A sole trader business is owned and controlled by one person. It is the most common type of business is found in a wide range of activities (e.g. window cleaning, plumbing, electrical work, busking). No complication work is required to set up a sole trader business. Decisions can be made quickly and close contact can be kept with customers and employees. All profits go to the sole trader, who also has the satisfaction of building up his or her own business.
But there are disadvantages. As a sole trader you have to make all the decisions yourself, and you may have to work long hours. (Then what happens if you are ill or want a holiday?) Another disadvantage is that you don’t have the legal protection of limited liability. What this means is that should the business run up debts these become the responsibility of the business owner. The debts are unlimited and the owner may be forced to sell their house and other personal possessions to pay off their business debts. The sole trader typically provides of their own finance, although they may also borrow from a bank, or friends. As a sole trader you need to be a jack-of-all-trades, and just because you are a good hairdresser does not necessarily mean that you have a head for business!
Partnerships:
A partnership is usually formed by signing a Deed of Partnership with the paperwork being supervised by a solicitor. Partnerships are typically found in professional work, e.g. medical or dental practice, a group of accountants or solicitors. People in business partnerships can share skills and the workload, and it may be easier to raise the capital needed.
For example, a group of vets is able to pool knowledge about different diseases and groups of animals, and two or three vets working together may be able to operate a 24-hour service. When one of the vets is ill or goes on holiday, the business can cope.
The Deed of Partnership sets out how profits will be shared and the different responsibilities and payments to partner.
The main disadvantages of partnerships are that people can fall out (‘she doesn’t work as hard as me!’) ordinary partnerships don’t have limited liability and partnerships can rarely borrow or raise large amounts make (and slower) because of the need to consult all the partners. There may be disadvantages about how things should be done. A further disadvantage is that the profits will be shared.
A new type of business was created in Britain in 2003. This is the ‘limited liability partnership’. This type of partnership exist in business like accounting and the law where these are hundreds of partners. This is to protect individual partners should another partner’s actions cause the partnership trouble. For example, it would be unfair for accountancy partners to be liable for irregularities in auditing accounts by one of their colleagues.
Private Limited Companies:
Private limited companies tend to be smaller than public ones and are often family businesses. There must be at least two shareholders but there is no maximum number. Shares in private limited companies cannot be traded on the Stock Exchange, and often shares can only be bought with the permission of the Board of Directors.
Private limited companies may find it possible to raise cash (by selling shares) than unlimited liability businesses. The shareholders can also have the protection of limited liabilities.
Public Limited Companies:
A public limited company has its shares bought and sold on the Stock Exchange. The main advantage of being a public limited company is that large amounts of capital can be raised very quickly. One disadvantage is that control of a business can be lost by the original shareholders if large quantities of shares are purchased as a part of a ‘takeover bit’. It is also costly to have shares quoted on the Stock Exchange.
Co-operatives:
A worker co-operative is a body that is owned by its members – the people that work for it. A worker co-operative has limited liability. To become a member of a worker co-operative an employee would buy a share in the organisation. Each member has one vote in making decisions. This type of business is democratic and prevents one or a few individuals gaining control. Members receive a share of the profits of the business in the form of dividends. When they leave the co-operative they can take their funds back. The basic principle behind a worker co-operative is that those who do the work should get the rewards. They tend to be small-scale local enterprises.
Franchises:
Franchising is an attractive option for those looking for a ready-made business opportunity. The franchisor has already established a brand and a business model. The franchisee then has to put money and effort behind their side of operation to reap the rewards. The franchisor grants the right to the franchisee to use their trading name in a particular area. They will often supply products, business systems and ‘know how’ to the franchisee. The franchisee usually pays a fixed sum to have the franchise, followed by regular payments. In 2006 franchising generated £10 billion of sales in the UK and nearly 400,000 people operated franchises.
Charitable Trust:
A charity is an organisation that is set up to raise funds and support other people or a good cause. The business objective of charities is to create a surplus to use to helping others. A surplus occurs when the revenue (money coming into the charity) is greater than the costs of running the charity.
The management of charity work is overseen by a group of trustees, who are volunteers with a reputation as responsible citizens. Many will have a range experience in both charity and business activities. Charities have to register as such and must produce annual accounts that are available to be viewed.
Most charity organisations start out when someone recognises the need for such an organisation. For example, the charity Shelter was set up in 1966 to help the many homeless people on the streets. The Toybox Charity was found in 1991 by the Dyason family, who were horrified by a television documentary showing the plight of some of the 250,000 children orphaned by civil war in Guatemala. The charity grew into a comprehensive rescue plan for children who live in the streets in Guatemala City.
Charities employ paid managers and workers (unlike voluntary organisations, which rely on the goodwill of their staff).
Public Sector Businesses:
Public sector organisations are owned by the government. There are government departments and government agencies. A government department like the Department of Customs and Revenue operates on behalf of the government and is staffed by civil servants, known as customs and revenue officers. Their job is to collect income tax and other taxes on behalf of the government, to collect repayments on student loans, and to make payments known as tax credits. Rather than seeking to make a profit they will want to collect taxes efficiently and make sure that taxpayers get a fair deal.
Government agencies are more independent than government departments. These are bodies that have been set up by the government to take responsibility for a particular activity. For example, the Child Protection Agency is a government-funded body responsible for looking after the rights of children. Although it is funded by government accountable to government it has considerable freedom to manage its own affairs. These bodies are set up with tight guidelines but in the interest of fairness they need to be seen to operate in an independent way.
Local government is an important branch of government activity. Local councils are responsible for supervising and, in a small number of cases, owning local services. Local councils cover specific areas of the country. What is your local council? In their specific area, the local authority will give contracts to private companies to run certain services such as managing refuse collection. It is the job of the council to oversee the efficient running of these services. Local councils also own and supervise the collection of rents and repairs to social housing. They manage local parks, leisure centres and swimming pools, street lighting and other essential activities.
Cadbury Schweppes
Cadbury supplies services (such as Cadbury’s world) and goods (chocolate bars, gums and candies). They supply this goods and services for profit, they are not free to the customers. Cadbury wants to make profit so Cadbury supply its product at cost or above cost, never below costs. Cadbury supplies its products to the corner shops, big stores and directly to the customers. Cadbury doesn’t work with the central and local government agencies.
The founding of the Cadbury business dates back to 1831 when John Cadbury first made cocoa products on a factory scale in an old malthouse in Crooked Lane, Birmingham.
In 1847 the business moved to larger premises in Bridge Street, which had its own private canal spur linking the factory via the Birmingham Navigation Canal to the major ports of Britain.
Business continued at the Bridge Street site for 32 years and by 1878 the workforce had expanded to 200, so more space was needed. This heralded the move to Bournville and the building of what is now one of the largest chocolate factories in the world.
John Cadbury retired in 1861 handing over the business to his eldest sons Richard and George. It is to their leadership that the success of the enterprise is owed as the company prospered.
Cadbury now is a public limited company in the private sector and it is owned by shareholders. The main advantage of being a public limited company is that large amounts of capital can be raised very quickly. One disadvantage is that control of Cadbury can be lost by the original shareholders if large quantities of shares are purchased as part of a ‘takeover bid’. It is also costly to have shares quoted on the Stock Exchange. Nowadays Cadbury’s key shareholder is Nelson Peltz (a leading US businessman) who bought 62 million shares which is equivalent to 2.9 per cent of its total equity.
Cadbury’s business activity is to make chocolates and sweets and to produce it to the businesses in the secondary sector globally, it’s good to operate globally because you have much more customers and bigger profits.
Advantages
- Have limited liability
- Easier access to finance
- More funds available for investment
- Public awareness gives status
Disadvantages
- You have to publish results
- Others, e.g. auditors have to look at your books
- Greater need to conform to legal procedures
- Owners might lose control
Cadbury’s Business Purposes
Cadbury’s Aims and Objectives:
Aim: To be worlds biggest and best confectionary company.
Objectives: Organic revenue growth of 4% - 6% every year, total confectionery share gain, mid-teens trading margins by 2011, strong dividend growth
Reason why Cadbury Exists:
Cadbury’s main reason is to make profit like every other organisation it he private sector. It is able to make a profit because people are willing to pay for the goods it offers
Supplying Products for Profit:
Where there is a demand for a product, there will be businesses set up to meet that demand. For example, customer want high quality chocolates, Cadbury knows that and it is doing it or the customers want something special for this Christmas and Cadbury has thousand of offers for chocolates and sweets for Christmas (such as the shape of Santa Clause made by chocolate and many other different shapes).
Supplying at Cost and Below Cost:
Cadbury do not always seek to sell their products for a profit. Sometimes they are willing to do so ‘at cost’. Supplying at cost occurs when the money received from selling a product is equal to the cost of supplying that product. For example, Cadbury may offer low cost products to primary school at Christmas. Sometimes Cadbury may supply products below the cost, this might happen because Cadbury is trying to generate interest in a new product. Once the customers are aware of the product it will be possible to raise the price so that profit can be made.
Supplying Products to Customers:
The supply of products is the quantity that a supplier is willing to provide at different prices. Typically suppliers will supply more than at lower prices. For example, Cadbury supplies its products and normal prices, but if Cadbury know that customers are willing to pay more Cadbury will increase the cost and make bigger profit.
Supplying Products to Businesses:
Some products are supplied by businesses to other businesses. For example, Cadbury makes products and supply other businesses like Tesco, ASDA, Sainsbury’s and other smaller organisations.
Supplying in Response to Demand:
A market exists in any situation in which buyers and sellers come into contact. Markets range from physical places where people exchange goods and services to ‘virtual’ markets where trade is carried out over the Internet and other forms of electronic communication. In a local market traders and customers come into contact. For example, I can go to the local shop and buy a Cadbury’s chocolate bar and sweets. Nowadays electronic trading is becoming more and more popular. For example, instead going to the shop I can go online and buy some of the Cadbury’s products at , or any other big UK shop and they’ll delivery it to me very soon.
Patterns of demand change regularly. As new products enter markets the demand for the old ones often declines.
Save the Children
Save the Children is ‘not-for-profit’ organisation so it doesn’t make any profit from the services it supplies. Save the Children provides its services at cost or below cost because its voluntary organisation. Save the Children provides its services directly to the people in need, for example, Gaza has problems now and Save the Children is there to help the children and the young people in need and it work with the central and local government agencies to demand - supplies services in response to demand.
Eglantyne Jebb and her sister Dorothy Buxton founded the first Save the Children organisation in May 1919, in London, United Kingdom.
Shocked by the aftermath of World War 1 and the Russian Revolution, they were determined to secure improvements to children’s lives. Their goal was to create a powerful international organisation, which would extend its ramifications to the remotest corner of the globe. This was soon achieved – and Save the Children continues to build on this success.
Eglantyne Jebb was the first to press for worldwide safeguards for children. The , adopted by the United Nations in 1989 and now ratified by nearly all countries worldwide, has its roots in her pioneering work.
Save the children is a charitable trust organisation in the voluntary sector. This is an organisation that is set up to raise funds and support other or a good cause. The business objective of charities is to create a surplus to use for helping others. A surplus occurs when the revenue (money coming into the charity) is greater than the costs of running the charity. The management of Save the Children work is overseen by a group of trustees, who are volunteers with a reputation as responsible citizens. Charities have to register as such and must produce annual accounts that are available to be viewed.
Save the Children is in the tertiary sector because it provides services and it operates nationally because it collects funds from UK and Europe and send it all over the world.
Advantages
- Uses board member expertise and external advisors
- Allows more time to focus on specific issues
- Helps to foster good working relations with staff
- Involves potential trustees and advisors
- Chairing a sub-committee is a good training ground for a future chair
- Keeps trustees involved as the organisation grows
Disadvantages
- Board may lose their oversight of the charity
- Confusion over the respective roles of the board, sub-committees and staff
- Board may be unwilling to challenge the decision of 'expert' sub-committees
- Decision-making process can become lengthy
- Overload of meetings
- Indefinite lifespan
Save the Children’s Business Purposes
Reasons Why Save the Children exists:
Save the Children’s main reason to exist is to help the children in need not to make profit from something. Save the Children provides ‘health, freedom from hunger, education, protection, emergencies, laying the foundation to increase its income and to manage its finances strategically, focusing its programmes and building a powerful Alliance, increasing children’s participation in overseeing its work, strengthening its workforce and improving its systems and inspiring communications’.
Supplying Services for Profit:
Save the Children doesn’t make any profit from the service it offers, everything goes for the children in need. This charitable organisation doesn’t get any extra money for the things that it is doing, it gets just a little amount of money to cover its costs.
