For-profit organisations are businesses established primarily to generate financial returns for their owners or shareholders. In Britain, they form the backbone of the economy, ranging from small family-run enterprises to large multinational corporations listed on the London Stock Exchange (LSE). Their central objective is the creation of profit, but they also contribute significantly to employment, innovation, tax revenues and economic growth.
This case study explores the structure, objectives, governance, performance and societal impact of for-profit organisations in Britain. Drawing on academic literature and reputable sources, it demonstrates how these organisations operate within a complex regulatory and economic environment while balancing shareholder expectations with broader stakeholder responsibilities.
1.0 Legal Forms and Organisational Structure
In Britain, for-profit organisations commonly operate under several legal forms, including:
- Sole traders
- Partnerships
- Private limited companies (Ltd)
- Public limited companies (plc)
According to Worthington and Britton (2018), the choice of legal structure affects liability, access to finance and regulatory obligations. For example, a private limited company (Ltd) limits shareholders’ liability to their investment, whereas a public limited company (plc) can raise capital by selling shares to the public.
A well-known example is Tesco plc, one of Britain’s largest retailers. As a public limited company, Tesco is accountable to shareholders and regulated under the Companies Act 2006 and the UK Corporate Governance Code (Financial Reporting Council (FRC), 2018). In contrast, many small enterprises operate as sole traders, where ownership and management are combined.
2.0 Objectives of For-Profit Organisations
The primary aim of a for-profit organisation is profit maximisation. Classical economic theory suggests firms seek to maximise shareholder wealth (Friedman, 1970). However, modern business theory recognises that companies must also consider long-term sustainability and stakeholder relationships (Johnson, Scholes and Whittington, 2020).
Short-Term vs Long-Term Objectives
For example, BP plc, operating in the energy sector, must generate returns for investors while investing in renewable energy transitions. Balancing short-term profitability with long-term strategic repositioning illustrates how British firms increasingly adopt a broader view of performance.
Similarly, Unilever plc, though headquartered in London, operates globally and has emphasised sustainable business models alongside profitability (Unilever, 2023). This reflects a shift from pure shareholder primacy to a stakeholder-oriented approach.
3.0 Corporate Governance in Britain
Corporate governance refers to the systems by which companies are directed and controlled (Cadbury, 1992). Britain has a strong governance framework, particularly for listed companies.
The UK Corporate Governance Code
The UK Corporate Governance Code (FRC, 2018) sets out principles relating to:
- Board leadership and effectiveness
- Accountability and audit
- Remuneration
- Shareholder engagement
Listed companies must apply the “comply or explain” principle, meaning they either follow the Code or justify deviations.
For example, Barclays plc, a major British bank, maintains a board structure with independent non-executive directors to ensure oversight and reduce agency problems. Agency theory suggests governance mechanisms are necessary to align management interests with those of shareholders (Jensen and Meckling, 1976).
4.0 Performance and Financial Management
Performance in for-profit organisations is typically measured through:
- Revenue growth
- Profit margins
- Return on investment (ROI)
- Share price performance
Atrill and McLaney (2019) emphasise the importance of financial ratio analysis in assessing business performance. For instance, companies like Marks & Spencer (M&S) regularly publish annual reports detailing profitability, liquidity and solvency indicators.
Beyond financial metrics, performance increasingly includes Environmental, Social and Governance (ESG) factors. According to Hart and Zingales (2022), investors are now more willing to support decisions that align with social values, even if they reduce short-term profits.
5.0 Contribution to the British Economy
For-profit organisations play a central role in Britain’s economy. According to the Office for National Statistics (ONS, 2023), the private sector accounts for the majority of employment and economic output in the UK.
Employment and Innovation
Large firms such as AstraZeneca plc contribute significantly to research and development in pharmaceuticals, enhancing Britain’s global competitiveness. Smaller enterprises, meanwhile, drive innovation and local employment.
The Confederation of British Industry (CBI, 2022) highlights that private businesses generate tax revenues that fund public services. Thus, while profit-driven, these organisations also fulfil vital economic and social functions.
6.0 Ethical Responsibilities and Corporate Social Responsibility (CSR)
Modern for-profit organisations face growing expectations regarding corporate social responsibility (CSR). Carroll’s (1991) CSR pyramid identifies four responsibilities:
- Economic
- Legal
- Ethical
- Philanthropic
British firms increasingly integrate CSR into core strategy. For example, Tesco has committed to reducing food waste and carbon emissions. Similarly, BP has pledged net-zero emissions targets.
However, tensions often arise between profitability and ethics. The 2008 financial crisis, involving several British banks, highlighted weaknesses in governance and risk management (Mallin, 2019). This led to stricter regulation and greater scrutiny.
7.0 Challenges Facing For-Profit Organisations in Britain
Brexit and Trade Uncertainty
Britain’s exit from the European Union created regulatory and supply chain challenges. Companies such as automotive manufacturers have had to adapt to new customs arrangements (ONS, 2023).
Digital Transformation
Retailers like Marks & Spencer and Tesco have accelerated online operations to compete with global e-commerce platforms. Digital transformation requires investment but can enhance long-term competitiveness.
Sustainability Pressures
Climate change policies and carbon reduction targets are reshaping industries, particularly energy and manufacturing. Firms must innovate while maintaining profitability.
- Case Example: Tesco plc
Tesco provides a useful illustration of a British for-profit organisation navigating structure, governance and performance.
- Structure: Public limited company listed on the LSE
- Governance: Board oversight aligned with the UK Corporate Governance Code
- Performance: Revenue growth supported by digital expansion and cost control
- CSR: Sustainability commitments and community programmes
Tesco’s recovery following accounting irregularities in 2014 demonstrates the importance of governance reform and transparency. Improved board oversight restored investor confidence.
For-profit organisations in Britain are diverse, dynamic and central to economic prosperity. While their primary objective remains profit generation, modern expectations require attention to governance, sustainability and stakeholder engagement.
Through strong regulatory frameworks such as the Companies Act 2006 and the UK Corporate Governance Code, Britain promotes accountability and transparency. Companies like Tesco, BP and Barclays illustrate how structure, governance and performance intersect in practice.
Ultimately, the British for-profit model reflects an evolving balance between shareholder wealth creation and social responsibility, demonstrating that profitability and ethical conduct are not mutually exclusive but increasingly interconnected.
References
Atrill, P. and McLaney, E. (2019) Accounting and Finance for Non-Specialists. 11th edn. Harlow: Pearson.
Cadbury, A. (1992) Report of the Committee on the Financial Aspects of Corporate Governance. London: Gee.
Carroll, A.B. (1991) ‘The pyramid of corporate social responsibility’, Business Horizons, 34(4), pp. 39–48.
CBI (2022) The contribution of business to the UK economy. London: Confederation of British Industry.
Financial Reporting Council (FRC) (2018) The UK Corporate Governance Code. London: FRC.
Friedman, M. (1970) ‘The social responsibility of business is to increase its profits’, The New York Times Magazine, 13 September.
Hart, O. and Zingales, L. (2022) ‘The new corporate governance’, NBER Working Paper No. 29975.
Jensen, M.C. and Meckling, W.H. (1976) ‘Theory of the firm: Managerial behavior, agency costs and ownership structure’, Journal of Financial Economics, 3(4), pp. 305–360.
Johnson, G., Scholes, R. and Whittington, R. (2020) Exploring Strategy. 12th edn. Harlow: Pearson.
Mallin, C.A. (2019) Corporate Governance. 6th edn. Oxford: Oxford University Press.
Office for National Statistics (ONS) (2023) UK business activity and economic statistics. London: ONS.
Unilever (2023) Annual Report and Accounts 2023. London: Unilever PLC.
