Compare the ownership, control, finance and objectives of business entities in IB Business Management SL, from sole traders and partnerships to companies and non-profit…
Belluno Frames (BF)
Image removed for copyright reasons
Belluno Frames ( B F ) manufactures high-quality frames for glasses (spectacles). Like many other firms in the private sector in northern Italy, the business is small, family-owned, and operates as a private limited company. Giovanni and Elda Rizzo own 100 \% of the shares, nherit. Giovanni designs the frames. Antonio and two employees which their son Antonio will inherit.
B F is located in a building that Giovanni and Elda own, near their house, 42 kilometres outside of Belluno. Antonio and the two employees live in the same village as B F. The road to Belluno is narrow, with traffic that moves very slowly because of farm vehicles. Antonio, who wants the business to grow, has asked his father to rent a building in the industrial park in Belluno with good road access. BF's new location would be closer to suppliers and customers. It would also improve B F 's visibility.
Currently, B F sells on average 1300 frames per month. Each frame is sold at an average price of € 24. Below are the costs (all figures in € ) for B F at its current location and if it moved to the industrial park in Belluno.
Monthly fixed costs:
Variable costs per frame:
Antonio believes that B F 's sales will grow on average to 1700 frames per month in the new location. To reach that level, Antonio suggests that B F offer extra financial rewards in addition to their usual salaries to employees after 1300 frames have been sold each month (the current monthly average). Giovanni and Elda are reluctant.
Define the term private sector.
Identify two advantages for B F of operating as a private limited company.
Suparman Fish ( SF )
Gepa Suparman owns and operates four fishing boats in Indonesia. There is a growing demand for canned (tinned) food, including cans of fish. Gepa wants to enter the secondary sector by opening a small factory producing cans of fish.
Gepa's business will be called Suparman Fish ( S F ) and will be a private limited company. Gepa will own all of the shares. The factory will be located in a village three miles from the harbour. Because unemployment is high in the village, Gepa should easily find workers for the new factory. In addition to the manager's salary, workers' wages, and the cost of fish, supplies, and cans, S F will have the semi-variable cost of electricity.
Gepa has prepared a four-month cash-flow forecast based on the following information:
- opening balance month 1: .
- month 1 : sales revenue of increasing by 20 % per month.
- manager's salary: per month.
- workers' wages: per worker per month.
- variable costs (fish, supplies, and cans) are equal to 40 % of sales revenue.
- semi-variable cost of electricity: fixed cost of per month, plus a variable cost of per kilowatt hour (kwh). Month 1 usage: 100 kwh , increasing by 10 % each month.
Although S F would create several jobs in the village, many residents are not happy about the new factory. The new factory would use chemicals, which cause pollution. Residents are concerned about the unpleasant smells from the factory. A representative from the local employment office is concerned whether Gepa's factory will provide a safe working environment.
Identify two advantages to S F of being a private limited company.
Red Squirrel Apple Juice (RS)
Red Squirrel Apple Juice ( RS) is a cooperative of apple farmers. RS was named after the red squirrel, whose population is declining because of growing numbers of grey squirrels. Originally from North America, grey squirrels are aggressive and take over red squirrels' habitats. RS's founders thought that the red squirrel would be a good symbol to reverse the declining popularity of traditional apple juice due to consumer preference for high-sugar American-style beverages. With the symbol, R S aimed to appeal
to environmentally aware and health-conscious consumers.
Originally, R S only sold apple juice in bulk to beverage companies. These companies bottle the juice and sell it under their own labels. R S requires these companies to place R S 's logo of a red squirrel on their labels. Although R S only sells to a small number of beverage companies, its logo is on juice bottles in stores across the country.
Awareness of the R S brand grew. The cooperative's managers recently opened another channel of distribution: direct sales of bottled juice to consumers at the cooperative's processing plant. R S charges lower prices than stores. The new channel of distribution required capital expenditure for bottling equipment and additional revenue expenditure. R S experienced increased labour and promotion costs, which some farmers complained about.
In recent decades, R S 's home country has experienced rising anti-immigrant sentiment. Some politically motivated organizations have begun to use images of red squirrels to symbolize this sentiment, so some beverage companies no longer want to use R S's logo on their labels.
Some of RS's stakeholders are concerned.
State two features of a cooperative.