Types of Companies: Small, Medium, Large, Sole Proprietorship, Partnership, LLP, PLC, Cooperative

This report discusses various types of businesses according to size such as small and large businesses, different forms of organisation on the basis of incorporation such as partnership, company, etc.

Types of companies
1

Table of Contents
Introduction......................................................................................................................................3
Section 1...........................................................................................................................................3
Different types of businesses......................................................................................................3
Section 2...........................................................................................................................................5
Different types of organisations..................................................................................................5
Section 3...........................................................................................................................................6
Different organisational structures .............................................................................................6
External factors affecting businesses..........................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
2

Introduction
Structure of a business organisation defines its operations and environment (Andersson
and et.al., 2018). This report has been prepared for Google LLC (Popularly known as and also,
herein after referred to as only Google) and presents various types of organisation that, it will
have to deal with. Google is an American multinational company operating in technology
business and specialises in internet-related services and products. It offers variety of services
including search engine, cloud computing, online advertising, etc. This report discusses various
types of businesses according to size such as small and large businesses, different forms of
organisation on the basis of incorporation such as partnership, company, etc. and various
organisational structures such as functional, divisional, etc. Impact of organisational structures
and external environment over Google are also discussed.
Section 1
Different types of businesses
In UK, it is the Companies Act that has defined micro, small, medium and large sized
businesses (Kachlami and Yazdanfar, 2016).
Small and medium sized enterprises - Most innovative and new business ideas start from
being small ventures and gradually progress to make it big. Small and medium size enterprises
are together called SME.
 Micro business – Those businesses which have less than 10 employees and whose
turnover is under £2 million are micro businesses in UK. For example, Boss Brewing
Company.
 Small business – Those businesses which have less than 50 employees and whose
turnover is under £10 million are small businesses in UK. For example, CafePod
Coffee Co.
 Medium size business – Those businesses which have less than 250 employees and
whose turnover is under £250 million are medium size businesses in UK. For
example, Verdant Leisure.
Characteristics of SME: Few characteristics of SME are mentioned below:
3

 Less number of employees – SME have lower scale of operations and therefore,
whole operations of the business can be run entirely by a team of few people or
few smaller teams that are able to perform dynamic operations.
 Smaller market – They operate within a confined area which happens to serves as
its market as well, possibly a single community or a city. These are less likely to
have multiple outlets in multiple states.
 Lesser revenue – Small scale businesses have lesser revenue and revenue sources
as well for it operates in a restricted market with fewer employees (Kumar,
Colombage and Rao, 2017). Low revenue does not necessarily mean lower
profitability. If the business is on asset and capital light approach, it can earn high
profit percentage out of lower revenue as well.
Large size business – All those organisations which crosses the range of medium size
businesses in terms of employees and turnover are termed as large size businesses. They have
large number of employees maintaining large number of clients, businesses in a wide area of
market. They usually have a corporate form of organisation. All multinational companies are
large companies. For example, Google.
Characteristics of large businesses:
 Larger market access – They produce goods and services at a huge scale and sells
them in a larger market which many a times transcends boundaries of a country.
Since they have larger market access, they enjoys better connect with larger range
of customers.
 Better access to finances – Their large scale of operations allow them to have
better access to different sources of raising finances as they have more profits and
resources at their disposal (Roberts, 2018). For example, share markets, bonds,
deposits, banks, etc.
 Defined organisational structures – As the size of organisation is large, to
facilitate smooth operations, it is defined into specified structures according to the
hierarchy. They also seek specialisations and groups their staff into departments,
divisions, functions and teams.
4

Section 2
Different types of organisations
On the basis of incorporation, there are various types of entities. Their nature of entity
defines their administration, liability of owners, their tax rates and modes of payments, their
ability to raise finance, etc. (James, 2016) Below mentioned are few structures of business
organisations on the basis of incorporation: Sole proprietor – These are the businesses where the owner and business are treated as a
single entity. Proprietor is responsible for all the operations, profits and losses that the
business makes. They have unlimited liability i.e. they are personally liable to
compensate for the losses suffered by business. They also have the sole liability of paying
all the taxes of the business. They are not governed under a defined law but must get
themselves registered with HMRC. They cannot use LLP or PLC behind their name. For
example, all the local provisional stores or barber store run by a single person. Partnership – In this form of business, two or more entities come together to commence
a business with profit earning motives. These entities can be both natural or artificial
person. Partnership needs to be registered with HMRC necessarily. Partners have a
specific partnership agreement which defines their profit-loss sharing ratio as well as
other operational conditions. There are different types of partnerships in UK defined by
different Acts – conventional partnership in which partners have unlimited liability,
limited liability partnership in which partners have limited liability, etc. For example,
most of the doctors, lawyers, architects work in partnership in UK. Limited liability partnership – These are the partnership businesses in which the partners
and the business are treated as separate entity. They have a corporate like liability
structure i.e. LLP partners are directors of a company and have their liability capped
according to their paid-up capital share (Schall, 2016). Therefore, they are to be
registered at Companies House and also, have to file their accounts there. They have to
get themselves registered with HMRC as well and have to deposit their taxes like
conventional partnership. For example, McGuireWoods London LLP. Public limited company – It is a form of public limited liability business. It is a corporate
structure and therefore, it is mandatory to get themselves registered with Companies
House and HMRC both. They have to file their taxes at HMRC but all the reports with
5

both of the authorities. These companies have to compulsorily affix PLC behind their
name. These are allowed to trade their shares freely at stock exchanges like London
Stock Exchange (Frankish and et.al., 2015). Its owners are its shareholders who appoint
directors to run the affairs of the company. It needs to pay out all finance costs and taxes
before paying out dividends to its shareholders. For example, Tesco PLC.
 Cooperative – This is a type of business entity which is owned and operated by its
members which generally includes employees, consumers, local residents, businesses,
etc. that come together to commence a cooperative business. They are to be registered
with HMRC. Cooperatives have a flexible model and all the members have an equal say
in business operations. Decisions regarding profits like whether it should be retained,
reinvest or distribute among the members, are also taken mutually. For example,
Edinburgh Student Housing Co-operative.
Section 3
Different organisational structures
Organisational structure defines hierarchy in the organisation that establishes a clear
command chain, communication channel and defines the path to professional development
in the company (MacKinnon, 2015). There are four types of structures that organisations
generally follows:
 Functional structure – This structure involves grouping together of people in
department on the basis of their same specialisations or work profiles like finance
department, marketing department, etc. It promotes quick decision-making but also
encourages preferring departmental objectives over company targets which can
create frictions in the inter-departmental relations in the company. For example,
Zara and Mc Donald's follows this structure.
 Divisional structure – This structure involves grouping together of people on the
basis of projects or products. This is used by large companies to separate their
products as different companies which work in independence under the guidance of
head umbrella companies. It allows flexibility in operations to group company and
ease of administration to parent company. For example, Hilton group and IHG
group uses this model of organisational structure.
6

 Matrix structure – This structure combines the elements of functional and
divisional models of organisational structure (Blair and Hitchens, 2018). Therefore,
it consists dual reporting relationship. Employees have to report to both their team
leaders in their functional department as well as divisional management. It
increases interactions and co-operations but can also result in conflicts about
reporting to whom and what. For example, Philips and Apple Inc. follows this
structure.
 Flat Structure – This structure is an attempt to take down traditional top-down
management system. It involves eliminating bureaucracy and encourages
decentralisation with less than few tiers of seniority. It facilitates innovation and
creativity but can also lead to power struggles. For example, Google and Marks and
Spencer follows this organisational structure.
Impact of organisational structure over productivity
Organisational structure has a direct impact on administration of a company and it has
following impact over productivity and efficiency of the organisation: Managerial Influence – Organisational structure streamlines managerial authority which
impacts their efficiency. Bad decisions by incompetent managers of company have high
chances of reducing its productivity It is the efficiency of good managers of Google that
is reflected in its high productivity and good results. Structural flaws – Whenever a company has flaws in its structure or the structure is not
implemented properly, command and communication channels are disrupted which
causes time lapses in communication that reduces efficiency and productivity. Flat
structure of Google reduces time lapse in communication channel. Creativity – Creative ideas from employees improves organisational processes.
Inefficient implementation of structure increases bureaucracy that can have negative
influence on creativity and might hurt the chances of improvement in productivity
(Gutierrez, Boukrami and Lumsden, 2015). Google follows flat structure so that it can
minimise the risk of reduced employee creativity.
 Growth – Efficient organisational structure and its effective implementation helps
company in maintaining corporate productivity and enhances the chances of sustainable
7

growth of the company. Strong corporate structure of Google has been one of its
corporate advantage.
External factors affecting businesses
PESTLE Analysis helps in analysing impact of external environmental factors over the
business of the company (Graham, 2018). PESTLE analysis for Google is mentioned below:
 Political factors – This factor analyses the effect of governmental policies overs
Google's profit and operations in UK. Google has been benefited by stable political
environment of UK but also has its share of confusion over Brexit policy.
 Economic factors – This factor analyses the effects of economic trends on revenue,
growth, stability, etc. on Google in UK. Unstable economic environment of UK has
the potential of developing threats for Google in terms of frequent changes in
currency market.
 Social factors – This factor analyses the impact of societal behaviour on Google.
Increasing use of social media applications like Facebook, WhatsApp, twitter has
increased its competitors especially in terms of online advertising. Also, it has been
receiving criticism from people for unauthorised used of their personal data.
 Technological factors – These factors are most significant for company as Google is
a technology based company. Growing dependence over internet has created a
plethora of opportunities for Google to experiment with new ideas and services and
also, has developed new competitors for it (Nurmi and Niemelä, 2018).
 Legal factors – This factors analyse the impact of scope that laws and regulations
create for the company to operate in UK. For example, Google uses individual data
for its business but strict data protection and privacy laws implemented by UK and
EU laws has created some threats for its business.
 Environmental factors – Google is a digital company but has been subjected to
increasing demand of adopting more eco-friendly sustainable business practices.
Adopting such practices helps company in strengthening its brand image and are
duly addressed by company's corporate social responsibility strategy.
8

Conclusion
From the above report, it can be concluded that a business organisation can be
incorporated into various types and can have different types of organisational structure. Its form
and size of business depends upon the staff it employs and turnover it rakes in a year. Operating
in a business environment, a company comes across various other organisations with which
either they cooperate or compete. Structure of the company facilitates its association with other
organisations as well as help it take on different competitors.
9

References
Books and Journal
Andersson, P. and et.al., 2018. Managing digital transformation. SSE Institute for Research,
Stockholm School of Economics.
Blair, D.M. and Hitchens, D.M., 2018. Campus companies: UK and Ireland. Routledge.
Frankish, J. and et.al., 2015. Measuring business activity in the UK. In Handbook of Service
Business. Edward Elgar Publishing.
Graham, D., 2018. PESTEL factors for e-learning revisited: The 4Es of tutoring for value added
learning. E-Learning and Digital Media. 15(1). pp.17-35.
Gutierrez, A., Boukrami, E. and Lumsden, R., 2015. Technological, organisational and
environmental factors influencing managers’ decision to adopt cloud computing in the
UK. Journal of Enterprise Information Management. 28(6). pp.788-807.
James, M., 2016. UK Tax System: an Introduction. Spiramus Press Ltd.
Kachlami, H. and Yazdanfar, D., 2016. Determinants of SME growth. Management Research
Review.
Kumar, S., Colombage, S. and Rao, P., 2017. Research on capital structure determinants: a
review and future directions. International Journal of Managerial Finance.
MacKinnon, D., 2015. Devolution, state restructuring and policy divergence in the UK. The
Geographical Journal. 181(1). pp.47-56.
Nurmi, J. and Niemelä, M.S., 2018, November. PESTEL analysis of hacktivism campaign
motivations. In Nordic Conference on Secure IT Systems (pp. 323-335). Springer,
Cham.
Roberts, J., 2018. Multinational business service firms: development of multinational
organization structures in the UK business service sector. Routledge.
Schall, A., 2016. The new law of piercing the corporate veil in the UK. European Company and
Financial Law Review. 13(4). pp.549-574.
10