The Structure of Business

This document discusses the structure of business, including legal statuses, strengths and weaknesses, sources of finance, sectors in the UK economy, and the importance of HR policies in a modern workplace.

THE STRUCTURE OF
BUSINESS

TABLE OF CONTENTS
QUESTION 1..................................................................................................................................1
a) Table showing various legal statuses of businesses with their strengths and weaknesses......1
b) Weaknesses and strengths of THREE major sources of finance that are available to a start-
up business...................................................................................................................................3
QUESTION 2..................................................................................................................................5
Identification of three main sectors within the economy of UK in which an organization can
operate. Also differentiate between these sectors and their value to economy of UK................5
QUESTION 3..................................................................................................................................6
Identification of human resource policies and explain their importance within a modern
workplace.....................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

QUESTION 1
a) Table showing various legal statuses of businesses with their strengths and weaknesses
Legal status is a status of business defined by law (Sheremetieva, 2020). This legal status
of business help organizations in understanding ways in which organization should run, decision
making within organization should be like etc. Some of the main types of legal status of
businesses that can be adopted by a start-up business have been explained below with their
strengths and weaknesses in below table:
Legal Status Define Strengths Weaknesses
Sole Trader Business which is
run by a single
person and their skill
set is known as sole
trader
Major strength of sole trader
is that, it requires minimum
cost. Another strength of sole
trader is that all profits of
business belong to sole owner
of the business (Hamid and
Razavi, 2017). One of the
main strengths of this legal
status of business is that there
is no requirement of business
audits.
One of the main weakness of
sole trader is that all the
liabilities for debts are incurred
by sole owner of the business.
As the business grows it might
become difficult for sole owner
to access finance.
If business is completely
dependent upon owner then it
can limit capacity of growth of
business.
Partnership When two or more
than two people are
involved in a
business and when
all the risk, cost,
profits etc. are
shared between all
the involved people
then it is known as
partnership
Even if a partner lives the
organization, business can
survive, all the management
responsibilities are shared by
all the partners. Another
strength of this legal status is
that availability of capital
investment increases.
different skill sets of partners
strengthen this business
because it increases chances
of survival of business.
Disagreement between partners
might increase risk of survival of
business.
All the partners are held
responsible if any kind of
negligence occurs.
All the partners have unlimited
liability of debts incurred.
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Limited Company Business which is
started as a separate
entity from its
owners is known as
limited company or
an organization
whose finances are
different from
personal finances of
its owners.
One of the main strengths of
this legal status is that
business has unlimited
lifespan and owners of the
company have limited
liability for debt (Abuseridze,
2017).
Capital for the business can
be raised by issuing shares.
Another one of the main
strengths of this legal status
business is that board of
directors and management
team control business but
they themselves are not liable
for debt liability.
One of the main limitations of
this legal status business is that
cost of setting up business and
administration of business are
much higher.
Another one of the main
limitations of this business is
that all kinds of auditing and
accounting procedures are
applied and it is important for
business to go through strings of
auditing and accounting
business.
Limited Liability
partnership
Business
organizations that
are a combination of
partnership and
limited company are
known as limited
liability partnership.
One of the main strengths of
this legal status business is
that each of the partner of the
business have limited liability
to money that partners had
put into their venture and
amount of person guarantee
they had given to business or
raising any finance for the
business (Shrotriya, 2019).
Some of the main limitations of
limited liability partnership are:
at least two partners are required
to be designated as members and
are required to have additional
responsibilities.
LLP business organizations are
required to register at company’s
house and file for annual returns.
All the members of such
business organizations, if they
make profit then all those profit
are taxable.
Community Interest
Company
Such type of
business
One of the main strength of
this type of business
On of the main limitation of this
type of busiess is that owners of
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also known as
registered charity
organizations have
recently come into
existence. Main
objective of such
kind of organizations
ae mostly social
rather than of
making profit.
organization is branding of
such kind of organizations
can provide marketing
advantage to the business.
Any kind of profit made by
business is not only used to
make payments and pay to
employees but those profits
are also used to benefit
community as well.
this type of busiess do not make
any kind of profit or get bonus if
company make profit.
It is important to focus upon
main business objectives of the
company such that it only
benefit community otherwise
whole community to which the
business serve can go against it.
b) Weaknesses and strengths of THREE major sources of finance that are available to a start-up
business
In order to start one’s own business and run it successfully it is extremely important to
identify sources though which business will be financed as finance is one of the most important
part of business without with it can become extremely difficult for business to sustain or survive
within the market in which they operate. Three major sources of finance that are available for a
start-up business that can be used by business owners for sunning their own business success
have been explained below with explanation of each source strengths and weaknesses in detailed
manner. three main sources of finance for start-up business have been explained below:
Personal Investment: It is one of the most common sources of financing a start-up business. In
this source owner of the business need to invest their own savings and other assets for starting
their own business. Owner of a business cannot start a business without putting something of
their own or something which is owned by them (Kobersy and et. al., 2017). By not putting
own’s own saving or money into business, one shows that they are nor committed or confident
about their own start-up. Some of the main strengths and weaknesses of this source of finance
have been explained below-
Strengths: IT helps in limiting liquid finance equipment for business such as stocks etc. Owner
do not need to repay their own cash or investment. It is the fastest and the easiest source of
finance that can be used for stating one’s own start-up business.
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Weaknesses: But this source has its own weaknesses as well such as putting one’s own saving
within business means putting one’s own finances at risk. If business is a failure then one could
lose everything that they had put within their own start-up.
Business Loan: it is another one of the most common sources of financing one’s own start-up.
Various banks provide different kinds of start-up loan to new small and medium scaled
businesses. Banks or other financial institutes might offer loan to start-up at regular interest
payment but you need to have a sold business plan for that and should have potential to pay it
back within defined time period. Recently UK government had started start-up loan provision for
small scale business so that they can run the business in this crises time period as well (Start- up
loan by UK government, 2021). Some of the main strengths and weaknesses of this source of
finance have been explained below-
Strengths: It is much easier to get loan for start-up business from bank by identifying most
appropriate and suitable option for taking loan whose interest rate are much less (Mounika,
2020). It can help in providing sustainability to business so that major business operations of
start-up can be carried out in an effective way.
Weaknesses: bank need to se detailed cash flow projection of business before granting loan
amount for which start-up have applied for. With the loan amount business also need to pay
interest on the loan amount with timely re- payment expectations.
Angel Investors: It is another mostly common source of finance that can be considered for start-
up business. Investors of this source are typically retired wealthy company executives of
respective field who make direct investment in business. They not only contributing in investing
in the business but also contribute by providing their knowledge, experience, network of contacts
and many more. But in exchange of their investment, angel investors might want to monitor
start-up management practices and want a say within the business. Some of the main strengths
and weaknesses of this source of finance have been explained below-
Strengths: angel investors can provide network to owner of business that can further help start-up
to gain access to other required resources and contacts that are required by them
Weaknesses: But this source has its own weaknesses such as: angel investors have access to large
part of start-up business resources because of which needs of owner of business might get
supressed. Finding right angel investor and convincing them might take much energy of owner
of business. Not only this, even if they agree, they want a say within business, ways in which it
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might operate and its expansion plans as well. When it comes to major decision making then it
can result in significant loss of major decision making power of business owner of start-up.
QUESTION 2
Identification of three main sectors within the economy of UK in which an organization can
operate. Also differentiate between these sectors and their value to economy of UK
There are three major sectors in which an organization can operate, that are primary,
secondary and tertiary sectors. Each of these sectors are important and plays a vital role in
enhancing overall value of UK economy (Leff, 2018). Each of these sectors are inter-dependent
upon each other and are important for a nation from economic point of view. Three main sectors
and their value to UK economy have been explained below:
Primary sector: It is one of the major sectors that deals with selling of raw material as well as
their production. In this sector raw material is used to be converted into final goods. It is one of
the most important and valuable sectors as it directly helps in enhancing overall economy of UK
because it is the base for manufacturing sector and helps in enhancing economy of the country as
extracted raw materials can be exported to other countries as well for enhancement of economy.
Secondary sector: It is a business sector that deals with economic activities of generating goods
or finished goods that can be consumed through manufacturing. Raw materials extracted from
primary sector are utilized in this sector for manufacturing of goods or end products. it is one of
the most important sector and valuable to UK economy because this sector not only contributes
in enhancement of UK economy but also helps in fulfilling needs and requirement of people. Out
of all the three sectors it is one of the major sector that provides employment and contributes in
enhancement of GDP (Adams, Scarneo and Casa, 2017).
Tertiary sector: it is a sector that provides services. This sector is one of those factors which is
responsible for delivering services to customers of secondary and primary sectors. This sector
provide services such as banking, communication, insurance etc.
Difference between all the three sectors have been explained below:
Primary Sector Secondary sector Tertiary sector
Agriculture and all other kind
of allied services comes under
primary sector
Manufacturing sector comes
under secondary sector
Service sector comes under
tertiary sector
Raw materials for provision of Raw materials are changed This sector helps in providing
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services and goods are
provided by primary sector
into final finished goods in
order to be consumed by
customers.
service to customers of
primary and secondary
sectors.
This sector mostly uses
traditional practises or
techniques but it is mostly
unorganized.
This sector mostly uses
modern and reliable methods
or techniques for
manufacturing or for
production and is mostly
organized (Phipps, 2020).
This sector uses modern
techniques including advance
logistics for execution of its
functions in an adequate
manner and this sector is fully
functional and very well-
organized.
This sector consists of
agriculture, Forestry, and
other mining activities.
It majorly focuses upon small
scale, manufacturing units,
production units, large firms,
and multinational
organizations whose main
business operation is
manufacturing or producing
and selling goods produced.
This sector involves provision
of service to customers in
terms o insurance trade,
banking, communication and
after sales services.
QUESTION 3
Identification of human resource policies and explain their importance within a modern
workplace
There are various kinds of HR policies that are important to be present in modern
workplace as these polices help an organization to operate in an effective manner and retain their
employees in an adequate manner. Two most important HR policies that are important to today’s
modern workplace are as follows:
Health and Safety policy: Health and safety policy is a set of written statements that help the
employer in ensuring that workplace is safe and have a safe environment for all the employees to
work in (Phipps, 2020). This policy helps in ensuing that work place is safe for employees to
work, have safe access to work equipment’s, there is no risk or harm of injury to employees and
many more. It is one of the most important type of policy which is required to be developed and
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adhered at workplace because it directly helps in promoting employee’s wellness. It further helps
in maintaining overall health of employees because healthy employees or staff members can do
or compete a task more effectively. Today most of the employees have developed their own
health and safety policies in order to ensure wellbeing of all the employees. It further helps in
enhancement of satisfaction of employees as they feel comfortable working within organization
with all safety which eventually help in enhancement of their overall performance within
organization. It is also important to today’s modern workplace because it helps in retaining
employees within workplace (Phipps, 2020). In current pandemic situation of Covid-19 this
health and safety policy of most of the organizations was their first priority. Most of the
organizations updated their health and safety policy as per the situational needs of current
pandemic situation. It was important to be done by most of the organizations because in this
current situation most of the employees were concerned about their health before work. Unsafe
working conditions can reduce satisfaction level of employees which can eventually result in
productivity of employees getting impacted. As a result, this health and safety policy becomes
important in modern workplace.
Equality and Diversity policy: It is another one of the most important workplace policy which
is required to be present within an organization because it directly helps in preventing
discrimination against employees and further helps in provision of a platform for employees or
staff members that have been subjected to discrimination or who beliefs that they have witnessed
discrimination to raise their complaint or issue with their employer or senior management staff
in order to get assured that serious actions will be taken. It is important to focus upon
developing and adhering equality and discrimination policy within modern workplace (Phipps,
2020). Equality and diversity laws of UK are quite strict and it is important for each and every
organization to adhere those laws and not doing so can result in sole strict and legal
consequences that would be faced by employees. Adhering this policy would directly help in
increasing diversity within workforce which will eventually help the organization in increasing
their productivity, enhance understanding among employees in better and appropriate manner.
CONCLUSION
From the above assessment it has been analysed that there are various kinds of legal
structures that can be adopted by organization. Each of these legal structures have their own
strengths and weaknesses. It is important for new ventures to identify and analyse strengths and
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weakness of each legal structure and then adopt appropriate legal structure accordingly. It has
further been identified that there are three major types of sectors within which most of the
organizations operate in UK economy. Each of those sectors have their own value and
importance in UK economy. In order to operate in an effective manner within their respective
sectors organizations need to develop their own appropriate HR policies as it helps them in
maintenance of positive working environment within organization.
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REFERENCES
Books and Journals
Sheremetieva, O., 2020. The Legal Status and Role of an International Financial Organization as
an Entity of Foreign Exchange Legal Relations in the Globalization Process. Law Ukr.:
Legal J., p.244.
Hamid, A.S. and Razavi, G.K., 2017. The Survey of the Legal Status of Indispensable Formal
Documents Enforcement in Iran’s Notary Organization. Journal of History Culture and
Art Research, 6(1), pp.825-831.
Abuseridze, G., 2017. Legal Status and Overview of World Trade Organization Disputes
Involving Subsidies in the Renewable Energy Sector.
Shrotriya, D.V., 2019. Internal sources of finance for business organizations. International
Journal of Research and Analytical Reviews, 6(2), pp.933-940.
Kobersy, I.S., and et. al., 2017. Enterprise finance: essence, composition and
structure. International journal of applied business and economic research, 15(23),
pp.297-304.
Mounika, A., 2020. Utilization of Artificial Intelligence in Different Business
Sectors. International Journal Of Multidisciplinary Research In Science, Engineering
and Technology, 3(3).
Leff, B.M., 2018. The boundary between the not-for-profit and business sectors: Social
enterprise and hybrid models. In Research Handbook on Not-For-Profit Law. Edward
Elgar Publishing.
Adams, W.M., Scarneo, S.E. and Casa, D.J., 2017. State-level implementation of health and
safety policies to prevent sudden death and catastrophic injuries within secondary
school athletics. Orthopaedic journal of sports medicine, 5(9), p.2325967117727262.
Phipps, C., 2020. “We Already Do Enough Around Equality and Diversity”: Action Taken by
Student Union Officers to Promote LGBT+ Inclusion in University Sport. Sociology of
Sport Journal, 37(4), pp.310-318.
Online
Start- up loan by UK government. 2021. [Online]. Available through:
<https://www.gov.uk/apply-start-up-loan>
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