Types of Companies and Their Impact on Business Performance

This report examines different types of companies and how they work, including micro business, small business, medium size business, and large business. It discusses the organizational structure and its impact on business performance. The report also explores the Pestle analysis of Rolls-Royce, a British luxury automobile maker.

BMP3002
Business in Practice
Assessment 1
Types of Companies
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Table of Contents
Introduction........................................................................................................................2
Section 1: Different types of companies and how they work.............................................2
Section 2: Different companies from sole traders to cooperatives and Limited Liability
Partnerships.......................................................................................................................4
Section 3: Different business structures and external factors affecting business.............6
3.1 Identification of different organizational structures and explaining how does
organizational structure affect business productivity.....................................................6
3.2 How different external factors affect the performance of a business – PESTLE
Analysis..........................................................................................................................7
Conclusion.........................................................................................................................8
Reference List..................................................................................................................10

Introduction
The aim of this report is to examine different types of companies and how they
work. This involves discussion regarding micro business, small business, medium size
business and large business companies. This report further discussed about different
companies on the basis of sole trader, partnership, limited liability, public limited and
public limited companies. This report will further discuss about organizational structure
and their impact on performance of organization. This report further discussed about
Pestle analysis of Rolls-Royce, British luxury automobile maker. Company was founded
in 1998 and is headquartered at England, UK.
Section 1: Different types of companies and how they work
Micro business:
Microbusinesses is defined as Small business administration as those that have
only 1-9 employees working together within organization. For Example- Vermont is
based on the micro business as one that employs fewer than 5 individual people. It is
only generating lless than $25,000 in annual revenue. A growing number of states
associated the microbusiness with cannabis related business for licensing purposes.
The characteristics of Micro business employ smaller team of employee than
enterprises, running entirely by single individuals or small teams.
Small business:
A small business is a kind of organization that is primary owned and consist of 50
or a smaller number of employees. Small business does not have annual turnover more
than £8 million (Bartlett and Morse, 2020). But this turnover or revenue completely
depends upon the area in which they operate and their target market segment. Small
business plays a vital role in enhancement of overall economy of a country. They have
access to limited area and do not have offices at many locations. In fact, some of the
small size business operate only from one location. As most of these small businesses
are privately owned so they are organized as sole proprietorships, partnerships or

limited liability companies. Vectair Holdings is one of the example of small business that
sells hygiene products and have 40 employees.
Medium size business:
Medium sized organizations are those companies that have employees up to 250
employee’s and so not have annual turnover of £50 million. These are those companies
that grows rom small sized to medium sized organization either by entering into new
market or by focusing upon developing innovative products and services for attracting a
greater number of employees. Such kind of organizations need to focus upon identifying
their USP so that thy can continue growing further. One of the most common example
of Medium sized organizations is Violia Media Services which is a medium sized
organization which is a book distribution house and have 160 employees. In order to
expand they focused upon Waste Management & Recycling Services as used it as a
unique selling point for attracting a greater number of customers and helped them in
expanding from a small sized company to a medium- sized organizations. They are still
focusing upon using more environment friendly solutions.
Large size business:
Large organizations are those business that have more than 250 employees and
have turnover £50 million. Such kind of organizations can be both public and private
type of organizations. This type of organizations continuously focusses upon expanding
and focusing upon identifying new areas for market expansion. These types of
organizations can expand globally and have quite complex organizational structure.
Such kind of organizations majorly need to focus upon maintaining their environment
sustainability, competitive advance so that they can maintain their growth rate. One of
the most common example of large business is Tesco which is one of the best and well
known example of large organization or business.
Section 2: Different companies from sole traders to cooperatives and
Limited Liability Partnerships
Sole trader business:

A sole trader business had been set up by a professional or a person who is self-
employed taking up all the obligation and responsibility to manage the business and its
corresponding debt. the business of sole trader doesn’t have any legal entity separated
from its owners. this type of business tends to offer comparative simplicity, versatility
and number of business. these type of busines do not have requirement for registration
in companies house or making of ongoing filing information. The busines following up in
this category are such as running of butcher’s shop, small retailers, photographers,
beauticians, hairdressers, plumbers, grocers and builders.
Partnership:
A partnership business is the legal form of business operations terming in
between two or more individuals sharing out managements and respective profit and
losses. In the partnership company all the member shares the profit, loss and liabilities
as per the given contract in company registration basically in proportion of capital. All
the partner is individually with jointly liable regarding corporate arear and
responsibilities. On the other hand, transfer of interest has been important
characteristic in mutual business transformation interest outside opposite party. on the
other hand, in the sole trader decision making is responsibility of only individuals where
as in partnership business all have to look into business decision making respective.
So, the example of partnership business firms is such as Red Bull & GoPro, Sherwin-
Williams & Pottery Barn, West Elm & Casper and Dr. Pepper & Bonne Belle
Limited liability business:
Limited partnership has following with hybrid of the general partnership looking
into the lability protection with tax managements and partnership. In the business
individual, this type of business structure is popular. On the other hand, this business
structure has disadvantages as government have failed in establishing up legal model
for regulation basis. In such situation one partner is active partner having out full
personal liability for partnership debt. whereas another partner will be silent partners
whole liability is limited to its capital. For example, Ready-Made Pizza LLC and any
more.

Public limited liability business:
PLC have the business signifies with offering share in pubic. There is need to
put in name of company is mandatory and communication to investors as anyone is not
dealing with company. in UK, there are business operations which are strictly regulated
and are required to publish periodic reports to shareholders and prospective
shareholders on their true financial health. For example, there are example for Burberry
is Burberry Group PLC. Automaker Rolls-Royce is Rolls-Royce Holdings PLC.
Cooperative:
Cooperative business has been organized with purpose of improving the bargaining
power of the individual members looking out to have product and service quality
provided by the members. This will have reduction in cost which are incurred in
production process provide up the competitive positioning larger companies with deeper
pockets. the common characterise of business have inclusion of fiscal concession,
human value development, democratic management and consumer protection.
Example a Weaver Street market, Ocean Spray and Do it best.
Section 3: Different business structures and external factors affecting
business
3.1 Identification of different organizational structures and explaining how does
organizational structure affect business productivity
Functional organizational structure is one of the most common structure of
organization. In this structure employees are grouped on the basis of their specialty,
skill and knowledge and related roles. Functional structure is based on levels of
Hierarchy that include departments and departments are headed by different
designated leaders of department. Department in functional organisation are based on
organisational functions and leaders are also known as functional managers and
employees are grouped on the basis of their knowledge in relation with organisational
function (Strese and et.al., 2016). This organisational structure ensures that employees
are able to utilise their skills effectively and are positioned on organisational roles on the

basis of their specific skill set. Organisational structure starts with topmost role within
organisation that is president or CEO and then includes positions in organisation on the
basis of their roles from senior to subordinate. Department in which organisational
structure are Finance production human resource administration customer service and
other functions that are carried out in an organisation. Certain benefits associated with
this organisational structure include fixed role and responsibilities of employees that
facilitate their working and performance. Organisational hierarchy remains clear and
everyone is aware of their reporting relationship and responsibility and accountability
within organisation.
This organisational structure influence organisational productivity in positive way and
specially for organisations as everyone in organisation is aware of their role and
responsibility. And with this knowledge they can make effective contribution in
organisational productivity. However this structure if not well manager can result in lake
of teamwork among different departments and this can make negative effect on
organisational productivity. In present Complex business environment it is important that
organisations are flexible to ensure effective productivity and quick adaptations of
changes but functional organisational structure can make organisation rigid and create
difficulty in change adaptation.
Divisional organisational structure involves grouping of organisational functions
on the basis of products or regional divisions. This organisational structure is most
suitable when organisation has more than one product or it operates in more than one
region (Fairfield, 2016). In this organisational structure every division of organisation
has their own necessary resources and functions within division so that they can carry
out their operations effectively.
Concerned with effect of this organizational structure on business productivity
overall productivity of business depends on productivity and performance of each
division of organization. It requires that every organizational division has required
resources and functions are effectively carried out in each division of organization.
However this organizational structure involves higher cost as resources required for

each division are different and functions are also separately carried out on the basis of
organizational division.
3.2 How different external factors affect the performance of a business – PESTLE
Analysis
Political- Political factor includes impact of political conditions and political stability of a
country on decisions and actions of a business. There are several decisions that get
affected by political intervention in a business and decisions of Rolls Royce also get
affected by different political conditions in a country. Decisions later become actions and
affect performance of organisation. Elements of political factors that affect Rolls-Royce
include government policies foreign trade policy taxation and employment and Labour
Law.
Economical- This is another element of micro environment that has significant
influence on financial conditions and monitoring performance of Rolls-Royce (Perera,
2017). Factors that affect organisation include economic condition cost of operations
disposable income employment rate and few other elements. Positive economic
condition ensures that company is having favourable impact of environment on
business performance. Higher disposable income has an opportunity for or organisation
in which they can increase their sales. Similarly low cost of operations increase profit
margin of Rolls Royce contributing in overall strong financial condition of company.
Social- This is another factor of micro environment this factors include element
concerned with customers of Rolls Royce. This include growth rate of population age
distribution consumer attitude towards a product emphasis on safety lifestyle of
customers and culture where organisation is operating. This factor has significant
impact on performance of business in terms of customer satisfaction. This means
passage on safety requires that vehicles of Rolls-Royce have emphasis on safety as
well to ensure customer satisfaction and successful company.
Technological- This includes level of innovation, research and development activities
and technological change within industry. This is an important factor for Rolls-Royce
because it is a automobile maker and technology in automotive industry is very

important. Technology has direct impact on performance of Rolls-Royce because this is
important for improving practices and processes of company.
Legal- This involves legislation, regulations that govern and regulates business
operations and organizations. Rolls-Royce can make positive impact of its performance
by strict adherence to legislation and regulation. Elements involves in this factor include
discrimination laws, consumer protection laws and employment laws and regulations
(Düerkop and Huth, 2017).
Environment- This has become very important because of increasing emphasis of
organization, government and society on protection and safety of environment. This has
impact on performance as this can lead to sustainable performance and growth of Rolls-
Royce.
Conclusion
On the basis of above discussion, it can be concluded that different types of
companies has different types of working practices. This differentiates their practices
and scope of work undertaken by organizations. Further report discussed about
different companies on the basis of sole trader, cooperatives, and limited liability
companies. This is concerned with different types of legal structures of the company.
This different structure of the companies also affects working and performance of the
company. This report also involves discussion regarding organizational structures, and
pestle analysis of Rolls-Royce.

Reference List
Bartlett III, R.P. and Morse, A., 2020. Small business survival capabilities and policy
effectiveness: Evidence from oakland (No. w27629). National Bureau of
Economic Research.
Düerkop, S. and Huth, M., 2017. Transportation under Threat–A PESTLE Analysis for
Critical Logistical Infrastructures. ICTA2017. p.14.
Fairfield, K.D., 2016. Understanding functional and divisional organizational structure: A
classroom exercise. Management Teaching Review. 1(4). pp.242-251.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Strese, S., Meuer, M.W., Flatten, T.C. and Brettel, M., 2016. Organizational
antecedents of cross-functional coopetition: The impact of leadership and
organizational structure on cross-functional coopetition. Industrial Marketing
Management. 53. pp.42-55.
Online
Partnership Business Examples: Everything You Need to Know.2019.[online]. Available
through < https://www.upcounsel.com/partnership-business-examples>
Limited Liability Company.2016. [online]. Available
throughhttps://legaldictionary.net/limited-liability-company/
Divisional organizational structure. 2019. [online]. Available through:
<https://www.accountingtools.com/articles/2017/5/13/divisional-organizational-
structure >.