Features of two contrasting businesses
P1: Explain the features of two contrasting businesses
Introduction
In this assignment I will be talking about business features such as: ownership, liability,
purposes, sector, scope, size and reasons for success. I need to include 3 advantages and 3
disadvantages for each business to describe the ownership and explain the features of the
business.
The businesses I will be talking about are Vodafone and the NHS. Vodafone is a PLC (public
limited company) and a profit sector organisation, compared to the NHS which is a non-
profit organisation.
Background
Vodafone was launched on 1 January 1985, and it became fully owned by Racal in 1986. In
1991, Vodafone became an independent company.
On the other hand, NHS was founded in England in 1948 and after that the NHS has
provided free health care, such as vaccines, treatments for diseases, transplants and much
more.
Ownership
Vodafone is a PLC and therefore owned by the public and controlled by shareholders.
Advantages of being a PLC include limited liability, raise additional finance through share
capital and increased negotiation opportunities. Having limited liability means the
shareholders are legally responsible for the debts of the company to an extent which means
they don’t have to lose all their money and assets if something happens. Share capital is the
money raise when a business becomes a PLC by offering shares in return for money or assets
so Vodafone can raise additional finance by offering shares which helps the business grow.
Vodafone can have increased negotiation opportunities with suppliers because large
businesses can get economies of scale which means the cost of production, distribution and
sales can decrease when the business increases production, distributions and sales.
, However, there are also some disadvantages of being a PLC such as the cost of setting it up,
complex reporting and accounting requirements and there is a risk of a hostile takeover. The
cost of setting up a PLC requires a minimum of £50,000 due to the requirements and risk.
The requirements are crucial for maintaining investors’ confidence and show transparency
and accountability. A hostile takeover is the acquirer taking over the target company. It is
accomplished without an agreement from the target company. PLCs like Vodafone are
vulnerable to hostile takeovers because their shares are publicly traded, making it easy for
an acquirer.
On the other hand, the NHS is a non-profit organisation owned by the government and
publicly funded through taxation. The NHS is managed by the Department of Health and
Social Care in England. An advantage of being a non-profit organisation is limited liability,
which means the owners are legally responsible for debts, but liability doesn’t extend to
personal assets. Another advantage is cost efficiency meaning the NHS can negotiate better
prices for products such as medication due to it being a large organisation, which helps
reduce overall costs. Although the costs can be reduced, the amount of resources provided
can be limited, which means the NHS must prioritize certain services and treatments and
can result in availability of certain services to disappear. Due to the NHS being publicly
funded they can provide healthcare services to everyone ensuring there’s access to services
regardless of their financial situation. However, there can potentially be funding constrains
like budget cuts or insufficient funding due to political changes or economic conditions,
which can lead to a shortage in resources, longer waiting times and reduced quality of care.
Another disadvantage is slow adaptations to change and innovation due to bureaucracy
processes, which affects efficiency and responsiveness to challenges.
Liability
Liability means being legally responsible for something, in this case, the business. There are
two different types of liability, such as limited liability and unlimited liability. Limited liability
means the shareholders are responsible to a certain extent, which is how much of the
business they own. Unlimited liability means the business owner is responsible for
everything that happens in the business, this is usually a sole trader, and they can lose their
own assets if something goes wrong. The difference between limited and unlimited liability
is the risk that a business is willing to take. Vodafone and NHS both have limited liability
meaning the owners are only responsible for their part of the shares, so the risk is also
limited.
Purpose
The purpose of Vodafone is to ‘connect for a better future’. They use technology to improve
lives and businesses by improving access to it, while also aiming to reduce their
P1: Explain the features of two contrasting businesses
Introduction
In this assignment I will be talking about business features such as: ownership, liability,
purposes, sector, scope, size and reasons for success. I need to include 3 advantages and 3
disadvantages for each business to describe the ownership and explain the features of the
business.
The businesses I will be talking about are Vodafone and the NHS. Vodafone is a PLC (public
limited company) and a profit sector organisation, compared to the NHS which is a non-
profit organisation.
Background
Vodafone was launched on 1 January 1985, and it became fully owned by Racal in 1986. In
1991, Vodafone became an independent company.
On the other hand, NHS was founded in England in 1948 and after that the NHS has
provided free health care, such as vaccines, treatments for diseases, transplants and much
more.
Ownership
Vodafone is a PLC and therefore owned by the public and controlled by shareholders.
Advantages of being a PLC include limited liability, raise additional finance through share
capital and increased negotiation opportunities. Having limited liability means the
shareholders are legally responsible for the debts of the company to an extent which means
they don’t have to lose all their money and assets if something happens. Share capital is the
money raise when a business becomes a PLC by offering shares in return for money or assets
so Vodafone can raise additional finance by offering shares which helps the business grow.
Vodafone can have increased negotiation opportunities with suppliers because large
businesses can get economies of scale which means the cost of production, distribution and
sales can decrease when the business increases production, distributions and sales.
, However, there are also some disadvantages of being a PLC such as the cost of setting it up,
complex reporting and accounting requirements and there is a risk of a hostile takeover. The
cost of setting up a PLC requires a minimum of £50,000 due to the requirements and risk.
The requirements are crucial for maintaining investors’ confidence and show transparency
and accountability. A hostile takeover is the acquirer taking over the target company. It is
accomplished without an agreement from the target company. PLCs like Vodafone are
vulnerable to hostile takeovers because their shares are publicly traded, making it easy for
an acquirer.
On the other hand, the NHS is a non-profit organisation owned by the government and
publicly funded through taxation. The NHS is managed by the Department of Health and
Social Care in England. An advantage of being a non-profit organisation is limited liability,
which means the owners are legally responsible for debts, but liability doesn’t extend to
personal assets. Another advantage is cost efficiency meaning the NHS can negotiate better
prices for products such as medication due to it being a large organisation, which helps
reduce overall costs. Although the costs can be reduced, the amount of resources provided
can be limited, which means the NHS must prioritize certain services and treatments and
can result in availability of certain services to disappear. Due to the NHS being publicly
funded they can provide healthcare services to everyone ensuring there’s access to services
regardless of their financial situation. However, there can potentially be funding constrains
like budget cuts or insufficient funding due to political changes or economic conditions,
which can lead to a shortage in resources, longer waiting times and reduced quality of care.
Another disadvantage is slow adaptations to change and innovation due to bureaucracy
processes, which affects efficiency and responsiveness to challenges.
Liability
Liability means being legally responsible for something, in this case, the business. There are
two different types of liability, such as limited liability and unlimited liability. Limited liability
means the shareholders are responsible to a certain extent, which is how much of the
business they own. Unlimited liability means the business owner is responsible for
everything that happens in the business, this is usually a sole trader, and they can lose their
own assets if something goes wrong. The difference between limited and unlimited liability
is the risk that a business is willing to take. Vodafone and NHS both have limited liability
meaning the owners are only responsible for their part of the shares, so the risk is also
limited.
Purpose
The purpose of Vodafone is to ‘connect for a better future’. They use technology to improve
lives and businesses by improving access to it, while also aiming to reduce their
