Types of Companies and Their Characteristics

This report provides an overview of different types of companies, including micro businesses, small businesses, medium businesses, and large businesses. It explains the characteristics of each type and provides case examples. The report also discusses various business structures, such as functional structure, divisional structure, matrix structure, and flatarchy structure. Additionally, it explores how external factors, such as political, economic, social, technological, legal, and environmental factors, affect business performance. Case examples and analysis are included to illustrate the impact of these factors on businesses.

Types of companies

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Understanding different types of companies and how they work..........................................1
Explanation of different types of companies from sole traders to cooperatives and limited
liability partnership.................................................................................................................3
Business structures and how external factors affect businesses.............................................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
Books and journals.................................................................................................................8

INTRODUCTION
A company is a legal entity and an association of people who engages in performing
business operations in market for earning profit. Company is regulated by various laws and
regulations imposed by government for the market so that it may not create any hindrance in
functioning of country. This report mainly covers brief understanding about different types of
companies and how they function in market. It includes sole trader to cooperatives and limited
liability partnership (Beckerich, 2019). It also includes different types of business structures and
how environmental factors affect business environment.
MAIN BODY
Understanding different types of companies and how they work
Companies are organized form of business which are governed by regulating authorities
of government. In a country there are many companies operating their business for earning
competitive advantage.
The different types of companies in market with their characteristics and examples are
explained below
Micro Businesses- The Business which have fewer than 10 people in an organisation is
defined as micro business (Blinova, 2018). Micro businesses are also known as small business
administration. Proviz company is a good example of micro business. It deals in cycling
clothing.
Characteristics
 Micro businesses carries out small operations on day to day basis. Transactions
involved in micro businesses have very less monetary value.
 Involvement of risk in micro businesses is low as capital employed in these businesses
is relatively low.
 Management of micro businesses is flexible and simplified as number of people involve
into it are low.
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Small Businesses- These are businesses with low revenue and they also have less
strength of employees (SMALL BUSINESS, 2021.). Generally small businesses has below 50
employees and minimum 10 employees as a whole (Sarkisyan, 2021). The small businesses are
established on the basis of partnership or an association. The Example of small scale business is
Marshfield bakery which manufactures and sells bakery items in the market.
Characteristics
 Small scale business is self motivated for expansion in short span of time. In other
words no external factors are needed for control of motivation to the employees in a
small scale business.
 The analysis and prediction of marketplace in small scale business is very low as
effective teams are not there for risk management.
 In the day to day operations of small scale businesses it is easy to manage the
workforce involve in operations..
Medium Businesses- Medium Businesses are organizations with having up to 250
employees in it (MEDIUM BUSINESS, 2021.). Medium businesses are generally operated by
families at the marketplace with short term cash flows. Medium businesses often require more
efforts related to most of the aspects of management (Hindradjaja, 2019). Captify is a medium
sized business which deals in data and media intelligence.
Characteristics
 Medium businesses demands continuous development. There are more chances of
development in medium scale businesses. Owner management can put continuous efforts
to transform the business.
 Medium businesses are composed of long term debts in general case. Long term debts
may generally lead to form unlimited liability to for a business in long run.
 Risk involvement in medium businesses is comparatively higher.
Large Businesses- Large businesses are also known as big businesses which means that
these deals in heavy financial transactions and operations on regular basis (LARGE BUSINESS,
2021.) These entities have more than 250 employees (Schönsleben, and et. al., 2017). Along with
dealing in big transactions they also acquire big companies from marketplace to expand
operations of business. Tesco is a good example of large scale business.
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Characteristics
 Large businesses have complex management hierarchy. As there are many departments
involved in operations so it leads to formation of a chain in management system.
 Large Businesses runs on conducting heavy transactions. On daily basis these businesses
run on high value of transactions which requires effective management system.
Explanation of different types of companies from sole traders to cooperatives and limited
liability partnership
Different types of companies functions at the marketplace in a country to earn monetary
returns. Different companies operates for business purpose in short and long run. Classification
of different type of private organisations is mentioned below:
Sole Trader
When all of business operations are carried out by a single owner along with the
maintenance of its assets and liabilities is defined as sole trader. In other words when a person is
ready to run a business with sole responsibility its know as sole trader business. In other words,it
is hard to separate legal entity of business from owner (Huang, 2020). Novus Accountancy
limited is a good example of sole trader business.
Characteristics
 Sole trader has freedom of making decisions in the business. Decisions made by sole
traders are made without any consultation or advice from any other person.
 In this type of business,there is lack of control of government. It means rules and
regulations in business imposed by government are absent or are very low. This also
leads to minimum obligation in taxation policy by government.
Partnership
Partnership business is a type of business which is carried out by two or more persons.
Partnership business can be small or large business depending upon the conditions of partnership
agreement prepared by partners before starting a business (Tangour, and et.al., 2019). Mumsnet
is an example of partnership business which is an international forum operated by two partners.
Characteristics
 In Partnership there is an agreement between partners before commencing a business
which is known as partnership deed.
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 In partnership profit and capital sharing is done according to the ratio which is mentioned
in partnership deed.
Public Limited liability business
Limited liability business is business in which the owners of a business are not obliged to
settle financial burden of company. In other words owner of a limited liability business is
responsible to pay limited debts and liabilities of company (Iovino, 2019). Oxfam International
which deals in eliminating global poverty is a limited liability company example.
Characteristics
 Limited liability company has flexibility in taxation policies imposed by the government.
It means these companies gets compensation in tax policies imposed by government.
 It is easy in a limited liability company to carry out its operations as transactions
performed in a limited liability business are low in number.
Cooperative business
Cooperative business is an unique type of business in which the owners of a respective
company uses their own produced products. Cooperative businesses are often small in number as
it happens very rare that an entity is using its own produced goods and not selling them to
customers. Central England cooperative is a good example of cooperative business.
Characteristics
 Cooperative business provides education to its members for managing its operations. It
includes oral as well as written education
 It also provides training to its members for accomplishment of several tasks related to
business.
Business structures and how external factors affect businesses
Business structure or organisational structure is a framework of elements which helps in
achieving organisational goals by analysing how different activities in an organization connect or
coordinate with each other. In other words it is a well managed hierarchy in a organization so
that maintaining coordination becomes easy task for the management. It is defining rank for
every individual in an organisation's management hierarchy.
Different organisational structures are explained below
Functional structure
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Functional structure is dividing a organisation in small groups and to allocate tasks and
roles according to eligibility of desired person. For example in functional structure a general
organization divides its functions on the basis of its marketing,sales and services. For example
Tesco uses divisional structure to smoothly carry out heavy operations in business. Tesco uses
divisional structure mainly for its marketing and sales department from other departments to
ensure minimum hurdles in operations related to sales.
Divisional structure
Divisional structure is used mostly by large organisations to control their business
activities. This structure is horizontal arrangement of different departments in an entity with
different functions. It enables inter linking different departments of the business. Although,inter
linking of departments means if one department has incurred loss then other department will also
suffer (Mrňová, 2020). The divisional structure is used in Aston martin which is using
divisional structure in a precise manner to facilitate coordination between employees and
management.
Matrix structure
Matrix structure is also known as hybrid structure. It is mixture of functional and
divisional structure in an organization which means that reporting head can be changed in an
organisation according to the need of project. Matrix structure is adopted by London Marriott
hotel to mark shift in communication and reporting according to change in its operations. It is
preferred as dynamic structure which is adopted by the company because it consumes less time
in operations.
Flatarchy structure
1. In flatarchy business structure there is only manager that establishes a connection
between the executive and other employees. In other words the levels of management are
absent in this structure. This structure is adopted by organisations to open up
communication between the employees. This type of structure is adopted by Acornsoft to
enhance communication according to its operations. The company has also focused on
implementation of flatarchy structure from beginning to enhance coordination between
the employees.
PESTLE analysis and how different factors affects performance of a business
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PESTLE analysis is observation of how different factors affect operations of a business . It is
performed in order to gain competitive advantage over other entities. PESTLE analysis is
generally performed at the starting of a business and sometimes when there are chances of heavy
losses in business (Perkumienė, 2020). These factors include Political, economical, social,
technological, legal and environmental factors. For better understanding of PESTLE here is an
example of Amazon to create a deep understanding.
Impact of different factors on business is explained below
 Political factors- Political factors include majorly the government policies related to
operations of a company. These are regulation policies,taxation policies,monetary
policies and corporate laws which directly impact a business entity (PESTLE, 2021.). In
case of Amazon its business is impacted by government's policy related to e- commerce
(Sala-Garrido, 2019). It is also influenced by political conditions of USA, political
stability is necessary for a company.
 Economical factors- Economical factors include current economic condition of country
which are GDP, Supply and demand Factors,market growth rate,Policies of central bank
and conditions related to recession or inflation in a country. Amazon is influenced by
major economic factors of most of the countries as it carry its operations in global
marketplace. Amazon briefly analyses its conditions related to economics in every
country to operate with minimum risk.
 Social factors- Social factors include socio cultural conditions of a country which
impacts the market as a whole. Social factors include consumerism of a country which
brings out different types of customers in a country on the basis of culture. Amazon faces
off different types of customers in a country depending on regional parts. So it has to
develop various strategies related to management of its CRM(Customer relationship
management). Amazon also asses demographic related differentiation in its customer and
performs market segmentation accordingly.
 Technological factors- These factors include impact on business incurred by modern
information and technology. It majorly consist of use of computers,internet,development
related to machinery and upcoming of a latest technology in the business. Amazon is a e-
commerce company so impact of technology factors impact it in a precise way. Company
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thus has to use latest technology in its business so that it doesn't gets impacted by its
competitors. It has to keep its technological department healthy and competitive.
 Legal Factors- The laws related to a company in a country are essential part of legal
factors which impacts performance of a company. Amazon has to precisely follow
company laws to conduct legal business at marketplace. Amazon follows laws related to
export and import as well to product regulation.
 Environmental factors- Environmental factors include factors which are present in
surroundings of a business related to ecology. Environmental factors majorly focuses on
building a sustainable business in environment. Amazon contributes to form a business
which is worthy even in a long run and focuses on less harm on environment.
CONCLUSION
From the above stated report it can be concluded that different types of companies
operate in market for earning monetary returns. Companies have different characteristics
depending upon what type of company it is. Business structures play an important role as a
backbone for the economy as well as it provides facility to the management to run its operations.
It can be concluded that a business should critically analyse its environment. It can be also said
that business gets huge impact from internal and external environmental factors. A business
should focus on its business strategies along with focusing on the current business environment.
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REFERENCES
Books and journals
Beckerich, C., Benoit, S. and Delaplace, M., 2019. Are the reasons for companies to locate
around central versus peripheral high-speed rail stations different? The cases of Reims
central station and Champagne-Ardenne station.European Planning
Studies,27(3).pp.574-594.
Blinova, E.A. and Kwatra, S., 2018. Discount rate calculation methods review for investors' use
at either stock or non-stock companies. InHIGH TECHNOLOGY MANAGEMENT &
ECONOMICS(pp. 62-69).
Hindradjaja, G.G., 2019. Financial Performance of Construction, Property, and Trading
Companies Based on Working Capital, Liquidity Ratio, and Profitability
Ratio.Advances in Civil Engineering and Sustainable Architecture,2(1).pp.1-9.
Huang, Y., 2020. The Relationship between the Impact that Customer Satisfaction has on
Service Companies' and Product Companies' Revenue.Frontiers in Economics and
Management,1(12).pp.20-22.
Iovino, F. and Migliaccio, G., 2019. Energy companies and sizes: An opportunity? Some
empirical evidences.Energy Policy,128.pp.431-439.
Mrňová, Z. and Roudná, V., 2020. FORMS OF FACILITY MANAGEMENT PROVISION IN
DIFFERENT TYPES OF COMPANIES.International Multidisciplinary Scientific
GeoConference: SGEM,20(6.2).pp.193-200.
Perkumienė, D. and Traore, M., 2020. PROBLEMS OF LEGAL REGULATIONS OF
COMPANIES IN LITHUANIA AND MALI.Humanities Studies, (3 (80)).pp.138-147.
Sala-Garrido, R., Molinos-Senante, M. and Mocholí-Arce, M., 2019. Comparing changes in
productivity among private water companies integrating quality of service: a
metafrontier approach.Journal of Cleaner Production,216.pp.597-606.
Sarkisyan, Z. and Tikhonova, M., 2021. Individualization of Approaches in Scenarios of
Survival and Development for Companies in the Digital Environment. InTechnology
and Business Strategy(pp. 113-126). Palgrave Macmillan, Cham.
Schönsleben.P. and et. al. 2017. Different types of cooperation between the R&D and
Engineering departments in companies with a design-to-order production
environment.CIRP Annals,66(1).pp.405-408.
Tangour.C. and et.al. 2019, April. Digital business model patterns of big pharmaceutical
companies-a cluster analysis. InInternational Conference on Digital Economy(pp. 397-
412). Springer, Cham.
Online
PESTLE.2021.[Online]Available through:<https://www.groupmap.com/map-templates/pestle-
analysis/>
SMALL BUSINESS.2021.[Online]Available through:<https://smallbiztrends.com/>
MEDIUM BUSINESS.2021.[Online]Available
through:<https://www.entrepreneur.com/article/246400>
LARGE BUSINESS.2021.[Online]Available through:<https://www.sangoma.com/articles/smb-
sme-large-enterprise-size-business-matters/>
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