Business ownership and location

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There are 6 different types of business ownerships. Each of the ownerships has different advantages and disadvantages to the owners. The type of ownership may change as a business grows and develops. A local news agent named cash and carry located in Whitechapel closed down. The company got bankrupt due to the high competition from the major public limited company superstore Sainsbury’s. The super market is situated in Whitechapel close to the cash and carry. There are many reasons behind the bankruptcy of the cash and carry however the main incentive was the superstore tends to sell the goods much cheaper than the newsagent.

The explanation of why the newsagent was not able to compete with Sainsbury was because of the goods that are bought at economy of scale. This means that the company buys thousand if not millions in stead of hundreds. This fits the story of Sainsbury’s and cash and carry. Sainsbury buy at economy of scale and the cash and carry don’t. The business was a sole owner therefore the owner had unlimited liability and the owner lost all his money and valuables. In order for a business to operate efficiently it must have good transport links.

And if the business doesn’t have good transport links this effect the firm a lot. Suitable areas of where many businesses want to locate is close to main roads, train and bus stops. There are many reasons why businesses prefer to be situated near these factors. A reason is the supplier can deliver the goods smoothly without any problems. Another reason of why locating a business near the main road is wise is because many people will be able to see the company. Reasons why it is good to locate near train and bus stops are customers who do not have cars can easily access the firm.

And if they shop they can take their goods without walking a lot to go to the nearest stop which I quite far. Businesses should locate their business in a place that has car parking facilities so that people can come with their own cars rather than using other transport links knowing there will be car parking facilities. Skills of the local people; It is vital that a business locates in an area where recruiting staff with the necessary skills is not hard to find. This aspect is important because if the business needs qualified staff and the firm is located in Whitechapel they will find staff however they will recruit few.

This is because in Whitechapel there are many people without qualifications. On the other hand Sainsbury is located in an area where it will be very easy to recruit staff. More over Whitechapel as there are a lot of unemployed people with retailer’s experience. Labour cost; The main cost a business faces is wages and salaries. Businesses often locate their business in an area with high unemployment so that the business will be able to employ workers at a very low price. This is going to be an advantage for the business because start up businesses often has less cash to spend.

Cost of premises; Businesses find it really difficult to find suitable premises. It can be very expensive to rent out premises. After the business rents out or lease a suitable premises it will have to then redesign or rebuild the place. There are many differences between the location of high streets store and local shops. Local shops tend not to have more than on branch. This is because the area they are located in is suitable for their business. And if they have another branch it will have to be in a similar area. These local shops sell good that are need for everyday life.

Their location is not effected much this is because these shop will not need car parks unlike high street stores. The skills of people will not be looked into much as most of these stores are sole owners or partnership. And most of the time the owners tend to work. Local corner shops mostly have ownerships; sole owner, private limited company and partnerships where as business around high streets have On the other hand a high street store will need to take in account all the factors that range from transport, skills of people, labour cost and premises cost.

This is because the high street store is most likely to be a very well established company or possibly a PLC. The transport will be affected as these stores have goods bought at economy of scale and will take some time to unload this is why they will need good transport and distribution links. Skills of people will be taken account as some of these stores need past experience. Labour cost will have to be taken in mind as these stores try to locate in populated area this is because there will be many people looking for jobs.

People will be prepared to work for less. Cost of premises is a factor which will always be a hurdle as these stores are located in known areas this means that the price of the premises will be very high. High streets have ownerships; franchise, public limited company and CO operative. An example of stores which are located locally and stores which is located in renowned areas will be: boots which is located in Canary Wharf and Ghandi which is located in Stepney Green.

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