Types of Companies and Business Structures - Desklib

This report discusses 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 includes a PESTLE analysis of Starbucks, discussing how political, economic, social, technological, legal and environmental factors affect the company. The report concludes with the importance of preparing for external factors that may influence business operations.

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
3-4
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships 5-6
Section 3: Different businesses structures and internal factors
affecting business 6-8
Conclusion 8
Reference List 10
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Introduction
A business can be defined as a separate legal entity which is developed in the
economy in order to achieving the growth of market along with applying innovative ideas
regarding the products or services. Each and every organization owned and run for the
purpose of creation of income but some of them are operated for the purpose of growth and
development of society by providing goods and services which leads to the development of
economy as well. Several of organizations do not work for the purpose of earning profit, as
they want to do the development of society. It is found that a business organization or a
company affected by internal as well as external factors. According to the analysis of
commercial institution, business is and entity which do the trading of goods and activities.
The purpose of making this report is to study about the different types of companies which
comprises the several entities from sole trader to cooperatives. Along with this, it also involve
the business structure with the help of conducting a PESTEL analysis.
Section 1: Different types of companies and how they work
In an economy, the companies are to be classified in three types i.e. Charitable
Companies, profit earning and financial institutions and this classification has been done on
the basis of their scope and size. Below explained are the several types of companies.
Micro business:
Such type of business organization involve less amount of investment and less than 10
employees. It has been found that the annual turnover of micro businesses are always less
than 2 million. Mostly, this business is run by a single person as it include less involvement
of technology for the operations of business (Lima and et. al., 2021). In order to achieving the
long run growth with this business, the owner is required to reduce the cost and for the
purpose of adding values in the business, they are required to generate employment
opportunities for the local people.
The features of Micro Business include as it is managed and handled by the owner
which is generally known as the manager. All the decisions regarding the business operations
are to be taken by themselves. These businesses have a limited area for performing the
business operations. The use of technology in such businesses is very less which result in the
labor intensity. Example: Local grocery store, plumber and many more.
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Small business:
This business can be defined as a business organization which is large in the size as
compared to the micro business as it include the involvement of more than 10 employees but
less than 50. There annual turnover is nearby 10 million. It can be defined as privately owned
company, sole proprietorship or partnership which include some employees and the annual
turnover is less than a company (Neubaum 2018). Under this business, the products or
services are to be provided on a small scale.
The characteristics of small business can be listed as it include less revenue and profit.
Along with this, small businesses are working with their small teams of employees. They
generate the revenue by serving small area of market due to presence of less employees they
can't work on huge level. Such businesses are found on limited locations as they do not have
much capital to expand their business.
Medium size business:
After gaining some profit, the small business become the medium size business. This
type of business include the more than 50 employees but less than 250 employees which
perform the business operations and bring the annual turnover of 250 million.
The flexibility of favors and innovation can be considered as the main feature of
medium sized business. It plays an important role in creating more competitive and healthier
economy. The use of technology in such businesses is high as compared to the micro and
small business organizations.
Large size business:
This business can be defined as a business organization which perform the business
operations by involving more than 500 employees, having the annual turnover is always more
than 1.5 billion euros and a balance sheet total of more than 2 billion euros (Kirchmer 2017).
Generally, the mining and manufacturing industries comes under this category of business.
Large Business include the diversification of ways for the purpose of generating
revenue. These businesses can contribute in the development of economy by establishing the
multiple revenue stream in order to helping the development of economy. These types of
businesses have huge brand recognition. Along with this, it leads to the creation of various
economic opportunities.
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Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
The business organization is said to be Sole trader business when it is owned and
managed by a single person or individual. That individual is responsible for managing and
completing all the tasks and bearing all the losses as well. All the decisions related to the
operations are taken by the owner as he is the boss.
This business is not considered as a separate lawful entity as it is run and managed by
an individual and all the continuance of business is depend on the personal circumstances of
the individual. The liability of owner of this business is unlimited as the organization is
managed by only owner.
Partnership:
It can be defined as a business based on a contract among two or more people. Under
this business, two or more person comes in a contract for the purpose of doing business and
sharing the profit and losses. The contract among the partners is known as partnership deed.
This business is the perfect combination of skills and capital (Khan 2020). Partnership deed
present the obligations for all the partners.
The existence of agreement which is done among the partners is the important
document which show the features of partnership. All the partners are flexible as they are
considering as self employed. The liabilities of partners are limited to their share. Examples
of partnership include McDonald and Twitter.
Limited liability business:
It is a structure of business under which the owners of business are not personally
liable for the debts of business. These companies are in hybrid entities as it is the
combination of features of corporation with those of sole proprietorship or partnership. These
businesses are generally limited by shares or guarantees (Petrů, N and et. al.,2018).
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The members of these businesses are not in obligations as it is a separate legal entity
having characteristic of limited liability of employees, manager and workforce. In the case of
insolvency or death of any partner, it is easy to continue the business by completing just
documentation regarding the same. The main feature of this business is the limited liabilities
of members.
Public limited liability business:
In United Kingdom, Public liability company comes under the public company. These
companies are registered under the London Stock Exchange and the shares of such
companies can be sold to the public (Herman 2017). The minimum share capital of these
companies are identified as £50000 and they use word PLC after the name of organization.
The features of Public limited liabilities business can be listed as the shares of these
companies are easily transferable as it has a separate legal entity. In order to arranging the
capital for the business operations, the shares are sold. It include high level of transparency in
the performance and decision making.
Cooperative:
It can be defined as an autonomous association of person united voluntarily for the
purpose of achieving the common economic, cultural and social needs and aspiration through
a jointly owned and democratically controlled enterprise.
The characteristic of this business is that the members have common goal and interest
in the voluntary membership of the members pertaining to the unlimited and limited liability
(Frishammar and et. al., 2019). Basically it leads to the development of economy along with
protecting the consumers for the purpose of serving the society.
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
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Organizational structure can be defined as a system which outline or make
boundaries of the process which state that how to perform certain activities for the purpose of
achieving the organizational goals and objectives in an effective and efficient manner. Such
activities may include the rules, roles and responsibilities. The structure of organization is
helps in gathering the information regarding each and every level of organization (Selyutina,
L.G., 2018). Along with this, it also state how the decision making power is distributed
among the people in the organization.
 Functional Structure: Under this structure, the organization is classified into small
groups according to the area of specialization such as marketing, finance, IT and
many more. The functional structure bring the effectiveness in the work as people
with same skills and knowledge work together for a common goal.
 Divisional Structure: Under this organizational structure under which each
function of organization is grouped as a division. These divisions are made on the
basis of either on product or geographies.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
Starbucks is a multinational brand of coffee and beverages, founded by Jerry,
Baldwin, Zev Siegl and Gordon Bowker in 1971, having headquarter in Seattle, Washington,
United States. Later on in 1980s, they sold the company to Howard Schultz. Starbucks is the
largest coffee house having almost 31256 outlets all over the world. Internal and external
factor both effect the company in various forms (Chaffey, D and et. al., 2019). PESTLE
analysis of Starbucks will show how external factors i.e. Political,Economic, Social,
Technological, Legal and Environmental factors effect the company, its operation and its
strategies.
POLITICAL FACTORS INFLUCING STARBUCKS
Starbucks is a multinational brand doing operations in many countries. They have to
follow all the rules and regulations of the concerned country in which operations are going
on. Mainly political factor influence the Starbucks by the following ways: While accessing raw material Rules and Regulations of various countries
They have to arrange raw material from other countries. For sourcing raw material they
have to follow the rules and regulation of the same place. In the same way, if Starbucks want
to expend business and wants to open more outlets in different countries, they should prepare
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themselves to do the work according to the existing political factors. They can easily adjust
with the political factors of any developing country. While serving in UK, Starbucks have to
follow strict employment and tax policy. If they have to work in UK, it is mandatory for them
to follow these policies.
ECONOMIC FACTORS AFFECTING STARBUCKS
These factors shows how the Starbucks is getting effected by the economic condition
of various countries. Before starting any outlet in any country they should know about the
exchange rate or value of money. They should know about the economic condition of people,
whether the people can buy their product or not (Bento and et. al., 2017). Also this ongoing
economic recession and increasing unemployment rate result in the deficiency of money in
the market, which result in the shifting of consumers taste to the cheaper alternatives. But this
global recession can also work as an opportunity for them, by decreasing the prices of their
product they can also beat this decreasing economic condition.
SOCIAL FACTORS IMPORTANT TO STARBUCKS
It was found that mainly the young age group of people between the age of 18 to 29
are preferring coffee. If the company wants to increase their sales, they should take care of
location, it can be nearby any office or nearby to the colleges, so that they can easily make
available coffee to the young age people. Also Starbucks is making products only according
to high class people. They can also change this strategy by decreasing prices for making
relation with lower and middle class people. In UK, customer want a place to sit relax with a
cup of coffee. Starbucks should know about the choice or need of people and they should
provide the same, so that they can make good position in the market.
TECHNOLOGICAL FACTORS ON THE BUSINESS OF STARBUCKS
Now a days technology plays an important role that's why Starbucks is taking help of
technology for their growth. They introduced an app by doing partnership with apple, though
which they are providing discount coupon to the customer which result in increase in sales of
their product (Ben Youssef and et. al., 2018). Also they found that young generation people
are attracting towards the technology. So they are also providing free internet connection in
their cafe so that the customers come and use the technology while enjoying their coffee.
Conclusion
from the above report, it is concluded that there are various types of business
organization which are classified on the basis of their scope or size. Various types of
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companies are also analyzed in this report along with there features. PESTEL is a marketing
tool which is used for the purpose of knowing about the external factors of an organization
which are influencing the business operations. It is very helpful for business organizations as
it give a brief analysis for the influencing factors. Organization can prepare themselves for
the purpose of facing any challenge in the future.
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Reference List
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Khan, O., 2020. Towards understanding customer loyalty: An empirical study on emotional
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Kirchmer, M., 2017. High performance through business process management. West
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Lima and et.al., 2021. Establishing the relationship between asset management and business
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Neubaum, D.O., 2018. Family business research: Roads travelled and the search for unworn
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Petrů, N and et.al.,2018. Comparison of marketing vitality of family and non-family
companies doing business in Czech Republic. Economics & Sociology, 11(2),
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