Definition and Characteristics of Different Sizes and Types of Businesses

This report provides an overview of different sizes and types of businesses, including micro, small, medium, and large size businesses, as well as sole trader, partnership, limited liability, public limited, and cooperative businesses. It also discusses the influence of organizational structure on business productivity and the impact of PESTEL factors on business performance. The report focuses on the case of Marks and Spencer, a multinational retail company.

INDIVIDUAL
REPORT

Table of Contents
INTRODUCTION...............................................................................................................3
MAIN BODY.......................................................................................................................3
SECTION 1........................................................................................................................3
Definition and characteristics of micro, small, medium and large size business...........3
SECTION 2........................................................................................................................5
Definition and characteristics of sole trader, partnership, limited liability, public limited
and cooperative business..............................................................................................5
SECTION 3........................................................................................................................7
Determine organisational structure and how it influences business productivity..........7
PESTEL Analysis and it impact on business performance............................................8
CONCLUSION.................................................................................................................10
REFERENCES................................................................................................................11

INTRODUCTION
Business environment is a factor which plays a crucial role in organisation
success and growth. Business environment can be internal as well as external, where
internal business environment involves- internal management, organisation structure,
plans, policies, finance and others. Whereas external business environment involves-
competitors, suppliers, distributors and other factors (Avram and et.al, 2018). Business
environment plays a crucial role in smooth functioning of an organisation and
identification of such internal and external factors are necessary for effective
functioning. Marks and Spencer is a multinational retail business which was founded by
Michael Marks and Thomas Spencer in the year 1884 in London United Kingdom. The
retail company is offering the services through all around the world and offers products
such as apparels, home furnishing and improvement products, banking services and
food products. The report aims to define different size of business and their
characteristics. The report will also highlight types of business, organisation structure
and how external factors can create an impact on performance and productivity of
business.
MAIN BODY
SECTION 1
Definition and characteristics of micro, small, medium and large size business
Micro business
Micro business is smallest of small business where there are only a few
employees and such business operates in the same manner as a small business. Micro
business enterprise are majorly sole proprietors and generate smaller revenues (Blanc
Serrier, Ducq and Vallespir, 2017).
For example, Boss brewing company is a micro business which was established
by Sarah John and Roy Allkin in 2014. The company is a craft brewery company.
Characteristics

 The annual turnover of a micro business is under £ 2 million
 Micro business has not more than 9 employees
Small business
A business functions and operates on small scale level and involves less number
of labor, fewer machines and less capital to operate is a small business. It can be a
partnership, cooperative limited liability or a sole trading business (Daepp and et.al,
2015).
For example, Marshfield bakery ltd is a private limited share capital company
which falls under small business and the company manufactures quality handmade
cakes, seasonal goods, biscuits and snack bars which are distributed throughout
Europe and UK.
Characteristics
 The gross income of a small businesses under £10 million
 Small business has not more than 50 employees
Medium business
A medium organisation is neither large or small but false in between and the
investment in equipment’s can be more than 2 crores but cannot exceed then 5 crores
(Edison and et.al, 2018).
For example, Verdant leisure is a medium scale business which was started by
Andrew Wall, Bev Dixon and Graham Hodgson in the year 2010. The company offers
services of best holiday parks, quality park facilities, attractive holiday accommodation,
quality customer service and wide variety of holiday homes for sale around Scotland,
Northumberland and Country Durham.
Characteristics
 The gross income of a medium scale business is under £50 million
 A medium scale enterprise can have employees under 250
Large business

A large scale business can have at least 5000 employees and such business
organisation focus on large profit making operation in regards to creating and impact on
social political policy. Such business can create powerful and influential impact on
financial position of the economy (Efremov and Vladimirova, 2020).
For example, Marks and Spencer is a big multinational retail company which
offers a wide variety of products and product lines. The company was started by
Michael Marks and Thomas Spencer in 1884 and is currently serving globally.
Characteristics
 The gross income of a large scale business can go up to £2 billion
 A large scale business can have 5000 employees and more
SECTION 2
Definition and characteristics of sole trader, partnership, limited liability, public limited
and cooperative business
Sole trader
Sole trader or sole proprietorship is an unincorporated business enterprise which
have one owner and is liable of income tax which has been earned on profits
(Fernando, Wah and Shaharudin, 2016). Such business is run by a single owner and
they are self-employed, owners are fully responsible for any loss that a business will
face.
For example, Novus accountancy Ltd, Graham Harvey & Co, MMS Accountants,
Pendragon Accounting services, AKM Associates and Lescott are some of the
examples of sole trader business which are operating in UK.
Characteristics
 Single owner
 Fully liable for profit and loss
 Have full control over business
Partnership

Partnership business is a type of business where two or more people come
together and share ownership, responsibility and operate the whole company. The
income profit and loss which is generated by a partnership business is divided on the
basis of the percent of share a partner holds in the organisation.
For example, Social Chain is a partnership company which was started by Steve
Bartlett and Dom McGregor in the year 2014 and is a marketing agency.
Characteristics
 Partners are liable to pay their taxes
 Easier to manage investment for business activities
 Less risk of loss as it has been divided
Limited liability
A limited liability is a type of business structure for private companies and a
limited liability company is a combination of partnership and cooperative companies
where partners of company have limited liability and status of corporation (Kamchatova
and Kostenko, 2016). In such organisation partners are not liable, holds no
responsibility to pay any amount if business faces any loss.
For example, Virgin Atlantic, Oxfam, Barclays, Deloitte, Touche and Credit
Suisse International are some of the examples of limited liability companies.
Characteristics
 Increase flexibility for contribution of each partner
 Highly flexible
 Limited liability status as company exist on the basis of its own legal entity which
protects partners from being liable
Public liability
A public limited company is an organisation which is listed under stock exchange
and people can purchase their shares through stock exchange market. Such companies
have separate legal entities (Maalouf, Abi Aad and El Masri, 2020).

For example, Burberry is a public limited company which was established by
Thomas Burberry in 1856 in London UK. The company different products which involves
apparels, accessories, footwear, perfumes, eyewear, beauty products and such
services and products are offered to national and international customers. The company
is also listed under London stock exchange.
Characteristics
 Can bid their shares for motivating the employees
 After taxation the profit earned by company is divided among partner and
shareholders
Cooperative business
A cooperative business is business which are owned and run by their members.
Such business operates for the benefit of their members (Mousavi, Bossink and van
Vliet, 2019). These business organization are autonomous association where people
unitedly volunteer by which they can meet common economic cultural and social needs.
For example, Penrith Co-operative society, Heart of England Co-operative
society, Lincolnshire Co-operative and Midcountries co-operative are few examples of
Co-operative business which are currently operating in UK.
Characteristics
 Have open and voluntary membership
 Democratic control
 Distribution of surplus
SECTION 3
Determine organisational structure and how it influences business productivity
Organisation structure is a system which directs task and activities in order to
achieve organisational goal. Organisation structure influence organisation action and
offers foundation on which business can operate. In other words, it is a model which
defines all workflow through an organisation (Näyhä, 2020). The most common
organisational structure which are used are divisional, hierarchical, functional, matrix

and flat organisation structure. With a strong and effective organisation structure, the
performance of employees can be enhanced, as it ensures that all operations are
performed effectively. An effective organisation structure increases inter departmental
communication which would lead to reduction in defects, complaints and returns.
In relation to Marks and Spencer, the company use flat organisation structure.
This organisation structure help the business, in reducing bureaucracy at workplace and
encourage employees to participate in forming business decisions. By using flat
organisation structure, it becomes more feasible for the company to form decision,
enhance transparency and maintain continuous flow of communication as there is no
middle management which can affect decision making activity (Ostos, Hinderer and
Bravo, 2017). This organisation structure have the company in avoiding the layer of
authorities and forming quick decisions in several situations. There are many
employees working in the organisation and they are assigned task based on their own
field and specialization which helps them in managing their work effectively and being
highly motivated in the workplace that can lead to positive working scenario.
PESTEL Analysis and it impact on business performance
PESTEL analysis of marks and Spencer is discussed below:
Political Factor- Political factors such as free trade and Brexit influence the
operations of Marks and Spencer. As in the modern era, free trade with different
countries creates high benefits and advantage for Marks and Spencer to import and
export foreign products for sale and maintain their profit margin. It also helps in
decreasing the sourcing cost. Political stability and tax influence operations of Marks
and Spencer, as due to increase in government tax can further increase the price of
products and services which are provided by Marks and Spencer and can create a
negative impact on the sale of their products. Brexit has influenced functions of Marks
and Spencer in relation to trade regulations and traffic and it lead to loss of numerous
free trade policies which resulted in higher product cost for end customers.
Economic Factor- Economic factors such as interest rate, economic growth
pattern, inflation and foreign exchange rate can create and impact on business
functions (Retolaza, San-José and Prunonosa, 2015). Due to incline in financial crisis,

this has led to decline in demand for high quality products which are sold by Marks and
Spencer because of low disposable income. Discount competitors and pricing strategy
has majorly created an impact on the market share and revenues of the business.
Social Factor- Socio-cultural factors such as changing trend and ready meal
sector has been dynamic. As it can be seen that the consumption of ready meals has
increased over the years and given an opportunity for many food stores. In relation to
this Marks and Spencer, company focused on dominating this industry by covering large
market share and being best ready meal distributors (Wu and et.al, 2018). As due to
rapid change in trends and patterns for cheap clothing, the demand of the company
products has become less trendy which has affected the revenues of the business. By
offering attractive discounts on the use of credit cards, Marks and Spencer has
managed to allow the customers to pay with a credit card which can increase their sale.
Technological Factor- Technological factors such as technological
advancement has created huge impact on business by offering self-checkout and online
shopping, Marks and Spencer has managed to maintain their revenues and profits. As
by offering a self-checkout system, this lead to better customer experience and to
higher revenues and profits. Marks and Spencer has also established strong E-
Commerce platform or online shopping page, where brand offer the products and
services to customers for shopping online and deliver goods directly to buyers.
Environmental Factor- As environmental concerns are rapidly increasing,
Marks and Spencer focus on supporting and following ecofriendly initiatives and actions
by which they can contribute in environment protection. The company also use digital
payments, promotes reduction in use of plastic, use biodegradable packaging and
recycling of waste through which they can contribute for environmental development
and such initiatives will help Marks and Spencer to establish and maintain their brand
image the industry (Yeh, Lee and Pai, 2015).
Legal Factor- Marks and Spencer focus on fulfilling all legal requirements and
norms which are formed by government that can lead to a favorable business solution
and policies which will result into increase in business growth and company can sustain

for longer period of time span in the industry by promoting economic development in the
country.
CONCLUSION
From the above information, it clearly defines that there are different types of
business which have distinct characteristics and operations which are performed by
them. External factors influence the business depending on the nature and size. With
the help of marketing techniques such as pestle analysis, it helps to identify the
influence of external factors on the business environment and how such factors can
create an influence on performance and productivity of organisation. As such factors
can create positive as well as negative impact on their business operations. The report
also quotes necessary information regarding organisation structure and how these
structures are created strategically, so that organisation can achieve productivity and
efficiency from their managerial activities.

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