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Understanding the Different Types of Business Activity and Ownership Unit 1: The Business Environment

Assignment 1: Understanding the Different Types of Business Activity and Ownership Unit 1: The Business Environment

In this assignment I will cover two business organisations, Wal-Mart and the Royal Society for the Prevention of Cruelty to Animals, discussing their similarities and differences in terms of their purposes, ownership and their stakeholders and how they affect them both as businesses. Walmart:

Walmart is an American family-owned multinational retail corporation, with over two million employees, and is the largest retailer in the world in the tertiary ...

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...sector. Walmart has 8,500 stores in 15 countries, under 55 different names. It is also one of the world’s most valuable companies. It operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. Walmart is a publicly held company. They have their shares sold and bought on the stock exchange and began trading stock as a publicly held company on October 1, 1970. Walmart remains a family-owned business, as the company is controlled by the Walton family, who own a 48 per cent stake in Walmart. They sell a variety of goods including groceries, clothing for adults and children, tools, hardware or electronics including TV’s and computers. Their mission statement is “Saving people money to help them live better” – which was made when they opened the first Walmart in 1962, and it remains their focus today. Becoming a publicly held company definitely benefitted Walmart as they were able to advertise the sale of shares and sell them to members of the general public through the stock exchange, with the first stock split occurring in May 1971.

With the positives come negatives, as a public company, Walmart were required to keep shareholders informed about their operations and financial condition and in doing so, they will also be sharing their information with their competitors – but the disclosures made as a public company also have advantages, larger companies that may be interested in Walmart would have assurance that they are providing an accurate database of information. Each stakeholder brings something different to Walmart in pursuit of their own interests, they takes risks in doing so and receive certain benefits in return. Customers – Customers determine Walmarts profitability. Customers
want value for money which involves providing the highest quality products at competitive prices. Walmarts customers provide the revenue and cash flow that Walmart needs to operate and ultimately earn a profit. Employees – Employees are the people that work for Walmart, they want to earn high wages and job security. Employees provide labour in return for good pay and conditions and job security. There are over 2 million Walmart employees. Suppliers – Suppliers provide products and services to Walmart in return for payment on time, repeat orders and respect want steady orders and prompt payment. They also want to know that the business is doing well so they can get their money back.

Communities – In order to operate effectively and be well accepted in the area, Walmart should be valued by communities and help people understand why their company is beneficial to them.

Walmart can affect the amount of jobs available in many communities therefore many people would want the business to do well. Communities could also affect Walmart in negative ways such as protesting for things such as pollution.

Investors/shareholders – Investors/shareholders demand information from Walmart about their operations and financial condition. They provide financial support in return for increasing value in their investment; they are interested in the business doing well so they can make their money back that they invested.

The Government – The government is interested in businesses as they set out the regulations and need the businesses to do well to keep the economy healthy. The government has an interest in businesses doing well and being successful as this helps to keep employment high, the more profit a business makes the more money the government gets.

RSPCA:

The Royal Society for the Prevention of Cruelty to Animals (RSPCA) was
founded in 1824 and is a National charity operating in England and Wales that promotes animal welfare. It is the oldest and largest animal welfare organisation in the world.

The RSPCA’s vision is to work for a world in which all humans respect and live in harmony with all other members of the animal kingdom. The RSPCA states that its mission as a charity is, by all lawful means, to prevent cruelty, promote kindness to and alleviate suffering of animals.

RSPCA is currently is the tertiary sector as they provide services to help the animals that need care or special treatments. The type of ownership RSPCA fits into is charitable trust/voluntary. The voluntary sector is a term used to describe organisations that focus on wider public benefit as opposed to making a profit. The RSPCA was set up to raise funds and support other people and animals for good cause. The RSPCA is funded primarily by voluntary donations. In 2009, RSPCA total income was £129,251,000, total expenditure was £119,339,000.

The RSPCA benefits from being in the voluntary sector as charities are widely recognised as existing for social good, therefore this can assist with fundraising. As well as being widely recognised, charities do not pay income tax or corporation tax on profit, this means the profits are used wholly for the charities’ purposes.

On the downside, voluntary sector organisations are under constant fundraising pressures. They compete with dozens of causes and charities for funds and volunteers. Non-profit businesses often have to invest in professional fundraising consultants and other salaried staff to raise money, which increases administrative costs and reduces the amount of funds available for animals in need. As well as this, charities are public bodies and are therefore open to public scrutiny. This is one of the disadvantages of this type of ownership.

The RSPCA wouldn’t exist without its stakeholders, the key stakeholders would be:

Funders – Anyone who funds/donates money, time, goods or services to the RSPCA is a stakeholder, this might be the general public, local government, the local council etc.

Volunteers – The volunteers will need to be happy to be working on a voluntary basis and also need to be caring for the animals that are suffering. These include role such as charity shop working, gardening or maintenance, drivers, fundraising or computer work.

Employees – Like most employees, RSPCA staff want job security and good pay. Examples of RSPCA job roles are trainee supervisors, animal care assistants, website designers and shop managers.

Government – Like Walmart, the government want to ensure that the business acts lawfully. The RSPCA can also bring in more jobs and bring in more tax revenue.

Communities – Employees and volunteers from the RSPCA get involved with lots of local communities and work with groups of people within these local communities to raise money for the charity. Being involved with the community has helped the RSPCA improve the way in which they meet their mission as well as raise awareness for the charity.

Both Walmart and the RSPCA are very different from each other but both share stakeholders such as employees, communities, and the government.

The main differences between Walmart and the RSPCA are that Walmart is in the public sector. They sell products, products like food, clothing and electronics. Their motivation here is to increase profit; attract new customers and build on existing relationships. The profit they make is kept.

On the other hand, the RSPCA is in the voluntary sector. The voluntary sector is focussed on making money for charitable use, which is very different in terms of where the money goes, in their case helping and rescuing animals.

As a not for profit organisation they would still sell goods and services as with a commercial organisation but their goal isn’t to make a profit but to continue to fund their activities.

For a company to survive, it has to have various stakeholders. Without their customers and employees, Walmart wouldn’t be where they are today. The same applies with all the kinds of people who are willing to help or have an interest in the RSPCA. Both companies are influenced and affected by their stakeholders.

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