Edexcel A level Business Paper 3 2024 - Bullet 2 Forms of business in the UK clothing market

Join Dobby the Business Dalmatian on an educational adventure through the diverse landscape of the UK clothing market!
Dobby explores business forms like sole traders, unlimited partnerships, limited companies (LTD), limited partnerships, public limited companies (PLC), charities, joint ventures, and mergers and acquisitions.
Using real-life examples from iconic fashion brands about the business structures behind your favourite clothing labels.
Different Forms of Business in the UK Clothing Sector
Sole Trader: A sole trader is an individual who owns and operates their own business. They have complete control over the business, are personally responsible for its debts, and can keep all profits after tax.
Example: Lucy & Yak is an independent clothing brand that started as a sole trading business, focusing on ethical and sustainable fashion.
Unlimited Partnership: An unlimited partnership involves two or more individuals who run a business together, sharing profits, risks, and responsibilities without limiting their personal liability for the business's debts.
Example: It's less common to find high-profile examples in the clothing sector due to the preference for limited liability structures, but many smaller, traditional tailors and fashion boutiques might operate under this structure, often under shared family ownership.
Limited Company (LTD): A limited company is a business structure where the company is a separate legal entity from its owners. The liability of the shareholders is limited to the capital they have invested.
Example: ASOS plc started as an LTD before becoming a public limited company. It's an online retailer specialising in fashion and cosmetic goods.
Limited Partnership: In a limited partnership, there are both general partners, who manage the business and are personally liable for its debts, and limited partners, who contribute capital and have their liability limited to the amount they have invested.
Example: Such structures are more common in the investment side of the fashion sector, supporting new designers or fashion startups.
Public Limited Company (PLC): A PLC is a company that has the right to sell its shares to the public. It has limited liability and offers shares to the public and other companies.
Example: Burberry Group plc is a British luxury fashion house listed on the London Stock Exchange.
Charity: In the context of the UK clothing sector, a charity might be involved in various activities, including recycling clothes, supporting sustainable fashion initiatives, or providing clothing to those in need.
Example: Traid is a charity working to stop clothes from being thrown away. They turn clothes waste into funds and resources to reduce the environmental and social impacts of our clothes.
Additional Business Structures:
Joint Venture: A joint venture is a business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This is often a temporary arrangement for a particular project, rather than a permanent business structure.
Example from Fashion Sector: Adidas and Stella McCartney partnership is a notable example of a joint venture, combining Adidas's broad reach and manufacturing capabilities with Stella McCartney's high-end fashion design to create a line of high-performance, environmentally conscious sportswear.
Mergers and Acquisitions: This refers to the consolidation of companies or assets through various types of financial transactions, including mergers, acquisitions, consolidations, tender offers, purchase of assets, and management acquisitions.
Example from Fashion Sector: The acquisition of Jimmy Choo by Michael Kors in 2017 is a prominent example. This acquisition allowed Michael Kors to enhance its position in the luxury footwear segment and expand its product offerings.