Types of Companies and Organizational Structures for Business in Practice

This report discusses different types of companies based on their size and organizational structures. It also covers how external factors such as political, economic, social, technological, legal, and environmental environments affect business performance. The report provides advantages and disadvantages of each organizational structure and is useful for entrepreneurs and business students. The course code is BMP3002 and the subject is Business in Practice for 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:
Contents
1

Introduction 3
Section 1: Different types of companies and how they work
3
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships 4
Section 3: Different businesses structures and internal factors
affecting business 8
Conclusion 10
Reference List 10
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Introduction
The main objective of this report is for examining various kind of businesses and their
functioning. There are many kind of company who have their own legal rule and structure.
Each type have their own disadvantages and advantages. The working of each company is
different from each other(Tilt, and, et. al., 2020). These are the companies which were
classified on basis of liability, size, control, etc. Various environment have a significant effect
on a business. Each company use various organization structure. The report have deep
information for different kind and their function and also different structure in detail.
Section 1: Different types of companies and how they work
Micro business:
The micro business is a small scale business which have less than ten worker and the
annual turnover is in 2 million pounds. This need low capital for operate and start. This is a
great option for freelancers and sole proprietors who wants to operate in a single location.
Some of the example for micro business were plumbers, street vendors, small farmers, wood
workers, etc.
Small business:
Small business is an enterprise have annual turnover more than two million pounds
and less than ten million pounds. In this kind of business, there have to be ten to fifty
workers. This need relatively less capital and low workforce(Silva, and Figueiredo, 2020).
This is ideally suitable for operate in small scale for serving in a local community. As
example of this business are photographers, grocery stores, food stalls, medical stores, etc.
Medium size business:
Medium size business is an enterprise with an average business size, have annual
turnover more than ten million pounds but less than fifty million pounds. This kind of
business have less than two hundred and fifty workers. This is suitable for a entrepreneur who
have to set their business on local level. Garages, consultants, online retailer, local restaurant
are some of the example for this business.
Large size business:
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Large size business is the enterprise which operates on above average size, have
annual turnover for more than 1.5 billion pounds and they also have more than 250 worker4s.
These business target national as well as international markets. These kind of business need
high amount of capital. British American Tobacco, HSBC, Rio Tinto falls in this category.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
Sole trader is the single owner of business. This is one of the simplest business
structure. Each of the power are with the single owner from managing to decision making.
Moreover, a single owner can have workers.
Advantages
 Easy for set up – These business are easy for set up as there is no requirement for
register a business and also this can formed with less investment.
 Full control – Single owner have whole control on the business as they are free for
making their own decision and run business on their own will.
Disadvantages
 Unlimited liability – This means that a single owner is personally liable for each of
the losses and debts of the business. Easily, personal assets were used in case of any
kind of deficiency.
 Sole responsibility – Single owner have full control of a business find this hard to
manage each of the work themselves. This make a barrier in efficiency of a business.
This kind of business is suitable for a business in which personal skills were included and in
which decision making is required to be quick. Some examples for this business are
plumbers, grocery store, photographers, hairdressers, etc.
Partnership:
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When two or more person comes together for operating a business with a motive of
profit earning, this is called as partnership. Each partner act as the owner and agent in behalf
of the organization.
Advantages
 Sharing of burden – In a partnership, burden of work is divided within partners and
this assists in smooth flow of business and better management.
 Better decision – At time of making decision each partner have their own thoughts
and perspective. Which assist them to make good decision for benefit of business.
Disadvantages
 Slow decision – For making decision in a partnership firm, consultation of every
partner is very important and this result to make this process slow.
 Chances of conflicts – Each partner have their own perspective and thoughts. This is
why there is more chances for contradiction in point of view which results in conflict
between partners.
This kind of business structure is suitable for a business which need different expertise and
medium capital are required for business(Lim, 2018). Law firms, wholesale trade, real estate
business are the example in which partnership structure is of great use for perform business.
Limited liability business:
The limited liability business is one of the hybrid kind of entity which have
characteristic of a partnership and company. In this kind of liability structure of a member is
limited in the extent of their unpaid share. On other word, a members personal property is not
liable for the loss of an organization.
Advantages
 Limited Liability – The benefit in a limited liability business is that a liability of a
person is limited for their unpaid share in a company. Any losses and debt are
responsibility of a company(Korte, 2019).
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 Perpetual Succession – This means that continuation of an organization for as long as
this is in legal existence. Insanity or death or bankruptcy for a member do not affect
an organization.
Disadvantages
 Public records – The company have to register their record to the companies house
and then they have to publish them and have to be accessed through general public.
 Complex set–up – The process of setting up business is mostly complicated as this is
mandatory for register a company with Companies House. There is also setting up
fees.
This kind of structure of business is suitable for a business have operation on national and
international level. Blockbuster, Anheuser-Busch and Westinghouse are some of the example
for this kind of business.
Public limited liability business:
Public limited company is a structure of business whose share were offer to general
public and owner of an enterprise having limited liability which means they are responsible
for company losses up for the extent of shares.
Advantages
 Public issue of shares – In this kind of enterprise, there is no issuing, no prohibition to
normal public. The company can raise more larger capital then private company.
 Transfer-ability of shares – There are no restriction in transfer of share and also this is
so much easier for transfer.
Disadvantages
 More regulatory requirements – There are many more regulatory and legal need in a
public limited liability company then a private limited company.
 Ownership and control issues – In this kind of business, this is hard for control that
who is a share holder of company and which are the directors are accountable for.
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Moreover, there is possibility of issue and dispute related to managing(Karpenko,
and, et. al., 2019).
This kind of business structure is best when the organization need huge capital for making a
specific move in a market and also for operate. Tesco, Barclays, easy jet are some well
known public limited company in UK.
Cooperative:
The cooperative is a structure of business in which a organization is owned and
controlled through their members for meeting their needs. The owner of this kind of business
is usually close to this like suppliers, workers, members, etc.
Advantages
 Lower costs – The main advantage in this is that structure of business is able for split
the cost as IT and Accounting which is very useful for a small business which do not
want service on larger scale(Engwall, and Wedlin, 2019).
 Easy to form – This is easy for setting up a cooperative business as this do not want to
be incorporated. Moreover, some paperwork is mandatory at time of setting up.
Disadvantages
 Less control – Individual member have lower control in decision making for
controlling a business. The members have to make decision collectively.
 Limited Capital – As this kind of business can not raise larger capital due to their
limited members.
Cooperative business is suitable for medium scale as the member and capital are limited. This
also have difficulty for expanding business. The common cooperative business is present in a
society were grocery cooperatives, retail cooperative, housing cooperative, etc.
Section 3: Different business structures and external
factors affecting business
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3.1 Identification of different organizational structures and
explaining how does organizational structure affect
business productivity
 Functional structure
This is the common organizational structure in which operation were divided in many
departments as marketing, sale, etc. this is of best use for a small firm.
Pros
1. More effective.
2. Aids worker to aim on their goal.
Cons
1. This make silos in an enterprise.
2. No free communication.
 Divisional structure
This is suitable for an organization with many other products. In this the leadership team
were divided for operate various products.
Pros
1. Assist in flexibility for large company.
2. Aids in quick response for change in a industry.
Cons
1. This make barrier within division and headquarters.
2. This leads a company for competing within themselves.
 Team based structure
In this the small team of worker are made for serve a goal or particular project.
 Flat or Horizontal structure
There are lower level within staff and upper management. Many of the start up use this
structure in starting for giving workers more responsibilities(Blewitt, Parsons, and Shane,
2018).
 Matrix structure
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In this structure the cross functional team were formed to serve a special project. Members of
this team works in more than single department.
 Circular structure
Higher level managers and workers were placed in circular ring expands outward with low
level of staff and worker. This is good to open communication within lower and upper level
workers.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
Political Environment. - The government's business leads in big changes in business and have
lot of importance. Decrease and increase in taxes is one of the best example for this
environment.
Economic Environment – The factors such as tax, rates, wage, etc. do have a great impact on
business. The entrepreneurs think twice for taking loans with bank because of high interests.
Social Environment – The factor were also consider as marketing and developing a product.
The best example in this is women's involvement in these big project(Basco, Calabrò, and
Campopiano, 2019).
Technological Environment – The technology changes day by day, the change becomes a
threat and opportunity for business. Introduction for GPS in a car is perfect example of this.
Legal Environment – The legal law and rule makes a big impact on business. As example
policies of import and export will having a great impact on price of goods.
Environmental – The factors such as weather, climate, etc. affect business in many possible
outcome. As example willingness of customer for buying an hater increases in winter season.
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Conclusion
In the above report this is being concluded that there are various structure of business
available for an entrepreneurs as their wants on various operating features and sizes. There is
many businesses based in their size such as small, medium, micro and large. Each
organization use their own structure of business have various communication and feature
processes. Each process of communication have advantages and disadvantages. Also there
are many factors or environment which affect or influence the business in many forms.
Business will be affected because of economical, political and so on environments.
Reference List
Basco, R., Calabrò, A. and Campopiano, G., 2019. Transgenerational entrepreneurship
around the world: Implications for family business research and practice. Journal of
Family Business Strategy, 10(4), p.100249.
Blewitt, J.M., Parsons, A. and Shane, J.M., 2018. Service learning as a high-impact practice:
Integrating business communication skills to benefit others. Journal of Education
for Business, 93(8), pp.412-419.
Engwall, L. and Wedlin, L., 2019. Business studies and management ideas. The Oxford
Handbook of Management Ideas, pp.159-76.
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.
Korte, R., 2019. Learning to practice engineering in business: The experiences of newly hired
engineers beginning new jobs. In The Engineering-Business Nexus (pp. 341-361).
Springer, Cham.
Lim, W.M., 2018. What will business-to-business marketers learn from neuro-marketing?
Insights for business marketing practice. Journal of Business-to-Business
Marketing, 25(3), pp.251-259.
Silva, M.E. and Figueiredo, M.D., 2020. Practicing sustainability for responsible business in
supply chains. Journal of Cleaner Production, 251, p.119621.
Tilt, C.A.,and, et. al., 2020. The state of business sustainability reporting in sub-Saharan
Africa: an agenda for policy and practice. Sustainability Accounting, Management
and Policy Journal.
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