Different Types of Companies and Their Working: Business in Practice

This article discusses different types of companies and their working, including sole traders, partnerships, limited liability businesses, public limited liability businesses, and cooperatives. It also covers organization structure and PESTEL analysis.

Business in practice

Table of Contents
Introduction .........................................................................................................................................3
Part 1 ....................................................................................................................................................3
Different types of companies and their working..............................................................................3
Part 2.....................................................................................................................................................4
Different companies from sole trader to cooperatives ....................................................................4
Part 3 ....................................................................................................................................................6
Different organisation structure and PESTEL analysis...................................................................6
Conclusion ...........................................................................................................................................7
References ...........................................................................................................................................8

Introduction
The business has separate legal entity structured in the economy to determine the innovation
with the idea of gaining market share and growth for the company. The business enterprises is
involved in the business activities which defines the commercial institution. On the basis of legal
system the organisations are divided where some runs and operated for maximizing profit and some
of are involved in the society welfare (Barr, T.L. and et. al., 2018). With this in the economy there
are some business enterprises which is not run in the purpose of profit maximization but operated
and run for some charitable purposes. In the study work the discussion is done on the different types
of companies with the legal entities in the business environment such as sole trader to cooperatives.
With this it has been illuminated organisation structure and the internal & external factors that
influences the business operations and their functioning.
Part 1
Different types of companies and their working
The company is denoted as lawful entity of association representing individuals which have
the common purpose for specific goals that has to be achieved. Various companies are involved in
business entities for maximising profit, financial enterprises, and voluntary association. Different
types of companies on varying size are micro, small, medium and large.
Micro business- It is recognised as fresh start-up from the family business with the
employees of 0-9 and turnover accounts for up to 2 million. The economic viability and social
cohesion is maintained to add value in the economy. The owners of such business are forced to meet
and manage the short term needs which faces challenges because of their capacity & size. The
employment and investment level is low (Carrillo Vera, J.A. and Aguado Terrón, J.M., 2019).
The features are the the decision taken is by the owner which is also liable for all the profits
and looses. The owner in the business matters takes decisions by participating effectively and to run
the business operations it has primary knowledge which requires low capital with low workforce.
To gain the return on investments the gestation period is small and involved in daily operations such
as spaza shops.
Small business- This types of business provides jobs and economy support on both the local
& national scale which comprises of 10-49 employees having annual turnover up to 10 million.
Depending on the sector it is independent operated and owned organisation which is limited in
income and size. It is held as a private of partnership, sole proprietorship, and corporations.
The features is to increase the business sales volume as working is independently

comprising of small figure of workers. The controlling power is with the single owner who has the
power to take all management decisions. The flexibility is render when sudden changes is made
which has the requirement of limited investment and workforce. Example- architectural firms, local
bakery (Chen, Y. and Lin, Z., 2021).
Medium business- This sort of business includes the annual turnover of up to 50 million
and the number of employees are employed is up to 250. The growth of theses business is with slow
of the small business after generating more incomes and profits. In such the management of the
organisation starts saving some capital for the future development such as machineries, recruitment
etc. between small business and large business the bridge is developed for medium sector.
The features of such enterprise has limited resources and highly depends on the owner
capability in resource generation. The management is informal where the employees performs their
duty as tasks division is not clearly defined and the owner is responsible to handle all the
functioning and challenges. The firm growth is determined by the owner which takes all decisions
(Christ, K.L. and Burritt, R.L., 2019).
Large business- The business in domestic market and in other countries have the coverage
of large network which has more than 250 employees with the annual turnover of more than 50
million. The working of the employee is voluntary membership and the growth of the firm increase
with the fast rate. The investment and employment level is high of the multinational companies.
The features are the large multinational company has complex management hierarchy with
high business communication. It provides the sustainability to environment with foster of
international relations. The employment level is high in the companies as it is capital intensive
approach which needs the investment in technology and staff hiring. Example- HSBC holdings.
Part 2
Different companies from sole trader to cooperatives
Sole trader- The set-up of the business is by the self-employed person which is run and
operated by the individual and responsible for all the debts. The business and owner are the same
concept as the losses made in the business is paid by the owner and the profits made is enjoyed by
owner himself. It is unincorporated sole proprietorship.
The characteristics are the set-up of the business is easy and simple with having unlimited
liability. The control on the business is with the owner which is not a separate legal entity. The
business is owned by the single person which makes contribution of capital and quick decision is
taken. The secrecy is maintained easily. Example- computer repairing service (Endres, H. and et. al.,

2019).
Partnership- The partnership business is created when two or more individuals works
together creates the partnership deed which defines the partners profit sharing in correct proposition
and for profit maximisation. The partnership structure and scope is defined.
The characteristics are it has unlimited liability and the all individual partners are liable for
the corporate responsibilities. The sharing of the profit and losses is agreed in the terms of ratio
stated in deed. There is a existence of agreement between the partners. There is transfer of interest
with the mutual agreement between the partners and jointly all the decisions are taken by the
partners. Example- McDonald and Twitter (Keränen, J. and Liozu, S., 2020).
Limited liability business- It is also considered as hybrid business arrangement which
syndicates firm protection liability and easy of partnership management. It is popular form of
business which operates small business. It has separate legal entity defining incorporated company
to regulate the relationship of shareholder and director. The company is limited by the shares or
guarantees. In limited shares the liability is limited to the amount of unpaid on shares. In the limited
by guarantee the guaranteed amount is paid by the member in he case of insolvency.
The characteristics are the owners are not responsible for corporation obligation and it is
separate legal entity. The members have limited liability. The documentation is simple and flexible
for the continuous operation of the business. Example- Blockbuster
Public limited liability- in such kind of business the shares are traded publicly in the stock
exchange which helps the owner to raise the capital by issue of public shares and risk is shared. The
growth and expansion opportunities are provided with the transferability of the shares.
The characteristics are it has high degree of transparency level with separate legal existence
in the performance and decisions of business. The transfers of shares are freely and through sale of
the shares the capital is collected. The financial institutions are willing in extension of the finance
the one who are listed. Example- Roll-Royce Holdings (Lüdeke-Freund, F. and et. al., 2019).
Cooperative- This kind of business is formed as legal body or unincorporated association.
The services are provide to the user and owners. The business is run for the profit maximization
which earns limited return on equity. The needs of the economic, social and cultural is voluntarily
meet through joint owned enterprise.
The characteristics are there is development of human value and consumer are protected
with having democratic management. The members have common interest and society rules are
abided by having the voluntary memberships. The liability of the members is limited and unlimited.

Part 3
Different organisation structure and PESTEL analysis
The organisation structure in the business determines flow of information in what way
between the numerous level of hierarchy and the ways in which roles, power, responsibilities and
authority is dispersed. Between the departments the interaction and relationship is defined.
Functional structure- To organise the work functional organisation structure is used in the
business. The work is grouped on the bases of skills and knowledges. Each department is structured
with roles containing the specialized units reporting to single authority of top management. The
effective decision and communication are made. The production in the organisation is efficient with
high quality. The management hierarchy is simple which makes employees confident and smooth
working. The functional areas are small groups centred on specialisation such as IT, finance (Nolan,
J. and Rowley, C., 2020).
Divisional structure- the organisational function is grouped together into a division. The
organisation is structured in many ways where each structure determines the manner of business
operations and performance. The division is based according to the product or geography. The
business functions and activities includes the diverse branches related to customer group, product or
market. The divisional structure is suitable for the large multinational companies where the team is
build to bring the efficiency in the organisation. The managers has the in dependency of decisions.
PESTEL Analysis
It is a tool used to identify the external forces that impacts an organisation functioning and
decisions if business wants to gain long term sustainability and success in the market. For
environment scanning it is a component of strategic planning. The analysis is done on HSBC
holdings.
 Political factor- It determines the long term profitability which impacts the business and
market. The changes in the policies and new government regulations and procedures has a
impact on the business performance. The HSBC consider the various factors before entering
or investing in market political stability, trade regulations and tariffs, taxation, wage
legislation (Nußholz, J.L., 2018).
 Economic factor- The HSBC is impacted with the competition norm of micro environment
for competitive advantage. The other factors impacting the HSBC is inflation, saving,
interest rate. The factors considered by the HSBC are type of economic system, financial
market efficiency, economic growth rate etc. the company can gain opportunities and
performance with stable economy.

 Social factor- The factors are associated with the consumer demographics and society
culture which impacts the organisation in environment. The HSBC consider the factors of
educational level, shared beliefs and attitudes. The customers need is determined by the
company and uses innovative technologies to meets the demand of customers (Reinhold, S
and et.al., 2019).
 Technological factor- The companies has the opportunities of increasing their business at
global level due to the technology advancement and digitalization. The analysis of
technology involves understanding the impact regarding the cost structure, rate of
technological diffusion etc. the factors which influence the HSBC holdings involves social
media marketing, research and development on technology (Tolkamp, J.C.C.M. and et. al.,
2018).
 Environmental factor- The changes in the climatic conditions, environmental standards,
laws and regulations impacts the HSBC holdings. To reduce the environment pollution the
adopting of waste management practices is crucial for the company. The other
environmental factors affecting the business are weather, climate change, recycling. In
renewable technologies the subsidies is offered by the countries to encourage investment
which benefits the HSBC to ensure long term profitability.
 Legal factor- The study of legal environment and regulatory structure of new consumer
market is required. The factors considered by the HSBC holdings which has influence on the
business employee protection law, consumer protection law, and intellectual property law.
The factors are associated with the government and state laws related to the market and
organisation. The company also consider the legal policies and procedures, legislations
(Weaver, M.W. and et. al., 2018).
Conclusion
In the above discussion to conclude the report it provides the understanding on different
types of companies with their legal entities. With the real life company example the impact of
internal and external factors has been highlighted on the decision making. Organisation structure of
functional and divisional is defined in the study with its productivity in workplace and gains the
efficiency. The companies are run for the profit purpose and some are for the welfare of the society.

References
Books and Journals
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Endres, H. and et. al., 2019. Industrial internet of things (IIoT) business model classification.
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