Understanding Different Types of Companies and Organizational Structures - Tesco Case Study

This report discusses the different types of companies and organizational structures, using Tesco as a case study. It explores the various types of businesses and their characteristics, as well as the impact of organizational structures on business productivity. Additionally, it examines the influence of political, economic, social, technological, legal, and environmental factors on Tesco's performance.

Assessment

Table of Contents
INTRODUCTION...............................................................................................................3
Section 1............................................................................................................................3
Understanding of different types of companies.............................................................3
Section 2............................................................................................................................5
Different companies.......................................................................................................5
Section 3............................................................................................................................7
Organisational structures...............................................................................................7
Pestle Analysis...............................................................................................................9
CONCLUSION.................................................................................................................10
REFERENCES................................................................................................................12

INTRODUCTION
There are different types of organisations that operate in business environment.
Businesses also have different structure, structure can be defined as system in which
roles and responsibilities are determined in an organisational setting. This report will
contextualise Tesco, British multinational groceries and general merchandise retailer.
Founded in 1919 Tesco is headquartered at Hertfordshire, England. With its existence
at around 6800 locations Tesco operates 11 countries. This report will discuss about
different types of companies and companies on the basis of their ownership. Further
this report will also discuss about organisational structures and how they affect business
productivity. Later this report will also discuss about affect that macro environment has
on business.
Section 1
Understanding of different types of companies
There are various type of businesses that one organisation may need to compete
with in their business environment. Regardless of their size organisation they compete
with can be of any size. Tesco also compete with different types of businesses and
these are-
Micro business
Micro businesses can be defined as those businesses that have less than 10
employees. This business category is sub-category of small businesses. Evolution
Loans Limited is an example of micro business (Warren, 2017). These businesses
operate with limited resources and mainly business decisions are taken by owners of
the business. Mainly these businesses are operated by their owners and employees are
there for minimum remuneration. Characteristics of Evolution Loans Limited involve-
 Less than 10 employees
 Limited scope of operations
 Operates in finance industry

 Turnover less than £632,000
 Balance sheet £316,000 or less
Small business
Small business can defined as those organisations that employs fewer than 50
employees. Though are bigger than in terms of size and scope as compared to micro
business, but still has limited scope. URA Ventures Limited is an example of this type of
business.
Characteristics of URA Ventures Limited involve-
 Less than 50 employees
 Limited operations
 Limited turnover and profits
Medium size business
Medium size businesses can be defined as businesses having less than 250 and
more than 50 employees. These businesses also involve limited liability businesses and
their scale of operations is bigger compared to small and micro organisations. These
organisations earn enough profit that they are working for growth of the businesses. In
terms of activities, these businesses along with core business activities also perform
key managerial and administrative activities to facilitate operations of the business.
these businesses are well established businesses (Maroufkhani and et.al., 2020). The
Esland Group Holdings Limited is an example of medium size organisation.
Characteristics of The Esland Group Holdings Limited involve-
 Less than 250 members
 Different services
 People with capability to contribute in growth of business
 Other than business also undertake charity activities
Large size business

Business with more than 250 employees is under this category. These are
businesses that invest extensive capital in their businesses and are seeking to increase
their productivity, profitability and grow their business. these organisations work on
providing value to their target customers and ensure that customers remain loyal to the
companies. Organisations also generate high revenue through increasing their
productivity and sale (Calvo-Mora and et.al., 2016). Tesco is an example of this type of
business. characteristics of Tesco involve-
 More than 250 employees, Tesco employs around 450000 employees
 Public limited company
 Involve several other activities than business and administrative activities
 Regulated by laws and regulations
Section 2
Different companies
Sole trade business
Sole trade business can be defined as form of ownership in which single
individual organises, has title to and operates the business in their own name. This
means that in this type of business or company individual is responsible for carrying out
business activities along with making all decisions for the business. Ma Baker is an
example of this type of organisation (Nwanzu and Babalola, 2019). Characteristics of
Ma Baker involve-
 Sole proprietorship
 Profit and loss- In this business individual owner of the business is subject to all
profit and loss of the business
 Less regulation
 Business and owner are considered same as business is not separate from its
owner
 Owner of business is liable for 100% debts

Partnership business
Partnership can be defined as association of 2 or more people who mutually
decides to carry out business activities. In this business they jointly share profit as well
as loss of the business. Partnership comes in existence through partnership agreement.
Social Chain is an example of this type of business it was started in partnership of two
people. Characteristics of Social Chain involves-
 Two or more persons are involved in a partnership business
 Agreement- business and relationship of partners is based on partnership
agreement
 Registration- Not necessarily but in order to take some benefits firms need legal
registration
 Not a separate legal entity- This means that partnership business may come to
end in case of death, bankruptcy of the partners
Limited liability business
Limited liability business can be defined as business in which owners and
members of the business have limited liability with respect to actions of the company
(LEUCIUC, 2018). This means that in this type of company owners are offered with
benefit of personal liability, in other words liability of the company cannot be recovered
from personal assets of the owners. Rise Art Limited is example of this type of
company. Characteristics of the Rise Art Limited involve-
 Separate legal existence- Company has separate existence from its owners
 Limited liability protection- Owners and members are protected
 Simplicity- This is simple to create this form of business
 Flexibility in terms of taxation
Public limited liability
Public limited liability business is a separate legal business entity which offers its
shares to be traded on stock exchange for general public. Other than this, profits
generated by company are also taxed as personal income of the company, different

from its members and owners. Tesco is an example of this type of company.
Characteristics of Tesco limited liability involves-
 Separate legal existence from its owners and members
 Formation, operation and winding-up of the company are strictly governed by
rules and regulations and laws
 Requirement of least members- This means that a public limited company must
have minimum number of members stated in law
 Needs to have three directors
Cooperatives
A cooperative can be defined as an association of persons that is owned and
controlled by the people to meet their common needs and objectives (Travis, 2019).
These are jointly owned and democratically controlled businesses. In other words,
cooperatives can be considered as people-centred organisations. Central England Co-
operative is an example of this business, about 330000 members it provide different
types of services to its members. Characteristics of Central England Co-operative
involve-
 Voluntary association
 Equal voting rights- This means it is based on principle of ‘one man one vote’
 Separate legal entity- Its existence is different from its members
 Distribution of surplus- Members are paid dividend and bonus
 Democratic management- Office bearers are elected by members
 Perpetual existence- Lifelong existence
Section 3
Organisational structures
Organisational structure can be defined as system in which roles and
responsibilities within organisation are directed towards attainment of organisational

activities. Different types of organisational structure and their effect on business
productivity can be explained as below-
Hierarchical organisational structure
This organisational structure consists of different layers in organisation and
outline relationship between different hierarchies in organisation. In this type of
organisational structure chain of command goes from top to down. Tesco also has
functional organisational structure. This is because it is best suitable for large
organisations.
Concerned with its effect on productivity, this organisation structure functions on
the basis of authority and responsibility and this is why people are aware of their role
within organisation (Doz, 2016). This is why productivity is based on consistency of the
job that employee is doing.
Functional organisational structure
This is also similar to hierarchical structure, but in this structure employees are
organised according to their specific skills and their corresponding functions in the
organisation. In this type of organisational structure each department is managed
independently.
Concerned with effect on productivity it can be said that productivity in this
structure gets affected by skills of staff in the organisation. Other than this, department
functions independently but their coordination also play important role in productivity.
Divisional organisational structure
In this structure organisation are operated on the basis of different divisions.
Divisions have control on their own resources, and each division has their own
marketing team, sales team and other teams as required. Division are based on market,
product, and functions like elements.
Productivity of organisation gets affected by performance and productivity of
each division in the organisation.

Project organisational structure
Project organisation structure is a temporary organisation that is designed to
achieve certain goals and objectives of the organisation. Specialist teams are
responsible for management of project. Once project is completed, members of project
get back to their previous roles.
Productivity in this organisational structure gets affected and influenced by
success of each project that has been employed by organisation.
Pestle Analysis
Political
This involves political conditions and political stability influencing Tesco and its
operations in country (Rastogi and Trivedi, 2016). Tesco is a multinational company and
this is why its performance gets affected by political factors of all those companies in
which it operates. Brexit is an example of political influence in performance of Tesco.
Economical
This involves elements such as GDP, per capita income, cost of operations,
taxation, interest rate, employment and level of unemployment are certain factors that
influence performance of Tesco. Recession is an example of economic situations
influencing Tesco. These factors significantly influence financial performance of the
Tesco.
Social
This is concerned with consumer shopping trends and preference of customers
in terms of quality and price. Online-shopping trend has influenced Tesco and it requires
ensuring effective presence on online-platform. Other than this, healthy eating habits,
increasing concern for environment requires sustainable products being used as input
also affect performance of Tesco. However, customers of different countries have
different shopping patterns and their taste and preferences also differentiated and this

has direct impact on Tesco’s performance. This means single product cannot be
guaranteed success in every market where Tesco operates.
Technological
This factor consist of technological advancement, technology being used by
competitors, use of technology for facilitating and enhancing customers in-store
experience are certain elements of this factor affecting performance of Tesco
(Christodoulou and Cullinane, 2019). It is important that Tesco has latest technology to
allow it a competitive advantage. Tesco and its performance can be influenced by
technological factors of different countries.
Legal
This involves different laws and regulations that are important to conform in order
to ensure avoidance of legal issues for Tesco. There are different laws and regulations
that govern business and its activities. this involve consumer protection laws,
employment laws and regulations, equality regulations and many other. However as
Tesco operates in international business environment it become subject to laws and
regulations of different countries and this has direct impact on the performance of
Tesco.
Environmental
This involve following environmental regulations and contributing in sustainability
of environment. People and organisations are becoming more concern towards
environment and in such situation it is important that Tesco has environment friendly
practices (Rastogi and Trivedi, 2016). This will help Tesco is ensuring positive image in
its target market. However, this influence performance as environment friendly practices
can increase cost of operations and influencing performance of Tesco.
CONCLUSION
On the basis of above discussion, it can be concluded that Tesco even after
being a multinational corporation has to compete with organisations of different types

and sizes. This report discussed different types in terms of size, operations and later in
terms of ownership of the organisation. This discussion also involved different
organisational structures and their effect on performance of organisation, this outlines
that different structure of organisation involve different elements that affect its
productivity. This involves impact of divisional performance and productivity, project
success and success of different departments. Later impact of different factors in
performance of Tesco were also discussed and on the basis of this it can be outlined
that there are several opportunities available for Tesco but environment also offers
different threats to Tesco.

REFERENCES
Books and Journals
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management and key business results in large organisations and SMEs: A
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Challenges from the Implementation of a Port Energy Management System:
A SWOT/PESTLE Analysis. Sustainability. 11(21). p.6046.
Doz, Y., 2016. Managing multinational operations: from organisational structures to
mental structures and from operations to innovations. European Journal of
International Management. 10(1). pp.10-24.
LEUCIUC, E.G., 2018. DECISIONS OF THE SOLE PARTNERSHIP WITHIN THE
UNIPERSONAL LIMITED LIABILITY COMPANY. LEGISLATIVE AND
DOCTRINE ASPECTS. Ecoforum Journal. 7(2).
Maroufkhani, P and et.al., 2020. Big data analytics adoption: Determinants and
performances among small to medium-sized enterprises. International
Journal of Information Management. 54. p.102190.
Nwanzu, C.L. and Babalola, S.S., 2019. Impact of organization ownership and strategy
on organizational sustainable practices. Academy of Strategic Management
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Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify
external risks in construction projects. International Research Journal of
Engineering and Technology (IRJET). 3(1). pp.384-388.
Travis, A., 2019. The organization of neglect: Limited liability companies and housing
disinvestment. American Sociological Review. 84(1). pp.142-170.
Warren, P., 2017. The potential of smart technologies and micro-generation in UK
SMEs. Energies. 10(7). p.1050.
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