Types of Companies and Organizational Structures: Business in Practice

This report analyzes different types of companies, including micro, small, medium, and large businesses, and their characteristics. It also explains different organizational structures and how they affect business productivity. Additionally, it examines external factors that affect business performance through a PESTLE analysis. Course code BMP3002 for BSc (Hons) Business Management with Foundation.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
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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
The aim of this report to examine various types of companies and how it is operating
in the marketplace. It also analyzes different types on basis of ownership like a sole
trader, partnerships, and limited liabilities. Moreover, it explains the organizational
structure and also analyzes factors that create an impact on the performance of the
business.
Section 1: Different types of companies and how they work
Micro business:
It is a business which consists of a small number of employees as it ranges from 1 to
5. This business is operating a small level and also requires a small amount of
capital not more than $50000 amount for purpose of operating of the company
(Alnidawi, Yousif and Hmdan, 2021).
Characteristics:
 Flexibility is one of the important components which is always present in the
Micro size business which makes it easier for them to implement changes. It
also makes it easier for them to make decisions.
 The business owner has proper knowledge of the field as whether they are
the contactor or freelancers, they have specific in their field and also, they are
able to maximize the marketing share.
 It does not require large investment and cost which allow a person to easily
establish the business.
Example: Freelancers, contracts are the example related to the Micro business.
Some other examples in this category includes Freelance designer in graphics,
home based businesses, Solo consultant, Amazon Supplier, Etsy Owners (Al-tamy,
2021).
Small business:
Small business are the business which is involved in production of goods and
service at the small scale. It is one of industry which is contributing for economic
development in a different manner. Investment required in this small business is for
purpose of purchasing of plants, machinery, tools and equipment and also for
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purpose of others assets. It is dependent on business whether they need to lease or
hire the assets.
Characteristics:
 Single owner owned this type of business and also management is also under
control of the owner (Baswani, Townsend and Luse, 2021).
 It is a business based on more flexibility and also require more changes.
 It consist limited area for purpose of operation and also it is operated at a
small scale.
 Dependent of this business is over the manpower instead of the machines
and also it require small investment.
Examples: Café Pod is a business which is operated at a small level and also it offer
different food and beverages to its customers.
Medium size business:
It is a business which is operated by maximum of 250 employees in their
organization. It is a business which is family owned business which is large in
comparison to the small size business. It is a business that has separate identity
from their owners (Chen, 2022).
Characteristics
 It is one of the well established business which is based on proper records and also it
provides proper guidance to a person. It allow them to made financial decision.
 These are able to get more growth as it is dealing in the mature marketplace. It
consists higher level of potential in the business for getting growth.
 It require more finance in comparison to small and micro business. For fulfilling its
requirement for finance, business is using short-term and long term finance.
Examples: one of example of medium size business is connect catering service which is a
family owned business and existed in the UK. It is a business which is focused on getting the
success in the marketplace.
Large size business:
It is a business which is operated at the large scape as it produce goods and service
at the large level. It is a business which can take advantage of economies of scale
as it produces at large level and also it is getting opportunities for attaining higher
revenue.
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Characteristics:
 It require more employees therefore, it is a type of business which is hiring
employees at the large scale.
 The Dependence of operation of this type of business is on the technology
which is important for the efficiency and improvement (Faradilah, 2022).
 It is a business which require the large capital and resources and also it has
opportunities for purpose of expansion of business in the international market.
Example: Next Plc is an international organization operating at large level.
Operation of this organization is not limited to one country but also it is focusing on
operating at large level.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
Sole trader is the business which is owned by a single individual who is self-
employed in the business. All these decision, investment and risk occurred in the
business belonged to that one person. All profit generated in the business is for
purpose of profitability which can be calculated after deducting it from the tax
(LERCH and HEIMBERGER, 2022).
Characteristics:
 There is proper control over the operation of the business and they do not
needs to include another person in the business.
 There is unlimited liability for the owner in this type of business which results
in a burden.
 There is a separate identify of business without the owner.
Example: Dark Woods Coffee is an example of this type of business which is owned
and managed by an individual person.
Partnership:
This business is depend on the relationship among different people who are ready
for purpose of sharing of profit and loss of business generated by those people. It
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includes sharing of liability, investment, profit, risk of business through sharing
partnership (Mugisha, 2022).
Characteristics:
 It includes two or more people in the business
 Approval of all partners are required for running and making decisions.
 It can be based on the verbal as well as a written agreement.
Example: One of example of it includes Pret a manager which is run by different
owners in the business and also, they are sharing the profit in business.
Limited liability business:
It is a type of business that is based on the structure owned by different owners in
the business with limited liabilities. It generates benefits for the owners in order to
protect the personal liability.
Characteristics:
 The business has separate legal entity from owner
 There is proper flexibility in the organization structure and treatment of tax.
 It provides benefits to the limited liability that does not create a burden
(Priyanka and Gowrisankar, 2021).
Example: River Island is one of the example of this business which is providing
clothing to the men, children and women.
Public limited liability business:
It is one of the businesses which is with limited liability in the business general public
can also purchase the share. Shares of the company can be purchased by
individuals through trade stock, initial public offering and others.
Characteristics:
 Company has different existence as members can come or go out.
 In this ownership is transferable to one shareholder to another.
Example: HSBC Bank is an example of public limited company which includes the
business in which shares are to be purchased by common people.
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Cooperative:
It is a type of business that is associated with a different person who is limited but
also voluntarily together for the attainment of economic end with the formation of a
more controlled organization for ensuring equitable distribution with the capital
requirement. It consists share of risk as well as benefits (Thao, 2022).
Characteristics
 Voluntary association of different people who can join or leave the
organization any time with withdrawal of capital.
 Funds can be raised with the with the contribution of various members.
 It includes limited liability for the members as their limit is with the helps of the
owner.
Examples; ARLA food is one of the example for the cooperative organization in UK.
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
Organizational structure refers to the system which is used for purpose of outlining of
ways through which activities of the business are directed for attaining goals and
objectives. It is used for defining the roles and responsibilities of different members
working in the company. Organization structures are of different types which are
adopted by businesses according to their requirements. Some of these types of
organization structures are mentioned below:
Functional organization structure: It is an organizational structure that is used by
the business that starts from the higher position and goes to the lower position. It is a
structure in which employees are organized in the organization structure according
to their skills and function (Yang, Su and Zhuo, 2021).
Divisional Organization Structure: This organization structure consists of different
divisions with proper control over the operating division and resources. There is a
separate team in the different divisions like sales, IT, marketing and others.
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The organizational structure is an important component that should have proper
control over the resource and operation of the business. It is important for a
company to have well-designed structure of organization that provides them proper
control over different resources and activities. It is also essential for businesses in
order to reduce wastage and also for purpose of improving productivity.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
PESTEL Analysis can be described as a tool used by businesses for purpose of
identification of factors that result in a negative impact on the business and its
operation. It consists of different components and explanations of some of these
components are mentioned below:
Political Factor: It is an important factor that directly impacts over the performance
of the business. For instance, the UK government provides support to different
businesses operating in their country which provides opportunities for businesses as
they get a different tax deduction and need to face less regulation. But at the same
time, there is political instability occurring in the UK due to Brexit which creates a
threat for the business operating in the UK.
Economic Factor: There are different economic benefits a business gets to operate
in the UK like skilled and talented labor, availability of resources, high growth rate
and others. All these create opportunities for the business but there are certain
factors in the UK that create a negative impact over the business-like high wages
rate and others.
Social Factor: It includes taste, habit, interest and preferences of the customers.
There is increasing health awareness among the customers and also people of UK
are highly using internet which allow business for purpose of taking advantage of
these preferences by adopting it in their business.
Technological Factor: the UK is a developed country that has different
technological resources in their country. Adoption of technology in the business
allows them for purpose of improving efficiency but at the same time, business
needs to ensure proper precautions to avoid its negative impacts like data breaching,
technological errors and others.
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Legal Factors: Laws and regulation are important in order to provides guidance to
the business as it provides the direction which things are right for them and which
are not.
Environmental Factor: There is increasing environmental awareness among the
people which makes it one of the important factors. It is important for the business to
adopt different measures which allow them to reduce the negative impact of activities
of business on the environment.
Conclusion
From above mentioned discussion, it can be concluded that business has a broad
term which has different terms. All these different types of business are different in
context to their nature and characteristics. These businesses are also different in
context liability, profitability, risk and other factors. Businesses also adopt different
organizational structures which define the roles and responsibilities of members
working in the company. The productivity of the company is also dependent on these
factors. Business while operating in the environment needs to consider the factors
that create an impact on the performance of the organization.
Reference List
Alnidawi, A.A.B., Yousif, A.S.H. and Hmdan, K.M., 2021. An investigation into the
impact of employee empowerment on organisational commitment: the case
of Zajil International Telecom Company of Jordan. International Journal of
Productivity and Quality Management, 32(3), pp.327-343.
Al-tamy, K.K.A., 2021. The role of relationships with suppliers in reducing
Interorganization costing A case study in Dar Al-Khair Trading
Company. Tikrit Journal of Administration and Economics Sciences, 17(55
part 1).
Baswani, S., Townsend, A.M. and Luse, A., 2021. Company-Sponsored Online Co-
Creation and Financial Incentives: The Impact of Intrinsic Motivation on
Participation Intention. International Journal of Electronic Commerce, 25(4),
pp.394-415.
Chen, F., 2022. General Requirements and Procedures for the Establishment of a
Company. In Essential Knowledge and Legal Practices for Establishing and
Operating Companies in China (pp. 39-42). Springer, Singapore.
Faradilah, D., 2022. Influence Size Company, Profitability, Liquidity, and Solvency of
Audit Delay with the Reputation of the KAP as Variable Moderating on
Company Manufacture Which Registered in BEI in the Year of 2017–
2020. Budapest International Research and Critics Institute (BIRCI-Journal):
Humanities and Social Sciences, 5(2).
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LERCH, C.M. and HEIMBERGER, H., 2022. THE PLATFORMISATION OF
MANUFACTURING: TOWARDS A HOLISTIC PERSPECTIVE FOR
SYSTEMATISING DIGITAL MANUFACTURING PLATFORMS. International
Journal of Innovation Management, p.2240015.
Mugisha, F., 2022. Effect of foundry practices on cast parts in Uganda case study:
john Lugendo Foundry Company (Doctoral dissertation, Makerere
University).
Priyanka, T.M.C. and Gowrisankar, A., 2021. ANALYSIS ON WEYL–MARCHAUD
FRACTIONAL DERIVATIVE FOR TYPES OF FRACTAL INTERPOLATION
FUNCTION WITH FRACTAL DIMENSION. Fractals, 29(07), p.2150215.
Thao, T.P., 2022. Poor fixed asset management at Taicera enterprise company.
Yang, L., Su, Y. and Zhuo, X., 2021. Comparison of two different types of fractional-
order COVID-19 distributed time-delay models with real data
application. International Journal of Modern Physics B, 35(21), p.2150219.
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