Business in Practice

This report explores different types of businesses based on size and incorporation, organizational structures and their impact on business productivity, and how external factors affect business performance. It includes examples and characteristics of micro, small, medium, and large businesses, sole trader business, partnership, limited liability business, public limited liability business, and cooperatives. The report also discusses the PESTLE analysis of political, economic, social, technological, legal, and environmental factors on business operations, using Marks & Spencer as a case study.

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 examples of sole trader business, partnership, limited liability
business, public limited liability business and cooperative........................................................5
SECTION 3......................................................................................................................................8
Identify different organisational structures and explain how organisational structure affects
business productivity. .................................................................................................................8
Using PESTLE analysis explain how different external factors affect the performances of a
business.......................................................................................................................................9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business mainly is an activity which is carried out by the organisations so that they can
make profit out of it and improve their living standards. The main purpose of business is do trade
goods and services and in return generate profits and revenues. These business organisation
contribute immensely in the upliftment of the society and also in the development of the
economy of the country. There are many types of organisations which can be formed on the basis
of various factors such as: size, incorporation, purpose, liability, etc. there are various
environmental factors which also affect the incorporation or the management and functioning of
the company (Ahrne and Brunsson, 2019). The company chosen in this report is Marks &
Spencer. It is a multinational and a leading company that mainly deals in the clothing, fashion,
food and home products. This report covers types of businesses according to their sizes and
incorporation. It also discusses different structures of organisation and its effect on the business
productivity. This report also have PESTLE analysis of all the external factors that may affect
the working of the organisations.
MAIN BODY
SECTION-1
Definition, Characteristics and example of Micro business, Small business, medium size
business and large size business
There are different types of companies that are formed on the basis of its size and the
amount of capital invested. The different types are: micro, small, medium and large scale
businesses.
Micro Size Business
This is the type of Business who do not have more than 10 employees working. The total
turnover of such businesses is also not more than £2 Million (Sharma, Agrawal and Khandelwal,
2019). These type of business are managed with very low funds and the employees are very
limited.
Characteristics:
 The employees are not more than 10.
 These are established in the limited area or locality.
 The market area covered is small.

 Very less revenue is generated.
Example: Boss Brewing Company.
Small size Business
These are the types of business which runs on a very small scale and the amount invested
in starting such business is also very small (Schneider and Clauß, 2020). The number of
employees working under this is not more than 50 and the turnover is under £10 Million.
Characteristics:
 They are commonly known as sole proprietorship as is managed by a single owner.
 The area in which they operate is limited.
 They are flexible in nature as they are open to rapid changes sue to its size and the
amount invested. The resources are easily available as they generally use local and immediately available
resources.
Example: Broadsword Event House
Medium size Business
These are the types of business which have medium size and the number of employees
working in this type of business is more than 50 but less than 250 members.
Characteristics:
 the owners to run this business maybe more than 1.
 More investment amount maybe needed by the business to carry out its activities. They can be expanded to other market area or to any other country.
Example: Verdant Leisure
Large size Business
These type of business have huge capital investment and the turnover is more than £10
Million. The employees working under such businesses are more than 250 in number (Chen,
2020). They have very huge capital investment, raw materials, employees, etc. and they operate
globally.
Characteristics:
 The number of owners are more than 1.
 large capital investment is done with the help of shareholders. It is expanded globally in various different countries.

Example: Marks & Spencer
Differences between Micro, small, medium and large businesses.
Basis Micro Small Medium Large
Total no. of
employees
Not more than 10 More than 10 and
less than 50
More than 50,
Less than 250
More than 250
Turnover Below £2
Million.
Below £10
Million.
Below £50
Million.
More than £50
Million.
SECTION 2
Definition, Characteristics and examples of sole trader business, partnership, limited
liability business, public limited liability business and cooperative.
The different types of organisations are also distinguished from each other on the basis of
many factors like: ownership, liability, size, etc. the type of business organization characterised
on the basis of its formation is discussed below: '
Sole proprietorship
This is the type of business which have only one owner who is solely responsible for the
management and functioning of the business (Mishra, Dimri and Chaubey, 2017). The owner is
solely liable for the losses and also of the profits earned.
Characteristics:
 owner have Unlimited liability for all the debts to be paid.
 This type of business is free from all legal formalities which arises at the time of
formation. Less investment is required to start such business.
Example: Tutoring business
Partnership
This is the type of business which have 2 or more partners who manage and functions the
business activities. To start this type of business, an agreement is to be made between the
partners confirming their partnership and terms of business.
Characteristics:
 partners are the outcome of the agreement formed between them.
 Each partner have unlimited liability to pay debts and the management of the firm.

 This type of company do not have its own personality or any separate legal entity.
Example: Mumsnet
Limited Liability Partnership
It is mainly the combination of a company and a partnership (Tripathi and Jha, 2018) . To
establish an LLP two or more than two members are needed. They are mainly formed by the
professionals and their liabilities are limited to the capital invested by them.
Characteristics:
 Partners have limited liability to the amount or capital invested by them.
 It is a combination of a partnership firm and the company.
 They tax system of it is transparent which is paid by the partners and not by the firm.
Example: Law Firms
Company
This is the type of business which have its own legal entity under the name of the
company as it is treated as a distinct member from that of the owners. The companies can be
classified as a private or a public company.
Public companies are those in which the capital is raised by making invitation to the
public in the form of shares or any other securities. Private companies are those who do not have
any involvement of it with the public. They only have directors who manage the activities and
invest money.
Characteristics:
 It is different from its owner and have its own separate legal identity.
 The death of the owners do not affect the life of company.
 It has its won common seal.
 The process of its incorporation and its dissolution is very complex and requires lots of
cost. The process is time consuming.
Example: Tesco (Public company)
New Looks Company (Private company)
Cooperatives
These are the associations which are voluntarily formed to provide social services to the
society and they do not have any profit motive.
Characteristics:

 It is a type of non profit organisation.
 Owned and controlled by the members.
 It works for the welfare of the society and for the social cause.
Example: Blue Diamond
Basis Sole
Proprietorship
Partnership LLP Company Co-operatives
Owned by One Two or more Two or more Minimum 2 in
private
company and
minimum 7 in
public
company
Two or more
Liability of
owners
Unlimited Unlimited Limited
liability to the
amount of
capital
invested
Limited
liability in
private
company and
unlimited
liability of the
owners in
public
company.
Unlimited
SECTION 3
Identify different organisational structures and explain how organisational structure
affects business productivity.
The organisational structure mainly explains the manner in which an organisation carry
out its activities. It mainly shows the chain of commands which is followed by the organisations.
There are two type of organisational structure. They are explained below: Flat Organisational Structure: This is the perfect structure for those types of
organisations that consist of very few levels between the upper and the lower

management staff. This is followed by those organisations who so not require its
employees to be supervised (Teske III, 2017).
 Hierarchical Organisational Structure: This is the type of organisational structure that
follows the chain of command which starts from higher level to lower level. It is in the
shape of pyramid where at all levels they are supervised by the higher levels.
Marks & Spencer follows flat organisational structure. They have very less levels of
management. They have adopted this so that the employees get motivated by the encouragement
they get in their involvement in decision making.
Basis Hierarchical Flat
Level of Management It follows the top to bottom
system of management in
shape of pyramid which have
many levels in between.
It have very few levels of
management.
Suitability Suitable for the large
organisation
Suitable for small companies
where employees are
encourages to take part in
decision making
Supervision All employees are supervised Very less supervision is
involved.
Using PESTLE analysis explain how different external factors affect the performances of a
business.
PESTLE Analysis is a tool which is used by the companies to know the impact of all the
external factor that can have on the operations and functioning of the company. The PESTLE
analysis of the company Marks & Spencer is discussed below: Political Factor: With the coming of Brexit in UK it has become very uncertain for the
companies. Still the terms and conditions are not made certain for the companies. This
has hugely impacted many of the companies along with M&S. With this the company's
revues are affected and also the spending of the consumers are affected.

 Economic Factor: These factors includes- rate of inflation, rate of foreign exchange, etc
(Zanina, 2019). the M&S may be affected by the rise in the rate of inflation as due to it
the profit of the company will be decreased. As M&S is a huge multinational brand, it has
high quality of products which will also be decreased and affect the profits and revenues. Social Factor: This is the factor which includes latest market trend, consumers demand,
etc. The M&S is a company that produce high quality products and it is important that
they keep up with the changing demands and trends pertaining in the market. By not
keeping updated with the latest trends in the market the company is affected. Technological Factor: This is the factor that includes advancement of the company by
updating the technologies being used. M&S used advance technology so that they cope
up with the trends of market and its demand, also stay sustainable and competitive. Legal Factors: It includes rules and relations that may affect the functioning of the
company. M&S to update all these laws must have training programs so that the work is
done effectively within organisations.
 Environmental Factors: These involve all the environmental factors which may affect
the operations of the company in many ways. M&S have already established policies
related to environment for its protection. They have developed sustainable plans through
which they are working to make friendly environment.
CONCLUSION
From the above report it is concluded that the business plays a crucial role in the
development of the economy by uplifting the society and generation of profits/revenues. There
are various type of organisations and also they can be categorised in various ways, such as on the
basis of its size, liability, incorporation, etc. When any organisation is formed it is important that
they follow a proper organisational structure by which the company may know its operations and
levels in which the powers lies. The company can either have hierarchical or flat organisational
structure based upon the management levels. It is further concluded that the companies must
analyse its performances by taking into consideration all the factors like: political, economical,
social, technological, legal and environmental factors which directly affect the growth and
operations of the company.

REFERENCES
Books and Journals
Ahrne, G. and Brunsson, N. eds., 2019. Organization outside organizations: The abundance of
partial organization in social life. Cambridge University Press.
Chen, H.Y., 2020. Affecting Factors of Business Analytics capability-for Organization,
Technology, Data management and Person Perspectives.
Mishra, N., Dimri, R.P. and Chaubey, D.S., 2017. Employer employee relationship and impact
on organization strategy. Splint International Journal of Professionals, 4(2), p.56.
Schneider, S. and Clauß, T., 2020. Business models for sustainability: Choices and
consequences. Organization & Environment, 33(3), pp.384-407.
Sharma, A., Agrawal, R. and Khandelwal, U., 2019. Developing ethical leadership for business
organizations. Leadership & Organization Development Journal.
Teske III, R.H., 2017. Nonprofit formation in Texas: Organization. Southern Journal of Business
and Ethics, 9, pp.154-165.
Tripathi, K.K. and Jha, K.N., 2018. Determining success factors for a construction organization:
A structural equation modeling approach. Journal of management in engineering, 34(1),
p.04017050.
Zanina, I.A., 2019. MODERN BUSINESS INTELLIGENCE TECHNOLOGIES AS A TOOL
TO ENHANCE THE COMPETITIVENESS OF THE PHARMACY
ORGANIZATION. Прикладные информационные аспекты медицины, 22(4), pp.69-
76.