Types of Companies and Organizational Structures: A Business Analysis

This report discusses the various types of companies and their characteristics, different organizational structures, and external factors affecting business. It includes a PESTLE analysis and examples of companies in each category.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
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Contents
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Introduction 2
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 7
Conclusion 9
Reference List 10
Introduction
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Business can be defined as an organisation or entity which is engaged in
industrial, commercial or professional tasks or activities. The organisation is a place
where people work together towards the achievement of objectives the business.
There are various kinds of companies which prevails in the market. This report
discusses about the various types of business along with their working style(Basco,
Calabrò and Campopiano, 2019). The different types of companies with their
characteristics are also covered in the report. This report examines the business
structures which are used in the organisation. The influence of external factors on
the working of the business is also discussed in the report.
Section 1: Different types of companies and how they work
Micro business:
Micro business is the type of enterprise which employs less than 10 persons
in the organisation. It perform its operations with very little capital and generally
operate in a small area. It is specialised in providing the goods and services in the
local region.
Characteristics:
 Due to the small size of the operations, there is greater adaptability in the
business. These are very flexible in changing any task or activity.
 The cost involved in setting up the organisation is very less which reflects on
the prices as well.
The example of this kind of company is Castle Hill Fire Protection Ltd. It is a contract
based organisation which have specialisation in installing the fire protection systems
and equipment's for major projects in the UK.
Small business:
It functions on a small scale level and also involves very less capital
investment, less number of labour and very few tools and equipment's to functions
the operations. The owner of the business makes the investment only once in the
machineries, plants, or industries.
Characteristics:
 Generally, the small business is run by a single owner. The control of
decision-making is with the owner itself(Huntington, Gordon and Plamping,
2018).
 The reach is very limited and the business operates in a local area or an
industry in a particular region.
 The resources available with the company are limited.
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Example – Davison Canners is a food production organisation which deals in filings,
jams, curds, sauces, syrups, etc. It is involved in the food and beverage industry and
mainly operates on a small scale in UK.
Medium size business:
It is the organisation which operates on a medium scale in terms of capital
and resources. The employees which work in this type of business are around 250.
These companies are well established and possess a good track record in the
market.
Characteristics:
 It works in a particular country and has no business units for performing the
operations.
 The dependence on IT is low and the business mainly focus on labour
intensive techniques(Kunc and O’brien, 2019).
Example – Verdant Leisure Limited is a boutique holiday park operator which offers
holiday home ownership and self-catering holidays in the UK. It has something for
every customer which helps in catering to the needs of the market.
Large size business:
This type of organisation has large operations and high economies of scale.
These businesses hire a large number of labourers and also uses advanced
technologies in its operations. The revenues which are generated by the companies
is also very high. The area of operation is more than one country generally.
Characteristics:
 These have large resources and capital to support the expansion
competitiveness in the industry.
 These have better reputation in the market which assists in meeting the
requirements of finances smoothly.
Example – Unilever is an British international consumer goods organisation which is
headquartered in London(Lim, 2018). It is the largest producer of soap in the world. It
operates in more than 190 countries.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
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Sole proprietorship is a kind of business which have only one owner who
manages and controls the entire business. It is the oldest and most commonly used
form of business.
Characteristics:
 The business is started by only one person as he arranges all the capital and
resources for the operations himself.
 The liability of the sole trader is generally unlimited. The losses are to be born
the sole owner alone(Netz, Svensson and Brundin, 2020).
 There is a great sense of secrecy as all the important decisions related to the
business are taken by the individual.
Example – The plumbers, electricians, hairdressers are the examples of sole trader
business. These perform the work alone and are fully owner of their business in true
sense.
Partnership:
It is a kind of organisational structure where two or more persons come
together for undertaking a legal and lawful business. The profit sharing is mentioned
in the contract of partnership. The operations and management of the business are
performed by either by all the partners or by any one of them, who is acting for all.
Characteristics:
 At least two partners are required to start a partnership business.
 All the members are jointly and severally responsible for the debts and
obligations of the firm.
 There is mutual agency present which means the act of partners bind each
other along with the business(Norbury, 2019).
Example – Yoomoo is a partnership company formed by the team of husband and
wife Daniel and Amanda Gestetner. It is the number one frozen yogurt brand in the
UK.
Limited liability business:
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A limited liability partnership is a entity which involves the mixture of the advantages
of limited liability and the flexibility of the partnership. The business has a separate
legal entity and can also enter into agreements in its own name.
Characteristics:
 It is a body corporate and legal enterprise which is separate from the
members.
 The members have a limited liability in accordance to the agreed contribution
in the LLP.
 There is flexibility in the organisation in regard to the partnership. But all the
filing and accounting requirements are almost similar with the company.
Example – Pearl Lemon is an accounting company which provides the services of
SEO to the organisations. It is an LLP which operates mainly in UK. It is the most
innovative SEO companies which offers results oriented services(Pieroni, McAloone
and Pigosso, 2020).
Public limited liability business:
The public limited company is a public company in the UK. It is the organisation
which has offered shares of stock to the general public. These companies are listed
on the stock exchange where the shares are traded publicly.
Characteristics:
 It is the organisation which is a legal entity which has a separate identity from
the members.
 There is perpetual succession which says that members come and go but the
existence of the company will continue until its winding up.
 The liability of the shareholders is limited and they are not liable personally in
case of losses for the company.
Example – Marks & Spencer Group Plc. Is an British international retailer which has
specialisation in selling beauty, clothing, food and home products. It is
headquartered in Paddington, London, England. The organisation is a public
company and it is also listed on the stock exchange.
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Cooperative:
It is a voluntary association which is established with the purpose of the
service of its members. In this type of business, the individuals who belong to the
same class join their hands for the promotion of the common goal. This organisation
is based on help each other with the resources which are available and it also
provides goods to the member of the society at a lower price or sometimes without
any profit(Pressman, 2021).
Characteristics:
 It is a voluntary organisation where anybody who have a common interest is
free to join the cooperative society.
 It has a separate legal entity since it is registered under a law formed by the
government.
 The main motive of the members is to provide service within the society or to
the members.
Example – The Central England Co-operative is a regional consumer co-operative in
the UK. The business is owned and controlled by its members who also stand for
election of the board and who are involved in the process of profit sharing.
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 Structure: This structure is a type of organisation structure which
organises the company into various departments on the basis of areas of
expertise and specialisation. These departments work as functional units and
are managed by the department heads. There is a top-down hierarchical
structure which involves the overall unit is supervised by functional heads.
The workers are hired for their expertise in a particular skill.
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 Divisional Structure: This structure involves creation of various departments
which are developed on the basis of products, region, or territory. There is a
divisional manager for each and every unit who is responsible for the overall
performance. The process of decision-making is completed very quickly in this
kind of structure. It also facilitates the growth and expansion as new division
can be introduced without making interruption in the existing operations.
The organisational structure assists the business in making sure that all the activities
and tasks which are essential are assigned to the right individuals. It provides the
guidance to the workers which helps in understanding of the roles. A poor and
unorganised structure will lead to low productivity, no incentives provided, less
delegation of work and also the decisions are taken in a central manner.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
This analysis is used as a framework by the businesses to track the factors of
external environment. It is a tool which is used to gain a wider picture of the
environment of the industry.
 Political Factors: These factors involves the Fiscal policy, trade tariffs, tax
policies and many more. The businesses must take into consideration these
factors for running the operations effectively and efficiently.
 Economic Factors: These factors are related to the interest rates, economic
growth patterns, inflation rates, etc. These make a direct impact on the
operations of the company since it affects the purchasing power of customer's
directly.
 Social Factors: It is related to the change in the tastes, preferences and
behaviour of the consumers in the market. The business must innovate new
products and services at a constant basis for catering the needs of every
section of society.
 Technological Factors: It is related to the technology which is used in the
operations of the business. The companies must adopt advanced
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technologies and equipment's for reducing the overall cost of production and
for enhancing the quality of the products.
 Legal Factors: There are various laws and regulations which are to be
complied by the business. These help in performing the operations of the
business in a smooth manner without much difficulty.
 Environmental Factors: These factors involves all those that influence the
surrounding environment. The organisations must reduce their pollution
activities and also minimise their carbon emissions for contributing to the
society and environment. This will improve the reputation of the business in
the industry.
Conclusion
From the above report, it can be concluded that business is very essential for
the people of the society. There are different types of organisations which are
working in the industry which are divided on the basis of size of operations. The
various kinds of companies which prevail in the market are examined in the report.
The various organisational structures along with the relation of structure with the
productivity of business is analysed. The PESTLE analysis is conducted analyse the
external factors which can affect the performance of the company. Every business
must take into consideration all the internal and external factors for formulating the
strategies. This will help in achieving the objectives and targets of the organisation
within the specified time period.
Reference List
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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.
Huntington, J., Gordon, P. and Plamping, D., 2018. Managing the Practice: whose
business?. CRC Press.
Kunc, M. and O’brien, F.A., 2019. The role of business analytics in supporting
strategy processes: Opportunities and limitations. Journal of the Operational
Research Society, 70(6), pp.974-985.
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.
Netz, J., Svensson, M. and Brundin, E., 2020. Business disruptions and affective
reactions: A strategy-as-practice perspective on fast strategic decision
making. Long range planning, 53(5), p.101910.
Norbury, P. ed., 2019. Business In Japan: a Guide To Japanese Business Practice
And Procedure--Fully Revised Edition. Routledge.
Pieroni, M.P., McAloone, T.C. and Pigosso, D.C., 2020. From theory to practice:
systematising and testing business model archetypes for circular
economy. Resources, conservation and recycling, 162, p.105029.
Pressman, A., 2021. Professional Practice 101: A Compendium of Effective
Business Strategies in Architecture. Routledge.
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