Different Sizes and Types of Businesses: Definitions, Characteristics, and Examples

This document provides an overview of different sizes and types of businesses, including micro-businesses, small businesses, medium-sized businesses, and large businesses. It explains the definitions, characteristics, and examples of each type of business. The document also explores the internal and external factors that impact different business structures, such as organizational structure and the influence of political, economic, social, technological, legal, and environmental factors. It highlights the importance of understanding these factors for the success and growth of businesses.

BMP3002 BUSINESS IN
PRACTICE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
SECTION- 1....................................................................................................................................1
Definitions, characteristics and examples of different sizes of the business...............................1
SECTION- 2....................................................................................................................................2
Types of companies, their definition, characteristics and examples............................................2
SECTION- 3....................................................................................................................................3
Internal and external factors impacting the different business structures....................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Businesses are operated with a motive to earn profit and to survive in the market. There
are different types of businesses based on their level of operations, characteristics, scope and
members. The project shall be highlighting the different types of businesses that are undertaken
by its members for the motive to earn profits by fulfilling the needs and wants of the customers.
It shows the businesses with different sized based on the level of operations that are carried out.
It shall further reflect the various external and internal factors that are imposed on the business
such that the performance of the company gets affected.
MAIN BODY
SECTION- 1
Definitions, characteristics and examples of different sizes of the business
Micro- business:- They are the type of businesses that operate on a very small scale level by
employing minimum employee, serving dozens of customers and generating profitability with a
turnover of minimum amount. These businesses include the companies sole trader, self-
employed and in the form of a small merchandising outlet. The major characteristics of micro
businesses shall be lower revenue, less employee or no employees, limited market area covering
fewer locations and highly motivated and confident employees (Tangour and et.al., 2019). They
are the highly risk taking business that enters the market with a small target market and expects
to succeed by attracting those consumers. Some examples of the micro businesses in UK are
Boss Brewing Company, Castle hill fire protection limited and Mantons Cards. These businesses
contain less than10 employee and a turnover of less than 2 million pound.
Small business:- A small business refers to one which is a privately owned corporation, sole
proprietorship, partnership that has employed less number of employees having lower amount of
profitability and less amount of revenue generation. It is limited in size and the market share that
is covered in terms of customers. They also have limited number of products and services that
are catering to the needs and expectations of the limited number of customers (Pelz, 2019). Some
key examples of small businesses in UK are Davison Canners, Marshfield Bakery and the Cafe-
pod Coffee company which are having employees less than 50 and turnover of 6.5 million
pound.
Medium sized business:- The medium-sized businesses are generally those which are either
operated by the family members or can be the businesses where the owners and the managers are
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separate based on the concept of separate legal entity. The number of personnels that are
employed in the organization fall below a certain limit that is prescribed in the companies act of
a particular country. They may have generalized or complex organizational structure based on
the type of operations that the company is undertaking. The small and medium enterprises get
certain incentives or grants to boost their performance and ultimately contribute to the economy.
The major characteristics are that the management is informal, they have limitation as to the
availability of several resources, highly flexible work environment to manage change in the
organization and individual decision-making. Examples of medium-sized businesses in UK are
Smith Brothers Contracting Limited, Verdant Leisure, John Good Shipping and the Captify.
Large size business:- They involve the big manufacturing and service industries which operate
at high level of production capacity. These are the huge entities which are capable of
contributing maximum amount in the development of the economy. It includes a staff of more
than 250 employees who are generating a revenue of about trillion pounds (Tereshchenko and
et.al., 2019). The major characteristics are that they involve huge investment of capital, high-
tech facilities, huge machinery and equipments, have to fulfil their corporate social responsibility
in terms of development of society and taking quality control measures. They majorly follow an
organized structure of hierarchy. Some large scale businesses operating in UK are HL Plastics,
Apex Hotels, Ceuta Group and XLN.
SECTION- 2
Types of companies, their definition, characteristics and examples
Sole trader business:- A sole trader business is one that is operated by an individual who runs
the business operations himself. The profits earned by undertaking the operations of the business
solely belongs to the owner post paying the amount of taxes that are generated in the business.
This simply means that all the risks and returns that are assumed by the business shall be levied
on the single owner. The person who is responsible for bringing capital in the company is only
responsible to meet the losses and the liabilities arising in the business. Also, they can purchase
the assets in their own name. Therefore, the concept of separate legal entity does not exist in the
company (Raguseo, 2018). One of the major advantages are that it is the simplest form of
company where the decision-making process is very quick and also there are fewer interferences
of the government. Some examples of sole proprietorship firms in UK are Graham Harvey and
company, Novus Accountancy limited, 360 Business services etc.
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Partnership:- A partnership is another type of company which is incorporated by two or more
than two individuals having mutual interest in the business. They combine to perform the
operations of business and share the profits and losses at an agreed ratio that remains pre-decided
at the time of formation of the partnership deed. The partnership deed is the formal arrangement
of all the terms and conditions that is formed prior to the commencement of the business. It is
undertaken for profit motive of the business.
Limited liability business:- The limited liability business or companies are the ones in which the
members of the company are not liable for the debts and liabilities of the business as per the
separate legal entity concept. They are a mixed form of both partnerships, sole proprietorship and
the corporates in the business (Prajogo and et.al., 2018). One more major feature of such types of
companies is that they do not pay taxes but are passed to the members who claim the profits and
losses on the tax returns.
Public limited liability business:- It is a form of company where the ownership is divided into
the shares which are offered to the public for subscription. The liability of the owners of such
businesses is limited to the amount of share capital that is outstanding with the business and the
remaining amount of debts and the liabilities of the company shall be assumed by the company
itself. These businesses are operating on the two major objectives one of which is profit and the
other is the maximization of the wealth of shareholders.
Cooperative:- They are like the association of persons who have gathered up voluntarily for
serving a specific objective of the business. They are the jointly owned enterprises which have a
common economic, social and cultural objectives. It can be in the form of agriculture, electric,
retail and housing where each individual has a single vote (Arfi, Hikkerova and Sahut, 2018).
SECTION- 3
Internal and external factors impacting the different business structures
Functional organizational structure:- Functional organizational structure is majorly used by the
organizations in order to divide the work efficiently and effectively between the various
departments. In this formation the division is done in major functional areas that are finance,
marketing, information technology, human resource and operations. These functional areas are
then further divided at employees on various levels to form a hierarchy for formal lines of
communication (Fernández-Olmos and Ramírez-Alesón, 2017). This helps in optimal utilization
of the resources, coordination, effective budgeting and setting of the goals.
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Divisional organizational structure:- In the divisional organizational structure the company
shall divide the roles and responsibilities based on some divisions which are based on
geographical area, product departmentalization or it can be based on the levels of hierarchy (7
types of organizational structures, 2021). Such divisions help in computation of the profitability
and revenue generation of the single department and can ascertain that whether the production of
a particular product should be continued or it should be stopped. This helps in smooth and
efficient conduct of the business and also in boosting the operational efficiency.
The various types of organizational structures impact the business in a way that they
conduct smooth lines of communication, proper allocation of the roles and responsibilities,
optimal use of the resources which ultimately generates operational efficiency and future growth
prospects for the business.
PESTLE Analysis
Political
The political factors that impacts the performance of an organization are associated with
the policies and regulations that are framed by the government in power. Instability of the
government is a big threat to the operational efficiency of the company (Mafundu and Mafini,
2019). The policy decisions related to tax, grants, trade and employment impact the business
directly or indirectly. The fiscal policies that are formulated by the government also affects the
profitability of the company.
Economical
The economic environment in the external environment of a business organization is also
one that certainly impacts the decision-making of the company. It is related to the rate of
inflation, GDP growth, interest, employment, foreign currency etc. which are the crucial factors
impacting the survival of the business. For example if the interest rates increase in an economy,
the businesses that are operating over there shall not be able to arrange finances at cheaper costs
to expand the business.
Social
The dimensions that are covered in the social environment of a company are the culture,
tradition, value system and beliefs of the target consumer market. It is also affected by the trends,
lifestyle and the changing tastes and preferences of the business. In order to survive in the market
and to assume larger share of the market the businesses have to cope up with the changing social
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environment and amend the products and services that are offered to fulfil the needs and
requirements of the customers.
Technological
The technological environment is currently imposing higher amount of threats to the
business with the advancement in the technological devices, automation of the processes and
modernization in the various machinery and equipments that are used by the businesses (Dowell
and Muthulingam, 2017). The business should update the existing technology to acquire the
benefit of the latest technology such that the operations of the company can take place in a more
faster and efficient manner.
Legal
The legal environment for any business consists of the laws and legislations that are
established for ensuring safe and secure operations of the business in an ethical manner. The
laws are mostly related to secure work environment, health and hygiene, ethical code of conduct,
job guarantee and maintaining the quality of goods and services. If these laws and regulations are
not complied with then the companies shall be charged with fines, penalties, punishments etc. by
the legal authority of the country.
Environmental
The external environmental concerns that are there shall be the major factors that are
impacting the performance of the business. The practices like corporate social responsibility,
clean and green environment, reducing carbon footprint, using the 4R policy, proper waste
disposal and sustainable development. It also includes the meeting of quality standards in the
production of goods and services. The company has to take the effective steps in order to
develop the society such that a positive brand image can be developed.
CONCLUSION
It can be summarized from the above project that an individual can operate a company in
various sizes based on the operational capacity, number of employees and the amount of
turnover that is generated by the business. Apart from that it shows that there are different types
of companies are formed having different structures, legal formalities, composition but with the
same motive of earning profits from the business operations that are conducted. It can be
analysed that a company can be arranged within diverse organizational structure which is best
fitted with the operations they perform. The appropriate organizational structure that is adopted
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by the company shall fetch positive result and performance for the company. Also it can be
analysed that the various internal factors like the code of conduct, level of motivation, quality of
management impacts the profitability of the business. Also, various external factors like
government, laws, rates, technology etc. also impacts the operational efficiency of the business.
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REFERENCES
Books and Journals
Tangour, C. and et.al., 2019, April. Digital business model patterns of big pharmaceutical
companies-a cluster analysis. In International Conference on Digital Economy (pp. 397-
412). Springer, Cham.
Pelz, M., 2019. Can management accounting Be helpful for young and small companies?
Systematic review of a paradox. International Journal of Management Reviews. 21(2).
pp.256-274.
Tereshchenko, D. and et.al., 2019. Combining strategic management and transformation
processes in the environment of international companies. Academy of Strategic
Management Journal. 18. pp.1-6.
Raguseo, E., 2018. Big data technologies: An empirical investigation on their adoption, benefits
and risks for companies. International Journal of Information Management, 38(1),
pp.187-195.
Prajogo, D. and et.al., 2018. The relationships between information management, process
management and operational performance: Internal and external contexts. International
Journal of Production Economics. 199. pp.95-103.
Fernández-Olmos, M. and Ramírez-Alesón, M., 2017. How internal and external factors
influence the dynamics of SME technology collaboration networks over
time. Technovation. 64. pp.16-27.
Arfi, W. B., Hikkerova, L. and Sahut, J. M., 2018. External knowledge sources, green innovation
and performance. Technological Forecasting and Social Change. 129. pp.210-220.
Mafundu, R. H. and Mafini, C., 2019. Internal constraints to business performance in black-
owned small to medium enterprises in the construction industry. The Southern African
Journal of Entrepreneurship and Small Business Management. 11(1). p.10.
Dowell, G. W. and Muthulingam, S., 2017. Will firms go green if it pays? T he impact of
disruption, cost, and external factors on the adoption of environmental
initiatives. Strategic Management Journal. 38(6). pp.1287-1304.
Online
7 types of organizational structures. 2021. [Online] Available through:
<https://www.lucidchart.com/blog/types-of-organizational-structures>
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