Types of Companies and Organizational Structures in Business

This report explores the different types of companies and organizational structures in business, including micro, small, medium, and large businesses. It discusses the characteristics and examples of each type of business, as well as how organizational structure affects business productivity. Additionally, the report examines external factors that impact business performance. The case study focuses on Tesco, a multinational company. Read more at Desklib.

Business in Practice

Table of Contents
INTRODUCTION......................................................................................................................2
SECTION 1................................................................................................................................2
Presenting different types of companies................................................................................2
SECTION 2................................................................................................................................3
Describing different companies from sole trader to cooperatives and Limited Liability
Partnership..............................................................................................................................3
SECTION 3................................................................................................................................4
3.1 Identifying different organizational structure and explaining how it affect business
productivity............................................................................................................................4
3.2 Presenting the external factor that affect the performance of business............................5
CONCLUSION..........................................................................................................................6
REFERENCES...........................................................................................................................7

INTRODUCTION
The aim of this report is to examine the types of business run within a market and
their role in different sector. The study will based upon the Tesco which is the largest
multinational company that helps to provide range of product and services to their customer
at low rate with high quality. The study will explain different types of business which include
micro, small and medium size business. Further it provide characteristic of sole trader to
cooperative and limited liability partnership along with examples. Moreover, report will
identify different organizational structure and examine how organizational structure affect
business productivity. Lastly by using Pestle analysis study examine different external factor
that affect the business performance.
SECTION 1
Presenting different types of companies
Micro business: This type of business have 1 to 9 employees but they contribute its
best in the order to increase economy. Such that this type of business are similar to small
business but they may have a difficulty to getting credit and funding in order to start up their
business. Another characteristic of micro business is such that its annual turnover is not more
than £2 million. Also secondary research stated that there are 5.6 million micro business are
working in UK and there are majority of business who have less than 10 employees (XUAN,
2020). For example, Boss Brewing Company which is located in South Wales and it is lead
by a female with an aim to include within different supply chain at world level.
Small business: It is define as a privately owned company and also liable to tax
policy. Also this type of business are implement the same quality management systems which
is found in larger with an aim to attract the customers. Their aim is to feed the family by
making best efforts within its business. There are many industry operating under this field
which helps to attract the customers. The biggest advantage of small business is such that it
start from low cost and employer may easily care for their family and manage the work as
well. Therefore, it also share its part for the growth of GDP and offer many job to the
employees as well (Donner, Gohier and de Vries, 2020). For example, Marshfield Bakery is
the small business who distribute handmade goods throughout UK and Europe and its annual
turnover is also less than £10m. There are 100 employees working in this company with an
aim to offer the best variety of goods to their customers.

Medium Size business: This type of business have 100 to 499 employees and their
annual turnover is varies from £20m to £50m. Hence, it is examine that there is small number
of medium size business and that is why, it does no contribute its best in order to improve the
economy of a country. Such that there are 35600 Medium size business and it does not also
require high amount of investment. For example, Verdant Leisure which is a holiday park
that is operating in England and it is famous for offering impressively low customer service
complaint ratio but high quality of services.
Large size business: It is that organization which has grown beyond limit of medium
size business and has more than 250 employees to more than 5000 and it has great number of
operations. Company operates under this must have enough experience so that they run its
business in better manner (Rawat, 2020). It also has a complex management hierarchy as
compared to medium and small business but entrepreneur working under this take a risk with
an aim to sustain the brand image at further level of success. For example, Tesco is working
under leading multinational company who has more than thousands of employees.
SECTION 2
Describing different companies from sole trader to cooperatives and Limited Liability
Partnership
Sole trader business: Sole trader business is simplest form of business structure
which is relatively easy and inexpensive to set up. Thus, sole trader is legally responsible for
all aspects of business and they make all type of decision in order to run a business at better
level. For example, plumbers, hairdressers and photographers are consider as sole traders
where only one people is responsible for all business.
Partnership: It is the formal arrangement by two or more parties in order to manage
and operate business as well as their profit. In this type of business, profit and loss are share
equally and both partners provide their opinion in order to run the business in better manner
(Srnicek, 2017). For example, Pret A Manger is a partnership business who worked together
with an aim of run a business at better level. Also, both partners have a strong background
that helps to run a business in effective manner.
Limited liability business: It is type of legal structure of an organization where
owners are not personally liable for company’s debt but they follow hybrid structure. This
type of business are investing upon the publically listed companies, where a shareholder can

participate in the growth of a company but the liability is restricted. For example, Oxfam
which is consider under voluntary business and have invested in publically listed firm as
well.
Public Limited liability business: This type of business have 2 as a minimum
number of shareholder and also accounts must be filed within 6 months. Thus this type of
business can be acquired by anyone through a stock market. For example, Sainsbury Plc
which is operating under PLL and this type of business offers its share to public as well.
Cooperative: Another type of business which is associated by different person who
are united voluntarily in order to meet their common economic, social and cultural needs
through jointly owned enterprise (Lee, 2017). Therefore this type of business are owned and
managed by people who use its services in order to stay ahead in the competition. For
example, Baywind Energy Cooperative which is own by wind turbines in UK and also offer
different types of services o their customers.
SECTION 3
3.1 Identifying different organizational structure and explaining how it affect business
productivity
Functional structure: One of the most common type of organizational structure
which is used by business on the basis of grouping employees. This structure is completely
relies upon accountability in which every employee have clear line of management and
clarity of their own and other’s one. Thus it is a type of a hierarchy system that helps to meet
the define aim by complying with their own rules and responsibilities (Business
organizational structure, 2020). So it is explain that business are organized as per their roles
and skills into a smaller part which include sales, marketing and production department.
Divisional structure: It is another type of organizational structure which group each
function into a division. Under this, each division contain all the essential resources in which

company divide its operations into different department that helps to meet the define aim.
Thus, this type of structure is especially followed by the large organization who have
different department and range of employees. Therefore, with the help of this type structure
company assign different roles and responsibilities to their employees which in turn assist to
meet the define aim of a company.
With the support of these organizational structure, company is trying to meet the
business objective and improve the performance as well. Such that through divisional
business structure, company maintain hierarchy and this in turn improve the overall
performance. With the help of such organizational structure, company work together and
improve the communication as well as coordination between each other. Moreover, a strong
management hierarchy also ensure that company comply with different policies and
procedure that assist to promote the efficiency level (Neubauer and Lank, 2016). In addition
to this, it is also analyzed that there is a positive impact upon the productivity if Tesco uses
proper organizational structure and this in turn improve the economies of scale as well.
On the other side it is also examine that with functional organizational structure,
company discourage creativity and market adaptability and this in turn reduce the morale and
lower down the productivity as well. That is why, there is a need to comply appropriate
organizational structure which in turn improve the results in the terms of productivity and
profitability.
3.2 Presenting the external factor that affect the performance of business
The company is prone to several external forces that are required to be managed
effectively for reducing the impact over performance of organisation. The external factors
faced by the Tesco are

Political Factors: Company though having adequate and stable political environment in UK
is required to take into account all the small or big changes relating the business. The step of
Brexit has affected the performance of company significantly as big decline in sales was
seen. It also increased the cost of company as it required to pay taxes to non EU members.
Company is also operating in different countries and it has to comply with all the new
regulations (Adamyk, 2019). The US trade disruptions are the political influences that
affected the sales in US. The political influences are not within the control of organisation but
have considerable influence over the business.
Economic factors: The economy of country plays a vital role in the growth and success of
the company. The UK economy is stable however the company is facing issues as the
purchasing power of people has declined. Likewise the economy of other countries in which
it is operating directly influence the performance of company. The world economic condition
is suffering due to the US China trade disruptions. The rate of interests, exchange rate
fluctuations also affect the performance of Tesco as revenues are generated from different
countries with decline in value of pound.
Social factors: This has a significant influence over the company and its performance as
every organisation is operating in a society. The social influences cause the people to prefer a
company over the others. The social medial platform is used by the company to be in touch
with its customers and to identify the needs of customers. Every organisation that they
ulyimately owes to the society and they have responsibility towards the society.
Technological factors: Companies are required to adopt the new advancement in technology
for maintaining pace with the growing world. The business of Tesco operates over a great
scale for which advanced systems and software are required to manage data and handle the
clients. The non compliance with the technology advancement could affect Tesco vitally.
Legal factors: Every organisation is required to comply with the legal laws, rules and
regulations of the region country in which it is operating. It is a difficult task for the company
operating in multiple companies to comply with all the laws and regulations (Stümke and
Ruël, 2017). However, for operating successfully it is required to comply with legal laws of
different countries.
Environment factors: People are becoming vigilant about the companies who pay attention
towards the environment. Company has to ensure that it complies with all the environmental
laws and regulations in every region in it are operating. The actions and measures taken by
the company should be reported in the annual report for attracting the new customers. It is

seen that firms active in environment protection receive positive response helping in growth
of their performance.
CONCLUSION
By summing up above report it has been concluded that here are different types of
business and they all have different aim and characteristic. Further study also concluded that
there are different legal structure of a business which is varies form sole trader to cooperative.
Thus it assist to lead a business at further level of success. Apart from this study concluded
that different type of organizational structure such that division and functional which help the
business to meet its objectives. Lastly by using Pestle analysis, study concluded six type of
external factor that affect the business.

REFERENCES
Books and Journals
Adamyk, K., 2019. PESTLE Analysis on Tesco PLC.
Anderson, J.R. and et.al., 2019, February. Functional (psychogenic) neurological disorders:
assessment and acute management in the emergency department. In Seminars in
neurology (Vol. 39, No. 01, pp. 102-114). Thieme Medical Publishers.
Donner, M., Gohier, R. and de Vries, H., 2020. A new circular business model typology for
creating value from agro-waste. Science of the Total Environment. 716. p.137065.
Lee, I., 2017. An exploratory study of the impact of the internet of things (IoT) on business
model innovation: Building smart enterprises at fortune 500 companies. In The
Internet of Things: Breakthroughs in Research and Practice (pp. 423-440). IGI
Global.
Neubauer, F. and Lank, A.G., 2016. The family business: Its governance for sustainability.
Springer.
Rawat, D., 2020. Business networks in an auto-component cluster: an exploratory
study. Journal of Asia Business Studies.
Srnicek, N., 2017. The challenges of platform capitalism: Understanding the logic of a new
business model. Juncture. 23(4). pp.254-257.
Stümke, L.I. and Ruël, H., 2017. Business Diplomacy by multinational corporations in
developing and conflict-prone zones: an interview based analysis to develop a
business diplomacy analysis matrix
XUAN, V.N., 2020. Determinants of investment capital size: A case of small and medium-
sized enterprises in Vietnam. The Journal of Asian Finance, Economics, and
Business.7(6). pp.19-27.
Online
Business organizational structure. 2020. [Online]. Available through:
<https://www.nibusinessinfo.co.uk/content/organisational-structure-function>