HOW BUSINESS OPERATES

Task 1 - The Business Environment

TASK 1 – KEY FEATURES OF A BUSINESS
ENVIRONMENT
Types of organisations found in the public and
private sectors – UK
The main types of Business Organizations in the public
and private sectors of UK are Sole Traders,
Partnerships, Companies and Franchises.
Sole Trader Model
Sole Trader is the most common form of Business
Ownership and is found in most of the activities.
Examples – Electrical Work and Cleaning
Advantages – Decision making process is quicker in this
model and a close contact is maintained between the
Customers and the Employees
PARTNERSHIP MODEL
 An ordinary partnership can have partners between 2 – 20.
Partnership Act 2002 has made it legal for some of the
forms of partnerships. Examples – Big Accountancy Firms
can have more no. of Partners who can enjoy a limited
liability. Partnership Models are set up by writing a deed of
partnership which is witnessed by a Solicitor and it
highlights the profits and losses which are to be shared
 Advantages – People in this model of Business can share
their skills and workload and it can also be easier to
increase the capital whenever essential
 Examples – A group of Engineers can work together by
sharing their experiences in diverse Projects and can
contribute effectively for the success of the Project
FRANCHISING
 A Franchise is a model which is gaining a new momentum
in the Country. It is hiring out a lot of good ideas to the
other companies. A Franchise grants permission to sell a
product and trade under a certain brand in a specific area
 The Franchisee should buy an agreed percentage of
supplies from the Franchisor and he can make a profit on
those supplies
 The Franchisor and Franchisee can make profits in this
model
 Examples – McDonalds, KFC, H&M, ASOS
DIFFERENT STRUCTURES WITHIN THE
BUSINESSES

There are three different structures within the

Businesses like
 Sole Trader

 Partnership

 Limited Company
SOLE TRADER
 Sole Trader is the most common structure for the Online
Store Owners and it is the most easiest model to set up
 Within this business model the business is not a separate
entity from you. A sole trader receives all the profits and is
also personally liable for all the debts or legal actions taken
against the business
Advantages
 It is easy to set up and run
 Control of all the business decisions and profits

Disadvantages
 It is not a separate business entity
 The sole trader is responsible for all the debts or actions
against the company
PARTNERSHIP
Partnership is a common structure of the Business which are
formed when two or more individuals are co – owners of a
business venture. A well – drafted and a balanced agreement is
made between two different companies and this includes various
factors such as
 Names of Partners and the ways in which they can be added
 An outline of the Business
 Investment, Liability and Profit share of each of the Partners
 Stages outlining the process if the partnership dissolves
Advantages
This model allows for a division of labour
Partner brings more capital investment
Disadvantages
Partners are jointly liable
Business relationships can sour
COMPANY
 The Company should register the company under the company
house and running a company has a lot of advantages and it
increases the credibility of the business
 A Company is a separate entity from its owner where they
have their own liabilities, debts and profits
 The Company model is a good business structure if the
Company is growing and it has a greater potential for
liabilities, debts and profits
Advantages
 The person is not personally liable for the Company
 It provides tax advantages
Disadvantages
 It is heavily regulated
 It has extensive record keeping
 It is the most expensive model to form in terms of the fees
associated with incorporation
BUSINESS - ASOS
 ASOS is a global fashion destination with its objective on cutting –
edge fast fashion. They offer a wide – variety of fashion related
content. They sell about 75000 fashion related products through
localized and web – based applications. They deliver from their
fulfillment centers from UK, US, Europe and China to almost every
country in the World
Impact of the local, national and global economic environment
on ASOS
The world wide economic condition has a huge impact on the way in
which the local brands perform as the business is conducted world –
wide with a large customer base of international locations.
The major financial impact is with the strengthening of pound.
Cut Over Strategy
The Retail sales are up by 27% which makes up the UK sales to 35% and
international retail sales to 22%.
With such impacts of global markets and economic conditions the brand
has managed to achieve an international retail sales expansion up to
61%.
ASOS has also managed to improve technology platforms mainly in the
local language front in almost all the mobile apps
BUSINESS OBJECTIVES DIFFER BETWEEN
VARIOUS ORGANIZATIONS
Different types of Business Organizations have various aims and objectives.
An aim or an objective of a business is what it tries to achieve over a definite
period. For example a business can set these aims for achieving various
targets like
 Survival
 Increased Profit
 Growth
 Increase in Market Share
Having an objective is useful because it helps the employees to focus on
various shared aims. The Business can also instruct its employees to work
towards achieving their business goals of increasing their revenue to a
greater high.
Voluntary Organizations have other aims where they work to provide service
for the other Organizations or for serving other Customers