Unit 1 the Business Environment
Assignment 1: Two Businesses on our Doorstep
The companies I have chosen to base my assignment on are: Tesco and IKEA
Tesco aim to become the leading retail supermarket and provide good quality services and products at a low cost so that they are cheaper than their competitors they aim to do this by cutting prices and offering more in store deals. They may have many different objectives in order to reach this aim, like for example introduce more healthy eating products into the wide range of groceries they supply.
TESCO’S 5 MAIN OBJECTIVES
Objective one: to maximise sales and with doing so increase their profits. If Tesco to maximise their sales the second half of the aim (increase their profits) will happen on its own.
Objective two: decrease their prices. Tesco aim to make shopping cheaper for the average household. They aim to do this by cutting prices and offering more in store deals. They may have many different objectives in order to reach this aim.
Objective three: introduce more healthy eating products into the wide range of groceries they supply. The advantage of introducing more healthy living products is that Tesco will; attract many more customers that are interested in healthy eating products, make Tesco an established business four providing healthy eating products.
Objective four: Tesco aim to develop a large Internet shopping site. Tesco aim to provide groceries, electronics and clothing goods as well as a number of their services online. Tesco are aiming to develop the online shopping experience, if they are successful in doing so they may attract many more customers which will help them achieve objective one.
Objective five: to provide jobs to their local community. Tesco aim to reduce the unemployment in local areas where Tesco Stores are built.
Ikea’s aim and objectives
Vision and business idea of Ikea
“To create a better everyday life for the many people”, this is the IKEA vision. Their business idea is “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them”.
IKEA said: “We work hard to achieve quality at affordable prices for our customers through optimizing our entire value chain, by building long-term supplier relationships, investing in highly automated production and producing large volumes. Our vision also goes beyond home furnishing. We want to create a better every day for all people impacted by our business”.
Variation in company size and sectors that they fit in
Tesco is a public limited company that is for profit and Ikeas is a private limited company and not for profit. There is a variation in size and that is that Tesco has 6,553 Stores around the world while Ikea only has 411 stores around the world this means that Ikea also has less employees that Tesco, Tesco has 360,000 while Ikea only has 149,000 also Tesco’s net worth is higher than Ikea’s net worth, Tesco’s net worth is 55.9 billion GBP while Ikea’s net worth is 58.7 billion US which when converted is around 45.9 billion GBP.
Net worth is the value of all the non-financial and financial assets owned by an institutional unit or sector minus the value of all its outstanding liabilities.
Tesco’s and Ikea’s owner’s liability for debts
Owners/Stakeholders of a business can be anyone that is because Stakeholders are anyone with an interest in a business. Stakeholders are individuals, groups or organizations that are affected by the activity of the business. Both Tesco and Ikea have a limited liability for its owner’s/stakeholders because they are either a public limited company (PLC) or a private limited company (LTD). Limited liability is where if the business goes into debt or bankrupt the people only lose whatever they invested in the business this is common with PLC’s and LTD’s. Shares can be bought from a PLC because if the company is publicly listed, its shares will be listed on the stock exchange and different rules apply to the sale and purchase of the shares. If the company is a private company, the rules about buying and selling shares are set out in the company’s constitution and in the COMPANIES ACT 1993.
P2 & M1
Different types of stakeholders within a business
As I already said Owners/Stakeholders of a business can be anyone that is because Stakeholders are anyone with an interest in a business. Stakeholders are individuals, groups or organizations that are affected by the activity of the business. There are different types of stakeholders within a business for example most if not all businesses have the following stake holders: Customers, employers, suppliers, owners, trade unions, employee associations, local and national communities and governments. Which Tesco and Ikea both have these types of stakeholders
Customers: A Customer is an individual or business that purchases the goods or services produced by a business. The customers want Tesco to produce high quality products and good services which have good value for their money. The customer’s interest in Tesco is to see improvements that give them better goods and services which are valuable for their money.
M1) Different stakeholders within a business have different points of view for example in Tesco’s case
• Customers want cheaper products and best deals to suit them from Tesco.
• Employees want a stable working environment and good wages to help them in their personal lives.
• Suppliers want some one who they can sell their goods to, on a regular basis, and in turn they expect Tesco to provide them with well pay and to be respected within the company.
• Shareholders want to make a profit, so they have money to spend.
• Government want the taxes collected by Tesco, and also the social responsibility of having people employed, rather than having to pay the unemployment.
Each one of these stakeholders influence Tesco’s success aims and objectives.