Business_Structure

* Task 1A Private Sector Sole Trader (Rita Hair Salon Camberwell) Rita decided to set up a hair salon shop in Camberwell since there is no competition. She has “Unlimited Liability” that is if she becomes indebted to the bank, she could lose her personal properties if the business fails. She employed a small number of staff. Rita has funds for the business. She carefully wrote down facilities and equipment she needs, for example the shop, hair dryer, a landline and publicity materials etc. She does have brilliant managerial skills to operate her shop, she sets up the opening and closing time, supervises the staff, do the account, etc. She registered her business with Inland Revenue and Customs for the purpose of her yearly tax return. Rita is now enjoying the benefit of ownership since she is not having a business partner. For any new development, for example expansion or paying suppliers, her consent is needed, since she is the sole decision maker and controller of the business. She did her tax return liability, paid staff, suppliers and other expenditures, what is left (Profit) is her own. She is also thinking of reinvesting this profit into the business for expansion. * Task 1B Public Limited Company (Marks & Spencer) For M&S to run as a public limited company they need at least two partners and shareholders and three legal documents, Memorandum of Association; this clearly states what M&S wants to relate to the public i.e. what they offer to the public. Articles of Association; this outlines the internal rules governing M&S i.e. rules about meetings and the right of shareholders to vote. Certificate of Incorporation; is evidence that M&S is fully established and can now trade. To raise capital M&S invited the general public to buy shares for which its prices will be quoted on the Stock exchange and also obtained a loan from the bank. The Board of Directors is relied on for new resolutions and plans; this makes decision taking very slow. The company holds an Annual General Meeting (AGM) to review their activities so far and declare dividends to Shareholders based on the Profit made. The Board of Directors are the controllers of the Company. M&S is owned by shareholders, this means that shareholders have rights to attend AGM meetings. If M&S goes bankrupt or shuts down with debt to repay to the bank; shareholders will not be held responsible because they have limited liability. * Task 1C Public Sector Public Sector is organisations set up by Act of Parliament, owned and financed by the State, for example BBC and St Thomas Hospital (Fardon, ‘et.al.’2004, pg.44). BBC BBC updates the public with information on what is happening in the society. The Executive Board decides the operational service of BBC to the public, for example the scheduling of programs and other departments like advertising. The Office of Communication (OFCOM) controls BBC, for example OFCOM can ask BBC not to run some programs, revoke their licence and even impose sanctions. (Your Rights, 2010). Profit generated from sponsored programs and TV License is reinvested into BBC. The Government have a limited liability towards BBC, meaning that no one in position of authority will lose their personal properties should BBC run into debt. * Task 1D St Thomas Hospital St Thomas Hospital is a non profit organisation with the purpose of offering health care service to the public. The Department of Health controls the activities of St Thomas Hospital, for example the treatment of physical and mental defects. The Head of Departments of St Thomas Hospital is charged with the power to take decisions on daily treatment of patients, for example the refusal to treat a patient due to non eligibility. * Task 1E Charitable Sector This sector is a non-profit sector with the purpose of performing socially valuable work while offering their service at lower cost. It is usually formed by individuals, groups, organisations and the government. (Evans, 1995, pg.108). Cancer Research UK Cancer research help people with Cancer and raise funds for research into Cancer. They get funds from the good will of the public through appeals advertised via various media, for example TV, websites etc. They have large scale of staff and volunteers who work to keep the organisation running. Cancer Research needs legal documents from Charity Commission which are Constitution or Rules: this contains the internal rules governing the charity. Trust Deed: This is a signed agreement of those who formed Cancer Research and a witness. Articles of Association: Document from the registrar of companies as evidence that Cancer Research was registered as a charity (Charity Commission, 2010). Board of Trustees take decisions, for example raising funds and other expenditures etc. The Charity Commission controls the affairs of Cancer Research, for example they ensure Cancer Research carries’ out its activities effectively without personal interest in order for the public to have confidence in their services. This organisation is owned by Cancer Research UK. Income from donations is reinvested into the organisation and Cancer Research UK has limited liability. * Task 1F Mind Mind was set up by Government but works independently. “Our vision is of a society that promotes and protects good mental health for all” (Mind, 2010). Their source of finance is supporters (public) taking action and from companies. The Board of Trustees are charged with responsibility of taking decision within the Charity, for example administrational actions and managerial strategy of rendering their services effectively. Charity Commission controls all activities of Mind for example the proper use of funds for the cause and not for personal interest. Mind is owned by UK State. The Government has a limited liability towards Mind. Task 2 H&M Marketing: H&M marketing department looks out for business opportunities, identifies customer’s wants and plans out ways of fulfilling them. For example the new H&M store which was opened in Soho London last autumn and the applied research carried out, that customers need organic skin care products. They do that to keep ahead of competition due to changing taste of customers. Because there is need for growth wide distribution and to remain in business. When there is gap in the market and need for expansion they introduce new products, for example the new H&M organic skin care products. They achieve this by carrying out applied research, suggestion box and surveys from customers, competitors and suppliers. Purchasing: H&M purchase department plan the range of products needed to meet customer’s expectations; they send for quotations from suppliers and keep track of products delivered. Because they want to remain in business they have to stock quality products and latest fashions to keep ahead of competition. They do this when there are orders from customers and need to restock the stock room or shop floor. H&M negotiate with independent suppliers in Asia and Europe to supply their demand. Sales: They work to attract potential customers, meeting of sales target, planning and training employees to provide excellent customers service. This is done to increase sales, expand the business profit margin and to sell products that satisfy customers’ needs. Basically sales can only be effective when there is demand for a product, increase demand increases sales. This is achieved by putting into action sales strategies and staffing the shop floor with sales assistants to attend to customers’ demands. Finance: They ensure that funds are available to get the resources needed, ensure cost is controlled and adequate cash flow within the business. For example they analyse the cost to finance a new product development etc. H&M do it to make sure there is no overspending or abuse of funds and to make informed judgement and decisions. H&M finance department release funds when expenditures are to be made, for example, wages, maintenance, purchase etc. Profit from sales and shares sold to the public raises the funds H&M need to carry out its activities. Advertisement: H&M promote the launch of a new product, design leaflets, posters and also monitor the strategy of their competitor’s advertisement. H&M do it to make their target customers aware of a new product, remind customers, and communicate the benefit of the product and to encourage customers to buy the product. H&M advertise when there are new products available to satisfy customers’ wants and when there is need to increase sales. This is achieved through advertising via various media, for example H&M magazine, TV, billboards etc. * Task 3A Marks & Spencer Managing Director | Advertisement Sales Marketing Finance Supervisors Workers Workers Workers “The Changes within M&S have created a business that now has a flatter organisation structure” (The Times, 2010). With a flat organisational structure the management have a large number of staff to control and employees have greater responsibilities. Workers: These are the people the personnel or sales manager’s recruited to do the jobs in the best possible ways, they are the floor workers attending to customer’s demands and mounting the cash till, fitting rooms, stock rooms with other associated tasks to keep the business running. They report to the supervisors in charge of products they are dealing with. Supervisors: “Supervisors are often the backbone of an organisation. These are people who know how things should be done at ground level. They work with middle and junior managers to put plans into practice” (Needham & Dransfield, 1996, pg. 216) M&S supervisors report to the departmental managers in charge of the products they are dealing with. Department Managers: Their main responsibility is to ensure that their department duties are carried out and functions properly, for example the marketing department manager continually looks out for business opportunities, identifies wants and how to satisfy them and report to the Managing Director. Managing Director: M&S managing director ensures that all the department within M&S functions properly to expectation, for example overseeing of the activity of marketing, advertising and sales department etc. * Task 3B Toyota Geographical structure CEO Headquarters Corporate Staff Administration Manufacturing Finance Marketing International Division U. S. A Asia Africa Europe Marketing Marketing Marketing Marketing Manufacturing Manufacturing Manufacturing Manufacturing Administration Administration Administration Administration Finance Finance Finance Finance General Electric Divisional Structure CEO Turbine Microwave Lights R and D R and D R and D Finance Finance Finance Marketing Marketing Marketing Similarities Authority: the Head Office retains power of authority despite a little power given to junior managers in their different units and regions. Performance: they both encourage efficiency in business performance due to pool of expertise and also lower cost and increased profit. Quick Progression: there is a good chance of succession along the hierarchy of position due to excellent training of junior managers and staff. Differences In Toyota geographical structure decisions are taken by local management in a specific region in contrast to General Electric structure that have to wait for senior management or CEO to authorise decisions. General Electric structure is very standard i.e. solving problems by applying rules, procedures and processes which is in contrast to Toyota structure that contains inconsistencies in standards across the company. General Electric divisional structure is centralised (authorities held at the upper level) with good strategic business unit within the organisation in contrast to Toyota geographical structure that is decentralised (most authority at regional level). Toyota functional sales departments are geographically organised but, General Electric sales department is product organised. Conclusion The sole trader bears all responsibility for establishing its own business but, also enjoys the benefit of using all profits personally or to expand the business. To establish a private sector company there is need for partnership involving two or more people and shareholders. The partners need to obtain Memorandum of Association, Articles of Association and Certificate of Incorporation. Private sector companies is owned by shareholders but controlled by Board of Directors. The public sectors are Government run organisations set up by Act of Parliament. They provide welfare, social amenities, health care services etc to the public. They are funded by the State and owned by the State. Charitable sector is non profit organisation working socially to help those in need and charitable organisations mostly need finance from the good will of the public. Organisations are structured on the basis of providing services effectively to meet demands or economical changes. All structures have their advantages and disadvantages. Bibliography Charity Commission (2010) Registering as a charity [online]. Available at: http://www.charity-commission.gov.uk/library/guidance/cc21text.pdf (accessed 19/10/2010). Evans, D. (1995) Business a student’s guide. 3rd ed. London: Pitman Publishing. Fardon, M. ‘et.al.’ (2004) Advance business. Worcester: Osborne Books Limited. Mind (2010) what we do [online]. Available at: http://www.mind.org.uk/about/what_we_do (accessed 19/10/2010). Needham, D. and Dransfield, R. (1996) Business studies for you. 1st ed. Cheltenham: Stanley Thornes. The Times (2010) The role of training and development in career progression [online]. Available at: http://www.thetimes100.co.uk/case-study--organisational-structure-careers--100-271-2.php (accessed 20/10/2010). Your rights (2010) OFCOM [online]. Available at: http://www.yourrights.org.uk/yourrights/right-of-free-expression/controls-on- broadcasting/ofcom.html (accessed 18/10/2010).