Public Sector organisations are financed by the state, for example hospitals, libraries and schools, as well as national defence and the police. They do not operate in order to make a profit.
History of Cadbury Schweppes
Both of the companies started of as an individual company. One was called Cadbury and the other was Schweppes, Cadbury was a chocolate company and Schweppes was a drink company. Theses two companies merged in 1969 to form Cadbury Schweppes plc.
The man that started of Schweppes was Jacob Schweppes in 1738 and the man that started of Cadbury was john Cadbury in 1824, they were both at first a sole trader. A sole trader is a one-person business, usually found in trades where only small amounts of finance are required to set up and where there are very few advantages to the existence of larger organisations. A sole trader faces unlimited liability for his/her debts and it is referred to as an unincorporated business – this means that there is no legal difference between the business and the owner.
Then Jacob Schweppes in 1790 entered into a partnership to expand the business and establish a factory in London, John Cadbury went into partnership at 1847 with his brother and the family business becomes Cadbury Brothers of Birmingham. Partnership is an association of individuals and generally there will be between 2 and 20 partners. Each partner is responsible for the debts of the partnership and therefore you would need to choose your partners carefully and draw up an agreement on the responsibilities and rights of each partner, an example is solicitors and dentists.
In 1899 Cadbury became as a private limited company and had 2,600 employees, Schweppes became limited company in 1885. Private limited company is a type of joint-stock company, they are small and family run the businesses which are owned by the shareholders. The business can continue if one or more shareholders die. Shareholders normally have little say in the running of the business; it is normally the company directors who run the business. The Board of Directors makes decisions. Private limited companies must have their accounts available for inspection at any time.
Then Cadbury and Schweppes merged to become Cadbury Schweppes plc in 1969. They then both became public limited company. This is the other, much larger, type of joint-stock company and, just like a private limited company, a PLC is an incorporated business, is run by the Board of Directors on behalf of the shareholders and shareholders can vote on certain key issues relating to the company. The main difference between a PLC and a private limited company is that a PLC can sell its shares on the Stock Exchange to members of the general public and can, therefore, raise significantly more finance than a private limited company.
A PLC has the same advantages as Ltd's, such as greater chance of continuation when a shareholder dies and separate legal identity. The main advantage of a PLC over an Ltd is that it is able to raise capital from the public. The other advantages and disadvantages of a PLC are:
Advantages of PLC's:
- Benefit from bulk buying (get things cheaper).
- A PLC can borrow money easier because of its large size.
- A PLC can easily specialise in various different areas.
- They are limited liability this means that the owner of the business will only lose the amount of money they invested in the business if it fails. They will not have to sell personal possessions to raise money to clear business debts. This reduces the risks involved.
Disadvantages of PLC's:
- The business may be too large, and be inefficient.
- Ownership can change quickly - other companies buying shares can achieve takeover bids.
- Annual accounts have to be open to public inspection.
- Shareholders may want short-term profits, whilst the directors want to invest profits for long-term growth.
- Formation of a PLC is complicated and expensive.
Setting up a Limited Company
There are a number of steps to take in order to set up a limited company. If a business wants to become a limited company it must become registered with the "Registrar of Companies". There are a number of documents that must be delivered to the registrar, including:
- Memorandum of Association
- Articles of Association
Memorandum of Association:
This document contain details of the external relationship of the organisation, it will include the following:
- The Name of the business, to ensure that the name is different from any other businesses.
- The main purpose of the company (what it makes or sells).
- The details of the companies Registered Office.
- Details about the limited liability of the members.
- Details about the amount of capital invested.
- The signature of at least two of the shareholders.
Articles of Association:
This document lists the internal details for the company. The same people who signed the Memorandum of Association must sign it. The following details must be included:
- How directors are elected.
- The director’s duties.
- How meeting are to be arranged and conducted.
- How profits are divided up.
Other documents, which must be submitted, include the "Statutory Decleration" which declares that the requirements of law have been met. If the registrar is happy that the documents have been submitted then they will issue a "Certificate of Incorporation". The company is now a separate legal entity. At this point an Ltd can begin to trade, but a PLC must arrange its funding from the public first. It will issue a "Prospectus" giving details about the company plans. Once funding is arranged the registrar will issue a "trading Certificate" and the PLC can then begin to trade.
1: Register with registrar of companies. Submit relevant documents.
2: The business will receive a "Certificate of Incorporation."
3: Issue a Prospectus (brochure).
4: Obtain Capital through a "Share Issue".
5: Receive a "Trading Certificate".
6: Begin Trading as a PLC.
