Fundamental Aspects of Business – Business Essay
During the developing of industry and economy, there become more and more opportunities for people to have their own business and a great number of people really want to attempt to do it. But before you start doing your business, how much do you know about it? Do you
realize what business exactly is and how does it works. Today I am going to introduce some very basic knowledge about business such as the fundamental facets and the main factors of different types of business, also a discussion of the different objectives between those different businesses.
First of all, a business is about a commercial or industrial enterprise and the people who constitute it. (Handout) It concern to many business objectives including profit, share price, environment, sales, long term survival and so on. But basically there are five fundamental facets of a business you must know, they are:
1. Your Products/Services: You must have very clear idea about what are you offering to the consumer, what advantages you have with your product or service and why you are strong in it. And to found your weakness is also important and then you should work hard to understand the reason of your incomplete even you could not fix it. This would help you to be more clearly about your current situation. Another factor is you may have to decide how to delivery your product would be the most efficiency way. Furthermore, after you made a decision about what are you going to offer the customers, you may face some problems, for instance the customer wants something you do not have, at this moment I recommend you to help them to find the goods they want even you probably have to send them to a other supplier, but don’t worry, your behavior would made you very impressive to the customer and that could increase your reputation. Moreover, when you considered all the factors such as the cost of produce and deliver for each product also the overhead, you have to give a very reasonable price; consumer could accept it and you can make profit at the same time.
2. The Customer Universe: By some successful case you could learn that if you want to gain more buyers, first you must know who are they, this means you can not address to all class of people, at less you are not being a supper powerful company. M & S could be such an appropriate example here, they use to sell more options goods than nowadays, but they stop it and began to focus on the middle class since they found that did not make more profit. In addition, what methods you are going to use to know how your customer thought about your work is extraordinary important no matter they are satisfy or not, it really gives you a clearly indicator. So you should use all the effective ways to do this including doing surveys and sending questionnaires, especially doing this by the Internet. In a word, confirm which segment do you want to address and than be as close as you can with them.
3. The Market Landscape: Primarily you have to understand the meaning of market niches; it means a special area of demand for a product or service in the market. And than you have to make sure your position in it by collecting many concerned data. After you know your quotient in the market, you may start to consider about your competitors situation during the comparison you made. Now you have to think about your competitors details, like do they offer the same product/services as you and what is their strengths and weaknesses, can you learn their positive and do your best to avoid their negative.
4. Your Financial Position: In this case, you may have to investigate your business to make sure how your financial position like is it big wealth or a bit embarrassed. That really correlate to your business closely, it could gives you the opportunity to change your goals and directions. For example the income and expense projections, investment in research etc. these all concern to your financial position.
5. Your Organization: Just like your products/service, you should realise what are the major strengths and weaknesses of your organization. Than you must to make sure the people in place is whom you need in order to make your business successful, and they also ought to have ideas, issues and upcoming changes in their circumstances that should be taken into consideration in business planning.
You may define as business which activity has these five facets. And the role of business in society a critical and complex issue today.
After the description of the fundamental facets of business, I would like to provide some information about the different types of businesses.
First of all, the types of business could separate into two sectors, private and public. In the public sector, all the business activity is owned, financed and controlled by the nation through the government or local authorities. Generally there are four kinds of business; Number one is the Government, whom is the key departments set policy and monitor implementation. Number two is the Local Authorities which including Country Council, District Councils and Parish Councils. Third one is the Health Trusts (NHS). And the last one is Public Corporations such as BBC. All of these public sector activities have objectives, for instance, the Access, which means they are available to all regardless of location or income. Another is Quality, which means they provide high quality services that do not cut corners. Also Affordability, this is a services offered at prices that are cheaper than private sector or free at the point of use. Lastly, Equity is also an important parts which means it is available to anyone whatever their background, status, income, class, race, religion, etc. In the society, there is a great number of establishment belong to the public, such as roads, paths and parks, museums, schools, allotments, waste disposal and so on.
Private sector of business is owned, financed and controlled often by private individuals. In my opinion, it is more complicated because there is more range of types of business.
1. Sole Traders, this must be owned, financed and controlled by one individual but can employ other staff and also this is very common in local building firms, small shops and restaurant. Because it is very easy to set up and you can keep all the profits, you can make key decisions by yourself and obviously you have a high degree of control. Also it has very much flexibility, less people are easier to make some change. And it has an ability to offer personal service, the reason is there are only few customers have to be serve at one time. In the other hand, a sole trader may face some problems particular easy to happened on them. Unlimited Liability, this means the trader has the liable for all the debt and I think this makes it quite challenged; solely responsible always could compose a pressure. And this kind of business will be ceases once the owner dies.
2. Partnerships, which is bound by the terms of the partnership act 1890 and it is owned, financed and controlled by upwards of 2 partners in terms of agreed through contract, it is very common in professions such as lawyers, accountants, architects, surveyors and so on. There are several positive things of this type of business. Firstly, Partnerships has a greater access to capital. Secondly, it provides a greater opportunity for specialization. Thirdly, a shared responsibility could improve people’s incentive. The negative thing is, this is an unlimited liability but since 2001, Partnerships can apply to be limited partnerships. All the partners liable for the debts of the others and the partnership dissolved on death of one partner. Potential for conflict could make a big problem, the reason is that would make the company very hard to achieve an agreement. Especially one partner could bind on the rest when making a decision. This is also a limited access to capital.
3. Limited Companies. Which could separate into Private Limited Company (Ltd) and Public Limited Company (PLC). Both of these companies must to register with registrar of companies at Companies House. Also there is a memorandum of association must be signed, it is about the details of the nature, purpose and structure of the company. And you must get a certificate of incorporation, it allows the company to trade. All the shareholders have limited liability; it means if your company is going into liquidation, you can only lose what you agreed to put into the company rather than your personal liability.
Here is some special policy to those two types of limited companies. Ltd generally constitutes by 2 or more shareholders but single member, but individual articles of association may stipulate max number of shareholders. And the shares can only transferred on agreement of all shareholders. The PLC is owned by minimum of 2 but no maximum number of shareholders and the shares can be traded publicly on the Stock Exchange. The firm also has a separate legal identity, it means the company can sue and be sued instead of person. But the PLC is more complex to set up, because you must supply a minimum share capital of fifty thousand pounds. Obviously, the distinct different between these two types of business is that the Ltd can have only one shareholder.
At last of the part of Limited Companies, I would like to provide some issues. Firstly there could be a divorce between ownership and control. Secondly is there is a potential for diseconomies of scale, for example the communication, decision making, etc. Thirdly as a limited company, you must publish your accounts. And here is some more issues particular to the PLC, because the shareholders may be a large institution so the company has to consider some problems such as pension funds, insurance companies and so on. Further more, the share value will subject to volatility, it could affects the company value. More over, the PLC can be large, complex, possess market power.
4. Co-operatives. This is very common to see in the farmer’s market, it ownership, finance and control and control in hands of the ‘members’ and it exists for the benefit of ‘member’.
There are three types of Co-operatives, they are: a). Consumer co-ops which the members buy goods in bulk and sell to members, than divide profits between members. b).Worker co-ops which mean the workers buy the business and run it and decisions and profits shared by members, such as the most farmers working way. c).Producer co-ops; this is meant that producers organize distribution and sale of products themselves.
5. Franchises. This kind of business is getting more and more popular in the world. After pays a fee for the purchase for the franchise, the business ownership backed by established ‘brand’ name, so the business could get a big benefits from the public praise. Of course the owner of the business have to pay for the right to use the established company’s name, format products, logo, display units, methods, etc. at the same time, the franchisee have responsible for debts, also pay a royalty to owners of the brand, than keeps any remaining profit.
6. Charities. This is a type of business which purposes not for profit. The non-profit organizations must working for relief of poverty, the advancement of education or religion and other purposes beneficial to the community not falling under above. For example it have to create and maintain mutually satisfying exchanges between their donors and beneficiaries, and being concerned with facilitating an exchange process between an organization and it publics so that some basic societal need can be fulfilled.
In conclusion, every kinds of business have their own nature and purpose; they all have a segmentation of the society to focus.
(1991 words)
Bibliography:
Handout from business class.
Resources:
https://www.bized.ac.uk/learn/business/index.htm