Types of Companies and Business Structures: A Comprehensive Guide

This report provides a detailed analysis of 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 explains how organizational structure affects business productivity and how external factors such as political, economic, social, technological, legal, and environmental factors impact business performance.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
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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 8
Conclusion 10
Reference List 10

Introduction
The report is working for the sole aim of examining the various types of business and its
functions. There are certain types of organisations that are having its own legal structure & rules
which its pros and cons as well. There are various organisation who are working in various
organisations. Mainly there are companies that are categorised on the basis of size, liability of
member and its control. There are various environment that has the major impact on the business
and they are operating its business by using specific organisational structure. This report will
considered about the various kinds of functions and various structures in details.
Section 1: Different types of companies and how they work
Micro business:
Micro firms are the small scale business that is having less than 10 employees and they
are generating the annual turnover approx. 2 million euros. This basically require less capital in
order to start and operate. It is an effective option for the sole trader who is planning to conduct
its business on a single location. There are some of the examples of micro business that are
carpenters, street vendors, shoe makers and so on(Talebi Anzab and et. al., 2021).
Small business:
Small business is a organisation that is having annual turnover of more than 2 million
euros but this can be less than 10 million euros. This type of business work with at least 10-50
employees. This require relatively less capital and less employees. This is basically suitable to
operate the small scale business by which they can serve the local community. For instance,
grocery stores, medical stores, photographers and food stalls etc. are the examples of small
business.
Medium size business:
A medium size business is defined as an organisation that usually generates the average
business size and having annual turnover of more than 10 million euros but less than 50 million
euros. They usually work with less than 250 employees. This is helpful for the entrepreneurs
who want to set the local business. Examples are online retailer, garages, consultants and so on.
Large size business:

This is the business organisation who usually operates its business on above average size,
earning annual turnover of more than 1.5 million euros. They are usually working with more
than 250 employees. They also approach to national and international markets. Such type of
business needs huge amount of capital. There are few examples of big firms such as HSBC,
Tesco and so on.
Section 2: Different companies from sole traders to cooperatives and
Limited Liability Partnerships
Sole trader business:
A sole trader is the itself is the owner of the business. They are operating its business by
following simple business structure. All the decisions are being taken by the owner of the
business. They can lead a group of potential employees.
Advantages
 Sole trade can be easily set up business by the owners as they do not need to register its
business and they can start its business with minimum capital.
 A business owner have the full control of the business as they are free to make their own
decisions and operate its business by their own.
Disadvantages
 Sole trader have the unlimited liability as they are responsible for all the debts and looses
of the company. Basically personal assets can be used by the owner in case of need.
 Individual is responsible for sole working and managing all the task to be done by them
only. This also act a s a barrier in the business(Rachinger and et. al., 2019).
Partnership
It is the type of business when two or more person come together in order to operates its
business in an appropriate manner with the motive of generating revenue. This is known as
partnership. Every partner of the firm act as the agent on the behalf of the company.
Advantages

 Partners are responsible for sharing profits and looses altogether so that they can ensure
the smooth functioning of the business in an appropriate manner.
 When the business is making the decisions based on the welfare of the company, this
helps them to have the better results for all the partners.
Disadvantages
 This leads to have the slow decisions in the partnership firm as every partners consult in
very vital that leads to have good results in process.
 Every partners has their own school of thoughts and perspective. This is the reason, there
is a high chances of contradictions of point of view that leads to results in the conflicts
among the partners(Jiaojiao and Zenglong, 2021).
Limited liability business:
It is the type of business which is working on the sole consideration as the combination of
the company as well as the partnership. This type of business structure liabilities of a member is
limited up to the extent of their unpaid share. Or can say that, personally properly of member is
not liable for any looses of the company.
Advantages
 The major advantage of limited liability business is that the liability of an individual is
limited to to their unpaid share in the company. Any looses or the debts are the
responsibility of the business.
 This simply means that the continuation of the company for a longer period of time as it
legally in the existence.
Disadvantages
 As it is vital for the company to register their company for recording their data and then
use it to publish. They can accessible to the general public(Chung, Jo and Lee, 2021).

 This is the complex process which ensure the limited liability. This is vital for the
company to register the company with the companies house. There is also a fee on setting
up the same.
Public limited liability business:
A public limited liability is a business whose shares are offered to the general public and
the owner of the company have limited liability that simply means that they are basically
responsible for all the looses of their market share.
Advantages
 In this type of business, there is not such prohibition on issuing the share to the general
public. An organisation can raise a large capital in comparison to the private company.
 There is no such restrictions on the transfer of share of the company. This also offer more
easier way to transfer.
Disadvantages
 There are various legal consideration which needs to analyse by the company. There is
the regulatory requirement in the public limited liability than a private limited company.
 There is type of business, it is tough foe them to control who is a share holders of an
organisation that is also accountable to the company. Therefore, there is the possibility of
disputes and issues related to the managing of the business.
This respective type of structure is the best as organisation needs more capital in order to
make tge significant move in the market. There are some examples of public limited companies
are Barclays, Tesco and Easy-jet.
Cooperative:
It is the type of business organisation in which the company is controlled and owners by
the member so that they can meet their needs in the market. The owner of the such type of
business is close to the suppliers, employees etc.
Advantages

 One of the main consideration of this business structure is, they are able to split such
costs of accounting and IT that is helpful for the small business who usually do not want
to service on large scale(Mrňová and Roudná, 2020).
 This is easy to set the business as this does not require incorporated. However, some
paperwork is required while doing so.
Disadvantages
 There is the less control of members or making decisions in order to control the business.
Members have to take decisions collectively.
 This is the type of business which cannot raise the huge capital as its members are
limited.
Section 3: Different business structures and external factors
affecting business
3.1Identification of different organizational structures and explaining how
does organizational structure affect business productivity.
 Functional structure: This is the common organisational structure that is operating its
business with the help of various departments such as sales, marketing etc. this is the best
for small size business.
Pros
1. More efficient.
2. Helps workers to emphasis on their goal.
Cons
1. It can create silos within the business.
2. Ineffective communication.
 Divisional structure: It is the organisational structure which is helpful to operate with
various product range. Leadership team are divided to operate its business for various
products.
Pros
1. Helps in flexibility of large organisations.

2. Helps in quicker response to changes in the sector.
Cons
1. It creates barrier in the headquarters & its division.
2. It can lead to company competing with themselves.
 Team based structure: In this, small team of employees are made in order to serve the
specific project or goals in the business.
 Flat or Horizontal structure: There is less levels among the top level management and
lower level management. There are various startups who are using this structure in order
yo assign the responsibility to the employees.
3.2 How different external factors affect the performance of a business –
PESTLE Analysis
 Political Environment: There is the huge government intervention in the business which
leads to create the major significance. Increase and decrease in taxes is the good example
of this environment.
 Economic Environment: There are factors such as taxation, wages have the huge impact
on the business. Entrepreneurs will think twice before taking loans from the bank as they
take high interest rates(HORÁK and PAVLOVÁ, 2022).
 Social Environment : These are the aspects which includes the culture, value, age,
geneder in the community. A good example of this is the women participation in the big
proejcts.
 Technological Environment : Technology is taking shape daya by day, this become the
threat also the opportunity for the business. Launching of GPS in cars is the best
examples of that.
 Legal Environment : These are factors which includes the laws and legislations which
create the huge impact on the businesses. For instance, export and import polices have the
huge impact on the prices of goods.
 Environmental : factors such as weather, climate etc also impact the overall
functionality of the business. For instance, customer willingness to purchase a heater in
the winter season will be more.

CONCLUSION
From the above report, it is concluded that there are various types of business
organisation and structure are available for the smooth functioning of the business. There are
various businesses which are based on the size which can be micro, small, medium and large.
Every business organisation is using its own structure to run their operations in an appropriate
manner. There are factors such as political, economical, social, technological, legal and
environmental which are impacting the business at large scale.

REFERENCES
Books and Journals
HORÁK, J. and PAVLOVÁ, Š., 2022. CAPITAL STRUCTURE OF COMPANIES APPLYING
PRINCIPLES OF CIRCULAR ECONOMY. Ad Alta: Journal of Interdisciplinary
Research, 12(1).
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.
Smerek, L. and Vetráková, M., 2020. Difference in human resources development in various
types of companies. Polish Journal of Management Studies, 21.
Chung, W.Y., Jo, Y. and Lee, D., 2021. Where should ICT startup companies be established?
Efficiency comparison between cluster types. Telematics and Informatics, 56, p.101482.
Jiaojiao, L. and Zenglong, Q., 2021. Investor Types and Company Performance through Private
Placements Basing on State-Owned and-Controlled Listed Companies. International
Journal of Business and Management, 14(11), pp.250-250.
Rachinger and et. al., 2019. The Influence of Technological Disruptions in Business Ecosystems
on Elements of Companies’ Business Models.
Talebi Anzab and et. al., 2021. The effect of personality, social and motivation psychology types
on reporting of social responsibility of accepted companies in Tehran Stock Exchange
using the pattern of structural equations. International Journal of Nonlinear Analysis
and Applications, 12(Special Issue), pp.2413-2427.