Unit 1 p1 - Describe the Type of Business Purpose and Ownership

UNIT 1
P1 describe the type of business, purpose and ownership of two contrasting businesses
 Organisation 1: Is the business a Sole Trader, Private Limited Company or Public
Limited Company?
In case of organisation 1 the chosen company is John Lewis & Partners which is an employee
owned company which is mainly a Public Limited Company. It is founded in the year 1864 by
John Lewis and its headquarters is located in London, UK. There main motive is to earn profit
and is a profit based organisation.
Organisation 2: This should be a Charity
On the other hand, in case of 2nd Organisation a charity trust is chosen which is Barts
charity. It is a non-profit organisation and they don not pay VAT.
 Is the business in the Primary, Secondary or Tertiary Sector?
 Is the business for profit or not for profit?
 Is the business a retailer or manufacturer?
 Does the business sell products, provide services or both?
 Is the business a national business(only operates in the UK)
Does it operate in Europe as well as the UK
Does it operate internationally as well as the UK
You can find information on a companies ownership type from companies house:
https://beta.companieshouse.gov.uk/
 What are the the features of
Sole Trader:
 What is unlimited liability?
 What personal responsibilities does a sole trader have?
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 How easy or difficult is it to set up?
 What are the restrictions?
 What are the requirements from HMRC?
Partnership:
 What is unlimited liability?
 What personal responsibilities does a sole trader have?
 How easy or difficult is it to set up?
 What are the restrictions?
 What are the requirements from HMRC?
Private Limited Company:
 What is limited liability and why is it a key feature of a Limited
Company?
 What is a legal entity and how does it relate to limited companies?
 What are the requirements for a limited company from HMRC?
 What are the requirements for formation of a limited company?
 Can ownership be transferred publically?
Public LImited Company:
 In addition to what has been mentioned above for Private Limited
Companies, for a Public Limited Company:
 Can ownership be exchanged?...if so how?
 Are these companies big or small?
 What are the requirements to become a Public LImited Company?
 What are the regulatory and reporting requirements of a Public Limited
Company?
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Charity:
 Can they take profits?
 What must they do with the income they make? Are there conditions on
how they can spend money?
 What are trustees?
 What is the situation when it comes to tax?
 What type of liability do charities have?
 Do they have their own legal status?
 Who are The Charity Commission? - why are they important?
P2 describe the different stakeholders who influence the purpose of two contrasting
businesses
Organisation 1: John Lewis & Partners
Business Stakeholders: They are the one who are associated with the profitability as well
as performance of business organisation. Some of the internal and external stakeholders are as
follows:
Customers: They comes under the external environment who highly affects the purpose
of business organisation. Each and every individual have their own perception which can affect
the profitability of business entity.
Employees: They are the one who mainly associated with the organisation and are
internal stakeholder. Employees can affect the purpose of business in both positive as well as
negative manner. If managers provide effective working environment to their staff members they
will positively enhance the productivity of the organisation.
Directors: They comes under the top management authorities of the company and is
associated with the profitability of the organisation.
Suppliers: If suppliers provide raw material according to the requirements of
organisation it will positively affect the purpose of business organisation but on the other hand if
suppliers does not fulfil the requirements of company it will negatively affect the performance of
business organisation.
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Organisation 2: Barts charity
Charity Stakeholders: Just like business stakeholders, charity stakeholders are the one
who is associated with the profitability as well as performance of business organisation. Some of
the charity stakeholders are as follows:
Volunteers: They are the one who work for the trust and charity by their own and provide
various help to the needy people and help in enhancing the living standards of individuals. They
positively as well as negatively affect the purpose of business as they work for the development
of the society.
Trustees: They are the one acts as a legal owner of the assets and are responsible for
handling all the assets which is associated with the charity. They help in taking decisions related
to the trust and affect the purpose in both positive and sometimes in negative manner.
Donors: They are the people provide and donate funds to the trust in order to enhance
their working functionality. If there are ample number of people associated with the charity trust
it will positively affect the purpose and vice versa.
Why is this stakeholder able to influence the organisation?
How does the the stakeholder influence the behaviour of the organisation and the things they do
or don’t do?
P3 describe how two businesses are organised
Organisation 1: John Lewis & Partners
The structure of this business is tall structure, as they have various hierarchical levels of
responsibilities as well as departmental functions. There are different functional areas which has
a director that mainly ensures the long to the medium term direction and guidance of the
department. Apart from this each department has their managers as well as supervisors who have
their duties and responsibilities in order to attain organisational goals and objectives.
Organisation 2: Barts charity
In the present context of Barts Charity it has been analysed that the trust have a Board of
directors as well as 3 or more than 3 volunteers who positively carry out their work in an
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effective manner. Apart from this, the board of director of the trust mainly hires a manager, and
then the manager hires potential and effective paid staff so that they can perform their work
effectively. At the end, it has been analysed that organisational style assist in fulfilling the
purpose in a positive manner as they support them in order to improve the lives of patients’ .
What is the organisational structure?
Is it hierarchical? - what are the benefits of this type of structure and what are the drawbacks
Is it flat? - what are the benefits of this type of structure and what are the drawbacks
How these structures affect communication and the speed of communication?
 What are the channels of communication?
How is the organisation structured on a geographical level?
 Do they have different offices in different countries? - if so what is the benefit of this?
 If they are solely UK based how are they organised around the country? Are they
strategically located in different cities or in different areas of the same city?
How are they organised on a departmental level?
 Do they have a HR department, finance department, marketing department etc.?
P4 explain how their style of organisation helps them to fulfil their purposes.
Organisation 1: John Lewis & Partners
In the present context of John Lewis & Partners, organisational style helps them in order
to attain their organisational goals and objectives in an effective manner. It is a public limited
company perform freely at the marketplace with the main motive of enhancing their profitability
at the competitive market area.
Organisation 2: Barts charity
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On the other hand, in case of Barts Charity there main motive is to provide safety and
security as well as to enhance the lives of patients. They mainly work for non profit motive and
provide various directions in order to raise the living standard of individuals.
What is the benefit of having dedicated, focused and specialised departments? -Is it more
efficient? - if so why?
Are there managers in the hierarchy?
 What is the benefit of having managers that staff report to?
 What is the benefit of having someone who supervises others?
 How is the organisation structured on a store/shop floor level?
What does their style of organisation ( hierarchical/flat) help communication
P5 describe the influence of two contrasting economic environments on business activities
within a selected organisation
Economic Environment 1 and 2 must be Boom and Recession Respectively
Organisation 1: John Lewis & Partners
Boom refers to a stage of business cycle which means a rapid and significant sales of
growth. In the case of Boom it has been analysed that company will increase their production
level according to the requirements of current market. In the present context of John Lewis &
Partners, it has been analysed that with the boom in marketplace company gain various
advantages as well as the profitability as well as good will of the company enhance.
Organisation 2: Barts charity
In the present context of Barts Charity, it has been said that recession plays very essential
role in the overall performance. It is the factor in which country faces significant decline in
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economic stability. This is the factor which highly affects the functionality of charity trust as
they do not have enough donors.
BOOM
 What is a boom?
 How does it affect consumers spending?
 How does it affect employment?
 How does it affect credit lending?
 How does it affect a businesses decision to invest?
 What kind of things would they invest in?
 Would they spend more money? - if so on what sort of things?
 Will they hire more staff?
 Will they advertise more?
 Will they open more stores?
 Will they increase their product range and diversify?
 Will they increase production?
 What will likely happen to their profits?
 Will credit be cheap or expensive? - how will this influence their decision
to borrow or use retained earning?
RECESSION
 What is a recession?
 How does it affect consumers spending?
 How does it affect employment?
 How does it affect credit lending?
 How does it affect a businesses decision to invest?
 What kind of things would do or stop doing and why?
 Would they spend more or less money? - if so on what sort of things?
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P6 describe how political, legal and social factors are impacting upon the business activities
of the selected organisations and their stakeholders
Political factor:
It has been analysed that political factors plays very essential role in the business as
external factors highly influence the business functionality. For instance, if a country where John
Lewis & Partners having unstable government this leads to affect the overall business functions
in a negative manner.
Legal factor:
In context of legal factor it has been identified that each and every country have their own
law and regulations which affects the overall business in both positive as well as negative
manner. For this it is essential for the company to follow the rules and laws in an effective
manner.
Social factor:
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It has been analysed that one of the biggest factor which affect the overall function of
John Lewis includes the fashion trends and demands of customers. With the help of massive
boom in the fashion sector increase the overall profitability of the company at the competitive
marketplace.
Political
Degree of political stability/instability
 How can an unstable government and the effect they have on a country and economy
affect businesses and the decisions they take?
Change of government How can a change in political direction influence a business and their activities?
For example how could a change from a conservative to a labour government affect
businesses?
Government support for different types of business organisations/Government initiatives
 How can support for a particular type of business influence an organisation. For example
how did the government's ‘Feed in Tariff’ influence the solar renewable energy sector?
 What would happen if a government subsidised businesses in a particular industry
 What would happen if a government gave tax breaks to certain organisations(e.g.
charities)
Membership of international organisations
 What is the knock on effect of a country being part of an international organisation on
businesses in that country? e.g. the International Monetary Fund
 Brexit: UK leaving EU
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Legal
 How does company law influence the activities of a business and the decisions they
make?
 How does the Trade Descriptions Act influence the activities of a business and the
decisions they make?
 How does the Sale of Goods Act influence the activities of a business and the decisions
they make?
 How does the Employment Act influence the activities of a business and the decisions
they make?
 How does the Health and Safety Act influence the activities of a business and the
decisions they make?
Social
Demographic issues
 How doe the size of the population/market influence the activities of a business and the
decisions they make?
 How does the age structure of the market influence the activities of a business and the
decisions they make?
 How does popular culture influence the activities of a business and the decisions they
make?
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Standard of living/quality of life
 How does the wealth of a market/area influence the activities of a business and the
decisions they make?
 Would poundland set up a store in Mayfair?
 Would Ferrari set up a showroom in Peckham?
Attitudes to work
 Changes in attitudes to male and female roles i.e. women taking on roles that were
previously socially viewed as a man's job
Religion
 How does religion and spiritual beliefs of individuals or a region influence the activities
of a business and the decisions they make?
Ethics and morality
 How does the sense of what is right/wrong influence the activities of a business and the
decisions they make?
 Have organisations been influenced to engage in charitable work?
 How has views on child labour influence the activities of a business and the decisions
they make?
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On Wednesday, September 25, 2019, 05:12:47 PM GMT+1, Ana Andreeea Andreeutza
<[e-mail]> wrote:
Unit 1
LO1 – Know the range of different businesses and their ownership
LO2 – Understand how businesses are organised to achieve their purposes
P1/M1/P2/D1/P3/P4
You need to research two businesses of your choice and work through the questions below.
Business 1 and 2 should be contrasting businesses.
Business 1
Business
Name
John Lewis
Describe the
type of
business this
is and its
purpose?
{P1}
John Lewis is an employee-owned company that operates John Lewis and
Partners department stores, Waitrose and Partners supermarkets, its banking
and financial services, and other retail-related activities.
John Lewis starts trading in 1864 and is a leading omni-channels retailer in the
UK with 51 John Lewis shops ( 37 department stores, 12 John Lewis home and
shops at St Pancras International and Heathrow Terminal 2) and online
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business.
John Lewis produces their own brand fabrics and provides direct services
having their own credit card, offering a range of insurance such as travel,
home, pet, wedding, and event insurance.
The Partnership’s purpose is the happiness of all its members. As the
Partnership is owned in trust for its members, they share the responsibilities of
ownership as well as the profit, knowledge, and power.
Name and
describe the
ownership
type of this
business
(you should
consider the
features of
this
ownership
type in your
answer)
{P1}
The ownership type of the company allows the partners to have control of the
business but also to divide and have a share in the profits. When John Lewis
created the Partnership, he created a governance system, set up into the
company Constitution, that is both commercial and democratic by giving every
partner a voice into the business they co-own.
The company is owned by a trust on behalf of all its employees (known as
Partners) who have a say in the running of the business, and receive a share of
annual profits, which is usually a significant addition to their salary. The John
Lewis Partners group is the third largest UK private company by sales. The
chain's image is upmarket, and it appeals strongly to middle- and upper-class
shoppers.
This is a general partnership in which each partner shares equally in the
workload, liability, and profits generated and paid out to the partners. All
partners are actively involved in the business’s operations.
John Lewis Partnership Limited is a private limited company. John Lewis
signed the First Trust Settlement and created a new type of business by giving
to the employees the power to decide for the business and share the profit.
Being a Limited Company, John Lewis had the power to decide for the
business and also to keep the profit. In the years following and expanding the
business, he starts to think more at the staff and created the Partnership. After
20 years, he signs the irrevocable Second Trust Settlement, and the Partnership
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becomes the property of the people employed within it.
A partnership is a form of business where two or more people share ownership,
as well as the responsibilities for managing the company and the income or
losses the business generates. That income is paid to partners, who then claim
it on their personal tax return. There are three types of partnership: a general
partnership, limited partnership, and joint venture.
Analyse the
type of
business,
purpose
and
ownership of
this
business.
{M1}
John Lewis started the business as a Private Limited Company. The liability of
the members of a private limited company is limited to the number of shares
respectively held by them. It was a business entity that was held by a private
owner, John Lewis, and this entity limits the owner’s liability to the amount of
capital invested in the company. All the profit but also the responsibility and
the ideas were coming from the owner.
John Lewis became a General partnership type as they have over 84,000
permanent staff being Partners who own 51% John Lewis shops across the
UK, 349 Waitrose supermarkets, an online and catalog business, a production
unit, and a farm. The business has annual gross sales of over £11.5bn.
After a tragic accident, John Lewis spent some time to rethink and to discover
the purpose of the business. He found new ways to make the business more
profitable by sharing the profit with the staff. By giving them more
responsibilities and a higher income resulted in the staff being more motivated
and content. The benefit of sharing the profit with all the partners motivates the
staff to work harder and be more productive in the end, as they will have a
good bonus through the share of profits. Sharing the responsibility make the
partners more conscious about the risk they take in the decisions regarding the
business as this may affect all the partners and it may affect the profit.
Describe the
different
A stakeholder is anyone with an interest in the business or can be affected by
its activity. There are two main types of stakeholders: internal stakeholders and
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stakeholders
who
influence the
purpose of
this
business(min
imum of 2
required and
why do they
influence the
business.
You should
consider both
internal and
external
stakeholders)
{P2}
external stakeholders.
An example of an internal stakeholder are the employees- known as Partners.
As they are governing the business it shares the details of all their main
business resolution with Partners and actively engages with them through
councils, forums, and committees at a local, divisional and Partnership level.
They also carry out an annual Partner survey which helps them to create a
working situation where everyone feels respected and can reach their
perspective. Without the employees, that are dedicated and hard workers, the
business wouldn’t have the same profit, as they always try to find new ways to
make the customers come back and buy the products and services that the
business is offering.
The external stakeholders are the customers, suppliers, local communities and
government. Firms get the resources they need to produce goods and services
from their suppliers. Therefore, the relationship John Lewis has with the
suppliers should be effective and is based on honesty, equality and good
manners, in order for the Partnership to get quality resources at reasonable
prices. It is important for them to build a trustful business and provide long
term and pleasing service. This is a two-way relationship, as suppliers also
depend on the business they get from their business customers like John Lewis
for their profitability and survival.
Without the suppliers, the business will have nothing to sell. Suppliers are not
part of the business but have a huge impact on the business and can greatly
influence John Lewis because, if for any reason they would go out of business,
John Lewis would have to find other companies to supply, that might not offer
the same high standards. For example, suppliers want to supply John Lewis
because of the business they get from them and the profit they receive from the
business.
Describe The structure gives the management the freedom to be entrepreneurial and
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how this
business is
organised
You must
include an
organisationa
l
diagram/char
t with your
answer
{P3}
competitive in the way they run the business for long term success while
giving to the partners, the right and the responsibilities of ownership through
active involvement in the business.
The structure is designed to safeguard the partnership’s future and integrity.
John Lewis has 3 governing authorities: the Partnership’s Council, the
Partnership Board, and the Chairman.
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The Partnership Council represents all Partners, reflecting their opinion, to
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ensure the business is run for and on behalf of all Partners. It shares
responsibility for the Partnership’s health with the Partnership Board and the
Chairman. Its role is to hold the Chairman to account, influence policy and
make key governance decisions such as choosing the Trustees of the
Constitution, select Board elected directors, change the Constitution with
Chairman’s agreement and dismiss the Chairman.
The Partnership Board ensures the business is run on a financially prudent
basis, major policy issues are addressed and high standards of governance are
maintained. John Lewis Boar is different from most, with a mix of appointed
and democratically elected Partners.
The Chairman carries personal responsibility for ensuring the Partnership
retains its distinctive character and democratic vitality with responsibility for
delivering the ultimate purpose. The Chairman is ultimately responsible for the
Partnership’s commercial performance and so twice a year appears before the
Partnership Council to answer questions about performance.
The structure that is used by this business is referred to as a tall structure, as
they have different levels of hierarchical responsibilities and departmental
functions. Being a large partnership, it is hard to have meetings with all the
partners, so they are represented by other partners elected to represent. The
members of staff which in this case are also partners report to the managers
who in turn report to the persons above them till it reaches the partnership
council, the partnership board, and the chairman.
Explain how
their style of
organisation
helps them
fulfil their
Everyone within the business starting with the staff and up to the directors
works accordingly to a plan set within the hierarchical structure. Everyone has
their own sections of the workplace that they need to ensure is working
perfectly and in concordance with the plan.
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purposes
{P4} The Partnership Council is directly elected by Partners, it holds the Chairman
to account and appoints the five directors to the partnership board. The
Chairman appoints five executives to the board: the managing Directors of
John Lewis and Waitrose, the Finance Director, the Director of Personnel and
the Group Development Director. The Partners Counsellor is automatically a
member of the Board which has three external non-executive Directors.
The Partners Counsellor seeks to ensure that the partnership is true to its
principles. They monitor the integrity of the business, its values, and ethics.
They are members of the partnership board and perform the role of senior
independent director in the interaction with partners as co-owners of the
business. They meet at least once each year without the executive directors.
John Lewis also have specialised functional areas like Finance, Human
Resources, Group Development, John Lewis, and Waitrose. Having each
department or functional area doing their job and following the plan is
ensuring a good functioning of the business which leads to customer
satisfaction leading to the profit of the business. Each functional area has a
director that ensures the long to medium term direction of the department.
Each department has a manager or supervisor who makes sure the staff is
following their duties and keep clean and tidy the departments. As well the
supervisor report to a manager, who decides the shifts of the staff and organize
the staff. Having a supervisor who reports to a manager is helping the
communication between the staff and management.
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Business 2
Business Name Barts charity
Describe the type of
business this is and its
purpose?
{P1}
A charity, it is a non-profit organization which has the purpose to
raise money for an altruistic reason. The charity supports the
remarkable work of staff and researchers at the Barts Health
group of hospitals, funding ground-breaking research and
innovative healthcare projects. It is based in the UK but the result
of the research is used all over the world.
Charitable fundraising is VAT free, and any surplus made by the
charity is non-taxable in the UK
The support of the charity dates back to the nine century for the St
Bartholomew’s hospital, and three centuries for The Royal
London Hospital, during which time donations from the people of
London have helped patients receive the healthcare they need.
Name and describe the
ownership type of this
business
(you should consider the
features of this ownership
type in your answer
{P1}
Every charity has its own trustees in order to function and exist.
The trustees of a charity are the equivalent of the board of
directors, the management committee, and the directors.
They are the people who share the responsibility of directing a
charity and how it's operated. The Trustees ensure that any monies
raised is used solely for the goals and purposes of the charity.
From a charity’s standpoint, limited liability exists between the
individual trustee or board of directors and the charity itself, and it
shields the individual trustees or board members from being
personally liable for the debts and obligations of the charity.
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The charity needs to be registered and needs to follow the rules
and regulations set by the Charity Commission.
Like all the charities also Barts charity needs to follow the rules
and regulations set by the Charity Commission. The
responsibilities of the Barts charity is to make sure they are
following the governing documents. The accounts of Barts, being
a charity that has an income under £250000 they don’t need to file
their accounts with the Charity Commission. Every year Barts
must produce the trustee annual report to present at the Annual
General Meeting and they must send the report to the Charity
Commission and also the annual return in an online form which is
used to inform the Charity Commission of the work over the year.
Barts is a charity with an income of over £10000 so they have to
publish their registration number and name on online publications.
Barts must maintain their own register of trustees on paper or
electronic, secured and backed up and it’s including the name and
any former name of each trustee plus their correspondence
address and the date they become a trustee and also the date when
someone stopped being a trustee.
Being a charity, Barts benefits from a variety of tax relief
including the exemption from corporation tax on profit from
trading undertaken in the course of charitable provision, 80%
mandatory and 20% discretionary relief from business rates,
stamp duty, land tax relief on freehold property and leases
acquired for charitable purposes. As a charity Barts doesn’t pay
VAT and the profit that they make from fundraising, organised
events and the sale of the goods need to be invested in the
research as they can’t hold the profit.
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The trustees duties are to ensure that the charity is carrying out its
purpose, comply with the governing documents and laws, act in
the charity’s best interest, ensure that the charity is accountable so
they can find the documents on time for the year and also to make
other people interest on the charity, manage the resources
responsibly and act with reasonable care and skill.
The liability is limited between the individual trustees or board of
directors and the charity itself, and it shields the individual
trustees or board members for being personally liable for the debts
and obligations of the charity.
Analyse the type of
business, purpose
and ownership of this
business.
{M1}
A charity is an organisation that can sell or offer its services in
order to raise money for a cause. Barts charity is focusing on
raising money and provide exceptional customer service to
encourage customers to return in order to make more profit. It
supplies goods and services that the citizens in the community
would buy. A charity has to be properly organized by its trustees
and staff to raise as much money as they can. Barts charity is
organizing events like quiz night, bake sales, supporting the
community in different events so they can raise the funds for the
charity.
The purpose of the fund raising is the get as much as they can
raise to help the community in offering medical support for
people in need and for research.
Describe the different
stakeholders who
influence the purpose of
this business(minimum
of 2 required and why
do they influence the
The different stakeholders who influence the charity are internal
and external.
The internal stakeholder who influences the purpose of the
business is the trustee, who makes the strategic decisions, the
workers that are volunteers helping the charity. The trustees are
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business. You should
consider both internal
and external
stakeholders)
{P2}
individuals on a board of a charity, most not being paid unless the
constitution of a charity and the Charity Commission authorise it.
If the trustees are not making the right decisions in organising the
activities and research work of the charity, this may lead to less
interest from the donors and will not raise the money needed for
research. The trustees of the charity are responsible for the overall
control and strategic direction of Barts Charity. They also have
board advisers, who are people with specialist experience who
provide independent advice and recommendations to the Trustees.
The external stakeholders are the community who benefits from
the results of the research of the charity and also the donors. The
external stakeholders, who may also be donors, have a very
important role for the charity. They are people or organisations
who give financial contributions to a charity, to support their
work, aims and objectives. If the Barts charity doesn’t attract
enough donors, interested in their cause, they will not be able to
raise the funds needed for the research or for the service that they
offer to the community. If the donors are not giving money to the
charity means that the charity is not fulfilling their purpose in
raising funds to help the community.
Describe how this
business is organised
You must include an
organisational
diagram/chart with your
answer
The management team comprising of the senior staff is
responsible for putting the Trustees strategic decisions into effect
and for the day-to-day running of the charity.
Board of directors 3+ volunteers carry out the work. The board of
directors hires a manager, the manager hires paid staff in order to
keep up the hard work. The managers supervise everything.
The structure of the charity is almost hierarchy, they did some
changes over the years but the board of directors is happy to keep
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{P3} the charity in the way it is. The staff and the volunteers are
reporting to the manager who needs to report to the board of
directors on the money that was raised, the research work they do,
and if they have any problems.
Explain how their style
of organisation helps
them fulfil their
purposes
{P4}
A charity starts off with the board of directors or trustees who are
responsible for the strategic direction of the charity. If the work is
too much for them and their volunteers, they decide to hire staff.
The style of the organization helps them to fulfill their purpose as
they support the research to improve patients’ lives. The research
they fund impacts positively the patients lives, not just in the
hospitals they support, but around the world. Sustaining the
community in organized events, they raise the funds they need to
help the hospitals by giving the medical support through research.
Organising events, selling goods and products help the charity to
raise the funds they need to fulfill their purpose.
Select either Business 1 or Business 2 mentioned above and evaluate the effect of a
change in its ownership status
Business Name John Lewis
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Evaluate the effects
of a change in this
businesses
ownership status
{D1}
There are situations where your business changes ownership. The
reason for a change of ownership is the selling of the business, the
transfer of the business to a family member or a friend and, adding new
partners to the business.
If you are changing ownership of the business by transferring it to your
family member or a friend, or if you are selling your business and will
no longer be part of it, you’ll need to: make sure you’ve met all your
reporting and payments obligations first, cancel other tax registration
such as goods and service tax, lodge any final tax return, pay any
outstanding bills such as water and electricity, pay any outstanding
activity statement and instalment notice, and transfer any business
records, customers record and employee records to the new owners.
Transfer lease agreements, permits, and licenses. By changing
ownership, staff and reputation of a business might be affected due to
the new change in management style. The new owners might have a
different management style and rules when it comes to day to day
running of the business than the previous ones, which means staff needs
to adjust to new rules. Adjusting to new rules can be difficult for staff
but sometimes it can turn out to be the best for both the business and
staff. A change in business ownership usually brings about changes to
the organizational structure. Overall, changing an ownership status can
bring the best and the worse to a business.
John Lewis went from a private limited company into a partnership
company showing their progression through the years. They were the
first company to have its own constitution.
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LO3 – Know the impact of the economic environment on business
P5
Select an organisation of your choice and describe how two contrasting economic environments
influence the business activities of this organisation
Organisation Name Wilko -retail ltd
Very briefly describe the
main activities this
organisation carries out?
{P5}
Wilko is a private limited company which remained in the hands
of the founding family.
The Wilko products range concentrates on household essentials,
including homewares, textiles, cleaning products, health and
beauty lines, stationary, confectionary, pet product, and kitchen
and bathroom goods. The company also sells seasonal lines such
as gardening products in the summer and Christmas decorations
in the winter.
State Economic
Environment 1
{P5}
Boom
Describe how Economic
Environment 1 influences
the business activities of
this organisation?
(your answer should
include an explanation of
Boom is a stage of the business cycle. The business cycle shows
the changes in economic activity over time. The other stages of
the cycle are recession, slump, growth.
The business confidence rises, increasing consumer expenditure,
the production rises, and the investment increases. This is the
period when the business is in the growth stage and this stage
Page | 26

the key aspects of this
economic environment)
{P5}
leads to the next stage that is the boom.
A boom refers to a period of increased commercial activity. For
individual companies, a boom means rapid and significant sales
growth.
Having a large proportion of the products made up of own-label
helps the company increase its profit. As the business cycle
shows, after the company was founded, in the years following,
the company increased the number of customers and they invest
money in opening new shops in different cities around the UK
and Scotland.
The characteristic of a boom include:
The fast growth of consumption helped by rising real income.
A pick up in demand for capital goods as businesses invest in
extra capacity to meet strong demand and make higher profits.
More jobs will be created and higher wages paid to help meet the
high demand for goods.
During the period of boom, Wilko will increase the production of
goods, as a result of the increased demand for goods and services
by their customers, and also will open new shops in different
areas and this will lead to a major need for staff. Opening new
shops will increase the demand for staff so Wilko will hire more
staff and gives the opportunity to reward the staff by increasing
their wages and giving bonuses.
State Economic
Environment 2 Recession
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{P5}
Describe how Economic
Environment 2 influence
the business activities of
this organisation?
(your answer should
include an explanation of
the key aspects of this
economic environment)
{P5}
In economics, a recession is a business cycle contraction when
there is a general slowdown in economic activity. A recession is a
significant decline in economic activity spread across the
economy. There are many symptoms of a recession: a fall in
purchase of components and raw materials, rising unemployment
and fewer job vacancies available for people looking for a job, a
rise in the number of business failures and business announcing
lower profits and investment, a drop in the value of exports and
imports of goods and services, large price discounts offered by
business in a bid to sell their excess stocks, the budget deficit is
rising quickly, a decline in consumer and business confidence.
All these factors may lead to the total closing of the business and
not only a few as well leading to potential Bankruptcy.
Being in a recession Wilko will have to re-plan the business. As
the demand in goods is dropping Wilko will have to either
decrease the prices to meet the needs of the customer or either to
reorganize the business. Wilko will have to find a solution fast to
stay in business if not they will have to close the shops where
they don’t make a profit anymore and this will lead to less
demand for goods and less need of staff.
For Wilko as well as for all the business, in cases of the
recessions, all will be like a chain reaction, less demand for goods
will lead to less demand for supplies and this will lead to less
profit that will lead to less need of the staff so the business will
make staff redundant, will close the stores and this will lead to a
major difficulty for the customers to have money so the period of
recession will be longer.
Page | 28

Analyse the
impact of
changes in
demand and
Supply on this
business
{M2}
The impact of changes in the demand can lead or in the growth of the
business and services, and profit or they can lead to low demand for
products and goods, a slowdown in selling, low profit and may lead to
closing down the business.
Being in a boom the demand for the product will grow as the number of the
customer.
For example, if there is a “boom” period the business will see an increase in
the demand for products and this leads to job opportunities and an increase
in supply demand. An increase in the demand will lean on an increase in the
supply and more demand for goods and products. This will lead to more jobs
and also a higher profit.
But if the business goes into the “recession” period the demand for goods
will be less, the demand for supply will decrease and also job offers will be
less. Being in a recession means that the customers will not have money to
spend so the business needs to reorganize. The demand for goods will
decrease and so the demand in the supply. Having less money to spend the
customer will choose products that are cheaper and also with low quality.
Evaluate to what extent the
business you have selected
above is likely to be affected
by changes in the economic
environment
{D2}
The business that I selected above had a good profit in the
following years after they open the business. That lead to the
investment of the owner into the business and opening new
shops. Being in the economic boom helps to increase the
number of employers, creating more job opportunities and
making the economy stronger, but also increase the profit.
Having more profit gives the business more opportunities to
Page | 29

reinvest the money in opening new shops, increase the wages
and also to give a bonus to the employers.
LO4 – Know how political, legal and social factors impact on business
P6
You need to research a business of your choice and work through the questions below.
Business Name John Lewis
Describe how political
factors impact the
activities of this business
and their stakeholders
{P6}
The political factors are playing an important role in business life
as being an external factor that can influence the business. If the
country has an unstable government will lead to a standby of the
business or may lead to a stop of the investment of the
stakeholders. Not knowing what will happen, no one will want to
invest in something that may lead the business in bankruptcy. If the
country is politically stable is in favor of the business.
The political factor that affects the business the most is taxation.
This is because it has the most impact on the profit made by the
business.
The fact that the UK is leaving the European Union has caused
some businesses to invest less money and some of the companies
have already moved outside the border just because the
government has yet to come to an agreement with the EU.
John Lewis store department suffered from falling demand, as
consumers cut back on non-essential spending. Consumers have
been reluctant to spend, with wages struggling to keep up with
Page | 30

inflation and growing fears of a no deal Brexit. The slowdown in
the housing market and a shift towards renting has also meant less
demand for large homewares such as sofas and washing machines.
Brexit may have created a lot of uncertainties for business, but one
thing is clear, the British businesses will likely have to comply
with the same data protection laws as Europe if they want to
continue trading as a single market.
Some of the changes involved with GDPR involve tightening how
businesses conduct marketing techniques like profiling and how
they obtain consent from consumers on whether they can use data.
But the laws also apply to how companies must respond to security
breaches, and heavy fines will be doled out for those who fail to
respond to breaches within the specified 72-hour window. John
Lewis delegates the team to work on finding ways to humanize the
message to get everyone on board internally. The business has
hundreds of data base and data lakes to work with so it will be a
long journey till they will finish analysing.
The regulations actually open up bigger opportunities as is giving
the change to reset the relationship between businesses and their
customers and create a two-way dialogue that puts the balance of
power on a more even kilter.
Describe how legal
factors impact the
activities of this business
and their stakeholders
{P6}
The legal factors that affect the business the most is competition
law because they are one of the leading markets. The company has
to make sure that they do not go to lengths efforts that will be
breaking the law.
The main types of legal factors are the company law, that will
check the paperwork and they will make sure as a business, you are
Page | 31

not using another business name and the business is registered on
the shareholders and directors that they have. Another factor is the
contract law, that makes sure that the business has legal contracts
with the consumers and with employees. Another legal factor is
competition law, that includes the restriction of practices that are
trying to reduce the amount of competition and the business is not
allowed to dominate a particular market.
John Lewis has been hit by the fight for survival on the high street
after heavy discounting by struggling rivals. The discount came as
the House of Fraser headed towards administration before being
saved by Sport Direct.
The Equality Act brings together over 116 separate pieces of
legislation into one single Act. The Act provides a legal framework
to protect the rights of individuals and advance equality of
opportunity for all. The Act simplifies, strengthens and harmonizes
the current legislation to provide Britain with a new discrimination
law which protects individuals from unfair treatment and promotes
a fair and more equal society. The Act gives to John Lewis partners
the right to be treated all equally in the employment including the
promotions, flexible working, reasonable adjustments, equal pay,
retirement, free from discriminations, protection against
harassment and right to accessibility.
Describe how social
factors impact the
activities of this business
and their stakeholders
{P6}
There are many social factors that have affected John Lewis but the
main factor is the trend of fashion. The massive boom in fashion
has paid John Lewis well with a lot of people shopping in their
store for branded items. In response to the high request, John
Lewis increase the stock line and invested in more branded items
such as Ralph Lauren.
They had also increased the staff members on the clothing
departments as the customer number has grown and at the same
Page | 32

time the demand for products.
John Lewis business is focused on offering luxury goods and good
quality products to its customers. The shops that they have are all
concentrated in good areas where the customers have a good status.
Focusing on the middle class towards the rich class of society, John
Lewis is selling goods and products with better quality and that
makes them have higher prices.
Page | 33
References
Internet, wikipedia.
http://www.johnlewispartnership.co.uk
Our history
https://digiday.com/u
Our history
We have a proud heritage of medical innovation and
care for the people of East London that goes back 900
years.