The Structure of Business

THE STRUCTURE OF BUSINESS
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Contents TOC \o "1-3" \h \z \u Question One: Structure of Business PAGEREF _Toc76593365 \h 3a) Legal statuses of businesses PAGEREF _Toc76593366 \h 3b) Sources of Finance PAGEREF _Toc76593367 \h 16Personal savings PAGEREF _Toc76593368 \h 16Loans PAGEREF _Toc76593369 \h 17Hire purchase PAGEREF _Toc76593370 \h 17Question Two: Sectors of the UK Economy PAGEREF _Toc76593371 \h 18Primary Sector PAGEREF _Toc76593372 \h 18Secondary Sector PAGEREF _Toc76593373 \h 19Tertiary sector PAGEREF _Toc76593374 \h 20Question Three: HR Policies and Importance PAGEREF _Toc76593375 \h 21Health & Safety policies PAGEREF _Toc76593376 \h 21Equality and Diversity policies PAGEREF _Toc76593377 \h 22Performance Evaluation Policies PAGEREF _Toc76593378 \h 22Disciplinary policies PAGEREF _Toc76593379 \h 23Reference List PAGEREF _Toc76593380 \h 24
Question One: Structure of Business
a) Legal statuses of businesses

Public Limited Company

Registered Charity

LTD

Strengths

* Raising capital by selling shares – a PLC has an advantage since it can raise share capital which can be very beneficial for the organization, especially if a renowned exchange registers it. Furthermore, anyone can invest in the company since the shares are sold in public. This allows the organization to raise a large amount of capital such as investment from mutual funds, investment funds, etc.
* Finance opportunities – A PLC gain rely on numerous sources of income. A company that has been listed on the stock exchange is regarded as more creditworthy. As a result, financial institutions and banks would be willing to offer loans. The company can also negotiate for favourable loan repayment and interest rates.
* Spreading risk- the presence of shareholders means that the company spreads the risk to multiple shareholders who have shared in the organization. A large number of investors is much better than a single or two angel investors.
* Prestigious confidence and profile – a PLC enjoys adds prestige. The business is viewed as more trustworthy since it is a public entity, and this also increases the chance that it can get attention from investors and the media. In other words, a PLC means the company can get free publicity in some cases, especially when it is recognised for its services or as a brand. The confidence and credibility arise since the company operates within stricter legal regimes when compared to private companies. A PLC also has more transparency and higher capital share needs. All these variables can influence the behaviour of customers, shareholders, and business partners.
* Exit strategy – A PLC provides founders with more options if they choose to exit the business. The higher visibility and transferability of shares of the business and its performance means that potential investors would be happy to take over the organization.
* Shares – the shares can also be transferred if they have been quoted in the stock exchange. A PLC does not bound customers to the company since they can choose to sell their shares. Since the transferability of the shares operates with minimal restrictions, it is much easier to deal with issues such as shareholder death when compared to other types of companies.

* The assets are locked. This means that they cannot be used for any other reasons besides the charitable objectives set by the organization. The assets cannot be used for personal purposes.
* A charity also enjoys public trust and recognition. In addition, since charities are focused on doing something regarded as a social good, they can attract financial support through fundraising.
* Tax relief – charities have an exemption from corporate tax since they are not-for-profit organizations. Some of the tax relies include land tax relief on leases and freehold property obtained for charitable objectives. The benefits also involve Gift Aid relief for funds donated by individuals.
* Funding – charities can get grant funding due to their work.

* Prevents personal liability – the person who owns the company is protected if the company gets into trouble. The term " corporate" separation is known by the term “corporate,” which means that any legal claims, losses, or debts linked with the company are the organization's responsibility and not the directors or the owners.
* Tax planning and efficiency – limited companies pay around 19%, while sole traders pay around 20-40% income tax based on their profits. It is also easier to make plans about taxes, such as differing personal income.
* Trust and credibility - an agency or organization is more credible if it is a limited company. Many companies prefer to engage within incorporates businesses since the level of risk is lower.
* Lending and investment opportunities – multiple people own companies, so they have various sources to raise capital. Moreover, it is also easier to secure a loan for a company without directors or shareholders to provide security against their property.

Weaknesses

* Regulatory requirements – PLCs have to follow numerous laws and regulations to remain operations. Some of the start-up's restrictions include a trading certificate which has to be obtained from the Companies House before the organization can begin trading. The PLC also needs a minimum of two directors, while other companies, such as private companies, only need a single director. Other rules that apply include the limitations on loans, AGMs should frequently update stakeholders and other rules about share capital. In addition, if the company’s shares are listed in the stock exchange, then the employees are expected to follow the rules of the exchange.
* Higher transparency levels – PLCs need higher levels of transparency, such as constant audits and releasing information to the public. Transparent procedures are expected when recruiting the board of directors (Griffiths and Wall, 2011). All these activities mean that there is the risk of disclosing important information about the business that competitors can use for their benefit. The activities by PLCs get more media attention and commentary from analysts.
* Control and ownership issues – it is hard to determine who owns the company since there are many shareholders. As a result, there is a risk that the original directors or owners of the company can lose control or even face disputes.
High financial commitment at the start – a PLC needs more investments during the formation due to the complexities of forming a company. For instance, the costs can arise when listing to the stick exchange.

Requirements and restrictions – charities also face restrictions on the type of activities that can be funded. For example, some trading or political activities cannot be funded if the charity engages in them. The charity organizations also need to comply with other rules regarding the preparation of returns and restrictions.
The employees or board members are not paid. The charitable status is not attractive for many investors since it means they will not receive a salary. The founder, who is head of the board in a charity, shares control with the trustees and is not paid.
Investment- charities cannot raise funds or equity investment.

The only way to start a limited company is at Companies House.
Company names are limited due to restrictions
Corporate and personal information will be shared with the public
Accounting requirements are time-consuming and complicated
A person cannot set up a limited company if they are disqualified directors or bankrupt.
The annual accounts and confirmation statements have to be filed at Companies House yearly.
If any changes are made in the company details, then Companies House must be notified.

b) Sources of Finance
Personal savings
This is the money spent by the owner, shareholder, or partner that is at their disposal. Personal savings are a good option to expand or start a business.
Advantages – The advantage is that there is not complex paperwork involved to access the funds. The owner will not need collateral so that they can lend to the business. Since the money is not a loan, the money does not have to be paid back to the owner (Nguyen, 2020). The money can also have a lower interest rate or interest-free based on the conditions set by the owner.
Disadvantages – Since personal loans are obtained via informal agreements, the owner can demand the money on short notice, which can negatively affect the company's cash flow (Nguyen, 2020). Personal savings might also fail to be useful in cases where large amounts of funds are needed.
Loans
Loans can be borrowed from banks and other financial institutions for long-term and large business projects, such as expanding the business or purchasing new equipment that is expected. Loans can still be substituted with other sources of funds.
Advantages – Loans are the best option for long-term investments, such as purchasing land that is paid of for five years. The business can also obtain a large amount of money via loans that do not need to be paid back for a fixed period, and the banks also cannot withdraw after a short time. Griffiths and Wall (2011) reveal that “some 24% of U.K. companies have loans of up to three years, which is similar to the E.U. average” (p. 173). The lenders also do not have a say on what is done with the money.
Disadvantages – a drawback is that collateral is needed before the company can get a loan. The amount borrowed also needs to be paid back within a specific period, and interest is charged, which means that the money paid back can be considerably higher when compared to the original amount.
Hire purchase
Hire purchase is also another option for the comp...