Attainable
Objectives settled have to be attainable and achievable. Sometimes people confuse attainable with realistic, so attainable in some businesses are called agreed. Targets are more likely to achieve if workers had been told about them and these targets were agreed as a realistic target.
Realistic
Realistic means that everyone within the company believes that they will achieve the target settled. When settling up the objective, company have to consider financial, size and expertise resources. For example, when a new chocolate producer set an objective of being the best selling chocolate company in the UK, this objective is unrealistic. When employees feel that objective settled is unrealistic, they are unmotivated so achieving this objective is even harder and less likely than before. When a manager put the target higher, then employee can feel that he was treated unfair and will be demotivated with what he is doing and will even do his work worst.
Timed
To set an objective, company need to find appropriate time to do it. They need to set when the objective has to be achieved, is company wants to achieve in a month time or in a year time. Time scale is really helpful in planning priorities and focus on particular objective. For example, if a student to finish his assignment has a month time, he will not take it as a priority to do it right now, the same is with the employees, and they will be less motivated to achieve the longer-term objective.
Forms of ownership
Businesses in the UK are ranged from small ones – one-person businesses - to large organisations, like supermarkets. Before deciding to open a business, a person who wants to open needs to consider the legal structure of business based on aims, financial resources which have to be invested in the business, etc. After the period of time, business will grow and its aims can change a lot; in this time, the owner can change legal structure of his business and add some new ‘settings’. There are many forms of businesses, for example partnerships, worker co –operative, franchise, building and friendly societies, charities, sole traders, private limited company and public limited company.
Partnerships
Partnerships businesses are operated from two to twenty partners. Usually partnerships are used in professions such as in accountants, solicitors or doctors with private clinics. This kind of a business is really easy to set, but it is hardest to withdraw, because of partnership agreement or Dead of Partnership, which sets how many of the profits are shared, what will be a salary for each of the partner, and what will happen when one of the partners wants to leave. By setting these agreements problems occurred are easily to resolve in the future. Silent or sleeping parents are present in the partnerships, just to invest money in it, but they do not really take a part in running this particular business.
There are couple advantages of partnerships like: taking on the ‘board’ some new partners, as it will put into account new capital; new partner can have lots of ideas which can improve the business; workload can be spread on the partners, so a person do not have much work to do individually and it makes their work easy; if there are more partners, each of them can be specialised in different business area and they can work on a position in which they are skilled and experienced.
There are couple disadvantages of partnerships like: in a common partnership, partners have unlimited liability and they are liable for any loans of the business, so in partnerships trust is vital; there may be disagreement between partners sometimes and because of it, decision-making can be really difficult; retirement or death of one of the partners can cause some problems, family of the death or retirement person will want to have some shares or profits.
Worker co-operatives
Worker co-operatives are valuable type of business in the UK. The workforce try to make more money to buy the company from current owners to make sure that their jobs are protected. Workers then become the owners of the business so they are able to do decisions by their own and they can run the business as they want. Workers in co-operative businesses are more motivated, as they invested own capitals and they want their business to success, in other side, they will have not management skills needed.
Franchise
Franchise is not a form of ownership, but it is a legal agreement, by which somebody can be a part of existing business. The most popular type of franchise is a business format franchise. The potential franchisee, buys a licence to exchange under existing business name from the original company.
There are some advantages of franchises like: they benefit from buying stabile businesses, by this, franchises are more likely to success this way, than by making own business; franchises are more motivated than managers, as they are investing their own money in the business and can become more successful.
There are couple disadvantages of franchises like: big amount of capitals is needed to buy franchise, like KFC by less known brand, as this is cheaper; franchises need to be ready to strict guidelines so they do not have as many independence as business settled up individually.
Building and friendly societies
Building societies have limited liability and they are owned by memberships. When an investor opens an account with building society, he automatically becomes a member of the society. These are mutual societies, what means that any profits made are kept for the members. Some of the building societies now become banks as public limited companies.
Friendly societies are another type of mutual societies. They can be found in financial services which provide savings and life assurance services for their members.
Charities
There are many charities within the UK. All of them must be registered with the Charity Commissioners. Charities do not exist to make profit, but to help people in needs or in special disease. Charities are made for one of the four purposes: to help people in poverty; to help with improving education; help with improving religion; to help animals or reduce environmental issues. Some of the charities work on large scale, they raise million of pounds and employs huge amount of staff, also they run professional marketing campaigns. To cover these expenses, they are run by the businesses. Other type of charities are working on small scale, they usually hire voluntary workers. Without looking on size of charity they need to have some money to promote their acts. The Charity Commissioners are able to measure any frauds.
Sole traders
Sole traders also called sole proprietors, are the simplest form of business in the UK. There are some legal needs to run this kind of business, such as licenses in types of business such as own pub or a taxi firm. The company can employ people, but there is just one owner. By this, owner has a freedom as he can run this business how he wants, he can make decisions which he wants and he is able to keep all of the profits. Except these, he has to deal with customers, suppliers and accounts to run a business. He cannot take holidays for a longer time as it is equal with no profits. Owner of a business in this type has unlimited liability, what means that if the company become bankrupt, to cover loans taken he has to sell his own assets, like a house or car to pay this off. Sole traders can be a stressful business as if it goes wrong he can lose everything. Usually sole traders are hairdressers, decorators, windows cleaners, builders, etc.
The example of the sole trader company is a building service called ‘Bobby Maker’. This company is hold by Bobby and he is responsible for all of the duties involved in this work. He has four employees who are not involved in any paper work related with this business.
Bobby Maker aims are to provide high standard service done by him and his qualified employees and to make a profit. Bobby Maker has objective settled monthly, as to make bigger profit they have to renovate 30 houses in this time, but it depends on what they have to do in a particular house and they have to be aware of making this in high quality what is related with aims.
There are couple advantages of the sole trader like: control – they have control of everything what is going on in the business and they decide how they want to run it, so it manes that decision can be made quickly; profits – they can keep all of the profits made; privation – all of the private information and details of the sole trader are kept private; specialists – the sole traders are able to suggest personal service with local roots and ties, what for potential customers can be encouraging.
There are couple disadvantages of the sole trader like there is unlimited liability – when the sole trader business will get into the debt, the sole trader is liable to pay it off, if he has not enough money, he can lose his house, personal savings or other goods which belongs to him; finances – it is difficult to keep business from own money and expansion in the future can be more harder; opposite economies of scale – the sole traders are not able to make any advantages of economies of scale, it means that the sole traders will put higher prices on products or services to cover the business; decision making – are decisions are made by one person – a sole trader, he has no help form outside so success of the business is in his hands.
Private limited companies
Private limited companies, also called LTDs are hold by shareholders, who bought shares within the company. These companies have limited liability, what means that of business become bankrupt, investors lose just money invested into the company. It means that their personal goods are not at risk of losing. By this, more people are likely to invest money in this type of the company, as risk is reduced, but bad side of this type of shares is that it cannot be sold on the Stock Exchange. To settle this type of the company, there are some legal formalities involved, also couple really important documents; I will outline two of them.
Memorandum of association – it shows company’s name, registered address, aims of the company and their capitals. This document is also called ‘birth certificate of a company’.
Articles of association – it shows how many directors are within the company, how many meetings were run and other information about ownership of the company.
Companies like this need to be aware of some of the Companies Acts. Also, this kind of the company is able to still exist even if one of the shareholders died.
Private limited company elects directors who run the company and when a business made satisfactory profits they get a dividend. Dividend means share of the company’s profit. If the one of the shareholders have more than 50% of shares, he controls the business. If shares are sold, then business can have more profits, but they can be just sold to public with consent from other shareholders. In small public limited company director and the shareholder is the same person. These companies are ranged from small-scale business to large scale.
Good example of the private limited company is Phones 4 U. They state that ‘Our friendly, experienced and knowledgeable staffs are always on hand to provide expert advice. They’re keen to find out more about your mobile phone needs and want to make sure you receive a great deal that’s right for you.‘ What shows that they really care about their customers.
Phones 4 U aims to ensure that buying a mobile phone from them is an enjoyable, stress-free and rewarding experience.
Their objectives are settled yearly and they want to have 10% more sold phones than in previous year. In 2010, their selling rate grew by 22% what raise their capital by £165 millions.
There are couple advantages of the private limited company as money can be easily get by selling shares; firm is bigger than the sole trader’s company; there is limited liability; they employ specialist in the professions; death or illness do not influence on the running of the company; shares can be sold to relatives; taxed on profits;
There are couple disadvantages of the private limited company as shares cannot be sold to the stock market; accounts are not private; it is expensive to set up; profits are shared; not all decisions are made by owners; it is separated legal company.
Public limited companies
Public limited companies, also called PLCs. Shares of this kind of the company can be sold and bought in the stock market. When a company sells shares into the stock market first time, it is called flotation. Public limited companies have to sell at least £50.000 of the shares. This kind of the company is expensive, as there are more legal formalities than in other kinds of the companies. Public limited companies need to comply with the Companies Acts and with Exchange rules.
To better understand the stages of setting up public company I will show it in the graph.
In a public limited company is a risk, as if an individual has over 50% of shares then the company is owned by this individual. It is also called takeover. When prices of the plc falls down, then they are able to become takeover as potential buyer can buy shares cheaply.
The divorce between ownership and control
The divorce between ownership and control is used in public limited companies and it means that owner of the particular business do not control and run this business. It is owned by shareholders, but decision making is made by directors of the company. Lots of the shareholders have just little shares of the company so they cannot have a power of how business is running.
Good example of the public limited company is Morrison’s.
Morrison’s have many aims but I will talk about some of them. They want to provide best customer service by which they can have more customers what equals with more profit. They are eco friendly and Morrison’s aims to save 50 million shopping bags a month. Also, they aim to provide fresh food and to provide all their customers with very best value for money on their weekly shopping. They want to become unique by offering freshly prepared food, ensuring that their food is of quality and aiming at bringing their store to every neighbourhood in the UK such that they are reachable in a radius of 15 minutes drive.
Also, on their website states: ‘Our programme is consistent with our vision and values and reflects sound commercial thinking, being run by our team as part of every day business and with our customers always in mind.
It is structured around three principal areas: environment: taking good care of our planet; society: taking good care of our shoppers, our colleagues and their communities; business: taking good care as we go about our business.
Their objectives are freshness – make freshly prepared food; values – they offer quality freshness at a price what people like and to provide good service.
There are couple advantages of public limited company it has separate from management and members; limited liability; name of the company is protected; lots of way of borrowing; death, illness or bankruptcy of one of the shareholders does not influence of running of the company; pensions are higher than in self-employment;
There are couple disadvantages of public limited company it is expensive; company is open for a public; some of the shareholders are not bothered about what is going on inside the company; company can be taken over someone if this person bought big amount of shares; lack of control; decision making is spread on directors what makes it longer.
