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T LEVEL
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Revision questions to consolidate
students’ understanding
Management and Administration T Level: Core
1.1 Types of organisations and
the environments in which they
operate
The types of organisations commonly
set up across the UK and the
differences between each type
A business is defined as an organisation or
enterprising operation engaged in commercial,
industrial or professional activities. Not all
organisations are businesses, however. A business
is a type of organisation, a group of people that is
formed for a given purpose and which then establishes
and conducts its activities in pursuit of this purpose.
Businesses can be either for-profit or non-profit
organisations.
Profit and not-for-profit
Managers and administrators are employed by the
owners and directors of organisations to run them on
their behalf. There are many different types of business
that you might come across as a customer or employee
or that you hear about in the news. They may be small
and local or large and international.
First, if organisations are owned and managed by
private individuals operating to make a profit. This is
called the private sector.
A new business that sets up in your town or area is a
local business. However, in time, it might set up outlets
in other parts of the UK so that it becomes a national
business. It may also start to sell its products or services
overseas and so become an international business.
Most managers of businesses are expected to make
a profit. This requires achieving a surplus of income
over expenditure (see Section 4.4), that is, more money
coming in than going out. But in other organisations
this is not so important, if these are managed on a
not-for-profit basis. Organisations can be of different
legal types, as we will see in Section 1.4, and they may
be classed in three groups.
Second, organisations may be owned or managed by
the government for the benefit of the public. When
they are, this is called the public sector.
Third, organisations may be owned and managed by
either private individuals or the government and aim
to provide a service on a free and voluntary basis. This
is called the voluntary or third sector.
Voluntary/third sector
Case study
Costa Coffee was founded by brothers Sergio and
Bruno Costa in Fenchurch Street, London in 1971.
Ten years later, with a shop and roasting facilities in
Vauxhall, South London, the brothers had gained a
wide reputation for their coffee. By 1995 they had 41
shops turning over £55m each year.
Source: Costa Coffee takes the cream as Britons wake up to
coffee | Financial Times (www.ft.com/content/
46aa29d2-49f3-11e8-8ee8-cae73aab7ccb)
The company was bought for about £20m by the
conglomerate Whitbread, which is best known for
brewing beer. By 2018 Costa Coffee had 2,400
outlets in Britain and 1,400 in more than 30 countries,
making it the world’s second-biggest coffee shop
in terms of outlets. In the summer of the same year,
Whitbread sold the business to Coca-Cola, the world’s
biggest beverage maker, in a deal worth £3.9bn.
Find three countries outside the UK where Costa
Coffee has outlets.
Which other businesses are the major rivals to
Costa Coffee in the UK? Have they ever been
sold to other businesses like Costa Coffee has?
Why do you think Costa Coffee has been so
successful?
Key terms
Profit: the difference between the total costs and
total revenue of a business.
Private sector: the part of the economy owned by
individuals and groups of individuals.
Public sector: the part of the economy where
production is organised by the state or government.
Voluntary or third sector: the part of the economy
that consists of non-profit organisations.
The private sector
This sector is made up of businesses and organisations
that are owned by individuals or groups of individuals. It
is the part of the economy that is managed by individuals
4
Case studies place
knowledge into a reallife context to help
with problem-solving
and dilemmas
Tasks and questions
throughout provide an
opportunity to reflect on
the knowledge learned
This is made up of non-profit-making organisations
that are set up, organised and staffed mostly by unpaid
volunteers working for a specific social purpose. It is
independent from local and national government and
is distinct from the private sector. It is called the third
sector so as to distinguish the organisations from the
public and private sectors.
Key terms and
definitions highlighted
throughout
Chapter 1 Business context
and companies for profit and is not controlled or run on
behalf of the central or local government. Since the late
1980s, the private sector has owned and run the majority
of the businesses in the UK, so it is the sector in which
you are most likely to find employment.
There are around six million private sector businesses
in the UK, employing more than 27 million people
between them in 2020.
Source: Business population estimates for the UK and regions 2020:
statistical release (HTML) – GOV.UK (www.gov.uk)
The private sector includes organisations and
individuals that provide goods and services, and their
primary aim is to make a profit. Profits are distributed
to owners and shareholders as well as reinvested. Five
of the largest private sector UK businesses that you will
know are Barclays, BT, Sainsbury’s, Tesco and Vodafone.
Reflect
While making a profit is their main aim, many private
sector organisations endeavour to act in a socially
responsible way through providing good conditions
of employment, being a good citizen in the local
community and supporting a clean environment by
not wasting resources.
Can you think of any ways in which organisations
you know of do this?
Research
Research-based
activities to stretch and
challenge learners,
enabling them to go
beyond the course
As there is no single database in the UK that deals
with every active business, a number of registers
are consulted to produce estimates. A register of
business population estimates was started in 2010
and is produced by the Department for Business,
Energy and Industrial Strategy (BEIS). Before this,
data was recorded as statistics on small to medium
enterprises (SMEs).
Source: www.gov.uk/government/statistics/business-populationestimates-2020/business-population-estimates-for-the-uk-andregions-2020-statistical-release-html
Visit the website below and open the latest business
population estimates for the UK and regions 2020.
www.gov.uk/government/statistics/businesspopulation-estimates-2020
Find the chart that shows the number of private
sector businesses by English region and UK country
in 2020. What is the number of private sector
businesses in your region?
Almost any business can be a private sector
organisation. Examples of private individuals
operating a business on their own include
shopkeepers, electricians, plumbers, restaurant owners
and hairdressers. They are known as sole proprietors.
Private individuals may work together in groups
known as partnerships, such as dentists, accountants,
lawyers and opticians. Large private businesses may
increase their financial funds by becoming companies
and offering shares to people they privately know or to
the general public. The range of legal entity types that
organisations can form is explained in Section 1.4.
Private sector organisations determine their own
pay structures and these can be competitive and
offer large incentives. The private sector rewards
creativity and innovation. This can provide scope for
personal development. The private sector promotes a
competitive working environment where job roles and
pay are flexible.
As private sector organisations are set up by
individuals, they may be both owner and manager, in
a single person operation. The term employees refers
to the number of people working within the business
under a contract of employment in return for a wage
or salary. A business can be counted as having no
employees if all the business is conducted by people
classed as being working proprietors. They are often
considered to be self-employed. Both full-time and
part-time workers are counted, and both are counted
as employees.
Research
Visit the ‘Nature of business: Standard Industrial
Classification (SIC) codes’ page on the Companies
House website shown below to find the range of
different codes A to U that identify enterprises
according to the Standard Industrial Classification
2007. These figures are estimated from surveys.
https://resources.companieshouse.gov.uk/sic/
Then identify the code for these three enterprises from
the Warwick Institute for Employment Research website:
https://cascotweb.warwick.ac.uk/#/classification/
sic2007
Public sector: primary school
Private sector: the construction of a primary school
Voluntary sector: charitable child care
5
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Administration T Level: Core
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