There are many types of business forms of business in the present society. They include the sole proprietorship, partnerships, limited companies, co-operatives, franchising, multinational companies and also the organizations and the public sector (Cavitch, 2015). Numerous companies across the globe are striving to generate finances from all aspects hence the use of business forms becomes relevant in the generation of income in a genuine way and catering to the needs of their customers, employees and employers and also their shareholders. Tesco is known to pursue a zero-carbon business come 2020 where it will work for the changes in climate towards the mitigation of the carbon emissions through the incorporation of the changes in climate into the firm operations. As a result, the implementations of numerous business forms of business are found to be useful in the development of satisfactory and efficient progress in the achievements of its goals come 2020 (Mentis, 2012). This paper focuses on Tesco PLC, which is amongst the world’s exclusive retailers that operate in almost 13 countries and the analysis of the business forms that are incorporated into the company.
We have found out that there are numerous business forms present in the current world. To begin with, a sole proprietorship is considered to be the simplest forms to set up since there are no difficult paper works that need to be incorporated. The sole trader does not have limited liability implying that they are accountable for their entire amount overdue of the business (Vermeulen, 2013). The form of business is owned by one person where the sole trader has to generate a yearly accounting return for the Inland Revenue. Partnership is where the businesses are set up by deed of partnership, the documents made by the partners in the business and eye-witnessed by a solicitor (Keown, 2009). This acts legal evidence that the partnership exists. It carries information about how the profits will be divided and the responsibilities of partners in the business. Partners in the traditional partnership tend to have unlimited liability where they are responsible for the debts of their partners. However, in the latest partnerships, this aspect was altered where some large partners such as the accountancy organization had limited liability (DePamphilis, 2009).
In the United States, some firms are operating under the franchise system such as the McDonalds that uses the licensing of useful ideas to other organizations. Franchises give consent to market a commodity and operate below a certain name in a given place (Rabkin & Johnson, 2009). If one has an excellent idea, then they can sell their license to trade and conduct business using the concept in a given area where the individual who takes the franchise notes the amount of money as capital and is given the equipment by the franchising company. If the materials are found to be of significance to the business, then the franchisee is expected to purchase the contracted proportion of materials from the franchisor that can make a profit and enable the quality of the final product is maintained (Mentis, 2012).
There is also the limited company that has shareholders. In this case, the shareholders, whenever the company is in debt, risk their shares and nothing in their personal belongings is affected. This implies that the debts of the company are separate from those of the shareholders (Woods, 2007). The ownership of this type of business form can be transferred where evidence has it that numerous companies have been passed down through generations.
A multinational corporation is a worldwide company that is directed from the main office or center. They include Shell, Kentucky Fried Chicken and also the Digicel in the Caribbean. They are found to be advantageous in that they provide employment to their residents and also incorporate highly developed technology and has the provision of well-required goods and services. This form of business, however, is found to have disadvantages such as the profits that are made are sent back to the main center where the workers tend to face exploitation through low payments and working for extra hours. As a result, there are always many closures that lead to unemployment where when the companies want to develop in another region, they look for cheap labor and reduced operational costs in another country.
There also exist the cooperatives that are business units owned by members who buy shares. The origin of this form of business is the need of a particular type of goods and services by a given population at a reduced cost. The profits that are made from these businesses are always distributed equally basing the division on the number of goods one buys and not on the amount of investment that they make from the business.
We have seen the different forms of business that exist and how they operate and how each type impacts the decisions in the industry. Based on this aspect, we can understand that an individual, who wants to set up a business, always has to take into consideration the legal form the company should take. This decision is based on the number of owners the business will have, the tax position of the business, the ability of the owners to take risks of the unlimited liabilities and if the owner wants all the business profits. This brings us to our company in this case which is Tesco PLC, a sole proprietorship, a partnership where there was no limited liability hence making the sole trader to b accountable for the debts of the business and a multinational company where its stores are in different locations across the globe (Lindgreen & Hingley, 2009). There is the provision of an annual accounting return and that Tesco is also a type of business that displays partnership where the documents made by the partners in the business are witnessed by a solicitor hence remaining as proof of the agreement (Hasan, 2011). The decision made in Tesco PLC are always agreed upon by the annual general meeting that is held and the shareholders select their team of management from the members. All these decisions are always agreed by the partners and the sole trader, after which a memorandum of understanding is reached, and the business run smoothly based on rules and regulations set by the partakers.
Numerous factors contribute towards the development of any form of business. With the increase in the pressure on businesses to address environmental problems and develop new ways of operation that would benefit the society, Tesco was found to be determined towards reducing the carbon emissions on the environment by 2020. Tesco PLC is the main food retailers whose operates are felt in the UK (Burt, Sparks & Teller, 2010). The company can provide financial products such as the banking services and insurance and also the telecommunication products. Based on the financial information of the company, Tesco holds 13% of the shares of the retail market in the UK (Doherty, 2008). This implies that it will be able to widen its shares in the market for food whereas it will also e bale to increase the space contribution from a dynamic market that will result in it being driven to share in the non-food sector. Its trends recorded in growth and ROI depict that the company will not show a downward trend anytime soon (Keown, 2009). Besides, the company had also invested in the financial sector where the personal finance of Tesco reached a million of motor insurance policies that resulted in its development as a motor insurance.
Tesco also had an online site that was considered to be the largest online supermarket where it was able to record sales of £577 million which market an increase of 29% from the previous year (Reineke, 2013). This led to the company having a strong platform over which it could market its products and services. The company was also able to develop a strong brand image across Europe, to Asia and also Ireland that increased its profits by 78%. This was also attributed to the innovative ways in which the company was able to improve the shopping experience for their customers and the coordinated efforts to branch out into the finance and the insurance sector. After Tesco was ranked number 1 in 1996, they have been able to develop strategies where they occupy more of the shares of about 71% as compared to those of Sainsbury. Hence, Tesco is known to hold a strong position in the domestic market.
However, even with the numerous strengths of the company, it is still is not able to adjust to the changes that take place in the UK supermarket industry. This tends to affect their market shares. It is also not able to reduce its debt since it is known to have a large capital expenditure due to its investments in space for new stores where it used its money and saved none. However, even with its weaknesses, it still had opportunities that included the growth of the company overseas that would further increase its earnings. Their health and beauty sector also is growing steadily where the company is leading in health care and toiletries and also in some of the baby products (Haerifar, 2011). Also, international growth was found to be expensive since the entering of a new, market with a new brand tends to be expensive and also the brand will be affected by the low entry prices and the expenses of operations. This might increase the debts of Tesco before they begin to reduce.
If the company would take part in the entering of the international market, it will face numerous debts that would take it time to recover considering that it already has debts in the local market. Consider a case where the company did not have diversified into the health and beauty sector and also into the insurance sector. The development of the company into a multinational corporation would never be realistic since diversification is found to be the key to companies that want to thrive in the ever-competing environment. As a result, the company has to make decisions putting into considerations different scenarios and cases that will elevate its status.
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