Types of Companies: A Comprehensive Overview

This article provides a comprehensive overview of different types of companies, including micro businesses, small businesses, medium-sized businesses, and large-sized businesses. It also discusses different business structures such as sole traders, partnerships, limited liability partnerships, public limited liability businesses, and cooperatives. Additionally, it explores the impact of organizational structure and external factors on business productivity and performance.

BMP3002
Business in Practice
Assessment 1
Types of Companies
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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 businesses structures and internal factors
affecting business 6
Conclusion 8
Reference List 9
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Introduction
The objective of this review is to provide a quick overview of the many sorts of
businesses available in competitive terms. Using a variety of examples, the paper
examines how businesses are classified depending on their nature and
responsibility. The research also emphasizes the importance of organizational
structure, highlighting the two most popular types. There are many distinct sorts of
businesses that are founded, each with its own structure, purpose, organization, and
obligations. Marks and Spencer, a worldwide brand with headquarters in London,
United Kingdom, was chosen to complete the below report.
Section 1: Different types of companies and how they work
Micro Business
This is a sort of business where there are no more than ten employees. This
is a relatively small corporation with an annual turnover of less than £2 million and a
balance sheet not more than £316,000. To conduct out almost all of the duties and
functions of this type of business, the owner must invest a very modest amount of
funds. These micro-businesses, according to statistical experience, add to the
overall economy. Microbusinesses are essential for the country's long-term future
prosperity. It also helps the economy by focusing on underserved developed and
developing countries. This type of microbusiness is usually launched with the same
amount of wealth as the previous one, and it is administered, operated, and directed
by the same person (Hoffman, 2020). It has an economic benefit by ensuring social
stability across the United Kingdom's regions. The example are freelance work,
architecture firms, plumber and so forth.
Small Business
This is a firm in which the quantity or capital committed by the owner is very
little, yet it has more than one comparison with a tiny size firm. According to the
Companies Act, 2006 this type of business does not employ more than 50 people
and does not employ fewer than ten. The company's annual revenue is less than £10
million and total of balance sheet require not to exceed £ 4 million. In terms of
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income and scope, small businesses are self-sustaining. The company aspires to
contribute both domestically and globally through boosting the economy, and it may
be able to contribute more financially in the future. Even this form of firm contributes
significantly to economic prosperity. As a result, they contribute to the local
economy's long-term sustainability. Small businesses can respond more swiftly to
changes in the business environment and the economy because they are not
restricted by organizational reluctance. Private businesses include bakeries, run by
private eateries, architecture companies, and other small businesses (Chatterjee,
Chanda and Ray, 2018). Sole proprietorships, partnerships, and corporations are
examples of private enterprises. Broadsword Event House, Fourex, Trusted
Housesitters and Marshfield Bakery are some small businesses in the United
Kingdom.
Medium- size Business
This is a business in which the capital invested is neither too huge nor
excessively small. As per the Companies act 2006 of UK, there are certain criteria in
respect of medium- sized enterprises which includes that the number of employees
must be fewer than 250, but more than 50, the annual turnover must not
exceed£25.9 million and the balance sheet total shall not be less that £12.9 million.
Because it promotes growth by providing a diverse range of employment
opportunities and delivers customer pleasure by establishing new emerging markets
with demanding business opportunities, the medium-sized enterprise is recognized
as the country's economic structural support. The business strategy for this type of
company begins with the gradual expansion of valued small enterprises, with the
corporation collecting a significant portion of the net sales and increasing profit
margins. Medium-sized businesses include companies like Verdant Leisure, which
employs around 250 people, and Northern Monk Brew Company, among others.
Large- size Business
Organizations of this magnitude typically require a significant amount of
capital investment as well as a large number of workers to function (Sultani, 2020).
These companies often conduct their operations on a worldwide and global stage.
There are more than 250 employees employed in such businesses. They account for
the largest share of all job opportunities and even more than half of the country's
GDP turnover. They offer a diverse product line and a dominant position across the
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country, as well as efficient communication channels. Large organizations also help
and benefit small and medium enterprises. This form of business has a hierarchy
capability that helps it to respond to different business conditions, as well as an
effective organizational structure and a consistent customer communications
infrastructure. As a result, it helps to provide economic chances, as well as
protection of the environment and certain other market chances. Sainsbury, Tesco,
Diageo, M&S are some instances.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole Trader Business
This is the type of company that is started by a single or solitary proprietor.
The owner of this form of business is exclusively accountable for the firm's activities
and operations. The owner of this business structure bears limitless liability and is
fully liable for all the debts and potential losses during the course of business
operations. Because the owner and the entity are almost same, the notion of a
separate entity does not apply to such a business (Larsson, 2018). It is simple to
start a business with fewer restrictions and uncomplicated legal procedures. The
costs of starting a business are lower for sole proprietorships than for other business
types. One of its advantages is that the sole trader is not required to publicly reveal
his or her accounts or other related documents, which allows for privacy. Sole
proprietorships include plumbers, electricians, reparation service and other small
businesses.
Partnership
This is a sort of corporate entity in which there are two or so more members.
This is a sort of corporate organization in which most of the company's partners, who
are also its owners, carry out business operational activities in pursuit of a common
aim (Mishra and Prabhakar, 2019). To form this sort of business structure, the
owners of the partners must sign a partnership agreement outlining all of the terms
of service, as well as any obligations, that will legally bind all of the partners to the
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company. One of the advantages is that the company is funded proportional to the
number of partners who participate. Even in the absence of government intervention,
such people benefit from flexible working. Furthermore, the level of risk is evenly
distributed amongst these partners, as agreed. The ability to transfer interests to a
third party with the approval of all partners is another unique feature. Further,
partners take equal participation in the decision making process of the company.
Twitter, WhatsApp, Red Bull and so on.
Limited Liability Business
This is a form of business organization that is formed with the traits of both
partnership and corporation. The term "limited liability partnership" (LLP) is widely
used to describe these types of businesses. Two or more members are required to
carry out the responsibilities and activities of this form of business structure. The
liability of all owners of this type of firm is divided according to the amount of money
they have contributed and the partners are not obligated to sacrifice their personal
assets to pay off company’s debts. This sort of business benefits from the principle
of "perpetual succession," which means that while partners may come and go, the
business continued to function (Lockwood and Papke, 2017). These companies
must follow corporate guidelines, but they have more power when it comes to
taxation and tax planning. Oxfam, M&S, Barclays Bank are some examples.
Public Limited Liability Business
This type of business has a distinct identity that is legally recognized. The
capital invested to carry out the operations and responsibilities of this type of
corporation is raised by the public through the distribution of shares in the company.
This kind of company has a higher chance of long-term success and industry
advancement. Compared to other forms of businesses, this one has a greater
chance of market progress and expansion. In both the decision-making process and
the success of the company, the owner must be fair and, as a result, not confidential.
In this type of organization, funds are often received from a variety of sources, with
financial institutions, such as banks, is perhaps the most common cause of
investment assistance. Some very well examples include HSBC Holdings, Rolls-
Royce Holdings Plc., Royal Dutch Shell, and others.
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Cooperative
This is the type of business organization that is founded on a voluntary basis.
The development of this sort of business organization is motivated by the betterment
of society as a whole and the well-being of its members. The sole purpose of this
organization is to benefit the community, and it's not founded with the aim of making
a profit. Non-profit organizations are the most popular name for this type of business.
This corporate structure's management in operations is the responsibility of its
owners or managers. Adopt a democratic leadership style that incorporates a proper
organizational structure and culture. A low return on capital also translates to a low
yield on investment in the form of profits. Cooperatives in the United Kingdom
includes Select Machine, Do it Best and so forth.
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
The lack of structure in the organization can results in an ineffective chain of
command and an ineffective management process, the organizational structure is
crucial for defining roles and responsibilities (Blomberg, 2020). The structure of a
firm determines the delegation of authority, jobs, and tasks, as well as the flow of
information inside it. The two basic organizational structure are discussed below.
FUNCTIONAL ORGANIZATIONAL STRUCTURE
It is the organizational structure that creates various segments based on the
major functions of the enterprise. An employee is entitled to do the same task within
a department on a constant basis under functional organization. Employee
happiness rises as a result, and the organization becomes more focused.
Employees were organized as per their areas of specialization under this method,
which resulted in customer satisfaction. Furthermore, this structure specializes in
promptly resolving problems with effective decision-making process. It also aids in
the maintenance and enhancement of professional relationships. The structure's
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shortcoming is that it divides employees, coupled with inadequate communication
channels and ambiguity. Due to a lack of creativity skills at work, the structure is
inflexible (Akrout and Diallo, 2017).
DIVISIONAL ORGANIZATIONAL STRUCTURE
It is the division of the entire company into divisions depending on the
principal products to be manufactured. Take, for instances, Samsung, Reliance, and
others. It aids in the resolution of new problems that have arisen as a result of
product differentiation. This is the greatest organizational structure for firms that wish
to enhance and evolve over time. The firm is divided into distinct divisions depending
on capital, goods, services, or geographical areas under this organizational
structure. Each division maintains its own duties and capabilities under this structure
(Burgess, 2017).
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
There are a number of factors that affect and impact the company's
operations and results. These are determined using the PESLE analysis. This tool
can be used to determine how external factors affect a success of a company
(Carter, 2017). The following is a breakdown of Marks & Spencer's PESTLE
analysis:
 Political: Since the adoption of BREXIT, the regulations governing a
company's actions have been unknown. The pandemic situation was equally
disastrous and had a negative impact on the company.
 Economic: Rates of interest, inflation, and other variables are examples. Due
to the high quality of Marks & Spencer's products, an increase in interest rates
will result in lesser revenues.
 Social: Marks & Spencer is a global company, and it is vital that it keeps up
with market trends in order to meet the requirements of its customers.
 Technological: Because of the modernization of the world, M&S began
offering online purchases to their customers. In remain competitive in today's
industry, technology must be improved.
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 Legal: Marks & Spencer must abide by all laws in order to avoid future
complications as a result of non-compliance.
 Environmental: Marks & Spencer has implemented environmental policy with
the goal of ensuring that the company's actions would not contribute to
climate change.
Conclusion
The report finishes with a look at different business sizes and types, as well
as some relevant examples. A number of elements that influence organizational
structure and growth have also been discussed. The main organizational structures
are also discussed, as well as a PESTLE analysis to better understand the impact of
a variety of external influences on corporate operations.
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Reference List
Akrout, H. and Diallo, M.F., 2017. Fundamental transformations of trust and its
drivers: A multi-stage approach of business-to-business
relationships. Industrial Marketing Management. 66. pp.159-171.
Blomberg, J., 2020. Organization Theory: Management and Leadership Analysis.
SAGE.
Burgess, A., 2017. The Executive Guide to Artificial Intelligence: How to identify and
implement applications for AI in your organization. Springer.
Carter, N., 2017. Changing ownership: meaning, culture, and control in the
construction of a co-operative organization. In New Forms of Ownership (pp.
323-340). Routledge.
Chatterjee, A., Chanda, S.S. and Ray, S., 2018. Administration of an organization
undergoing change: Some limitations of the transaction cost economics
approach. International Journal of Organizational Analysis.
Hoffman, A.J., 2020. Business education as if people and the planet really
matter. Strategic Organization, p.1476127020967638.
Larsson, M., 2018. Development as a Process of Organization. In Circular Business
Models (pp. 9-18). Palgrave Macmillan, Cham.
Lockwood, T. and Papke, E., 2017. Innovation by design: How any organization can
leverage design thinking to produce change, drive new ideas, and deliver
meaningful solutions. Red Wheel/Weiser.
Mishra, S. and Prabhakar, R., 2019. Recent Trends in Management: Organization
Growth. Splint International Journal of Professionals. 6(1). pp.49-56.
Sultani, H.H., 2020. Factors Affecting Implementation of Management Control and
Information System for Organization Performance (Doctoral dissertation,
Mzumbe University).
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