Business In Practice

This document provides an overview of different types of businesses based on size and form, including micro, small, medium, and large businesses, as well as sole proprietorship, partnership, limited liability business, public limited liability business, and cooperative. It also discusses the impact of organisational structure on business productivity and uses PESTEL analysis to explain how external factors affect the performance of a business. The case study focuses on Marks & Spencer, a multinational company dealing in home products, food, and clothing.

Business In Practice

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
SECTION 1......................................................................................................................................3
Definition, characteristics and example of micro business, small business, medium size
business and large size business .................................................................................................3
SECTION 2......................................................................................................................................5
Definition, characteristics and example of sole trader business, partnership, limited liability
business, public limited liability business and Cooperative. ......................................................5
SECTION 3......................................................................................................................................7
Identify different organisational structures and explain how organisational structure affects
business productivity. .................................................................................................................7
Using PESTLE analysis explain how different external factors affect the performance of a
business.......................................................................................................................................8
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business is usually the activity which an enterprise undertakes in order to make a living
out of it. It generates revenue and earn profit from the offering it offers to the public. It usually
involves trading of goods or services. There are many forms of business which are divided on the
basis of their size or form. A business may engage itself in either industrial, commercial or
professional activity through which it fulfil its objective of either earning profit or doing social
service. The external environment may impact the operations of the business which must be
analysed by the enterprises in order to facilitate itself with smooth functioning. The organisation
chosen for completing this report is Marks & Spencer, a leading multinational company which
deals in home products, food and clothing. This report shall cover the types of business
according to the size and form. Further different organisational structures are discussed which
affect the productivity of business and the PESTEL analysis for analysing the external factors
which may affect its working.
MAIN BODY
SECTION 1
Definition, characteristics and example of micro business, small business, medium size business
and large size business
Businesses are run with a sole motive to earn profit and generate maximum revenue so
that it can grow and succeed in the market. There are different types of businesses which may be
distinguished on the basis of its size which includes micro, small, medium and large businesses.
Micro size businesses
These types of businesses involve 0 to 9 employees where the annual turnover of the
business is under £2 million. These businesses are small in terms of employees also and
investment also where the owner establishes the business with little or low funds.
Characteristics of micro business-
 It has very few employee, normally ranging between 0-9.
 It has its establishment in limited areas.
 Its target market is small and generates low revenue and profits.
Example- Boss Brewing Company
Small size businesses

This type of businesses involves employees ranging between 10-49 whose annual
turnover is under £10 million.
Characteristics of small size business-
 The owner usually takes responsibility of the management of the business.
 It involves limited investment with less funds. It is usually preferred by sole proprietor as it involves low investment (Adegbite and et.
al., 2018).
Example- Broadsword Event House
Medium size businesses
These types of businesses involve 50- 250 employees and whose turnover is under £50
million. It involves more capital investment for establishing it and has large market share.
Characteristics of medium size business-
 It involves 1 or more than 1 owners for running the business.
 Large investment may be attracted in order to operate the business. It may be expanded in different locations or countries.
Example- Verdant Leisure
Large size businesses
this type of business involves more than 250 employees and has a turnover of more than
£50 million. It involves huge capital investment and may have expanded its operations globally.
Characteristics of Large size businesses-
 It involves more than 1 owner for operating the business.
 It has large capital investment which may be acquired either by debt or equity. It has global expansion and large market share.
Example- Sainsbury.
Basis Micro Small Medium Large
no. of employees 0-9 Between 10 to 49 Between 50- 250 More than 250
Turnover Under 2 million
euros
Under 10 million
euros
Under 50 million
euros
Above 50 million
euros

SECTION 2
Definition, characteristics and example of sole trader business, partnership, limited liability
business, public limited liability business and Cooperative.
The businesses are also categorised according to their form which distinguishes it
according to its incorporation and other factors like owners, liability and many other. The
different types of business organisations on the basis of its form are as follows-
Sole Proprietorship
These type of business involves one owner who is entrusted with the responsibility of
handling the day to day operations of the business. The owner is personally liable for the liability
of the business and all revenue and profit and losses belongs to the owner (Beynon-Davies,
2020).
Characteristics-
 It involves unlimited liability of the owner for all the debts of the business.
 The sole proprietorship is free from legal formalities and requires no formality for its
establishment. It requires less funds for starting up the business.
Example- Any computer repair business or tutoring business.
Partnership
These types of businesses involve two or more partners who mutually shares the
responsibilities, liabilities and profits of the firm. It requires a partnership agreement between the
partners in order to mutually decide the terms of the business.
Characteristics-
 It is the outcome of agreement which is done between two or more people who are called
partners.
 Each partner possess unlimited liability for all the debt and liability of the firm.
 It is not a separate legal entity or personality.
Example- Mumsnet
Limited liability partnership
It is a hybrid of both company and the partnership which involves two or more person to
establish a LLP. It is usually formed by the professionals and involves limited liability of the
partners according to their share.

Characteristics-
 it involves limited liabilities of the partners according to their capital contribution.
 It is a mixture of both partnership and company. It has a transparent tax system where taxes are paid by the partners and not the firm.
Example- law firms.
Company
These types of business is incorporated at the Companies house. It is a separate legal
entity distinct from its owners. It is an artificial personality which has its perpetual succession. It
is governed from the Companies Act of UK.
The company can be classified into public and private where, the public companies
involves invitation to public for purchasing the shares to become the owner of the company who
are called the shareholders. Example- Tesco company. private companies does not involve
share purchase but requires only owners who are called the directors and no share capital is
raised. Example- New Look company in UK.
These are further classified into limited and unlimited where the limited company
involves limited liability of the owners to the extent of their share in the business and unlimited
company involves unlimited liability of the owners.
Characteristics-
 It is a separate legal entity distinct from its owners.
 It has a perpetual succession.
 It has its common seal (Chión, Charles and Morales, 2019).
 Its incorporation and dissolution is a complex process which involves major cost and
lengthy process.
Cooperatives
These are voluntary associations which work for social service rather than profit motive.
These involves members who manage and control the business and are also the owners of the
cooperative.
Characteristics-
 It is non profit association.
 It is owned and controlled by the its members. All economic result is equally distributed among the members.

Example- Blue Diamond
Basis Sole
proprietorshi
p
Partnership LLP Company Coorporative
s
Number of
owners
One Two or more Two or more Private-
minimum 2
public-
minimum 7
Two or more
Liability Unlimited Unlimited Limited to the
extent of their
capital
contribution
Limited-
limited
liability of
owners
unlimited-
unlimited
liability of
owners
Unlimited
SECTION 3
Identify different organisational structures and explain how organisational structure affects
business productivity.
The organisational structure is a system which outlines how activities of the business are
to be directed. It basically tells the chain of command which a organisation follows (Gupta and
Nair, 2020). The different types of organisational structure is discussed below-
 Flat organisational structure- This structure is fit for the organisations which have few
levels between their upper management and the staff. This structure is followed by the
companies who need less involvement and supervision for the employees.
 Hierarchical organisational structure- This structure involves the chain of command
which starts from the top to the bottom. It is a pyramid shaped structure where every
employee has a supervisor (Hui and et. al., 2020).

Marks & Spencer follows flat organisational structure which has limited level of the
management between their administration department and the front line staff. This structure is
followed in the company so that decision making by employees is encouraged by the company.
Basis Hierarchical Flat
Level of management It ranges from top to bottom
which involves different levels of
management.
It has very less levels of
management.
Suitability It is suitable for large
organisations (Ortega and et. al.,
2019).
It is suitable for small companies or
those organisation which
encourages decision-making by
employees.
Supervision Every employee has a supervisor. Less supervision is involved.
Using PESTLE analysis explain how different external factors affect the performance of a
business.
PESTEL analysis is a tool used by the companies to oversee the impact of external
factors which may affect the working of the company. The PESTEL analysis of Marks &
Spencer is discussed below-
 Political- This factor may affect the working of M&S as this company is a global brand
which has its establishment in various locations. The company has benefit of EC's trade
agreement as it can travel its product without restriction in different countries. The
company has full support from the government which gives benefit in its working and
performance.
 Economic- These include many factors like inflation, foreign exchange rates, etc. The
rise in inflation may affect the working of the company M&S as it may decrease its
profits. The company deals in high quality products which may decrease the demand in
situation of inflation and affect the profits and revenues of the company.
 Social- These include socio cultural factors which involves customer trends, market rends
etc. The company M&S deals in high quality products and keep up with the changing
trends of the market (Polyviou, Pramatari and Nancy, 2016). The cheap clothing

organisations has captured the market by updating with changing customer trends which
may affect the sale of the company.
 Technological- These include up-dation of technological advancements in the company.
The company M&S have announced the use of Technology Transformation Program
which made the organisation first digital business. The company has utilised the
technology in its supply base which have benefited the company.
 Legal- It includes laws, rules and regulations which affect the companies and their
performance. M&S organises training programs for its staff so that they can be updated
with the laws and regulations of the company on health and safety (Shmeleva, 2018).
 Environmental- These includes the changes in the environment which causes impact on
the business. M&S have established their green policy in order to protect the environment
and work on environment friendly manner.

CONCLUSION
It is concluded from the above report that businesses play an important role in the
economy as they are the major contributor in building the economy. There are many types of
business which exist which can be categorised on the basis of size and form which includes
micro, small, medium and large according to size and sole proprietorship, partnership, LLP,
corporation, companies on the basis of form. Further organisational structure followed by Marks
& Spencer is flat which allows less supervision on employees. At last it is summarised that
PESTEL analysis of M&S will help the company in managing its performance as these factors
have major impact on its working. Economic and social factors impact the performance of the
company whereas the political, environmental, legal and technological have positive impact on
the company.

REFERENCES
Books and Journals
Adegbite and et. al., 2018. The organisation business environment. In Organisational
Adaptations (pp. 11-26). Springer, Cham.
Beynon-Davies, P., 2020. Business information systems. Red Globe Press.
Chión, S.J., Charles, V. and Morales, J., 2019. The impact of organisational culture,
organisational structure and technological infrastructure on process improvement
through knowledge sharing. Business Process Management Journal.
Gupta, C.B. and Nair, R., 2020. Marketing Management, CB Gupta & N. Rajan Nair. Sultan
Chand & Sons.
Hui and et. al., 2020. Exploring the impacts of organisational structure, policy and practice on
the health inequalities of marginalised communities: Illustrative cases from the UK
healthcare system. Health Policy, 124(3), pp.298-302.
Ortega and et. al., 2019. Pestel analysis based on neutrosophic cognitive maps and neutrosophic
numbers for the sinos river basin management. Infinite Study.
Polyviou, A., Pramatari, K. and Nancy, P., 2016. Cloud adoption factors in a specific business
area: Challenging the findings of organisation-wide cloud computing research.
In MEDITERRANEAN CONFERENCE ON INFORMATION SYSTEMS (MCIS).
Association For Information Systems.
Shmeleva, N., 2018. THE NEW BUSINESS MODEL FOR THE CIRCULAR ECONOMY:
MOVING FROM THEORY TO PRACTISE. International Multidisciplinary Scientific
GeoConference: SGEM, 18(5.3), pp.919-926.