Types of Companies and Organizational Structures: Business in Practice

This report discusses the different types of companies and their organizational structures, including micro, small, medium, and large businesses, as well as sole traders, partnerships, limited liability businesses, public limited liability businesses, and cooperatives. It also explores how external factors such as political, economic, social, technological, legal, and environmental factors affect business performance through a PESTLE analysis. The report is based on the subject BMP3002 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:
1

Contents
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 6
Conclusion 8
Reference List 9
2

Introduction
The aim of this report to examine the various types of business companies along with
their different organisational and legal structure. Further, in continuation to this, the report
also aims at describing the company's organisational structure along with an application of
PESTLE framework. Every company within the existence has its own separate entity
according to the law which operates with its name and identity (Cao and Zhang, 2021). The
different forms of companies like sole proprietors, partnerships, non for profit or social
organisation, etc. performs their functions and are existing within the market.
Section 1: Different types of companies and how they work
Micro business:
The micro level business organisation refers to those businesses which operates with a
very little capital and labour such as by own or with less than 10 employees. Such form of
companies are generally seen in towns or villages in a form of shops or own local level
business (Jean Mmurray, 2020). Micro businesses does not required to have legal formalities
hence can be opened or shut at anytime without any permission or grant (Cerda-Suarez and
Valero-Matas, 2021).
The example of micro businesses in UK are Mantons Cards, Proviz, WriteUpp, etc.
Small business:
These type of businesses are those which operates with more than 10 employees and
are large in size as compared to micro business. The turnover of these businesses are less then
10 million annually and are independent bodies (UCL, 2020). The owner is solely
responsible for all the profits & losses of the company (Devinney and Dowling, 2020).
The example of small businesses in UK are Davison Canners, Fourex,
CommuterClub, etc.
Medium size business:
Medium Size businesses are those which operates at state or at national level. The
number of employees who works under medium sized organisations ranges to less than 100
employees with an yearly turnover up-to 250 million. These businesses could be conducted
either privately by a single person or can be in partnership (Haines Watts, 2017). Such form
of businesses are categorized as the contributors of the national development and provides
employment to the local people hence also provides an opportunity of employment
(Friesendorf and Uedelhoven, 2021).
3

The example of medium size businesses in UK are Verdant Leisure, John Good
Shipping, Giacom, etc.
Large size business:
These form of businesses operates their activities or functions mostly at international
level with more than 250 employees and revenue of greater than 25.9 million (Katie Deverill,
2017). These companies are a great contributors to the development of country through
generating revenues from overseas too and paying heavy taxes to the government. They on
the other hand provides huge scope of job opportunities at national as well as international
level. Such type of businesses has a great organisational hierarchy and has a combination of
various managers who are responsible for handling specific department at greater level
(Hongcheng and Junchao, 2020).
The example of large businesses in UK are Unilever, Tesco, AstraZeneca, etc.
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships
Sole trader business:
The sole trader business refers to such business which is being run by a single person
who is the sole owner of company's profits and losses. These are generally found in village,
town or city level where they operates with a limited market and their main aim is to earn
their livelihood (Gov.UK, 2021). The sole proprietor businesses does not comprises of a
separate legal entity hence the complete liability of any happenings lies on the shoulders of
owner only (Januarita, 2021).
The example of sole trader businesses in UK are Bain Henry Reid, E M Bookkeeping
services, Murray Taylor, etc.
Partnership:
The partnership business refers to an organisation which is being operated by the
collaboration of two or more owners who share the business responsibilities, profits and
losses equally or in their decided ratio. Here all the owners are denoted as partners and brings
some capital to the business. Although, it is not necessary for the partnership business to get
registered and create a deed but it is beneficial for them because this gives a legal status to the
firm (Kim, Lee and Sohn, 2020).
4

The main characteristics of the partnership firm is that the business it is a
contractual relationship between two or more persons whose main objective is
to generate profits for the company.
The example of partnership businesses in UK are NotOnTheHighStreet.com,
Mumsnet, Yoomoo, etc.
Limited liability business:
The limited liability businesses are those in which the owners of the firm carries a
limited liability to the company above which they are not liable for any thing to the business.
Such type of business is having its distinct legal entity and is different from the owners in the
eyes of law. The firm is required to get registered with the concerned authority and is asked
to follow all the rules of companies act. The extend of owners liability depends either upon
the shares held b y them or is fixed on the basis of guarantee where the owners are asked to
pay the sum of amount which is set as a guaranteed amount in case of any set back to the
business (Ohno and Uesu, 2020).
The example of limited liability businesses in UK are Bestway group, Reed, Tesco,
etc.
Public limited liability business:
In the scenario of public limited liability business, the company is an undertaking of a
government authority and is liable to raise fund from the general public through listing of
shares in stock exchange market. The firm is established with a collaboration of minimum 7
members and each board member comprises of a limited share in the company's liability
(Omilion-Hodges and Ptacek, 2021).
The example of public limited liability businesses in UK are Barclays Plc, HSBC
Holdings Plc, Unilever Plc, and many more (Statista Toplist, 2021).
Cooperative:
Cooperative firms are established with a joint efforts of individuals whose main
motive is to provide employment to their members and serves best to their livelihoods.
Cooperative firms are required to get register under the Cooperative act and is mandatory to
follow all its clauses (Legal forms of cooperatives, 2021). The members of a cooperative firm
5

establishes their company with a voluntary independent association where each member has a
right of single vote to elect their board team.
The example of cooperative businesses in UK are Co-operative press, Ilkeston Co-
operative Society, Baywind Energy Co-operative, etc.
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
The organisational structure refers to a company's specific system that briefs the
organisational activities, board hierarchy, roles and responsibilities of each employee along
with the company's rules. The different types of organisational structure comprises of
divisional, functional,matrix, etc. out of which any one is applied by the organisation. Divisional Structure: The business through this divides the company's structure based
upon the product line, market, customer segment, etc. This type of structure is
generally found in large or multinational businesses where they deals is multiple
product or product line with a large coverage of international market. The divisional
structure is comprises of various separate divisions that comprises of full functions
which operates successfully hence increases company's productivity. On the other
hand, it is highly beneficial for those businesses which has different products, markets
or regions so that each division can focus on their own part and brings higher
productivity for the business (Ricci and et. al., 2021). Functional Structure: This type of organisational structure is formed on the basis of
different departments or functions of a business. The various departments comprises
of finance, human resource, marketing, information technology, production, etc.
presence and smooth running of which is highly essential for the business to attain
higher efficiency as well as the productivity in outcomes. This form of structure
involves specialized experienced units that reports to the one authority that is the
company's top level management.
 Hierarchical Structure: Under this form of structure, the company is having different
level of employees such as top, middle and lower level where the personnels are
placed according to their job role and experience. Such type of structure is being
applied by large multinational organisations as they have vast area of work as well as
6

operates with a large number of employees. A particular chain of command or
authority is specified here which is needed to be followed by each employee of the
firm.
The organisational structure which is being followed by Tesco is hierarchical
structure within which the company is following a specific line of hierarchy at each level
starting from the top level management followed by middle level and lower level of
employees. This allows each employee to have immense clarity for their roles as well as to
whom they are required to report. The clear and well managed structure helps Tesco to
enhance their productivity with the achievement of greater efficiency in work.
3.2 How different external factors affect the performance of a business –
PESTLE Analysis
The PESTLE framework comprises of political, economical, social, technological,
legal and environmental factors that are outside forces but affects the business internally and
at large level. These are explained below with context to Tesco. Political: The sustainability and unsuitability of the political party gives rise to the
changes on different polices or rules such as tax policies, import export policies and
many other. The company Tesco being a multinational company is required to make
its decisions based on the governmental policies of each nation which is different
from country to country. This decision making process affects the business
performance in negative way following all policies or each nation simultaneously is
not easy and is tough to implement such as the policies of UK and US are different in
nature (Riwayadi, Deliabilda and Panahatan, 2021). Economical: The country's economical condition of UK such as inflation or deflation
rate, purchasing power of the customers has a great affect upon the performance of
the business. As if the country is experiencing the situation of inflation then Tesco
would not be able to generate high revenues which will not support the business in
making various growth decisions. Social: The ethics, morals, preferences of the customers who lives within the society
are respected by the companies as they are the buyers of firms product and assists
them in generation of profits. Tesco if not offering such products which are preferred
by their customers, then it will become tough for the company to have its sales and
attract more customers. Technological: In the period of constant development in technology, the market
always gives enhancement to them and attracts market or customers to have more
7

better product or service. This factor affects the business performance of Tesco in
positive manner as the company always tries to indulge new technology in its
offerings or within the services. Legal: This factor is related with the court of justice where such laws are made which
are beneficial for the customers or the company's employees. Laws like consumer
protection act, employment law, health and safety laws are formulated which is
mandatory for the companies to implement. This affects the business performance in a
way that the Tesco is required to take such decisions which are respecting to the laws
even when this does not allows company to make higher revenues from it (Yi and et.
al., 2021).
 Environmental: The affect upon business performance from environmental factor
like producing more of recyclable products, generation of less carbon, etc. Tesco is
not much affected through this as the company feels high responsibilities towards the
environmental safety and manufactures its items with minimal carbon emission.
Hence, for this the company has launched various environmental initiatives that
supports environment from getting destructed.
Conclusion
From the present report it can be concluded that a country's economy comprises of
various companies in different form such as sole proprietor, partnership and many others
which has their identity and liability. Other than this, a company operates at different level
such as small, medium and large company which is differentiated according to their capital
and operational size. Every business organisation functions their tasks by adopting a specific
organisational structure which can be either divisional, hierarchical, functional or could be
any that defines the management hierarchy of that organisation. In order to have long term
sustainability as well as good competitive advantage, a business is required to scan macro
environment and react according to such forces. If not focused properly, this will bring
various problems to the company and can come on their existence.
8

Reference List
Cao, Q. and Zhang, J., 2021, June. Digital Inclusive Finance and Innovation of Small and
Micro Enterprises Under Mobile Internet. In International Conference on
Applications and Techniques in Cyber Security and Intelligence (pp. 141-150).
Springer, Cham.
Cerda-Suarez, L.M. and Valero-Matas, J.A., 2021. Disseminating Pet-Friendly Trends in
Partnership: The Initiative ‘Marketing Con Causa’in Mexico. In Cause-Related
Marketing (pp. 211-220). Springer, Cham.
Devinney, T. and Dowling, G., 2020. What Are the Strategies of Australia’s Universities?
Organisational Structure. In The Strategies of Australia’s Universities (pp. 183-190).
Palgrave Macmillan, Singapore.
Friesendorf, C. and Uedelhoven, L., 2021. Macro-Environment of Mobility. In Mobility in
Germany (pp. 11-17). Springer, Cham.
Hongcheng, W.A.N.G. and Junchao, C.H.E.N., 2020. Research on the Land Consolidation
Strategy of Dalian City Based on PESTEL Analysis Model. Meteorological &
Environmental Research. 11(4).
Januarita, R., 2021. The Newly Sole Proprietorship as Limited Liability Company in Recent
Indonesian Company Law. MIMBAR: Jurnal Sosial dan Pembangunan. 37(1).
Kim, H.J., Lee, B.K. and Sohn, S.Y., 2020. Comparing spatial patterns of sole proprietorship
and corporate payday lenders in Seoul, Korea. The Annals of Regional Science.
64(1). pp.215-236.
Ohno, I. and Uesu, S., 2020. A new partnership between business and development: A case
study of Ethiopia’s industrial development. Designing Integrated Industrial Policies
Volume II, pp.203-236.
Omilion-Hodges, L.M. and Ptacek, J.K., 2021. Leadership in Different Organizations and
Sectors. In Leader-Member Exchange and Organizational Communication (pp. 99-
119). Palgrave Macmillan, Cham.
Ricci and et. al., 2021, August. PESTLE Analysis of Cybersecurity Education. In The 16th
International Conference on Availability, Reliability and Security (pp. 1-8).
Riwayadi, E., Deliabilda, S.A. and Panahatan, M.B., 2021, August. PESTLE ANALYSIS OF
FINANCIAL TECHNOLOGY IN INDONESIA. In International Conference on
Innovations in Social Sciences Education and Engineering (ICOISSEE) (Vol. 1, No.
1).
Yi and et. al., 2021. How social enterprises overcome growth barrier? A capability view on
cross-sectoral partnership. In Academy of Management Proceedings (Vol. 2021, No.
1, p. 13232). Briarcliff Manor, NY 10510: Academy of Management.
Online
Micro business, Jean Mmurray, 2020. [Online] Available through
<https://www.thebalancesmb.com/differences-between-micro-business-and-small-
business-4159188>
Small and medium enterprises, UCL, 2020. [Online] Available through
<https://www.ucl.ac.uk/procurement/suppliers/smes>
9

Medium Size businesses, Haines Watts, 2017 [online] Available through
<https://www.hwca.com/accountants-leeds/opinion/what-s-the-definition-of-small-
or-medium-sized-business/>
Large size businesses, Katie Deverill, 2017. [Online] Available through
<https://help.companycheck.co.uk/hc/en-us/articles/202550273-What-determines-
the-size-and-type-of-company->
Sole trader, Gov.UK, 2021 [Online] Available through <https://www.gov.uk/set-up-sole-
trader>
Top Public limited companies, UK, Statista Toplist, 2021. [Online] Avaliable through
<https://www.statista.com/study/45778/top-100-companies-from-all-industries-uk/>
Legal forms of cooperatives, 2021. [Online] Available through
<https://www.seedsforchange.org.uk/legalforms>
10