Table of Contents INTRODUCTION..........................................................................................................................3 Section 1: You are to show an understanding of the different types of companies and how they work.................................................................................................................................................3 Definition, characteristics and example of micro business, small business, medium size business and large size business..................................................................................................3 Section 2: You are required to explain different companies from sole traders to cooperatives and Limited Liability Partnerships........................................................................................................5 Definition, characteristics and example of sole trader business, partnership, limited liability business, public limited liability business and Cooperative........................................................5 Section 3: To consider different business structures and how external factors affect businesses..7 Identify different organisational structures and explain how organisational structure affects business productivity...................................................................................................................7 Using PESTLE analysis explain how different external factors affect the performance of a business.......................................................................................................................................8 CONCLUSION...............................................................................................................................9 REFERENCES..............................................................................................................................10 2
INTRODUCTION A business is an activity which includes buying ans selling or certain goods or services for some consideration from customers to offering firm. Such kind of activity are done with a purpose of generating revenue or profit or sometimes are conducted fro the purpose of serving society people at no cost are established just to make charity(Chowdhury, 2013). There are various kinds of business firms operated in market. Organisations such as Sole proprietor, Partnership, Limited liability partnership, private company, public company, cooperative and one person company. Such kind of business firms operates at different level such as micro, small, medium or large business size. In the present report different forms of business firms are going to be discussed along with their various characteristics and examples. The all levels of business are also considered under the report. Further a private company is taken for which organisational structure and PESTLE analysis is done in report. Section 1: You are to show an understanding of the different types of companies and how they work. Definition, characteristics and example of micro business, small business, medium size business and large size business. Every business firms operates in market at a certain level of operation such as micro, small, medium or large size of business(Dixit, 1997). These type of businesses are classified on the basis of company's net worth, sales volume, number of employees, capital employed and its total assets. The definition, characteristics and example of different level of business is mentioned below: Basisof Comparison Micro BusinessSmall BusinessMedium Business Large Business DefinitionMicrobusinesses are those who are operating at very smalllevelin Smallbusiness refers to a type of firmthatruns with less number Medium business are those type of businesseswhich arelargethan Largebusinesses arethosewhich operatestheir functionat 3
market.of employees and doesnotposses largesales volume. microorsmall butissmaller thanlarge businesses. biggest level and involveshuge sales and revenue. Numberof employees Under micro level business less than tenemployees works. Smallbusiness comprisesof employees between 10 to 49 inasingle organisation. Mediumsize businessis establishedby having employees rangingfrom50 to 249 in a firm. Largebusiness arethosewho works with more than250 employeesinan organisation. Value of AssetsMicrobusinesses operates with less than£113,647. classificationof business based on sizeinlondon industry Thevalueof assets under small businessranges from£13,647to £1,134,434. Medium businesses operatestheir functionwitha assetsvalued from£1,134,434 to £3,402,621. Largesizeof businessesare thosewhoholds an asset for more than£3,402,621. TurnoverMicrobusinesses carries a turnover up-to£2 million. Smallbusiness firm operates with aturnoverthat ranges from£2 to £10 million. Suchkindof businesseshasa turnoverfrom £10 to £50 million. Largebusiness organisations carriesits operations with a turnover of more than£50 million. ExampleBossBrewing Company operates at micro level of business. CafePodCoffee Company runs as asmallsizeof business. VerdantLeisure comesunderthe categoryof medium business. HSBCBankis categorizedas largesize business. 4
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Section 2: You are required toexplain different companies from sole traders to cooperatives and Limited Liability Partnerships. Definition, characteristics and example of sole trader business, partnership, limited liability business, public limited liability business and Cooperative. Every business firm operating in market that is based upon certain type which can be a sole trader or can be partnership, limited liability or public limited liability or it can be a cooperativebusiness(García‐Quevedo,Jové‐LlopisandMartínez‐Ros,2020).Such classification of business is treated as ownership classified forms of business. Thedefinition,characteristicsandexamplesofownershipclassifiedbusinessare mentioned below: Sole Trader Businesses Sole trader or sole proprietorship business is one which is owned and being run by a single person who is a owner of a company(Hernández, Yañez-Araque and Moreno-García, 2020). He is the sole person who enjoys all the profits of business and suffers all kind of losses occurs if any during course of business. Owner is held responsible for all the liabilities and assets of the company. Such kind of companies are not mandatory required to get register to registrar of companies but only requires to register under the category of Self-assessment Tax. Example-Knight Frank is a sole trading company headquartered in United kingdom deals in Payroll and Salary management business. Partnership Business Partnership refers to a collaboration of two or more persons who comes for some business purpose with a motive to earn profits and share losses(Ivanovich, 2020). Each partner under this business is liable equally or according to their profit sharing ratio for liability and debts. Every partner brings some capital into business and runs in combine. There can be up-to 20 partners in a single firm operating as partnership business. Example-Mumsnet is a partnership business being founded by two close friends that is Justine Roberts and Carrie Longton based on UK. Private Limited Business 5
private limited businesses are those which are owned and controlled by a person privately.Thecompanyisnotbeingownedbygeneralpublicorgovernmentofficials (Jurkiewicz and et. al., 1998). Shares of such companies are not bought or further sold by common people in market. Only board of directors are authorised to buy its shares. The company has a feature of separate distinct identity then its owners who has a limited scope of liability in business course. Any single or group of people can setup a private limited company by following certain mandatory norms prescribed by registrar by submitting various necessary documents to them. Such businesses are required to put Pvt Ltd. after the name of their organisation. It is the most common type of business firm that is found in every corner at globe. Example-Greenergy is a private limited company based on Unite Kingdom deals in supply an distribution of fuels that are used in transportation. Public Limited Business Public Limited business refers to a company that comes under the management and control of government either central or state. Under such type of business maximum powers are in the hands of government allotted personal who are company's board of directors(Kuter and Gurskaya 2020). Public limited company is mandatory required to put PLC after their company name. Shares of such companies can be bought and further sold by general public who wants stake in that business. These organisations has a limited liability of public in business as the name suggests public limited company. The business has a distinct identity then its owners. Example-Kingfisher Plc is a Public Limited Company based on UK deals in home décor and furnishing products having more than 78000 employees covering all branches. Cooperative Business Cooperative businesses are those which is established by few people who comes together to share profits and losses for the benefit of all those members who are registered under specific community(Mayer, 2020). Example-London Capital Credit Union is a cooperative business established in United Kingdom as its headquarter. 6
Section 3: To consider different business structures and how external factors affect businesses. Identify different organisational structures and explain how organisational structure affects business productivity. Organisational structure refers to a system that every company follows in their business thatmapsvariousbusinessactivitiesalongwithaproperchannelofcommunicationor responsibility that is required to be followed by each and every employee of such organisation (Santoro and et. al., 2020). There are various kind of organisational structure which are used by business entities in order to have a clear and fair understanding of company's structure. These are Functionalorganisationalstructure,DivisionalOrganisationalstructure,Flatorganisational structure and several more. Each organisational structure is discussed below: Functional Structure:This kind of organisational structure is based upon various functions or departments of an organisation such as marketing, finance, human resource, production,supplychain,etc.whichallarenecessaryinabusinesstohavesuccessful achievement of target. Divisional Structure:This type of organisational structure is formulated based upon teams allotted for each separate task according to a specific project or product which fulfils customers needs of a particular segment(Trigkas and et. al., 2020). Flat structure:Underthisform of organisational structure there is no hierarchy of manager or no one is superior to anyone. All employees of an organisation is treated as equal and can communicate to anyone whenever required. Kingfisher Plc is a multinational company having its headquarter in United Kingdom with a dealings in home décor or furnishing products offering its items to more than 1300 physical stores across globe. Kingfisher plc adopts functional organisational structure in its organisation that is formulated on the basis of company's certain departments that is finance, marketing, supply chain, human resource, etc. 7
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Using PESTLE analysis explain how different external factors affect the performance of a business. PESTLE is an acronym stands for Political, Economical, Social, Technological, Legal and Environmental factors that affects the performance of business. The analysis of PESTEL factors in respect of Kingfisher Plc is done below: Political factor:This talks about certain governmental regulations that are necessarly followed in each organisation(Weiss and et. al., 2002). Kingfisher PLC being a multinational firm is required to follow political norms of each operating country in order to sell its products in that country. Every country has their own political norms that becomes tough to follow all at same time. Economical factor:This factor of external environment is concern about country's development and sustainability issue that is inflation,deflation,employment and other issues(Wineburg, 2001). Weaker unemployment rate in some operating countries creates a problem for Kingfisher Plc in hiring competent personal for their company. Social factor:This factor is related with concern towards society people related to their acceptance, preference, etc. It is very necessary for Kingfisher Plc to scan demographics and culture of society where company is selling its products. Technological factor:This factor of external environment is related to technical know how and various innovations in market. Kingfisher Plc regularly brings innovation in their offerings which are preferred by their potential customers. Legal factor:The factor of external environment talks about legality in business operations applying which becomes obligation for businesses. Kingfisher Plc is required to follow various employment or labour laws of each country in which it is operating and hiring employees. Environmentalfactor:Thisfactordiscussesaboutvariousissuesrelatedto environmental concern of surroundings, safety of which is the responsibility of each company(Yao, and et. al., 2019). Kingfisher Plc is always concern about environment and offers such products that produces less harm to nature such as pollution free items, etc. 8
Negative reaction from any or all of the above discussed forces hinders the business performance and its profitability. Ignoring or non adopting of nay factor can create a question on sustainability of business in market because it can lead to loss of brand image or market share. Positive reaction towards such external forces helps company in achieving success and getting competitive advantage over firms who deals in same industry. CONCLUSION From the present essay it can be concluded that there are various kinds of business which are classified on the basis of size and ownership. Under the classification of size business firms have micro, small, medium or large size business. Whereas in ownership category business is classified as sole trader, partnership, private company, public company or cooperatives. From the report it is also concluded that there are various types of organisational structure that is followed in each company which outlines its working structure. External environment such as PESTLE has a great impact on business performance that can effect either negatively or positively to business balance sheet and its market image. 9
REFERENCES Books and Journals Chowdhury, A., 2013. Proprietorship Firms: Advantages and Survival.Available at SSRN 2220979. Dixit, A., 1997. Power of incentives in private versus public organizations.The American Economic Review.87(2) pp.378-382. García‐Quevedo, J., Jové‐Llopis, E. and Martínez‐Ros, E., 2020. Barriers to the circular economy in European smalland medium‐sizedfirms.Business Strategyand the Environment.29(6). pp.2450-2464. 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.151p.119774. Ivanovich, K.K., 2020. About some questions of classification of institutional conditions determining the structure of doing business in Uzbekistan.South Asian Journal of Marketing & Management Research,10(5), pp.17-28. Jurkiewicz and et. al., 1998. Motivation in public and private organizations: A comparative study.Public productivity & Management review, pp.230-250. Kuter, M. and Gurskaya, M., 2020, May. Features of Accounting on Household Goods Accounts in Early Sole Proprietorships. InInternational Conference on Integrated Science(pp. 164-173). Springer, Cham. Mayer,C.,2020.Ownership,agency,andtrusteeship:anassessment.OxfordReviewof Economic Policy.36(2). pp.223-240. Santoro and et. al., 2020. The interplay among entrepreneur, employees, and firm level factors in explaining SMEs openness: A qualitative micro-foundational approach.Technological Forecasting and Social Change.151.p.119820. Trigkas and et. al., 2020. Business model for developing strategies of forest cooperatives. Evidence from an emerging business environment in Greece.Journal of Sustainable Forestry.39(3). pp.259-282. 10
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Weiss and et. al., 2002. Making the most of collaboration: exploring the relationship between partnership synergy and partnership functioning.Health Education & Behavior.29(6). pp.683-698. Wineburg, B., 2001.A limited partnership. Columbia University Press. Yao, and et. al., 2019. How to reduce carbon emissions of small and medium enterprises (SMEs) by knowledge sharing in China.Production Planning & Control.30(10-12). pp.881- 892. 11