Manchester United FC is a profit making, private limited company. It is known as private sector as the shareholders of a particular family own it. These members of the family agree to pay specific amount of money in to the Manchester United FC. Manchester United FC is a national business. All the shareholders who have bought their shares who will be the members of the family will control this business.
Tesco is a profit making, public limited company. It is identified as private sector business. The shareholders own this type of business. Tesco permits people to buy shares through stock exchange. People who puts in money expects to get dividend. Director controls Tesco. Tesco is global business. Tesco is a divorced ownership business, which means that even though shareholder owns the business, the business is controlled by only director. Director makes the decision of the business and manages it.
What is the liability of the business? Manchester United FC is a limited liability business. This is because the shareholders are responsible for only the amount of shares they have bought. Example, if father buys ï¿½300 of shares and son has bought ï¿½100 but has not paid for it. Then when business goes in debt then son will only have to pay 100. Tesco is a limited liability business. Therefore, the people who bought shares but have not paid for it will only have to pay for the shares and they bought. If Tesco goes in debt, their prices of the shares will decrease so when the shareholders sell the share they will make loss instead of profit. The liability of each shareholder is limited to any unpaid shares.
Aims of the business? Aims of Manchester United FC will not be to make only profit but also to make the team better and building new and better stadiums. Aim of Tesco will be to make as much profit and to sell better quality products at low price. They will also aim to attract many customers as they can and sell as many shares as they can. Objective of the business? Manchester United FC's objective will be to try getting better coaches and buying enhanced players to improve their team. They will have to get bigger stadiums in order to sell more tickets, which will lead them to make money.
Tesco will have to reduce their prices of their products so that they can attract more customers. They will need to show shareholders that they will make more profit, which will lead people to buy their shares. Number of employees? Manchester United FC has more than100 employees but not as many as global businesses like Tesco. Tesco has over 250,000 employees in U.K., which helps them contribute over to 12 million customers. How is profit shared?
In this Manchester United FC, the profit is shared by the amount of shares bought by the members of the family. So if a person buys shares worth ï¿½800 and the business makes profit so the prices of the share will increase and that person can sell the share for profit. If Manchester United FC makes profit, part of it also goes to the inland revenue as tax. Manchester United FC uses part of their profit to buy new players and a coaches
When Tesco makes profit, the prices of its share will increase and so the people who have bought shares worth of any amount of money can sell those shares for profit. It would also be distributed among the shareholders as dividends. Tesco uses part of their profit to open more stores. They also give part of profit to their employees as a bonus. Conclusion Therefore, I conclude that from this course work I have evaluated many differences between public and private limited company. I have shown this by giving examples of each type of business and how they vary from each other.