Business_Environment

1.1. the purposes of different types of organisation Organisations differ in scale, size, complexity, sector and type. The majority of organisations have a common purpose – the duty to provide a service. As you break this down, you find that organisations have different purposes dependant on type plus other factors. Organisations have different purposes although they are the same type, for example, one commercial organisations purpose may be to grow into a new market sector e.g. from hardware to outsourcing whereas another commercial organisation may be looking to maximise profit within a bespoke market. Different types of organisations: * Sole Traders Sole Traders are the owners of their own business. The business is basic with no complicated set up. A Sole Trader is to provide a service to a client/customer and charge for that service. Profits, taxes, debts and business decisions are made by one individual. Examples include many small shops, plumbers, electricians, painters and decorators. * Partnerships Two friends of mine, doctor and dentist - recently qualified and plan to open a medical surgery forming a partnership. In most cases, partnerships are formed when an organisation has between two and twenty partners. Partnerships are established through the writing of a legal agreement which specifies rights and duties (witnessed by a solicitor). Profits and losses are shared as defined in the legal agreements. Although a partnership is more flexible than a sole trader organisation, there are more legal obligations. Examples of partnerships are accountancy firms and solicitors. The main purposes of a partnership organisation are to make a profit, but also to gain market share, satisfy stakeholders and be competitive. Partnership organisations may prioritise these aims dependant on their strategy. * Private Limited Companies (Ltd.) UK Private Limited Companies (Ltd.) are registered with Companies House and have a range of 1 to 50 shareholders. Shareholders own the company and invest money through the buying of shares. Both a Public Limited Company and a Private Limited Company raise their capital through shares. However, a Private Limited Company cannot trade its shares on the stock exchange. Limited companies have their own legal identity therefore owners are not personally liable for debts. * Public Limited Companies (Plc.) A Public Limited Company is similar to a Private Limited Company in structure; however its shares are floated on the stock exchange. Therefore, control can be easily lost by original/key shareholders if a large amount of shares are purchased. It is however quicker to gain capital. Tesco’s purpose is ‘to create value for customers to earn their lifetime loyalty’ (source: http://www.tescoplc.com). Although their core aim is customer loyalty, the tangible results are profit margins and market share. * Franchising Franchising is using an already established business model. The franchise and franchisee both benefit from a franchising arrangement due to the stake the franchisee has in the business and the profit the franchise makes from supply orders. Let’s take McDonalds as an example. At a high level, if I (franchisee) wanted to run a McDonalds restaurant, McDonalds (franchiser) would need to give me permission to trade using their brand, materials and products. I can then conduct McDonald’s business on their behalf. I would need to invest an agreed sum of money in order to set up my franchise. I would agree to buy supplies from McDonalds whereby McDonalds make a profit on the supplies I purchase. I would sell these products to end customers whereby both the franchisor and franchisee make a profit. There are some additional national factors to consider such as consistent pricing between restaurants and quality of product served. Both parties benefit in terms of profits, maintaining a brand and management of a local, national and world wide monopoly.