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assignment one exploring business on Nike and Cancer Researcg...

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Unit 1: Exploring Business

Assignment One: Features contributing to the success of contrasting businesses For this assignment I will be assessing the difference between 2 businesses, one for profit and the other not for profit. My private sector business is Nike, and my public sector business is Cancer Research. I will also be analysing all the things that make a business successful.

Features of a business:

 Ownership and liability Liability of a business are segmented into two different meanings, limited and unlimited. Unlimited liability is where a business owner or owners take all financial responsibility if the company becomes bankrupt. The owner or owners would have to repay debts and if it cannot be repaid in full, their assets, such as a car or house, could be taken as a payment instead. Whereas Limited liability is the opposite. The owner is not financially responsible for any debts and is not attached to the company entirely. If the company goes bankrupt, their assets are not repossessed. Examples of limited liability business are a public limited company or private limited company. My for-profit businesses that I am assessing, Nike, has Limited liability. This is a big positive as no one is financially responsible for debts of the company. It puts a peace of mind to its shareholders. Especially the internal shareholders such as Owners. Managers and Employees.

 Private sector= Most of UK businesses are privately owned by a single person or a group of shareholders. This makes them part of the Private sector. Meaning they are separate from the government. There are 5 different types of private ownership. Each have pros and cons.

 Sole Trader 1|Page

Unit 1: Exploring Business

A sole trader is an individual who starts their own business. The owner has all control of the business and is entitled to all profits after tax. This is a big advantage over most private sector business. This is because as a sole trader you work for yourself, at your own pace, in your own schedule. For an owner, having a business in your name and receiving all profits after tax tends to be a big motivator. The more motivation, the more the passion. This passion is something consumers recognise and are attracted to. However, a sole trader is an independent individual starting a business. This could be a very impacting negative. Its one person running the company. No one to rely on for financial advice, work shifts, motivation. These reasons put the business heavily at risk. If an external factor occurs like the owner falling ill. No one can be there to keep the company going, no one to cover all the work/labour required. This would lead to debt. As a sole trader, all debts are the responsibility of the owner. If not paid back, there could be legal action or repossession of assets

 Partnership A partnership is a legal form of ownership between two or more individuals in a company. They share the responsibility of management and profits. It is similar to a sole trader, as they both have full control and liability of the business. Although, in a partnership the responsibility is equally split between everyone involved. An advantage of this is that equal split of responsibility means they can rely on each other. The decisions would be more thought out to be in the interest of the business’s success instead of personal gain. However, the more people involved, the longer the process of decision making. Each person has full control, so a unanimous decision needs to be made. There is also still risk of repossession due to limited liability.

 Cooperative Cooperative organisations are businesses that are privately owned by the people who use their products or services, called members. Anyone that uses the cooperative is a member and they have the power to have a democratic election to find a manager who oversees the outgoings of the business. They do not aim to make profit but instead generate money to cover expenditure. Examples of cooperative businesses are building societies and credit unions.

 Private Limited Company

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Unit 1: Exploring Business A Private Limited Company (LTD) is a business that offers limited liability or legal protection for its shareholders. Over 95% of UK businesses are a LTD. As the company is private, it has regulations that restrict the trading of shares. Shares cannot be sold or traded without the owners' permission and cannot be traded on the stock market with the public. Further regulations limit the number of shareholders to an average maximum of 50 shareholders. The advantage of an LTD ownership is that the liability is limited which means the debts of the company are not connected to the owners' personal lives. So, there is no threat of a hostile takeover from an external company which gives peace of mind to the owners. However, a disadvantage is the shares are restricted, and the number of shareholders is limited to fifty. Meaning the company cannot generate capital income by selling shares to the public through the stock market. Which is a big financial loss if the business needs capital.

 Public Limited Company Public Limited Company (PLC) are businesses that are able to trade their shares of the business to the public on the stock market. As a limited company, its liabilities have a limit of shares held by shareholders. Because the shares are traded publicly, if the business were to go bankrupt, the public would lose their shares and money. The big advantages of being an PLC means better access to capital. Money can be raised from shares bought from investors and that it gives a company a more prestigious profile. A disadvantage is if these shareholders gain over 50% in shares, they have the power to do a hostile takeover on the company. Meaning they can control what goes on within the business. This is a big disadvantage as a shareholder could gain 51% of shares and could change the entire business. They have the power to do anything. Which could have a big impact on the brand and image of the business.

 Public sector The Public Sector is the part of an economy that is controlled by the government. These include services such as military enforcement, public education, National Health Service (NHS). These are just a few of many businesses that are owned by the government and funded by taxes. Its main purpose is to help the government to enforce restrictions on trade and industry for guaranteeing the fair distribution of goods and services.

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Unit 1: Exploring Business

 Not for profit Not-for-profit are independent business whose purpose is to provide goods and services to people. Unlike all other businesses, their intentions are not to make private profit. Not for profit organisations are not owned by the original owner or owners. Instead, it belongs to a group of people responsible for the outgoings within the company. These people are called directors and they are elected by the staff in the organisation.

Purposes  Products All businesses have a purpose. In most companies, this purpose is to provide products to customers. These are for-profit organisations. My private sector business, Nike, has the mission to provide ground-breaking sport innovations. Good quality and sustainable shoes and clothing to the public. They also aim to build a creative and diverse global team making positive impacts on communities worldwide.

 Services A service business is a company that gives professional support to its clients. These services are usually intangible and provided by public sector businesses and PLCs. My not-for-profit organisation, Cancer Research UK, is a philanthropy that asks for donations to fund finding the cure for cancer. They also provide support for current and past cancer patients.

 Profit Profit is the financial gain earned when the revenue generated from selling goods and services exceeds the expenditure acquired carrying out the business activity. Businesses that have the primary goal of making money are a for-profit organisation.

 Not for profit Not-for-profit organisations are tax-exempt companies for religious, charitable, literary, artistic, scientific, or educational purposes. They are there to mainly support its members and the people in the community around them.

Sectors 4|Page

Unit 1: Exploring Business In all industries, there is a specific sector the business belongs to. They are segmented into primary, secondary, tertiary, and quaternary.

 Primary The primary sector is the part of the economy that produces basic and raw materials. They only harvest, mine or obtain raw materials and food from the Earth but not process them. This sector offers very little pay as it varies on external influences, like weather, to survive.

 Secondary The part of an economy that includes industrial manufacturers from raw materials into finished goods and products. For example, people who work in factories are working in the secondary sector. Mainly minimum wage is given to these workers. People working in the secondary industry are why Nike is popular. These workers make sure products are made and shipped off to stores all over the UK. If they did not work, there would be no goods.

 Tertiary The tertiary sector is the area of the economy that mainly provides goods and services to consumers using goods manufactured by the other sectors. These are places like the physical stores people go to buy goods. People who are employed there are part of the Tertiary sector. People who work in Nike stores in the UK are part of this industry.

 Quaternary This section of the economy is reliant on knowledge relevant to some business activities involving the preparation of services. The quaternary sector might include information gathering, distribution, and technology. Both Nike and Cancer Research UK have jobs in this sector. For cancer research, Technology is a vital part to helping fulfil its mission, which is to find the cure for cancer. These people are part of the quaternary sector. For Nike, people are required to use technology to promote, to sell online, advertise. People who do these jobs are part of the quaternary sector.

Scope 5|Page

Unit 1: Exploring Business

 Local Business scope refers to the geographical location of a company. There are three different scopes: local, national, international. A local scope business is a company that supplies goods or services to the local community. It is usually suggesting a locally owned business. These businesses are commonly small and limited to one location.

 National The definition of national is "within a country." Therefore, the national scope is when a business expands and has several locations within a country. Cancer Research UK is a national business as it only has branches within the United Kingdom. All with the same mission, to find the cure for cancer.

 International International scope means worldwide companies. Unlike Cancer Research UK, Nike has an international scope, it has expanded to every single country in the world and is accessible anywhere, online or tangible stores.

Size There are 4 types of business sizes:

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Micro = 1- 10 employees, less than 2m turnover per year, net worth of less than 2m

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Small = 11 - 50 employees, less than 10m turnover per year, net worth less than 10m

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Medium = 51 – 250 employees, less than 50m turnover per year, net worth less than 43m

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Large = More than 250 employees, more than 50m turnover per year, net worth more than 43m

In 2019, Nike has approximately 76,700 employees worldwide. Revenue on August 31st was $37.403B. As of 2020, Nike’s net worth is valued at about $34.8 billion. All these statistics make Nike a large business.

Cancer Research UK is also a large business as it has 3,964 employees as of October 2020. Its revenue was £634million in 2017/2018. This capital was made through fundraisers, donations, trading, events, legacies etc…

Stakeholders and their influence: 6|Page

Unit 1: Exploring Business

Stakeholders refer to different segments in a society that have an impact on the business decision-making process and can directly impact the marketing performance of the business. There are 2 types of stakeholders: Internal and External. 

Internal Stakeholders are those who engage in the management of the company. They can influence the achievement or failure of the company. Examples are employees, managers, and owners.

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External stakeholders are entities that are outside the business' control but can still have an effect on the company. Generally, they are interested in the company, as it can have an impact on their financial situation. Examples are suppliers, lenders, competitors, debtors, creditors, customers, government agencies, communities, pressure groups, interest groups.

These stakeholders can have a massive influence on success: 1. -Managers coordinate tactical and strategic decisions within the cooperation. 2. -Employees influence the productivity of the firm. 3. -Owners can determine investment. 4. -Suppliers can affect the quality and reliability of the company 5. -Customers prompt positive word of mouth promotion that would bring awareness to the business. Without them, the business would not be successful. 6. -Community and interest groups influence social media, which raises awareness of the institution.

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Unit 1: Exploring Business

Cancer Research UK - Internal Stakeholders: Being a large business, Cancer Research UK has many internal stakeholders. One type of internal stakeholders the company has is the Council of Trustees and a board of directors that conducts the responsibilities of the business. The councils' role is to prepare a strategic administration, observe the delivery of equipment, uphold its values, and guide/advise and support the Chief Executive. This helps to achieve Cancer Research's vision and purpose. Professor Sir Leszek Borysiewicz is the chairman of the council. His role is extremely significant as he has the power to influence decisions and is responsible for the overall leadership and management. In addition to the board of directors, another influential internal stakeholder is employees the members. Cancer Research's members are volunteers, health professionals, employees, and anyone who donates. Despite the fact a member does not have the power to make decisions, they vary the success of the business. Cancer Research would not be successful if they did not have professionals working to find a cure to the world's biggest killer.

Cancer Research UK - External Stakeholders: One of the numerous but important external stakeholders for Cancer Research is its volunteers. It does not have control over who can volunteer their time into helping support patients going through cancer. Another substantial external stakeholder is competitors. Cancer Research is not the only notfor-profit business in the UK that is asking for the public to donate their time and money. There is a demand for donations from similar charities. Cancer Research aims to win over the hearts of the community and get as much help towards their cause as possible. The biggest stakeholder for a not-for-profit business are donors, especially for Cancer Research as they require people to test their research on. Some very kind people in the UK place their organs to such charities to be used to carry out this research. This is very beneficial as it can be used to guarantee that the business’ mission is smart and achievable.

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Unit 1: Exploring Business

Nike - Internal Stakeholders: Suppliers are very important to most for-profit businesses. Especially Nike as they rely on suppliers for stock and raw materials. If that were not available, Nike would not have products to sell. Having a good relationship with these suppliers could mean discounts on stock bought in bulk or similar incentive, which all conclude in Nike being successful.

Another internal stakeholder is employees. Nike has both tangible and intangible stores. Employees that work in tangible stores can be viewed as the face of the business. They are what the consumers subconsciously associate the company with. Their experience of customer service. They influence customer loyalty too, if a customer goes to a Nike store and is treated with respect and kindness, they are likely to go back and even recommend to others.

Nike - External Stakeholders: To any business, customers would be the most significant as they represent the major source of revenue. They are crucial to the success of the business so is it important the firms stimulate customer loyalty to the consumers. This could be done through discounts, incentives, etc. Repeat customers are very valuable to businesses. Losing these consumers could mean the end of a business as, without customers, there cannot be a business. Keeping customers satisfied makes them likely to bring more buyers by word of mouth recommendation, particularly if their loyalty is rewarded with discounts and gifts. A business should also have a mission statement that is a target that would help them aim towards success. Nike's mission statement is what drives them to do everything possible to expand human potential. They do that by creating ground-breaking sport innovations, by making their products more sustainably, by building a creative and diverse global team, and by making a positive impact in communities.

Stakeholder relationship and communication Nike Stakeholders are critical for a business, but a relationship with both internal and external stakeholders is what varies their success. These relationships become developed through communication, but different stakeholders require different types of communication.

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Unit 1: Exploring Business For Nike, the best way to communicate with managers would be weekly meetings for the teams to share progress and what needs to be improved. They can privately share the ins and outgoings of the business, whether the company is declining or advancing in sales, etcetera. These meetings are rewarding as they can listen to each other’s advice rather than a biased individual making all the decisions. The more people involved also means the faster work gets done. Efficient communication is not only important for internal stakeholders but also with external stakeholders. For a strong relationship with customers, communication should be through emails and social media. The primary target audience is young adults, athletes, and women, whom all use social media. Receiving emails is a way of showing customers that they are perceived as a member. This gives them a sense of security and belonging, it makes the company look more trustworthy. This could influence them to recommend to friends and family.

Communication is crucial when trading with suppliers. Sometimes suppliers require to be regularly updated on all the products so they can determine areas that they need to improve. Letters are the most appropriate and professional way of communicating with them.

Cancer Research Cancer Research is part of a big community, a citizen of society. When preparing to operate a sponsored event or fundraiser, the internal members managing the event need to communicate and promote it appropriately. Not only its existing members but also the public/community, to increase the charities support and drive new people to register and aid the cause.

Beneficiaries also need to be communicated with about information. They require information about progress with research, as they are donating large sums of money to these companies. The most appropriate method of communication would be a video or face to face meeting as hea...