Types of Companies: Characteristics and Impact on Business

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
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Contents
Introduction 2
MAIN BODY 2
Section 1: Different types of companies and how they work
2
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships 4
Section 3: Different businesses structures and internal factors
affecting business 6
Conclusion 9
Reference List 10
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Introduction
The aim of this report is to understand characteristics of different types and sizes of
business firms. The UK based Multinational Company Marks and Spencer is the
selected business firm for this report. This report provides information about various
business firms that M&S have to compete with and are part of the retail sector. In
addition to this, this report includes description of various organizationalstructures
and impact of organizational structure on employee productivity. The external factors
affecting business firms are also provided in this report.
MAIN BODY
Section 1: Different types of companies and how they work
Micro business:
A micro business is defined as an enterprise which operates at a very small
scale. A business is considered to be a small scale entity in the United Kingdom if
the business enterprise fulfills any two of the criteria provided below:
 10 or fewer employees
 Annual turnover equal to or lower than £632,000
 Balance sheet total equal to or lower than £316,000
The main characteristic of a micro business are provided below:
 Unorganized: Micro-businesses are unorganized in nature as there is no
clear organizational structure proper division of labor (Cosenz and Noto, 2018).
 Personal management: Micro business firms are managed by owner and the
owner completes daily business expanses from their personal capital.
 Taxation: Micro business firms generally do not fill corporate taxation, instead
company owners write expenses and income of the business as a part of their
personal tax return.
An example of Micro Business firms which is rival to Marks and Spencer is Micro
retail shop Victoria Grocers located in 54, Paisley Road, Barrhead Glasgow,
Scotland. The nature of this micro business is retail sale in non-specialized stores
with food and beverages predominating.
Small business:
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A small business organization is defined as privately held sole proprietorship,
corporation that has lower employees and revenue compared to a medium sized
business firms. For accounting purposes The Company’s Act, 2006 which was
implemented by the British government states that a small business firm needs to
fulfill requirements provided below:
 Equal or lower turnover than £6.5 million
 Balance sheet total equal to or lower than £3.26 million
 Maximum workforce of 50 employees
The characteristics of a small business firm are provided below:
 Low profitability: Small business enterprises have low profitability because
of their inability to cater to influx of consumers.
 Informal management: The management at small business enterprises is
not unorganized like micro business firms but the management but informal
management takes precedence over formal structures and systems in daily
operations of the enterprise (Lude and Prügl, 2018).
 Limited geographical coverage: Small business firms sell in very limited
geographical areas as delivery or transport to longer distances requires huge
investment.
Arthur Knight is a shoe retailer based in Northampton UK (Arthur Knight, 2021).
The company is medium sized enterprise rival of Marks and Spencer as booth
business firms retail shoes.
Medium size business:
Medium sized business firms come between the categories of small
enterprises and large enterprises. The requirements for a business firm to be
considered a medium sized enterprise by the British legislation are provided below:
 Workforce consisting of fewer than 250 employees
 Turnover under than £12.9 million.
The charecterstics of medium sized business firms aare provided below:
 Expanded geographical area: Medium sized busienss firms are able to
expand their geographical business terittory by collaborating with logicstics
firms for international dsitribution of their products (Pletsch and da Silva Zonatto,
2018).
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