Types of Companies and Business Structures - Desklib

This report discusses the different types of companies, business structures, and external factors affecting business. It covers micro, small, medium, and large businesses, as well as sole traders, partnerships, cooperatives, and limited liability businesses. The report also includes a PESTLE analysis of Marks and Spencer, a British multinational retailer. Course code: BMP3002, Course name: Business in Practice, Subject: BSc (Hons) Business Management with Foundation

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

Contents
Introduction 2
Section 1: Different types of companies and how they work
P
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships p
Section 3: Different businesses structures and internal factors
affecting business p
Conclusion p
Reference List p
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Introduction
Business is defined as the group of activities of trading of products and services for
the purpose of earning profit. It is well known that the activities of trading are done with the
objective of earning profit but it has been found that there are various businesses which do
not perform their operations for earning profit. Such type of business organisations focus only
on the development of society by providing goods and services to them. Basically business
involve the activities of exchange, purchase, production and sells of goods and services.
Along with this, business is a continuous process. So any single transaction cannot be
consider as the business. One more important factor of business is risk. The owner of
business have to take the risk in order to gaining the profit. Below mentioned report deals
with the different types of companies, different companies, various types of business
structure and the factors which effect the business organisation.
Section 1: Different types of companies and how they work
Classification of companies haws been done on several basis which include size,
scope, purpose and many more. Below mentioned are the various types of companies which
are classifieds on the basis of their size:
Micro business:
Such type of business organisations complete the business activities on a very small
scale. Several of specialist has measured the scale of this business on the basis of their
number of employees and the total amount of capital invested in the organisation. It has been
analysed that this business involve less than 10 employees and the annual turnover of these
organisations have been calculated as less than 2 million. Micro business is generally
managed and owned by single individual. This business help the owner in earning a small
amount of profit so that they can do survival easily.
Micro businesses are managed by the owner or manager of the organisation. The area
of performing business operation is very small. These types of businesses do not involve
technology in their operations. Along with this, there is no any involvement of employees are
found. It include less amount of capital which can be arranged by any individual.
Small business:
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These businesses perform business operations on a large scale as compared to the micro
business as it involve the involvement of 10 to 50 employees with the annual turnover of less
than 50 million. The scope of this business is high as compare to the micro business. There
are various types of businesses which comes under small business such as sole proprietorship,
partnership and privately owned company
The main characteristic of these businesses is that it include several small teams of
employees which are made for the purpose of achieving organisational goals and objectives
in an effective and efficient manner. It also serve a small area of operation as it has a limited
scope. These businesses are not depend on the technology. Majorly they focus on the labour
for there work done not on the technology.
Medium size business:
Constant growth in the small business results in the conversion of small business into
a medium sized business. It involve more than 50 but less than 250 employees in order to
making the annual turnover of less than 250 million.
Innovation plays an important role in these businesses. Mainly the organisations under
this category earn profit only on the basis of innovation which also leads to the creativity and
development of economy. In order to do innovation in businesses, it is necessary to introduce
the technology.
Large size business:
Such business include the involvement of more than 500 employees while performing
business operations. It has been found that the annual turnover of these businesses always
more than 1.5 billion euros. The grand total of their balance sheet has been found as more
than 2 billion euros. Generally, these businesses comes under mining and manufacturing
industries.
These type of businesses are run only with the purpose of creation of revenue. Along
with this, it also provide the employment opportunity to the general public which leads to the
development of society as well. These businesses have a huge brand image which result in
the creation of positive reputation of organisation in the market.
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Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
Sole Trade Business organisation is the business which is owned and managed by an
individual. All the tasks related to the organisation are performed by the business owner. That
individual is only responsible for gaining the profits and bearing all losses. The business
owner is the only task performer in the organisation.
As the business is managed by a single person, hence it is not be considered as the
separate legal entity and the liability of owner is unlimited as it depend on the personal
circumstances of the individual. At the time of winding the business, the owner have to pay
all the liabilities by selling their personal assets.
Partnership:
It can be defined as an agreement which is made between two or more parties for the purpose
of managing and operating the business and sharing the profits. In simple words, it can be
defined as a type of business under which a formal agreement has been made between two or
more people in order to sharing the profit and losses in a specific decided ratio.
The main features of partnership include the agreement among partners, involvement
of two or more people, sharing of profit in a specific decided ratio and many more. The
owners of these businesses are also considered as the agent of business. It is necessary for
partners to have some profit gaining motive.
Limited liability business:
Under this business structure, the owner of organisations are not personally liable to pay for
the debt of business. Such type of companies involve the characteristic of both corporation as
well as sole proprietorship or partnership.
The main feature of these types of businesses is that the owners are not restricted to
pay the liability personally as it gives the features of limited liability of members. These types
of business organisations do not get disturb in the case of insolvency or death of any member.
Remaining members in the organisation can continue the work after fulfilling some
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documentation. Limited liability of members of business organisation implies that in the case
of insolvency of organisation, every member have to pay liabilities as per their limited share
in the organisation.
Public limited liability business:
It refers to the large business which are registered under London Stock Exchange and there
shares are to be sold to the general public. It is necessary to use the word PLC after writing
the name of organisation. These type of business organisation arrange the capital by selling
the shares to the general public. It's minimum share capital has been analysed as £50000.
The characteristics of these companies can be highlight that the shares of Public
Limited Liability can be easily transferable because of presence of separate legal entity of the
organisation. Along with this, the presence of transparency in the performance and decision
making process of organisation can be consider as the another important feature of Public
Limited Company.
Cooperative:
It can be defined as a private business organisation managed and owned by the people who
use it's product, supplies or services. This type of companies are very beneficial as it bring
the people together in a democratic and equal manner.
The members of these companies have common goal and interest having unlimited
and limited liability. The main purpose of cooperative is to serve the society which result in
the development of economy and protecting the customers.
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
Creation of boundaries and outlines so that all the activities are performed in an effective
and efficient manner in order to achieve the organisational goals and objectives. It helps the
employees to know about the method to perform the tasks. Division of organisation is done
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for the purpose of doing division of roles and responsibilities of employees. Division of
organisation is necessary to bring the effectiveness in the organisation. Functional Structure: Under this structure, the organisation divide the complete task
on the basis of various factors which include the specialization, education
qualification, experience and many more which made various departments such as IT
department, marketing department, HR department etc. The people with the similar
experience and skills work together for the common goals to acheive.
 Divisional Structure: Several divisions are made according to the functions of
business. The divisions are made on the basis of geographies and types of product.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
PESTEL analysis is a framework which is used by organisations for the purpose of
doing evaluation of external environment of a business. If any business management want to
make effective strategy at their work place, it is essential to analyse all the political,
economic, social, technological, legal and environmental factors which are going to effect the
operations.
Marks and Spencer Group Plc is a British Multinational retailer which was founded
by Michael Marks and Thomas Spencer in 1884. it's headquarter is in London, England,
United Kingdom and performing business operations globally. PESTEL analysis of Marks
and Spencer is given below: Political Factors: The UK government has introduces free trade policy under which
the companies can perform their functions globally freely. Marks and Spencer is
working in UK, along with this they are also working abroad. This policy allow the
organisation to import the foreign products and make available that products at cheap
prices in there stores. On the other hand, Brexit has decided to leave the European
Union and the changes which comes because of Brexit are not clear. Economic Factor: Due to presence of high competition in the market, price become
the most important factor of competition in the retail market and customer get attract
towards the low prices. Along with this, availability of budget stores in United
Kingdom work as threat to the target market of Marks and Spencer. Sociocultural Factors: Marks and Spencer is a brand which is in existence from
1800s. Hence, it has been found that they are losing the group of customers from
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youth generation as the people of today's generation are not aware about it the brand
and they are finding other brands more attractive. On the other hand, they started
providing ready meals which result in the rise in the consumption of ready meals all
over the United Kingdom. Technological Factor: Introduction of technology or advancement of technology
result in increase in the sales and brand image of organisation. They had introduced
self checkout technique through which they can save the time of customer and
provide them best service. Along with this, they had also introduced the option of
online shopping under which the customers can purchase the products online and get
deliver their order at doorstep. Legal Factors: It has been found that the Marks and Spencer was involved in several
disputes which are related to the legal department for instance dispute with Frascati
Landlord which makes tough for the organisation to maintain their brand image.
Changes occurred because of Brexit is the another legal factor which affect the
organisation a lot.
 Environmental Factors: Marks and Spencer is a luxury brand and they has
developed the concept of sustainable retail industry on several occasions. These
factors are related to the multitude of environmental factors which deals with the
food, clothing and home products.
Conclusion
It has been concluded from the above report that the business organisations plays an
important role in the economy of a country. They are divided in several types which have
been discussed in the above report. Furthermore, the classification of companies are done on
the basis of the nature and number of owners of business organisations. PESTLE is a tool
which is used by organisation to analyse the external environmental factors of organisation.
Marks and Spencer is a huge brand of United Kingdom which deal with food, clothing and
home products. This report is also highlighting the political, economic, social, technological,
legal and environmental factors which are influencing the Marks and Spencer.
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