I have chosen the two businesses Burberry and The Rainbow Trust Foundation for this assignment. Burberry is a PLC which means that it is owned by many shareholders, for profit and sells ready-to-wear outwear, fashion accessories, fragrances, sunglasses and cosmetics. The Rainbow Trust Foundation is a charity who gets donations for providing care towards children with cancer or any other illnesses. Being a charity means that the company isn’t for profit.
Ownership and Liability
Burberry is a PLC (Public Limited Company) because it is a large luxury brand and is owned by many shareholders. By being a PLC, the company can advertise its shares and they are listed on Stock exchange which means large numbers of their shares are being bought and sold all the time to whoever wants those shares.
Advantages of being a PLC:
- Because they are listed on the Stock exchange they have a greater number of potential investors than a private company.
- They attract more media coverage because it is owned by many shareholders
- Is likely to attract more interest from the media providing a good form of cheap publicity.
The disadvantage of a PLC:
- More regulated meaning it has more things it must do according to the law for example, producing detailed information on its finances each year and send it to its shareholders giving information away to potential competitors.
As Burberry is a PLC, it has limited liability because of it being such a big company it can own land and equipment since they resource, manufacture and sell their products. The advantage of limited liability is when there is a limit to the amount of money investors can lose; they can only lose the funds invested and not their personal possessions. The disadvantage is that the accounts have to be independently checked.
The Rainbow Trust Foundation is a charity that supports families who has a child aged 0-18 years with life-threatening or terminal illness and needs the support according to their website. Unlike Burberry who makes profit, Rainbow Trust is a non-profit company meaning any money they get from donations they don’t buy anything they already have but to invest in anything they need in order to make useful charitable purposes. The charity is not owned by anyone but is controlled by a board of directors/trustees who are responsible for ensuring the charity are run well to deliver charitable causes. The trustees recruit people who are passionate, motivated and find this particular purpose rewarding since they need to be committed on caring with people.
Pros of becoming a charity:
- Are widely recognised as existing for social good and certain sources of grant funding are open only to organisations with charitable status.
Cons of a charity:
- They may face restrictions that can be carried out or funded and charities cannot raise equity investment (the buying and holding shares of stock).
Purpose and Sector
Burberry is a brand that purely exists for focusing on outdoor attire. Thomas Burberry first supplied a weather-proof gabardine trench coat for World War 1 officers in trenches. Nowadays Burberry is well-known for their trench coats as its name came from trenches where military personnel were sustained in World War 1 to keep officers protected against the wind and rain.
Burberry is in the primary, secondary and tertiary sector since it manufactures, produces and sell their products. The company can take control over their supply chain since it is in more than one sector by knowing the key knowledge that the factories are in which is a huge benefit for the company. There are also disadvantages, for example:
- Burberry is a huge brand worldwide which means they have many manufacturing factories across the world. The operating factories can produce many toxic fumes and pollution which can cause global warming.
- The factories take away crucial space of farmland and requires a large quantity of water in an area where its already sparse.
As Burberry sell, manufacture and improve ideas for the products to hopefully maximize their profit to satisfy the shareholders, compared to Rainbow Trust, it is completely different. Firstly, since Rainbow Trust is a charity, they do not have any stakeholders and most charities are not there for profit. Rainbow Trust purely exists to support families with children with illnesses and working more closely with hospices and other charities and organisations that also support children and their family. Any money that they get from their donations, they will use it to invest to something that can make their services better (growth).
Business Aims and Objectives
PLC’s generally have four main aims for their company such as profit maximisation, growth, increase market shares and survival. For example, Burberry’s goal for growth is to aim to positively impact 1 million people by 2022:
- 65,000 students engaged in Yorkshire, UK, through school workshops and work experience at Burberry
- 18,000 people in Tuscany, Italy, benefitting from enhanced multicultural spaces
- 7,000 people in Afghanistan benefitting from training on more sustainable livestock management
Every PLC’s main aim is to have profit maximisation so Burberry’s aim is to:
- focus on expanding the business year after year and increasing its market share
- maximize profits by reducing costs and generating sales to satisfy their shareholders
Whereas Rainbow Trust is mainly for survival and growth. This is because charities do not get enough profit from the donations and grants they get. They mostly need the money to invest in different things such as revenues to keep their charity open. They make money by using volunteers, hosting gala fundraising events, sponsoring events and advertising to bring in more donations.
Scale and Size
As Burberry is one of the biggest luxury brands in the worldwide, it is an international company meaning that they have stores all around the world (475 stores as of 30/03/19) such as the Asia Pacific, EMEIA (Europe, Middle East and Africa) and America. Burberry has its headquarters in London and has its manufacturing factories throughout the world such as China, Poland, Romania, India, Spain, Italy, England and some in the US.
Advantages of a large enterprise:
- They have a greater degree of security than smaller companies and they offer career growth
- Income that cannot be matched by small companies.
- Big companies are usually very slow to act. It can take years to get a new idea accepted
- They can be too layered with management meaning you can find yourself ten layers removed to being a manager, thus being in the dark side about the direction of the company.
Unlike Burberry, Rainbow Trust is a medium enterprise because they have 11-49 employees working since it’s just a charity but there are at least 32 volunteers, 53 staff and 8 care teams of family support workers in 9 locations so this charity is only a national and local charity within the UK. They do not support families internationally since they do not have enough funding.
Burberry has internal and external stakeholders. Their internal stakeholders are the employees (want to stay employed), managers (only interested in maximizing the profit the business makes), the board of directors and investors (concerned about earning income from their investment). For Rainbow Trust, its internal stakeholders are also the managers, employees and owners but because it is a charity they also have volunteers because they contribute by volunteering with supporting families.
Burberry’s external stakeholders are its suppliers (wants the business to continue purchasing from them), the government (wants the business to pay taxes, employ more people, follow laws and truthfully report its financial conditions), shareholders, creditors (wants to be repaid on time and in full), the society (community wants the business to contribute positively to its local environment and population), customers (wants the business to provide high-quality goods or services at low cost). Rainbow Trust’s external stakeholders are also their suppliers, customers (affects the charity because they are the ones giving donations which is very important for a charity), competition (for example, Make a Wish) and the government. Since charities do not make enough profit like big companies such as Burberry, they receive most of their money from customers and grants from the government.
In conclusion Burberry and The Rainbow Trust Foundation are both very different from each other. Rainbow Trust is a rather small and national charity but as for Burberry, it is a very large company and a very well-known brand across the world.