Different Business Structures and External Factors: A Study

This document provides an in-depth analysis of different business structures, including micro, small, medium, and large businesses. It explains the characteristics and provides examples of each type. The document also explores how external factors, such as political, economic, social, technological, environmental, and legal factors, affect businesses. Additionally, it includes a PESTEL analysis of Tesco, a multinational grocery store company.

Business in Practice

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION 1......................................................................................................................................3
Explain the definition, characteristics and example of micro business, small business, medium
size businesses and large size business..................................................................................3
Section 2...........................................................................................................................................4
Explain the definition, characteristics and example of Sole Trader Business, Partnership,
Limited Liability Business, Public limited Liability Business and Cooperative....................4
SECTION 3......................................................................................................................................7
What are the different business structures and how external factors affect businesses?........7
PESTEL Analysis of Tesco....................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business is the organisation which is engaged in commercial, industrial and industrial
activities. Thus, it helps the business owners to generate the money. There are may practices
which a firm has to perform to attain their objectives of the organisation. Their primary objective
is to earn profits; secondary the satisfaction of their customers and many more. There are the
certain activities which the organisation has to perform to do so in most effective way. There are
certain rules and regulation for company's practices to ensure that their workforce is working
effectively with the applicable laws.
SECTION 1
Explain the definition, characteristics and example of micro business, small business, medium
size businesses and large size business.
Micro Business: It is the informal practice of an organisation. In this firm, has a
workforce of not more than 10 employees. This kind of business is very small business, which
helps the individuals to attain their needs and wants(Foss and Saebi 2018).
Characteristics:
 The enterprise has a turnover not more than £632,000.
 They cannot employee more than 10 persons.
 The annual sale must be Less than £1,400,000 [Types of Business according to size].
Examples: Spaza shops and Shebeens shops are the micro business.
Small Business: It can be defined as they do not have the turnover of more than £6.5
million. They have the headcount of less than 50 persons but more than 10 people. They use the
services of one of the agencies.
Characteristics:
 The annual Turnover of the firm more than £2 million but less than £10 million.
 The annual sale of the company shall be between £1,400,000 and £7,000,000 [Types of
Business according to size].
 They are limited boundaries to access their business.
Examples: Hair and beauty, Food and Drink, Freelancing, child care, Coaching and many more.

Medium size Business: It can be defined as the number of employees should be more
than 50 but less than 250 employees. The enterprise has the turnover under £50 million. The risk
of the companies are protected by insurance. These are also known as “Mid-Market”.
Characteristics
 The firm has the annual turnover between £7,000,000 and £31,000,000.
 The organisation has the workforce of more than 50 persons but less than 250 persons
[Different types of business].
 It has limited geographical area but may have remote workforce.
 They have no geographical boundaries (Hii and Ko 2019). They are at domestic and
international platforms.
Examples: Verdant Leisure is a holiday park, Captify is a data driven display and many more.
Large size business: This type of business mostly seems in mining and manufacturing
industry. They have the workforce of more than 251 but less than 1,000 [Different types of
business].
Characteristics
 These firms have the annual turnover of more than £31,000,000.
 They have the annual amount of revenue more than £1 billion [Types of Business
according to size].
Examples: Tesco, Sainsbury, Marks and Spencer and many more.
Thus it says as, the business main objective is to earn profits, which can be done with the
help of providing the needs and wants of their customers. It helps in achieving the satisfaction of
customers. Therefore, the business can be micro, small, medium, large scale of business.
Section 2
Explain the definition, characteristics and example of Sole Trader Business, Partnership, Limited
Liability Business, Public limited Liability Business and Cooperative.
Sole Trader Business: It is the business which is solely run by the individual only. All
the profits shall be enjoyed by the sole trader and risk also. It is riskier business as there is no one
with whom the sole trader share the amount of losses incurred in the business.
Characteristics
 It is owned and managed by single person.

 They have the freedom to work in the manner they want to.
 They can take quick decisions; they are not bound by any other person.
 They enjoy the entire profits.
 They don't have any legal septate entity.
 The organisation can maintain the secrecy easily.
Examples: Knight Frank, Admin Services, James Milne Chartered Accountants etc.
Partnership: When two or more persons agrees to share the risk and profits occurred in
the business. They look after the matters together and manage them accordingly. The partners in
partnership may be the individual, group, a business, firm, company or any other. They together
work to attain the common goal of the partnership firm. They can be of three types: ordinary
partnership; Limited partnership; limited liability partnerships.
Characteristics:
 there must be two or more persons.
 The profits and losses will be divided according to the agreed agreement.
 Each partner is individually responsible to pay the taxes.
 Each partner must be registered with HM Revenue and customs.
 Partners may raise the asserts on their own bases or on loan.
Examples: Greenenrgy, John Lewis Partnership, Reed, Setmcor, Swire, Virgin Atlantic, Bestway
Group and many more.
Limited Liability Business: It is the structure where the partners are not liable for debts
personally. It is the combination of both partnership and sole proprietorship. Where a corporate
loss amount will not be more than the amount of investment in the company. It helps the
company to share the agreed risk and profits.
Characteristics
 There must be two or more members in the company.
 The shares between the members must be fixed.
 It is simple to carry out operations of the firm. The partnership will continue if here is death or bankruptcy, insolvency or any other. It
totally depends on the members of the firm.
Public Limited Liability Business: It is the type of company which is owned and
governed by the government. It is the limited liability company where the shares can be easily

sold or purchased by the public at large (Inigo, Albareda and Ritala 2017). They also have the
separate legal entity. It can be listed or unlisted in the stock exchange market. It must be
registered. The company raise the fund by issuing the shares for commercial purpose.
Characteristics:
 The company is leaded by the Boards of Directors.
 The firm has a separate legal identity.
 The formation, working and the procedure of winding up all is governed by the specific
rule and regulations.
 The company raise the capital by selling of their shares.
 The liability of the shareholders are limited in nature. It depends on the face value of the
invested capital.
 The shareholders don't play any role in the day to day functioning of the organisation.
 Decision making power is vested in the Board of Directors.
Examples: BT Group plc, Sainsbury plc, Prudentials plc etc.
Cooperative: It is a private business organisation that is owned and controlled by the
individual or a group of people with the consideration of achieving a common objectives of the
members by using their products, supplies and services (Sydow and et, al., 2020). In order to get
the effective results. It is the separate legal entity which is different from their owners.
Corporation enjoys the rights and responsibilities as the individuals has. It is a like of a legal
person, which can be sued or may sue for infringement of their rights.
Characteristics:
 Anyone can become the member of the organisation. They must have a common interest
and goal.
 The funds can be raised by the parties themselves.
 Liability of the members are specified.
 The organisation is managed by the specific committee only.
Examples: Central England Cooperative, Channel Islands Cooperative Society and many more.

SECTION 3
What are the different business structures and how external factors affect businesses?
Organizational Structure means the function of the organisation. It is the system which
talks about how activities should be carried out to achieve the certain goals of the firms. It
includes the rules and regulation of business as well as the roles and responsibilities of the
members of enterprise. They are of different types: Flatarchy structure mean the structure of
hierarchy and chain of command which provides a lot of autonomy to their workforce; Matrix
Structure is the most confusing and less used by the firms. In this the team is more autonomy and
to take more responsibility for their work.
Tesco a multinational grocery stores and general merchandise seller company. Follows
the hierarchical organisational structure. In the organisation divides the positions and
responsibilities at different levels of the company (Schroeder and et, al., 2018). It is in the
pyramid form the top most level has the most responsibility and authority. It has a positive
impact on the organisation.
PESTEL Analysis of Tesco
Political Factor: This factors talks about the government policy which has an impact on
the company. With context to Tesco, changes in the policies of the governing authority it is
difficult for the organisation to work. Due to Brexit there were many changes in the laws, which
affects the day to day working of the firms.
Economic Factor: When there are any changes in the economy of the nation, it will
effect on the firm’s profitability. The major factors include as employment rate, rate of resources
and many more. With reference to Tesco, when there are the changes in consumption of goods
and services. The organisation has to keep an eye on the factors so that it will be easy for the
firm to alter themselves with the changes.
Social Factors: It is also called as socio-cultural factor. It focuses on the social
environment and upcoming trends in the market. Tesco keeps a proper record to deal with the
trending change in the society. They observe the attitude of customers why it is shifting and
where it is going. Their main aim is to satisfy the needs of the customers.
Technological Factors: This factors states about the changes to increase the productivity
of company. Tesco has also developed themselves with the advance technology and initiated the

online shopping platform. Millions of people can access to it. This leads to decrease in cost of
company.
Environmental Factor: The organisation has to work according to environment. They
must take necessary measure to keep the health environment. Tesco has also taking measures to
save the environment. It follows all the guidelines which is provided by the government and the
legislature. The pressure is also from the side of the public which works for keeping the
environment clean (Thomas and Housden 2017). For this, firm uses paper bags instead of plastic
bags and uses recycled things or uses proper disposal methods for the purpose of dumping.
Legal Factors: It means the government policies and the legislature changes in laws.
There were the changes in competition laws, prohibits the anticompetitive activities which harms
the interest of the buyers. Tesco has taken many imitative to work according to the prescribed
procedure of law (Toarniczky and et, al., 2019). The company cannot pay under minimum wages
slab to their employees.
PESTEL helps in analysing the outside factors which has a impact on organisation. This
helps in monitoring the external factors of SWOT analysis which are threats and weakness of the
organisation.

CONCLUSION
From the above report, it can be concluded that, the business can be divided on the bases
of its size like: Micro, small, medium and large business organisation. There are many
characteristics which helps in analysing which kind of business is this. The enterprise can be
divided on the bases of the liability. It can be sole proprietorship, a limited liability, a public or
private limited or unlimited liability company, cooperative. Furthermore, the PESTEL analysis
of Tesco is made, Environmental, Economical, Legal and technological factor has a positive
impact on the organisation and Political and Social has a negative impact on the organisation.

REFERENCES
Books and Journals
Foss, N.J. and Saebi, T., 2018. Business models and business model innovation: Between wicked
and paradigmatic problems. Long range planning, 51(1), pp.9-21.
Hii, W.S. and Ko, V.S., 2019. Are Companies Aiming to be More Regional or More
Global?. Journal of Management Policy and Practice, 20(2), pp.43-50.
Inigo, E.A., Albareda, L. and Ritala, P., 2017. Business model innovation for sustainability:
Exploring evolutionary and radical approaches through dynamic capabilities. Industry
and Innovation, 24(5), pp.515-542.
Lee and et, al., 2018. Antecedents of adopting corporate environmental responsibility and green
practices. Journal of Business Ethics, 148(2), pp.397-409.
Schroeder and et, al., A nice new update for the competitive global marketing textbook
marketplace, Global Marketing provides a grounded, international perspective on
globalization, emerging markets, and strategy. Especially welcome is its strong focus
on social media and technology, culture, and critical viewpoints.
Sydow and et, al., 2020. Entrepreneurial workaround practices in severe institutional voids:
Evidence from Kenya. Entrepreneurship Theory and Practice, p.1042258720929891.
Thomas, B. and Housden, M., 2017. Direct and digital marketing in practice. Bloomsbury
Publishing.
Toarniczky and et, al., 2019. Responsive higher education through transformational practices–
The case of a Hungarian business school. Futures. 111. pp.181-193.
Online
Different types of business. 2021 [Online] Available through:
<https://www.open.edu/openlearn/money-business/business-strategy-studies/different-
types-business/content-section-2 >
Types of Business according to size. 2019 [Online] Available through:
<https://prezi.com/p/thhogsw-ltcz/types-of-business-according-to-size/ >