Business Structure - Not for Profit Business.pptx

Not for Profit Business

AS Business Unit 1: Business Opportunities Chapter 6 Business Structure

What are not – for – profit businesses?

• They exist NOT to make a profit

• Their aims are to BENEFIT the community or to HELP people
• Their focus is on social or ethical objectives

What are not – for – profit businesses?

• They exist NOT to make a profit

• Their aims are to BENEFIT the community or to HELP people
• Their focus is on social or ethical objectives

How are they run?

• Similar to other businesses

• Money flows in (income) and out (expenditure)

• Money generated by the business (excess) does not go to the owners as profit

• Instead it is used as reinvestment in the business and to achieve business objectives

Not - for - Profit

1. Charities
2. Co-operatives
3. Social Enterprises

Student Activity…………………..

• What is a charity?
• What is a co-operative?
• What is a social enterprise?

Charities

• Charities are established with the aim of collecting money from individuals and spending it on a ‘cause’

• They can earn surpluses

• Can you name some charities, locally, nationally and internationally? And what is their ‘cause’?

Charities - Greenpeace

• Other charities have a broader perspective (multi-issue). Greenpeace state that their mission is to…………………………………………

“Defend the natural world and promote peace by investigating, exposing and confronting environmental abuse, [and] championing environmentally responsible solutions.”

The Big Issue

• Charities can often have a narrow focus (single issue) in what they are trying to achieve. For example, the Big Issues mission statement is:

“Our mission as a UK charity for people who are homeless, is to connect vendors with the vital support and personal solutions that enable them to rebuild their lives; to find their own paths as they journey away from homelessness”.

Charities – Examples

• Oxfam
• Red Cross
• Cymru Shelter
• Money in from where?
• Donations
• Charity shops
• Note that charities are liable for tax reductions

The surge in charity shops BHF - Number of shops: 732 Sales: £161 million Profit: £31.3m

The surge in charity shops Number of shops: 700 Sales: £88.7 million Profit: £20.1 million

The surge in charity shops Number of shops: 550 Sales:£69.2 million Profits: £14.4 million

Student Activity Local/National Charitable Organisations

Identify one local charity and one national charity and find out what their purpose and motivations are?

Co-operatives

History:

• Business co-operatives were initially set up in the 19th century as part of a social movement by working people.
• They were established around workplaces or in districts of industrial towns
• Were designed to prevent profiteering and exploitation by company shops and tallymen (door-to-door lenders).

Co-operatives

• A co-operative is an organisation owned by its members.
• Employees of co-operatives automatically become members after a short probationary period.
• Shoppers at co-operative shops such as ‘the Co- op’, can apply to become members: acceptance is automatic.
• Members benefit through the payment of a dividend (their share of the co-operatives profits) in the form of money-off vouchers.

Co-operatives

• Just like any business, co-operatives have managers and there is a business hierarchy
• Hierarchy, is much flatter than that of a typical business – there are fewer layers
• Pay differentials between the most senior and most junior workers may be just 2 or 3 times (it is likely to be 30 times or more in a PLC).

Worker Co-operatives

• These are businesses which are owned and controlled by those who work in it
• They often take the form of producer co-operatives, where people work together to produce a good or a service
• As owners of the business, all employees are likely to be well motivated because they are all working towards the same goal.

Co-operative examples:

• John Lewis Partnership
• Suma Wholefoods
• Essential Trading Co-op
• Infinity Foods
• Edinburgh Bicycles
• The co-operative Bank
• The cooperative Group

Social Enterprises

• Social enterprises are a booming organisation structure.
• They are businesses with clear social objectives and are currently thriving in a number of industries and sectors of the economy.
• Social enterprises trade to help solve social problems, improve the communities they operate in, and improve the environment.

• Many social enterprises aim to make profits from selling goods and services in the open market; but then, instead of paying dividends, they reinvest these profits, towards achieving their social objectives.

Social Enterprises

• The government is looking at the social enterprise model as a way of providing services such as child protection.
• Other social enterprises operate in the housing, drinks and holiday sectors, as well as many other sectors, and the number of social entrepreneurs is rapidly growing.

Social Enterprise examples………………..

• Eden project

• Jamie Oliver Restaurant 15

• Divine Chocolate

Homework……………..

• In a short (300 words) essay discuss the following statement:

‘Co- operatives will never be able to compete and be successful in the modern business environment.’ Friday 16th 2016