Chapter 4 Flashcards
What are sole traders, partnerships, private limited companies, public limited companies
Private - funded by investors all with the common goal to make profits
Sole traders - simplest form of private sector business. owned are ran by one person often hairdressers, carpenter, artists etc. they have total control over their business however, the owner is solely and personally liable for all debt accrued.
Partnerships - business owned by 2 or more people who are liable for debt accrued. Ownership can be split between owners e.g. 60/40. there will then be a majority owner. Partnership can be limited companies but with out letter behind their name/ title
Private limited companies - purpose is to generate a profit. Owners are separate to the company as the company is a legal entity in its own right. Thus owners are not liable for debt accrued. There must be a minimum of one shareholder but can be more. Shares can be floated on the stock exchange but can not be traded publicly i.e. can only be sold privately.
Public limited company - same as private limited company but its shares are traded publicly on the stock exchange. This helps generate capital.
What are Co-operatives?
Business ran with benefit of its members in mind. profits are reinvested or shared with its members. e.g. John Lewis
Who owns public, private and third sectors?
Public - government through tax payers money
Private - private investors
Third sector - Trustees
What’s the key factor which separate each sector and their objectives?
How they are funded!
Remember, CSR opportunities in the public sector include the following
Sourcing and evaluating supplier for sustainability
initiating projects that give something back to the community
Reducing environmental impact
Ethical business behaviors
promoting the interests and employment of those disadvantaged in society
Remember, “ procurement policy requirement is that all pubic procurement must be based on value for money, defined as the best mix of quality and effectiveness for the least outlay over the period of use of the goods or services bought”
Consider how public sector organization will likely achieve this by sharing frameworks with one another for economies of scale of process improvements to ensure value for money is achieved.
Which is tender process is most common in public procurement?
Restricted Tender Process - two stage process of an initial pre qualification questionnaire (PQQ) to create a shortlist of suppliers. If short listed supplier meet minimum requirements they will then be invited to tender a.k.a. ITT
Under Public Contracts and Procurement Regulation 2015, supplier are to be given a minimum of 30 days to respond to a PQQ. Buyer must adhere to this for the process to be considered legal
Following public procurement regulation, PQQ etc, there are 5 tender processes a buyer can choose from. Can you name them?
Open tender process - this is a one stage process. IF supplier number are limited the buyer will immediately issue the RfP/ITT. It’s important to remember that this has no PQQ state!
Restricted tender process - following the submission of PQQs, suppliers are then shortlisted for selection. Those selected with be sent RfP
Competitive procedure with negotiation - same as restricted but after initial RfP submissions there are subsequent rounds of proposals and negotiations . No more is allowed after final submissions. This is obviously very time consuming.
Competitive dialogue - used for complex requirements where the spec may be updated during the process based on buyer understanding developing and supplier influencing scope. PQQ would take place to short list suppliers. Supplier are then expected to submit final proposals.
Innovative partnership structure - often used for unique items which do not exist on market. Rather than asking supplier to bid against a spec they are to bid against capacity to research and development, pre agreed level of performance and maximum cost. There is no negotiation after final bid.
The only option whereby buyer may negotiated after final bid is competitive dialogue
Another option is for buyer to use a pre established framework agreement, whereby another buying organisation has completed the selection stage. Same as a preferred supplier list. Buyer would need to advise the tandem use of a framework in any OJEU advert. Using a pre existing framework is quicker as buyer only have to call off a mini competition.
What are Public Policy Notes (PPN)?
PPN are regulations with in public sector which are displayed and maintained by the Crown Commercial Services (CCS) for all public agencies to use as procurement guidance to achieve value for money, transparency etc.
PPN currently set regulation which states that any project value in excess of £10,000 is legally obligated to publish/ advertise the tender via the Contract Finder Platform. PPN Ref: PPN 07/16. Contract Finder enables tender to be seen by UK and European suppliers and for bids to be received to encourage competition.
Which public sector regulations exist?
Public Contract Regulations 2015 - processes to follow before awarding a contract
Public Procurement Regulations 2016 - Amendment made which affect Public Contract
Equality Act 2010 - regulation which dictate equality in the public sector procurement
Public Services (Social Value) Act 2012 - CSR and compliance to help local communities and environment
What advantage and disadvantage of public sector procurement regulations exist?
Adv: Uniformity of processes Enhanced controls Reduces risk Accountability & responsibility Open up contract to wider market/ supplier base
Dis adv: Suppresses innovation May reduce competition Time consuming Costly Strict evaluation processes may remove best supplier One regulation may not suit all projects Inflexible
Possible exam question - why might procurement regulations be both a good and bad thing?
Remember, value for money in the public sector is audited by the national audit office NAO. NAO state audit value for money with the 3 e’s. There are:
Efficiency - spending well
Economy - spending less
Effectiveness - the difference between intended result and the actual result
Note a 4th e has been added called Equity - spending fairly and ability to positively impact all people as intended.
What is net profit?
Gross profit - expenses
This information can be found via the statement of comprehensive income
What should a brand aim to do?
Explain…
What the product is
What the product can do
Why the product is the desired choice
Benefits of branding/ marketing should be:
Increased awareness
Increased profitability
Increased loyalty
Why are Charities regulated?
UK charities are regulated by the Charities Act 2011 ran by the Charities Commission. Their conduct is monitored closely as funding is from the public, businesses as well as government.
Charities with an income over £5,000 must be registered with the Charities commission.
The commission has the power to:
Appoint new trustees
Remove trustees
Appoint new managers
Freeze associated bank accounts
