Different Types of Business and Organisational Structures

This report discusses different types of businesses, including micro, small, medium, and large businesses, along with their characteristics and examples. It also explains various organisational structures and how they impact business productivity. Additionally, it explores how external factors affect business performance through PESTLE analysis. The report is based on River Island, a high street fashion brand headquartered in London, UK.

BUSINESS IN
PRACTICE

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 example 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 performance of a
business........................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business organisation is defined as an association that exists into market with purposes
which has to be achieve within pre-determined time period. It consists of different types of
businesses which includes micro, small, medium and large (Andrews and Nwapi, 2018). These
businesses follow different kinds of organisational structure according to their mission and
vision. To achieve long-term sustainability into competitive market, it is important for every
organisation to analyse macro-environmental factors through conducting PESTLE Analysis so
that corrective action can be properly implemented. The present assignment report is based on
River Island which is high street fashion brand operated worldwide. Its headquartered is located
in London, United Kingdom. The report discusses different types of business along with their
characteristics, Using of PESTLE Analysis and description of organisational structure that
organisations can adopt according to their pre-determined objectives.
MAIN BODY
SECTION 1
Definition, characteristics and example of micro business, small business, medium size business
and large size business.
The main motive of the business is to earn the maximum profit and generate maximum
revenue for the global reach and growth in the market. There are different type of business, who
work for the society as well for their wale fare (Chan and et. al., 2016). There are different type
of organisation on the basis of their size type and product offered and these are as follows:
Micro Business
A micro enterprise is one which carries small business and can employ upto 9 members
and have turnover upto 2 million.
Characteristics:
 They generally cater to local or regional needs.
 They are managed by one person and is increasing to reap benefit of government
incentives.

 It require less funding in comparison to other ownership basis and fosters the creativity of
the person.
Example
boss brewing, Issoria and mantons card etc.
Small business
The small sized business is the business which has few employees and less turnover as
compared to the large or regular sized business. In each country the definition of term 'small'
differs in government notations. The meaning also differs from every industry to industry in
respect to employees and turnover (Chión, Charles and Morales, 2019).
Characteristics
 The small scale is defined broadly as having 10 to 50 employees and annual turnover
of €2 to 10 million.
 The structure and size of business is limited which ensures the effective and smooth
functioning of business.
 It fosters the entrepreneurial spirit of employees (Del Giudice and et. al., 2017).
 It is more preferred in sole proprietorship, limited liability and partnerships form.
Examples
Cafe Pod Coffee co, Broadsword Event House, Imaginera etc.
Medium Size Business
The medium sized business is referred to business with turnover of 50 million and
employee less than 250.
Characteristics:
 The Government offers incentives and rebates to increase this sector.
 Medium size enterprises play an important role in economy by fostering the
entrepreneurial state and giving employment to people (Gandhi, 2017).
 They have certain minimum limit to employ people and to earn that much profit.
Examples

Verdant Leisure, Captify, Giacom, Pharmacy2u etc.
Large size Business
The Large size business are the business which can employ more than 250 employees,
have turnover of more than 2 million and balance sheet is at 12.9 million.
Characteristics:
 The large sized business are great source of income to the government and contributor to
GDP.
 The large sized business are able to maintain international relations efficiently (Lüdeke-
Freund,and et al., 2018).
 There is clear line of distinction of owners, management and employees.
 They help in uplifting of weaker sections of society and helps in development of
economy by providing the employment opportunities to people and by expanding
overseas respectively.
 The large sized companies are having large pool of funds.
Examples
ADM group, River Island
Different between various type of organisations are:
Basis Micro Small Medium Large
Turnover It is under 2
million euros.
It is under 10
million euros.
It is under 50
million euros.
It is above 50
million euros.
No. of employee 0-9 01/10/49 50-250 More than 250
SECTION 2
Definition, characteristics and example of sole trader business, partnership, limited liability
business, public limited liability business and Cooperative.
There are different types of business which are categorised on different basis and
function accordingly in order to run the organisation successfully and these are follows:

Sole Proprietorship
A sole proprietorship is a one man company which does not needs to be incorporated and
in eyes of law the owner and the business are same. It is one of the simplest form of business
(Muñoz and Cohen, 2017).
Characteristics:
 The main characteristic of sole proprietorship is that it has comparatively less formalities
than any other form of ownership.
 This form of ownership have the benefit of tax savings as once tax is paid i.e personal
income tax is paid just.
 The profit distribution lies in hands of owner only it need not to be distributed but lacks
in the pooling of funds.
Example
The small shops of grocery, mom and pop stores, etc.
Partnerships
The partnership refers to when two or more partner come together to start the business
and enter into agreement to carry out business, to share profit and loss (Pilkova, and Holienka,
2018).
Characteristics:
 The registration of firm is necessary to carry on business.
 Minimum two partners are required to enter into agreement.
 The agreement must be carried out to carry on any business that is of legal nature.
 This mode is governed by the partnership act,1980.
Example
WhatsApp, Social chain, NotOntheHighStreet.com, etc.
Limited Liability Partnership
It is a form of partnership in which the partners have limited liability. In UK the limited
liability is registered as the separate body rather than as partnership and governed by Limited
Liability Partnership Act 2002.
Characteristics:

 This form has its own existence independent it does not depend upon the existence of
members as in case of partnership.
 The members of LLP have joint responsibility as ceased in agreement and no other
liability exist of each others action.
 In LLP the capital gains and distributed among partners and are liable for the personal tax
treatment.
Example
the common example of LLP are in the field of accountants, law firm and doctors.
Company
The company is a result of formation of some specific objective. The company is an
artificial person with existence of separate legal entity. It is governed by Companies Act,2006.
Characteristics
 The Company is independent of its members existence.
 The company has separate legal existence apart from its members and can enter into
contracts and sue, buy and sell assets under company's name.
 A company has board of directors to manage the operations.
 The memorandum defines the duties, rules for carrying out operations.
Example
Shell, Tesco etc.
Cooperatives
The cooperatives are bodies in which members unite to pursue the social, economic and
cultural goals. The cooperative bodies are democratically owned bodies which elect the bodies
by vote. It is governed co-ops (Polyviou, Pramatari and Nancy, 2016).
Characteristics:
 They are open and democratic bodies.

 The finances are contributed by the members by buying shares.
 The surplus is shared by members and their main motive is the economic goal.
Example: Daily Bread, Bawing Energy Cooperative
Basis Sole
proprietorshi
p
Partnership LLP Company Cooperatives
Liability Unlimited Unlimited Limited to the
extent to their
capital
contribution
Limited-
limited
liability of
owners
unlimited-
unlimited
liability of
owners
unlimited
Number of
owners
one Two or more Two or more Private-
minimum 2
public-
minimum 7
Two or more
SECTION 3
Identify different organisational structures and explain how organisational structure affects
business productivity.
It is the system that defines the activities which has to be performed by the employees in
order to give contribution to an organisation in achieving its desired goals and objectives. It
includes roles and responsibilities of employees working within an organisation. There are
different organisation structure which are briefly explained as under:
 Flat organisational structure- It is an organisation which allows employees to directly
communicate with top authorities without facing interferences of middle level
management. This kind of structure is mostly followed by small business and start-ups.

 Hierarchical organisational structure- It is an organisation that direct employees to
follow chain of communication which includes top to bottom. It is a pyramid that every
employee are accountable to their superior (Trad,and Kalpić, 2017)..
River Island follows hierarchical structure due to operating at large scale. It directs
employees to follow chain of communication in which they need to first communicate with
middle level manager and then top authorities. It reduces chances of conflicts among employees
and maintain healthy working atmosphere.
Basis Hierarchical Flat
Level of management It structure flows from top to
bottom which involve different
level of management.
There is fewer level of
management.
suitability This is suitable for large
organisation.
This is suitable for small
companies or those company
whose motive is to motivate
their employees.
supervision Every employee is accountable
to their superior
Less supervision is there.
Using PESTLE analysis explain how different external factors affect the performance of a
business.
PESTLE Analysis is an analytical tool which is used to conduct in order to analyse
external factors and accordingly take corrective actions to tackle the threats and grab the
opportunities.
Political factor: This factor includes the government stability in the UK and River Island is a
global leader in clothing industry which faces the major impact on its operations. The company
can have benefits of EC's trade agreement as it can travel its product form one nation to another
without restriction in different countries. As with new government change can have effect on the
company's working. With China amidst the import duty will be higher as compared due to
tension among both nations and increase in import duties will result in increase in company cost
of operations (Gaganis, Pasiouras and Voulgari, 2019).

Economical factor: These factors include the inflation, foreign trade and exchange rate etc.
As the economy is under recession and with inflation the River Island's profitability will also be
affected as government are rising tax in return leaving with consumers less purchasing power
which have direct impact on company. With rising raw materials cost it will result in increase in
price of the merchandise and rising restrictions on shipping among pandemic also affect
company working.
Social factor: These factors include the customer trends, market trends etc. River Island's
deals with the top quality products and involve the required changes time to time to match the
ongoing trends and needs of the customers. The companies do mass manufacturing which
affected company as consumers are purchasing less now a days and fashion is changing
constantly. The company at same time needs to collaborate with some famous celebrities
constantly to make consumers feel intricate to the brand.
Technological factor: These factor includes the updation in the technology and develop new
market for the organisation. River Island's have announced the use of technology transformation
program, which made the organisation first digital platform. The company will utilize all the
technology for the growth and expansion of their organisation. The continue bridging of
technology and upgradation it in company structure should be the focus (Rialp-Criado, and
Komochkova, 2017).
CONCLUSION
It can be concluded from the above report that there are different kind of businesses
following different structures according to the suitability of their mission and vision. It includes
small, medium and large businesses with having different characteristics. It is important for an
organisation to follow suitable organisational structure that can easily accepted by the employees
so that it bring motivation to work hard and give their best performance. Business organisation
can only sustain into competitive market if they are able to identify and analyse external factors
exist in market environment. For this, conducting PESTLE analysis is useful which gives
information about the market fluctuations.

REFERENCES
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