Business in Practice

This document provides insights into different types and sizes of businesses, including micro, small, medium, and large businesses. It also discusses the characteristics and examples of sole trader, partnership, LLC, public LLC, and cooperative. Additionally, it explores the impact of organizational structures on business productivity and the influence of external factors such as political, economic, social, technological, legal, and environmental factors on business performance.

BUSINESS IN PRACTICE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
Definition, characteristics and the example of micro, small, medium and large size business . .1
SECTION 2......................................................................................................................................3
Definition, characteristics and the example of Sole Trader, partnership, LLC, Public LLC and
cooperative...................................................................................................................................3
SECTION 3......................................................................................................................................6
Evaluating different types of organizational structures and its impact over the business
productivity..................................................................................................................................6
Impact of external factors on the performance of the business...................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In the business practice, there are different factors, which are very essential for an
organization to take into account. These aspects are useful in determining whether the desired
objectives of the organization can be achieved or not. This report, provides an insight about the
different types and the sizes of the business along with their characteristics. It also covers the
impact of organizational structure over the business productivity and the various external factors
affecting the business functioning.
SECTION 1
Definition, characteristics and the example of micro, small, medium and large size business
Definition Characteristics Example
Micro The micro business
are the smallest
form of company
that have very
small and generally
are operating in
private sector.
The micro business has
Less than 10 employees
Provides around 10% of the
private sector jobs
Find difficulty in raising funds for
start up.
Very less capital investment
They have turnover of less than 2
million
Ice cream parlours
Small businesses like
web design firm,
small retailers. etc
Small It has limited
number of
employees and
sales volume is also
lower than medium
and large but higher
than micro business
(Shafi, Liu and
Ren, 2020).
It employs less than 50 employees
It has turnover generally less than
10 million
They could range from a
convenience store to a small
production plant.
It could be sole proprietor,
partnership or corporation
These business have limited
geographical boundaries
Small scale business
includes law firms,
restaurants,
engineering,
architectural firms and
inns.
Medium Medium size Mid scale entities have employees Mid sized firms could
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enterprises are
independent
companies. These
firms emerge from
steady growth of
the successful small
entities.
ranging from 100 – 1000
The turnover is generally less
than 50 million of these
enterprises.
It starts keeping the portion of
profits aside to make effective
investments for future growth and
expansion.
These businesses operate under
both private and public sectors.
They create a bridge between the
big and small companies
serve in any industry
like manufacturing,
service companies,
hotels etc.
Large size Large organisation
operates over large
scale and have
employees and
turnover higher
than other size of
business.
The employees and
and revenues of the
large companies are
high.
Large enterprises provide
employment to higher number of
people.
Large firms have employees more
than 1000
Revenues of these firms is more
than 50 million
It has increased compliance
requirements as compared with
small and micro.
They have higher number of
resources and technology
(Hernández, Yañez-Araque and
Moreno-García, 2020).
It has its presence over a wider
geographical regions from one
country to other.
These organisations operate under
both private sector and public
The large firms are
there in all industries
like Sainsbury, Tesco.
Ford, British Airways
and other firms that
operate at multiple
locations.
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sector.
The capital structure of these
firms consists of funds raised
from public in equity and debt.
SECTION 2
Definition, characteristics and the example of Sole Trader, partnership, LLC, Public LLC and
cooperative
Definition Characteristics Example
Sole Trader It is easiest and
simplest business
structure and is
inexpensive as well
as easy to set up.
Sole trader takes the whole
responsibility of managing the
business. All the decisions related
to business are taken by owner
itself. The owners are responsible
for the liabilities of business. Sole
trader businesses do not have
separate legal standing. They are
not required to comply with
statutory requirements for
recording their transactions and
preparation of financial
statements.
Sole proprietor
business includes
general stores, barbers
and other business that
are owned by single
owner.
Partnership It refers to business
entity that is
established through
formal agreement
between 2 or more
partners for
operating and
sharing the profits.
The partnership firms generally
operate in private sector.
The cost of formation of business
is not high and also the legal
requirements for establishment
are not complex (Yáñez-Araque
and et.al.,2020).
All the partners share profits and
The examples of
different partnerships
are Casper and West
Elm, Uber & Spotify
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losses on the basis of agreed
ration. Each partner is liable for
the obligations of partnership firm
to the extent of agreed ratio and
without any limits.
Partnership business do not have
to publish their financial
statements and comply with
accounting standards for
recording the transactions. They
could prepare as per their
convenience.
Limited
Liability
Business
LLC is business
structure where the
owners are not
liable personally for
business
obligations. It has
characteristics of
corporation with
sole proprietorship
and partnership.
The cost of incorporating a LLC
is higher than sole proprietor and
partnership.
It has to comply with higher
statutory obligations for
establishment of corporation.
The owners of company are not
held liable for the obligations of
company.
It has separate legal existence
apart from its owners and
transactions take place in name of
company.
Business profits are shared among
members in proportion of their
ownership.
It has to pay separate tax on
company profits.
Companies who have
limited liability but
whose shares are not
listed for trading.
Nike, Sony,
Blackberry.
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Corporation is required to
maintain proper accounting
records as per the accounting
standards and other applicable
laws.
Public limited
liability
business
Public LLC refers
to company whose
shares are publicly
traded and its
member have
limited liability.
Such companies
make offer to
public for
subscribing to
shares and to
become the
shareholders.
It has to use abbreviation Plc after
name compulsorily.
It shows that company has
publicly trading shares and listed
on a stock exchange.
The members or the people
buying shares of the company are
given proportion of ownership of
company.
They have limited liability to
extent of their shareholding.
They could not be made liable for
the business losses and
obligations beyond their
shareholding.
Public LLC is also required to
comply with all the rules and
regulations related to business.
Transactions are recorded in
accordance with accounting
standards.
It has to publish financial
statements in accordance with the
concerned stock exchange
(Pucihar and et.al., 2019).
Companies listed on
any recognised stock
exchange. Sainsbury
plc, BT Group plc,
Prudential plc
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Cooperative It is autonomous
association of the
persons that come
together voluntarily
for common social,
economic and the
cultural needs &
aspirations through
jointly owned
entity.
The business is managed and
owned by people using its
services.
Managed by people working
there.
Cooperatives vary in size and
type.
They are formed to achieve
specific objectives of the
members and structured to meet
changing needs of members.
Examples : Channels
Island Cooperative
society, Central
England Cooperative,
East of England
Cooperative Society.
SECTION 3
Evaluating different types of organizational structures and its impact over the business
productivity
There are various types of organizational structures which are based on the needs of the
company. A detailed analysis is given below.
Functional structure: In this structure, the employees are grouped on the basis of their
work specialization and features across different departments. In this people are highly
specialized and focusses on the collaborative working and better coordination. The management
hierarchy is required to be strong in order to make sure that the employees complies with all the
policies (Ugoani, 2016). This type of organizational structure ensures that there will be plenty of
specialization along with the mechanization which results into effectively meeting with the
efficiency and productivity. But it might also lead to less creativity, flexibility along with the
adaptability pertaining to the market change. This might result into reducing the morale of the
employees consequently leading to lower productivity.
Divisional Structure: This structure is bets suited when the business is having more
products and services and each product or service has its own group of employees. The business
is bifurcated into various divisions and each will operate as a separate business (Jaakkola and
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Hallin, 2018). In simple words, each division is developed as functional structure but with a
higher adaptability which is because of the reason that each division is working for an individual
product. But this structure is not that productive as against the functional one because under this
some economies of scale is being lost.
Team Structure: This structure has no comparison with the functional structure in terms
of productivity but it can surpass in the areas like innovation, motivation, responsiveness,
flexibility and so forth. The teams are created by the different experts from the different streams
and then take on a project and therefore, works on the goals and objectives of the company and
power is being delegated to them for taking decisions (Palyvoda and et.al., 2018). But these
teams are required to communicate which might require spending lot of time in meetings which
is unproductive. For unstable market, this structure is right as the teams can respond quickly and
be innovative.
Virtual structure: This might not look like a structure, the small owners can employ
small group of the workers and then outsource some of its work to the virtual teams. For
instance, the business can hire someone to look at the production, logistics etc. This is the bets
way to expand the business instead of hiring a huge team to remain there at all the time.
Therefore, the productivity is in the hands of the companies to whom the small business hires.
Impact of external factors on the performance of the business
In order to determine the degree of impact of the external factors over the functioning of
the business activities. For analysing this, PESTLE analysis is being used.
Political factors: This factor mainly refers to the factors which is having the tendency or
the ability to affect the political stability of the nation. It involves the components like taxation
policy, trade restrictions and tariffs being imposed by the government, corruption, foreign trade
policy etc. All these factors accounts for the political factors which all the business organizations
should take into consideration in order assess the market attractiveness of the target market and
carry out the business operations without any government intervention.
Economic factors: This factors is based on the economic performance. It involves factors
like inflation and the interest rates, economic growth, purchasing power of consumers etc (Rizal,
Suhadak and Kholid, 2017). This factors may have a direct or indirect impact and some impact
can be seen in the long term. Thus, affecting the prices of the company's product and services.
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Social factors: Under this, demographic characteristics is being considered like beliefs,
age, gender, income level, attitude, preferences etc. From the marketing perspective, this factor is
important for targeting specific customer segment. This is important as these factors keeps on
changing with time impacting the demand of the products and services.
Technological factors: As per this, there is a regular variation in the technological side
affecting the operation of the business. The up-gradation in technology can be favourable or
unfavourable depending upon how the company makes use of it (ButarButar and Lisdayanti,
2020). This can add value to the business and can affect it productivity because of its inability to
meet with the change. By analysing this factor, helps in preventing the organization from
spending a large sum of money on that technology which will become obsolete very soon.
Legal factors: This factor is related to specific laws like consumer protection laws,
copyright laws, health and safety acts etc. This helps the companies in determining what is legal
and not legal so that it can carry out its practices ethically and legally. Otherwise, it might cause
government intervention affecting reputation of the organization.
Environmental factors: It accounts for the impact of the business activities on the
surrounding environment and society as a whole. It involves, climate change, environmental
offsets which is mainly due to the business activities. Thus, because of the increase in consumer
awareness and government pressure, the businesses are required to involve in practices which is
beneficial for the companies.
CONCLUSION
It can be concluded that the businesses are categorized based on the size and the level of
operation like micro, small, medium and large businesses. Along with this, there are different
types of business such as the sole trader, company, partnership and so forth, each having
different features. The organizational structure of the business also plays an important role as
each of these structure has an impact over the performance and productivity of the business. The
external factors identified using PESTLE is essential to be analysed regularly in order to
overcome the threats that might occur.
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REFERENCES
Books and Journals
Shafi, M., Liu, J. and Ren, W., 2020. Impact of COVID-19 pandemic on micro, small, and
medium-sized Enterprises operating in Pakistan. Research in Globalization. 2. p.100018.
Hernández, J.P.S.I., Yañez-Araque, B. and Moreno-García, J., 2020. Moderating effect of firm
size on the influence of corporate social responsibility in the economic performance of
micro-, small-and medium-sized enterprises. Technological Forecasting and Social
Change. 151. p.119774.
Yáñez-Araque, B., and et.al., 2020. Corporate social responsibility in micro-, small-and medium-
sized enterprises: Multigroup analysis of family vs. nonfamily firms. Journal of Business
Research.
Pucihar, A., and et.al., 2019. Drivers and outcomes of business model innovation—Micro, small
and medium-sized enterprises perspective. Sustainability. 11(2). p.344.
ButarButar, D. J. A. and Lisdayanti, A., 2020. The Impact of External Business Environment on
Marketing Strategic Impacting Marketing Performance in the Retail Industry in
Bandung. Prosiding IcoISSE. 1(1). pp.81-89.
Jaakkola, E. and Hallin, A., 2018. Organizational structures for new service
development. Journal of Product Innovation Management. 35(2). pp.280-297.
Palyvoda, O. and et.al., 2018. Influence of network organizational structures on innovation
activity of industrial enterprises. Problems and perspectives in management, (16, Iss. 3).
pp.174-188.
Rizal, O., Suhadak, M. and Kholid, M., 2017. Analysis of the influence of external and internal
environmental factors on business performance: A study on micro small and medium
enterprises (MSMES) of food and beverage. Russian Journal of Agricultural and Socio-
Economic Sciences. 66(6).
Ugoani, J., 2016. Employee turnover and productivity among small business entities in
Nigeria. Independent Journal of Management & Production (IJM&P). 7(4).
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