Types of Companies and Organizational Structures: A Study on Business Management with Foundation

This study explains different types of companies, their characteristics, and examples. It also focuses on various organizational structures and external factors affecting business operations. The study is based on Business Management with Foundation, course code BMP3002, and course name Business in Practice.

Business Management with Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
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Contents
Introduction 3
Section 1: Different types of companies and how they work
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Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships 4
Section 3: Different businesses structures and internal factors
affecting business 6
Conclusion 9
Reference List 10
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Introduction
Business corporation describes how the businesses are structured in order to meet the
goals and objectives of the company. These are formed to focus on either gathering profit or
for the benefit of the society (Salman, 2020). Then report will include the pestle analysis of
McDonald's. It is an American company of fast food which was founded in 1940. it is one of
the largest restaurant chain by revenue serving over 69 million customers daily in over 100
countries. It is popularly known for its hamburgers, cheeseburgers and french fries. The
report will include various topics such as different types of companies on the basis of size
with their definition, characteristics and an example and secondly limited liability partnership
to sole traders and cooperatives. Then it will include the different business structures and the
external factors affecting the company's operations.
Section 1: Different types of companies and how they work
Micro business:
These companies are fewer than 10 employees and
an important part of the UK economy. It serves as a trademark of developing country as well
as the economy. These businesses create jobs and increase purchasing power , reduce
production cost and offer convenience. The government also encourages such businesses in
low income areas. The example of such company are Boss Brewing , Beauty Boulevard.
Characteristics
 The average number of employees are not more than 10.
 There is only one decision maker.
Small business:
It is defined as owned and managed privately with not more than 50 employees and
less annual revenue. They play an important role in economic development. These businesses
do not invest much for the machinery and plant. For example plumber , flower shop milk
booth are small businesses (Goel and Nelson, 2020).
Characteristics
 They have single owner also known as sole proprietorship.
 They are open and flexible to sudden changes
Medium size business:
These are medium size businesses because their employee size is between 50 to 250.
example of such businesses are land bay, Spirit heath group .
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Characteristics
 It does not require any heavy or sophisticated machinery rather it uses labor intensive
techniques.
 These are operated in local areas and remain there for longer period which help to
maintain customer relationship.
Large size business:
It is categorized with an above average business size and has large operations and
high economies of scale. They hire a lot of people and generate revenue. These businesses
can operate several production facilities and are dependent on high technology and
techniques. Examples of such companies are Unilever, BHP ETC.
Characteristics
 Having large resources and capital to support expansion and competitiveness in the
market.
 The target the broad market which can be national and international and have
production facilities in several countries (Stoll and Thomson, 2017).
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
It is a type of business where there is just single owner who is responsible for
managing all the assets and liabilities of the business. It is the easiest form of business where
there to lack of government interference. These have less paper work and no need to obtain
any employee identification number from the IRS. Example of such bushiness are
bookkeeping business, freelancer writer , catering company etc.
Characteristics
 It has ownership by one single person who contributes in the capital required and not
only he/ she is the owner but also manages all the business activities
 The owner has unlimited liability in sole proprietorship and if the business assets are
not sufficient the owner has to pay all the debts from the personal property.
Partnership:
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This business consist of two or more people who are agreed upon a agreement to
work together and share their profits , risk and losses. In this it has a advantage of more
resources in the business. There are different kind of business partnerships general , limited
and limited liability partnership.
Characteristics
 It is basically manged on the agreement between two or more people to carry out
business. The partnership act 1932 , states that the relation between partners arises
from contract and not from status. The agreement can be oral or written .
 The minimum number of people is two and there is no upper limit for this form of
business.
Limited liability business:
It is a structure that provides several benefits to its members. It is a specific form of
private limited company
Characteristics
 it is a separate legal entity in almost many states. It is distinct from its owners which
means they are not responsible for the obligation for the corporation.
 It can legally transact business and enter into contracts in its own name (Marks,
2019.)
Public limited liability business:
It is form of a company that offered shares of stock to the general public. The
buyers of these shares has limited liability. Example of such companies are Burberry, Shell
etc.
Characteristics it is a separate legal entity that separate identity from the members and shareholders
of the organization. It is a company that own a property on its own name .
 It offers its shares to the public to raise fund for commercial use.
Cooperative:
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It is an self governing association of persons united voluntarily to meet their common
economic, cultural , social needs through a jointly owned organization. The people who join
cooperative or are the member of it share the same values.
Characteristics
 The membership is open for all irrespective of gender, color, caste. Any person has a
common interest and is prepared to join the rules and regulation of the society has
right to join .
 The business is generally controlled by the committee elected by the members at the
annual general meeting. They are operated on the local scale. It has a procedure of
one man one vote.
Section 3: Different business structures and external
factors affecting business
3.1 Identification of different organizational structures and
explaining how does organizational structure affect business
productivity
ORGANISATIONAL STRUCTURE – It is the framework within which the tasks
are separated and the managerial and operating activities are performed by clearly stating the
flow of authority and responsibility. It is a flow to set the coordination of the heads and
subordinates in the business organization.
There are many types of structure and the two of them is explained below Functional structure – This is used to organize the employees of the organization.
The workers are grouped on the basis of their skills and knowledge. It designs each
department vertically with roles from the president to finance and sales department ,
to customer service , to workers allot them for one product or service in the
organization. In this structure the employees report to a single authority which is the
top management. When the employees are grouped together it makes the production
more efficient.. also the employees are clear on whom they need to report and answer
for every activity done in the business .for example Apple , Starbucks follow the
functional structure in their businesses (Xi and Jing, 2021).
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 Divisional structure – It assembles the activities of a business around geographical,
market , product or service groups. The organizations activities are spited into semi-
autonomous units called divisions. The employees are liable to the central authority
that provides the overall strategy for the company and coordinates its implementation
among the divisions. This is usually utilized by the large organizations. Here
McDonald follows this structure in its company for smooth functioning . The
activities are divided into small parts that are given responsibility based on
operational equipment. Each division handles the specific area to meet the objectives
of the company. It has the geographic division and uses performance as basis for the
new division in its organizational structure (Lebedev, K.A.E., 2018).
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
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PESTLE analysis is a foundation used to evaluate the external environment of the
business organization by breaking down the opportunities and risk into such factors. Here is
the analysis in context of McDonald's :
 Political factor- These determine the extent to which government policies may impact
the business organization or on a specific industry. These factors include taxation,
fiscal policy , trade policy etc. As the McDonald is spread world wide it has adopted the government guidelines of public heath policies in order to maintain the
business. Economical – This element impact on the economy and its performance, which
directly impacts on the business organizations and its profitability. Factors include
interest rates, foreign exchange rates, employment or unemployment rates etc.
McDonald is also affected from the economic external factors in such a ways that
when there was slowdown in the economy affected its business of the company. Social – These factor concentrates on to identify the emerging trends in social
environment. It assists the marketer to understand the customers preference and taste.
These include cultural trends, attitude , change in lifestyle , behavior etc. McDonald's
is following the trend as it is seen the change in the lifestyle of the people has bring
them to have a quick and easy meals which consumes less time. So for this the
company has taken drive through strategy for its customers (Horch, 2018). Technological – These aspect consider the development and innovation that can
impact the market or industry. Such factors are change in digital or mobile
technology, research and development. The main focus of the organizations is to
change the digital technology as well as to find new methods of distribution,
manufacturing and logistics. McDonald's is addressing the external factors to increase
in sales is happening through online order more because of the technology up
gradation . Environmental – These factors are those which impact the business organisations
because of the environment surroundings. With the rise in corporate sustainable
responsibility this factor is becoming more important for the businesses to take into
consideration. Factors include such as carbon footprint, climatic change, recycling
procedures , sustainability etc. As the government has made mandatory for the
organisations to maintain the CSR activity for the environment . McDonald's is
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practicing such programs like it has stopped using the plastic straws to support
government.
 Legal – It is important for the business organisations to know what is legal and
allowed within the territories they are operating their businesses. These factors have
impact on the business organization because of any change in law. This covers
employment legislation, consumer laws, health and safety etc As McDonald s has
diversification culture of the employees . It hires both male and female and pays
equally to its employees and has increase the heath regulation in the workplace
(Preuss 2017).
Conclusion
From the above discussion it can be concluded that there are various types of
companies and every business is operated to share some value to the society . It is explained
the types of companies and how they work with their characteristics and with an example..
the companies are distinguish on the basis of their size. There are sole trader, partnership,
public limited liability business that carry out different activities for the profits and add value
to the society. For every business it is very important to have a organizational structure for
the smooth functioning in the company . There are various types of structures. Functional
structure carries out the flow from top level to bottom. The employees are groped on the basis
of their skills and knowledge. Then comes divisional structure where the organisations adopt
it for the better communication and proper functioning in the company. McDonald have
adopted this organizational structure to have proper communication between the managers
and subordinates. Every department has clear instructions and have proper communication.
From PESTLE analysis it can be concluded that every factor is important for the company in
order to operate its day to day activities. The external factors play role in the increase or
decrease of the sales for the company which need to be adopted and change accordingly.
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Reference List
Goel, R.K. and Nelson, M.A., 2020. Do external quality certifications improve firms’
conduct? International evidence from manufacturing and service industries. The
Quarterly Review of Economics and Finance, 76, pp.97-104.
Horch, H.D., 2018. The intermediary organisational structure of voluntary
associations. Voluntary Sector Review, 9(1), pp.55-72.
Islam, S., and et.al., 2017. Inorganic arsenic in rice and rice-based diets: health risk
assessment. Food Control, 82, pp.196-202.
Lebedev, K.A.E., 2018. Methodological approaches to assessing the efficiency of personnel
management in companies. J. Advanced Res. L. & Econ., 9, p.1331.
Marks, J.H., 2019. The perils of partnership: industry influence, institutional integrity, and
public health. Oxford University Press.
Michaud, J.P., and at.al 2021. " In The Final Analysis": The Utilization of PESTLE Analysis
in the Nuclear Medicine Workplace.
Preuss, L., 2017. Barriers to innovative CSR: the impacts of organisational learning,
organisational structure and the social embeddedness of the firm. In Innovative
CSR (pp. 331-351). Routledge.
Salman, N.S., 2020. Case Study: Gading Aqua Company “Sole Proprietorship”.
Stoll, L. and Thomson, M., 2017. Moving together: a partnership approach to improvement.
In Improvement Through Inspection? (pp. 23-37). Routledge.
Xi, B. and Jing, H., 2021. Research on the impact of green bond issuance on the stock price
of listed companies. Kybernetes.
at.al 2021)(Islam and et.al., 2017)
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