1. Describe two characteristics of a public Ltd company.

[4]
Limited Liability: - liable to amt invested in the co. can lose that to pay BS debts
Sell shares to general Public and list on the stock market – FLOATATION
Separate Legal entity
Continuity
Lack of secrecy :- as their accounts are disclosed to the public
Lack of control – divorce between ownership and control
Ownership – Shareholders , Control - BOD
 2. Discuss GSK’s aim to “balance the need to make a profit with the ethical side of health care.”

Additional Questions :
(c) Describe two benefits to GSK if it stayed as a private limited company.

(d) Using Swot Analysis, identify one strength or weakness and one opportunity or threat for GSK

(e) Explain the difference between mission and vision statement for GSK

(f) Explain two other objectives for GSK apart from profit maximisation.
Social enterprises are an example of social purpose organizations (SPOs). They aim to
primarily provide a solution to important social or environmental issues. They exist to to create a
better world due to the role they play to improve society overall. As they are not always revenue-
generating, SPOs often need financial funding and suitable human resources. Other SPOs
include charities, cooperatives, and non-governmental organizations (NGOs).Although there is
no universally accepted definition of a social enterprise (and the legal definition differs between
countries), it is essentially an organization that focuses on meeting social objectives (such as
improving social and environmental well-being) and not only commercial business objectives
such as profit maximization or maximizing shareholder returns (see Case Study 2 - M-Pesa
below).
Traditional, for-profit organizations strive to maximise profits or financial gains for their owners
(shareholders). Jack Welch (former Chairman and CEO of GE - General Electric) said: "Even in
these uncertain times, every company should practise good corporate citizenship post op but
they also need to face the reality that's you first have to make money before you can give it
away." In other words, whilst traditional businesses might donate money to charitable causes or
have ethical objectives, they primarily aim to earn a profit.
Unlike traditional commercial for-profit businesses, social enterprises combine
social and commercial agendas in order to achieve their social and environmental agenda, i.e.,
they strive to gain a financial surplus to facilitate social gain. Their activities, by definition,
purposely create social benefits.
Some differences between social enterprise, traditional commercial (for-profit business entities),
and charitable organizations are outlined below.

Charities Social enterprises Traditional businesses

Mission driven (charitable Purpose driven (social Vision driven (commercial

mission) purpose) vision)

Funded by owners,
Funded by internal and investors, and
Funded by donations internal and external
external sources
sources

Profits distributed to
Surplus reinvested Profits reinvested owners
and/or redistributed

Corporate social
Purely charitable Focus on social benefits
responsibilities*

Focus on social impact and

Focus on societal gains Focus on financial returns
financial gains

* Whist traditional businesses may allocate some funds to corporate social responsibilities
(CSR), it is not their main or most important focus. Instead, the main drivers for such businesses
is profit, growth, and protecting shareholder value. A growing number of traditional businesses
are reporting on the triple bottom line to as part of their CSR and sustainability goals.
 According to the Harvard Business Review, traditional businesses focus on
their mission whereas social enterprises focus on their purpose. The differences between an
organization's mission and purpose are outlined in the table below.

Mission Purpose

What we do Why we do it

Operating a business Sharing a dream

Strategic Cultural

Creates buy-in Instils ownership

Provides focus Fuels passion

Builds a company Builds a community

In reality, it is up to each business to determine its preferred approach to its mission or

purpose.Nevertheless, social enterprises generate revenue like any business organization, but
hold community objectives for the wellbeing of others in society, rather than primarily aiming to
earn profit for their owners.
According to Social Enterprise UK, to be classified as a social enterprise, a business must:

1. have a clear social or environmental mission set out in its governing documents and be
controlled in the interest of that mission

2. be independent of state or government control, and earn more than half of its income
through trading

3. re-invest or donate at least half of its profits or surpluses towards their mission

4. be transparent in the way they operate and the impact they have.
Types of social enterprise explicitly featured in the IB Business Management syllabus:

 For-profit social enterprises (AO3): (i) Private sector companies, (ii) Public sector companies,
and (iii) Cooperatives.

 Non-profit social enterprises (AO3): (iv) Non-governmental organizations (NGOs)

There are three main types of for-profit social enterprises covered in the IB Business
Management syllabus:

 Private sector companies

 Public sector companies
 Cooperatives.