BTEC business Unit 1 Assignment
In this Assignment I will be exploring the features of two contrasting businesses and analysing what makes them successful. I will then investigate how these businesses are organised. One of the businesses will be a profit organisation and the other will be a non-profit organisation. The two businesses that I have chosen are Tesco and British Heart Foundation.
Tesco is a super-market with many stores situated around the UK and it was founded in 1919 in the east end of London. Their slogan is ‘every little helps’ and its core values are ensuring that the customer comes first to help them enjoy a better quality of life and an easy way of living. They also promote healthy living and general wellbeing in order to support the local community. Their operating profit from 2016 to 2018 increased from £1,017m to £1,837m. Their number of employees as of 2016 was 335,000 according to https://www.statista.com/statistics/490882/tesco-group-united-kingdom-uk-number-of-employees/
British Heart Foundation is a non-profit organisation that does research into killer diseases such as; Heart disease, stroke, vascular dementia and diabetes. They fund £100 million worth of research in order to fight these diseases so that our loved ones don’t suffer. Their promise is to beat heartbreak forever with the kind donations of others in order to fund life changing research. ‘Our 727 BHF shops across the UK generated £27.7 million in profit by collecting, sorting and selling around 73,000 tons of goods over the last year.’ Sourced from: https://www.bhf.org.uk/what-we-do/our-annual-review-2018
Tesco is a Public Limited Company (PLC) which means that it is owned by shareholders who fund the company. However, British Heart Foundation is governed by a board of trustees composed of 14 members who are also members of The Council which is an advisory body comprising of up to 30 members.
One advantage of Tesco being a PLC is Liquidity as the shareholders are able to buy and sell their shares. This means that they will be able to get themselves out of financial crises so long as the assets/shares can be liquidated and not fixed. If fixed assets are having to be sold to pay off any financial burdens then the business is in a poor financial position. However, a disadvantage of being a PLC is that the original owners lose ownership and control of the business because the shareholders could bid to take over the company so long as there are a majority of shareholders willing to partake. Also, they have to disclose all financial records to the public which could be greatly publicised by the media potentially resulting in a bad reputation due to negative media coverage.
An advantage of British Heart Foundation being governed by a separate governing body is that they can supply the charity with a strategic direction and also ensure that they are complying with the appropriate laws and regulations. However, a disadvantage of being governed by the separate governing body is that they are ultimately in charge of the organisation of the charity and they are dependent on the treaty board for managing their finances and ensuring that the funds are not mistreated or put at risk.
Tesco has a limited liability as well as all of its shareholders which means it is easier for the company to raise funds. Having limited liability in essence means ‘restricting the responsibility of being responsible for all of your debts’. This impacts on the business because it means that if they were to be sued then only the assets of the business would be at risk not the personal assets of the owner such as their house or their car.
The BHF is a company limited by guarantee and therefore it does not have a share capital. Their Articles of Association provides a limitation of member liability to £1. This means that the company cannot have more shareholders as there is only one share worth £1. It is also a registered charity in England, Wales and in Scotland.
Tesco is a National business as they have stores all over the UK. They also carry out charity work in their local communities in order to help customers in their every-day lives. They have 6,784 stores all over the UK and they employ 327,601 employees (taken from 2017 data from Statista). Being a National business means that they can attract customers from a diverse range of backgrounds and can also utilise social media in order to attract new customers from different surrounding areas.
British Heart Foundation is also a National Charity with 730 stores all over the UK and they have 22,500 employees. ‘We are active across the whole of the UK, from funding research in Scotland, campaigning in Northern Ireland or holding fundraising events in Wales.’ They also have local appeals for research projects and fundraising projects that go towards life-saving research.
Tesco is within the Tertiary sector as it stores and distributes the goods which are manufactured by those who work in the primary sector and also the secondary sector which processes the goods so that they are ready for sale. It deals in home appliances, clothes and groceries as well as offering services such as insurance, optical check-ups and their own mobile service plans.
British Heart Foundation is in the Quaternary sector as they fund life-saving research in order to support the fight against cardiovascular disease and other life threatening heart problems. Their research is focused entirely on preventing early deaths experienced from those with cardio vascular disease and other related heart problems. As of right now, they are investing £63 million in 125 projects in universities across Scotland such as; Glasgow, Edinburgh, Dundee, Aberdeen and St Andrews. Across the UK they fund six Centres of Research Excellence with two of them being the University of Glasgow and the University of Edinburgh.
Tesco’s purpose is to sell products and services to the general public. They offer; Groceries, Home appliances and a clothing range as well as this, the services that they are offer are; Home, car, life and pet insurance, an opticians and their own mobile network. Their slogan is ‘every little helps’ and their key aim is to ‘Serve customers a little better every day’.
British Heart Foundation’s purpose is to fund life-saving research for those with cardio vascular disease and other heart problems. They rely heavily on donations in order to fund their research projects and they also have clothing and electrical stores in order to raise more funds for their causes.
Stakeholders are people who have an interest with the business and there are two types of stakeholders which are internal and external. Examples of internal stakeholders include; managers, owners and employees. A few examples of external stakeholders are; debtors, competitors and customers. Customers are an interesting example of external stakeholders as once they have inquired about a product or service or even purchased one they have now become a stakeholder. You are also considered an external stakeholder even if there wasn’t an exchange in money in the transaction for example; receiving hospital treatment or careers advice. This is because whilst you may not be giving money there is government funding that is paying for that to happen meaning you are now a part of that financial exchange as a user of that service.
7 stakeholders for Tesco:
Shareholders: They are the most important stakeholders for Tesco because they have invested time and money into the growth of the business. The shareholders could vote their shares at a shareholder meeting generally held once a year. Also, the shareholder’s rights are governed by State Corporation’s law and the company’s bylaws. Any shareholder in a corporation has the right to propose a course of action for the company.
Customers: They want Tesco to produce high quality; goods, products and services which have good value for their money. The customer’s influences as stakeholders are that they can control the number of sales as they are the ones buying the products and/or services. Also, they influence Tesco by providing customer feedback which helps them to improve their products and services or even encourages them to change their products and develop the stock made available to the customers.
Employees: Their interest in Tesco is that they want to be provided with secure employment, opportunities for promotion and also rewards and recognition for their good work. The employees influence Tesco as stakeholders because they control the level of customer service that the customers receive. Also, they receive wages/salaries directly from Tesco which is an obvious example of how they influence Tesco because if they get a pay rise then that increases the costs of Tesco’s.
Suppliers: The suppliers which supply products to Tesco want to be represented by a company with high credibility (reliable for payments, and meeting objectives etc.) and a business that can pay them quickly. They influence Tesco as stakeholders because if they increase the price of the stocks that they supply to Tesco then that means there costs would increase effecting how much they are spending as a business.
The local community: Their main interest in Tesco is for them to help the community by; finding jobs for people in the community or by doing community garden projects to promote healthy eating and having respect for the local environment. The local community influences Tesco as stakeholders because they want projects to be implemented in order to develop the cohesiveness of their community and educate them on important issues. These projects that give back to the community will cost Tesco money thus increasing their costs meaning that they would have to re-assess their profit margins in order to be cost effective.
Government: The interest in which the government would have in Tesco is that they want them to take the majority of the responsibility for looking after the welfare needs of the local community by carrying out their community projects and strengthening the community around them. The government influence Tesco because if they stop supporting them then their income could be reduced due to a lack of government sponsorship. Also, if the government revoked any grants then they would struggle financially.
Trade union: The main interest that the trade unions have in Tesco is ensuring that the employees are receiving good wages and safe working conditions in line with the workers’ rights which they campaign for. The trade union influences Tesco as stakeholders because they can influence how much your workers are paid which would increase your costs. This would mean that you would have to ensure that your workers are not being underpaid and ensuring that your workers are being cared for properly.