Limited Liability Company Business Analysis - Coursework Example

Running head: LEGAL ENVIRONMENT ANALYSIS Legal Environment Analysis s Executive Summary: Perhaps the foremost social and economic responsibility levied upon private and public organisation in recent decades is the maximisation. This responsibility is being increasingly codified in law and various governmental orders. Its influence is becoming increasingly pervasive through a constant series of federal court decisions as well as steady enlargement in the size and scope of administering agencies. Despite the immense pressure of increased competition in the UK hospitality industry a carefully crafted business plan while keeping in view the economic and legal conditions of the market, can help the organisation in achieving its aims and objectives. The report contains practical recommendations for the effective and successful implementation of the business plan in order to make the business successful. Introduction: Task A: "The profitability of London chain hotels fell by 16.9 per cent in February, according to the latest HotStats survey by TRI Hospitality Consulting. London hotels generated daily profit - expressed as income before fixed charges (IBFC) - of 47.75 per available room compared to 57.46 the same month a year earlier." (Hospitality Trends, 2009) Although the trends in the hospitality industry at the levels of the hotel chains are not satisfactory the company is going to be the part of the small firms which comprises 99% of the UK business community. The tourism industry of UK comprises of 127,000 businesses in which 80% of the businesses have a turnover of 250,000 pounds per annum. "The London outlook by business segment has also been revised since the Q4 2007 Hotel Market Outlook report when it was expected that the luxury market would lead the sector in 2008. The model now suggests that the mid-market sector will be the front runner, seeing revPAR growth of 7.3% during the year, before falling back to 4.2% in 2009" (Hotel Market Outlook, 2008). The main source of competitive advantage in services industry is efficient service for the customers. Supply chain plays an important role in the efficient service provision to the customers. "The goal of a supply chain should be to maximise overall supply chain profitability. Supply chain profitability is the difference between the revenue generated from the customer and the total cost incurred across all stages of the supply chain. Supply chain decisions have a large impact on the success or failure of each firm because they significantly influence both the revenue generated as well as the cost incurred. Successful supply chains manage flows of product, information, and funds to provide a high level of product availability to the customer while keeping costs low." (Chopra & Meindl, 2004; 44) The company will also use the same competitive technique in order to keep abreast with the challenges posed due to the high level of competition in the market. Industry Categories or types of establishment Hotels: These are the most luxurious provision of hospitality services (including conference and banqueting), resort, budget and bed and breakfast. Pubs, bars and nightclubs: These are the managed houses where alcoholic beverages are sold. Contract food service providers: These hospitality companies provide services such as schools or hospital catering provision; food and drink and facilities management at different organizations. They also provide services such as housekeeping linen and security. Hospitality services companies: These companies provide support to the provision of in house food and drink. They can be retailers or local authorities. Restaurants: Restaurants are the most popular category of the hospitality business found in UK. These include the Fast food establishments, cafes and coffee shops, mainstream restaurants and fine dining. The proposed business will belong to the same category. The hospitality business will be a restaurant with Oriental theme. Reason for choosing the category is the popularity of the Continental cuisine in the masses in UK. Again the restaurant will not require a huge amount of capital and will involve least risk (Foundation Diploma in Hospitality). Task B: Legal requirements for the Formation of Limited Company: According to the UK Companies Act one or more persons are allowed to develop a company in order to attain lawful objectives by undertaking the subscription of the memorandum of association. In order to get the company incorporated the following documents will be submitted for registration with the required fee to the Registrar of Companies: A memorandum of association, Articles of association, Form 10 and Form 12 The memorandum of association will contain the company's name which will be "Leisure inn"; the registered office of the company will be situated in London, England. The business objectives will include the provision of hospitality services to the tourists in affordable and simple way. The company's memorandum will be delivered to the Registrar and will be signed by each subscriber in front of a witness who will attest the signature. The articles of association can be crafted according to the intentions of the subscribers. The company will have a functional departmentation style in order to ensure the expertise in the specialist area and help avoid duplication of functions strengthening the centralization of the organization. Form 10 will contain the detail regarding the director(s), secretary including their names, addresses, and date of births, occupations and the duration of the directorships. This form will also provide the address which will be at the Oxford Street duly signed by the officer appointed and each subscriber. Legal requirements for the Formation of Limited Company: If the company is not trading it can apply for the dissolution to the registrar. Following conditions need to be fulfilled for a limited company in order to apply for the dissolution: The company has not traded in the last three months. It has changed its name. If the company has sold its assets or rights before ceasing the trade; "Engaged in any other activity except one necessary or expedient for making a striking-off application, settling the company's affairs or meeting a statutory requirement. However, a company can apply for striking off if it has settled trading or business debts in the previous three months." (Coddan, 2008) Task C: The person starting the business can choose to do the business alone, take on one or more partners who also share the profits of the business, or set up a limited company. The business is planned to be a limited company. A limited company has a separate legal personality from its owners (shareholders). The shareholders cannot normally be sued for the debts of the business unless they have given some personal guarantee. Their risk is generally restricted to the amount they have invested in the company when buying the shares. This is called limited liability. The limited company has an edge as the ownership and control are owned by the same individuals. The business will be owned by the shareholders but they will have limited rights over the day to day business of the organisation. The shareholders of the business will appoint directors to run the company. The directors will be answerable to the shareholders and will have responsibility towards employees and the directors both. These directors will be: 1) Executive directors responsible for the daily operations of business. 2) Non-executive directors will provide consultancy to the board of management of the organisation. The operational management of the organisation will comprise of the career managers who will be hired to eke the operational functions of the organisation and will be accountable to the board. As the company will be a Private limited the number of shareholders will be small. The shares of the company will not be transferable without the consent of shareholders. The director's of the company will hold an extensive number of shares. The sources of capital may involve: The founder or promoter. Business associates of the entrepreneur. Venture capitalists. The business is planned to start as a family business which will operate as limited company and at the increasing growth level the company is planned to convert in the public company and will invite the investors to subscribe for the shares. The legal status of a limited company has both pros and cons attached with it. The pros will include the availability of more money for investment. The limited liability company also has a cutting edge over other legal statuses of business of reduced risks for investors according to the proportion of their investment. The limited company has legally separate personality from its owners. It can undertake contracts and can own property also. The organisation can avail benefits of unlimited growth in size of the company. On the other hand the cons include increased legal compliance costs as the financial statement of the limited company is required to be audited and published in order to meet the regulatory requirements. In case of Limited Liability Company the shareholders can exercise their power by selling their shares or voting to sack the directors of the company (BPP, 2008; pp.52-53). References BPP, (2008). F1: Accountant in Business, BPP Learning Media, pp. 52-53 Chopra, S., & Meindl, P., (2004). Supply chain Management: Strategy, Planning and Operation, Second Edition, Pearson Education, Inc. United Kingdom, pp. 44. Coddan, (2008). Companies Dissolution Fillings, retrieved as on April 12, 2009 from http://www.coddan.co.uk/s-1C-uk-company-dissolution-and-restoration.html Foundation Diploma in Hospitality, Introducing how the hospitality industry works: Unit 1, available at goalonline.co.uk/web/admin/edinews/Hospitality Level 1 Unit 1 Introducing how the Hospitality. Hospitality Trends, (2009). UK Chain Hotels Market Review - February 2009, retrieved as on April 12, 2009 from http://www.htrends.com/modules.phpop=modload&name=trends&file=detail&sid=37783 Hotel Market Outlook, (2008). RevPAR growth remains positive despite the current economic climate, retrieved as on April 12, 2009 from deloitte.com/dtt/.../content/dtt_Hotel_Market_Outlook_Q1_2008(1).pdf Read More