Types of Business and Their Characteristics

This report examines the different types of companies and their characteristics. It covers micro businesses, small businesses, medium size businesses, and large size businesses. It also discusses different business structures and how external factors affect business performance. Get study material and solved assignments on types of business at Desklib.

Types of business

Table of Contents
INTRODUCTION ..........................................................................................................................3
Section 1: Different types of companies and how they work ....................................................3
Section 2: Different companies from sole traders to cooperatives and Limited Liability
Partnerships ...............................................................................................................................5
Section 3: Different business structures and external factors affecting business........................7
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The aim of this report to examine the different type of companies and their
working. The term business is described as the enterprise that incudes various activities
such as professional, industrial and commercial. Every businesses are different from
each other’s in terms of their characteristics and size. These businesses are conduct for
the profit as well as non-profit purpose such as corporative. In this report different types
of companies and their characteristics are evaluated. Organisational structure such as
functional as well as divisional structure is covered and various effect of external factors
on the organisational performance is being mentioned in the project report.
Section 1: Different types of companies and how they work
Micro business:
Micro businesses is also known as the micro enterprises that is incorporated with
the fewer than 10 employees. Micro business needs less amount to start and
organisation a borrow the amount from banks and various other financial institutions. As
these business are conduct at low level; so they provide their products and services to
their near local areas (Micro business, 2021). These organisation provides its services
in various sectors such as retaining, healthcare, social assistant as well as in
construction. Vermont is the micro business that is founded in the 1791 and its
headquarter is in the United Kingdom. Phil Scott is the owner of the Vermont
oganisation.
Characteristics:
Few number of employees: In the micro level organisation few number of
employees are conducted all organisational activities and provides all their products
among the smaller and local areas.
Lower revenue and profitability: Micro business have limited resources and
employees, so their profitability and revenue ration is also less in compared to the large
organizations.
Small business:
An organisation that functions and activities are conducted on small scale and
that includes less capital investment, less number of employees and utilise less

machinery in its operations is termed as the small business (Baynova, Petrov, and
Shasha, 2019). These small businesses are involved in the producing product and
services on small level and provide them to their local customers and areas. Small
business plays vital role in country’s development. In this organisation owner invest in
the machinery, plants at once or take them on lease for operations. Davison Canners
Ltd. is the example of small business incorporated in 19 April, 1978. Alan Davison is the
owner of the organisation.
Characteristics:
Small number of employees: In micro businesses few number of employees
are working and conduct all organisational activities. In business less than 10 members
are working. Small business provides the its product and services to the smaller local
area as well.
Ownership and management: Owners of the small businesses are the single
person so; it is also known as the sole-proprietorship. All organisational as well as
management activities and functions are done by the owner of business.
Medium size business:
Medium size business are also known as the family owned as well as managed
business. The ownership of the organisations is separated from the management.
Company act is followed by the entrepreneur. In the respective organisation more than
250 employees are working together in order to attain all organisation goals and
objectives (Johansson, 2019). In the United Kingdom, Hello cleaners organisation is
working under the medium business that is incorporated in the year of 2013 by the Paul
Leyden and Morgan O'Neill.
Characteristics:
Capabilities of innovation: Medium scale business have the capacity to
innovate their processes and product because they have skilled and experienced
employees.
Flexible: As small businesses are medium in size, so they are always ready to
adopt sudden changes that take place in the market. All decisions are taken very
quickly and effectively.
Large size business:

Large size business is referred as the business that is conducted on large level
and involves high number of employees and latest technical machineries to produce
products. In a large business at least 5000 employees are working together in order to
achieve same goals and objectives. The respective organisation has annual turnover
more than 1.5 billion euros and balance sheet statement reflects shows total balance of
2 billion euros(Krause, and Matzdorf, 2019). Business includes various activities such
as management, operations, human resource that are done by the specialised personal.
GlaxoSmithKline is large scale organization that is founded in the 2000 by Sir Philip
Hampton.
Characteristics:
Resources availability: In the large scale organisation high number employees
and it conduct activities at large level. Organisation have availability of resources that
contribute in attaining goals.
Section 2: Different companies from sole traders to cooperatives and Limited Liability
Partnerships
Sole trader business:
Sole-proprietorship business is defined as the business that is established by an
owner, all organisational as well as managerial activities and decisions are taken by
owner own self. In the respective business whole power is remains in the sole-proprietor
(Meager, 2017). All decisions and issue are handled by the owner so it can be able to
make changes in organisation quickly and effectively. Barclays is the sole trader
business that is multinational investment bank, established in the 1690. headquarter of
organisation situated in the London, England. James Barclay is the founder of the
organisation.
Characteristics:
Sole-management and unlimited liabilities: the sole trader ship business
contains unlimited liabilities. Trader is liable to pay all organisational credits from
personal assets.
Less legal formalities: There are less legal formalities in order to incorporate or
run business activities.

Partnership:
Partnership is referred as the business in which two or more persons are come
together for the purpose of run business and earn profit. Persons who are working in the
partnership firm is known as the partners. There is clear agreement in the partnership
that defined all profits ratios and responsibilities of partners.Pret a Manger is the
international sandwich shop in the United Kingdom, that is founded in the 1983 by the
Jeffrey Hyman.
number, In partnership 10 members work together
size, in banking sectors the number of employees are 20
scope In partnership all profits as well losses are divided in partners in ratio of their
capital or defined ratio.
Characteristics:
Membership: In the partnership at least 2 members and maximum 100 member
working together. A legal contract is formed between all partners that mentions all
policies and relative information.
Legal agreement: In the partnership business, there is a legal agreement
between all partners that describes all rules and regulations of the firm. In partnership
members are working in order to share all profits and losses in the ratio of their capital
or in equal ratio.
Limited liability business:
Limited liability business is determined as the business structure in which owners
of organisation is not liable for the payment of company's debt as well as liabilities from
their personal assets (Mihaela, Alina, and Viorina,2018). Maximum limit of employees
are 50 in the limites liability businesses. Limited liability organisation is the combination
of corporative and partnership firm. In respective business, partners are liable to pay
business debts at the limit of their capital invested. John Lewis Partnership is the limited
liability business that is founded in the 1929 by the John Spendan Lewis. Headquarter is
situated in the London, England.
Characteristics:

Limited liabilities: In the limited liability business, liability of partners is limited to
their capital that is invested in the business. They are not liable to pay companies
debts and liabilities from their personal assets.
Easy to incorporate: Incorporation of limited liability business is quite simple,
there is no more legal formalities in order to start business.
Public limited liability business:
Public limited liability business is defined as the business in which organisation
offers its share to the public. Shares of the organisation is offered to the public by the
initial public offering and di8rect in the stock market. Minimum 7 number of employees
are required and there is no maximum limit of employees. In the public limited liability
business, various rules and regulations must be followed that is passed by SEBI. These
organisations prepare appropriate financial statements and disclose them for the public
use. Capital plc is the public limited company that is founded in the 1984 and its
headquarter is situated in the London, England. Chika Mordi is the chairemen of the
organisation.
Characteristics:
Name: At the end of Public limited company it is necessary to put “pubic limited”.
It differentiated the public company to the private companies.
Directors: In the public limited business, minimum 3 directors manage the
business and there is no limit of maximum numbers of directors.
Cooperative:
Corporative business is defined as the autonomous association of several
individuals as well as group members that conduct their business in the area of
economic social and cultural activities. Corporative is related to the various political
functions and other sectors such as economic functions, banking and labour. National
building society is the corporative business which is situated in the United Kingdom. It is
founded in the 1846 by the David Roberts and Joe Garner. 18,333 employees are
working in the organisation.
Characteristics:
Finance: In the corporative society finance is contributed by the all members of
organisation by purchasing shares (Pathiratne, Khatibi, and Johar, 2018). Although it is

formed by the weaker or poor section of society, so the process of capital collection is
not bounded.
Democratic control: Corporative society is controlled and managed by the
member who is elected by the all members in the annual general meeting. Regarding
decisions are taken by every member of organisation.
Section 3: Different business structures and external factors affecting business
Identification of different organizational structures and explaining how does
organisational structure affect business productivity
Organisational structure defines the structure that guide as well as direct
organisation to perform all organisational activities in systematic manner in order to
achieve defined goals and objectives within time. Effective organisational structure
facilitates the organisation to flow all information at all level properly. Appropriate
organisational structure affects the productivity and profitability of evert organisation.
There is various organisational structure such as democratic, centralise structure,
fictional as well as divisional structure that is used by the organization to enhance their
productivity. Some structure is discussed below:
Functional organisational structure: Functional organizational structure is
divides all organisation into various department based on specific functions. Each
functional department have the functional manager and various employees (Pisani,
2018). These functional managers have various skills and experience and they ensure
that employees use their capabilities effectively in order to achieve goals and objectives.
Like Tesco use the functional structure and divide whole work into several functional
departments. Each and every department is liable to their department productivity. So,
the respective structure enhances overall productivity of business.
Divisional organizational structure: In the divisional organisational structure,
organisational activities and functions are formed and distributed in various divisions.
Every division have its marketing team, IT team as well as sales team. It is used in large
organisation, as all divisions are empowered to take decision without report ant
executive (organisational structure,2021). Divisions are formed on the bases of market,
product, geographical division that takes whole responsibilities of that particular division.

In the large organisation, divisional structure facilitates to conduct all functions in
specific and proper manner. So it enhances the productivity and profitability of
organisation.
How different external factors affect the performance of a business – PESTLE
Analysis
External factors are existing outside boundaries of the organisation and affect it
in direct as well as in indirect manner. These factors are the out of control of respective
organisation performance and its productivity. Some external factors are discussed
below:
Political factor: There are various political factors that affect the performance
level of Tesco such as government policies, rules, regulations, foreign trade policies and
political stability as well as instability.
Positive impact – If the Tesco follow all government policies and regulations in its
operations facilitates the organization to work smoothly.
negative impact – Changes in the foreign trade policies affect Tesco.
Economic factor: In the economic factor various external factors such as
economic growth, inflation rates, exchange and interest rates are included. These
factors affect the Tesco in positive as well as in negative manner. So all strategies are
formulated accordingly.
Positive impact –Effective exchange rates facilitates Tesco to increase the foreign trade.
negative impact – Increment in the Inflation rate affect the organisation profitability and
performance.
Social factor: Some social factor have impact on the Tesco. These factors are
income distribution, cultural barriers, lifestyle attitudes and various demographical
characteristics. Respective organisation should consider all these factors in operations
in order to enhance performance.
Positive impact –Life style and positive attitude of customers help the Tesco to enhance
brand awareness.
Negative impact – Cultural barriers limits the Tesco product to the limited area of
customers.

Technological factor: Technological factors affects the performance level of the
Tesco. It includes various factors such as changes in technologies, automation,
innovation and advancement in the technologies (Tarska, 2019). Respective
organisation involves these factors to enhance its productivity and profitability.
Positive impact –By the help of technological advancement Tesco improve its
productivity and save time.
Negative impact –Technological advancements need high capital investment that is the
negative impact of this.
Legal Factors: Legal factors includes various laws such as health and safety,
equal opportunities and product safety that have impact on the organizational
performance of Tesco.
Positive impact –Health and safety facilitates the Tesco to provides enhance its
customer base.
Negative impact – Government interruption affect the Tesco performance.
Environmental factors: Various environmental factors affect the business
functions and its performance in various ways. This factors are climate condition,
weather conditions. All these factors are examined properly and develop various
strategies to overcome their negative impacts.
Positive impact –favourable environmental condition enhance the Tesco performance
effectively.
Negative impact –Bad weather conditions affect operations and profitability of Tesco.
CONCLUSION
As per the above report, it can be concluded that companies and business are
the entity that conduct all organisational functions in order to achieve all goals and
objectives. Businesses can be conducted under various types such as partnership firm,
sole-proprietorship and public limited companies. Each and every business have their
own characteristics that facilitates organisation in various manner. Organisational
structure facilitates organisations to improve their profitability and productivity efficiently.
Various external factors such as political, social and legal affects organisation's decision
making process.

REFERENCES
Books and Journals
Baynova, M. S., Petrov, A. V. and Shasha, I., 2019. Transformation In Supply Chain
Management With Modern Companies. In European Proceedings of Social and
Behavioural Sciences (pp. 437-444).
Johansson, P.E.C., and et. al., 2019. Challenges of handling assembly information in
global manufacturing companies. Journal of Manufacturing Technology
Management.
Krause, M. S. and Matzdorf, B., 2019. The intention of companies to invest in
biodiversity and ecosystem services credits through an online-
marketplace. Ecosystem Services. 40. p.101026.
Meager, L., 2017. Private UK companies face governance shakeup. International
Financial Law Review.
Mihaela, Z. O., Alina, N. C. and Viorina, B.,2018 Groups of companies and their
particularities in the credit institutions.
Pathiratne, S. U., Khatibi, A. and Johar, M.G.M., 2018. CSFs for Six Sigma in service
and manufacturing companies: an insight on literature. International Journal of
Lean Six Sigma.
Pisani, S., 2018. Controls over the technical provisions in local insurance companies: an
evaluation (Master's thesis, University of Malta).
Tarska, M., 2019. Unity of civil law and the legal regulation of commercial companies–
selected issues. Acta Iuris Stetinensis. (27 (3)). pp.189-203.
Online
organisational structure.2021 [Online] Available through
:<https://online.pointpark.edu/business/types-of-organizational-structures/>
Micro business.2021 [Online] Available through
:<https://www.thecompanywarehouse.co.uk/blog/what-is-a-micro-business>