Different Types of Companies and Business Structures

This article discusses the different types of companies based on size and legal structure, such as micro, small, medium, and large businesses. It also explains various business structures, including sole traders, partnerships, limited liability partnerships, public limited liability companies, and cooperatives. Additionally, it explores the impact of external factors on businesses and the importance of conducting an external analysis using the PESTLE tool. The case study of Marks and Spencer is used to illustrate these concepts.

BUSSINESS IN
PRACTICE

Table of Contents
Introduction......................................................................................................................................1
Section 1...........................................................................................................................................1
Different types of companies and how they work......................................................................1
Section 2...........................................................................................................................................2
You are required to explain different companies from sole traders to cooperatives and Limited
Liability Partnerships. ................................................................................................................2
Section 3...........................................................................................................................................3
To consider different business structures and how external factors affect businesses................3
Conclusion.......................................................................................................................................5
REFERENCES................................................................................................................................5

Introduction
It is important for all the businesses through the world to motivate each of their talented
workforce to adhere to all the business management practices as it is vital for their success
(Antero, 2015). There is diverse type of companies that are operated in a business environment.
This is mainly done by classifying different businesses by size and the legal structure.
Marks and Spencer, is one of the well-known British national retailers. They are engaged
in offering that includes selling clothing, home and food products. This product mainly covered
different type of companies, legal structure and different types of structure that used in the
Organizations. Along with this, it also stated impact of external analysis using pestle tool on the
company.
Section 1
Different types of companies and how they work
Organisations in U.K economy are classified into different types that are highly
dependent on their size and purpose of businesses. This companies are mainly groups into micro,
small, medium is large business (Azudin and Mansor, 2018.). It can be explained in detailed
before for its better understanding.
 Micro business: This can be referred to as company single person company wherein
there are less than 10 employees for doing their operations. Along with this, there is less
than £2,50000 revenue and required approximately £50000 as a capital to initiate their
businesses. In this type of companies, managers are involved in day to day businesses.
For example, Boss brewing company and Mantons cards.
 Small business: This can have referred to as those businesses wherein employees than
between 10 to 50. Along, with this, there annual turnover is less than £10 million. This
company's lack in finances and find difficulty in surviving in this dynamic business
environment.
 Medium business: This business is those business wherein there are less than 250
employees. Adding to this, there annual turnover is less than £50 million. They have
lower capability to arrange finances in order to be able to survive in the business
environment.
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 Large business: All the businesses that have more than 250 employees and have annual
turnover of more than £50 million are classified as large business (Bouwman, Nikou, and
de Reuver, 2019.). They have comparatively more capabilities to finance their business in
order to expand themselves for growing their offerings. Some of the companies that are
included under this business are ASDA and Walmart. Hence, these businesses are
involved in the huge transactions in order to do something big and also undertake both
financial and business activities.
Section 2
You are required to explain different companies from sole traders to cooperatives and Limited
Liability Partnerships.
All the different types of business explained above must decide their legal structure
mainly dependant on their funding requirements and criteria for distribution of profits. Some of
these can be elaborated in detail below:
 Sole trader: These type of businesses is owned and controlled by a single person. In this
business, owned isn't separate for his business and is personal liable for paying in context
of different aspects of business mainly for arranging the finances (Broekemier and et. al.,
2015). Along, with this he has full right in entitlement of profits. These businesses mainly
include hair dresser, restaurant and electricians.
 Partnership: It can be referred as two business wherein there are more than two persons.
Their relations are formed by a written agreement in the form of partnership deed that
comprises the full information’s of each of the partner’s responsibility, profit
distributions, investment shared and structure of Partnership. In this structure also
partners liabilities are limited for their businesses. The deed specifies the liabilities
payable by each of the partners. For example, Maruti Suzuki and Redbull
 Limited liability partnership: This can be referred to those Organization which are
limited liability. This can further be elaborated wherein the separate legal entity principle
comes into force. In the economy of U.K, the liabilities of the partners financial
responsibility are limited by number of shares held by them. As the company is
considered as separate from their Owners so company has its own name, own assets and
can sue or be sued. For example, DVD express and GEO.
 Public limited liability: These companies are limited to those can sell as well as trade
their businesses in the stock exchange. As per the U.K guidelines their minimum capital
requirement is $50,000,00. In addition to this, it is must for them to appoint two directors
as well as company's secretary and it is a necessary requisite for them to file their income
tax return annually. For example, Toyota and General electric.
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 Cooperatives: This type of business can be referred to those which is independent and
consist of multiple shareholder (Faludi and Gilbert, 2019). In the corporation business
can deduct tax similar to an individual. In this case, the only issue is that profit are taxed
twice at both corporate as well as personal level. For doing this business, the company is
requiring to follow certain requirements that can include appropriate licenses and permit
in order to initiate their Operations. For example, Belk Lindsey and Dole Food Company.
Section 3
To consider different business structures and how external factors affect businesses.
Business Structure
Organisational structure is primarily referred to as those structures and mainly states how
a certain activity are conducted in order to realize the goal of an Organizations. In addition to
this, it also states how the information flows between different level of the Organisation. For
getting it's better understanding the most common utilized structure can be detailed below:
 Functional Structure: This is one of the most common structure that is being used in
this modern time. In this structure, people who are engaged in similar type of activities
are grouped together (Ferraz and Gallardo-Vazquez, 2016). The group is mainly done on
the basic of speciality area that include Marketing, Finances, Operations, Human resource
and research and development. As the work is segregated and the talented forces are
well-verse with the knowledge required to do the task, so work is done at a much faster
pace that to in an efficient manner. It minimized the supervision required and thus leads
to greater productivity. In addition to this, as the system is bifurcated into different
diarchy level, so each of the employees demonstrate higher amount of productive as each
of them are encourages by providing performance based rewards or promotions.
 Divisional Structure: In this structure, are divided into team mainly based on different
product offering. This is done, as the needs of an individual for highly dependent on their
preference and their class. This type of Organizational Structure, is most appropriate
wherein the company is engaged in more than one product or services. In addition to this,
each structure has its own set of employees that manages their specific divisions. As the
division is Organized, there is less but they are much more adoptable in comparison to
functional structure. Still, in reality they aren't as organized as they should be as there are
higher chance that their economies of scale have been vanished.
External Analysis
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Business operates with the multiple type of businesses and consist of a dynamic
environment that have a direct influence on its business. This highly influence their purpose of
existence and determine the viability of achieve their business objectives. One of the main tool
that is used for doing external analysis is Pestle analysis. This can be explained in detail below:
 Political: These factor mainly determine how the government may include in the
economy or an industry (Glass and Cook, 2018.). This are including number of restriction
related to new tax policies and trade tariffs. As the company is one of the well-known
company some of the factors that include free trade as M&S, is involved in operating in
U.K and many other countries throughout the world. This is beneficial for the company to
indulge in export or import for selling it at a cheaper price (Weller, 2017). Brexit, is
another important factor and it could have a direct impact on their operations mainly due
to trade as well as tariff regulations.
 Economic: This factors mainly determines the economic condition that has a high
influence in their performance. Some of the common economic factors includes inflation
rate, interest rate, foreign exchange rates and growth pattern of an economy (Jones and
Chin, 2015). One of the specific economic factor can be reduction in their prices by
providing discounts. In recent years, company has witness huge increase in their
competitors that include increase in supermarkets in clothing segments (Serra and Kunc,
2015). So, by providing discounts company is able to retain as well as enhance their
customer base in order to gain a competitive edge in the industry.
 Social: These includes a number of social factors that exist in the business environment.
Some of social factors can include demographics, cultural trends as well as population
analytics (Faludi and Gilbert, 2019). One of the maim social factor that is affecting Marks
and Spencer is that this is quite an old company and today's youth have many options
with many retail stores that provides them cloth as per the latest trend. Another factor, is
that the people in their business environment have increased consumption of readily
available meals (Liesch and et. al., 2015). Adding to this. It is one of top food distributor
in U.K.
 Technology: These factors are mainly related to innovation. This is one of the most
crucial as well as dynamic factor and it is important for the company to utilize the latest
available technology in order to sustain their performance (Liesch and et. al., 2015). One
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of the most important technology issue that M&S faces is that of self-checkout. This is
mainly advantageous to the retailers to save money by offering customer's faster services
of self-checkout. The company has been favourable enough to utilize this services in all
their stores. Another issue that the retailer may face in this changing times is Online
Shopping (Ferraz and Gallardo-Vazquez, 2016). The company has not been able to
deliver business and isn't engaged in e-commerce.
 Legal: This factor can be internal as well as internal. This is because, there are certain
country that are a requirement of a particular company as well as certain policy that is
defined by themselves in order to ensure its effective operations (Kretovics and Eckert,
2019). Some of these law that affect retail industry that includes Consumer Protection
laws and Unfair trade regulations.
 Environmental: These factors have a higher influence on all the operations due to
dynamic changes that exist in the environment. In order to manage this issue, it is must
for the companies to adopt sustain environmental measures (Weller, A. E., 2017). As
M&S is one of the well-known company in the retail sector so they need to ensure
produce sustainable that includes Carbon emissions and deforestations. They need to
think of unique ways in order to create their unique presence in the retail industry (Jones
and Chin, 2015). Along with this, they need to include their fair trade practices that make
their produce better than the foreigners. It is even beneficial for protecting their
environment.
Conclusion
This can be concluded from the above mentioned report, that it is important for the
Organization throughout the world to know the different ways how companies are classified that
is described above. Adding to this, they need to have a proper evaluation of their company's legal
structure and carefully undertake the norms that are a requisite for the company to follow in
order to manage their business effectively. The company also need to undertake the importance
of the structure that has been described above and choose the most appropriate structure for
enhances their productivity. As Mark and Spencer, is one of the recognized retail company, it is
must for them to undertake a thorough analysis of their external environment using PESTLE in
order to incorporate the chances in order to have a favourable impact in order to get sustainable
competitive advantage in the retail industry.
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REFERENCES
Books and Journals
Antero, M. C., 2015. A Multi-case Analysis of the Development of Enterprise Resource Planning
Systems (ERP) Business Practices. Frederiksberg: Copenhagen Business School (CBS).
Azudin, A. and Mansor, N., 2018. Management accounting practices of SMEs: The impact of
organizational DNA, business potential and operational technology. Asia Pacific
Management Review. 23(3). pp. 222-226.
Bouwman, H., Nikou, S. and de Reuver, M., 2019. Digitalization, business models, and SMEs:
How do business model innovation practices improve performance of digitalizing
SMEs?. Telecommunications Policy. 43(9). p. 101828.
Broekemier and et. al. , 2015. Social media practices among small business-to-business
enterprises. Small Business Institute Journal, 11(1).
Chang, J. F., 2016. Business process management systems: strategy and implementation. CRC
Press.
Faludi, J. and Gilbert, C., 2019. Best practices for teaching green invention: Interviews on
design, engineering, and business education. Journal of Cleaner Production. 234. pp.
1246-1261.
Ferraz, F. A. D. and Gallardo-Vazquez, D., 2016. Measurement tool to assess the relationship
between corporate social responsibility, training practices and business performance.
Journal of Cleaner Production. 129. pp. 659 -672.
Glass, C. and Cook, A., 2018. Do women leaders promote positive change? Analyzing the effect
of gender on business practices and diversity initiatives. Human Resource Management.
57(4). pp. 823-837.
Jones, B. H. and Chin, A. G., 2015. On the efficacy of smartphone security: A critical analysis of
modifications in business students’ practices over time. International Journal of
Information Management. 35(5). pp 561- 571.
Kretovics, M. A. and Eckert, E., 2019.Business practices in higher education: A guide for
today's administrators. Routledge.
Liesch and et. al. , 2015. Use of business-naming practices to delineate vernacular regions: A
Michigan example. Journal of Geography, 114(5). pp. 188-196.
Salovaara, P. and Bathurst, R., 2018. Power-with leadership practices: An unfinished business.
Leadership. 14(2). pp.179-202.
Serra, C. E. M. and Kunc, M., 2015. Benefits realisation management and its influence on
project success and on the execution of business strategies. International Journal of
Project Management. 33(1). pp.53-66.
Weller, A. E., 2017. Aligning responsible business practices: A case study. Business Ethics: A
European Review. 26(4). pp. 457-467.
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