Businesses and Their Interactions with National Environment
Name: Le Tung Lam
Roll Number: GH12142
I. Introduction 2
II. Analysis 2
1. Understand the organizational purposes of businesses (LO1). 2
2. Understand the nature of the national environment in which businesses operate (LO2). 14
Organisations are part of human society and, like people, are subject to rules their conduct towards others; in our lives, everyone has contacted with many forms, types of organisations with different purposes and objects; The business organisations that people contact range from many different giant ...view middle of the document...
There are four main form of legal in business: sole traders, partnership, companies/corporations, and franchise. (BBP Learning Media, 2013)
* Sole trade: is a type of business entity that started and run by one individual. The advantages of this type of business are easy to start up, just need small or medium invest, no formal procedure; autonomy and independence in make business decisions; commitment and motivation; quickly to catch the market (Sole trader are close to customer and can respond quickly to market change). Another advantage is that sole trader takes all the profit if the business becomes successful and sole trade can easy to discontinue if the business becomes unsuccessful. In the other hand, there are some disadvantage that sole trader may face with, because sole trader is a type of business started by one individual so it may hard to raising finance by personal and may have many problems about finance; personal liability; hard to specialise or enjoy economies of scale; problems with continuity if sole trader retire or die. (BBP Learning Media, 2013)
* Partnership: it is defined as two or more persons build and develop business with a view to making profits; in a partnership, the partners will serve the capital and share the responsibility of running the business on agreement between two or more members. In this type of business, the advantages is every member can help each other when business have troubles; partners can bring profits and resource to the business; members can share their ideas or skills to the business, make decision to develop become more success; it is less risky than trading with just a sole trader. However, partnership created by two or more person so they must share profits or any benefits that they brought; individual have less control of business; it shall be conflict or rising problems when partners disagree over of direction of business. (BBP Learning Media, 2013)
* Company/Corporation: In this type of business, a company like an artificial ‘person’ which created with purpose take legal responsibilities for person who operate it. The advantage in this type of business is limited liability, and can attract more investors and partners. There are two types of Company/Corporation: Plc (Public Limited Company) is a company which sold their shares on a stock exchange and can be bought and sold by anyone; Ltd (Limited Company) is a company that exist in their own right, keep their shares in private, and can be manage with people in the company. (BBP Learning Media, 2013)
* Franchise: It is business whose sell their brand, process, and supply to another business (Franchisee) to operate the franchise. (BBP Learning Media, 2013) The advantages of this business are: franchise supplies franchisees with a certain level of independence; franchise supplies products or services, give right and appropriate equipment which may already enjoy widespread brand-name recognition; franchises may offer consumers...