AN OVERVIEW OF ISSUES TO DO WITH WEBDESPIX (WDP)

1. WebDesPix AN OVERVIEW OF ISSUES TO DO WITH WEBDESPIX (WDP) This is only a start look at your booklets and notes!

2. CONTEXT – WebDesPix Ltd (WDP) In 1999, three students (Tom, Dee and Ali) in the final year of their Computer Studies degrees at Bristol University decided to start a business designing websites. The business was called WebDesPix (WDP). On the advice of Tom’s father, John, WDP was a private limited company. John is still involved with the company as non-executive Chair and attends a monthly board meeting, travelling from Suffolk to Bristol. The company has always been located in Bristol. Tom says, “We could have run the company from anywhere in England but, as we were all from different parts of the country, it was easier to locate where we had studied”. The initial capital of £8 000 was raised from the three families. Ali left the company after two years and was bought out by Tom and Dee, who each now own 50% of the shares. They are planning to give John shares in the company. It is company policy to re-invest profits. The company has never had a bank loan but uses an overdraft facility. The objectives of WDP for 2009 were to: • consolidate following two years of sustained growth (15% on turnover per annum) • market all products on-line • increase use of e-commerce in its own website and those it designs for other companies • continue trading in a competitive market where anybody can set up as a web designer. Web design is still the core business of the company but new services include electronic newsletters, domain registrations, hosting and search engine optimisation. The company offers three standard web design packages: Budget at £800, Professional at £1 000 and Executive at £1 500. Each package provides a number of web pages, e-mail facilities and the costs of hosting the site. WDP will give a quotation to clients who require non-standard packages. The majority of clients are in the South West of England but 25% of the company’s income is from clients in the South East. WDP uses branding, shown below, with the tag line, ‘Like ducks to water’. The company is labour-intensive with relatively small overheads. WDP builds and upgrades its own computers. Tom is responsible for sales and finance, and Dee for design and health & safety. All other areas of the business are shared between them. There are seven full-time employees: two sales assistants, two computer coders, two search engine optimisers and a design assistant. All of these salaried positions require highly-qualified (a degree in IT) and skilled people who train new employees as required. Vacancies are advertised on the company website and at regular networking meetings with other businesses in the Bristol area. Tom and Dee interview all applicants personally. There is a three-month probationary period for all new employees. There are two part-time employees: a Personal Assistant (PA) for Tom and a bookkeeper. The part-time employees present monthly invoices for their services. Full-time employees receive a monthly bonus based on turnover; free health insurance after six months’ employment; a free lunch each Friday and the use of a Wii during their breaks. Office hours are five days a week from 0900 to 1730. The two sales assistants receive, in addition to their salary, a commission of 12½% on their sales. No employee works from home. The main form of communication is by e-mail. Fax is now rarely used. There is occasional use of video-conferencing. The company website displays examples of its web design work. Tom says, “Networking meetings and word-of-mouth are very important and bring us most of our clients”. All financial documents are raised by the Sage Accounting package and the PA uses Word, Excel, PowerPoint, Access and Outlook.

3. WebDesPix TYPES OF BUSINESS

4. Private Limited Company Definition of a (LTD) WDP is a private limited company that is run by its shareholders, but these shareholders are made up of only family and friends (Tom, Dee and John). Shares for WDP are not available to the general public and are not sold on the stock exchange.

5. How WDP was set up • Step 1 – A memorandum of association and articles of association was prepared. • Step 2 – These documents were sent to the registrar of companies • Step 3 – The registrar of companies issued a certificate of incorporation which allowed WDP to start trading.

6. What type of Business is WDP? LTD Private Limited Company What are the advantages of staying an Ltd? They have limited liability, can’t be taken over – stays in Family. Have total control. Why did they become an LTD? • Have limited liability – rather than unlimited can’t take PW • Can raise/get capital into the business by selling Shares to family/friends, Directors control who they sell to. • Easier to get better loan deals (cheaper) – better risk for Banks • Better credit facilities from suppliers How is it formed? Memorandum of AssociationArticles of AssociationRegistrar of CompaniesCertificate of Incorporation

7. Advantages and Disadvantages of WDP’s type of ownership. • It can raise capital by issuing (selling) shares, but not to the general public. • The owners have limited liability. • WDP has its own legal identity • Money can be raised by selling shares to their friends and family. • WDP cannot sell shares on the stock market. • Annual reports have to be produced by law.

8. Reasons why WDP might change ownership Growth/decline of the business Growth of the business To raise extra capital • As WDP grows it will need new sources of capital and it may need to change its legal structure.

9. Obtaining finance Changing to a Public Limited Company Definition of a (PLC): A public limited company is a business that is run by shareholders, the shares can be bought by any one, and its shares can be bought on the stock exchange. • As a public limited company (Plc) WDP will be able to raise considerably more capital than a private limited company (Ltd). • But remember, we are in a recession difficult to launch on the stock market and it would be very expensive. Not a realistic option for WDP.

10. What sector does WDP operate in? WDP provides web design, electronic newsletters, domain registration, hosting and engine search optimisation services. They therefore operate within the tertiary sector. This is where finished product can be sold. This sector provides both goods and services.

11. Main Roles and responsibilities of those involved in LTD’s WILF: The meaning and responsibilities of: CEO Board of directors Chief executive chair

12. Activity: Use the case study to answer the following questions: • Who are the owners of WDP? • Who are the directors of WDP? • Who the non-executive chief of WDP is? • Who the board of directors of WDP might be?

13. Who are the owners of WDP? WDP is owned by its shareholders which are currently Tom, Dee and members of their families (including Ali’s as they all invested capital into the business).

14. Who are the directors of WDP? The Directors of WDP are Tom and Dee. Roles and responsibilities of Tom and Dee: • Act on behalf of the shareholders • Run the day to day affairs of WDP • Provide reports to shareholders about WDP performance, future plans and strategies. • Prepare the articles and memorandum of association. The objectives of the company are defined in the Memorandum of Association and regulations are laid out in the Articles of Association. • Hold yearly board meetings

15. What is John’s position with WDP? Johns position within WDP is that of non-executive chair. His main roles and responsibilities are to: • Work with Tom and Dee to develop an appropriate schedule and agendas for board meetings. • Chairing all meetings of the Board • Address all issues relating to the performance of individual directors Tom and Dee.

16. Who are the board of directors? The board of directors of WDP will be made up of Tom, Dee, John and shareholders. The members of the board (other than Tom, Dee and John) will be decided by the shareholders voting.

17. Communication between the board of directors and shareholders • Communication between the board and shareholders happens mainly through yearly meeting called annual general meetings. 2. The board meet monthly to discuss WDP performance.

18. WDP may look to see if they can use any Economies of Scale • Buying – buy in bulk cheaper prices • Marketing – cost of advertising per item cheaper • Financial – Easier to borrow money at better rates, issue shares • Administrative – can afford specialist managers What are they, giveme (4)? Diseconomies of Scale Sometimes can be a problem – How? • Decisions take longer • Communication poor with staff • Employees feel demotivated • May lead to trade union problems

19. WebDesPix LOCATION

20. Factors which may influence a business’s choice of location include: • Close to customers • Availability of skilled labour • Transport links for suppliers and distribution • Financial help available from the government • History and tradition • Wage levels

21. Close to Customers • These businesses depend on customers passing through their doors and spending money. Locating near their customer base increases their chances of making sales.

22. Availability and Cost of Skilled Labour • The cost of labour varies in different parts of the UK, because of levels of unemployment and differences in living costs. Wages in London are usually higher than in the rest of the UK. • Businesses need people to work for them. Consequently, businesses often set up in populated areas.

23. Transport Links for Suppliers and Distribution • Most businesses need to be easily accessible to their suppliers and distributors. • Businesses that distribute their products within the UK or overseas will have to think about access to the transport infrastructure.

24. Financial help available from the government • The government can give grants, tax relief and subsidies to businesses that set-up in areas of high unemployment. The aim is to try and create new jobs. Benefits: These incentives can drastically cut a business costs.

25. History and tradition • Sometimes businesses will locate in a certain area because there is a history of that type of business in the area. Benefits of this will be: - People in the area have the skills that are needed. - Local colleges provide special training for the type of work required.

26. Wage levels • The average wage offered by businesses varies in different parts of the UK. • So business need to think about the wage or salary that people in that area will expect as this can raise their costs. Think about this. Do you feel that WDP should stay in Bristol or maybe move to the South East where 25% of their customers are. Be able to answer reasons for and against moving location.

27. WebDesPix HUMAN RESOURCES

28. External Recruitment Methods used by WDP to recruit and select staff How their recruitment and selection process can differ

29. Starter • Use the case study to identify what methods of recruitment and section WDP use to recruit staff. • List one advantage and drawback for WDP using these methods for both recruitment and selection.

30. What methods do WDP use at the moment to recruit staff? Vacancies at WDP are advertised via: • the company website • Networking meetings

31. What selection methods do WDP use to recruit staff? Selection at WDP takes the form of: • Interview (Tom and Dee carry these out personally). • All applicants have a 3 month probationary period.

32. The stages in recruitment that WDP will need to go through to recruit staff In order to externally recruit staff WDP will go through the following stages: • Write a job description • Write a person specification • Advertise job via their website or at networking meetings • Receive applications • Shortlist • Interview • Appoint successful applicant (subject to references) • Check references

33. Other methods of recruitment that WDP could use to advertise/recruit staff Other external methods of recruitment that could be used by WDP: • Bristol local newspaper • ICT related professional journal/magazines • Job Centre • Recruitment agency • Careers Service • Head hunting • Local radio • University Career Fairs • Competitors staff!

34. Things that WDP will need to consider when deciding to recruit staff • How quickly vacancy needs to be filled • Pay • Skills, qualifications and experience needed • Local supply and demand for jobs • Importance of job to organisation • Size of organisation

36. Selection stages that WDP will need to go through • Receive application forms or CVs – to find out qualifications and experience • Shortlist - by comparing applications with person specification • Interview – to judge qualities not possible to judge from written applications • also to give applicants a chance to find out about the WDP. - Could also include a test to find out whether candidate has key skills needed for the post • Call for references – to check performance in a previous job or to check character

38. Why is it Important to Have a Good Recruitment and Selection Process? It is important for WDP to have a good recruitment process for the following reasons: • John and Dee can make sure that she employ’s the best person for the job. This person should in-turn bring new ideas into the practice, and help them towards achieving their overall business aims and objectives.

39. Exam Question 1 WDP are growing. As a result John and Dee decide to recruit new members of staff. Explain the stages they will go through in recruiting and selecting new employees (4 marks)

40. Exam question 2 WDP need to recruit a new sales team. Identify and evaluate suitable methods of: • recruiting and selecting • Training • Motivating The new team (12 marks)

41. Exam question 3 WDP has to advertise for a new member of staff to work at the business. They must choose one of the following to advertise for the new member of staff: • A free weekly paper that serves the local town. • Local radio • ICT related professional journal/magazines • Job Centre 1. From the list choose a suitable source to advertise for the new member of staff. Give one reason for your choice (2 marks). 2. Suggest one disadvantage to WDP of using the source you have chosen (1 mark).

42. WebDesPix Employment Legislation How the law will affects the way WDP recruits and selects staff

43. Keywords: • Discrimination – When you don’t give someone a job or treat them differently because of their colour, sex, or race.

44. Sex Discrimination Act What the Act says: It is illegal to discriminate against anyone because of their sex or marital status. How this will affect WDP:When advertising a vacancy John and Dee must be careful with the language and wording used in the advert. When selecting the best candidate for the job they cannot be seen to be choosing the candidate based on their sex or martial status. They should also not promote, train, or dismiss any of their staff on these grounds.

45. Race Relations Act What the Act says: It is illegal to discriminate against someone on the basis of race, ethnic group or colour. How this will affect WDP: When advertising a vacancy WDP must be careful with the language and wording used in the advert and must not show preference to a particular ethnic group. When selecting the best candidate for the job John and Dee cannot be seen to be choosing the candidate based on their ethnic group. They should also not promote, train, or dismiss any of their staff on these grounds.

46. Equal Pay Act What the Act says: An employee who does similar work as someone else of the opposite sex is entitled to equal rates of pay and conditions. Men and women should be given equal pay. How this will affect WDP: WDPmust pay all their staff that do the same job i.e. the 2 sales assistants, the same amount of pay regardless of their gender.

47. Disability Discrimination Act What the Act says: It is unlawful to discriminate against a person on the grounds of disability. How this will affect WDP: When advertising a vacancy WDP must be careful with the language and wording used in the advert. When selecting the best candidate for the job John and Dee cannot be seen to be choosing the candidate based on a disability they may have, as long as the disability will not affect them from carrying out the job. WDP should also not promote, train, or dismiss any of their staff on these grounds.

48. Exam question 1 Advise how the following acts will influence how John and Dee writes the job advertisement and carries out the selection process: • Race relations • Sex discriminations • Disability discrimination • Equal pay (8 marks)

49. Benefits and drawbacks of WDP using probationary periods as part of the recruitment process

50. What is a probationary period? A trial period for new employees, prior to their employment becoming permanent. Up to a maximum of 90 days.