A.P1 Explain the features of two contrasting businesses
This guide will help you answer A.P1 Explain the features of two contrasting businesses.
For this task we will look at two businesses that have clear differences. One will be a large public limited company (PLC) operating internationally. The other will be a small sole trader operating locally. By comparing them you can see how their features vary and how each meets the needs of their customers in different ways.
The two businesses chosen for this example are:
- Tesco PLC – a large supermarket chain and retail company based in the UK with operations in several countries.
- Jane’s Cakes – a local home-based cake-making business run by an individual in a small town.
These examples are different in their size, structure, ownership, aims, and the way they operate.
Business Type
Tesco PLC
Tesco is a public limited company. This means it can sell shares to the public on the stock exchange. It is listed on the London Stock Exchange. The public and large institutions can buy these shares, making Tesco owned by multiple shareholders. The company is legally separate from its owners and has limited liability. This protects shareholders from losing more than they invested.
Jane’s Cakes
Jane’s Cakes is a sole trader business. This means it is owned and run by one person. There are no shares sold to the public. The owner has unlimited liability, which means they are personally responsible for all business debts. There is no legal separation between the owner and the business.
Size and Scale
Tesco PLC
Tesco is a large organisation employing thousands of staff worldwide. It operates in several countries and has a vast network of supermarkets, smaller convenience stores, online services and distribution centres. The scale of its operation allows large amounts of goods to be bought in bulk and sold at competitive prices.
Jane’s Cakes
Jane’s Cakes is a very small business operating locally. The owner works from home, producing cakes for events such as weddings, birthdays, and anniversaries. Production is small-scale and customer orders are made individually. The business serves customers within a limited local area.
Sector
Tesco PLC
Tesco operates in the tertiary sector. The tertiary sector sells products and services directly to consumers. Tesco purchases goods from manufacturers or wholesalers and sells them in physical stores and online. It also offers services such as banking, insurance, and mobile phone plans.
Jane’s Cakes
Jane’s Cakes is also part of the tertiary sector as it sells products directly to customers. However, it also has a small element of primary production when sourcing local ingredients or fresh products from nearby farms for cake making.
Purpose and Aims
Tesco PLC
Tesco’s aim is to make a profit for shareholders while delivering value to customers. It has a strong focus on customer satisfaction, competitive pricing, and offering a wide range of products. The business also aims to grow market share, expand into new markets, and improve efficiency.
Jane’s Cakes
Jane’s Cakes aims to provide high-quality, handmade cakes tailored to customer requirements. Meeting customer needs and building a good reputation locally are key goals. Profit is important but growth is limited to what can be achieved by one person’s workload and kitchen space.
Ownership and Liability
Tesco PLC
Shareholders own the company. They elect a board of directors to run it on their behalf. Shareholders benefit from any share price increases and dividends. Tesco has limited liability, meaning personal assets of shareholders are not at risk if the company fails.
Jane’s Cakes
Jane owns the business outright. She makes all decisions herself and keeps all profits after costs. However, she also carries all risks. Her personal assets could be used to pay debts if the business struggles.
Legal Structure
Tesco PLC
As a PLC, Tesco must follow strict legal rules. It must publish detailed annual reports, submit accounts to Companies House, and follow the UK Corporate Governance Code. Share trading rules apply and the company must remain transparent to investors.
Jane’s Cakes
As a sole trader, Jane’s Cakes has simpler legal requirements. She must register with HM Revenue & Customs, keep accurate financial records, and submit a self-assessment tax return. There is far less public reporting than for a PLC.
Funding
Tesco PLC
Tesco can raise large amounts of money by selling shares, issuing bonds, or getting bank loans. Access to finance supports new store openings, technology investments, and international expansion.
Jane’s Cakes
Jane funds her business through personal savings and income from sales. She may take a small bank loan if needed. Her access to funds is much more limited compared to a PLC.
Location and Reach
Tesco PLC
Tesco has thousands of stores worldwide. It selects store locations based on market research, consumer demand, and transport access. It can reach millions of customers each week. Online delivery services extend this reach further.
Jane’s Cakes
Jane’s customer base is within her local community. Orders are collected or delivered locally. She may use social media for promotion but cannot fulfil orders far away because of transport limits and the fragile nature of cakes.
Products and Services
Tesco PLC
Tesco offers a wide range of products, from fresh food and household goods to electronics and clothing. It offers services like Tesco Bank, mobile phone contracts, optical services, and fuel stations. The product mix is diverse and aimed at many different customer needs.
Jane’s Cakes
Jane’s Cakes sells handmade cakes, cupcakes, and custom baked goods. Each product is unique and often tailored to customer events. Production quantity is small. The focus is on quality, taste, and presentation.
Technology Used
Tesco PLC
Tesco uses advanced technology in operations. This includes automated stock control systems, self-service checkouts, online shopping platforms, and digital marketing. Tesco also uses data analysis to study buying habits and create targeted offers.
Jane’s Cakes
Jane uses basic kitchen equipment, a small website or social media page, and perhaps accounting software for admin. She may use an email address or messaging apps for orders. Technology use is simple and affordable.
Customer Service
Tesco PLC
Tesco offers customer service through store staff, helplines, apps, and online chat. It has formal complaint procedures and loyalty schemes such as Clubcard to reward regular customers.
Jane’s Cakes
Jane deals with each customer personally. Service is more personal and flexible. She can make last-minute changes, offer advice on designs, and build relationships with repeat customers directly.
Marketing and Promotion
Tesco PLC
Tesco uses national advertising campaigns on television, radio, online platforms, and billboards. It uses sophisticated branding strategies, seasonal promotions, and loyalty programmes. Marketing is designed to attract millions of customers in different markets.
Jane’s Cakes
Jane relies on word of mouth, social media posts, local adverts, and attendance at community events or fairs. Marketing is low-cost and informal but very targeted at local people.
Staff and Employment
Tesco PLC
Tesco has a large workforce with various roles, including shop assistants, managers, warehouse staff, accountants, and IT specialists. Staff receive structured training, career development opportunities, and benefits such as pensions and staff discounts.
Jane’s Cakes
Jane works alone or hires temporary help during busy periods. There is little formal structure. Skills training is self-directed and work hours are based on customer orders.
Decision Making
Tesco PLC
Decisions are often made by senior managers or the board. They are influenced by sales data, market trends, and shareholder interests. Decision-making can be formal, documented, and subject to approval processes.
Jane’s Cakes
Jane can make decisions instantly without needing approval from others. She can adjust pricing, menu items, or production schedules based on her own judgement.
Advantages and Disadvantages of Each
Tesco PLC Advantages
- Large financial resources
- Strong brand recognition
- Ability to reach a wide market
- Economies of scale reduce costs
Tesco PLC Disadvantages
- Complex decision-making processes
- High competition from other large retailers
- Public scrutiny from shareholders, customers, and regulators
Jane’s Cakes Advantages
- Flexible and personal service
- Direct relationship with customers
- Low start-up and running costs
Jane’s Cakes Disadvantages
- Limited growth potential
- Personal liability for debts
- Limited financial resources
Final Thoughts
By comparing Tesco PLC and Jane’s Cakes, you can see how business features change depending on scale, structure, and ownership. A large public limited company has access to significant financial resources, operates across wide areas, and has complex management systems. A small sole trader operates on a more personal level, with simpler legal responsibilities and more direct customer contact.
Both types of business can be successful. Success depends on how well they meet the needs of their target customers and how they manage their resources. Understanding these differences helps you see why a business operates in a certain way and why decisions are made as they are. Each structure has benefits and challenges, and these will shape the day-to-day running of the business and its future growth.