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Unit 1: Exploring Businesses Report into the features contributing to success of contrasting businesses A1 Features of businesses This report is going to be based on two contrasting businesses and to the extent of which they are successful, one of which is a Public limited company that supplies products for profit called Burberry and the other is non-profitable charitable trust called the Salvation Army. Firstly, ownership and liability is the extent to which the owners of a business are liable for the debts of the company and to protect the business against the risk of being sued or held legally responsible, anyone owing or running a business should insure against such liability for example sole traders, public limited companies, private limited companies, Franchise, Partnership and C-operative. A public limited company is company that trades their shares on a stock exchange and can be bought and sold to anyone allowing businesses to raise as much money as possible. A private limited company is when shares may be sold to others who then become owners/shareholders of the business and can only sell their shares to shareholders. A sole trader is a business that is owned by one person and that person is responsible for the debts and decisions that need to be taken within the business, although more than one person may work in the business. A franchise is a company that can have their license bought from them, enabling a sole trader to operate ‘under license’ for bigger company, for example McDonalds, KFC and The Body Shop. A Partnership is a business that is owned by 2 to 20 people but this may be exceeded in some cases for example in law firms or architects. A Co-operative is when groups of people work together to share essential services and equipment for example farmers may share combine harvesters or artists ay share the rent of studio. A majority of business provide both prefects and services but not all businesses measure success by profit for example non-profit businesses such as charitable organisations. Businesses that measure success through profit are called profitable organisations which aim to make the most profit through promotion of the business or a specific product. A sector is an area in the market in which businesses share a related product or service and shares common operating characteristics, there are many sectors that different businesses operate in for instance, primary, secondary, Tertiary and Quaternary. The primary sector involves acquiring raw materials for instance metal and coal must be mined from the ground, businesses that rely on the primary sector include construction businesses which also rely on the secondary sector to prepare materials from their raw state. The secondary sector processes raw materials from the primary sector so that they could be further sold on for example coal, farmed vegetables, caught fish all need to be manufactured and prepared in a way of which 1

allowing it to be available to be distributed to companies that provide products to customers. The tertiary sector provides the services that ensure storage and distribution of goods that have been manufactured. Similarly, to the Tertiary sector, the quaternary sector also provides support services which include communication services that allow day to day operations to occur for example, emailing and telephoning. The scope of a business means the range covered by that business for example, local, national, and international. A local business is a business that is owned locally and serves just the local area for instance, local convenience stores, pubs, mobile hairdressers, plumbers, gardeners and more. National businesses are businesses that serve and offer their products or services nationally which could be a franchise for example, Dunkin Donuts, Kwik fit and McDonalds. Since the Internet has been around, Businesses have been given worldwide opportunities to sell products and services internationally. International businesses do business transactions that take place across national borders for example, Apple, Amazon, Google and more. Burberry is a British fashion company that distributes outerwear, fashion accessories, fragrances, sunglasses, and cosmetics in 498 shops worldwide with an employee count of 10,181[1]. It’s a global company that has been providing products for 155 years and its distinctive tartan pattern has become one of its most widely copied trademarks [2]. Burberry is most famous for its trench coat, which was designed by founder Thomas Burberry that was initially created for officers off the British royal Army to wear during World war one which was made with an originally invented fabric created my Burberry himself which was lightweight, comfortable and rainproof see figure A[3]. The first store was originally opened in 1856 in Basingstoke, England (see Figure B) [4]. Burberry is a public limited company which means it is owned by the government as it is classified as belonging to the public sector. Businesses that are owned by the government are either set up by the government or bought by the government from the private sector or to save them from financial failure. In the case of Burberry, it has been bought by the government in order to prevent financial failure. Businesses must ensure that their business is protected against being legally responsible then being sued must guarantee such a liability. There are two different types of liability that businesses use which are limited liability and unlimited liability. Unlimited liability refers to owners of a partnership or sole traders have equal responsibility for both profits and the losses; therefore, this could mean that the owners’ savings and 2

possessions including car, house and many more could be at risk. Burberry has limited liability which is when there is a limit of the amount that could be legally claimed by shareholders, therefore not all of the owners would be held responsible if the business has any insufficient funds or losses.

Figure A: Image of Thomas Burberry, the founder of Burberry and the first trench coat made during World War one

Figure B: First Burberry shop opened in 1856 Maintainuing effective business communication is very sugnificant, eithout this, a business has a low chance of succeeding. Organisanisations require a structure in order for the business to operate 3

effectively. As a business expands, the organisational sturcture should be develepod so that it adheres to the aspects of the business as lines of communication must be established and levels of reponsibilities must be identified. There are several types of organisational structures that would suit different types of business, for example, Hierarchical, Matrix, Flat and Holacratic. There are many functional areas in a business in order for it to operate effectively which include, human resources, researche and developement, sales, marketting, purchasing, production and quality, finance, customer service, IT and administration. The Human resources area is responsible for hiring the most high qualified candidates for each job role. Research and development is responsible for the iniation and development of new products or concepts. The Sales area is responsible for selling products and services. The marketting area is responsible for the advertising and promotion of the business or product. The purchasing are is in charge of the suppllies, products and stationary. Production and quality is rfesponsible for high quality manufacturing and and making sure that products meet specifications. The finance area is responsible foracounting, wages, nills, taxes and raising invoices. Customer service in responsible for resolving customer queries and disputes, seeking feedback to improve feedback for innovation. The IT area is in charge of the computer infrfastructure for instance a company’s websites. The administration area is responsible for organising meetings or travelling withing the business and more Burberry’s organisational structure is assigned to the hierarchical structure ( see figure C), This demonstrates the Chief exectucive at the top meaning they have overall responsibilty of the business.The Hierarchical structure displays responisbility and authority within an organisation, clarifying who is in charge of decision making regarding business operation ranking from the lowest to highest rank.This enables employees to recognise positions of leadership within the business which would further motivate them to perform well as there would possibly be opportunties for promotion. However, many problems could occur as the CEO has a large span of control, for example, it would be difficult for decisions within the business to be transmitted and for CEO’s to oversee every single employee in the business that are in the lower rankings. This would therefore have a bad affect on the communication of business operatiions within the business. The matrix structure brings together employees from departments with different specialist skills so that they can work together to complete a particular projcct. One or two people are chosen from each department, such as, production, Marketting, Personnel, accounting and Each individual in the team has their own responsibilies. The matrix structure is very effective because employees are able to efficiently exchange 4

important information withikn the business, therefore allowing quick decision making as information would be transmitted very quickly and problems would be sold, whereas the hierarchical structure could lead to miscommuication due to the many roles that the manager would be responsible. On the other hand, as matrix structues are quite complexed, it may not be clear who each department is accountable for, therefore, this could also alter communication as employees would not be sure of who to take orders from. The flat structure refers to an organisation with little or no levels of responsibility and authority between management and staff level employees. A flat organisation has less employee supervision and more staff involvement in the decision making of business operations. This is an advantage because decision making becomes easiers amongst employees as there are less levels in management and increases the level of reponsibility the employees have. Although, the communication is sped up in the flat structure, employees would lack a specific boss to report totherefore, this would raise confusion within the business. The Holacratic structure is where responsiility anf authority are distributed amongst the workplace allowing each employ to have equal responsibility relying on their own clear roles as the holacratical structure does not operate with a boss, whereas other organisational structures such as the hierachical structure depend on higher authority and bosses to make decisions, therefore the holacratic structure can be seen as an emerging structure which can increase innovation as it relys on very clear communication and trust. Aims and objectives There are many aims and objectives that businesses have in different sectors which ar built around three key areas, mission, vision and values. The mission refers to themission statement of the business fo example burberry’s mission statement can be seen below (see figure D).The mission statement states “ The missionn of the company is to maintain its integrityand vitality of their brand … “

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Span of control- the number of people a person is directly responsible for.

Line Authorityauthority a manager has over a subordinate.

[6] Figure C: Burberry’s Organisational chart; Hierarchical structure

[7]

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Figure D; demonstrating burberry’s mission and vision statement

Bibliography:

1

http://citywire.co.uk/money/share-prices-andperformance/share-factsheet.aspx? InstrumentID=168976

2

https://en.wikipedia.org/wiki/Burberry

3 https://uk.burberry.com/our-history/ 4 http://www.parischerie.com/25958/the-fall-trenchtrend/ 5

http://www.maxmayo.com/stories/burberry-story/

6

http://www.sketchplus.com/resources/pmBook/02_Organizing_For_Project _Management-01.html

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