Types of Companies - Analysis of Different Forms of Companies

This report analyzes the different forms of companies present in the business environment, including micro, small, medium, and large companies. It also outlines the various business structures, together with extrinsic factors that influence the process and functions of business.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
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1Limited liability business

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 4
Section 3: Different businesses structures and internal factors
affecting business 6
Conclusion 8
Reference List 9
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Introduction
The term “Company” can be represented as any legal entity established under
the Companies Act, 2013. It is abbreviated as Co., is a legal entity showcasing an
association of individuals, whether, legal, natural or a combination of both, with a
certain objective. The members of company shares a common goal while uniting to
attain declared and certain objectives (Boldyrikhin, 2021). The key purpose of this
report is to analyze the different forms of companies present in the business
environment. These companies highly contribute in the growth of nation's economy.
It also outlines the various business structure, together with extrinsic factors that
influences the process and functions of business.
Section 1: Different types of companies and how they work
Micro business:
A micro-enterprise is also known as a type of small business in which
employees are few, approx. one to nine people. These businesses plays an
important role in the development of national economy and are the most general
type of company in UK. These businesses usually face difficulties in getting funds
and credit for the start-up or expansion. The turnover of this company is less than
Euro 2million. It helps in satisfying the basic needs of an individual by opening micro
businesses. One of micro businesses in UK is Marshfield Bakery. This business
aims to increases its sales so that sufficient amount of revenue can be generated.
Features of Micro-business:
 There is a need of low capital investment.
 Minimum employees- one to nine.
 The profit or revenue should not cross the limit of £2 million.
Small business:
Small business can be characterized as the company which is privately
owned company, or it can be sole proprietorship or partnership that has fewer staff
members while less yearly revenue than regular-sized or corporation business
(Chang, Paramosa and Tsai, 2021). It is able to apply for the support of government
as well as qualify for preferential tax policy. It is varies by nation to nation and
industry as well. One of the good examples is CafePod Coffee Co.
Features of small business:
 The members cannot exceed the limit of 50.
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 The revenue of the business should not exceed the limit of £10 million.
 If grants a chance to the individuals to generate revenue while making money
through such businesses which raises the living standard.
Medium size business:
Medium size companies are the businesses which are generally bigger in size
in comparison with micro and small businesses. These companies are rapidly
growing in the country as its turnover is rising day by day. Captify is a good example
of medium size business.
Features of medium size businesses:
 Minimum employees are only 250.
 Turnover should not cross the limit of £10 million to £50 million.
 Import and export activities plays an important role in the expansion of such
businesses.
Large size business:
Larger businesses have an important role in the contribution of nation's GDP.
These businesses are highly contributed in the global economy. It is necessary for
the massive businesses to obey all the rules and regulations imposed by local
government wherever it operates their business so that it cannot impacted negatively
by such extrinsic factors. AstraZeneca is a example of large business (Efimova,
Rozhnova and Zvyagintseva, 2020).
Features of large businesses:
 It should have more than 250 employees.
 The revenue or turnover should be exceeded £50 million.
 The key purpose of such businesses is to increase the annual turnover every
year. This is the cause these companies are highly concentrate on their
marketing activities.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
Sole trader business is also named as sole proprietorship, individual
entrepreneurship or sole tradership. It is owned and run by single owner while having
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no separate legal entity between owner, together with business entity. It can
employee other people in the business for the support. The sole trader gets all the
generated profits while having limitless liabilities for all losses and debts (Ku, Hsu
and Wu, 2020). The sole trader may utilize the business name or trade name other
than their legal name. If it is differ from their legal name than they may have to
trademark their company in a legal manner. Hairstylist, plumbers or electricians are
few examples.
Partnership:
A partnership can be understood as the form of businesses where a formal
agreement is developed between two or more parties who all agree to share
responsibilities, income or losses and more as a co-owners. In general partnership,
all co-owners share both income and liabilities. There may be tax advantages to a
partnership in comparison with corporation. It is essential for the organization to
carry some sort of business while having a motive to earn profit. Spotify and Uber,
Casper and West Elm and so forth are few examples of partnership.
Limited liability business:
A limited liability company refers the company whose main aim is to protect its
owners from individual liability for its debts or liabilities. It is the business which have
hybrid entities that joints the features of a corporation with those of sole tradership
and partnership. It benefits from flexibility as well as flow through taxation of sole
tradership and partnership and keep the limited liability status of businesses. In such
type of companies, the entrepreneurs are recognized as members instead of
shareholders. It showcase the legal structure of privately owned companies. This
businesses enables members to bear all the financial liabilities and risks of business
(Luo and et.al.). If the company is unable to clear off its debts, then members are
only responsible up to limit of their shares. It has minimal paper formalities than any
other businesses. Anheauser-Busch is the good example of limited liability company.
Public limited liability business:
A public limited company are those businesses in UK which are public in legal
structure. The company use PLC abbreviation after their company's name which is
compulsory to use and communicates to investors and to any person who deals with
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the business that it is a publicly listed corporation. It has limited liabilities in which
shares may be sold freely while trading to the public. It has minimum share of capital
of Euro 50, 000 (Prushkivska and Avramenko, 2020). It can be either listed or
unlisted company on the exchanges of stock. In UK, a public company commonly
utilize cover the words public limited company or the abbreviation of PLC at the end
of their legal business name. British Petroleum Company is a public limited company
in UK.
Cooperative:
A cooperative company is a company in which an association of individuals
amalgamated voluntarily to fulfill their social, economic as well as cultural aspirations
and objectives through a jointly owned company. These are democratically owned by
their unit, with each person having one vote in choosing the BOD (board of
directors). It owned, managed and operated for the employee's welfare that makes
use of catered services. Whatever the organization generated the money are
distributed among the members of the business and lately use for the goodness of
its members without any condition to be paid to the external members. Housing
cooperatives is one of the examples of cooperative business.
Section 3: Different business structures and external
factors affecting business
3.1 Identification of different organizational structures and
explaining how does organisational structure affect business
productivity
An organizational structure explains how particular activities are delegated
toward accomplishing the goal of business. It showcase the role and different
responsibilities of employee within the organization (Ranta, 2021). Following are few
types of organizational structure are discussed:
 Functional structure: Through this structure, the companies are categorized
into specific groups with certain roles and responsibilities. Most of the
business firms divides their organization into different department such as
marketing, finance, R&D or HR. Each of such departments has a manager to
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manages activities. This manager is directed by an executive or administrator
who manages multiple departments.
 Divisional structure: In this type of organizational structure, different groups
work alongside each other towards a common or shared goal. Each of these
units has its own manager who tackles how that division operates, allocate its
resources as well as budget. Each division can have its own sales team,
marketing team, IT team and many more. It is mainly used by larger firms as it
authorizes the different branches to make decisions without every person
having to report to few managers.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
An organization needs to analyze its external factors that have a significant
impact on their business and its day to day operations. If these factors are not
analyzed effectively then it may affect the business's long term profitability and
performance (Seehausen, 2019). Unilever is taken to analyze different external
factors of business environment. These are as follows:
 Political factors: Unilever is a global company which deals in international
activities of their business, due to which they have to face many challenges
and problems. Every country has their own policies of trading and dealings so
it makes company to focus on the changes in the political factors. In UK,
Brexit has created a vital impact on the businesses, including Unilever. It has
impact the trade activities of business.
 Economical factors: Covid-19 has influenced the global economy and
resulting recessions. The global pandemic and lockdown situation influences
shockingly on the country's economy. The chosen organization is also gets
impacted negatively while facing difficulties and generates less productivity.
 Social factors: It shows the demands and needs of consumers which
influences the business's productivity (Soniewicki, 2021). Unilever has gained
the value by customers as it is able to fulfilling the demands with a range of
products and services. It shows a positive performance globally.
 Technological factors: It is essential for the organization to upgrade their
equipment, machinery and tools so that better productivity can be attained.
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The chosen organization always focusing on the advanced tools and
techniques to promote their business effectively and efficiently.
 Legal factors: It showcase the laws and legislation which makes company to
adhere so that better flow of working can be held. The respective firm
considers taxation laws, employment laws and so forth, wherever they
operate their business.
 Environmental factors: It is observed the global economy is also influenced
by the environmental factor (Zhang and et.al., 2022). There are many
activities which are considered by companies in order to reduce the negative
impact on the environment. Unilever is focusing on the recycle of wastage,
utilize more natural resources and many other steps.
Conclusion
From the above study, it can be said that there are many types of companies
mentioned under the Companies Act, 2013.These companies are micro, small,
medium as well as large companies. All such companies plays an important role in
the growth of national economy as revenue generated by these companies helps in
creating various positive results for the better of the nation. Sole proprietorship,
partnership, public limited company, limited liability company as well as
cooperatives, all such companies have different legal structure and features.
Organizational structure has many types of structure which showcases how duties
and roles are assigned to the employees towards a common goal. It helps in creating
better productivity and profitability. Functional and divisional structure are discussed
in this report. Pestle analysis covers various extrinsic factors such as political,
economic, social, technological, legal and environmental factors. These factors must
be assessed by the organizations so that better strategies can be made to tackle the
impacts of such variables.
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Reference List
Boldyrikhin, A., 2021. SHADOW MANAGEMENT AS A NEW UNDERSTANDING OF
INFORMAL LEADERSHIP IN COMPANIES. Панорама, (38), pp.34-39.
Chang, A.S., Paramosa, L.S. and Tsai, C.Y., 2021. Linking key topics to
environmental indicators in corporate social responsibility reports of
construction companies. Corporate Social Responsibility and Environmental
Management, 28(4), pp.1335-1347.
Efimova, O., Rozhnova, O. and Zvyagintseva, E., 2020, May. Creation of a System
for Climate-Related Risks Disclosures in Companies’ Reporting.
In International Conference on Integrated Science (pp. 201-211). Springer,
Cham.
Ku, E.C., Hsu, S.F. and Wu, W.C., 2020. Connecting supplier–supplier relationships
to achieve supply chain performance of restaurant companies. Journal of
Hospitality and Tourism Insights.
Luo, Z. and et.al., Profit Loss Risk Modeling and Avoidance Decision of Power
Selling Companies for Medium and Long-term Electricity Market. In 2020
IEEE 4th Conference on Energy Internet and Energy System Integration
(EI2) (pp. 3517-3521). IEEE.
Prushkivska, E.V. and Avramenko, K.O., 2020. Innovative strategies for development
of international companies in the conditions of globalization. Economic
Bulletin of the National Mining University scientific journal, 72(72), pp.28-35.
Ranta, A., 2021. Consumer types of sustainable convenience food companies.
Seehausen, J., 2019. European Model Companies Act (EMCA): A Critical Review of
Chapter 12–Annual Accounting and Auditing. European Business Law
Review, 30(4).
Soniewicki, M., 2021. The effect of knowledge appreciation and development of
internal ideas on the competitiveness of service industry
companies. International Journal of Innovation and Learning, 29(4), pp.431-
448.
Zhang, Y. and et.al., 2022. Turnover of Companies in OpenStack: Prevalence and
Rationale. ACM Transactions on Software Engineering and Methodology.
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