Business and business Environment : Sole Trader
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Added on 2021-02-18
Business and business Environment : Sole Trader
Added on 2021-02-18
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Business and businessEnvironmentTable of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31. Explaining about different types of organisation, their advantage and disadvantage andcomparing them...........................................................................................................................3TASK 2............................................................................................................................................52. Two types of organisational structure and interrelationship between organisational functionsand show their relation with organisational objectives................................................................5TASK 3............................................................................................................................................83. Analyse both positive and negative influence/impact of Macro environment on businessoperations.....................................................................................................................................81
TASK 4..........................................................................................................................................11SWOT Analysis of organization and its interrelationship with external macro factors............11CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................132
INTRODUCTIONBusiness environment plays an important role in assessing that whether an organization willbe able to derive adequate amount of profits from its activities or not. The report makescomprehensive discussion regarding different types of organisation, their advantage anddisadvantage and establishing comparison among them. The report will also prepare anassessment of types of organisational structure and interrelationship between organisationalfunctions so that its impact can be ascertained. It, the, focuses on, performing Pestle and SWOTAnalysis so as to assess the performance of the business and its impact on business functions. Inthe end, its interrelationship with external macro factors will also be ascertained in the report. TASK 11. Explaining about different types of organisation, their advantage and disadvantage andcomparing them.To establish a business entity, there are different options available like sole trader,partnership, private, public and voluntary. This depends upon the size, circumstances, objectivesand scope. Sole TraderThis form of business is operated by only one person. It is one of the simplest forms ofbusiness. The requirements are minimal and easy to set-up as it is the least costly. The owner ofbusiness can choose either its own name or can use “d/b/a” which means doing business as.Advantages of Sole trader are:They are economical and cheaper start-up. Sole trader is less subjected to government involvement and taxation like other forms ofbusinesses (Aithal, 2016).Owners have complete and Direct control in decision-making process.Disadvantages:Major drawback of sole trader i.e. owner faces unlimited liability.In case of repayment of debts owner's personal assets are been used.Raising Capital for expansion of business is difficult for Sole Traders.3
But under the law owner and business are treated as same and there is no distinction betweenthem. The scope of business is small and objective of sole trader is to earn profit for their familymembers. PartnershipThe formation of this form of business takes place when two or more individuals form awritten agreement. It can be established in between one forms of business with another form.Partners divide their profits of share and their liabilities into agreed ratio in between them. It is oftwo types; in general partnership liabilities of partners are unlimited while in limited partnershipscreditors cannot claim the personal assets of partners. In UK, partners are not considered as anindependent legal entity and payment of tax is done similar as that of limited partnership.Advantages of Partnership are:There is limited external regulations.It increases the borrowing capacity of firm and thus, more capital is available.Further, it is easy to establish as start-up cost is low.Disadvantages of partnerships are:There is a risk of disagreements and conflicts may arise in between them (Babatunde andAdebisi, 2012).If partners join or leave the firm, assets of organisation is revalued which is costly.Lastly, each partner is an agent of other. Thus, he/she is liable for actions by others. PrivateIt refers to that form of company which held privately by small business entities. Theliability of members is being restricted to the amount of shares held by them. The members ofprivate limited companies are not allowed to publicly trade their shares. The formation ofcompany starts with its registration till it get professional certificate of incorporation.Advantages are: They have less legal formalities in comparison to public companies (Beske and Seuring,2014).There is greater flexibility in Management of affairs and conducting of Businesses.After, receiving Incorporation certificate Private Companies can start their businessimmediately. They are not subjected to compulsion of disclosing their information to other parties4
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