Types of Companies: Business in Practice

This report on Business in Practice discusses the different types of companies based on size and ownership, their structures, and how external factors affect business performance through PESTLE analysis. It includes examples of companies in each category and their characteristics. The course code for this report is BMP3002.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
ID:
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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 motive of this report to understand the type of businesses exist in the
market to whom company need to compete in order to survive and earn desired
profit. Business is an intentional organisation which come into existence with the sole
motive to earn profit by providing any product or service to the society in exchange of
money. When business register in an legal way under the business law, That provide
them with different kind of entity which includes sole trader, partnership, limited
liability partnership, public limited company, cooperatives. Business are classified of
different bases which is discussed below. It also includes the structure model
adopted by business to operate. How business get affected with business
environment is studied with help of PESTLE model (Adashev and Ismoilov, 2021).
Section 1: Different types of companies and how they work
Clarification of type company on the basis of there size in term of
employee and capital invested in business.
 Micro business:-
This firm is also known as Microenterprise. As this firm raise capital with equity
capital of the founders or the loan provided by small banks. It hold less than 10
employees as their capital is low their working spectrum is local areas. These firm
focus on to provide goods and services to fulfil the requirement of local people.
These business are the most important type of organisation in the success of
developing economic as it maintain the supply of goods for public which relive the
dependency on imports for necessities. Due to low capital invest these organisation
uses labour intensive techniques, provide jobs to local people(Candra, 2022). These
organisation does not hold much of bargaining power as there scale of operation is
not much high. It can be of many of many type such as Sole Proprietor,
partnership ,LLP ,one personal company and etc. some example are Boss Brewing
Company, Castle Hill Fire Protection Ltd, Issoria,Mantons Cards,Proviz.
 Small business: -
A business which operate on large scale as compared to the macro business. There
capital investment is in the range of 10 lac to 50 lac, number of employees is
between 10-49 .Company have low level of security so company can raise fund with
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short term loans from small bank which is stablish to support small scale industries
as they play a vital role in economy. It provide market to the good of macro business
as finished good or raw material for the production of new product. These
organisation enjoy credit facilities from macro businesses, they have certain kind of
low level of bargaining power (Castilla-Polo and Sánchez-Hernández, 2020). As their
scale of operation is large as compared to macro level. These type of organisation
include sole proprietorship, partnership, LLP, one person company, company. These
company have combined capital which consist of borrowed capital as well as
equities of founder or promoters. For example Broadsword Event House, CafePod
Coffee Co., Davison Canners , Fourex, Imaginera.
 Medium size business:-
This kind of business have more than 50 lac capital, have more employee than 50
persons. Firm came into this categories have decent kind of security in form of
machinery, have good cash flow and stable venture back easily provide loans. Firm
also have internal sources of finance as firm sale turnover is huge compared to
macro and small enterprises. All kind of firm can come in this category but fulfil the
conditions of size describe above. It can be partnership,LLP, company(private or
public) cooperative societies. This type of organisation is consumer of small and
medium enterprise products as finished product or raw material. Organisation enjoy
barging power over the raw material provider as well as on customers. This
companies more active in producing product and rendering service to businesses.
Medium level enterprise hold the largest share in market as they are the best form of
organisation to maintain supply in countries. They partial capitalised and partial use
labours maintain balances. Verdant Leisure, Captify, Smith Brothers (Contracting)
Ltd, John Good Shipping,Checkout.com
 Large size business:-
Firm having employee more than 1000 and their capital should be more than 1 cr.
They have the highest leverage to raise loan from financial institution, industrial
construction bank, government provide them support, public provided deposits and
loans, have the ability to raise fund through share and debentures. Their scale of
operation is large they enjoy economics of scale, highest degree of bargaining power
in all aspect. There is an abundance of capital so management prefer capitalisation
over labour intensives. They contribute most in GDP but not in employment as
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compared to other firm as there quantity is more and firm uses labour intensive
production method provide employment (Christodoulou and Cullinane, 2019). Firm
like company, partnership come in this categories as it would not be possible for sole
owner to operate and raise such large capital and work force. Organisation mostly
deal in fast moving consumer goods. These are some examples of large
organisation :- Unilever, AstraZeneca, BHP, Rio Tinto, HSBC and etc.
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships
Classification of company or organisation of the basis of ownership:-
 Sole trader business:-
organisation which was incorporate under act which allow a single person to do
operation for the motive of profit in exchange of any product or service to the society.
No other organisation come under this category if a person register its firm under
company act then it would have the status of one person company or if a trust
register by one person then it is consider as non-profit organisation. Sole trader have
invested wholly or partial owned equity, sole trade have separate legal entity but in
case of liability owner have unlimited liability in case of repayment of
default(Kalogiannidis, 2020). Firm can sue can be sued in case of conflict with third
party. For example Spinning, YogaPilates, Les Mills, Hyrox, F45amd etc.
 Partnership:-
organisation which come into existence with the combined capital of more than one
person, it is incorporated under partner ship act. Partner are the founding member of
the firm, firm have separate legal entity and have limited liability to the level of
contribution in capital But in case of any default made intentional partner will be
liable of the amount. Partnership is dissolved in case of bankruptcy, dead of partner,
metal unfitness of the organisation. Partnership come into existence with the oral or
written partnership deed, In this they decided the percentage of the capital
contribution. Partnership firm does not exceed the 50 member in the firm. It can be
incorporated under partnership act or not.
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NotOnTheHighStreet.com, Social Chain, Pret A Manger, Mumsnet, Carphone
Warehouse.
 Limited liability Partnership business:-
This firm is similar with the partnership firm but the only difference is the partnership
firm does not have unlimited liability. Partner only liable for the capital paid or
guaranteed by partner to other. Partners are member come into agreement to do
combined business to have agreed percentages of profit. Firm register or
incorporated under the act of limited liability partnership need to put LLP after the
name of the organisations. It also have the partnership deed on which all of them is
agree upon. LLP have limited option to raise capital as bank don't prefer them for the
loan dispersement as they lack security for repayment. It can not be orally
incorporate as they need to have proof of the extend of their liability.
 Public limited business:-
The firm which is incorporated under companies act or any equivalent act is known
as company. Government have more than 50 % of share holding in company is
known as public company. Or the company who is listed on the stock exchange
means local public can invest and purchase share in the ownership of the company.
This company have many option for raising finance,company can issue share,
debentures, public deposits, short term loan and long term loan. Some example of
such company are Nightcap, Wynnstay Group, Cineworld PLC, Haydale, IP Group.
 Cooperative:-
These organisation is a initiative taken by public to combats the challenges faced by
general public or small businesses in order to compete with international companies.
Cooperative are the organisation incorporated under cooperative society act. This
increase the bargaining of firms is raw material market as well as centralised selling.
Some of the cooperative are:-
Central England Co-operative, Channel Islands Co-operative Society, Chelmsford
Star Co-operative Society, East of England Co-operative Society, Heart of England
Co-operative Society(Puente and Schneider, 2020).
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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
Organisation structure is the sort of placement of leader or team, it can be done
according to the nature of business and type of work to be performed. Two major
structure is known as functional or divisional which is described in detail below.
 Functional structures:-
In this structure the decision is made according to the major type of function need
be performed by the company in order to smooth operates. For example a trading
company need to perform purchasing, warehousing, packaging, distribution,
customer service So company with single or similar product choose functional model
as it provide better control over business(Varbanov, Dyachenko and Skarga-
Bandurova, 2018).
 Divisional structures:-
In this company with diversified products and service make division according to the
products. As company dealing in FNCG choose this model as it provide over all
control over product and services. Such as Soaps, chips, drinks and etc.
company prefer the combination of both the model such as divisional on top
level and functional model under it. As it prove to best way to improve the efficiency
of the company. As well defined structure reduce the wastage and establish
reporting relationship in which all the employee clearly known whom to report and
the duties and responsibilities assigned to them.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
PESTLE Analysis are the assessment which is to be performed in other to
known the interrelation of business with the external factor present in the business
environment. For this purpose company considered here is Unilever, It is a UK
based Fast moving consumer good producer and distributors.
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 Political factors:- Are the element of politics present in the environment
where business operate such as the election manifesto, political stabilities and
etc. Unilever got affected by this factor the most as their production facilities
present in china and political parties using self sustenance as main point for
vote criticising Unilever.
 Economic factors:- It includes all the economic policies of the country and
their current economic condition such as GDP, inflation or deflation, repo rate,
interest rate, reverse repo rate and foreign exchange rate. Unilever as use
countries as market for the good produced from all round the world get affect
as economic factor affect the consumer behaviour.
 Sociological factors:- It consist of all the believes and norms present the
society such as religious and regional. These thing affect the acceptance of
product and services produced by the companies. In case of Unilever
products which are virgin in nature are not accepted much in UK as their
society prefer non-veg foods items.
 Technological factors:- Factor includes all the technical stuff such as
production facilities or administration technologies. In case of Unilever as
dealing in FNCG which is a price sensitive market so company have to
regularly update the technology to compete in market.
 Legal factors:- each and every country have their own set of legal rule to
which business organisation need to be abided in order smooth functioning, it
includes import-export duties, taxation ,company laws and etc. In case of
Unilever products are for consumption as well to they need to meet quality
standard set by international organisation.
 Environmental factors:- It deal with all the element present in environment
such as atmosphere, water bodies, land and natural resources. In case of
Unilever company use eco-friendly way of production so government provide
subsidies.
Conclusion
From the above report following conclusion can be dawn. Company
classification can be either from the basis of size or on ownership. As it is basis
matter both can be contradictory to each other. Management decide the structure of
organisation according the need of organisation best suited for operation efficiency
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and effectiveness. Some factor which are not in control of management but effect
business must be studied in order to take advantages from it and reduce the effect
that cause the loss. PESTLE analysis portraits the relation of external factor to the
organisation. Conclusion proper knowledge of these matter is very helpful in
attaining the success in business.
Reference List
Adashev, A.U. and Ismoilov, A.M., 2021. The importance of organizational structure
in small business management. Экономика и социум, (2-1), pp.21-26.
Alanzi, S., 2018. PESTLE Analysis. Project Management.
Candra, J.A., 2022. Empowering Micro, Small and Medium Enterprise (MSME) by
Indonesian Government by Establishing Policy of Establishment of Sole
Proprietorship. Small and Medium Enterprise (MSME) by Indonesian
Government by Establishing Policy of Establishment of Sole Proprietorship
(February 5, 2022).
Castilla-Polo, F. and Sánchez-Hernández, M.I., 2020. Cooperatives and sustainable
development: A multilevel approach based on intangible
assets. Sustainability, 12(10), p.4099.
Christodoulou, A. and Cullinane, K., 2019. Identifying the main opportunities and
challenges from the implementation of a port energy management system: A
SWOT/PESTLE analysis. Sustainability, 11(21), p.6046.
Kalogiannidis, S., 2020. Economic cooperative models: agricultural cooperatives in
Greece and the need to modernize their operation for the sustainable
development of local societies. International Journal of Academic Research in
Business and Social Sciences, 10(11), pp.452-468.
Puente, I. and Schneider, B.R., 2020. Business and development: how organization,
ownership and networks matter. Review of International Political
Economy, 27(6), pp.1354-1377.
Varbanov, S., Dyachenko, Y. and Skarga-Bandurova, I., 2018, April. Functional
structure of autonomous intelligent agent. In Information technologies,
management and society: Theses of 16th international scientific conference
“information technologies and management” April (pp. 26-27).
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(Adashev and Ismoilov, 2021)(Candra, 2022)(Castilla-Polo and Sánchez-
Hernández, 2020)(Christodoulou and Cullinane, 2019)(Kalogiannidis, 2020)
(Puente and Schneider, 2020)(Varbanov, Dyachenko and Skarga-Bandurova,
2018)
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