Different Types of Companies and Business Structures: Business in Practice

This assessment for Business in Practice covers different types of companies and business structures, including micro, small, medium, and large businesses, sole traders, partnerships, limited liability businesses, public limited liability businesses, and cooperatives. It also discusses how organizational structure affects business productivity and how external factors like PESTLE analysis can impact business performance.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
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Contents
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Introduction 2
Section 1: Different types of companies and how they work
P
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships p
Section 3: Different businesses structures and internal factors
affecting business p
Conclusion p
Reference List p
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Introduction
Business in a practice is a programme which can helps in innovating the operation
system and function of the organisation. Practices helps in making improvement in the
organization and making business environment effective and smooth. Best practices in
business environment helps in making best solution for the organization. Every business have
their own business structure, policies and rules. Every organization have advantages and
disadvantages within their business either it is small or large business. These companies are
classified on the basis of size, number of staff members and liability (Novelli and Spina,
2022). There are different type of companies and they have their own structure and policy on
which organization run smoothly. This project cover different type of companies and
different business structure which affect external and internal factor.
Section 1: Different types of companies and how they work
Micro business:
These type of business are the small organization which are operate with few
employee's approximately 10-50. It requires few capital to start the business organization.
This type of business operate in a single location in local community and require less amount
of fund to invest in the business operation. Micro business are the independent business and
have their own business structure on which their business run.
Small business:
small business are the private cooperation having less number of employee and it require less
amount of fund to operate business (Sivani, 2019).They can operate their business in local
community in which they can earn more profit and invest less money. Turnover of small
business is approximately 2 million.
Medium size business:
Medium size business have approximately 250 employee and average size of business
and having approximately 10 million overall annual turnover. These type of business set up in
the local area where consumer attract more easily and organization invest less capital in
operating the business (Lascelles, 2021). For example- local restaurants and medium supply
chain industry.
Large size business:
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Large business are the organization having above average business size and has large
operations with high economic scale. Large size business hire number of employee's more
than 250 employee and overall annual turnover is 1.5 billion. They target at national and
international level market and invest lot of fund to promote their organisation.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
This type of business organization is owned and run by one person according to their own
business structure and policies. All powers and authorities are under solo owner and they can
maintain and run business on their own decision-making ( Allwood, 2021).They have
employee and are managed by the one person.
Advantages:-
Easy to establish:- This type of business are easy to set up because it require low capital to
operate the organisation. They does not follow the rules and policies of government.
Full control:- This type of business have own authority for making an effective decision
independent to impose policies by their own decision.
Disadvantages:-
Unlimited liabilities:- The disadvantages of solo trader business are self responsible for loss
and profit because they run their organisation by self decision making and according to their
business structure (Kassamany and et. al., 2022).
Partnership:
In this type of business, more than two people get together to run the organization and make
strategic plan to enhance the profitability of an organization. Participant works as an owner of
the business.
Advantages:-
sharing of burden:- The advantages of this business is that loss and profit is shared with all
partner which reduce the burden on single person.
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Effective decision:- In partnership business, all participant or owner can together make an
effective decision which are beneficial for the organization.
Disadvantages:-
Slow decision:- The disadvantages of the partnership business is that each partner of the
organization give their opinion according to their thoughts and ideas which can take lot of
time to make better decision for the organisation (Yeoh, 2019).
Conflicts:- Due to more than one owner it can cause conflicts because of their different
thoughts and ideas. This is the main cause of the partnership business and have many issues
in decision making and developing structure plan.
Partner business have are beneficial for the medium type of business which require medium
capital to manufacture the business. These type of business face low amount of loss because it
is shared with all partners and they can invest more to grow up their business (Jolly and et.
al., 2022).
Limited liability business:
Limited liability is the type of cooperate business structure where owner are not personally
liable their organisation . Limited liable companies are hybrid entity that combines the
characteristics of solo partnership with cooperation. In this type of business one member is
not liable tp face any loss within the organisation (Kawas and Dockery, 2022).
Advantages
 Limited liability:- Limited liability have biggest benefits is that the liability is limited
because any type of loss and profit are the responsibility of the organisation.
 Perpetual succession:- The another benefit of the limited liability business is the
continuation of the organisation for long existence. In case of death and bankruptcy of
individual employee does not affect the business organisation.
Disadvantage
 Public records:- the main disadvantage of the limited liability business is that
company have to register their records and after this process they are access to
published by customers and public.
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 Complexities in establishment:- Establishment of limited liable business is difficult to
set-up because it is important to register the company because of the detail and
security and these type of business are free to set up.
Limited liable business structure is beneficial and they have manufacturing around the
national and international level.
Public limited liability business:
Public limited liability business is a type of business which are offered shares of stock
to the general public. These type of business are not responsible for any type of business loss
in excess amount. Owner of the business are self responsible for the loss up to their shares
(Pawsey, Nayeem and Huang, 2018).
Advantages
 Different issues of shares:- one of the most beneficial advantage is that there is no
restriction on providing share to the general public. This type of business organization
gain more profit compare to other private company.
 Exchangeability of shares:- There is also one option to provide share and easy to
transfer to the general public.
Disadvantages
 Regulatory requirements:- The main disadvantage of this type of business is that the
there is more legal requirements which is essential and time taken.
 Control issues:- In public limited liability business, it is difficult to control and
manage the company activity because there is no responsible authority to control the
organization process. This can create issues and conflict in the public limited liability
business.
Cooperative:
Cooperative type of business structure is the organization which is controlled and owned by
its members to meet their requirements and needs. Cooperative type of business owner makes
an effective interaction with the working employee and suppliers.
Advantages
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 Lower costs- The main advantages of this type of business is that it can maintain their
cost according to their financial developed plan which is more beneficial for small
scale business. This type of business can reduce the cost and make more profit.
 Easy to set-up:- It is one of the most easy process to set up cooperative businesses
because it can owned by self and does not need the policies and rules which can affect
the business organisation.
Disadvantages
 Less control:- In this type of business there is individual person who faces many
difficulties in controlling the all function of the organization (Onjewu, Jafari-Sadeghi
and Hussain, 2022).
 Limited assets:- This type of business organization does not enhance their profitability
at large level be cause they have limited assets and capital.
Cooperative type of business structure establish their organization at medium scale with
limited number of employees and they are unable to expand its business. There are some
examples of the cooperative business such as retail and grocery.
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
 Functional structure-
A functional structure is the type of business which divides the major functions of a
firm into different departments which includes sales departments, marketing departments and
other such groups are classified separately. Functional structure is used for the small scale
business.
Pros
 Effective and beneficial
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 Employees are focused on achieving the goals.
Cons
 It can generates the depot with in the business environment
 No restrictions to make interaction
Divisional structure
In this type of business structure the organisation functions are classified according to
the product and services. This business structure is beneficial for the organisation having
number of products.
Team based structure
In this type of business structure an organisation works towards the common goal and
team are classified on the basis of the some specific tasak and all focus on achieving the
targeted goals (Castle, 2020).
Flat or horizontal structure-
This type of business structure is divided into the few management layer. Business
start-up used this structure and give more responsibility to every employee.
Matrix structure-
This type of business structure are the combination of two or more type of
organisational structure, individual works across teams and project in their own departments.
Circular structure:-
Circular business structure is mainly for the low skilled employee for providing the help from
the high level of employee by making coordination and make interaction with the high and
low level employee's.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
Pestle analysis is a type of strategic tool which can helps in identifying the external
and internal factor which affect the business organization. There are six factors of pestle
analysis which includes:-
 Political - This factor is based on the government rules and policies on which
organization can run. Positive changes in government polices helps business to grow
more rapidly. Decrement in government taxes are more beneficial for the business.
 Economic:- This factor is regarding the financial conditions of the organization which
can affect the overall revenue of the organisation. This factor identify the economic
growth of the business which can also improves the business performance.
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 Social :- This factor is depend on the society factor such as culture differences and
marketing trends. It is most important to analyse the customer's needs and
requirements on which organisation provide the service and product that can lead to
help in enhancing the profitability and productivity of an organisation.
 Technological factor:- this factor is about the new technologies and new market trend .
It is most important to analysis the market opportunities and trends into the
marketplace.
 Legal factor:- This factor analysis the organization legal rules and policies of the
business environment which can have huge impact on the organization. These factors
can affect the employee wages and access to materials.
 Environment factor:- These factors includes the environmental factor which includes
the climatic changes and weather condition of different location can affect the
organization. These factor can increases or decrease the potential growth of the
business which is depend on the environment factors.
Conclusion
From the above discussion, it is concluded that there are different type of business
have variations in the business structure which is depend on the business size and features.
Different type business which includes micro, small, medium and large business organisation.
Every organization has its own structure with different laws and policies it include various
features within the organization. Different organisation have different features which can
affect the business firm in positive or negative way. Business organization uses PESTLE
analysis for identifying the internal and external factor which can affect the business firm
which includes political, economic and environmental factors. Large business adopted
different tools and techniques to analyse the different factor that are harmful for the business
environment.
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Reference List
Allwood, J., 2021. Entrepreneurs not Emissions: New business opportunities to fill the gap in
UK emissions policy.
Castle, H., 2020. Disrupting from the Inside: UK Archipreneurs. Architectural Design, 90(2),
pp.40-49.
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Jolly, M., Velenturf, A.P., Salonitis, K. and Paddea, S., 2022. The UK Transforming the
Foundation Industries Research and Innovation Hub (TransFIRe). In REWAS 2022:
Developing Tomorrow’s Technical Cycles (Volume I) (pp. 341-353). Springer,
Cham.
Kassamany, T., Harb, E., Louhichi, W. and Nasr, M., 2022. Impact of risk disclosure on the
volatility, liquidity and performance of the UK and Canadian insurance
companies. Competitiveness Review: An International Business Journal.
Kawas, S. and Dockery, E., 2022. What do we know about the stock markets’ reaction to
regulatory announcements regarding financial institutions? Evidence from UK
financial institutions. Review of Quantitative Finance and Accounting, pp.1-37.
Lascelles, D., 2021. Dr Kate McLoughlin, Management, Manchester Metropolitan University,
Manchester, UK. Sustainable and Green Supply Chains and Logistics Case Study
Collection, p.106.
Novelli, E. and Spina, C., 2022. When do Entrepreneurs Benefit from Acting Like Scientists?
A Field Experiment in the UK.
Onjewu, A.K.E., Jafari-Sadeghi, V. and Hussain, S., 2022. Revisiting innovation practices in
subsistence farming: the net effects of land management, pesticide, herbicide and
fungicide practices on expected crop harvest in Ethiopia. International Journal of
Technological Learning, Innovation and Development, 14(1-2), pp.23-51.
Pawsey, N., Nayeem, T. and Huang, X., 2018. Use of Facebook to engage water customers: a
comprehensive study of current UK and Australian practices and trends. Journal of
environmental management, 228, pp.517-528.
Sivani, K.M.S., 2019. Critical Analysis of the Effects of Regulations under Competition Law
on Mergers and Acquisitions: A Comparison of the India, EU, US and UK
Laws. Journal of Corporate Governance and International Business Law, 2(2).
Yeoh, P., 2019. Corporate governance codes in the UK: The risk of over-reliance. Business
Law Review, 40(1), pp.19-27.
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