Business Environment Assignment

1 January 2017

Its mission statement is to enrich people lives with programs that inform, educate and entertain. The BBC has the second largest budget of any UK broadcaster with an operating expenditure of ? 4. 23 billion in 2009/2010. The only UK broadcaster with a larger operating expenditure is British Sky Broadcasting with ? 5. 9 billion (http://en. wikipedia. org/wiki/BBC#Finance).

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The reason that Sky’s operating expenditure is higher is because Sky is a private sector PLC, which means that the public can buy shares in a company. Selling shares means more capital income is invested in the business as people invest their money hoping that the value of their shares will increase. Sky will then use this money from the shares to improve their broadcasting service by offering better quality, more programs and more channels. With the BBC being a public sector organisation it doesn’t have shares therefore the BBC wouldn’t receive more income from selling shares meaning that they have a lower operating expenditure.

The BBC is in the public sector meaning that it is owned and funded by government grants which are funded through tax payer’s money, through income tax which in effect means that the taxpayers own the BBC. The public sector is in decline as government have had to cut funds to some government funded public sector services such as the Police service as many local police stations have lost their funding because the United Kingdom is in recession so government have tried to find ways to reduce the countries debt which means reducing costs through reducing funds to some government organisations.

The BBC creates ? 3,446. 8 million in license fees collected from householders, ? 888,3million from BBC Commercial businesses, ? 293 million from government grants and ? 112. 9 from other income such as providing content for overseas broadcasters through BBC World Service (http://en. wikipedia. org/wiki/BBC#Revenue). The BBC Commercial is made up of BBC Shop which is a multi-channel retailer selling thousands of books, DVDs, audiobooks and toys for fans of the BBC and BBC programmes.

BBC Shop sells products online, by phone, post. BBC Worldwide also makes up BBC Commercial. (http://www. bbc. co. uk/aboutthebbc/insidethebbc/whatwedo/commercialbusiness) The BBC World Service broadcasts news and information to the world on radio, TV and online in 32 different languages. Any profits from this are returned to the BBC for investment in new programs and services (http://www. bbc. co. uk/aboutthebbc/insidethebbc/whoweare/ataglance). The BBC is a large business as it has 23,000 staff (http://en. wikipedia. rg/wiki/BBC) however it is only international not global because all programs and services are produced in the UK only and are sent out to other countries meaning it is international as goods or services are produced in one country but are then used in other countries. An example of this is the program ‘Top Gear’ it is a UK program produced by the BBC but it is broadcasted in other countries in different languages. In contrast, British Petroleum is a public limited company (PLC) which means that the public can buy shares in BP and become shareholders. A shareholder is an owner of shares in a company.

The price of shares in pounds is ? 461. 00 as of the 31st October 2011 this is down ? 6. 20 (http://www. bp. com/extendedsectiongenericarticle. do? categoryId=9026517&contentId=7048504). When shares go down it means that large amounts of shareholders want to sell them. If people don’t want to own the shares it pushes the price that buyers want to buy them at down. Reasons for shares to go down might be because of a company’s action such as the Gulf of Mexico oil spill this led to an increase in the sale of shares because shareholders don’t want to be associated with the BP Corporation.

British Petroleum is a public limited company (PLC). This means that the shareholders own the company and anybody can buy shares in BP, whereas if BP was a Private Limited Company then share cannot be sold to the public only employees in the business can buy the shares. The benefit of being a PLC is that selling shares raises capital for the limited company however the company and the shareholders are separate meaning that the shareholders have limited liability meaning that their investment in BP and their personal assets are separate.

This is a benefit because if BP were in debt then the shareholders personal assets such as their house and car would not be reposed to repay the debt because the shareholders’ investment and personal assets are separate. The advantages of a PLC are that Public Limited Companies have more available capital through selling shares meaning there is potentially more money invested in the business. Another advantage of a PLC a limited company is seen to be a separate legal existence from its owners. This has several advantages, including the fact that the company will exist beyond the life of its members.

If they retire or die, the company will continue to exist and operate. The disadvantages of BP being a PLC is that it can be expensive to create, as the company must pay taxes and employee insurance, such as Initial Public Offering (IPO) which is the first sale of stock by a company to the public, as well as and additional legal fees or other incidentals in setting up on the stock exchange. Another disadvantage of PLC is that even though they are very profitable, the profits must be evenly distributed among all shareholders and with BP there are 315,553 shareholders the profits are reduced by a large amount.

Sharing profits between shareholders is called dividends. The definition of this is a sum of money paid regularly by a company to its shareholders out of its profits. Another disadvantage is that accounts must be kept and published and fourthly a PLC is less flexible than other forms of ownership because any business decisions and changes must be run past all shareholders meaning changes are harder to make as all or a majority must agree to them. The British Broadcasting Corporation is a publicly owned organisation.

This means that it is owned by the country or state and is controlled by the national government or local authority. Being a public owned organisation the BBC’s capital is funded by government but any profit isn’t returned to the government. Instead it is invested back into to BBC organisation so that the BBC can maintain and improve their service by broadcasting more programs or increasing TV channels and improving their radio services because the aim of a public organisation is to provide a service to the public for free and not to make a profit so any profit is invested back into the business so the BBC creates a surplus.

Surplus is a term used to describe when a company’s income exceeds their expenditure and this extra capital is reinvested into the business instead of being used in staff bonuses. The advantage of a public sector organisation to the public is that it they are usually a free service however the BBC is different as the public has to pay a TV license so this is a disadvantage to the public.

As well as this the government is in a good position to plan the overall provisions for the country and any profits made could benefit taxpayers because if the organisation is making a profit the government has extra funds and taxes can be reduced or more money can be invested to improve the service that the BBC offer. The disadvantages of being a publicly owned company like the BBC are that the running of the corporation could be politically influenced.

The ways that the BBC can be politically influenced is by the government asking to broadcast programs that support their views on various political subjects to persuade the public to follow their views and not the views of other political party’s. As well as this they can be influenced by the government as they can cut grants to the BBC like they have done with the police service. This would influence the BBC because the quality of their services would reduce and the amount of TV and Radio programs that they could broadcast would be lowered.

Public corporations are very large, with high amounts of employees which can lead to inefficacies within the organisation. The BBC can suffer from having too many managers due to being a large organisation which costs a lot of money and decisions and information can take a long time to reach the bottom of the hierarchy leading to inefficacies in the BBC organisation. Thirdly, if the corporation is making a loss then high taxes may be implemented to increase government funds so that the organisation can cover their costs costing the taxpayer more.

BP (British Petroleum) exists to supply fuels, lubricants, petrochemicals to the public at a cost for a profit. As well as this BP aims to make a profit. Evidence for this is that BP is a public limited company meaning that it has shareholders and shareholders want their share price to increase because of BP profits being shared with shareholders, which is called dividends, which means BP has to sell products at a cost to cover the expenses of extracting and refining the crude oil and to then make a profit.

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