Different Types of Companies and Business Structures

This report provides an overview of different types of companies and business structures. It covers micro businesses, small businesses, medium businesses, and large businesses, along with their characteristics. It also explains the concepts of sole traders, partnerships, limited liability businesses, public limited liability businesses, and cooperatives. Additionally, the report discusses the impact of organizational structures and external factors on business productivity.

Business in Practice

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Section 1: Understanding and working of different types of companies...............................3
Section 2: Different companies from sole traders to cooperative and Limited Liability
Partnerships............................................................................................................................5
Section 3: Different business structures and how external forces affecting businesses.........7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Businesses are important as it helps in gaining profit for individual as makes the life of
people easy by providing them with products and services. Many organisation are of different
size and structures. In this report, it covers the different types of businesses along with its
working. Also it includes the different types of organisational structure used by companies and
the external factors that affects the productivity of the organisation.
MAIN BODY
Section 1: Understanding and working of different types of companies
Different companies have different type of size and scale (Astrachan and et. al., 2020).
Company's working depends upon the number of employees, revenue generation, management
and many more and it is categorised by different type of businesses that are mentioned below- Micro businesses: Micro business is a type of business which is having less than 10
employees including owner and generates less than £2 million annual sales. Also, it
requires less than $50,000 to start the business.
Characteristics:
Formality: Micro businesses operates in informal structure and usually they are unregistered
businesses.
Economic relations: Most of these businesses doesn't have any connection with large
organisations.
Market orientation: They target and sell to local markets groups.
Example: Castle Hill Fire Protection is an organisation which specialises in passive fire
protection installation, headquarter in Huntingdon, UK. They are having less then 10 employees
with annual revenue of £2 million. Small businesses: Small businesses are privately owned business have employees
between 11 and 50 with annual sales of not more than £10million. They are generally
manages by the owner itself.
Characteristics:
Formality: Some small businesses are unregistered with no business licenses and also few
companies have the chance to operate in formal industry (Breuer and Lüdeke-Freund, 2017).

Economic relations: Many small businesses have relationships with large companies such as
foreign investment. Furthermore, they also have access to governmental programs such as credit
programs which helps in future development (Carlucci and Schiuma, 2018).
Market orientation: They target the domestic markets and in export markets and also to the
middle class groups.
Example: CafePod Coffee Company was established in 2011 by Peter Grainer and Brent
Hadfield. It is a coffee company which sells Nespresso compatible to ground coffees and whole
beans. It has less than 50 employees with total of £5.2 million raised capital. Medium businesses: Medium size business have employees not more than 250 and
generates annual sales of not more than £50 million. They have limited sources of
funding for investment.
Characteristics:
Formality: Medium enterprises are working in formal sector and also they have registered and
pay their taxes to the government.
Economic relations: Economic relations are same as small business. They also have the access to
government programs and have connections with large businesses.
Market orientation: Medium enterprises target domestic markets and also export markets. Upper
middle class groups are served by them.
Example: Smith Brothers (Contracting) Limited deals with high voltage electric power
contractor. It was established in 1999 by Richard and John Smith in Yorkshire, UK and 200
employees are working under this company. Its annual revenue generation is £25 million Large businesses: These businesses are managed by professionals and has employees
more than 250 with more than £50 million as annual sales. Decisions are distributed and
taken by the organisation hierarchy also they have wide range of funding sources.
Characteristics:
Formality: They have independent and formal structure and processes.
Economic relations: They have multiple programs with career development paths.
Market orientation: They are having diverse market with diverse customers (Child, 2019).
Example: HSBC is considered to be a large size business as they are having more than 250
employees and generates more than £50 million annually. They serving their clients globally.

Section 2: Different companies from sole traders to cooperative and Limited Liability
Partnerships Sole traders business: These type of businesses are run by single owner and they are
simple and inexpensive to start the business (Delen and Zolbanin, 2018). Owners are
responsible of the profitability and all aspects of the business. Sole traders businesses are
also known as sole proprietorship.
Characteristics:
Unlimited liability: The liability of sole traders are unlimited as the owner is responsible for all
the profits and losses and also the liability is unlimited to the investments.
Management and control: As the there is only single owner to the business, the whole
management and control is done by the owner itself. The owner plans and execute itself for the
betterment of the company.
Motivation: The owner will enjoy the profit and bear the losses. More the owner earn, more will
be the motivation for him to earn more.
Secrecy: As the owner has all the power of handling and managing the organisation, they will
always keep the secrets to themselves regarding the organisation.
Example: Achilleos Energy Assessors is a small business which provides domestic and
commercial energy performance certificate, floor plans, legionella risk assessments and many
more to property professionals and landlords and its founder is Mr George Achilleo. He is a sole
proprietor and responsible for all the management of the company. Partnership: Partnership is a business that is owned by two or more people. Income
gained by the organisation is enjoyed by both the partners.
Characteristics:
Membership: Partnership can be started by joining at least two person together to become
partners. The members must be legally competent to become partners.
Unlimited liability: The members have unlimited liability so that if the organisation assets are not
enough, one can claimed the creditors for realising outstanding amount (Di Gregorio, 2017).
Sharing of profit and loss: Partnership have the advantage of sharing profit among the partners
but also have to bear the losses together (Di Muro and Turner, 2018).
Dissolution: The partnership can be dissolve if one of them met with any mishap such as death,
lunacy or insolvency.

Example: Deloitte & Touche is a multinational professional services network, founded by
William Welch Deloitte. Limited liability business: Limited liability business is a type of business where the
members are not liable for the debts and obligations. This business is a combination of
sole trader and partnership.
Characteristics:
Limited liability: The members are responsible for their own fault not for other member's
mistakes.
Tax ease: The members have option to represent themselves as sole proprietor, partnership for
taxation purpose.
Simplicity: Documentation and operation are simple to carry out.
Example: Oxfam is a charitable organisation focusing on global poverty and it was founded in
1949. Public limited liability business: It is a business that offers its shares to be traded for
public.
Characteristics:
Limited liability: The shareholder and directors have limited liability and does not suffer
personally in case the company has loss its debts.
Easy transferability: Shares can be easily transferred to the public without any restrictions.
Board of Directors: Board of Directors are elected by shareholders and minimum 3 and
maximum 12 person are required to form Board of Directors.
Example: Barclays plc is the famous multinational investment bank working globally. The
company is listed at both London Stock Exchange and New York Stock Exchange and one can
easily buy and sell shares on them. Cooperative: Cooperative businesses are private businesses that is controlled and owned
by the people who enjoy their services (Drucker, 2017).
Characteristics:
Liability of members: Cooperative organisation are organised on the basis of limited and
unlimited liabilities (Eden, Nielsen and Verbeke, 2020).
Fixed rate of return: During the formation of cooperative organisation, the members are also
suppose to give contribution in the formation of the organisation.

Example:London Capital Credit Union is a non-profit member owned financial cooperative and
its founders are Helen Baron and Martin Groombridge.
Section 3: Different business structures and how external forces affecting businesses
An organisational structure helps in gathering of people in same fashion that will increase
the productivity of the organisation. Different companies uses different types of business
structures which determines the working and interaction of the employees in an organisation and
also affects the productivity of the businesses which are mentioned below-
 Functional structure: It is considered to be the most strong structure as the employees
are grouped together based on the work. They are also further divided into various
departments such as marketing, IT and so on. This type of organisational structure
ensures that there is standardisation and mechanization in a diverse way which means
the efficiency and productivity is more. Also this structure is not favourable for small
business.
 Divisional structure: Divisional structures are used in those companies when the
business has offers more than one product or services. They organisation gets divided
into different divisions and then each division work like a separate entity. Divisional
structure are used by those organisation which are serving their clients globally. In
reference to Tesco, they use divisional structure for the working of their organisation as
they are working globally.
 Team: In terms flexibility, innovation and many more, team structure beat the functional
structure. Team structure helps in tackling projects and organisational goals by forming
teams in an organisation. The teams that are formed are on the basis of needs and leaders
motivates them and also the productivity decreases in team meeting and
 Virtual: Virtual structures are mostly used by small organisation (Marques, 2019).
Small businesses divides their work according to different departments and these are
handled by other outsourcing companies and no permanent employees are present in the
organization. Productivity is stable as the owners hires.
Using PESTLE analysis for finding the factors that affects the businesses
PESTLE analysis is a tool that is used by organisation to identify the macro-
environmental factors that creates impact on the productivity of the organisation (Mitra, 2017).
Tesco is taken as base company and it was found in 1919 by Jack Cohen. It is a multinational

retailer, headquarter in London, UK. Tesco uses PESTLE analysis for finding the factors that
create impact on the productivity of the business is mentioned below-
Political factor: This factor determines the influenece that the government has on the
functioning of the organisation. In relation to Tesco, in order to operate globally, they have to
make sure about the political stability.
 Economic factor: These are the factors which determines the stability of economy as it
create a direct impact on the organisation. Factor such as sales, revenue and many more
will affect if the economy of the countries chances. And also it occurs and additional cost
which will affects the productivity.
 Social factor: Factors such as religion, beliefs and many more are included. Tesco sells
halal meat to their Muslim customers and also sells their own labelled halal meat.
 Technological factor: Technological factors such as technological innovations play a
vital role in advancing the organisation. Tesco has self service checkpoints which help
customers in easy shopping.
 Legal factor: Factors such as consumer protection laws, employment laws and many
more are included which affects the operations of the organisation. Tesco needs to follow
certain laws and regulations in which they have to provide minimum wages to their
empolyees.
 Environment factor: Environment factor are important as there is scarcity of resources
(Rebelo, Silva and Santos, 2017). Tesco has been taken initiative to not use plastic while
packaging the products.
CONCLUSION
From the above discussion, it can be concluded that businesses are useful in making lives
of people easy. There are various types of businesses which are running across the globe, each
having different organisational size and structure. In this report, it include about the types of
businesses such as micro businesses, small businesses, and medium businesses and large
businesses with its characteristics. Also it includes the different companies from sole traders to
cooperatives and limited liability partnerships. Furthermore, it is also explained what are the
different organisational structure and its affects business productivity. And at last, PESTLE
analysis has been used to explain the external factors that affects the performance of the
businesses.

REFERENCES
Book & Journals
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