The report is based on a case study in which two partners started their business for gaining growth and success in the large marketplace. Mary Jones and Sue Jackson are partners and they are operating their business whose name is Little Dessert Shop in which they both are responsible for their duties and functions. The main purpose of this report is to analyze the impact of the low price rate of products on their business operations and their functions effectively. Also, it describes the different market segment and understands the macro-environmental factors which help them in gaining opportunities.
Question 1: Different types of business organizations and apply this knowledge in the context of the case study reference to partnership structures
Business organizations are of various kinds in which the organization’s financial conditions are described for the business. There are majorly four types of business organizations which are sole proprietorship, partnership, corporation, and Limited Liability Company. A sole proprietorship is the type of business organization in which the business is owned by a single owner and all the decisions are made by the owner. This is the simplest and most common type of business ownership. Partnerships are another kind of business organization in which the two parties are involved (Barkauskas, et. al., 2015). Both the owners will invest in terms of labor, money, property, etc for business and are also liable for business debts equally. The corporation is another type of business organization in which tax purposes, which are considered a legal person. The profits of the business are meant as personal income and the profits are distributed as the dividends for shareholders of the company. The limited liability company (LLC) provides the owners with limited liability along with the income advantages of the partnership which is similar to the limited partnership.
As per the case study, Mary Jones and Sue Jackson have contributed £30,000 each for the business of ‘little dessert shop’. The little dessert shop is contributed to a partnership type of business organization in which both parties are liable for the profits and debts of the business. The partnership business organization is very advantageous for the business of little dessert shop as the shared resources of the business will provide more capital for the business which is far better than the proprietorship type of business organization (Bodislav, 2015). The partner’s sue and Mary will share the total profits of the company as they are an equal partner in the business for the dessert shop. This is a simple design for the business organization which can be easily dealt with the flexibility of the proprietorship of the business organization. This type of business organization is less expensive to establish as the capital finance can be divided within parties like Mary and sue invested an equal amount of money for the establishment of the business. There are some disadvantages present in the partnership type of business organization in which the partners will be responsible for debts and losses of the business on equal terms (Chesula, et. al., 2018). The selling of business for Mary and sue can become difficult without the consent of both parties. The partnership of the business can be ended with the decision of any of the partners such as sue and Mary can end the partnership anytime during the time of business. The partnership business organization comes with various advantages but also with some disadvantages of the business affecting factors.
Porter’s five forces framework is an analyzing method for business competition the competitive intensity of the industrial organizations can be determined with the help of porter’s five forces analysis. There are five forces of porter which are as follows-
Competitive rivalry – the little dessert shop of Mary and sue need to identify their rivals in the industry. The rivals can be defeated by the aggressive price cuts in the products and goods of the business (Gao, et. al., 2017). The high impacting marketing campaigns will help the business to grow further with competitive advantages over the rival businesses.
Supplier power – supplier power is very important for the business establishment and the further growth and development of the company. The potential suppliers for the goods and products for the business should be made who will be major factors for the little dessert shop of sue and Mary as the suppliers have the power to charge more when they become stronger. This needs to be handled by the little dessert shop of Mary and sue (Gutierrez, et. al., 2015).
Buyer power – the customers are the major power for the competition in the market. The customer’s base for the little dessert shop of Mary and sue is required to be created for keeping advantageous in the competition of the market. The savvy customers are the most powerful for the business but the customer’s number should be increased for the business impact.
The threat of substitution – there is a threat of substitution for every business when the competition increases and the business need to continuously improve their services to attract a major customer base.
The threat of new entry – this is the major threat for the business in which the new business entry can attract their customers through their schemes or policies which are needed to be savaged by the little dessert shop of Mary and sue.
Mary and sue need to be work for gaining a competitive advantage in the marketplace using porter’s five forces which are very beneficial for the business. They need to keep an eye on the competitive rivalry in the market place which can steal their customers for this they need to be proactive in offering deals and low prices for products. They need to turn the buyer power on their side in which the major customer base will decide the business advantages (Hammel, et. al., 2015). This will help in gaining an advantage over the substitute products of the business in the market or the new rival entry in the market which can attack the business areas of Mary and sue. They also need to improve their relationship with the suppliers of goods and products. The supplier power should be on their side which will help in gaining competitive advantages over the business. These forces will help Mary and sue to gain a competitive advantage for a little dessert shop in the market place.
The macro-environment is the situation that exists in the economy as a whole rather than in a specific industry or region. The macro-environment involves major trends in GDP, inflation spending, employment, fiscal policy, and monetary rate (Shtal, et. al., 2018). As per the case study, Mary and Sue need to examine external environmental factor as these are directly or indirectly impact their business operations. Three macro environmental factors have been selected for evaluating this case study and such help improve company activities or growth. These are described as follows:
Political factors – It is that factor which is directly or indirectly influences the business functions and its regulations. This is required for every business is to adopt government made rules and norms for smoothly run their business operations in a large market place (Iamratanakul, 2015). As per the case, Mary and Sue need to adopt government developed laws while they are providing any products and services to their customers after the opening of the lockdown. As authorities made major guidelines for the people to protect themselves against the COVID 19.
Technological factors – In this factor, Little Dessert shop requires adopting the latest and updated technology which assists them in enhancing the number of customers’ rates. Mary and Sue think that they require offering friendly facilities, quality based products, and a low rate of items which attract more customers (Lüttgens, et. al., 2016). For attracting customers, they need to use promotional techniques that can easily analyze potential buyers towards their shop.
Social and cultural factors – This is one of the important factors which create difficulties while attracting buyers towards company goods. For increasing the profitability of the business, Mary and Sue need to analyze their customers’ choices and preference according to this requires developing appropriate products and services at lower rates (Jasiulewicz-Kaczmarek, et. al., 2017). In this case, it is described that the company is focused on trends towards healthier eating so they are developing healthy products for gaining the attention of potential customers. Along with this, the Little Dessert Shop needs to supply desserts and fix lower prices to capture more buyers. With the help of understanding customers’ needs and wants, the company can easily reach with desired goals and enhancing their goodwill in the market area.
Based on the above-described report, it is concluded that Mary and Sue need to understand whole external environmental factors and how they will create a negative impact on their business operations. It is important for both partners is to focus on evaluating the framework of porters five force model which helps the company in achieving growth and success and also assist in maintaining a strong relationship with customers. Along with this, the Little Dessert Shop examines the three macro-environmental factors that can assist in improving the business development level in the market area.
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