Types of Companies and Business Structures: A Study

This report examines the different types of companies and their working in dynamic business environments. It also assesses different business structures and factors that affect business performance.

In Practice

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
SECTION 1.....................................................................................................................................1
Distinct types of companies and how they work.........................................................................1
SECTION 2.....................................................................................................................................3
Different companies.....................................................................................................................3
SECTION 3.....................................................................................................................................5
Different business structures as well as external factors impacting business..............................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Organisation is delineated to collection of human resources that are involved in working to
pursue defined goals or objectives. It is seen as a social system that entails all formal
relationships among people (Karpenko and Et. Al., 2019). It includes division of work between
employees along with alignment of tasks for ultimate corporate goals. The purpose of report is to
examine variants of companies and their working in dynamic business environment.
The report highlights distinct kinds of companies and ways to work. It also assesses
different business structures and factors that affect business performance.
SECTION 1
Distinct types of companies and how they work
Micro Business
Definition: A business which carry out activities with less than 5 employees and earns
for day to day living. They attain target with limited finances as well as investment.
Characteristics: Key characteristics that defines micro business are below:
 Annual turnover of 632,000 £ or less.
 Balance sheet showing 316,000 £ or less.
 Micro businesses serve individual communities, for example, convenience shop within
rural township (Zellweger, 2017).
Example: Mantons Cards is an example of micro business that offers best selection of gifts
addition to greetings cards. It works with local suppliers as well as artists for providing locally
themed merchandise.
Small Business
Definition: Business that have fewer employees and capital to carry out operations are
defined to small businesses. They are heart of a country as they aid in reducing unemployment
level and support an economy at local together with national scale.
Characteristics: Features of small business are below:
 Annual turnover of £ 6.5 million or less.
 Small business is established, managed and controlled by an individual.
 They have limited area of operation.
 Small business uses local addition to immediately available resources.
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Example: A type of small business is CafePod Coffee Co. which manages working with
spirit to make strong along with exciting coffee for people that drinks coffee and are
adventurous. It run with individual minded ambition to never stop innovating and push
boundaries for becoming leading coffee brand.
Medium Sized Business
Definition: Businesses with up to 250 human resources and maintains revenues, etc
below certain threshold is termed to medium sized business. These are well established together
with possess an observable track record that facilitates decisions about financing by investors or
lenders.
Characteristics: Characteristics for medium size business are mentioned below:
 Turnover of medium sized business is approximate to £25.9 million and employee size
of less than 250 employees (Caldera, Desha and Dawes, 2018).
 They make necessary changes to services and products that suits need of clients.
 Medium sized businesses are open to change, stays calm in high pressure and adapt
quickly to dynamic conditions of market.
Examples: Verdant Leisure is medium sized business that employs around 245
employees as well as is passionate to build an influential team that are ready to contribute skills
in brand along with deliver excellent customer services.
Large Sized Business:
Definition: A business that have motive of making huge profit and employ more than
250 people are named as large sized business. They have several office locations at domestic and
international level.
Characteristics: Attributes that define large sized business are mentioned below:
 The combined turnover is approximate to £ 1.7 trillion.
 Main purpose is to generate revenues and meet corporate social responsibilities.
 Large sized company are required to devise as well file full accounts.
Example: Unilever is large sized company that have international presence and three
main divisions that are Home Care, Foods and Refreshments along with Beauty & Personal Care.
It has around 155000 employees at different locations across the globe.
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SECTION 2
Different companies
Sole trader business:
Definition: A business management wherein one person is responsible to run and own
whole venture is defined to sole trader business. It is relatively easy as well as inexpensive to
establish (Newton, 2019).
Characteristics: Features of sole trader business are below:
 Sole trader business is established and managed by a single person who prepares prints
about venture and makes arrangement for production factors.
 Business liability of sole trader is unlimited.
 Important decisions about business are taken by owner and keep all secrets to self.
Examples: CafePod Coffee Co. is sole trader business that was established in the year
2011 for conceiving quality of coffee for adventurous drinkers of the product to enjoy at house.
The business has direct relationship among efforts and rewards.
Partnership:
Definition: It refers to an arrangement in which parties that are known as business
partners generally agrees to cooperate for advancing mutual interests. Purpose of partnership is
to earn huge profits as well as share it in equal proportions or as per agreed partnership deed.
Characteristics: Major characteristics of partnership are below:
 Under the act, it is not compulsory to register partnership business. The only document or
agreement between partners that is required in partnership is partnership deed for bring
the business into existence.
 Minimum number of partners that are required for forming partnership business is two
(Wang, Indulska and Sadiq, 2018).
 Partnership business is carried on by all as well as any of partner that acts for all.
Example: Proviz Sports is a type of partnership business that is established by Anthony
together with Rupert Langly Smith in order to design and produce high visibility clothing for
runners, cyclists together with outdoor enthusiasts.
Limited Liability Business:
Definition: A business structure in which owners are not personally responsible or liable
for liabilities or debts is named to limited liability business. It benefits from flexibility together
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with flow through taxation of sole traders and partnerships, while maintaining limited liability
corporate status.
Characteristics: Certain characteristics of limited liability business are mentioned
below:
 Limited liability organisations offer protection addition to flexibility which makes
structure of company more appealing to owners.
 It is governed by state legislations that could change the ways business behaves in
different scenarios in drastic manner.
 There is simplicity for documentation addition to carrying out practices of limited
liability business (Prohl and Kleinaltenkamp, 2020).
Examples: Verdant Leisure is categorised as limited liability business as it requires to
keep less record keeping and have possibilities to continue operations for offering holiday home
ownership and self-catering holidays. It offers variants of holiday homes to customers.
Public limited liability Business:
Definition: An organisation that is designated to offer shares of stocks to general public
refers to public limited liability business. They select to raise capital through offering shares to
general public.
Characteristics: Mentioned underneath are characteristics of public limited liability
business:
 Corporates which offer shares of stock in market are public limited liability business.
Buyers of shares possess limited liability; means they cannot be responsible for business
losses when they pay excess amount for shares.
 It grants ability for raising capital through issuing public shares.
 Though becoming public limited liability, business is provider huge access to capital as
well as shareholders are offered liquidity.
Example: Unilever is said to public limited liability as it raises more capital through
offering shares to public, enhance potential for raising future capital addition to make
acquisitions. The entity has no restrictions on issuing securities to public.
Cooperative:
Definition: People centred businesses that are owned, controlled together with run for
realising common social, cultural and economic aspirations are corporative business (Gray,
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2019). They bring people together equally and democratically. They also permit individuals to
take control of economic future as they are not managed and owned by shareholders.
Characteristics: Key characteristics of cooperative are demonstrated underneath:
 Finance of cooperative business are contributed by members via buying shares.
 These are democratic in action and operate on local scale.
 It uses immense capital power for carrying working of society in interest of members as
well as community.
Example: Heart of England is example of cooperative business that sells ample consumer
products along with services within dynamic environment to solve issues in society. It operates
with goal of fulfilling needs of society.
SECTION 3
Different business structures as well as external factors impacting business
Organisational structure
A system outlining direction of certain activities to attain organisational goals is termed
to organisational structure (Schiuma and Lerro, 2017). In Unilever, organisation structure
determines ways in which information flows among different levels or positions. Some
organisational organisation and impacts of business profitability are explained as:
Functional structure: A type of structure that is formed through grouping roles and jobs
having similar nature functions is termed to functional structure. When managers of Unilever use
functional structure, they organise functions into separate departments, namely, marketing,
finance, information technology, etc. Within the structure, decision making is slow and unclear
communication results to affecting productivity of entity.
Divisional structure: In this, human resources are grouped together on the basis of
products or services that are provided by them, despite of the working they perform. In case with
Unilever, use of divisional structure can permit greater operational efficiency because divisions
are created that works as independent unit, takes timely and effective decisions, create wider
career development chances and makes divisional managers experts in areas. However, it
emphasis on short term performance and duplication of activities happens among divisions that
affect productivity of company.
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From discussed organisational structures, Unilever opts divisional structure in which
divisional heads assist employees to quickly respond changes within market environment, retain
functional specialisation in each division, promote authority delegation, remove requirement of
direct supervisions and separates strategies from operating control.
PESTLE Analysis
Analysis of macro environment or external factor that affect performances of company is
possible through PESTLE Analysis. It is a framework for scanning and monitoring external
factors that affects performances and strategies of the entity (Munro, 2017). Unilever is leading
multinational venture which operates in UK. There are times when it faces huge external
situations that directly impacts of its performances. The ways in which external factors affects
performances of Unilever are as explained:
Political: Within UK, decision making for execution of trade restrictions along with
governance are in hands of political leaders. For instance, Brexit is decision of political leaders
of United Kingdom wherein organisations that are based on UK including Unilever are required
to close down stores in European Unions which impacted adversely on business performance for
generating revenues.
Economic: UK has highly developed economy. But, there are some economic factors
such as consumer purchasing powers that impacts performance of company, including Unilever
at the time when demand of products is low and consumer do not buy them. It impacts
performance of cash flow negatively. Moreover, whims of target segments and inflation are
factors affecting business performances greatly.
Social: Social cultural trends in UK impacts performance of entity at wider manner. For
example, population of UK are changing preferences towards innovative addition to
distinguished products (Täuscher and Abdelkafi, 2017). However, offering of Unilever emphasis
on personal care and wellbeing so that society feel good. But, changing preferences of population
affects performance of company to made rapid changes in strategies and manage operations.
Technological: UK is a country in which technological aspects are changing rapidly in
such manner that new products meet desires of target segments. Unilever is more dependent on
available technologies for the purpose of supporting business performance for consumer goods.
However, rising research and development investment reduces profitability of entity that affects
its position and ultimately performance in the industry.
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Legal: Within UK, there are changes in legislations such as Health and Safety at
Workplace Act, Equality Act, Minimum Wages Act and hence forth which affects performance
of organisations, like Unilever. It is essential for Unilever to satisfy regulations for minimising
barriers to business of consumer goods. When government makes sudden changes in provisions
of legislations then it affects performance of Unilever as managers have to change strategies to
match with changes.
Environmental: Within UK, ecological trends influence performance of company such
as Unilever. Rising interest in organisational environmentalism fosters performance of Unilever
in order to improve its environmental initiatives with the hope of attracting consumer associated
to environment (Shanafelt, Goh and Sinsky, 2017). At the situation, when Unilever is unable to
protect environment of country and its action hamper ecological aspects then it impacts
performances negatively.
CONCLUSION
From the presented information, it is concluded that practices undertaken by various
businesses such as small business, micro businesses, medium sized and large sized business are
different from each other. Organisational structure promotes faster decision making, eliminates
duplication of practices, better communication and minimises employee conflicts.
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REFERENCES
Books and Journals:
Caldera, H. T. S., Desha, C. and Dawes, L., 2018. Exploring the characteristics of sustainable
business practice in small and medium-sized enterprises: Experiences from the
Australian manufacturing industry. Journal of Cleaner Production, 177, pp.338-349.
Gray, D.E., 2019. Doing research in the business world. Sage.
Karpenko, L. and Et. Al., 2019. Formation of the system of fair business practice of the company
under conditions of corporate responsibility. Academy of Strategic Management
Journal, 18(2), pp.1-8.
Munro, E., 2017. Building soft skills in the creative economy: Creative intermediaries, business
support and the ‘soft skills gap”. Poetics, 64, pp.14-25.
Newton, A., 2019. The business of human rights: Best practice and the UN Guiding Principles.
Routledge.
Prohl, K. and Kleinaltenkamp, M., 2020. Managing value in use in business markets. Industrial
Marketing Management, 91, pp.563-580.
Schiuma, G. and Lerro, A., 2017. The business model prism: Managing and innovating business
models of arts and cultural organisations. Journal of Open Innovation: Technology,
Market, and Complexity, 3(3), p.13.
Shanafelt, T., Goh, J. and Sinsky, C., 2017. The business case for investing in physician well-
being. JAMA internal medicine, 177(12), pp.1826-1832.
Täuscher, K. and Abdelkafi, N., 2017. Visual tools for business model innovation:
Recommendations from a cognitive perspective. Creativity and Innovation
Management, 26(2), pp.160-174.
Wang, W., Indulska, M. and Sadiq, S., 2018. Guidelines for business rule modeling decisions.
Journal of Computer Information Systems, 58(4), pp.363-373.
Zellweger, T., 2017. Managing the family business: Theory and practice. Edward Elgar
Publishing.
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