Business Environment

Topics: Market economy, Corporation, Supply and demand Pages: 27 (8087 words) Published: March 4, 2013
Business Environment


All businesses operate in a always changing, growing and in some ways unique environment. In order for a business to operate successfully in its environment, business need to adapt after the environment. It can mean that business have to respond to changing market conditions which affect the demend for the their products, how the competitors behave or the change in government policy.

The business environment can be divided into two components, internal and external environment. Internal environment is the part where business have control over the changes e.g. management while the external environment is beyonde the controle of business enterprice e.g. government. In addition the ability for a business to operate succesfully depends on how good it can adapt the internal environment to the demands and opportunities of the external environment.

1. Identify the organisational purposes of businesses.

1.1 Identify the purpose of different types of organisations

Here are some diferent types of organisations
* Sole trader
* Private limited company LTD
* Public limited company PLC
* Franchise
* Partnership

Sole trader
Sole trader company is owned by and controlled by one person. The individual can take all the profit from the organization, however they are responsible of any debt and losses because they have unlimited personal liability. In terms of starting up the business the sole owner has to finance it themself. It is easy to set up as a sole trader but on the other hand there are some risks involved because you are liable for the business, responsible for the business so you are the one to blame if things go wrong. The purpose of a sole trader is to provide goods or services and get paid for it. Examples of sole trader businesses are small independent retailers, beauticians and internet entrepreneurs.

Private limited company LTD

One of the most popular organizations, the private limited company with limited liability, whose shares are only transferable by direct contact and purchase from the shareholders for example by members of a family. Private limited companies tend to be owned by a small number of shareholders because they do not sell shares openly on any stock exchange. Such companies cannot sell shares to members of the public in order to raise more capital for the business. The number of shareholders can not exceed a fixed figure, usually around fifty. The purpose of becoming a private limited company is usually that businesses want to keep their shares within their family members and close friends and by doing that they remain the control of the business. An example of a private limited company is Mars Family where all the shareholders are family members and friends.

Public limited company

Public limited companys have shares that are traded on an official stock market and the shares can be bought and sold by anyone. A public limited company is usually owned by many investors while a private company is held by very few shareholders. Public limited company is a type of company within the United Kingdom, Republic of Ireland and other English-speaking countries outside the United States, where "Inc." is used instead of PLC.  The advantage of the PLC is that it often dominates the market because a large amount of finance that can be raised and it is always easy to borrow money from lenders due to the large size of  company, which has many assets against which loans can be secured.   When business becomes successful and a privet limited company wants to expand and make higher profits becoming a PLC is an option. Examples of public limited companies include Tesco's and Salisbury's.    


Top of FormBottom of Form| A franchise is an agreement by which a company, the franchisor allows the smaller firm the franchisee to trade services or goods under its...
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