Types of Business Organizations and Organizational Structures

This document provides an overview of different types of business organizations, including micro, small, medium, and large businesses, as well as sole trader, partnership, limited liability, public limited liability, and cooperative businesses. It also explains the concept of organizational structure and its impact on business productivity. Additionally, it discusses how external factors, such as political, economic, social, technological, legal, and environmental factors, can affect the performance of a business through a PESTLE analysis. The document offers insights into the importance of selecting the right type of business organization and implementing an effective organizational structure for business success.

Project / Essay

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Definition, characteristics and example of micro business, small business, medium size
business and large size business. ...............................................................................................3
Definition, characteristics and example of sole trader business, partnership, limited liability
business, public limited liability business and Cooperative. ......................................................4
Identify different organisational structures and explain how organisational structure affects
business productivity...................................................................................................................6
Using PESTLE analysis explain how different external factors affect the performance of a
business.......................................................................................................................................7
CONCLUSION ...............................................................................................................................9
REFERENCES .............................................................................................................................10
Books and Journal ....................................................................................................................10

INTRODUCTION
The selection of the appropriate type of business organisation is important in order to
further the operations pertaining to the initial stages of development of the business. The report
encompasses the various types and form of business organisations available in the organisation
and examine the characteristics of the same (Prathima and Sasibala, 2020) . It also highlights the
relationship between the organisational structure and productivity. The report also involves the
formulation of a Pestle analysis of Marks and Spencer in order to examine the impact of the
external environment on the same.
MAIN BODY
Definition, characteristics and example of micro business, small business, medium size business
and large size business.
Micro Business
The micro business can be termed as the casual businesses that are established for the
survival purpose of the individuals. The micro business functions are similar to the small scale
businesses. Tuck shops, tea shops and shebeens are few of the examples of micro size
businesses.
Characteristics :-
 Single owner manages and controls the business in micro business units.
 There is very less scope and opportunity for expansion and development in micro scale
businesses. The revenue generation is extremely low in comparison to other types of business firms.
Small Business
It can be characterised as a business unit wherein productions and operations of the the
respective business is limited to a small scale as well. The proprietor of the business is entitled
to invest in the function of and execution of the business and procurement of all the required
resources for the facilitation of the business activities (Phan, 2021). The examples of small
business units are grocery shops, food corners, bakeries etc.
Characteristics:-
 The risk and liabilities associated with the business activities of small scale business is
relatively less as compared to other type of businesses.

 In small businesses, the decision making as well as the control mechanism
implementation is very immediate as there are few number of individuals working in the
business unit.
Medium Size Business
The respective business firms can be termed as well establishes business units that are
operating at an average level and have the necessary investment resources to facilitate to run the
current operations adequately. Some of the examples of Medium size business are furniture
manufacturing, transport companies, wholesalers etc.
Characteristics :-
 The ownership of the business unit is separate from the management in medium size
businesses.
 The employee rate is rate is relatively high from small scale enteritises Medium size enterprises have wide scope for development and expansion as well.
Large Size Business
The large scale business can be characterised as the busiens sunits whioch reqiuire a huge
investment in technology, manpower and infrstructure so as to facilitate the operations of the
organisation at a vast level. Few of the examples of large scale business are Steel , textile and
retail industries , ship manufacturing, aircraft manufacturing etc.
Characteristics :-
 The employee rate is very high in comparability to medium scale enterprises.
 Large scale units have a critical and complex hierarchy system of communication,
management and engagement (Lam and Wong, 2018).
 The investment is exceedingly high in large scale business units.
 Large businesses have a great scope for expansion, development and cross border
business opportunities as well.
Definition, characteristics and example of sole trader business, partnership, limited liability
business, public limited liability business and Cooperative.
Sole Trader Business
Sole proprietorship can be characterised as the business institutions that are owned,
managed , operated and monitored by a single individual. The sole proprietor is responsible for

the execution of the management as well as the operations in the respective firm. Stationeries,
departmental stores, hardware shops etc. are few of the examples of sole trading firms.
Characteristics :-
 The profits as well as the losses incurred in the functioning of the business are owned by
the businessman (Devi and Devaki, 2019). The owner has the right to implement decisions in the business according to his own will
and choice.
Partnership
Partnership can be termed as the oral or written agreement between two or more parties
who are willing to share the profits and losses according to their respective share in the
partnership firm.
Characteristics :-
 The resources are shared in this form of organisation which leads to more capital
investment in the business firm.
 Existence of an agreement is an essential component for the establishment of the
partnership firm. Ownership as well as the decision making authority is distributed among both the
partners.
Limited Liability Business
Limited liability business can be characterised a business firm wherein the liabilities of
the respective individuals limited to the extent of the share invested by them in the functioning of
business entity.
Characteristics :-
 The main object of limited liability business is to minimise or reduce the liability
principles of the stakeholders enrolled in the concerned business institution. The limited liability business dissolves or gets terminated under the circumstance of the
death of partner or the insolvency.
Public Limited Liability Business
The respective business can be characterised as a firm which enjoys the facilitations
which comes under the limited liability component and also allows the general public to acquire
the shares of the organisation.

Characteristics :-
 The public limited liability has separate legal entity and existence apart from the
members who incorporated the same. The respective business organisation needs to have seven minimum members so as to
register the company's name as public limited liability firm.
Cooperative
A cooperative can be characterised as a voluntary association of a number of individuals
who come together in order to meet their common objectives.
Characteristics :-
 No particular restriction is imposed on the entry or exit of members in the cooperative
firm.
 The leaders of the cooperative is elected through the democratic voting style and the one
who receive the maximum number of votes is appointed as the designated leader.
 The extra surplus generated from the cooperatives is distributed among the members of
the organisation.
Identify different organisational structures and explain how organisational structure affects
business productivity
Organisational Structure
Organisational structure can be termed as the systematic business outline that guides the
business activities as well as the operations of the organisation. It is a structure that provides the
attributes that needs be taken under consideration while the facilitation of the major or minor
business functioning of the firms. Organisational structure also determines the movement of
information or data in the business entity (Creedy and Hoang, 2018). It details about the ways
and mechanism in which the various business roles needs to be carried out in an organisation.
The organisation structures are majorly classifies into two types i.e. Divisional and Structured
organisational structure.
Divisional
The divisional structure characterises and classifies the business operations and activities
into various diverse variable such as product, offering,services, customer base, marketplace etc.
The main objective of divisional structure is to implement the different teams so that the work
can be done in an orderly manner.

Functional
According to the functional structure, the organisation divides the work and duties into
various department on the basis of the functions performed in each department. The organisation
needs to ensure that the departments are facilitated in accordance with the assigned roles. The
respective department formulated in the functional structure are further appointed with the
leaders and managers which are required to lead the team of employees working in the
organisation. The functional managers need to make sure that every employee is providing and
rendering its best for the fulfilment of the goals of the organisation. They can be termed as the
experiences and skilled individuals who have relevant skill set to influence and guide the their
subordinates in the appropriate direction.
Organisational Structure and Business Productivity
Organisational Structure is an organisational that can make a prominent impact on the
functioning of the business organisation and its productivity (Cooper, 2020). An effective and
competent organisational structure is likely to facilitate better communication practice in the
organisation which in turn will help the employees working under the same to express their
opinions in a deliberate manner. The improvement in the flow of information will lead to better
understanding of the tasks and duties that needs to be executed by the staff. Hence, the respective
employees will be able to provide the best performance in their field of work which will lead to
higher productivity in the operations of the business institution.
The financial productivity can also be improved with the utilisation of optimum organisational
structure in an organisation. Employee productivity also gets accelerate with the implementation
an advanced and systematic organisational structure.
Using PESTLE analysis explain how different external factors affect the performance of a
business
Pestle Analysis
Pestle analysis can be defined as the management tool that is incorporated by the
organisation so as to monitor the components of external environment. the organisation assesses
the external environment to identify and determine the forces and attributes that may have
implication on the regular day to day operations of the business entity.
The pestle analysis of Marks and Spencer is as follows :-
Political

The alterations in the political stability of the environment in which Marks and Spencer
carry out its business activities can effect the functioning of the same. The Brexit policy can also
have major implications on the cross border trade policies of Marks and Spencer. The incentives
and the assistance provided by the government can also influence the business operations of the
respective organisation and can also impose influence on the profit generation of the
organisation.
Economic
The growth rate of the market, inflation rates, deflation rates, economic policies, trade
regulation etc. are the factors of the external environment that can effect the business activities of
marks and Spencer. The COVID 19 outbreak led to major market recession in the world will
impacted the financials as well as the sales operations of Marks and Spencer.
Social
Taste and preferences of customers keeps changing due to innovative market trends.
Markers and Spencer needs to identify these trends prevailing in the market place in order to
develop an design the product and services in alignment to the same (Simion, Popescu and
Bucovețchi, 2019). The social environment is extremely sensitive and the organisation is
required to work in accordance with the asocial norms and morales of the society in order to
reach the customers and retain the same in the respective business institution.
Technological
An introduction of new and improved technology can lead to the downfall in the existing
technology used by the Marks and Spencer. The company needs to keep an eye on the
technological advancement in the business environment in order to upgrade the best technology
so as to deliver quality products and services in the target market domain.
Legal
The legal environment needs to be analysed in order to gain awareness about the new
legal policies implemented in context to the business regulations in the business environment.
Marks and Spencer needs to amend all the legal policies in the management and operations of
the business entity.
Environment
The environment plays a major role in the success of the business organisation. It is the
moral duty of Marks and Spencer to reduce the waste material as well as the use of plastic and

other harmful material in its production in order to give it back to the environment. The
corporate social responsibility of the organisation can also impact its business activity in a
positive manner and can build a good brand value and image of the company in the target market
environment.
CONCLUSION
From the above analysed information, it can be summarised that in order to establish a
competent and successful business organisation, the businessman needs to analyse the various
types and forms of the business organisation existing in the environment. The pros and cons of
every business organisation needs to evaluated so as to select the best suitable organisation for
the line of bushiness company is trying to incorporate. Business productivity can be enhanced
with the adoption of an organised and flexible organisation structure. Pestle tool helps the
organisation identify various variables that can be measured in order to enhance the
sustainability of the firm in the long run.

REFERENCES
Books and Journal
Cooper, R.J., 2020. Pestle and mortal: the demise of community pharmacy in the
UK. International Journal of Pharmacy Practice, 28(3), pp.205-206.
Creedy, J. and Hoang, H.T., 2018. Types of Microfinance Organisation: A taxonomy. Third
Sector Review, 24(2).
Devi, A.M. and Devaki, M.A., 2019. Applications of Quantitative Techniques in Decision
Making of Business Organisation.
Lam, J.S.L. and Wong, H.N., 2018. Analysing business models of liner shipping
companies. International Journal of Shipping and Transport Logistics, 10(2), pp.237-
256.
Phan, S., 2021. The effect of PESTLE factors on development of e-commerce. International
Journal of Data and Network Science, 5(1), pp.37-42.
Prathima, V.V. and Sasibala, P., 2020. SUCCESSION PLANNING AND ITS IMPORTANCE
TO THE BUSINESS ORGANISATION. Editorial Board, 9(4), p.127.
Simion, C.P., Popescu, M.A.M. and Bucovețchi, O.M.C., 2019. Analysis of Different Change
Types in the Management Process of an Organisation. In Advanced Engineering
Forum (Vol. 34, pp. 326-332). Trans Tech Publications Ltd.