How Business Operates: Public Limited Companies, Product Life Cycle

This report provides a comprehensive overview of public limited companies (PLCs), detailing their advantages and disadvantages, and exploring the stages of the product life cycle. It also examines the concepts of leadership and management, highlighting their differences and importance in business operations. Furthermore, the report discusses the role of incentives, both financial and non-financial, in motivating employees and improving overall organizational performance. The analysis includes real-world examples and references to relevant literature, offering a practical understanding of business development and management strategies. The report concludes with a summary of key findings and implications for business success, covering topics like company structure, product life cycle, leadership, and employee motivation.

HOW BUSINESS
OPERATES

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................2
TASK 3............................................................................................................................................3
TASK 4............................................................................................................................................4
CONCLUSION:...............................................................................................................................5
REFERENCES................................................................................................................................5

INTRODUCTION
The report presented below describes the definition of a Public limited company including to
mention the advantages and disadvantages of the same. After detailing the concept of a public
limited company, various stages of a product life cycle have been mentioned. Further the
leadership and management concepts have been explained briefly by also analysing the
difference between the two. Employees being the main part of organization does not only need
constant supervision and control but also must be provided enough opportunities for enhancing
their carrier keeping in mind the importance of motivating them. The report presents a clear
understanding on the life cycle stages of a product (Bryman and Bell, 2015).
TASK 1
Public Limited Company: Company is assumed to exist having its own legal identity in the
industry of which it is a part. The company and its owner are hold separate existence. PLC is an
abbreviation of Public Limited Company that has offered its shares to general public. The
company has limited liability. It offers its stock to public in general through initial public
offerings or by trading its stock in stock markets or stock exchange market. After the name of
company public Ltd is added to inform various stakeholders and general public that the company
has fairly large business and its shareholders are general public. E.g., Burberry group PLC.
ADVANTAGES AND DISADVANTAGES OF PUBLIC LIMITED COMPANY
List of advantages:
 As the company is assumed to have own legal identity, in case of death of any of the
shareholder, the company continues to exist.
 The liability of the shareholders is limited as the company has to include 'limited' with its
name.
 The companies that have limited liability, can obtain funds with no restrictions upon
collection limit on the amount of funds (Chand and Fraser, 2006).
 The shareholders of the shares of this type of company can easily transfer their shares to
any of the member or any individual.
 The shares being freely transferable imply a sense of relief in the mind of customers
without any issue of not being able to transfer the same.
List of disadvantages of a public limited company:
1

 The government has framed strict regulation for establishing a public limited company.
 The procedure of establishment of a public limited company is complex.
 It requires huge funds and a lot of time for completing the legal formalities to establish
the same.
 Being a public limited company, it is necessary to display the accounting and financial
information before general public.
 There is no sense of confidentiality of financial documents of the company.
 On transferring the ownership, the original investors might loose control over the shares.
 As the activities of public limited companies are wide, it involves a great deal of efforts
on managing the company (Dahlsrud, 2008).
 The decision making process might be very slow.
 Industrial relations might be hard to be build up and strengthened.
TASK 2
VARIOUS STAGES OF PRODUCT LIFE CYCLE: The product manufactured by any company
or an organization has a life cycle and is assumed to follow any of the four stages of a product
life cycle according to the features and characteristics the product has. Like a human being,
product is also believed to be a part of a life cycle depending upon various situations. According
to the life cycle stage of company's product , the company makes profit accordingly. The list of
four stages of life cycle of a product is mentioned below:
 Introduction stage
 Growth stage
 Maturity stage
 Declining stage
Each of the above mentioned life stages have been described below briefly:
 Introduction stage: This is the initial start up point of market journey of a product. A new
product launch includes to be a part of introduction stage wherein if a company is a part
of competitive environment then the company might have to incur huge expenditure on
researching and promotional activities related to increasing the marketing of the product.
Initially with this start up , the company might not obtain large profit margins on account
of low sales due to non acceptance of product in an initial stage (Johnson, Lenartowicz,
and Apud, 2006).
2

 Growth stage: The growth stage of the product depicts acceptance of product by
customers in the market. If the product is possessing qualities for aligning with
customer's preferences then there will be a sudden increase in sales of product. The
company hereby makes all possible attempts to capture and hold on major section of
market. If a product enters growth stage , it can be concluded that there will be more
opportunities for the company to increase market sales. The company will hereby obtain
enough funds to enhance promotional activities.
 Maturity stage: After successfully clearing the above mentioned stages of product life
cycle, the company's product enter into the maturity stage. It can be said that the product
is capable enough of possessing required features and characteristics. This does not mean
that the product has acquired a permanent leading position in the market but it has to
constantly keep on studying the market and thereby bring in required modification and
changes in the product so as to continue maintaining current position and ensure future
position too. The product has a major holding in the market and possesses good brand
image.
 Declining stage: This is the final stage of products life cycle. After exploiting the benefits
of maturity stage , the company finally enters the declining stage. There is no scope for
any modification or change in the features or characteristics of product. The demand for
such products is assumed to decline suddenly as the customers might have already
purchased enough units or they might be willing to switch over to another product
attracting them more unlike the old one.
e.g., The products of Next PLC are in the maturity stage of product life cycle and thereby the
company is enjoying the leading position in the market by receiving huge profit margins
(Johnson, Christensen and Kagermann, H., 2008).
TASK 3
INCENTIVES
Incentives in simple meaning includes rewards given to the employees or personnel to
recognize their contributing efforts. Those efforts that directly or indirectly influence the overall
performance of the organization or contributes to achieve objectives must be rewarded.
Incentives are generally provided to motivate an employee to perform better. Incentives can be
given in various forms including monetory and non monetory incentives discussed below:
3

 Financial incentive: These types of incentives are in pure form of money. Financial
incentives have greater impact on motivating performance of employees by providing
incentives in the form of bonus, wages, salary, medical reimbursement, etc. Money has
an significant role in individual's life. Employees expect these types of incentives as they
can obtain cash that can be used for various purposes. Financial incentives are used to
reward the employees to attract major section of potential employees as against
competition with the rivals or competitors (Lepoutre and Heene, 2006).
 Non financial incentive: These types of incentives are unlike financial incentives.
Humans need can never be limited as it keeps on increasing constantly. Employees being
a part of human resource also expect non financial incentives once they are satisfied with
financial incentives. They expectation for such incentives increases once the employees
feel the need for improved moral status, recognisition in the industry. These incentives
include group recognition and opportunities for improving self esteem.
TASK 4
DIFFERENCE BETWEEN LEADERSHIP AND MANAGEMENT
Leadership is an important concept impacting the overall performance of the employees
team. A leader is expected to lead its team in such a manner so that he can supervise and control
the activities done by each personnel. Considering the modern context of business , leadership
must be understood or interpreted as an authoritative style of leading the team but it must be
efficient to provide required guidelines and instructions in a manner that is acceptable by the
employees as well as is suitable for improving the performance level of employees.
Management includes a wider scope wherein various business activities and the personnel
carrying out these activities are managed in an efficient manner.
Leadership must be implied after considering the necessity of applying guidelines to obtain the
objectives by following the vision set by the company. Leadership is carried out simply to ensure
appliance of procedures and plans to align the business activities to achieve overall objective set
by the organization (McGrath , 2010).
Management is an important matter of concern as it has direct impact on the performance of
other functional activities in the organisation. The management structure determines how the
activities will be carried out with respect to human resources, production and distribution.
4

There is a wide difference between management and leadership. The scope of leadership is
limited to just supervision and control of employees whereas management deals with controlling
entire managerial activities including various functional departments to be managed by the same.
CONCLUSION:
It can be hereby concluded that for establishing a company, it is necessary to be acknowledged
with definition of different types of company and being able to manage the business activities
and operations in such a manner so that it enhances company's overall performance by
effectively applying skills of leaders and managers (Wiklund, Patzelt, and Shepherd, 2009).
REFERENCES
Books and Journals
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA
Chand, M. and Fraser, S., 2006. The relationship between corporate social performance and
corporate financial performance: Industry type as a boundary condition. The Business Review.
5(1). pp.240-245.
Dahlsrud, A., 2008. How corporate social responsibility is defined: an analysis of 37 definitions.
Corporate social responsibility and environmental management. 15(1). pp.1-13.
Johnson, J.P., Lenartowicz, T. and Apud, S., 2006. Cross-cultural competence in international
business: Toward a definition and a model. Journal of International Business Studies. 37(4).
pp.525-543.
Johnson, M.W., Christensen, C.M. and Kagermann, H., 2008. Reinventing your business model.
Harvard business review. 86(12). pp.57-68.
Lepoutre, J. and Heene, A., 2006. Investigating the impact of firm size on small business social
responsibility: A critical review. Journal of business ethics. 67(3). pp.257-273.
McGrath, R.G., 2010. Business models: a discovery driven approach. Long range planning,
43(2). pp.247-261.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Wiklund, J., Patzelt, H. and Shepherd, D.A., 2009. Building an integrative model of small
business growth. Small Business Economics. 32(4). pp.351-374.
Wüllenweber, K. and et.al , 2008. The impact of process standardization on business process
outsourcing success. Information Systems Frontiers. 10(2). pp.211-224.
Online
Business Structure Basics. 2016. [Online]. Available through
<https://www.entrepreneur.com/article/75118>. [Accessed on 15th December].
5