Types of Companies and Business Structures: A Case Study of TESCO

This report analyzes different types of companies and business structures with a case study of TESCO. It also explains how external factors affect business performance through PESTLE analysis. The report provides insights into the impact of political, economic, social, technological, legal, and environmental factors on business activities and performance.

BMP3002
Business in Practice
Assessment 1
Types of Companies
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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 business industry is involving the different areas of business such as
food, hospitality, business support, retail, construction etc., each type of the business
industry is having their own specific sets of the task and activities but the
management function and terms of the business are always similar. Such as the
competition, business structure, business size and external factors, and in order to
manage the continuous success that is important to be attentive and aware about
the types business competitors, their organization structure and external business
factors (Fehmberger and et. al., 2020). TESCO is one of the largest multinational
retail company, headquarter in England. In this report different types of the
companies, business structure and external factors are analyzed in context to the
selected organization.
Section 1: Different types of companies and how they work
The business organization are divided in to different category on the basis of
their size and ownership. Such as in context to the size business is can be micro,
small, medium and large. So in context to the TESCO the different type of business
competitors are explain below.
Micro business: The Micro organization concept is new and interactive which
involves the management and accomplishment of the business goals and task in
small structure along with the aid of 1-5 employees. This require very less
investment for starting the micro business. For the TESCO micro business retail
stores are not competitors but these business can impact the organization sales
through low cost products and location benefits (Banisadr and et. al., 2020).
Small business:
The small business is known as the privately owned corporation or it can be
sole trader business, which involves the fewer employees and Small investment.
These types of the business entities are independently owned and monitored. The
size and revenue is limited, the small business are involving the 10-150 peoples or
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employees for complete business function management. Such as the Pound-world
everything is the Small retail business in the UK. TESCO is not having strong
competitor at this level but there are some small online retail business which can
impact the TESCO competitive values. In context which organization have to be
strategic (Barko and et. al., 2020).
Medium size business:
The business entities which accomplished their management and business
functions with more then 150 employees is consider as the Medium size business.
This can be managed or family owned business, the organization infrastructure and
revenue strategies set in the medium level. Such as the Pound stretcher discount
shop retailer, run In the UK with medium size employees and at multinational level
there are the various Medium size business substitute and common competitors of
TESCO with approach 200 employees (Bouncken and et. al., 2020).
Large size business:
In the UK business organization which work for the customer services with
more then 250 employees is consider as the large scale business. The organization
which generate the more then $7 million in annual revenues . In the UK TESCO is
one of the leading large size business and performing at the multinational level. But
that is having the competitors at this level also such as Walmart and Morrisons in
the UK and multinational level with large size business, these are the type of large
size business with more then 250 employees existing as the TESCO competitors .
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships
The business organization are posing different characteristics on the basis of
their size, governance, leadership and ownership. On the basis of the organization
paper work or ownership there are the further more types of the business
competitors which should be evaluated in context to the TESCO business strategic
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development and improvement for the effective growth, which can be achieve by the
meeting the competitive edges more effective in comparison to the competitors
(Kumar and et. al., 2017).
Sole trader business:
The type of the company which owned and monitor my the one individual is
known as the sole trader business. This type of the organization not having and
legal distinction (Dekimpe, 2020). The special service providers such as the artist,
hairdressers, electricians or micro business owner who run thew business
individually are sole traders. In context to the TESCO similar business services there
are the various sole traders such as Metal Grocery Store, vegetable relaters and
micro grocery shops. but they can not reach that brand value easily as tesco is
having. So in order to be competitive TESCO have to be innovative and unique.
Partnership:
The business organization which run by the two or more partners is known as
the partnership business organization. This is not the type of legal business entities
but this involves some sets of the legal activities in ownership such as partnership
agreements for equal share of the profit and loss. Sainsbury's is having various
partnership, within the retail organization competitors through out the multinational
level such as Sainsbury's, in context to which TESCO have to be competitive
through their effective business strategies.
Limited liability business:
The business organization with the limited legal liability, according to which owner of
the share is can only be responsible for the limited debts of the amount of capital they have
invested. The organization which combines the aspects of partnership and offer the limited
liability for the business debts. Such as the ASDA is Limited liability business and In this
type of the organization shareholders can responsible for limited liability according to their
investment. For the TESCO one of the biggest LTD competitor organization is ASDA, in
context to which organization have to compete effectively (Umar, and Musa, 2020).
Public limited liability business:
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This is the type of business organization which offer there shares of the stock
to the general public in order to generate fund and investment for the their shares
values. TESCO is the public limited company and due to this structure organization
is utilizing several benefits such as negotiation and additional financial support
opportunities. Walmart is the Public limited company which is the biggest
competitor of the TESCO.
Cooperative:
this is the type of business in which organization is run by the the voluntary
groups, such as Co-op supermarket is the cooperative type of business in the UK is
the competitor of the TESCO, with cooperative business structure. This is the type
of autonomous association of persons to meet the common economic and social
needs (Titley and Ward-Campbell, 2018). The organization which run by the group
members who get involve in the business through open and voluntary membership.
The more effective competitive factors of these types of the organization is lower
cost marketing and lower tax charges (Tan and Sousa, 2018).
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
Organization structure is the systematic outlining of the organization activities
and task management. This use to effectively and smoothly direct the task and
actions in order to achieve organization goals and objectives. TESCO is maintaining
the functional structure, due to the large size and multiple activities of the business.
Functional structures – This organization structure is similar to the
hierarchical structure, because this also starts from the highest positions and
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responsibility's and then goes down to the small job roles and responsibility. This
involves the vertical structuring of the departments from the role of manager, finance,
sales to customers service department and employees. In this structure employees
are organized in the departments on the basis of their specific skills and functions.
Each department is manage by the leaders independently. This lead the
departments to work on their own functional specialization. This organization
structure helps in the effective productivity achievement through the best flow of
functional task and activities at specific functional department (Tiran, 2018).
Advantages
The major advantages of the functional structure is it facilitate the
specialization within the organization to smoothly run the specific task, this helps to
increase the productivity of the employees by facilitating the task according to their
skills. This increase the level of accountability and clarity related to each task
accomplishment. Such as within TESCO this helps in the effective accomplishment
of the goals according specific department roles and responsibility. Such as the
marketing department of the TESCO get engage within their specific task with clarity
and accountability.
Disadvantages
Functional structure is can lead to the coordination issues within the functional
unites of the organization, it lead to the poor communication. This can also cause
the lack of the understanding within the departments, because different functional
unites of the businesses do not give importance to the other department and focus
on their own specific functional department. Such as TESCO marketing department
have to build strong connection with the financial and other departments.
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Divisional structures - Another important organization structure which use
by the various companies is divisional organization structure. In this type of the
structure through which company control their own resources within large
organization. Such as this structure is based on the different product line of the
company, according to which organization maintain the division of product line
management departments with there own specific functional departments. This lead
to the product specialization, with the consideration and management of each and
every product development, collection and supply activities.
Advantages
Application and implementation of the divisional structures with in the
organization helps in the effective decision making by facilitating the development of
divisional heads. This helps in the easy expansion, increase expertise. This helps
the the accomplishment of each and every goals of the organization by effective
work division and it give adequate freedom to the employees for application of their
innovative ideas.
Disadvantages
This reduce the level of focus from the right direction of the organization. This
increases the chances of risk related to the divisional manager abusing power. This
can cause the duplication of activities and resource allocation issues. All these
limitation can lead to the expensive business system management needs.
Organizational structure affects business productivity
TESCO is maintaining the functional structure, due to the large size and
multiple activities of the business, Which is business effecting because
organization structure is important in context to the smooth flow of all task and
activities according to the company polices and standards, which aid to the effective
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task accomplishment and productivity at selected period of time with cost effective
investment and resources waste reduction (Yanase and Limpaphayom, 2017). This
promotes the efficiency and productivity, this also helps in the effective coordination
of the organization departments and functional management. This effects the
business productivity by all these contribution to the smooth step by step
accomplishment of the goals, which further result in the organization success.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
PESTLE Analysis
In context to the clear understanding and evaluation of the external business
factors one of the most important tool is PESTLE analysis because that is providing
the structure or framework of key external elements analysis. That is involving the
analysis of political, economical, social, technological, legal and environmental
factors, that who these are changing and impacting the business activities along with
performance (Tang, and et. al., 2018).
Political
This is one of the most essential external factor which influence the business
activities and performance. The main elements of the political factor are political
polices, legislation, tax rate etc. in context to the TESCO the political agenda of
increasing employment is the opportunity which helped the organization to meet that
political or government goal and diversify workplace along with the increasing
demand of the products (Walter, 2017).
Economical
The economical factors are very important in context to the TESCO business
plan and productivity. Because that is involving the financial stability, employment,
and economic condition of the target market, which play very important role in the
business supply and demand activities. In context to the TESCO increasing
demands of the products is the opportunity, but in other hand due to the impact of
COVID customers are looking for the lower cost products. Which can be threaten for
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the organization if the pricing strategies can not be modified with in the time. If the
organization manage their functional and activities changes within the economical
factors then this can lead to the effective performance.
Social
The social factor is related to the different element of the society which play
very crucial role in the business strategies and performance. Such as customers
cultural values, occasion or personal needs, trends etc., play very important role in
the development or collection of the customers satisfactory products which further
lead to the effective performance, through higher sale. In context to the TESCO the
new trends of online shopping is the opportunity to grow business.
Technological
In context to the business organization technology is one of the most
important external factor which impact the organization competitive performance.
Because the implementation of new, innovative technology helps to reduce the
production cost and also provide the effective mean to customer services. For
TESCO technology is the opportunity to improve their performance and productivity.
Legal
In terms of the business company legal factors are the legislative polices and
standards, which is keep changing and have to be implemented by the organization.
Such for the TESCO the improving employment polices are increasing the
responsibility for employees satisfaction.
Environmental
The environment factors are related to the protection of nature and natural
resources. The developing standards of the environment suitability is opportunity for
the TESCO to become more sustainable with effective approaches (Zahari and
Romli, 2019).
Conclusion
From the above study it has been concluded that business organization have
to be and aware and strategic about the different types of business competitors such
as the business entities on the basis of size is can be small, micro, medium and
large. On the basis of ownership comparative organization is can be sole trader,
partnership, limited liability business and public limited liability business. All these
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types of the business competitors have to be effectively evaluated in order to be
more competitive and perform effective then them. For best results and goal
accomplishment company should manage effective organization structure on the
basis of business products and services. Such as functional and divisional business
structure. Another most important activity which should be manage by the business
in practice is PESTLE analysis in order to be effective and sustainable in changing
environment through modified approaches.
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