Report: Type of ownership of J-Sainsbury

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Jaymit Patel

Report: Type of ownership

To: Alf Filer

From: Jaymit Patel

Date: 24/11/03

1a. Background information of J-Sainsbury’s

 

J-Sainsbury’s is one of the United Kingdom’s largest supermarket chains, operating more then 400 stores and employing over 142,000 people.

Sainsbury’s have developed an excellent reputation over the years and has worked to provide their loyal shoppers with the widest selection of food and services possible.

However, in recent years the grocery chain has seen an increase in competition as the market has consolidated and large multi-national grocery chains have moved into the UK market.

J-Sainsbury’s is a Plc. Plc stands for public limited company.

As J-Sainsbury’s is a public limited company, their shares are traded on the stock exchange.

Any person who may be interested in the business can buy these shares.

It is easy to obtain information of J-Sainsbury’s because, the business is a plc and they have to publish accounts every year, which can be gathered from the company’s house.

People who have J-Sainsbury’s shares are known as the owner. But the shareholders do not run the business.

Board of directors are appointed to run the business.

The shareholders have unlimited control of the business, as they are the owners.

The liability of J-Sainsbury’s is limited. This means that the owners (shareholders) of the business are only responsible of the losses of the business, but only of the amount they have invested.

To start a PLC, the business must have more than £50,000 capital before it can “Go Public” and must have a satisfactory financial track record. Also it is important to have enough people interested in buying shares for it to have a successful flotation.

1b. J-Sainsbury’s share prices

People who have J-Sainsbury’s shares are known as the owner. But the shareholders do not run the business.

Board of directors are appointed to run the business.

The shareholders have unlimited control of the business, as they are the owners.

On the 12th November 2003 J-Sainsbury had share volume of 15,176,107 shareholders in total.

The share prices of J-Sainsbury’s on the 12th November 2003 were 293p each.

1c. History of J-Sainsbury’s to date

J-Sainsbury’s first shop opened in 1869 by John James and Mary Ann Sainsbury, at 173 Drury Lane, London, selling butter, milk and eggs. This shop was a sole trader ownership as it was small at the time.

In 1873 Sainsbury’s second shop opened at 159 Queen’s Crescent, Kentish town.

1882 was a crucial year because the first branch of Sainsbury’s opened outside London, which was opened at 11 London Road, Croydon. And also in the same year the first depot at Allcroft Passage, Kentish Town North London was open.

The new headquarters, depot and factory were established at Blackfriars, London in 1890.

46 years after the first shop of Sainsbury’s was opened, his father took John Benjamin Sainsbury’s who was the eldest son of the founders into partnership.

In 1922 there was the incorporation of J-Sainsbury’s Limited.

In 1961 Sainsbury’s was the first British food retailer to computerise stock control and ordering.

There was floatation of J-Sainsbury’s plc in 1973.

Another branch was opened in 1974, but this was the first J-Sainsbury’s edge-of-town store at Coldhams Lane, Cambridge.

1975 was a big year because J-Sainsbury’s opened a save centre, which was Britain’s first specialist hypermarket company, founded as a joint venture with Bhs.

That year J-Sainsbury’s also opened their first petrol station at Coldhams Lane, Cambridge.

In 1979 Homebase formed as a joint company (75%: 25%) with Belgian retailer Gb-Inno-Bm. And also in the same year computer checkout experiments began at Broadfield, Crawley.

In 1983 J-Sainsbury’s plc purchased a 21% stake in Shaw’s, a US retailer based in New England.

Payments by debit cards were accepted at Sainsbury’s in 1988.

In 1994 J-Sainsbury’s plc purchased 16.7% of giant Food Inc, a supermarket chain based in the Washington Dc area. The stake later increased to 20% and subsequently disposed of in 1998.

Also in 1994 a French store opened at Calais, selling beers, wines, and spirits.

In 2001 J-Sainsbury supermarkets, the UK’s biggest retailer of fair-trade products, announced on the 26th November 2001 that it is working with the fair-trade foundation, which guarantees a better deal for tired world producers, to develop a range of own label products.

On 21st November 2001, J-Sainsbury’s plc announced its Interim Results.

For the 28 weeks end 14 October 2001 group sales were up 8.4 per cent to 9.6 billion and underlying profit before tax and continuing e-commerce was up 7.0 per cent to £338 million.

These Interim Results showed three successive quarter growths, which was the best-sustained rate the company has delivered for over ten years.

As you can see there is a lot of history in how J-Sainsbury’s has go to where it is right now.

 

OWNERSHIP AND EVOLUTION

(E1)

2a. Types of ownership

There are many types of business classifications, Sole trader, Partnership, Private limited company, Public limited company, Co-operative, Non-for-profit, Franchise.

2b.Sole Trader

Sold traders are the most common form of business ownership and the easiest to set up.

Only one person owns a sole trader, but the owner can employ several other people to work for him.

Examples of sole traders might include a newsagent, small retailer or an electrician or plumber.

2c.Partnership

An ordinary partnership can have between 2-20 partners.

People in business partnerships can share skills and the workload, and it may be easier to raise the needed capital.

Partnerships are particularly common in professional services (doctors, solicitors, accountants) a small business such as a corner shop may have a form of husband and wife partnership.

There are many disadvantages of partnership businesses, such as

Partners may fall out

Partners can rarely borrow or raise large amounts of capital

Business decisions may be more difficult to make because of the need to consult other partners

Profits will be shared

There may be disagreements about how things should be run

2d.Private limited companies

Private limited companies tend to be smaller than public limited companies and are often family businesses.

In a private limited company there must be at least 2 shareholders but there is no maximum number.

Shares in private companies cannot be traded on the stock exchange and often shares can be bought only with the permission of the board of directors.

Private limited companies may find it possible to raise more cash (by selling shares) than unlimited liability businesses.

Shareholders can also have the protection of limited liability.

2e.Public limited companies

A public limited company has its shares bought and sold on the stock exchange.

In order to create a public limited company, the directors must apply to the stock exchange council, which will care fully check the accountants.

A business wanting to “go public” will then arrange for one of the merchant banks to handle he paperwork.

One big disadvantage of this type of business ownership is that control of the business can be lost by the original shareholders if large quantities of shares are purchased as part of a “take over” bid.

2f.Co-operatives

This type of business ownership involves people joining together to make decisions, to work and share profits.

Which are:

Retail co-operatives

Producer co-operatives

Marketing co-operatives

To become retail co-operative you need only buy a pound share, and this entitles you to vote at meetings to choose the president and other officers of the local co-operative society.

Producers co-operatives are usually registered as companies “limited by guarantee”, which means each member undertakes to find any losses up to a certain account.

Marketing co-operatives are set up exclusively to help groups of co-operators to market their products jointly.

2g. Not-for “profit” or charity organisations

A charity is an organisation set up to raise funds and support other people or a cause.

The objectives of charities are to raise enough funds, or surplus, for use in helping others.

The management of charity work is overseen by a group of trustees- volunteers with a reputation as responsible citizens.

Charities have to register as such and must produce annual accountants that are available for anyone to see.

Many large charities employees’ resources on a large scale in the same way as private business organisations.

2h. Franchising

Franchising is really the “hiring out” or licensing of the use of “good ideas” to other companies.

A franchise grants permission to sell a product and trade under a certain name in a particular area.

The person taking out the franchise puts down a sum of money as capital and is issued with the equipment by franchising company.

This type of trading is common in the fast food industry.

(Examples include, Pizza Hut, Burger King, Mc Donald’s and The Body Shop).

As businesses change their types of ownership, this will have implications for: Limited and unlimited liability. Shareholders in companies and co-operatives have the legal protection of limited liability.

Sole traders and ordinary partners cannot have limited liability.

Limited liability means, that if the business goes bankrupt because it is unable to meet its debts, the shareholders/ owners will not be liable to possessions to pay the money that is owned. The maximum amount they can lose is the amount they have put in to their shares.

3a. Control of business

Control is a key consideration in deciding on what type of business to form. The great thing about being a sole trader is that it is you own business and you make the decisions and you have total control of the business.

Unlike J-Sainsbury’s, which is a public limited company and so has many owners of the business.

When you take a partner into your business you have to share control equally. The relationships between partners are generally determined by a deed of partnership.

In a public company, shares can be sold only with the permission of the board of directors. These is a danger of losing control when you become a public company- the shares can be traded on the stock exchange and individuals can take over other companies by buying 51% of the shares.

Co-operation tends to be controlled by the co-operators.

In a franchise both franchiser and the franchise control operation activities.

Professional managers control charity and voluntary organisations.

3b. Use of profits

The great benefits of being sole traders are that all the profits belong to you- the owner.

Partners will have to share profits. In co-operatives profits are shared amongst the co-operators.

In a franchisee operation, both the franchiser and the franchisee control activities.

The franchisee will have to pay a royalty, to the franchiser, even if he or she makes a loss.

4a.

Advantages of J-Sainsbury’s plc ownership

By having thousands of people or organisations interested in your shares, it makes expansion easier.

Public limited companies can be quite small, which needs to have 2 directors and 2 shareholders.

Very large plc’s like J-Sainsbury’s can operate more cheaply than small companies as they operate on economies of scale. This means that large companies can mass-produce goods for sale and buy in bulk to save more money.

If J-Sainsbury’s is successful, the shares will increase in value and this will increase the overall value of the business.

Large amounts of capital can rose very quickly because of the selling of shares on the Stock Exchange.

4b.

Disadvantages of J-Sainsbury’s plc ownership

J-Sainsbury’s must be registered as such with the registrar of companies and has many external regulations to comply with. This means any problems J-Sainsbury’s encounters may become news if the press decide to run a story on it.

An annual general meeting must be held every year inviting all the shareholders. Any shareholders that do not agree with the way J-Sainsbury’s is managed may raise an objective or vote against the directors.

All accounts must be published every year so J-Sainsbury’s cannot hide a problem year.

Shareholders will expect to receive a dividend. They will want the share value to increase. If the share value decreases then this will make the shareholder want to sell their shares, which will make J-Sainsbury’s value go down.

If J-Sainsbury’s goes bankrupt then the investors will lose all the money they have invested.

The original shareholder can lose the control of J-Sainsbury’s if large quantities of shares are purchased as part of a “take-over” bid.

J-Sainsbury’s is a complicated business ownership because the business is too large to run as a sole trader as Sainsbury’s have over 463 stores throughout the UK, it will be impossible for one person to run all these stores with a high standard of service.

5a.  Memorandum of Association

J-Sainsbury has to send a Memorandum of Association on to the company’s house before they can be issued with a certificate of incorporation.

The Memorandum of Association sets out the constitution and gives details about the business. The company Act 1985 states that the following details must be included, the name of the business, the name and address of the company’s registered office, the objectives of the company, the scope of its activities, the liability of its members, the amount of capital to be raised and the number of shares to be issued, the amount of capital to be raised and the number of shares to be issued.

 5b. Articles of Association

J-Sainsbury also has to send an Articles of Association along side and Memorandum of Association to the company’s house before they can be issued with a certificate of incorporation.

The Articles of Association deal with the internal running of the company, these include details such as, the right of the shareholders depending on the type of share they hold, the procedures for appointing directors, the scope of their powers, the length of time directors should serve before re-election, the timing, frequency of company meetings and the arrangements for auditing company accounts.

A plc must also have a document called a Statutory Declaration provided.

This is a document, which states that the requirements of all company acts have been met.

Mission statement, Aims and Objectives

(E2)

6a. General information to business aims

An aim is what a business is set out do to. In a business some of the main aims are

Making profits, providing goods and services to the local or wider community, surviving as a business or expanding, maximizing sales, improving quality of products, providing a competitive service and being environmentally friendly.

An aim for a business is the overall direction in, which the management wish it to develop over a period of time. For example, “ I want this company to be the biggest supplier of building materials in the Brent area”.

The small business owner will have a more clear idea of the main aims of the business and will work hard to achieve them.

The management structure of a larger business will be more complex and will have to deal with many more staff.

A common aim for this type of large business would be to motivate the employees to work together, in order to achieve the businesses aims.

A business will often set out its aims in a “published statement”. This can take the form of a “mission statement”.

6b. J-Sainsbury’s aims

J-Sainsbury’s aims to make your shopping trip quick and effortless. With providing over 23,000 products on its shelves. Sainsbury’s provides a diverse choice of products to meet the needs of everyone.

 

J-Sainsbury’s aims to have 16% of its milk organic by 2004.

J-Sainsbury’s also aims to encourage children aged 7 to 11 to eat more fruit.

J-Sainsbury’s aims to double trade with South Africa to, 40 million over the next two years based on the tremendous changes and opportunities in South Africa.

        

The new Sainsbury’s on the Greenwich Peninsula aims to be 50% more energy efficient than a standard supermarket by incorporating new technologies and design innovations.

6c. General information to business objectives

An objective is how they will achieve what they are set out to do. An objective is usually to be quantified (expressed as a number).

To achieve your objective successfully you must use the SMART rule.

Specific

Measurable

Agreed

Realistic

Time constrained

Businesses adopt a variety of objectives, which include making a profit, providing quality products, helping the society and caring for the environment, all of which combine in the overall business aims.

A business needs to make sure that its workforce works together to achieve its objectives.

Having a focused objective gives you a clear idea where the business is heading in.

The main objective of a business would be to make profit. I say this because without the business making profit the business cannot keep its shareholders happy, it cannot pay higher wages to its employees and it cannot invest in better technology to improve its product and keep up with other competitors.

6d. J-Sainsbury’s objectives

Sainsbury’s has a long-standing involvement in education and is strongly committed to partnerships with education bodies

There objective is to give free fruit for one week each term to be used as part of a lessons. This will encourage children to eat more fruit and lead them in eating more fruit in the future.

A main objective of J-Sainsbury’s Supply chain is to provide outstanding availability of products at optimum costs. This means “we must get the right product in the right place, in the right condition, at the right time”. This is what Sainsbury’s say we deserve. By doing this customer will be contended and this may attract more customers.

 

A key objective for J-Sainsbury’s is to deliver great service to all there customers. They want to provide a great service to meet one of their aims.

Also J-Sainsbury’s want to make shopping more efficient by providing a online-shopping service which is very less consuming and is a quick way of doing your shopping which is delivered to your door at a suitable time of the customer. The online shopping is a very good way of doing shopping because people these days don’t have enough time to do there shopping, so this online shopping service will suit them because then customers can so there shopping from there comfort of their homes. This service will suit a lot of customers and the customers will be happy and continue shopping with J-Sainsbury’s.

Also J-Sainsbury’s have a customers service booth in every store for customers if have any quires or any problems.

Thirdly J-Sainsbury’s are trying to cut down time which customers are spending waiting in the line paying for they product by opening more tills.

They are also training staff to help customers for example if a customer wanted a bottle of coke one of the staff members can help them to find the product.

By providing all these services there are meeting there aim and customers will be contended and continue doing there shopping with J-Sainsbury’s.

6.e General information to mission statement

A mission statement is a public statement by the business setting out in general terms what the business does, what it aims to achieve, its value and standards.

In a mission statement a business tries to persuade people to become consumers in there business.

6f. J-Sainsbury’s mission statement

J-Sainsbury’s mission is to be the customer’s first choice for food. They are doing this by, delivering products fast of number one quality at very Competitive prices and working together.

By looking at this mission statement J-Sainsbury’s want there customers to find all the products they want under one roof, which makes shopping quicker and efficient for customers

Functional areas in J-Sainsbury’s

(E3) Criteria  

7a.Administration Department within all departments in J-Sainsbury’s

Join now!

The Administration department supports all the activities of J-Sainsbury’s.

The administration department is involved in the day-to-day running of J-Sainsbury’s.

In order to be well-organised and efficient j-Sainsbury must have effective administration systems.

Administration work at J-Sainsbury’s will include, dealing with post, emails, replying to all letters and telephone enquiries, keeping records up-to-date and filed, dealing promptly with enquiries, responding quickly to complaints, organising meetings, photocopying documents, providing security systems and staff for the business, providing cleaning and maintenance staff for the business.

As you can see j-Sainsbury’s administration department has a lot of duties to ...

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