Business Types
P1 Describe the type of business, purpose and ownership of two contrasting businesses. P2 Describe the different stakeholders who influence the purpose of two contrasting businesses. P3 Describe how two businesses are organised. P4 Explain how their style of organisation helps them to fulfil their purposes. P5 Describe the influence of two contrasting economic environment on business activities within a selected organisation.
P6 Describe how political, legal and social factors are impacting upon the business activities of the selected organisations and their stakeholders M1 Explain the points of view of different stakeholders seeking to influence the aims and objectives of two contrasting organisations. M2 Compare the challenges to selected business activities within a selected organisation, in two different economic environments. M3 Analyse how political, legal and social factors have impacted on the two contrasting organisations. D1 Evaluate the influence different stakeholders exert in one organisation.
D2 Evaluate how future changes in economic, political, legal and social factors may impact on the strategy of a specified organisation I work for the Kent Messenger and I am writing a report on two contrasting businesses within the local area. The two businesses that I have chosen to report on are JD Sports and British Heart Foundation. These two businesses contrast significantly. The Four Business Types There is four main types of business that all organisations will fall into, they are: Local, National, International and Global.
Local business organisations only provide and make custom within a small area within a country, typically this would be regional, or even restricted within a County. Ownership would usually be limited to one or two individuals therefore the profits would be split accordingly between the limited numbers of shareholders as opposed to dozens of shareholders. Employees within a local business (typically small business) are able to connect more easily and quickly with customers and as a result, are more likely to develop
better customer service and develop long term customer loyalty. These attributes ultimately leads to improved sales and larger profit and success for the business. However being restricted to a town or county, would restrict the business’s ability to grow and create business elsewhere within the country. National businesses operate within the whole country, therefore capitalise on sales from many different areas which ultimately increases profits. There would typically be more stakeholders of a national business, unlike a local business who would have one or two.
The running costs of a national business would be significant as there would be several assets such as office locations, depots or factories, compared to a local business that may simply consist of a single warehouse or shop. Communication between stakeholders would be more complicated and sophisticated due to the fact that the business is spread all round the country. Many different people would be holders of a percentage of this type of organisation therefore profits would be spilt. However being national not local the profits would be considerably higher.
A national business would most often be seen on the stock market where shareholders purchase shares within the business and would be rewarded with depending upon the success of the business. A dividend is a certain percentage that is worked out according to the amount of money you have contributed. This money is only assessable if the business turns over a profit at the end of the year. International businesses would have assets in multiple countries and would provide a service or product to many different parts of the world.
This gives company owners more ideas and creativity to what services or products to produce and sell in different locations. Highly likely to be in the stock market and being international, would produce many different levels and profit margins from different parts of the world. So unlike a national business they would have money and profits vary due to levels of wealth in places, in turn raising the prices on shares for holders. However this could mean that shareholders would be more in the dark about the economy and capital factors with different countries.
Finally, global companies operate on a much larger global scale with assets in every corner of the globe. As a result of this scaling up effect, the turn-over is significantly higher and invariable the profit is also significantly more. . However funding and supporting a business and organisation on a global scale would require considerable amounts of managing and also large amounts of capital. This would mean a great number of shareholders investing in the business. To summarise the main difference of these four types have is the location in which they sell or provide their service.
Like all other companies, JD Sports and British Heart Foundation fit into these categories. Purpose and Ownership JD Sports is a national business as it only supplies clothing and footwear brands across the UK. However other customers in countries outside the UK can purchase items online from overseas, arguably making JD Sports an international supplier. The ownership of JD Sports would be multiple shareholders, banks and possible individuals, all requiring various percentage of the profits.
This however does not mean that all shareholders in JD Sports have any management input within the business objectives or management of the business. Like most private sector companies, JD Sports was established to create profit by supplying customer demand, in turn developing and growing in size. British Heart Foundation also fall into the national business type, however, the way in which the business is operated contrasts drastically from JD Sports as it is run to fund money to help Heart development.
A common misconception that people have with charities is where the money comes from to fund the organisation. Not 100% of the funding will end up helping the cause as a considerable amount of money would be injected back into the business to fund business expenses such as advertising, web setup of fund raising events and office and building running costs. Sectors As well as types of businesses there is also three sectors which business are categorised into.
The first is the Private sector this includes all business set up by members of the public, business men and women, anyone and everyone can set up a business that would be branded in the private sector. They are all part of the national economy however not under direct government control. Private sector businesses would be classed in the national business type as they would only operate in the UK Secondly is the Public sector, unlike the Private sector, it is set up and run by the government. Business examples include: Police, NHS, Fire brigade.
The main aim and objective for these type of business is to provide; safety, well-being and care for the people of the United Kingdom. Public sector businesses would be classed in the national business type as they would only operate in the UK. Lastly there is the Voluntary sector, business that fall into these sectors are set up by either successful business people or a trusted nominated member. The main purpose of a voluntary business is to collect funds to in turn provide a service to the wider community or in some cases locally. Primary Secondary Tertiary
Business activity can be broken up into: primary industries, secondary (manufacturing) industries and tertiary (services) industries The primary industry is also known as the extractive industry and is where the raw materials are obtained. This The secondary industry, also known as the manufacturing and construction industry, is where products are made, build or assembled. And, the tertiary or services industry is where the final product is distributed to the end user (consumer). Stakeholders I am now going to describe the different stakeholders who influence the purpose of; JD Sports and The British Heart Foundation.
Customers are interested in a business if they buy products from that company. A business also depends on the customers because if no customers bought products from the company, then the company would make no profit and would fail. However customers are not the only stakeholders within a business. If JD was to close down then the customers would have to shop for designer clothing elsewhere, in turn would increase the competing businesses sales. The British Heart Foundation would also be affected by customers as they need the money to fund the charity organisation.
Employees are certainly interested in the growth and success of the business they work for, as they provide them with a livelihood. The business is influenced by the staff as they make the improvements to the store by adding good customer service in which the existing customers would come back and the business would be recommended to new potential customers. They would be interested to see if anything happens in the business, also to see how many other staff are employed. The staff would be communicated by the business by newsletter or meetings on a regular basis about new products, as they are internal stakeholders.
Also staff gets paid by the company which influences them to be better. The competition is external stakeholders, they would find out information with the competitions annual report or internet. They would be interested to see how well they are doing as if they sell similar products for example JD and Topman. Competition would influence business as they can identify what the competition is selling so that the company can create products that are better that the competition so they can hopefully attract their competitors’ custom.
