Types of Companies and Business Structures: A Study on Barclays

This report discusses the different sizes of companies and their types on the basis of their legalities. It also describes the various types of business structures and the impact of external factors on an organisation, with a focus on Barclays.

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 5
Section 3: Different businesses structures and internal factors affecting
business 7
Conclusion 9
Reference List 10
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Introduction
Business can be defined as term in which people involve themselves in the activity of
manufacturing, buying and selling of goods and activities so that they can earn their own as
well as the livings of their family members. In other words, it is a means to gain profits and
generation of wealth (Myers, 2019). The concept do not involve professionals in it, so the
owner of the business is not required to have any specific qualification or degree to run its
enterprise. The company chosen in this report is Barclays, a London based universal bank. It
is a multinational bank operating in more than 40 countries. The report discusses the different
sizes of the companies and their types on the basis of their legalities. It also describes the
various types of business structures and the impact of external factors on an organisation.
Section 1: Different types of companies and how they work
Micro business:
Micro business can be defined as firm where an enterprise can employ less than 10
people to run its business. These employees are generally expert in their skills and operate the
business on the basis of these cap[abilities only. Their annual turnover is generally less than
€ 2 millions and tends to add value to the economy by generating employment opportunities..
Characteristics of Micro business
 Limited reach- These businesses operates in very small area such as a particular
community, society or a town.
 Finance- Owners of such enterprises generally use their savings or take loans ofr
micro banks to operate their tasks.
 Labour Intensive- The operations of these businesses are dependent on the labour
employed by them. They do not use heavy and costly machines.
For example, Mantons Cards.
Small business:
Small businesses are the sole proprietors or partners which operates their firm on a
small scale while recruiting more than 10 but less than 50 employees with them. The decision
making power is in the hands of the owners only (Wexler, Shaffer and Cotgreave, 2017).
These enterprises usually do not earn more than € 10 millions.
Characteristics of Small business
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 Skills- The employees of small business generally learn the required skills on the job
only. They acquire these capabilities while performing their tasks.
 Technology involved- These businesses use less costly machines and mostly these
equipments needs labour for their operations.
 Resources- They use such resources which are local and can be readily available to
them. These firms use their resources judiciously with minimum wastage.
For example, Fourex.
Medium size business:
Medium sized business can be recognised by its attribute of more than 50 but less
than 250 employees. This type of enterprise is far big from the the small businesses but
smaller than the large companies. Their annual turnover is less than € 50 millions (Julien,
2018).
Characteristics of Medium business
 Location – These firms have more than one offices and that too at different locations
of same city or different cities. Their employees also belongs to the various parts of
the country.
 Skills- The staff holds the basic or general skills but the specialised skills are acquired
by them on the job only.
 Technology- These companies make use of large automated machines for their daily
operations.
For example, Checkout.com.
Large size business:
Large businesses can be defined as a firm which is operating at a scale which ls larger
than the medium sized enterprise. These companies can have their offices nationally as well
as internationally with minimum workforce of 250 employees. There is no maximum limit on
their turnover but it needs to be more than € 50 millions (Expósito and Sanchis-Llopis,
2019).
Characteristics of Large business
 Skills- The employees in these companies are generally specialized in their tasks and
hold a wide range of knowledge about their subject.
 Capital investment- These businesses initially invest their own money to run the
business or take loans from banks but after getting g registered with the stock
exchanges, they raise their capital by offering shares to the public.
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 Legal formalities- Large scale businesses has to accomplish with lot of legal
formalities because there operations impacts number of employees, general public and
even the international and national countries.
For example, Barclays.
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships
Sole trader business:
Sole trading is the most inexpensive and easiest form of business out of all other types
of firms. In this, a single self employed person owns and controls the whole enterprise. The
legal entity of the individual and the business is same. The person cannot give the authority
of control to its helpers or the person hired by them (Foss and Saebi, 2018).
Characteristics of Sole trader business
 Unlimited Liability- The liability of the owner is unlimited which simply means that
at the time of shortage of funds, the person property of the individual will be attached
to pay off the debts.
 Quick decision making- The owner of the business is the sole authority to take any
decision which makes the task quick as no other person is involved for any sort of
discussions.
For example, a book store.
Partnership:
Partnership can be defined as a formal agreement among two or more persons to start
a venture with some common goal. They distribute responsibilities, profits and losses among
each other. It is not a perceptual succession that means a partnership comes to an end on the
death or retirement of a partner and even at the entry of new person (Horch, 2018).
Characteristics of Partnership
 Formal Agreement- Though it is not necessary, but it is recommended to sign a
partnership deep which governs all the legal aspects among the partners so that any
future conflicts can be avoided.
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 Unlimited Liability- The liability of the partners is unlimited. So the personal
property of the partners can be used to pay off the money to the creditors if the
company is facing crises of funds.
For example, Pret A Manger
Limited liability business:
A limited liability business is a type of firm which enjoys the right of protecting its
owners from personally taking the responsibility of paying off its debts and liabilities. These
are the private companies which can choose its taxation structure from companies,
partnership and sole proprietorship (Gracey, 2020).
Characteristics of Limited liability business
 Separate legal entity- The business in this type has its own identity other than the
owner in the eyes of law. They enjoy all the legal rights and bears punishments like a
real person.
 Creation- A limited liability business is build by filling articles of association which
consists of all the policies and rules related to the company.
For example, Specsavers.
Public limited liability business:
A Public limited liability business is just like a private company with an additional
power to offer its stocks to the general public. The liability of its shareholders is limited to the
amount paid by them for the shares.
Characteristics of Public limited liability business
 Directors- The company is operated by the board of directors who represents the
interests of its multiple shareholders (Hopej and Kandora, 2018).
 Prospectus- A firm requires to issue prospectus in order to to invite public for
purchasing its shares.
For example, Barclays.
Cooperative:
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A cooperative is a voluntary group of people united to fulfil their common economic,
cultural and social needs by forming a jointly-owned firm (Goswami, 2019). They give equal
rights and responsibilities to the members.
Characteristics of Cooperative
 Liability of members- It depends on the wish of the members. They can organise this
business by limited or unlimited liability.
 Democratic Control- These organisations are managed by the elected members and
works on the policy of 'single person single vote'.
For example, East of England.
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
Organisational structure can be define as a system which gives direction to the
activities of a corporation with a view to achieve organisational desires (Tajani and Morano,
2018). It helps in identifying the jobs and responsibilities of the employees and the person to
whom they are accountable. There are various types of organisational structures out of which
two are discussed below:
 Functional structure- It is the most common type of structure practised by almost
all types of businesses operating at large scale. In this system the whole organisation
is divided into different departments according to the nature and type of function
performed by them. This structure helps in developing personal and specialised skills
among the employees as they tend to repeat the tasks at regular intervals. This will
bring efficiency in the working environment which will help in increasing the
productivity of the organisation. But it can prove to be harmful if the structure tends
to develop inter organisation competition among the departments.
For example, Starbucks.
 Divisional structure- This structure focuses on dividing the whole organisations into
different divisions on the basis of either the variant products or unlike locations of the
company. In simple words, this type of structure is adopted by those firms who either
deals in various type of unmatched products or have multiple offices at different
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geographical locations. It helps in identifying that which product or location is
generating profits or losses separately. But this structure is not suitable for the small
organisations.
For example, Barclays.
3.2 How different external factors affect the performance of a business –
PESTLE Analysis
An organisation cannot operate its business in vacuum . It has its own internal and
external environment which it requires to examine at regular intervals. Otherwise, a firm may
have to bear some losses in future (Coppenhaver, 2018). External environment is not in the
control of corporation, but it can take an advantage of the opportunities and tackle the threats
if it analyse the external environment properly and in time. Here is the PESTLE Analysis on
Barclays to evaluate its opportunities and threats.
 Political Factor- This factor analysis the influence of the decisions of the government
on the operations of the business. Barclays is a multinational bank, so it is exposed to
the political systems of various countries. Whenever there is a situation of economic
crises , the government of UK intervenes to provide financial support to the bank.
 Economical Factor- It comprises of the current and future economic variables like
taxation policy, inflation rate which impacts the economical condition of the
organisation. If the UK government decides to increase the rate of interest on the
loans, then people will feel reluctant to take borrowings from Barclays which will
result in the loss of income for the firm.
 Social Factor- It deals in analysing the demographics of population, their lifestyle,
choices, habits, education, tastes etc. In this modern world, people starts investing in
the pension scheme right from the starting of their career. For this, Barclays has
launched various and flexible pension schemes to attract more customers.
 Technological Factor-It analysis the impact of various technologies and innovations
on the business (Kietlińska and Jabłońska, 2018). Barclays must recognise the need of
using latest technology to gain competitive advantage. For example, it launched in
website in time on analysing the impact of such sites on the profitability of the banks.
 Legal Factor- This factor describes the authority of a firm to perform a particular task
according to the laws prevailing in the country. Barclays has to keep an aye on the
various laws of various countries so that it do not had face any legal obligation which
can tarnish the reputation of the bank.
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 Environmental Factor- It deals with the rules related to the environment like
pollution level, attitude towards the sources of energy etc. Barclays must adhere to the
various environment laws so that it can contribute in improving the environment. It
will also improve the reputation in the minds of the society and its competitors.
Conclusion
It can be concluded from the above report that there are different types of businesses
on the basis of their size and legalities. All these categories have their own features and
limitations which distinguish them from each other. Also, there are various type of
organisational structure which affects the workings of the business. A company before
commencing any firm must analyse all these types and structures so that it can take advantage
of the various features of these kinds. In addition to this, it is also important to analyse the
impact of external environment of the business, because it consists of various opportunities
and threats. These forces holds the power to lift the firm to the next higher level and they can
even drag it to the lower degree.
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Reference List
Coppenhaver, R., 2018. From Voices to Results-Voice of Customer Questions, Tools and
Analysis: Proven techniques for understanding and engaging with your customers.
Packt Publishing Ltd.
Expósito, A. and Sanchis-Llopis, J.A., 2019. The relationship between types of innovation
and SMEs’ performance: A multi-dimensional empirical assessment. Eurasian
Business Review. 9(2). pp.115-135.
Foss, N.J. and Saebi, T., 2018. Business models and business model innovation: Between
wicked and paradigmatic problems. Long range planning. 51(1). pp.9-21.
Goswami, P., 2019. Literature review: Financial problems of micro, small and medium
enterprises. International Journal of Management, IT and Engineering. 9(4).
pp.115-136.
Gracey, A., 2020. Building an organisational resilience maturity framework. Journal of
Business Continuity & Emergency Planning. 13(4). pp.313-327.
Hopej, M. and Kandora, M., 2018, September. The Simplification of Organizational
Structure: Lessons from Product Design. In International Conference on
Information Systems Architecture and Technology (pp. 188-200). Springer, Cham.
Horch, H.D., 2018. The intermediary organisational structure of voluntary
associations. Voluntary Sector Review,.9(1). pp.55-72.
Julien, P.A. ed., 2018. The state of the art in small business and entrepreneurship. Routledge.
Kietlińska, K. and Jabłońska, M., 2018. Forms of MSME Involvement in Social
Activities. Przedsiębiorczość i Zarządzanie, 19(1, cz. 2 Determination of
Organizational Effectiveness vs. Humanistic Management). pp.37-49.
Myers, M.D., 2019. Qualitative research in business and management. Sage.
Tajani, F. and Morano, P., 2018. A model for the elaboration of fair divisional projects in
inheritance disputes. Property Management.
Wexler, S., Shaffer, J. and Cotgreave, A., 2017. The big book of dashboards: visualizing your
data using real-world business scenarios. John Wiley & Sons.
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