Types of Companies and Business Structures: A Comprehensive Guide

This report provides a comprehensive guide to different types of companies and business structures, including micro, small, medium, and large businesses, as well as sole traders, partnerships, limited liability businesses, public limited liability businesses, and cooperatives. It also explores how organizational structure affects business productivity and how external factors like PESTLE analysis impact business performance. The report includes examples and references to support the information provided.

Business Management with Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
ID:
1

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 9
Reference List 10
2

Introduction
The aim of this report to examine different types of companies(micro, small,
medium, large size business) and their work structure. The report also describe
companies from sole trader to cooperatives and limited liability partnership. All types
of companies have different characteristics and features which represents own
identity of company (Alomar, 2019). It also highlight business structure and external
factors affecting business. The external analysis can be done from the model of
PESTLE analysis. This will help in determining factor that affect the performance of
business. The company is a form of legal entity which representing a group of people
to accomplish specific objective.
Section 1: Different types of companies and how they work
Micro business:
The micro business is also called as micro entity or enterprise which consider
as exclusive trend in entrepreneurship world. The micro business is the foundation of
nation creation that support economy of the country. The micro business is a kind of
small business that operates at very smaller level. The micro business have less
employee than 10, including owner (Betancourt, 2019). The annual sales is less
than $ 250000 that required less than $50000 to starting business activity. The micro
business require very less capital in order to operate business activity. The micro
business can be operates by the single owner without employee, for example- event
planner, consultant, housekeepers and so on.
Small business:
The smaller business is refers as private owned entity or corporation which
combines of less employees as well as annual salary and operate regular sized
business. The government support small business to qualify for preferential policy of
tax. The employees of small business includes from 100- 500 employees with
revenue less than $ 25 million. Example- Bakery shops, Schools, virtual assistant
services and so on are consider as small business. The small business are more
independent and operates the company in limited size.
3

Medium size business:
The medium size business is refers as family owned and manged kind of
business which combine virtue size with complex entities. The medium size business
have separate business from the management that established observable track to
track the record to strengthen financial decisions by lenders or investors (Coppin,
2017). The medium size business is consider as mature entities which operates in
higher growth potential market. The employees of medium size business are more
than 500 but less than 1000.
Large size business:
The large business concentrate upon big market share rather than niche market.
The large size business involves employees more than 1000 employees and
generate revenue more than $1 billion (Huidrom, 2020). The employees are very
professional skilled to manage work quality in large scale business. Examples of
large size business are Walmart, Google, Microsoft and so on. These types of
business provide large employment to develop community and improve living
standard of people.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
The sole trade business is called as sole proprietorship which determine small
business arrangement to run or owns complete business cycle. Sole trader is known
as self employment person who execute business operation on the individual basis.
In sole trader business, it does not have separate legal entity from its owner. The
sole trader is accountable for its business liabilities during its business practices.
There is great disadvantage mange by the sole trader is to bear all the risk while
starting business operation. Sole trader business does not have directors so they do
not required to register in companies House. For the self assessment they must pay
all the taxes due to self employed.
4

Partnership:
The partnership is a legal arrangement among two and more party that share
all profits and loses on equal basis. In general they mange partners responsibility
along with debt and obligations. The tax benefits is enjoyed in partnership
corporation that jointly involve multiple parties who undertake goals of partnership.
Each business partner in partnership has unlimited liability (Mainardes and et.al.,
2021). This type of business combines various skills and experience talents due to
different partners. Example of partnership business are Spotify and Uber, Maruti
Suzuki, Hindustan Petroleum and so on.
Limited liability business:
The limited liability business is a form of legal structure in the organization in
which corporate loss that will not exceed the amount invested during partnership.
The features of limited liability is consider as biggest advantages is invested in public
listed company (Matés-Barco, 2020). The limited liability is known as legal structure
of company which limits extent of economic loss towards the assets invested in
organization Another benefit of LLP is to enhance ability to contribute partners and
let others partner are out. The LLP is a hybrid business structure in which owners
are called as their members who will enjoy advantages as several partners.
Public limited liability business:
The public limited company is an entity which offer limited liability and deliver
shares to general public. Their stocks will be acquired as initial public offerings in
order to trade in stock market. This company is regulated and required publish their
financial health in stock market. The company has at least three directors which
contain limited liability of each shareholder those are accountable for loss and debts.
Cooperative:
The cooperative business is called as autonomous association of people that
voluntary meet economic, cultural, social needs and aspiration towards joint owned
enterprise. This refers as association of persons which controlled by people of
common aspects. In cooperative business profits will be returned back to the
5

cooperatives members. These are more focus upon the services of members rather
than investment. The principle of cooperative is voluntary and open members who
able to use services that are willing to accept accountability of membership by
avoiding discrimination of gender, racial, political and religious (Neves and et.al.,
2020). They are very concern for their community development. Company work for
sustainable development by the help of approved theory of members. The members
contributes equal democratic control on capital of the company. The members are
actively participate in polices and decision making of company to gain more profits
and revenue. They provide education, training to the members as they will contribute
cooperative development.
Section 3: Different business structures and external
factors affecting business
3.1 Identification of different organizational structures and
explaining how does organizational structure affect business
productivity
The functional organizational structure ensures organized workers based
upon their specialized skill and knowledge. The functional organization is an
appropriate structure in which groups of employees are organized and based upon
their similar, role, task and skill (Nurmi, 2018). The functional structure of company is
divided into department are-
Finance-The finance department is accountable for acquiring company funds,
managing financial resources in order to plan expenditure of funds and assets of
company.
Marketing-This department is responsible to develop interest of valuable
brand of company in eyes of customer. This will raise sales and customer base of
company by communicating best ideas in market.
Human resource- They appoint skilled and qualified candidate who operated
business practices in order to increase revenue of company.
IT- This department tackle all technicalities related with technology
advancement and improve quality of company performance by reducing cost of
operations.
6

The divisional organizational structure divide employees into several segment
corresponded with products and services. The divisional organizational structure
combines of Geographical, Performance, Functional, Market base.
Performance base-The divisional structure utilize metric of performance base
in order to build or remove divisions of company. Example- Mc Donald is performing
well in Asian market then so they prefer to open new restaurants (Savenok, 2018).
Where as if they are no performing well in particular region then they can shut down
its operations.
Functional base-This is known as traditional structure of organization that is
adopted by company like Mc Donald. In company human resource department will
perform their specialize task based upon their function same as with other functional
department.
Geographical division- In this company, operates its business on basis of
local, regional and domestic market. Example Disney operates its business execute
its business on local, regional and domestic market as they support several movies
in other countries by dubbed in local language.
Market base- This will define customer allocation that is identified by the
customer business market (Schomaker, 2020). This involves market from existing,
potential, and sub group of customer with specific characteristics of market. This will
help company in developing polices of company and they can easily update
productivity level by recognition preference of particular market segment.
The company organizational structure affect the productivity of company
because it will promote strong communication system among several department.
For example Finance department help marketing department by providing funds to
execute marketing promotional campaign. This will contribute more profits of
company and productivity because each department is working their special
assigned task to contribute more profits of company. The effective organizational
structure facilitates policies and procedures which determine each department
specialization to promote standardization in goods and services. This will boost
efficiency and productivity be performing special task between departments. This
divisional structure is most suitable in the market where lost of competition has been
seen. This will help manager fast shift direction towards business change. IT will
develop more accountable actions of business as company will be able to manage
its division group with interest of market and
7

3.2 How different external factors affect the performance of a
business – PESTLE Analysis
The external factors like political, social, environment, economical, technical
and legal are uncontrollable which impact the performance of business. With help of
PESTLE analysis company can identify factors that affect its business performance.
Political- The political factors determines government influence that affect
economy and profits of certain industry (Touratier-Muller, 2019). Example- The
government exercise new tax duty on specific industry which affect revenue of
company due tax changing policies.
Economical-It include factors like inflation, interest, economic growth rate
and foreign exchange rate. These factors ensure company performance which
directly impact operations of company and impact on long term profits. Example-
Increased inflation rate impact price of products and services of company. This will
influence purchasing power of customer and model of supply chain gets affected
due to decrease economic level.
Social-The social factor determine scrutinize aspect of social environmental
market of company. These factors is refers as cultural trends, population,
preference, demographics demographics and so on (Valentin, 2017). Example- In
the season of holidays most the customer prefer to buy western culture clothes.
These clothes are on high demand which impact on the company profits if they fail to
provide westernize clothes.
Technological- The technology factor determine innovation in technology
which may impact on operation of industry specific and its favorably towards market
aspect. That is why company need to update its knowledge of technology change
which refers automation, research and development, technology awareness of the
market in which company is operating its business. If company successfully adopt
technology changes in its operations then they can easily reduce cost of operation
and improve quality of products and services.
Legal- In business, there are some certain laws which impact business
environment of company. There are some laws which is legally obliged by company
for executing these policies in its business operations. The laws include labor,
8

consumer laws, safety laws and so on. The company will be penalized by the
government if they fail to perform these laws in business operations.
Environment-The environmental factor combines of environment surrounding
factor which impact the performance of company (Yong, 2017). These factor is
mainly associated with the industry in respect of tourism, farming, agriculture and so
on. Business environment combines of factor which are not limited towards climate,
weather, geographical, environmental offset, change in climate and so on. These
are uncontrollable and affect company operations. The company must ensure
recycling and waste management policies in its business practices because it will
promote renewable energy and company can protect the environment.
Conclusion
From the above report, it has been concluded that company is called as legal
enterprise that are engage in the business practices to increase profits of the
company. The small and medium enterprise enhance economic growth of country by
maximum production, employment creation, distributing income and so on. Large
size company target big market share and brings innovative development to the
society. PESTLE analysis is an appropriate framework by which company can
determine its current capabilities and its influencing factor so that they can improve
its performance in competitive environment. The different organizational structure
boost company profitability because it splits specialized department who contribute
toe enhance value of company.
9

Reference List
Alomar, M.A. and De Visscher, C., 2019. E-public procurement: Which factors
determine its acceptance by small-to medium-sized enterprises and large
companies in Belgium?. International Review of Administrative
Sciences, 85(2), pp.356-376.
Betancourt, D., 2019. Análisis pestel para describir el contexto organizacional.
Coppin, A., 2017. Organisation Structure and Design. In The Human Capital
Imperative (pp. 45-49). Palgrave Macmillan, Cham.
Huidrom, G., 2020. Top Management Team Functional Diversity and Organizaitonal
Performance: The Moderating Role of Structural
Interdependence. International Journal of Management, 11(9).
Mainardes, E.W and et.al., 2021. Marketing capabilities for small and medium
enterprises that supply large companies. Journal of Business & Industrial
Marketing.
Matés-Barco, J.M., 2020. Small, Medium and Large Companies in the Supply of
Water in Spain (1840–1940). In Entrepreneurship in Spain (pp. 82-98).
Routledge.
Neves, M.E and et.al., 2020. Capital structure decisions in a period of economic
intervention: Empirical evidence of Portuguese companies with panel
data. International Journal of Accounting & Information Management.
Nurmi, J. and Niemelä, M.S., 2018, November. PESTEL analysis of hacktivism
campaign motivations. In Nordic Conference on Secure IT Systems (pp.
323-335). Springer, Cham.
Savenok, O.V., Kusov, G.V. and Barambonye, S., 2018. Transition problems from
small and medium oil companies into large business. In Современная
Россия: потенциал инновационных решений и стратегические векторы
развития экономики (pp. 185-192).
Schomaker, R.M. and Sitter, A., 2020. Die PESTEL-Analyse–Status quo und
innovative Anpassungen. Der Betriebswirt, 61(1), pp.3-21.
Touratier-Muller, N., Machat, K. and Jaussaud, J., 2019. Impact of French
governmental policies to reduce freight transportation CO2 emissions on
small-and medium-sized companies. Journal of Cleaner Production, 215,
pp.721-729.
Valentin, B.A., 2017. METHODS OF ASSESSMENT AND TRAINING OF A
COMPANY TOWARDS THE ENTERPRISE 4.0. Annals of DAAAM &
Proceedings, 28.
Yong, J. and Park, G., 2017. The implications of team efficacy and team structure on
team creativity. In Academy of Management Proceedings (Vol. 2017, No. 1,
p. 16190). Briarcliff Manor, NY 10510: Academy of Management.
10