Different Types of Companies and Business Structures

This report discusses different types of companies and business structures, including micro, small, medium, and large businesses, sole traders, partnerships, and more. It also explores how organizational structure affects business productivity and how external factors like politics, economics, and technology impact business performance. The report includes a PESTLE analysis to identify these external factors and their impact on business operations.

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

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
As we all know that business in practice plays an important role as it is an innovative
program which is especially designed to engage workers. It allows people to gain industry
skills from business leaders through active learning. The present report aims to examine the
different forms of firms and business environment in an effective manner. The study will
cover different businesses which is classified with the help of legal entities as well as size.
Furthermore, the study is going to discuss about the various functional, business structure and
departments. In addition, it will provide information on different external factors which may
directly impact the performance and operations of business using tool named as PESTLE
analysis. At the end, report describes how these factors may influence the business functions.
Section 1: Different types of companies and how they work
Micro business:
Talking about micro business, basically it is a small business that employs not more
than 10 people. The turnover of micro business is also quite different from small and large
business that is 2 million. Nowadays, micro business are developed in different sectors which
includes social support, retail sector, construction and health care settings (Aagaard, Saari
and Mäkinen, 2021). People who want to start micro business can invest small amount of
capital advanced from financial institution like banks and run business smoothly without any
issues. Examples of micro business includes freelancers, home based businesses and also solo
suppliers. This business type are taxed on the basis of different ownership such as
partnership, LLC and sole owner. The major benefit of micro business is that it helps owner
make more money which opens door for various opportunities and achieve profits which
helps in building self-confidence. It means that micro business is all about single owner who
works as sole trader or proprietorship. The major drawback of such type of business is that
they have limited reach and also due to lack of guidance they sometime face financial risk
and uncertainty.
Small business:
speaking about this small business, it worked with fewer employees and have less
annual revenue than other business type (Suryani, Fauzi and Nurhadi, 2021). It can be
partnership firm, sole owner or privately owned corporation. Small businesses are
contributing highly to economy and enhance the growth level of country. If anyone wants to
run small business smoothly they need to invest the required amount of machinery, plants,
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money. The annual turnover of small business is around 5 crores to 75 crore. The major
benefit of small business is that it helps businesses achieve customer satisfaction. Nowadays,
small businesses are earning more profits because of their competitive features. They use
current resources, the latest trends and technology, advanced innovation and tools to work
with flexibility in their ever-changing era. The major drawback of small business is that
increasing income instability which can create issues like financial risk for small business.
Medium size business:
It is one of the fastest growing business in the world, as people believe in expanding
their business using medium-sized type. Nowadays, medium size business provides job
opportunities for large number of people in various types of sectors and industries. There are
almost 100 to 500 employees are working together to build business and perform different
task in different departments. They work with each other to achieve goals and objectives set
by firm. This type of business are majorly focused on managing their employees in an
effective manner, manage their income as well. This type of business are contributing a great
share to the development of country and economy both.
Large size business:
This type of business is established where more than 500 employees are working
together to achieve their business goals and gain growth in the particular industry (Aagaard,
Saari and Mäkinen, 2021). Such type of businesses is working effectively and have annual
turnover of 7 million. If any people want to set up the large size business then they need to
invest huge amount of capital and plants, machinery so that they can operate business easily.
Nowadays, large size business is offering great opportunities in terms of employment. Large
size business like amazon is working hard to satisfy the needs and requirements of customers.
This type of business are spreaded across the world in different locations such as japan, UK,
US.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
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Sole trader business has been considered as that business which is being handled by
only one person. Thus, this can be said that this business has only single owner who is
responsible for all the losses and profit in the business. At the time of profit all the profit has
been earned by only a single person and at the time of loss ad well whole loss is bear by the
single person (Cribb, Miller and Pope, 2019). Thus, this type of business is mainly suitable
for starting small shops such as- general stores and grocery shop.
Partnership:
Partnership has been referred to that type of business in which two or more than two
person comes together in order to start the business. This form of business includes different
partners in the business that equally shares the losses and profit. Before starting the
businesses, partners decides the profit and loss sharing ratio and on the basis of that the profit
and loss has been shared among the partners. In case, the ratio has not been decided
previously then, loss and ratio has been shared equally among the partners (Cott, 2021). Thus,
this form of business includes two or more than two owners.
Limited liability business:
The limited liability business has been determined as the business in which the
owners are personally not liable for the organization’s debts and liabilities. Limited liabilities
companies are the companies that involve the features of sole trader and partnership business
as well (Rye, 2020). Thus, this business requires large number of investment and board of
directors is being appointed in the business which takes the major decision in relation of the
business activities. Thus, limited liability businesses are the private owned business that
performs all the activities that must be performed by the private businesses.
Public limited liability business:
Public limited liability business has been determined as the business that approach the
number of shareholders. The shareholders are invited from the public. These shareholders are
the actual owners of the company that supports the growth of the business. These type of
businesses often approaches the debentures in order to take the debt (Pagura, 2021). These
are the large organizations that runs on the basis of company act. All the rules and regulations
that are mentioned in the act has been followed by these organizations.
Cooperative:
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Cooperative business organizations have been determined as those business
organizations who are the social organizations. These organizations work for the betterment
of the people instead of earning profit (Imaz and Eizagirre, 2020). Thus, the major motive of
these organizations is to serve the society rather than focusing over earning profit.
Cooperative organizations can be handled by one owner or it can be handled by the number
of owners. Thus, cooperative organization is the group of the people that voluntary join
together in terms of solving an economic or social crisis.
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
Functional organizational structure
Talking about this structure, it is the most essential structure in any kind of
organisation which can be used by top management to operate functions. By using this
structure into company work culture, the leaders can maintain performance of employees as
well as defined their roles and responsibilities. By using this structure the management can
maintain hierarchy to achieve goals (Funminiyi, 2018). With the help of this structure the
company can easily achieve high operational goals. Not only this, with the support of
organizational structure the company can easily develop knowledge level of employees.
Speaking about its importance, by using this structure company can make division in such a
manner that it would help them in increasing efficiency of employees. In addition, it would
further help them in achieving competencies which are required in a firm.
Divisional organisation structure
This is one of the most utilized structure in the company which develops groups of
each organizational operations. Not only this, it helps to improve the business functions into
the department of the firm. With the help of this structure the company can easily enhance
capabilities to different sections (Nwachukwu and Chladkova, 2019). As we all know that
there are various types of divisions which needs to be taken into consideration such as sales,
marketing, IT, production and finance. By using this structure these departments is able to
perform in a better way. These departments consist of required resources that help in assisting
in understanding how to perform better work efficiently so that company can achieve goals.
In addition to this, the company who follows this structure is allowed to make important
decisions. This can also help them to improve their skills and knowledge and also
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demonstrate talent in the firm. It has been noted that this structure is well suitable when the
firm has diverse customers as well as locations.
As we all know that with the help of organization structure, the firm can easily flow
important data and information as it helps them to provide correct direction to departments.
By using this structure, company can make accurate decisions that can lead the firm to gain
high profitability. With the help of this structure, the company can easily achieve right path
and achieve high income.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
In today's business environment, it is very important for company to find out the
external factors which can affect the business performance (Matovic, 2020). So, in order to
identify such factors they use an effective tool named as pestle analysis. With the help of
pestle analysis, the company can easily know about factors which can directly influence the
operations, activities and functions of business.
Political- this is one of the most important factor which needs to be taken into
consideration. Company needs to focus on government made rules and regulations before
implementing any strategy (Pan, Chen and Zhan, 2019). They must focus on policies and
strategies which is designed by government related to interest rates, trade policies and tariffs.
So that they can easily work without any issues and perform in a better way to achieve their
goals.
Economic- this factor can influence the decision-making and working functions of
business and impact the performance as well. It includes inflation rate which can impact the
buying decision of customers which can lead to lack of productivity in the firm.
Social- as we all know that customer is mostly influence by their relatives and market
trends. So, company should focus on the latest trends and fashion that will help them to gain
the attention of a large number of customers towards services and products. The company
who provides trendy products to customers then they can easily achieve profitability and
increase their reputation and market share.
Technological- in this ever-changing era, where everything is going online, people
prefer to buy things online and make payment on their finger tips via mobile devices using
app (Matovic, 2020). So, company needs to adapt advanced technology to attract more
customers which helps them to gain more customer base. The firm needs to develop
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innovative products keeping in mind about trends then only they can gain and build good
relationship with clients.
Legal- as we all know that company needs to follow legal laws before proceeding for
any changes and running business smoothly. There are laws like consumer laws, labor laws
which needs to be taken into consideration while implementing any business strategy then
only firm can smoothly run their business operations effectively.
Environmental- nowadays, people are becoming more environmental conscious as
they are more concern about environment, company needs to concentrate on developing some
strategies and initiatives which can help them gain customer satisfaction (Matovic, 2020).
Company much develop eco-friendly products or any kind of items which do not impact the
external environment. Before proceeding for any product development business must follow
ethical rules and regulations.
CONCLUSION
To conclude, there are many types of business formats which have discussed in this
report such as small, medium, micro and large. In addition, the report has also summarized
about different structures that are currently adopted by company. Plus, many types of
business formats are discussed here such as sole trade, public limited liability and partnership
firms. Lastly, pestle has been discussed, With the help of pestle analysis company can know
about factors which can impact business performance.
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Reference List
Aagaard, A., Saari, U. A. and Mäkinen, S. J., 2021. Mapping the types of business
experimentation in creating sustainable value: A case study of cleantech start-
ups. Journal of Cleaner Production. 279. p.123182.
Cott, P., 2021. Legal matters: What is the best business structure for you?. Electrical
Connection, pp.36-37.
Cribb, J., Miller, H. and Pope, T., 2019. Who are business owners and what are they
doing? (No. R158). IFS Report.
Funminiyi, A. K., 2018. Impact of organisational structure on employee engagement:
Evidence from North Central Nigeria. International Journal of Advanced
Engineering, Management and Science. 4(8). p.264311.
Imaz, O. and Eizagirre, A., 2020. Responsible innovation for sustainable development goals
in business: An agenda for cooperative firms. Sustainability. 12(17). p.6948.
Matovic, I. M., 2020. PESTEL analysis of external environment as a success factor of startup
business. ConScienS, p.96.
Nwachukwu, C. and Chladkova, H., 2019. FIRM RESOURCES, STRATEGIC ANALYSIS
CAPABILITY AND STRATEGIC PERFORMANCE: ORGANISATIONAL
STRUCTURE AS MODERATOR. International Journal for Quality
Research. 13(1).
Pagura, I., 2021. Law report: The company: An alternative business structure. Journal of the
Australian Traditional-Medicine Society. 27(3). pp.156-157.
Pan, W., Chen, L. and Zhan, W., 2019. PESTEL analysis of construction productivity
enhancement strategies: A case study of three economies. Journal of Management
in Engineering. 35(1). p.05018013.
Rye, J., 2020. What is the difference between a sole trader and a limited company?. In Setting
Up and Running a Therapy Business (pp. 132-134). Routledge.
Suryani, T., Fauzi, A. A. and Nurhadi, M., 2021. SOME-Q: A model development and
testing for assessing the consumers’ perception of social media quality of small
medium-sized enterprises (SMEs). Journal of Relationship Marketing. 20(1). pp.62-
90.
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