Many Private limited companies are sole traders or partnerships. They are mostly small-scale operations, often with just family members running the business like French’s Fish Shop.
P2 A brief description of the industrial sectors[s] that each business is part of and identification of the broad trends of growth or decline for that sector[s] in the UK
All industries can be described as belonging to a particular industrial sector. All businesses operate in 3 broad industrial sectors
Primary
- Secondary
- Tertiary
Primary Sector
Industries in the primary sector include:
- Farming and fishing, producing the basic foodstuffs needed by society
- Forestry, producing the timber that is used in making houses, furniture, paper and other items
- Mining and allied industries, producing coal, oil and gas for manufacturing goods, and stone for building.
The primary sector is involved with producing or obtaining raw materials, which are not large in Britain, in 1986, 309,500 people were employed in agriculture, horticulture, forestry and fishing (less than two per cent. of the employed population) and 237,500 in coal mining and other mining and quarrying. The overall reason why employment in the primary sector is declining gradually is because it is becoming more efficient by brining in new technology such as new machinery, which means that only one employee can do the work that was previously undertaken by several employees.
Secondary Sector
The goods that are produced by secondary sector businesses fall broadly into two categories:
- Consumer goods, that are bought by members of society for their own use, such as washing machines, televisions and bread
- Producer goods that are used in the production of other goods, such as machinery and commercial vehicles.
The secondary sector is involved with manufacturing, processing, assembly and construction. Manufacturing industry in Britain has declined considerably and now accounts only for around a fifth of total employment. The Secondary Sector will slowly start to increase as new technology is introduced, which will increase productivity in the future.
Tertiary Sector
The Tertiary sector is usually known as the Service sector. It is the widest ranging industrial sector in the UK, it can be divided in to four sections.
-
Public services (including administration, defence, health, education and personal services such as hairdressers).
-
Financial and business services (including banks, insurance companies, advertising, law, accountancy).
-
Transport and communication (including haulage companies, bus and train providers, radio, telecommunications and television companies).
-
Retailing, distribution, hotels and catering (including shops, distributive services, inns and pubs, fast-food outlets).
The Tertiary Sector is the fastest growing and most diverse sector of the UK employment. This sector is expected to increase in the next few years due to the introduction of new technology.
The table below shows the industrial pattern of employment in the UK.
UK employment by sector, 1901-98
The table above shows that most of the working population in the UK are employed in the tertiary sector and there are people working in the primary and secondary sector. In every country the industrial sectors change. In the UK the primary and secondary sectors are declining while the tertiary sector is expanding, this is because big businesses will only produce goods or offer a service if it is in demand so they can make money. This means that if the demand increases for that product or service the industry the product or service is in will start to increase, and more and more people will start to get employed in that sector as it starts to expand which means that many people will start to get employed where they know they will make money.
The Graph below shows the industrial pattern of employment in the UK
The French’s Fish and Chip Shop is in the Tertiary Sector.
The table below show the employment figures for all the industrial sectors within the U.K from 1993-97
The table above shows that the number of people employed in the Tertiary Sector over the last few years has increased.
P3 A description of the activities of your chosen businesses and whether those activities are growing or declining in the UK
The main activity of a business is usually known as the core activity. The core activity of my chosen small business (French’s Fish Shop) is selling fish and chips. This is a tertiary sector activity. Selling fish and chips, drinks and various snacks is the only service that my small business provides to its customers. French’s Fish Shop generates most of its income from selling fish and chips.
Businesses that have one core activity usually decide to move into other areas of activity, which is known as diversification. They can have a natural extension (lateral) of their core activity. This means if French’s Fish shop wanted to expand their business they could make their chip shop into a restaurant, or they could choose to conglomerate (unrelated to core business). A business undertakes conglomerate diversification to go into areas of activity that are showing a sign of growth or a demand of the product/services the business supplies starts to fall causing the business to diversify.
The activities of my chosen business are growing strongly in the UK. The core activity of my business is expected to grow due to the service my chosen business provides benefits when people have more or extra money to spend. This is called disposable income. This is the amount left over after paying tax, National Insurance and various bills, e.g. gas and electric bills.
P4 An explanation of why each business has located where it has
An important decision for an owner of a business is to decide where to locate his/her business. The decision that the owner makes is an important one and it can also influence its performance in several ways. Many factors are taken into consideration when choosing the location such as the type, purpose and nature of the business. E.g. Morrison’s (supermarket) searching for a new site for their store, would be different or Rover (car manufacturer) considering where to build their new factory.
The diagram above shows the factors that need to be considered when choosing a location for a business.
There are many factors to consider when locating a new business which all play an important part in successful sale of a product. For some businesses only a few factors will be important. Other businesses may need to consider and balance a complex mixture of location factors. One important factor to consider is the infrastructure of business site:
- The business needs very good transport systems for the site the most common are (road, rail, river, canal, ports)
- The business needs good communication systems, telephone systems, fax e-mail.
- Production is important to a business so a firm needs to know whether there are ancillary firms in the area to help deal with waste disposal, repair machinery and to transport the finished good.
The supply of labour is another important factor to consider. The business will need to consider whether the right kind of skilled, or semi skilled labour is available or grants for retraining if not; What the local wage rates are like; whether the housing school, and leisure facilities will attract and keep labour in the area. How much government, local authority, and EC aid is available.
Before a business chooses its location it would need to take some of these points into consideration which relate to the cost of the premises.
- How long the site will be needed?
- Should it be rented or purchased?
- Will the site need to be drained and leveled?
- What is the level of rates payable to the local council?
- Is there room for expansion?
- Are there any risks with the site will this raise the insurance premiums?
Some business also need to locate near water supplies especially paper manufacturers, pharmaceuticals, and electricity generation.
Waste disposal is also important for the business as some businesses produce a great deal of waste during production there are various laws, which strictly control how this should be disposed of.
French’s Fish Shop is at 10 Quayside, Wells-Next-the-Sea, Norfolk. This is
Case Study 2
The large business that I have chosen is called Cafedirect. Cafedirect is the UK’s leading fairtrade company - providing the best deal for coffee and tea growers in the developing world. In return, Cafédirect are able to supply their customers with some of the highest quality teas and coffees. Basically this means the coffee is purchased direct from the grower’s co-operatives, not from the middlemen. The price paid is never lower than an agreed minimum, regardless of any fall in world market price reductions. When the world price goes above this minimum, Cafédirect pays an extra 10% social premium. Pre-payments, regular price updates and a business development program all go to help the growers help themselves by negotiating better terms for all their coffee. By building strong partnerships with growers, guaranteeing a good price, with a shared aim of producing the best coffee, by doing this Cafedirect enables the growers to invest back into their businesses and communities. This way everyone benefits, Growers are more secure and better able to improve the quality of their crop, so we the consumer get a better cup of coffee. Cafedirect has many major competitors such as Nescafe, Kenco, Maxell House and Carte Noire.
P1 A description of the different types of business ownership and how this affects the position of the owner
Cafedirect, which is a well-known coffee supplier in the UK, is in the private sector, the organisation is owned and operated by private individuals, which makes it a private limited company (Ltd). A private limited company is owned by ‘the members’ usually shareholders, who have limited liability. The shareholders of a private limited company can only buy or sell their shares with the agreement of the other shareholders- the shares cannot be freely bought by members of the public. Usually the shareholders are the directors of the company, so that they are responsible for the day-to-day management of the company and also have ultimate control. There is no maximum amount of shareholders in a private limited company. As long as the shares have not been offered to the general public. An Ltd company has limited liability for its members. The effect of this is that, if a company is unable to pay its debts and is put into liquidation, the members will not be required to contribute more than they have actually paid, or agreed to pay, towards settling its debts. A private company can be limited by shares or by guarantee, (which is a commitment to contribute a given sum if the company is wound up
One main aspect in running a business is liability. Every business has unlimited liability or limited liability
- Unlimited liability-means that the owners of the business are personally responsible for all the debts the business incurs. If the business is unable to pay its debts the owners can lose all their assets such as their house and car.
- Limited liability-means that the owners of the business are only responsible for the debts of the business up to the amount they have invested in the business.
There are advantages and disadvantages of being a private limited company (Ltd)
Advantages
- It is easy to set up a private limited company
- Banks are more willing to give a loan to a limited company
- The owners can never loose more than they invested
Disadvantages
- Disagreement amongst existing shareholders
- Difficulty of finding suitable shareholders
- Loss of control by existing shareholders
- Lack of collateral and security for those lending funds
- Element of risk in the loan
P2 A brief description of the industrial sectors[s] that each business is part of and identification of the broad trends of growth or decline for that sector[s] in the UK
All industries can be described as belonging to a particular industrial sector. All businesses operate in 3 broad industrial sectors
Primary
- Secondary
- Tertiary
Primary Sector
Industries in the primary sector include:
- Farming and fishing, producing the basic foodstuffs needed by society
- Forestry, producing the timber that is used in making houses, furniture, paper and other items
- Mining and allied industries, producing coal, oil and gas for manufacturing goods, and stone for building.
The primary sector is involved with producing or obtaining raw materials, which are not large in Britain, in 1986, 309,500 people were employed in agriculture, horticulture, forestry and fishing (less than two per cent. of the employed population) and 237,500 in coal mining and other mining and quarrying. The overall reason why employment in the primary sector is declining gradually is because it is becoming more efficient by brining in new technology such as new machinery, which means that only one employee can do the work that was previously undertaken by several employees.
Secondary Sector
The goods that are produced by secondary sector businesses fall broadly into two categories:
- Consumer goods, that are bought by members of society for their own use, such as washing machines, televisions and bread
- Producer goods that are used in the production of other goods, such as machinery and commercial vehicles.
The secondary sector is involved with manufacturing, processing, assembly and construction. Manufacturing industry in Britain has declined considerably and now accounts only for around a fifth of total employment. The Secondary Sector will slowly start to increase as new technology is introduced, which will increase productivity in the future.
Tertiary Sector
The Tertiary sector is usually known as the Service sector. It is the widest ranging industrial sector in the UK, it can be divided in to four sections.
-
Public services (including administration, defence, health, education and personal services such as hairdressers).
-
Financial and business services (including banks, insurance companies, advertising, law, accountancy).
-
Transport and communication (including haulage companies, bus and train providers, radio, telecommunications and television companies).
-
Retailing, distribution, hotels and catering (including shops, distributive services, inns and pubs, fast-food outlets).
The Tertiary Sector is the fastest growing and most diverse sector of the UK employment. This sector is expected to increase in the next few years due to the introduction of new technology.
The table below shows the industrial pattern of employment in the UK.
UK employment by sector, 1901-98
The table above shows that most of the working population in the UK are employed in the tertiary sector and there are people working in the primary and secondary sector. In every country the industrial sectors change. In the UK the primary and secondary sectors are declining while the tertiary sector is expanding, this is because big businesses will only produce goods or offer a service if it is in demand so they can make money. This means that if the demand increases for that product or service the industry the product or service is in will start to increase, and more and more people will start to get employed in that sector as it starts to expand which means that many people will start to get employed where they know they will make money.
The Graph below shows the industrial pattern of employment in the UK
Cafedirect is in the Secondary Sector.
The table below show the employment figures for all the industrial sectors within the U.K from 1993-97
The table above shows that the number of people employed in the Secondary Sector over the last few years has remained the same and probably would decreases due to
the rise in employment in the Tertiary Sector.
