Market Economy Essay

Submitted By nagaad
Words: 3117
Pages: 13

Assignment 1

Introduction: As business student I have offered to advise a group of friends who are planning to start up a business. The group of friends have no backgrounds in business. I will be advising them and direct them through this. I will be introducing them into the business environment. I will be discussing about:
In this assignment I will be defining what the definition of a business organisation. I will also be covering what types of business organisation exist. There are different sector that they operate in and these will be discussed as well. The advantages and disadvantages will be discussed and compared. At the end of this assignment I will be presenting the most suitable organisation to the group of friends. I will end this assignment with a conclusion which will resume the whole assignment and it will clarify the group with the decision the will make.

Group of friends: Jean Paul, Claudia Boucher, Ali Hassan and Aria Johnson are the four member of the group. They are planning to start up a new business organisation together. The group members do not have any business background; therefore I will be assisting them during this process. The group members have decided to enrol for different courses to gain some knowledge. Mr Paul will be enrolling for finance and accountant course, Ms Boucher will be joining a HR course, Ms Johnson will be joining an IT course and Mr Hassan will be joining a Health and safety course. The group of friends wants to operate a seafood buffet (restaurant). They will all be investing in it and all want to work as a group.

Business organisation: A business organisation is an enterprise, company or firm that operate in exchange of goods or services. They might be privately owned and aim to make profit. They also might be public and owned by the government. Some business organisations do not aim to make profit such as charities.
Types of Business Organisation:
Sole trader: A sole trader is a business organisation owned by one person, although they may employ workers. As there is been a growth of unemployment, people star setting up their own business so that they can work for their self and gain independence. The government support e.g. (prince trust) young people to start up their own business so that they can reduce unemployment. The person that want to set up a sole trader has to be creative by creating a business that he thinks that would be successful and unique, therefore market research is demanded. They have to register their self as a self-employed but they do not have to pay any registration fee. Corner shops, take away, Ice cream van, window cleaner etc… all operate as a sole trader.” Research shows that those organisations such as sole traders are in growth. In 2004 there is been a growth of 4.2 million”ref: “National stastiques”. As a sole trader organisation is a small firm and easy to set-up because you don’t need to invest a lot of money. On the other-side as this organisation is small and easy to set- up, the banks and building societies do not see this type of organisation reliable. With a sole trader type of organisation the owner makes all the decisions, it’s also a lot of responsibility, pressure as you have to undertake everything. The owner is responsible for any type of failure that the business faces. Starting –up a sole trader organisation it’s less investment than a partnership, LTD or a PLC but it’s more difficult to gain investors. For a sole trader you won’t need to recruit many staff due to the size of the business. On the other hand you will be facing lack of specialisation as you need to be a “Jack of all trades”. You don’t need to shares internal information of the organisation to the public whereas you need that for plc.’s. A sole trader organisation is easy to run or close down because you own it therefore you don’t need to consult anyone, whereas for a partnerships all the partners have to agree on the decisions. It’s also