Business ownership

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 - Chairman  - Chief Executive  - Finance Director  - I.T. & Logistics Director  - Non Executive Director  - Non Executive Director

Chairperson 

A person who is elected by the board of directors to represent Peacocks as a business and to help form and carry out its policy.

Chief executive

A person appointed by the board who is in charge of the day to day running of Peacocks.

Institutional investors

 Financial institutions, such as banks, insurance companies and pension funds, which have billions of pounds to invest.

Lender

A person who can keep the needs of individual workers and the aims or objectives of Peacocks in harmony.

Share capital

The money Peacocks obtains by selling shares to investors.        

In Peacocks, the two most important people are the chairperson and the chief executive. In general terms, the chairperson represents the company in the outside world and takes a leading part in making policy. The chief executive is responsible for carrying out company policy and the day-to-day management of the business.

        

In recent years, there have been changes in the ways Peacocks is managed or run. It has become more open and dramatic with a bigger emphasis on teamwork. However, all organisations need lenders who can keep employees working together towards agreed aims and objectives.

Institutional investors own the majority of shares in Peacocks. Their huge blocks of shares give them great influence over the company’s policies and the way in which they are run. The shareholders’votes at Peacocks’ annual general meetings frequently decide who should be elected to the board of directors. If Peacocks is performing badly, institutional investors can force a chairman or even a whole board of directors to resign. Companies can never ignore their power.

The shares can be bought and sold through a bank or the company, which deals in shares. Their current price is quoted on the stock exchange. The nominal, or original, price of the share when it was issued by the company may be £1. However, the price of the shares will rise or fall according to how well or how badly the company is performing.

Regardless of the price of the shares, the shareholders are responsible only for the amount they invest in the company.  

The bad thing about a public limited company compared to a sole trade business is that forming and launching the company is an expensive business. Many legal documents are required. Advertisements in newspapers are needed, and a prospectus needs to be published as a pamphlet or as a spread in a newspaper. Another thing is that original members of the company may loose control if new members of the company bring in more shares than them.

Peacocks is a public limited company, which is owned by shareholders and run by directors. The shareholders elect the directors. An annual general meeting is held each year and all shareholders vote for or against a proposal made by the directors. It is a large company, which sells its shares to the public. It is a national retailer of clothing, footwear, and home wears. The company was originally found in Warrington in 1884. In the late 1940’s the business moved to Cardiff. The business grew steadily under the chairmanship of Robert Peacock in the early 1990’s.

In 1996 Richard Kirk (ex MD of Iceland frozen foods) was appointed chief executive, in April 1997 a management buy out took place.

“In 1998 Peacocks opened a new distribution centre in Natgaru, near Cardiff. The company sold its shares on the London stock exchange on 22 December 1999”. Peacocks has a minimum of £50,000 in initial share capital, which is raised by its aims and objectives and effectively is an advertising brochure ‘selling’ the company. Once the offer for sale is taken up, the shares are determined by the demand for them.

Potential lenders and investors have confidence in Peacocks because it is a public limited company. So it finds it much easier to obtain finance and credit facilities. In addition, the detailed accounts of Peacocks are published and freely available, so potential investors and lenders check out business performance before making their decision. Peacocks can attract shareholders by placing advertisements in newspapers and on television.

Ownership agreement

Basically an ownership agreement guarantees a buyer for retiring or deceased owner interest in a business, thereby allowing the owner to recover his or her investment. The agreement also fosters the continuation of the business by not allowing the departing owner’s interest to fall into the hands of outsiders’ persons who may not be qualified to run the business or who may be incompatible with the remaining owners. Peacocks has a formal ownership agreement just in case some shareholders want to sell off their shares to someone else.

Liability

                

Peacocks has limited liability, which means that if there are any debts, the shareholders’ belongings will not be touched. The company has to pay for the debts since it is registered in its own name.

Peacocks can also approach investors to raise capital for the company as well as getting bank loans.

Setting up a public limited company is more complex than setting up as a sole trader or a partnership.

Peacocks is bound by the companies Act legislation. The company’s secretary and directors have legal duties for example prepare audited accounts and make an annual return filling these accounts at companies house within the timescales set down by law. Peacocks’ directors are classed as employees for income tax purposes.

The peacocks company has to be registered to the company’s house before running. To do this the following has to be submitted:

A memorandum of association

 This sets out the company’s name, where the registered office is situated, and the company’s objectives. This contains the company name, the main business address, what the business will produce, a statement of limited liability of the members, and lastly the number and face value of shares to be sold.

Articles of association

This sets out the rules for running the company. It contains the procedures for calling shareholder meetings, the number, rights, and obligations of directors, shareholder voting rights, and lastly details of how accounts will be kept and recorded.

Once these two documents have been agreed they are sent to Companies House (a government body that watches over limited companies). If everything is in order, the registrar of companies’ issues a Certificate of incorporation, which allows the company to start trading out makes the company a separate legal entity from the owners.

Form 10

 Details of the director’s and the secretary’s intended address for the registered office as well as their personal details and information of other directorships they may have held within the last five years.

Form 12

This must be signed after all the other documents as it confirms that all the other registration requirements have been fulfilled. This declaration must be signed before a solicitor.

Once all the forms are completed, they should be send to the company’s house where they are checked for such instances as confirming that the prospective officers of the company are not on the disqualified directors’ list.

How the ownership suits the business activity

Peacocks group’s ownership suits their activity because they operate on a large scale by selling a wide range of goods like women’s wear, (lingerie, night wear, swimwear, e-vie fashions), men’s wear (jackets, shirts, ties, trousers), children’s wear (new borns, toddlers, babies), street wear, foot wear, home wear. With this, they employ more than 5000 personnel and trades from over 385 stores throughout the UK.

The profits Peacocks receives from selling their goods is used to pay wages, and buying other products to be sold from the suppliers. Because Peacocks is a large company, it gets a lot of profits from different branches and can manage to sell a large number of products and also employ enough staff to maintain the smooth running of the business.

        

Relationship between the size of the business and the type of ownership

Peacocks is a large business covering 110,000 square feet and has about 385 stores in the UK. It operates on a large scale and this is one of the reasons why it is a public limited company. It employs 5000 personnel to work for it throughout the UK.

The industrial sectors to which my businesses belong

The primary sector is concerned with the production or obtaining of raw materials. This includes occupations like farming, forestry, fishing and mining, and oil and gas drilling. For many products, such as fish fingers, this will be the first stage of production. The fish will be then sold on for processing at the secondary stage.

The secondary sector deals with manufacturing, processing, construction, and assembly. This relates to manufacturers of consumer and industrial goods. A paper mill, a carpet factory, and a house builder are all found in this sector. Secondary industry processes the goods that come from the primary industry and turns them into something that people want.

My two businesses, which are Peacocks, and Top Girl hairdressers both belong to the same industrial sector. They both belong to the tertiary sector, which is known as the service sector. The tertiary sector includes all the providers of services to businesses and to individuals, and can be divided into four sections. These are business services, financial and business services, transport and communication, retailing, distribution, hotels and catering. They belong to this sector because they provide services. Peacocks mainly provides retailing while top girl hairdressers provides hair styling. Top girl hairdressers also provides retailing but as a side activity. It sells a few hair products to its customers just in case they come to get their hair done without any products. They also provide information about maintaining hair. Peacocks sells women’s wear, men’s wear, home wear and children’s wear.

The main trends of growth or decline in the tertiary sector

Trends

These are overall patterns over a period of time or trends could indicate that something (a variable) is increasing, decreasing or static/ stable.

Retailing refers to selling goods in outlets.

  • Retailing is seriously affected by changes in consumer demand and this, in turn is affected by two factors:

  • The disposable income of consumers
  • Consumer confidence about the future

Disposable income is the amount a person has left after paying tax, National Insurance and essential bills, such as rent and mortgage, council tax, fuel and food. If a person receives pay rise, but their expenses do not increase they will have more money to spend buying goods or on leisure activities. However, their confidence in the future is important. If they have a temporary job, which will finish in a week or two, it wouldn’t make sense to spend all their money that week, no matter how much they were earning. If however they were in a permanent job with good prospects they would feel safer spending their money.

Consumer demand is also affected by interest rates. If interest rates are high then mortgages and loans are more expensive so customers have less disposable income. If interest rates fall, consumers may spend more.

  • Despite difficulties many retail outlets have steadily expanded and taken on more staff. Peacocks intended to create 10’000 jobs during 1999. Larger out of town shopping complexes were opened, such as cribs causeway, Trafford park and blue water park, to add to existing centres such as meadow ell, lakeside and the metro centre.

  • Staff in retailing are often employed on a part time, flexible hours basis and many are women. Superstores now open 24 hours a day and 7 days a week in many areas.

  • Mail order shopping has also increased. Many small organisations find it more cost effective to sell their goods by mail order than to have premises in expensive town and city centres. They can also target a wider market over a greater geographical area.

However, these developments have had a price. More out of town large shopping centres and more goods bought by mail order or over the internet, means that fewer people do their shopping locally, or in their own town center.if sales fall the businesses close, town centre shops can not be re-let because there is no trade taking place. This can start a downward spiral with the area becoming more depressed, fewer and fewer people shopping there, more and more businesses closing and so on. Many councils have tried to stop this happening by offering free parking, organising special shopping weeks and reducing rents to small businesses and market traders.

Catering

  • Many businesses in the tertiary sector are governed by licensing laws. Changes, such as drink driving regulations and extended licensing hours, affect their operations.

  • The number of restaurants has increased in Britain so has the number of takeaway food outlets. People have become more adventurous in what they eat (partly as a result of going on foreign holidays) and this has led to the opening of Sushi bars and other specialist restaurants.

  • The growth of business hotels has been static. Special weekend break prices have failed to tempt enough people to stay away during a time when business is low. Hotels are wary possible government regulations to limit ‘unforeseen’ such as high telephone tariffs from hotels catering for female business travellers. Many hotels use the Internet for marketing.

  • Fast food continues to be popular. McDonalds ‘s UK is still opening new restaurants at the rate of about 100 a year and creating 5,000 new full time and part time jobs for young people. Burger king opened 33 new stores in 1998. The fast food industry is one of the largest employers of young people in the country. McDonalds’s alone employs 55,000 with 35,000 aged between 16 and 20.

  • Niche markets are successful but only for a short period. The late 1990s shops like the Seattle Coffee Republic. In the 1980s the trend was wine bars. What will it be by 2010?

Transport, storage and communication

  • Rail companies are complex and to be avoided for serious investigation. Britain now has many train operating companies running train operating services as well as Rail track, which provides the infrastructure to support these services.

  • The travel business is booming. Most people now see an annual holiday as a necessity, not a luxury. Prices are competitive and the number of major travel operators has been reduced. Many smaller companies are often owned by the larger ones. The big operators are Thomson, Airtours, Cooks and First Choice. Cruises are increasingly popular.

  • Deregulation of the airlines has led to an increase in the number of airlines and the emergence of ‘no frills airlines’ such as EasyJet and Ryanair, which pare cots to the bone by operating from less popular airports, cutting out travel agents and charging for extras such as food and drink on board.

  • Freight and cargo companies are affected by the number of goods exported each year and the number of people immigrating/emigrating. Goods are usually transported by container by train and by sea. Airfreight is common for valuable and urgently needed goods.

  • Deregulation has increased competition on bus services and between taxi companies. Private bus and coach companies compete to provide the most competitive fares on the most lucrative and busiest routes.

  • More letters are being posted every year despite the increase in the use of the Internet. In 1988 13,568 million letters were sent, by 1998 this had risen to 19,266 million according to the royal mail.

  • Motorbike courier services are relatively new. The number of private companies has been increasing rapidly.

  • More people own a home computer than ever before and are signing up to the Internet services access to which is now offered free by many providers. BT is looking at new technological innovations, which will make connections much faster for all Internet users.

  • Telecommications is a growth area. Mobile phone ownership is currently 20.8 million. Ownership is said to be peaking. The main players are vodafone Air Touch, Orange, BTCellnet, and T Mobile. A new innovation is pre pay phones though these are said to be more expensive in the long run.

Financial services

  • The number of local bank branches has been falling rapidly because of costs. Critics accuse banks of closing down in poorer areas and not providing facilities for local people. In 1999 Barclays announced plans to cut a quarter of its work force by2002 industry experts stressed this was not a new trend. According to the credit card research group, 6,000 jobs have been created over the last five years.

  • There has been a boom in the in the number of credit cards on the market. There are 37 million credit cards in Britain, on which over £1,744 is spent every second, the average value of a purchase being £49. Most spending is on entertainment, food and drink, travel household items and clothing.

  • Insurance companies have been merging. When Eagle Star’s owner merged with Zurich insurance this resulted in a reduction of 540 jobs in the company. By the mid 2000s it is likely that only a few key players will remain.

  • Building societies have also been merging since 1980s to save costs. Many, such as the Halifax, have converted into banks and become public limited companies. This means they are now accountable to their shareholders. Critics argue that this means that savers will now take second place.

  • All financial providers are aware of the power of the Internet and the popularity of the telephone banking and 24 hour banking. Most banks accounts are now available through the Internet and more and more banks are investigating heavily in this form of service.

  • The government is keen to encourage more people to save towards their own pension. The stakeholders pension scheme began in 2001 and financial providers were looking to increase their business by selling these to lower paid workers who do not have a company pension scheme.

  • Be aware that financial providers are facing competition from other players. Supermarkets are already involved in offering services. People can save money through Tesco or Sainsbury and borrow money from Marks and Spencer.
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Real estate, renting and business activities

  • Estate agents are highly dependent upon the property market for their business. When property prices increase and interest rates remain low (so mortgages are cheaper) their business increases.

  • Solicitors have changed in two main ways. Deregulation has meant that their charges for routine services such as house conveyancing have fallen. Competition has reduced charges for wills and probate and many solicitors offer free advice mornings for potential clients. Two areas where solicitors are benefiting from increased business are family law and litigation. The first is through the number of divorces in ...

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