However, are several constraints you should be wary. Initial and continuing fees, franchisors will charge new franchisees a lump sum to start up a business using their brand name. Although this can be under £1,000, the amount varies greatly according to the franchisor. Many will insist that you purchase most of the materials you need from your own savings, and some will demand that you have a certain amount of working capital before you are even considered to be a suitable candidate. Unfortunately, the costs don’t end there. Franchisors will take a regular slice of your takings as royalty fees. If you have a tight profit margin, the bad news is that this fee is deducted from your actual turnover, not the surplus you make. Once your fixed-term contract is up with your franchisor, your wallet will again be needed, as you will have to pay another fee to extend the time you can trade under the company’s name. This is based on how well your firm is doing at the time. Although these costs may compare favourably to those if you were starting up on your own, it is worth remembering that you will often have to deal with all the normal overheads that a business generates. It all adds up to a fairly large amount and you must be sure that you have the necessary capital behind you before you embark on your franchise. You do things their way, not yours; each franchisee will gain training and guidelines on how the business should be run. Although this is a helpful leg-up into running your own firm, after your franchise is established you may feel your entrepreneurial creativity is somewhat restricted. Perhaps, may get slightly frustrated if your plans for your outlet are hampered by company policy on what you can and can’t do. Franchisors generally like their outlets to look and feel the same way, so you will have to work within someone else’s idea of what is best for your firm. As well as restricting your independence, the penalties for falling out of line with your franchisor’s wishes can be harsh. Many franchise contracts stipulate that any wild alterations to the running of your franchise can lead to the termination of your agreement. Other people’s decisions could sink your franchise, the lack of actual control you have over your franchise means that even if you run a profitable outlet, you could still lose everything if your franchisor makes bad business decisions and the firm fails. As well as seeming vastly unfair, news of such catastrophes can often come out of the blue if your franchisor doesn’t keep you up-to-date with developments. Another potential source of trouble that is out of your hands is the actions of other franchisees. One bad franchise could ruin the good name of the company, dragging down your profits as well as your reputation.
Private Limited Company
Private companies are formed when there is no need to appeal to the public to subscribe for the company's shares or to lend money to it, and often they are little more than incorporated partnerships whose directors hold all or most of the company's shares.
If your business is expanding and you may consider changing your company formation to a joint stock privately owned company (Ltd). By doing this you will raise extra capital through selling parts of your company (shares) plus you will have the added advantage of limiting your company’s liabilities. To do this you would firstly need to find the true value of our company in order for you to divide it into a number of shares (nominal value), this would be calculated by looking at how well your business has performed in the passed and how your business would be expected to perform in the future, this is normally done by a merchant bank and so you would need to appointed one. Once this information has been obtained, you then need to decide the number of people and the percentage of shares that should be divided up between the shareholders. Ownership needs to be considered carefully, as the shareholder with the largest share of the business has the greatest control. The remaining shares can be sold to other businesses or family members or acquaintances, but not generally to members of the public. Not more than 50 members can hold shares within the company and these must be "desirable individuals" stipulated in the Memorandum of Association wish represents name of company, address, what’s the business about, liability, amount and division of shares. You also need to appoint a board of directors for your company. The board would control the company, making decisions and driving the business and would be elected by all the shareholders.
The advantage is that all shareholders will benefit from limited liability for debts incurred. This means that, if your business gets into difficulties financially, the shareholders would only stand to lose what they originally invested; this is a major advantage for you as it would help to attract more investors. As a limited company you need to publish some annual account. The business has continuity, because it has a separate legal existence to its owners, the business can be bought and sold like other commodity, the death or retirement of shareholders does not affect it. Large amounts of capital can be raised in relatively short time periods. It is easier for the business to borrow a loan.
However it has the constraints. There are legal formalities which must be carried out before the company can be set up. The company must produce some accounts. Ltd has to pay for some legal paper work, for example limited liability.
Can’t earn as much capital as a plc, because a plc sells mush more shares than a Ltd
More difficult to get a loan because the banks don’t know the business well, but for a plc is mush more easily to get a loan because the bank now’s who they are.
Cannot advertise their shares for sale
Do not have their share prices quoted on stock exchange
Public Limited Companies
In a typical public company the directors hold only a small fraction of its shares
When a company terns plc means they want to expand, diversify their quality products to other location. A plc is formed or more usually created by the conversion of private companies into public ones when the necessary capital cannot be supplied by the directors or their associates and it is necessary to raise funds from the public by publishing a prospectus.
The main benefits on a plc are that each shareholder enjoys limited liability so they are not risking personal bankruptcy. The business has continuity, because its survival is not influenced by the personal circumstances of its shareholders. Large amounts of capital can be raised in relatively short periods because of the company's size and the security it offers. It can specialise by setting up separate departments and using specialist equipment. The companies have a separate legal existence from their owners. People are willing to invest in such companies because they are organised through the stock exchange, so people can get their money back easily. Large amounts of capital can be gathered in one organisation. Very large companies can compete worldwide. Banks are more willing to lend to companies with a large share capital. They are able to gain economies of scale, e.g. they can buy in bulk, and use labour more efficiently. Anyone wanting to do businesses with a public limited company can check their annual accounts and report to see if they are financially sound.
However it has its constraints. When a private company becomes public, the original shareholders may lose control of the company. There are many legal formalities that must be complied with before the company can be set up. It usually requires a solicitor to register a company and this makes it more expensive than setting up a sole trader or partnership. Activities are closely controlled by company law and the running of the company is subject to legal constraints. Accounts are public and this means a lack of privacy. The company has to pay for an auditor to independently check the accounts. The company is accountable to its shareholders and its creditors. Divorce of ownership from control can lead to a conflict of interest, as the aims of the shareholders, directors and management may not be the same, e.g. directors may want to grow the business over the long-term, shareholders may be expecting a quick, high return on their money. The performance of the company may not be reflected correctly in its share price. For example, recent speculation on the future of Microsoft led to a fall in the price of shares of other IT firms across the world, which had nothing to do with the actual performance of the companies. If the company is too large it may lose its efficiency and become bogged down in red tape. They are subject to take over bids. There is no way of stopping other companies buying big blocks of shares. In practice, the small shareholder can do very little to influence the way the company is run.
Caspian:
I my opinion, I personally surmine, Caspian is a private limited company because it only has three shareholders on the company, perhaps if it was a public limited company the business would have more than three shareholders and sell the shares to the public. Also it can not be a partnership because of the way the way the employees are structured indicates that the business is a limited company because it’s organised by Function. Each department does one part of the work of the business; each specialist can concentrate on their particular job. There is a divorce of ownership from control, the owners may have different aims from the directors they appoint, the managers may have different aims from the workers they appoint.
The main benefits of Caspian of being an Ltd than a Plc are: lower running costs than plc, because is a smaller or medium-sized company and it has mush lower running costs.
The accounts, trading account, profit and loss account and balance sheet need only to be published in a summarised form; therefore they keep some measure of privacy, wish saves them time and costs, perhaps know one can see if they are passing through an unpleasant time. They have less legal paper work to pay. There’s more control on the business, only has three shareholders, wish have shares on the company, wish motivates the shareholders, they have the will and desire to work efficiently well and to produce as much effort as they can on the company. The owners keep control and choose the shareholders; they want to select the right person to help them on running the company.
There are less conflicts, less disagreements, fewer arguments because there are only three shareholders on the business. The shareholders have better communications with there costumers, there’s more efficient, more product activity because they speak to the costumers and they now what they want from they company. The business has its own legal identity, which means that its survival is not influenced by the personal circumstances of its shareholders.
Share capital, a plc by law must have at least £50 000 in share capital to start up. A private company can start up with just £2 in share capital. In practice, new plc’s today have to have a market value of millions of pounds in order to get a listing on a stock exchange wish means that is mush more efficient to have an Ltd than a Plc.
The constraints
There are only three shareholders, wish have less ideas, less people to share the responsibility with. Ltd has to pay for some legal paper work, for example limited liability.
Caspian can’t earn as much capital as a plc, because the shares cannot be sold to the general public, raising large sums of money for expansion is difficult.
More difficult to get a loan because the banks don’t know the business well, but for a plc is mush more easily to get a loan because the bank now’s who they are, shares are Quoted on the open market. There is a limit to the amount of capital that can be raised from friends and family.
Cannot advertise their shares for sale, shares cannot be sold on the open market, therefore it is hard for investors to get their money back if they should want to sell.
Unless founder members own the majority of the shares, they may lose control over the running of the business.
Unfortunately banks are more willing to lend to companies with a large share capital than to an Ltd. They are not able to gain economies of scale, e.g. they can’t buy in bulk, and use labour more efficiently. Anyone wanting to do businesses with a public limited company can check their annual accounts and report to see if they are financially sound, but unfortunately with Caspian won’t be possible because they only show a summary of their balance sheet.
Business Objectives
Usually all business’s have different objectives in for the future. The main business objective of a business is to survive and be able to make profit. Most companies want survival because they aim simply to stay in business. A lot of small businesses strive to cover costs each month and so survive to do business another day. Most business just wants to make profit, most businesses aim to make enough money to stay in business and make a good living from it at the same time. If it is a joint stock company it will aim to give its investors a good return on their money. There are businesses that want to grow set as their objective not only staying in business and earning a good living, but also making a bit more profit to put back into the business and so grow, expand and diversify. There are businesses, mostly in the public sector, whose sole objective is to provide a service for the benefit of the community, e.g. health services, transport. The Post Office is an example of such an organisation. Charities are organisations whose only objective it is to make enough money, and use that money, to assist those who are in need.
Other objectives are to maximise efficiency, Maximise turn over, Maximise their market share and maximise their return on capital invested. Other wants their products to have a good quality to attract more customers to buy their product.
Caspian objectives
The objective of Caspian is only to make profit, but in my point of view the main objective is to survive in order to make profit and to pay for they’re daily expenses. Caspian is still on the primary objectives wish are those that must be achieved if the business is in survival and be successful, it relates to issues such as profit levels and market share. However Caspian is a new business, survival is particular important when they are vulnerable such as; during their first few years, during periods of resection and intense competition. On the other hand they need tight control on costs because Caspian does not enjoy economies of scale, cannot buy in bulk, it would attempt to take a greater share of the market, perhaps it would allow them to manufacture their products more cheaply and to sell them at a lower price, increasing their competitiveness.
There is a lot of competition between other companies, however, the unpleasant part is that the other businesses are Plc’s, has mush more capital than a Ltd, wish they can qualify new and skilled employees and pay them a superior salary. They are able to afford Technical economies because a large firm can afford to operate more advanced machinery than a small firm like Caspian.
Caspian in order to compete with other firms they need good quality work, need trustworthy and skilled workforce to manage the work properly. And with a skilled workforce they’ll be more productive, enabling the business to operate more cheaply and more profitably, and with trained workers they can increase their motivation and reduce the numbers seeking to leave the business. The business needs an outstanding workforce, produced by three shareholders wish work on the business. The shareholders are motivated and are willing to work quintessential, want to maximize efficiency; the business wants the most efficient use of resources and work swiftly well to obtain their targets. They also want to maximize turnover because a higher turnover may lead to the more efficient use of resources such as machinery and equipment.
Caspian has three Magazines wish target different readerships, they have defined target audience, fortunately Caspian now’s who their target audience is, they now what they have to write; now what they are aiming at, they now who they have to target is terms to get profit. Caspian is aiming at the advertisers, but to get the advertisers to advertise in Caspian they need to produce a high quality of work, they need to have a high market share to captivate the advertisers. However Caspian wants to maximize market share because the greater the market share, the more power the firm will have to set prices or to control production.
Expansion, although Caspian may try and consolidate, eventually because of the competitive nature of the market Caspian may need to start thinking about expanding into new geographical markets or aiming their product at new segments, for example entertainment magazines. They need to start producing new products and hang on to their target audience. They want to be successful on what they do in terms to expand their target market and to make profit for the business.
However, the workers have objectives as well. Directors often want to increase their own status by being a director of a growing and prestigious company with a good reputation. They could do this by maximising the businesses share of the market, giving the business more power.
Management, want bigger salaries and extra perks. They may want to be paid bonuses based on increased turnover to motivate them to work harder. Employees always want higher wages, more time off, better working conditions. Suppliers, if the company increases its sales they can increase the supplies they provide.
Unfortunately I didn’t manage to get Caspian’s Mission Statement, wish is a short phrase used to state the general targets of a firm.
