Types of Companies: Micro, Small, Medium, and Large Size Businesses

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This report provides an overview of different types of companies, including micro, small, medium, and large size businesses. It explains their characteristics, such as their contribution to the economy, employment opportunities, and financing methods. The report also discusses various organizational structures and their impact on business productivity. Additionally, it explores external factors affecting business performance through a PESTLE analysis.
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BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Contents
Introduction 2
Section 1: Different types of companies and how they work
P
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Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships p
Section 3: Different businesses structures and internal factors
affecting business p
Conclusion p
Reference List p
Introduction
The main aim of this report is to raise the understanding about
various forms of companies and business that operate in a
country. As there are large number of companies and business
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so every type of business is having special characteristics and
features. This report also contains details about various
organizational structure along with PESTLE analysis in the
contrast of Unilever.
Section 1: Different types of companies and how they work
Micro business:
Micro business are very small business. Number of employees doesn't matter or
constitute small business. As per Companies House, any business would be
considered as micro business if its turnover is less than £632,000. However, if the
number of employees are less than 10 then that should also be considered as very
small and micro business (What is a micro business?, 2021). In addition to this the
balance sheet total should also not be more than £316,000 for covering under the
definition of micro business.
Characteristics:
High contribution in the growth of economy in terms of raising income or
purchasing power.
Generate employment opportunities for those who need job but have no
education and lack of education.
For financing their business they usually dependent on micro finance and
micro credit.
Grab good support of government.
For example:
Mantons Cards is one of the micro and famous business of UK which usually deals
in a variety of quality cards and gifts.
Small business:
A business is said to be small if its annual turnover lies in the range of 2-10
million. This means that its turnover should be above €2 million but not
more than €10 millions. In addition, of this the number of employees must
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not be more than 50 (Rosling, 2020). If these conditions will be satisfied by
any business then only it will be categorized in small business.
Characteristics:
Highly focused over their goals along with ready to take good moves towards
driving success.
Always ready to bear risk.
Self motivated and reliant. This means that as they are micro business, so
they do not need any external motivation instead they are self-motivated and
self centered towards their goals.
While performing their operations they usually take expert advice.
Close monitor and control over finance.
As they are small business, so they need hard work in order to
establish their business. But those who run this business have ability
to separate their work and family. This means they are usually more
efficient in comparison of other form of business.
For example:
Cafepod coffee company which is one of the small company with a broad
coverage over the market.
Medium size business:
A business is categorized under this category if its turnover is more than €10
millions but it should be less than then €50 millions. However one more
requirement of this category is its number of employees. This means that
the number of employees should be more than 50 but it should not exceed
250.
Characteristics:
Since, they have no access to grab more resource due to availability
of fewer funds. But, they have capability to run and operate their
business in limited resources.
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It usually follows and adopts informal style of management while
dealing with their employees.
They are very flexible form of business. This means that they usually
adopt and implement changes in their workplace.
For example:
Texaport which is one of the medium size business of UK and provides
Information Technology support services.
Large size business:
Large size business are not only large from their size but the number of employees
in this kind of business are more than 250. They produce large number of goods and
avails number of services for its customers.
Characteristics:
They have more complex management structure.
Usually follows formal communication practices and adopt formal traits in its
internal structure of workplace.
They usually have large number of customers and clients.
Since, they are large size enterprises so supported by huge amount of finance
for carrying their routine activities.
Their main motive is to earn profit in addition of taking care towards their own
employees.
For example:
Aon Plc is one of the big company having wider and large scale business in UK.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
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These business are those which is usually run by single individual or trader. As it is
run by single person so every risk and profit has to being bearded by that individual
only. That single person is the sole owner of the entire business entity.
Characteristics:
Run by single person.
Bear all risks and losses. This is because as it is held by single person so all
risks and losses have to be borne by that sole trader only.
As it is run by single trader so no sharing of profit is being performed in this
type of business.
No legal entity. As a result that sole trader has unlimited liabilities. This means
in case of repayment of any debt and loss everything has to be meet by that
sole trader only.
For example:
Apple. Though it is one of the largest and big companies nowadays but it has started
its business as a sole trader.
Partnership:
Partnership is that form of business which is being operated and run by partners and
not single individual. This means that it is very essential to call a business as
partnership firm if it has more than 2 persons (Wassmer, Pain and Paquin, 2017). It
is one of the most flexible form of business in which two or more than two partners
agrees to do business and as per their deed and agreement they run their business.
Characteristics:
Run by two or more than two members.
Sharing of risk, cost, as per the agreement.
Profit is also being shared among partners as per their agreement and deed.
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Every single partners have separate responsibilities.
They have to record all their income and expenses.
Along with sharing of losses every expense has also to be bearded by
partners which is being incurred in the partnership firm.
For example:
Pret A Manger is one of the famous partnership firm of UK which operate its
business in the form of restaurant.
Limited liability business:
It is also one of the famous form of business in which liability will be limited as per
their agreement and deed. This means that the owners and traders of this form of
business will not share unlimited liability (Toson, 2018). Their liability will be limited up
to the limit of their share and as per the agreement.
Characteristics:
Limited liability of owners. Their liability will not exceed above their share or
investment in the business. This means that they don't have to repay any debt
by their own personal income.
Better form in comparison of partnership business. Or it would be right to said
that it has characteristics of both companies and partnership.
This business have to be guided by rules and regulations of the concerned
state.
Their owners are called as members.
However, it is guided from state to state but anyone can become a member of
this form of business.
This form usually not exist in UK.
For example:
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John Lewis which operate its business in the form of limited liability partnership and
run various departmental stores.
Public limited liability business:
This form of business usually operates in the form of public limited companies in UK.
It is the only single form of business which is being run in UK. As per its name it offer
shares to public also (Simkovic, 2018). This means that the shares of the public
limited companies can also be owned by general public. However, many companies
do not allow this and run their business as private companies.
Characteristics:
Separate legal entity.
Its all activities including formation, working or winding up is governed by rules
and regulations.
It arranges funds by selling its share and those tho purchase the share will
become its members.
The liability of member is limited up to the value of share.
For example:
Sainsbury is one of the public limited company and famous retailer of UK which
operate its business as public limited company.
Cooperative:
It is one of the flexible mode of business which is owned by any person that could be
an employee, customer, resident and any one (How to set up a co-operative, 2021). It
is one of the most famous form of business of UK.
Characteristics:
Two elements of starting the business and that includes the idea of business
and the term that who is going to own and control the business.
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Open membership this means that anyone can become its member.
Its finance is being arranged by its member by purchasing its shares.
For example:
Suma Wholefoods is one of the famous cooperative form of business. It is a famous
whole seller of food items in UK.
Section 3: Different business structures and external
factors affecting business
3.1 Identification of different organizational structures and
explaining how does organisational structure affect business
productivity
Functional structure:
As per this structure the whole organization is being divided into different department
as per the functions performed by them. This means functions are the base upon
which the organization will perform its work through its departments. In this type of
structure the reporting relationship is based on functional area. This type of structure
has major impact over the productivity of company (Coppin, 2017). This is because if
the work of the company is being divided on the basis of its functions then each
function of the company will be well performed and focused. This will ultimately raise
the efficiency and productivity of the company in terms of raising sales and revenue.
Divisional structure:
In this type of structure the whole organization is being divided into different
divisions. Each division of the company will be having its own responsibilities and
work along with its defined resources. This type of structure will also raise
productivity of the company along with well settled functioning. Since each
department will allot separate resources for the performance of its work so this will
lead to smooth functioning of company and as a result its productivity also raises.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
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It is very essential for every company to analyze its external environment so that its
forces will not put impact over the company. Unilever can performed this through
PESTLE analysis.
PESTLE analysis:
Political:
It includes the impact of government's rules and policies that could affect Unilever
and its activities. Brexit brings many more changes in the political environment of the
country so Unilever has to carefully analyze this environment before dealing in
countries of European union.
Economic:
Economic situation in the form of changing wage rate, economic stability all are
constituted in this force. Unilever also have to work as per the economic changes. As
rate of wages are being raising in the developing countries so it will work as
opportunities for Unilever because its sales can be raised due to raising income of
customers. But it has negative impact too because its cost of operation will also raise
simultaneously.
Social:
Changing taste and preferences of customers constitute this force. If Unilever will
produce its products considering the needs of customers then its sale will raise and it
will act as opportunity for it. However, a negligence towards this factor will brings
serious negative impact over the company.
Technological:
Moving along with this force and continuous up-gradation of technology by Unilever
will not only help to meet this force. This will also lead to raising efficiency of Unilever
along with decreasing cost of operation (SMITHSON, 2017). It has direct impact over
sales also because with high technology Unilever can produce more products in less
time which will ultimately raises its sales.
Legal:
Working within the framework of legal structure will help the Unilever to continue its
business along with raising its brand image in public. Compliance of laws will also
raise its working exposure.
Environmental:
It constitutes all environmental forces and elements. For meeting this force Unilever
can produce Eco-friendly products. It can also make its production process
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sustainable so that natural resources will be fully utilized and wastage will be
avoided.
Conclusion
From the above report it would be concluded that there are different modes and
forms in which business can be run and established. Every form is having their own
features. Likewise, it is also being understood that how different form of
organizational structure helps the companies in raising their productivity level.
Reference List
Books and journals
Coppin, A., 2017. Organisation Structure and Design. In The Human Capital Imperative (pp.
45-49). Palgrave Macmillan, Cham.
Simkovic, M., 2018. Limited Liability and the Known Unknown. Duke LJ.68. p.275.
Toson, S.J., 2018. Renewed hope for the low-profit limited liability company. Society and
Business Review.
Wassmer, U., Pain, G. and Paquin, R.L., 2017. Taking environmental
partnerships seriously. Business Horizons.60(1). pp.135-142.
Online references
How to set up a co-operative., 2021. [Online].available through
<https://www.theguardian.com/social-enterprise-network/2012/apr/05/how-to-set-
up-a-cooperative>
SMITHSON, N., 2017. Unilever’s PESTEL/PESTLE Analysis & Recommendations. [Online].
Available through <https://pestleanalysis.com/pestle-analysis-of-unilever/>
Rosling, L., 2020. Need To Know Micro Business Statistics UK 2021.[Online]. Available
through <https://smeloans.co.uk/blog/micro-business-statistics-uk/>
What is a micro business?., 2021. [Online]. Available through
<https://www.thecompanywarehouse.co.uk/blog/what-is-a-micro-business>
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