UK Enterprises: Analysis of Legal Status and Financing Options

This report provides a comprehensive analysis of the business environment in the United Kingdom, focusing on Fashion Clothes Company as a case study. It begins by describing the various legal statuses available to enterprises in the UK, including public limited companies, private limited companies, and registered charities, outlining their respective advantages and disadvantages. The report then assesses three different financing sources for the company: long-term (loans from financial institutions, government grants, and retained earnings), medium-term (borrowing from banks and lease financing), and short-term (bank credit and loans from directors), evaluating the merits and drawbacks of each. Furthermore, it examines the three main sectors of the UK economy—primary, secondary, and tertiary—explaining the differences between them. Finally, the report explains the relevance of human resource policy within the company, highlighting its importance in achieving business objectives. The document is available on Desklib, a platform offering a range of study tools and resources for students.

Structure of Business

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Describe the various legal status of enterprises that a company has in the United Kingdom, as
well as their advantages and disadvantages.................................................................................3
Set up the merits and drawbacks of THREE financing sources for the company selected.........5
Assessing the three areas of the United Kingdom economy in which a firm can operate and
showing how the three sectors are different?..............................................................................8
Explain the relevance of human resource policy in the company...............................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Starting a business needs a variety of resources, including inventive ideas, cash, people,
legal processes, and other resources that must be utilized efficiently in order to achieve
commercial success. This entails making the best use of innovative ideas in order to deliver
market offerings that best meet market demand, which necessitates an understanding of the
demographic and psychographic factors of a specific geographical location, such as age, people,
income, and lifestyle patterns, among other things (Ribeiro and Nagano, 2018). As a result of
evaluating all of these criteria, “Fashion Clothes Company” is a new company start up in the UK
market, with high preferences and living standards in the UK, where people desire to wear nice
and stylish clothing, and therefore the new business concept in the UK market is justified. To
meet market demand, the company concentrates on producing high-quality fabric and stylish
clothing.
The following responses are evaluated in this report: a detailed investigation of the business
legal structure in the United Kingdom, an evaluation of different financial sources for businesses
and how they work for businesses with the relevant strengths and weaknesses applied to the
business, three different business sectors of the UK economy and their differences, and a detailed
investigation of the UK economy.
MAIN BODY
In terms of its legal position, a business structure refers to how a corporation is organized.
When forming a firm, choosing a suitable business structure allows your organization to be
legally recognized and offers rules for how it should be operated. Who owns the firm, how
earnings are divided, and which management do which responsibilities are all determined by the
corporate structure (Ode and Wadin, 2019). It's also important for tax and liability reasons, as the
firm will be taxed differently based on its structure, and managers and owners will bear varying
levels of responsibility in the case of misconduct or a lawsuit.
Describe the various legal status of enterprises that a company has in the United Kingdom, as
well as their advantages and disadvantages.
According to the nature of the business, legal statuses of the business are split into limited
liability and registered charity. These legal statuses are briefly explained below:
Public Limited Company Private Limited Company Registered Charity

A public limited corporation
is one that engages in the
delivery of shares to the
general public.
Because public limited
companies have so many
advantages, more than 90%
of UK firms are public
limited companies. These
advantages of a public limited
company include the ability
to obtain simple business
financing, the legal existence
of the business is distinct
from that of the PLC's
owners, the ability to increase
business capital by issuing
public shares, and the firm's
everlasting commercial
existence.
The disadvantages of the
business include the fact that
it is answerable to several
shareholders, with the owner
of the firm also being
accountable to these vast
numbers of shareholders,
resulting in a loss of control
over the business's operations
In order to raise business
financing with a restricted
number of shareholders, the
private limited company
simply means the businesses
that cannot give a share to the
public and the shareholders
have not control in the
business operations (Bondel,
Faber and Matthes, 2018).
The company is operating in
a distinct financial
transaction, as are personal
interactions between owners
and the company. The profit
earned by the company is
divided in accordance with
the shareholders' acquired
dividends. The company
owner can only withdraw the
money for any transaction
from the company.
There are several advantages
to forming a private limited
corporation. Most of those
are: the number of
shareholders is limitless, that
also helps to reduce the
corporation's potential
burden; the private limited
A registered charity is a
company that provides social
services to individuals while
also doing commercial
activity for philanthropic
reasons. The advantages of a
registered charity include tax
benefits, a simple financial
solution, and the opportunity
to acquire trust and
trustworthiness in society.
The disadvantages of a
registered society include the
inability of the firm to acquire
cash from equal capital,
restrictions on carrying out
commercial operations, and
compliance with all UK
government regulations.

(Gopalakrishnan and
Matthews, 2018).
company performs solely for
the aim of developing &
generating revenue by
manufacturing things and
services at the lowest cost; as
well as the PLC operates for
the sole purpose of making
money by manufacturing
goods and services at the
lowest cost.
The main disadvantages of a
private limited company are
the restrictions on borrowing
financial resources and the
fact that the owner is held
liable for paying obligations
on time in the event of
insolvency or business
failure.
Set up the merits and drawbacks of THREE financing sources for the company selected.
The process of supplying cash for commercial operations, purchases, or investments is
known as financing. Banks, for example, are in the business of supplying capital to businesses,
customers, and investors in order to assist them accomplish their objectives. Financing is critical
in every economic system because it allows businesses to acquire items that are beyond of their
immediate grasp. There are numerous financing sources, which vary according on the type and
duration of each financial source (Xu, Hitt and Miller, 2020). The long, medium and short-term
sources of funds for the timeframe of these financial resources are classified. Whereas the
companies employ these money sources according to the necessities of the companies. The
following are briefly discussed:
Long-Term Funding Sources

Long-term finance sources are those from which money are raised for a longer period of
time, often more than a year. Modernization, growth, development, and expansion of corporate
operations need long-term funding. Few of them are discussed below in context with the chosen
company. Loans from Financial institutions
A loan from a financial institution entails borrowing money from a bank for a lengthy
period of time, with or without collateral. Fashion Clothing Company obtains a long-term
loan from a financial institution.
Strengths: It assists in meeting the company's financial needs.
Weaknesses: By charging interest on the loan, it increases the cost of the business. Government Grants
Governments in the United Kingdom provide grants to businesses in order to help them
grow and contribute to the country's economic growth (Brondoni, 2018). Where the UK
government not only provides financial assistance but also non-financial business
solutions so that firms may perform their operations without difficulty. Fashion Clothing
Company is reliant on such donations in order to satisfy its financial obligations.
Strengths: Assists the firm in meeting its long-term financial obligations.
Weaknesses: Government grants might be difficult to get in some circumstances since
they demand documentation and a suitable business plan. Earnings Retained
Businesses' retained earnings are profits that are not shared among shareholders and are
set away as a reserve to be used for future company needs. Undistributed profit is another
name for retained earnings. The quantities of retained earnings are used by Fashionable
Clothing Company to satisfy the long-term financial needs of the company.
Strengths: It enables organizations to meet their long-term financial needs without
sacrificing security or incurring additional costs.
Weaknesses: It lowers the profit share
Financial medium term sources
Medium-term finances are needed for a span of further over one year but much less than 5
years (Lemarchand, 2019). Loans via commercial banks, public deposits, lease financing, and

loans from financial institutions are among the medium-term funding options. Few of them are
discussed below in context with the chosen company. Borrowing from bank
It is also a beneficial business strategy for financing companies to obtain the banks'
borrowings as medium-term company financing for a time period of 3-7 years. In order to
satisfy the financial requirements of the firm, Fashionable Clothing Company receives
support from different financial institutions.
Strengths: This helps to satisfy the business' financial needs and also the company's
trusted source.
Weaknesses: Interest charged is a costly turn to companies. Lease financing
Lease finance is one of the helpful business technologies that assist lease the company's
fixed assets (Kowalkowski and Ulaga, 2017). Whereas, Fashionable Clothing Company
uses rental finance to satisfy the company's needs for fixed assets like as land, for a
defined term of time.
Strengths: Useful approach to finance business requirements, not to expend on fixed
assets and to increase financial costs.
Weaknesses: The ownership of the property is not transferred, when the owner has the
control of the fixed property constantly.
Short Term Sources of Finances
Sources for the short term are Short-term sources are funds that are needed for a period of
less than a year. Trade credit, financial institution loans, and commercial papers are only a few
examples of short-term financing options. Few of them are discussed below in context with the
chosen company. Bank credit
Bank loan is a valuable credit option to satisfy companies' short-term financing. Whereby
Fashionable Clothing Company gets the aid of several banks to satisfy the business' short
finances.
Strengths: Reliable sources to satisfy the finances of small companies
Weaknesses: It increases the company's short-term liabilities. Loan from director

In order to satisfy the short-term financial needs of businesses, a loan from detector is a
viable internal short-term financing method (Akume and Iguisi, 2020). The director of the
Fashionable Clothing Company contributes his own cash to the company in order to help
it achieve its financial obligations.
Strengths: It assists firms in meeting their working capital requirements.
Weaknesses: It places a financial strain on enterprises.
Assessing the three areas of the United Kingdom economy in which a firm can operate and
showing how the three sectors are different?
In the UK economy there are three main types of business sectors, namely primary,
secondary and tertiary, in which various business sectors have diverse business services and are
intended to operate. Each of them is essential as they make a significant contribution to the UK
economy. These business sectors include primary, which includes the provision of raw materials
to other firms, secondary, which involves the processing and manufacture of raw materials into
completed items, and tertiary, which involves providing services to people. All of these business
sectors contribute significantly to the UK economy and contribute to the country's economic
progress.
The primary sector comprises firms that conduct their operations in order to acquire raw
resources such as coal, forests, food grains, and other basic materials, and then sell those raw
commodities to other businesses for a profit. Farmers and mining companies are two examples of
such enterprises. These businesses are critical in supplying raw materials and carrying out other
commercial tasks.
The secondary sector contains firms that complete the raw material production process by
collecting raw materials from primary sector businesses and converting the raw materials into
completed items (Wang, Wang and Xing, 2019). Car manufacturing companies, such as Bentley
British car manufacturing company that manufactures sports luxury cars and is headquartered in
England, UK, can be used as an example of secondary sector businesses. Bentley British car
manufacturing company that manufactures sports luxury cars and is headquartered in England,
UK, was founded by H. M. Bentley and W.O Bentley in 1902. The enterprises in the tertiary
sector comprise those that provide commercial services to the economy. Where such enterprises
gather and manage secondary industries' needed products and materials in order to provide client

services. They benefit from the type of services that they give to clients. These can be sponsored
by companies such as food, clothing, and other services in order to provide clients with value.
Fashion Clothing Company belongs to the tertiary sector, where the company provides
services to consumers by selling them clothing as market offers. They give clients with high-
quality, trendy clothing that follows the newest market trends and is made of organic, soft fabric
that can be worn in all seasons. Where they source usable materials and clothing from the
secondary market, personalize each garment, and ensure that each customer receives high-quality
service. They also establish pricing based on the costs involved in company activities, thus the
Fashion Clothing Company provides value to its clients by taking into consideration all of these
factors.
Explain the relevance of human resource policy in the company.
Human resource policies are essential in order to manage and coordinate the efforts of
various individuals according to the set working standards of the company, and they play a vital
part in delivering the correct organizational objectives to the employees. Fashion Clothing
Company's human resource manager creates favorable policies to maximize the company's
human capital (Lee, Lee and Gaur, 2017). Some of the human resource policies adopted by the
HR manager at Fashion Clothing Company include maintaining the pleasant working
environment in the workplace and managing employee performance.
Policies on health and security: The most essential policy every organization must pursue
is the formulation of health and safety policies. It involves administering the workforce safety
whereby the HR Manager implements preferential policies in order to maintain safety, including
ensuring that every physical infrastructure does not harm any employee, compensating
employees for any injuries that the employee has experienced during the period of employment,
insurance facilities, job security etc. The HR manager at Fashion Clothing Company executes the
company's health and safety policy in order to minimize any workplace uncertainty or mishaps
that might injure employees or ruin the company's reputation. It is critical to define the
organization's health and safety rules so that the company can provide safety to each employee
while also providing a good working environment and ethical business practices.
1974 legislation on health and safety at work and other matters: The law was enacted by
the UK government. The law was enacted only for the purpose of ensuring the protection and
safety of people at work. The statute stressed the need of companies taking responsibility for

their employees' health and safety at work. By fostering a good working atmosphere, the fashion
apparel firm complies with health and safety regulations. Employees in the association were
given training in order to execute the legislation, including complete awareness and information
about the law, as well as strong instructions not to discriminate against any disabled person in the
workplace. The Association's employers adopt this law to comply with all the actions of the
Government to prevent such unfair means or discrimination against employees, regardless of
their gender, culture and position, or any of the factors, and employers practice the same rights
and opportunities for everyone in the Organization's workplace.
Policies on equal opportunities and diversity: The Fashion Clothing Company human
resource manager oversees workplace equity and diversity through fair employee opportunities,
equal treatment with unfair methods, discrimination, and fair compensation (Hanafi, Setiyono
and Sanjaya, 2018). Where individuals at a company come from various backgrounds, cultures,
and societal beliefs, it is critical for the organization to recognize each employee's worth in order
to establish fair and ethical working conditions. The significance of treating men and women
equally and providing equal chances in the workplace. Equality and diversity assist businesses in
conducting their operations in a lawful and transparent manner.
Salary and wages: It is critical for companies to follow the UK government's standards and
laws in order to provide equitable compensation to all employees at the workplace. Fashion
Clothing Company's human resource manager ensures that all workers receive fair salaries and
pay in accordance with their job responsibilities. Furthermore, the association's human resource
manager provides benefit packages, holiday packages, paternity, maternity breaks, and other
types of leaves to employees so that they feel at ease at work. Employees who work for
companies that pay them fairly tend to stay loyal to them, whereas employees who work for
companies that don't pay them fairly become demotivated and quit. In addition to its basic
salaries, the association's HR manager also offers facilities like accommodation, food, clean
environment, which allows the director to provide financial and non-financial incentives to
workers who are very well employed, which also motivate employees to perform productivity
and efficiency.

CONCLUSION
As a result, the aforementioned study emphasizes the relevance of many elements that
contribute positively or negatively to the business. Furthermore, there are just some reference
points or considerations that companies ought not try to prevent when establishing a successful
business new company, such as with the allocation of business areas in the surrounding
environment, the legal framework of businesses, and perhaps the most valuable financial
resources, which have been critical in order to fund various business activities and operate it
according to requirements. Human resources policies are just another critical asset in which
businesses must demonstrate innovative measures that positively influence financial
performance, maintain the financial resources of the work environment, ascertain the working of
the functional area in a socially appropriate way, and implement strategies to achieve efficiency
in the workplace in company’s performance.

REFERENCES
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