grow, the cheaper you can produce products and the more profit you can make. Once Tecsave build/ purchase retail outlets (fixed assets) and the longer time in which they open the more money they will make eg. Tecsave pay for the cost of the building of the premises so hey make more profit because they do not have to pay for development.
All companies have objectives and these objectives vary from business to business. Tecsave need to be clear about what exactly they would like as their objectives. Their main objectives would probably be:
- Provide a quality service
- Selling quality goods
- Sell a wide range of goods
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Make prices cheaper than other competitors
- Operate in other markets
- Dominate the market.
To expand Tecsave would have to raise their capital. To do this they would
- Invest their profits
- Keep savings / invest their savings
- Obtaining loans from banks
- Obtaining loans from other businesses
- Issuing new shares
- Merge with other companies.
Organization charts are vital for companies. The structure of business organizations depends on the nature of their activities. A manufacturing firm may have a different structure from one providing a service. Two common ways of organizing firms internally are dividing by:
- Functions (departments)
- Products
A manufacturing firm may divide its operations up by product, as it probably produces a range of products.
Most large companies have departments or functions as their basis for internal structure, for example: Production, Finance, Marketing and Personnel. The head of each area is called a director.
Each department has different tasks, all of which are extremely important in order for the company to run smoothly.
Production: Department in manufacturing firms responsible for turning raw materials into finished goods.
Marketing: The function of this department includes consumer and market research, selling, advertising and distribution.
Finance: This department deals with the accounting, recording, controlling and analysing of the firm's funds.
Personnel: This department is responsible for employing and dismissing staff; salaries, assessment and training.
The Tecsave Human Resources Department.
The Human Resources department anywhere is usually responsible for recruiting new staff and for training them to do their job. When job vacancies arise, it draws up documents for specific purposes, organizes and runs interviews. They do plenty to ensure that all staff working for a company are happy and well looked after within their working environment. The department arranges holidays and overtime for staff. They operate wages and the perks to a job eg:
- Cars
- Health insurance
- Free uniform
- Discounted products
- First class travel
And also arrange shifts, the hours people want to or need to work and they also provide equipment and uniforms for all employees.
Tecsave's Human Resources department has to follow certain procedures before a job can be advertised;
Vacancy occurs - Three reasons why a vacancy may arise in a business:
- retirement
- promotion
- to go to a new job
The Human Resources manager then draws up a job description - The job description should contain these basic details about the vacancy:
- the job title
- the position in the organisation chart
- a list of duties
Person specification drawn up - The person specification should include the following details. This specification represents the ideal qualities of the person required to fill the vacancy:
- qualifications
- experience
- personality
The job is advertised- The Human Resources manager needs to consider the following:
- what details need to go in the advert
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where the advert should be placed
Candidates apply for the job - The advert will usually say what the candidate needs to send in as part of their application. This will probably include:
- a letter of application or a completed application form
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a copy of their curriculum vitae or CV. The CV contains personal information about their qualifications and interests.
The application forms are sifted by the Human Resources manager to reduce the number or shortlist the candidates being considered - If you compare these documents you can assess whether the person has the right skills for the job:
- the CV
- the job application form
- the job specification
Arrange the interviews - Why are the candidates interviewed?
- whether a person gets the job or not depends on their performance at interview
The interview is held - What are the interviewers looking for?
- good answers to all the questions
- the candidates' attitude and dress
- body language
Follow up references - What is a reference?
- the names and addresses of people who can provide details of your performance with a previous employer or give evidence of your good character
Appoint candidate to the job - What happens if references are not satisfactory?
- the job offer will be withdrawn and offered to someone else
- it might be necessary to re-advertise
After selecting a successful candidate for any position Tecsave would have to then provide induction training. Induction training would benefit both employer and employee. Induction training is a simple guide given to new staff to welcome them into a company. Whilst on an induction training day staff will learn what is required of them and at what standard they are expected to be working at. They will learn about hygiene and safety within their working environment. Which will include teaching your staff what to do when put into emergency situations. Providing staff training and induction training will ensure the new employee feels happier and comfier in their new job and the employer will feel at ease knowing all their staff have been told what to do and how to behave.
Example advert:
E-commerce (electric commerce – internet) is the newest service in the supermarket industry at the moment. And to gain more customers and compete with its competition Tecsave must ensure that they keep up to date with new and exciting services. E-commerce looks like it is the way into the future. Tecsave's main aim is to branch out and open up their business to ever sort of customer possible. E-commerce could help them gain customers that cannot get into the store as often as they'd like. Tecsave could look at the simple chart and decide if there are any sorts of people that they are neglecting:
The main two that e- commerce would benefit are:
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Lifestyle – people who do not have time to go to the supermarket.
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Age- elderly people who cannot get to the shops easily.
Advantages of e-commerce:
- Larger market and more options for consumers. This creates more market competition, thus driving down prices and forcing better retail practices.
- Don't have to leave home and fight traffic...delivered to door
- In many cases, a larger selection is available.
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Consumers are able to research a product and its competetors more thoroughly before purchase and compare many prices from different retailers.
- No sales tax.
- Open 24 hours a day / seven days a week, which is very beneficial to those who can not find time to go to a store and for those who just want to shop whenever they feel like it.
- Don't have to deal with the sales atmosphere.
- More friendly: no rude salespeople who ignore customers
- Can find what you are looking for a the touch of a button - sizes, colors, etc
Marketing Advise for Tecsave.
The 4Ps are the ideas to consider when marketing a product. They form the basis of the marketing mix. Getting this mix right is critical in order to successfully market a product. The 4Ps are:
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Product : This part of the four sections refers to the actual product itself. It refers to the actual nature of the product. On this part you should think about the design and quality, how it compares to other competitors products and whether difference kinds of models are to be made.
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Price: The second part is focuses strongly on the chosen price of the new product. The price has to be a good price compared with other competitors but also must make a good profit.
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Place: This is concerned with the forms and channels of distribution that are to be used in getting the product onto the market.
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Promotion: This means how it is to be advertised, whether any discounts are to be made or offered and what other types of sales promotion are to be used.
Tecsave's Pricing Decisions
This is a very important decision to make and must be chosen wisely. Your product does not have to be highly priced to make a profit, but it also doesn’t have to be the cheapest on the market to make the public buy it. You must think of internal factors and external factors to decide on your price. So if you have decided on a product that has a lot of fillings and uses a lot of machinery in a factory then your costs of production would be higher and your product would need a higher price to have a good profit. So the price decision widely depends on your product production line. Consider different price strategies for your product. You can use two types of strategies:
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High-price strategies – this one will work better if your product is unique, it will have no other competitors.
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Low-Price strategies – used to compete will other low price products and to attract people to buy for the low value.
Types of Promotion Tecsave could use.
You must make sure that your product's branding and packaging shows how different your product is to your other competitors once a product, whatever it may be, becomes differentiated from other similar products, advertising, personal selling and sales promotions can be used effectively.
I suggest you try to gain a brand image. This will help consumers to remember and distinguish the product from other leading brand's products.
But what types of promotion would be best for your product? Well there are only really two forms of promotion, and you do not have to chose either or, you can have adverts that contain both aspects of promotion. The two kinds are:
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Persuasive: The main objective of persuasive advertising is to persuade your consumers that they need or must have this product. It attempts to persuade the public to buy your product over rivals' products, suggesting that yours is the best. Persuasive promotion is supported by the use of branding, packaging and other forms of product differentiation.
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Informative: The way in which informative promotion tries to sell a product is emphasising on the full information of the product, (e.g. telling consumers your products are okay for diabetics.) Although informative is not very common with products such as ice creams it does not mean it should not be considered. Informative promotion is often used with services to try and compete with each other suggesting that they have better or more services available than other companies.
Tecsave's Financing
The Public Sector operates both at national level and locally. Responsibility, and therefore funding, lies with central government or local authorities. Although the main function of public corporations and local authority undertakings is to provide a service for everyone, they may also make a profit. If this is the case, then the surplus cash is reinvested in the business as retained profits, to develop or improve the service. Otherwise, funding comes from the Treasury or the local authority, either in the form of grants funded by taxation, or loans.
The Public Sector Borrowing Requirement (PSBR) is the money required by the public sector of the economy for expenditure on items that are not financed by income.
External sources of finance
- A sole trader or a small business may be able to borrow money from family or friends without paying interest.
- Loans from a bank or a building society can be expensive. An agreed amount is borrowed and repaid over a fixed period of time with interest.
- Grants from central or local government can cost the firm nothing.
- Firms often lease equipment or machinery to avoid a large outlay of cash. This is useful if a firm needs to upgrade within the medium term as technology advances.
