How Business Develop
Normally when a business starts, the business is small. This is because the person who starts it hasn’t got a lot of finance. A person who starts alone in the business world is called a sole trader. If there are two or more persons involved, e.g. family or friends, then it is called a partnership. These two types of businesses are unlimited liability, because it’s not the business that is liable but the owner. This means that, if the business goes bankrupt, the owner’s personal assets can be taken away.
Sole Trader: Tourist shop Franchise: Safeway Plc Safeway Plc Safeway is one of the top four food retailers in the United Kingdom. This very competitive market includes Tesco, Sainsbury’s and Walmart/Asda. Food retailing has undergone many changes in the recent past with the advent of the supermarkets in the U.K. during the late 1950’s, and the mobility of the population (increasing car ownership). This sector has prospered over time as shopping habits have changed.
The arrival of a new Chief Operating Officer Carlos Criado-Perez some two years ago resulted in a change of strategy, and has transformed Safeway from a “follower” to a dynamic leader in grocery retailing. This statement will be analysed elsewhere in this report. The Safeway brand is an international one born in the USA with outlets in other parts of the Americas and Europe. This report deals especially with Safeway Plc here in the U.K. where the company trades as an autonomous unit. (Quoted on the London Stock Exchange, in the FTSE 100). I contacted via e-mail many companies in my search for suitable material. I decided to choose Safeway Plc because I believe it to be the basis for an interesting case study.
Sole trader Tourist shop
The sole trader investigated was a souvenir shop at West End London. This shop was a total of 100m2 and is located next to Sounds Bar in Charring Cross, and sells all type of goods, which the customers can take back to their own country for a remembrance. The market of these types of shop was only for tourists, most of the tourists are here in winter vacation, so the owner had to get all his profits in that specific time of year.
On that same street there were about twenty other shops, so competition is big. So each of the shops has to attract the customer eyes, if they don’t the business won’t work. Each shop had a different way of attracting the customer’s attention. Some did this by hanging big signs saying discounts; other shop put the quality goods outside so when the customer walks past it would bring it attention. If the owner of the specific shop saw a tourist looking at a good of his he would directly help them out and be as nice as he could.
The problem of being a sole trader is that everything that happens to the business has to be confirmed by the owner. He’s got do calculations and sees how his profits are doing. All the blames and complaints go to the owner. He said there is a lot of responsibility and there is a lot to do if you run the business by yourself. There is no one to help you if you’re a sole trader. This sole trader got its own finance by working for some one, and then building it up by himself.Safeway is a Public Limited Company (Plc).
A Public Limited Company tends to be larger than a Private Limited Company. A Public Limited Company can be abbreviated as Plc. There are around 1.2 Million registered limited companies in the U.K., but only around 1 per cent of them are public limited companies. However, they contribute far more to national output and employ far more people than private limited companies. The shares of these companies can be bought and sold by the public on the stock exchange.
To become a public limited company, a Memorandum of Association, Articles of Association and a Statutory Declaration must be provided. This is a document, which states that the requirements of all the Company Acts have been met. When the company has been issued with a Certification of Incorporation, it is common to publish a Prospectus. This is a document, which advertises the company to potential investors and invites them to buy shares before a Flotation. To become a Plc Safeway had to go through these legal formalities, which can be expensive. Current market value Safeway Plc has a market capitalisation of 3.5 billion pounds as identified in ‘The Sunday Times’ dated October 7th. The following chart identifies Safeway’s progress versus the FTSE 100 over the past two years. This timescale is the same as the C.O.O’s (Chief Operating Officer) revised strategy.
Definition A public limited company (PLC) is a business that is able to float its shares on the stock exchange. This type of company can be registered by having a PLC or a INC at the end of their chosen name. Basis As the same as the LTD Company, the PLC must register with the registrar of companies and also submit a Memorandum of Association; Articles of Association and a Statutory Declaration. Once the registrar has checked them and if all the documents are fine, a certificate of incorporation is issued.
As ownership is more divided and because it is divorced from control, the law, through the Companies Acts, places even more detailed controls on the way a PLC must run on the matters that must be reported to a shareholder. Examples are; highly capitalised industries; multinationals and high-risk developments.
At this point and LTD may begin trading, however as this is a PLC, a few more procedures should be undertaken. First, the company should issue a prospectus and also have at least 50,000 share capital, whereby one quarter needs to be fully paid up. Shareholders elect a board of directors (usually 12), who then select managers who take on the responsibilities of making the daily decisions. Once this has been completed, a trading certificate is issued and it is now able to commence trading under the title of a PLC.