Types of Businesses and Organizational Structures: A Report on Sainsbury

This report provides an overview of different types of businesses based on size and form, and discusses the impact of organizational structure on business productivity. It also includes a PESTEL analysis of external factors affecting the performance of Sainsbury, a leading supermarket chain.

Individual Report

Table of 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......................................................................................................................................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 .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Businesses are generally industrial, commercial or professional in nature. The sole
motive of the business is to earn profit and generate maximum revenue. It contributes to the
economy by offering its product or service to the large public. There are different kinds of
business which can be categorised on the basis of either size or form (Steyn, 2020). The external
environment plays a major role in the running of business as it affect the business from the
macro factors. The organisation chosen for this report is Sainsbury, leading company in
supermarkets with its business operating globally. This report shall deal with the types of
business on the basis of size and form and further it will deal with different organisational
structures and PESTEL analysis for analysing the macro factors which affect the business.
MAIN BODY
Section 1
Definition, characteristics and example of micro business, small business, medium size business
and large size business
The businesses can be classified on the basis of size which includes micro, small,
medium and large sized enterprises. These are explained as under-
Micro Sized Businesses
These businesses involve 0-9 employees only and operate at micro level and has a
turnover under 2 million euros.
Characteristics-
 These involve low investment for starting up the business.
 The owner handles the day to day operations of the business and is solely responsible. All income and profits belong to the owner.
Example- Issoria
Small Sized Businesses
These businesses engage 10- 49 employees in their functioning and operate in small
smart. They have a turnover under 10 million euros.
Characteristics-
 These businesses are generally preferred by the sole proprietor or partnership.
 It involves small investment for establishing the business.

 The turnover ranges under 10 million euros.
Example- Imagineria
Medium Sized Businesses
These businesses involve 50-250 employees who contribute to the achievement of
organisational goals. The turnover of these businesses are under 50 million euros.
Characteristics-
 These businesses have big market share to offer their offerings.
 It involves big investment for starting up the enterprise (Smirnova, 2019). These expand their business in other locations.
Example- Verdant leisure
Large Sized Businesses
These businesses involve more than 250 employees who mutually contribute in the
success of the company. The turnover of these businesses are more than 250 million euros.
Characteristics
 These business involve large investment from both equity and debt.
 It focuses on larger market capture to offer their product or service. It has usually expanded its business globally to reach large market share.
Example- Tesco
Basis Micro Small Medium Large
Number of
employees
0- 9 Between 10 to 49 50- 250 More than 250
Turnover Less than 2
million euros
Less than 10
million euros
Less than 50
million euros
More than 50
million euros
Investment Very low or little Low investment Large investment Huge investment

SECTION 2
Definition, characteristics and example of sole trader business, partnership, limited liability
business, public limited liability business and Cooperative.
The businesses are further classified according to their form which includes sole
proprietorship, partnership, limited liability partnership, companies and cooperative. These are
discussed below-
Sole Proprietorship
This form of business involve single owner who is responsible for the daily operations of
the business. All profits and losses of the business belongs to the owner and he is personally
liable for all the debts and liabilities of the business,
Characteristics-
 it involves one owner.
 The owner is personally bound for the debts and liabilities. The tax is paid by the owner personally as both business and owner are single entity.
Example- a carpenter or computer repair service
Partnership
This form of business involve 2 or more person for establishing a partnership firm who
are called partners. They mutually share the liabilities, profits and responsibilities of the business
operations. The partners are personally bound by the debts and liabilities of the business.
Characteristics-
 It involves two or more people for starting up a partnership firm.
 The partners mutually share profits according to their capital contribution. It requires a partnership agreement to start up a partnership firm (Ramanadham, 2019).
Example- GoPro
Limited liability partnership
This type of partnership is same as general partnership but involves limited liability of the
partners according to their capital contribution. There is no unlimited liability of partners.
Characteristics-
 There is limited liability of the partners.
 The partners share profit and losses together. Partnership agreement is required for establishing a LLP.

Example- law firms
Company
This type of business is a separate legal entity distinct from its owners. It has a perpetual
succession which means that the owner may come and go but company shall remain forever till
its winding up. It is an artificial personality and has its common seal.
Characteristics-
 it is separate legal entity distinct from owners.
 Its incorporation is a complex process which involves cost and lengthy procedure. It is an artificial personality.
Example- public company- Tesco, private company- Swire
there are generally two types of companies, public and private where public companies
involves invitation to general people for purchasing the share as it raises its share capital from
application of shares. The shareholders are owners of the company and elect the board of
directors to run the business. On the other hand, private companies are not required to raise share
capital rather they raise capital either by equity or debt. The directors are owners of the company.
Further the company can be classified into limited and unlimited where limited
companies involve limited liability of the owners equal top their share in the company and
unlimited companies are those which involves unlimited liability of the owners (Perera, 2017).
Cooperation
These businesses are run not with the motive of earning profit but for voluntary services.
It is owned and controlled by its members who handle the day to day operations of the business.
Characteristics-
 They have democratic structure which involves vote from the members.
 They equally and fairly distribute the economic result of the business. They are voluntary and open associations.
Example- Blue Diamond
Basis Sole
proprietorshi
p
Partnership Limited
liability
partnership
Company Cooperatives
Number of
owners
One Two or more Two or more Public
company-
More than 2

Basis Sole
proprietorshi
p
Partnership Limited
liability
partnership
Company Cooperatives
minimum 7
private
company–
minimum 2
Liability Unlimited Unlimited Limited Unlimited
company-
unlimited
limited
company-
limited
unlimited
SECTION 3
Identify different organisational structures and explain how organisational structure affects
business productivity.
Functional Organizational Structure- This structure is same as hierarchical structure.
In this structure, organization divide into different functional departments. All the employees of
department divide in groups according to their job role and every departments lead by
experienced functional manager. All the employees are well aware of their job roles and use their
skills so that it helps in to accomplish organisational goals (Okpara, Ezirim and Mohammed,
2017). This structure start from upward, top level positions with hight responsibilities and goes
downward.
Divisional Organizational Structure- In divisional structure, every function has their
own division. This all the operations are based on groups on separate product categories. In this
structure, organization divisions have totally control their own resources. Each and every
division have divided into own team like marketing, IT and sales, etc. this structure is
responsible to work effectively for the large organization because it empowers the different
division to take decisions. In this structure, market based, product based and geographical based

divisional department. Every division responsible for the important functions and resources
which are necessary to help in geography and product line.
Basic Functional organizational
Structure
Divisional Organizational Structure
Meaning In functional structure, organization
divided in various separate
functional departments and job
divided in groups according to the
similar nature.
This structure organize in various
diversified functions and activities in
to separate divisions.
specialization In this structure, the specialization
criteria based on functions.
In this structure, the specialization is
based on products.
Responsibility In functional structure,
responsibilities are difficult and not
flexible for the departments
(Miśkiewicz, 2017).
In divisional structure, responsibilities
are easy to allot for the employees.
Managerial
Development
In this structure, managerial
development are not in demand
because there are some specific
functions are performed.
In divisional structure, lots of
managerial development activities
performed because it is perform
multiple functions in divisions.
Sainsbury follows Functional organisational structure where it has departments divided
into functionary units according to their specialisation. It has marketing, production, finance,
operations etc. which help in contributing in the overall achievement of organisational goals. It
helps in increasing the productivity of the company so that it can maximise its profit.
Using PESTLE analysis explain how different external factors affect the performance of a
business.
PESTEL analysis is a tool which is used by the companies in order see the impact of
macro factors which may affect the working of the business. Sainsbury operates globally all

around the world and it may get affected from the external factors of different nations so it is
important to analyse its macro factors. The PESTEL analysis for Sainsbury is discussed below-
 Political- These include those factors which involves government interference. Sainsbury
operates globally so it may get affected from the laws and regulations of different
countries. The UK's relation with Qatar may affect the company's operations and affect
its business performance.
 Economical- These include the factors like which affect the decision making of the
business especially relating to finance. As Sainsbury has large number of employees and
they expect a rise in their salary due to increase in the expenses. So this may affect its
working (Cohen, 2017). Rising fuel prices also affect the transportation cost which results
in low profits. The fluctuation in foreign exchange rate also impact the profits of the
company.
 Social- These involve socio culture factors which affect the performance of the company.
As Sainsbury offers junk food but now the trend is followed towards healthy eating
which may affect its profitability. The comp[any must adopt the customer demand so that
long term success is ensured.
 Technological- These include technological advancements which make the business
easily going. Sainsbury operates globally and has customers from all around the world, so
the company expanded its operation online so that it can utilise the technology and can
increase its performance.
 Environmental- These include impact of the enterprise on the environment. As a
supermarket chain, they are responsible for the carbon footprint. The company Sainsbury
must work towards becoming environmental friendly si that it can minimise its ecological
damage which is caused due to its operations.
 Legal- These include laws, rules and regulations which operate the working of the
businesses. Sainsbury has to comply with the laws of different countries and needs to get
familiar with every law so that it can eliminate the risk of any legal consequences. This
may affect the decision making of the company and its growth as regulatory approvals
may cause delay in their smooth functioning (Chión, Charles and Morales, 2019).

CONCLUSION
It is concluded from the above report that businesses are major contribute to the economy
of the country. They work with sole motive of earning profits. The businesses can be classified
on the basis of their size or form which includes micro, small, medium and large enterprises
according the size and sole proprietorship, company, partnership, LLP and cooperatives on the
basis of its form. Further the organisational structure plays a major role in impacting the business
productivity as it divides the functions of the business according to its structure. At last it is
summarised that PESTEL analysis can be used by Sainsbury to see the impact of its external
factor which may affect its working.

REFERENCES
Books and Journals
Chión, S.J., Charles, V. and Morales, J., 2019. The impact of organisational culture,
organisational structure and technological infrastructure on process improvement
through knowledge sharing. Business Process Management Journal.
Cohen, E., 2017. CSR for HR: A necessary partnership for advancing responsible business
practices. Routledge.
Miśkiewicz, R., 2017. Organisational structure in the process of integration on the example of
iron and steel industry enterprises in Poland. Difin.
Okpara, E., Ezirim, C.B. and Mohammed, U., 2017. FIRM SIZE, INDUSTRY TYPE AND
INTERNAL AUDIT OUTSOURCING IN NIGERIA: EVIDENCE FROM
SMEs. International Journal of Business, Accounting, & Finance. 11(1).
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Ramanadham, V.V. ed., 2019. Public enterprise: studies in organisational structure. Routledge.
Smirnova, L.S., 2019. Economic effects of the implementation in the company of the innovative
models of management based on the stakeholder approach and network forms of the
business organisation. International Journal of Nuclear Governance, Economy and
Ecology. 4(4). pp.273-287.
Steyn, R., 2020. Leadership Styles and Organisational Structure. International Journal of
Human Resource Studies. 10(3). pp.98116-98116.