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Exploring Business Purpose Essay

I have chosen four different types of businesses and I will write an informal report describing each one in terms of purpose, ownership, size and scale.

My chosen organisations are as follow:

* Tesco

* Red Cross

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* MacDonald’s

* Alsultan shop

Explanation of terms

There are some business terms which I mentioned above and I will talk about what these mean in business. These terms are purpose, ownership, size and scale.

Purpose

The purpose is the object toward which one strives or for which something exists; an aim or a goal. The business definition of this term is that what the organisation is aiming for or what is their intention of setting up the organisation e.g. Does it sell goods or services, does it aim to make a profit, does it provide its goods/services at cost or below cost.

Ownership

Ownership in business is who owns the organisation or in other words it is who the organisation belongs to, whether it is a sole trader, partnership, private limited company, public limited company, franchise or workers’ cooperative. I will give a brief description of what each one means.

A Sole trader

This means that the business is only owned by one person. The sole trader bears alone full responsibility for the actions of the business and keeps all the profit. Examples include designers, electrician, hairdressers and some local retailers such as the local news agent.

A partnership

This means that the business is owned and run by two or more people who share responsibilities, resources, profits, and liabilities. Most partnerships are small such as accountants, solicitors, and doctors. However, there are few large organisations such as John Lewis and Waitrose supermarkets that run on the basis that employees become partners when they join the company, and receive a share of the profits as a bonus each year.

Private limited company

Private limited company (LTD) is owned by shareholders. If the company made a profit and became successful, then the shareholders will get financial rewards in the form of dividends. A private limited company cannot sell its shares on the Stock Market. Often, in the case of a private limited company, the directors and shareholders will be one and the same people.

Public limited company

A Public Limited Company (PLC) can raise money by selling its shares on the Stock Market. PLC is the largest type of business. It can be owned by the public and institutional investors, such as large banks, insurance or investments companies. A PLC has far more power to raise large amounts of capital, through selling its shares to the public. This means it can develop the business more easily than a private limited company. It can also benefit from being a large-size organisation. It will be able to buy in bulk, and specialise. All of this should reduce costs.

Franchise

Big companies make agreements for private individuals to buy the right to sell their goods, for example fast-food outlets like Burger King. The franchisee runs a private business, buying products from the company franchisor that is given a percentage of the profits. In return, the franchisee can use the company’s logo and have the shop fitted out in the company style. The franchisee benefits from specialist training and the company’s own national advertising. The franchisor can expand without financial risks.

Workers’ cooperative

Sometimes groups of workers buy out their company if it is in financial difficulties. By co-operating with each other, they can share expertise, buy more expensive equipment. The members of the co-operative invest their own capital, and share the profits.

Size

This term in business is meant whether the business has a small or large number of staff, and the size of business can be broken down into four categories. Micro which is a business with less than 10 employees, Small which is a business with up to 5o employees, Medium which is a business with up to 250 employees and Large sized business with 250 employees and more.

Scale

The scale in business means is whether the organisation provides its products or services within an area, particular region or throughout the country or world. The scale of the organisation could be Local (within an area), Regional (for example in within Yorkshire), National (within the UK), European (all over Europe) or Global (throughout the world).

My next step is to look at my chosen organisations and relates them to the above mentioned terms.

Tesco:

Tesco is a Public limited company (PLC), and it is in the private sector which means it is owned by shareholders. Tesco is the biggest employer in the UK with over 250,000 employees and over 1,800 stores. Tesco has four different store formats, each tailored to customers’ needs, and these four store formats are, Express, Metro, Superstore and Extra stores.

Purpose

The main business activity of Tesco is to sell food products. Tesco’s purpose is to sell products and make a profit as it is owned by shareholders and want to expand by making profit, and to make their organisation survive Tesco aims and strive to make profit as it is not like other organisation that obtains the money by donations or funded by the government.

Ownership

Tesco is a Public Limited Company (PLC), so it is owned by shareholders. Tesco is run by management who also have shares in it as anyone who works for Tesco has shares with this big company. Tesco has shares for staff who works for it. The shares are not just limited to directors and senior managers, 65% of the people who work for Tesco own shares. All the staff with more than one year’s service received shares worth 3.6% of their salary.

Size

Tesco is a big company and it is the biggest employer in the UK with over 250,000 employees. Tesco serves market in 12 different countries. It operates some 3,250 stores worldwide, and over 1,800 stores in the UK. Tesco plan to open 559 new outlets in the next 12 months.

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