Explain the objectives of the business
I am researching a tyre company called ‘Bridgestone’. Bridgestone is a limited liability company and it is begun in Japan in 1931 by Mr. Ishibashi. He dreamed of supplying his nation’s new automobile industry with tyres developed and manufactured with Japanese capital and Japanese expertise. His mission, which is to ‘serving society with superior quality’. Bridgestone soon became the largest manufacturer of tyres in Japan and expanded its business in other markets in the world.
Nowadays Bridgestone is expanding to more than 100 factories in 24 countries in the world. The growth of Japan’s automobile industry subsequently propelled them into the top ranks of the global tyre and rubber industry. First of all, Bridgestone started to make tyres and after this success they started production on car components. The Bridgestone Group has diversified more and more, encompassing industrial products like polyurethane foam products, construction materials, parts and materials for electronic equipment, bicycles and sporting goods.
Their ethos is to make life safer, more fulfilling and more fun but of course their major objective is to produce high quality products. The most important thing for Bridgestone is to earn the trust of their customers. So they never neglect marketing, manufacturing, researching and developing, providing service and using new technology. E1: Classify the business according to its ownership, and explain the benefits and constraints of this type of ownership Companies in the private sector organizations are separated into categories. These are;
It is the most popular type of business which is owned by one person. Sole trader is self employed, because it is easier to set up than any other kind of business. There are lots of sole traders in UK. They have tendency to rely on banks for overdrafts or obtain credit from suppliers when they start their business, but it is difficult to borrow money because their funds are limited. As the owner they make all the decisions themselves. It can be set up with relatively little capital. As they work in close contact with customers they can encourage customer loyalty.
Unfortunately their hours are long because they do not have any help and they have unlimited liability which means, they are fully liability for the company’s debts. This type of business is also very easy to set up and it consists of between 2 and 20 people. They are providing capital and working together in a business with an objective of making profit. It covers professions like accountants and solicitors.
Partnership means they can raise enough finance, because they can help each other, they share the work load, and support each other when they need to go on holiday and are ill. To become partner it is necessary for the prospective partner to buy their way into the partnership thus providing existing partners with additional capital. Bank prefers to lend more money to them because of the security. Partnership can share ideas and useful skills for their business.
However they may have disagreement when they have to share profits. Also unfortunately they have unlimited liability. In addition, if one partner resigns, dies or is made bankrupt, a partnership will automatically end or dissolved to overcome this Deed of Partnership can be drawn up. It is to be taken on ownership of a company which has already created an image by individuals who buy into a Franchise. Owner can get money from franchisee.
Different amount of money are paid depending on location and type of business and franchisee will get company image, support from Head Office in respect of marketing, sales, designing of premises, possible transport, expertise, corporate image, initial support, on going support and advertising for their money. Franchisor will get money from franchisee for initial outlay and 5 -10% of the profits on a yearly basis. The franchisor will expect the franchisee to keep the rules of their company.
Franchises do not have any problem in launching a new business and also there is less chance to fail the business. Business is already published and established so it is easier to raise finance and they will succeed at high degree. Another thing is that they do not have lots of competition and they can always be supported from franchisor so it is easy to solve problems. In addition, they are economies of scale and they have established product so they do not have any development costs.
Unfortunately they are less independent than a sole trader and they are not allowed to sell business without franchisor’s permission. Also they do not have automatic right to renew business. Another thing is they have to make continued royalties for franchisor. Limited company is divided into two types of limited companies (Private Limited Company and Public Limited Company). Both of them have to have at least two shareholders. If they wish to set up as a limited company the promoters are required by law to provide a number of legal documents to the Registrar of Companies at Companies House, Cardiff. These are:
Memorandum of Association It show how the company is managed, who are the name of business, owners, business address, objectives of the business, a statement of limited liability of the members, amount of capital to be raised by issuing shares and the agreement of the founder members to form a limited company. The Articles of Association It controls the inside working of the company. It includes details like procedures for calling a general meeting of shareholders, the number, rights and obligations of directors and shareholder voting rights.
After these documents have been produced, the Registrar at Companies House will issue Certificate of Incorporation, which means they can start trading. Many small to medium sized companies trade as private limited companies. This is often once they have been a sole traders or partnership. It is a way of expanding their operations. Their shares are only allowed to be sold to friends and relations. They cannot be sold on the stock exchange.
The advantages of this are money can be raised through the sale of shares and it never has to be repaid. All shareholders have limited liability which means they can only loose the money they have invested as they company receives its own identity. Another thing is that owners can appoint directors on their record of achievement and business knowledge. On the other hand shares cannot be advertised or sold on the stock exchange.