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Business Studies- Unit 1- Business Ownership

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´╗┐Daniel Hardman. A02- Business Ownership When a business is being set up, the proprietor(s) will decide what type of business ownership to follow. Business ownership will alter for expansion, liability and legal purposes. In this assignment, I will be addressing each category of business ownership, giving advantages and disadvantages in addition to business examples. There are six different forms of business ownership, these are: 1. Sole Trader 2. Partnership 3. Private Limited Company (Ltd) 4. Public Limited Company (Plc.) 5. Franchise 6. Co-operative Sole Trader A Sole Trader is any business owned and controlled by one single proprietor. Although the business may only have one owner, the sole proprietor may employ secondary workers. Sole traders do not have a separate legal existence from their owner. Consequently, the owner is personally liable for the business?s debt which may have to be paid out of the owners? personal capital- this is called Unlimited Liability. The first thing needed to start a sole proprietorship is to document your trading name. As simple as this sounds, one must be very cautious about choosing a name as the wrong name can get you into difficulties. If you are going to work under an alternative name to your personal birth name you must display the name of the owner and an address where documents and records can be served and at your premises. Design letterheads, business cards and signage accordingly. The registering of a business name must be done via the National Business Register. Certain words and expressions such as international, federation and registered are restricted under the Business Names Act 1985 and the Company and Business Names Regulations 1995. Companies House and the National Business Register have lists of these words and details of how to obtain approval to use them. Your business name is not allowed to be the same or too similar to that of another business. ...read more.


This publicity tends to come from analysts of the stock market and investors generally come to hear of it. Because of the simple one way money that Public Limited Companies receive from public investors, this means that the business can avoid borrowing capital from banks, private lenders etc., which must be paid back- usually with added Business Examples- Although various Private Limited Companies struggle to acquire capital from investors- there are many which are very successful and wish to remain private. Examples of these are Virgin, Warburton?s and Littlewoods- all of these make a very large profit and, because they are able to choose who can invest into the business to purchase shares, they have fewer investors to share the profits with. Nevertheless, businesses such as Scunthorpe United FC may wish to change their ownership to Public to become more successful. This would be achieved by floating the business on the stock market, thus gaining capital to buy better players and ultimately ascend from the first division to the premiership. However it is risky as a takeover could occur similar to that of the takeover of Manchester United which floated on the Stock Market until Malcolm Glazer, already the owner of Tampa Bay Buccaneers at the time, bought over 50% of the shares and thusly took over the whole business. Pictured left is a memorandum of association for Nebulas Limited- a small Private Limited Company based in the Isle of Man. This, as with all Memoranda of Association, states the company?s name, the names of its shareholders and their number of shares, the location of its head office, the type of liability that the shareholders have, the objectives, and the authorized share capital (maximum price of securities that a business can legally give out). A Memorandum of Association is available for any member of the public to inspect. Public Limited Companies- Usually large nationwide or global companies, this type of ownership both trades directly to private investors and also floats shares on the stock market to trade via the stock exchange. ...read more.


Because the majority of workers are at the same status, conflict may emerge with regards to business decisions etc. Yet again, because the majority of workers have a say in how the business is run, this will cause a longer decision making time which may cause the business to be behind in terms of new ideas in comparison to competitors. Also, participation of members is crucial for the success of the business which can be quite difficult to achieve. The final disadvantage of a Co-operative is that extensive record keeping is necessary for the business to succeed which is time consuming and requires staff to manage. Why would a co-operative change ownership to a Limited Company? Co-operatives are commonly very charitable organisations with ethical values and are commonly willing to lose some profit if in the aid of ethical values. If the business however decided that profit could not be lost in the aid of anything, the business may choose to change ownership to a Limited Company. Also, if the majority of workers in the Co-operative are tired of conflict and slow decision making due to all being of similar status, the workers may opt for more of a hierarchy within the business which would be much simpler in a Limited Company due to the overall structure of this type of ownership. Also, to join a retail Co-operative, an investment of only one pound is necessary- yet in Limited companies, share prices have been known to be very high- thus resulting in much higher profits. Business Examples Many Co-operative businesses such as ?Co-operative?, John Lewis and CRS are currently very successful Co-operative businesses and wish to remain in its current type of ownership. However- John Lewis, if all John Lewis? ethical values were lost, John Lewis may choose to change to a Limited Company. Also, John Lewis may choose to shorten its decision making process to stay ahead of fashion trends against its competitors. This would be done by making the business more hierarchical which is much more compatible with Limited Companies. ________________ | Page ...read more.

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