Types of Companies and Their Legal Structure - Desklib

This article discusses the different types of companies and their legal structure, including micro, small, medium, and large businesses. It also covers organizational structures and external factors affecting business performance through PESTLE analysis.

BMP3002
Business in Practice
Assessment 1
Types of Companies
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INTRODUCTION
In UK, there are various types of companies are operating by most of the
entrepreneurs like micro, small, medium & large businesses. Every type of businesses
contains specific motive, size, scope & characteristics which constantly work for the
development of their marketing by appropriate goods & services. Every kind of
businesses is established their company with an appropriate legal structure likes sole
proprietorship, partnership, companies, and limited liability business (Bradley, 2020).
(Blair and Hitchens, 2018). The prime concern of this project is to discuss about various
types of businesses & their legal structure with its specific characteristics. ASDA
company is considered for chosen organization which situated in 1949 & headquartered
in Leed , England. This project will determine the organizational structure that can
impact the productivity of the business. PESTLE analysis will apply to determine the
impact of external factors on business performance.
MAINBODY
Section 1 : Different types of companies & how they work
As per to maintain business in a specific industry & field, there are different kinds of
companies are running their business operations. All type of Companies are essential to
improve the economic development and also in living standards of the local people and
communities. The description about different types of companies & it's characteristics &
how they perform their work are discussed below -
 Micro Business - This kind of businesses are small scale & size but the
purpose of these companies are more effective because entrepreneur open their
organizations with the specific business idea which can help us to improve the
living of the local communities. This type of business is required less amount of
money for establishment & less than 10 people can work effectively. The annual
turnover rate contain as £2 million. Micro businesses are considered some

specific kind of characteristics which demonstrate them from the other
businesses. Some specific characteristics such as low production rate, low
participation of workers, low revenues & profitability, cover limited areas, sole
proprietorship ownership & taxes. Entrepreneurs are open their business with
their innovative ideas so that they can provide their contribution for the welfare of
the people (Brandano, Detotto and Vannini, 2019).
 Small Business - Small firms are privately owned & maintain specific business
structure like partnership, limited company, sole proprietorship , corporation and
many other structure. Small businesses need less capital and sources as
compared to the medium and large corporation. Small firms generally cover
limited market areas & people. In small businesses, less than 50 people perform
their services & annual turnover contain under the £10 million. Small businesses
are contain specific characteristics like small team of workers, limited market
reach, partnership formation structure, sole proprietorship regulation, average
productivity.
 Medium Business - Medium enterprises operating business activities in various
locations as compared to the small businesses. These require sufficient capital
and resources in order to maintain each & every functional units. Medium
businesses provide employment 2 less than 250 employees and the average
turnover rate under the £50 million. These organizations maintain appropriate
characteristics which demonstrate this business from the others. Some specific
characteristics such as more productivity rate, participation of many people,
average production, optimum utilization of resources (Brown, Bocken and
Balkenende, R., 2020).
 Large Business - These businesses are demand more capital, finance,
manpower & equipments as per to run the business activities on international
level. Large companies provide direct contribution in the development of the
country's economy and also generate more foreign currency which make
economy more strong. Through their innovative products, large companies lead

the whole market place. In these businesses, more than 250 employees are
working appropriately and the annual turnover rate considered more than £50
million. Few appropriate characteristics of large businesses such as large
number of resources, huge capital, more production & manufacturing, more
involvement of employees & profit maximization.
Section 2 : Different companies from sole traders to cooperatives and
Limited Liability Partnerships.
The explanation about various companies and its business structure are discussed
below -
 Sole Trader Business - This business structure is very simple and utilized by
most of the entrepreneur because it is very convenient and easy to register. As
for this business structure, entrepreneur quotes are responsible to pay taxes and
maintain all the legal considerations in an effective way. This business structure
is associated with various procedures which maintained by the entrepreneurs. In
this ownership structure, the interference of the government is less so that owner
can operate their business activities in their own style (Cools, Stouthuysen and
Van den Abbeele, 2017). This business structure contains specific
characteristics such as unlimited liability, freedom to take decisions, sole
management, strategic planning, legal agreements. Partnership - This ownership structure contain two or more person to operate
business activities in an appropriate manner. Business structure operated by two
or more people who are responsible two equally share each and every activities
like working, profit, losses , roles and also responsibilities. Partnership forms are
considered as the separate entity which are entirely controlled by their partner
without any direct interference of the government. Partnership firm contains
some specific characteristics like non transferability, sharing the revenue, nature
of the liabilities, ownership, proper agreement & many more. Limited Liability Business -This business structure is work like a partnership
ownership structure conducting one thing that is partner’s liability is limited

income tax of money that they invest in their business. LLB can be run by two or
more people who are involved in each and every business operations. Owner are
liable to sign LLP agreement & also prepare a self assessment report which can
help full to to provide their contributions. All the owners are share same profit and
also liable to pay tax. Summer specific characteristics involved in this structure
such as limited liability, financial privacy, massive capital, transferable shares etc.
 Public Limited Liability Business - This ownership structure is generate for
profit & it's categorized into specific shares that are mainly publicly tradable on
the stock exchange. These ownership structure contain specific characteristics
like limited liability, high cost & capital , number of employees, transferable
shares,
 Cooperative - This ownership structure is known as " Co - Op" & monitored by
its participants. All the participated members mainly utilized specific products and
services in context of co- operative. There are few characteristics are includes in
this structure like voluntary membership, democratic control, open membership,
Limited interest on the capital (Gray, et. al., 2020).
Section 3: Different business structures and external factors affecting
business
Identification of different organizational structures & explaining how does
organizational structure affect business productivity
In order to maintain business activities in a systematic manner, it is mandatory for
the HR manager to adopt a specific organizational structure so that it all the employees
activities can be manage in a structured manner. Basically organizational structure is a
a strategic framework and techniques which can useful to balance each and every
activities of the organization in an efficient manner. Organizational structure provide
appropriate contribution to enhance the business operations of the company so that
company can effectively obtain their business objectives. ASDA HR manager
considered specific kind of organizational structure as per to improve the productivity of
the firm which are discussed below-

 Functional Structure - The main concern of this structure is to perform their
operations in a systematic manner and also follow top down structure in which all
the flow of communication and information operated from top level management
to the bottom level of management. Highest authority of employees has a right to
take appropriate decisions for the welfare of the manpower. This organization
structure work similar as a hierarchical structure. Top management is responsible
to to maintain proper chain of command and take appropriate action, formulate
strategy and guideline for the employees so that they can work in a systematic
way. There are various advantages are considered by the HR manager in order
to utilize this organizational structure such as it can help full to improve the
productivity of the staff members and reduces the chances of disputes and
conflicts. The flow of communication is more and all the staff members share
adequate information so that they can maintain their operations and finish their
task on a given time period (Miśkiewicz, 2017). This organization structure
categorized in various functional units which are totally dedicated to maintain the
accountability and adaptability of the employees. All the departments are lead by
their respective functional manager and they are liable to prepare a specific
report which needs to deliver to the head manager so that all the employees can
gain effective support of their mentor and they can work collectively in teams.
 Divisional Structure - This organizational structure perform their operations in a
specific division and each division maintain specific resources and also perform
their operations to support the employees who can maintain specific product line
on a geographical basis. The main focus of this structure is to manage the
parallel divisions that are mainly responsible for specific products and also
services which can useful to create a strong customer base, maintain
geographical location so that HR manager can effectively regulate all the
activities in effective way. Every divisional unit it can be equipped with own
factors & resources independently.

On the basis of above discussion about both organizational structures it can be
evaluated that functional organization structure is more convenient and appropriate for
ASDA. Through functional structure, company can appropriately maintain proper
communication & circulate adequate information in a right direction so that all the staff
members can effectively improve their performance level in order to obtain
organizational objective (Napoli and Caplan, 2017)
How different external factors affect the performance of a business – PESTLE
Analysis
To analyze the overall performance rate of the company, it is compulsory to identify
the impact of external environmental factors on the working operations of the company.
To determine the impact of external factors on the business performance, ASDA
company is conduct PESTEL analysis which can help full to evaluate the affect of
outside factors on the business operations. The explanation about all these external
factors are given below -
 Political Factors - This factor generally include political procedure, trade
regulations, foreign trade policies & much other political consideration. ASDA
need to maintain political stability in their business operations so that company
can effectively in his their performance level and reduce the political interference.
 Economical Factors - On the basis of economical factor, exchange rate,
minimum wages, rate, interest rate, inflation & recession are includes. ASDA
manager II is the big organization which provides direct participation to improve
the economical growth of the country. Because of pandemic & Brexit, company
faced adverse situation so company adopt convenient pricing strategies in order
to improve their productivity (Palmer and et. al., 2018).
 Social Factors - Cross cultural activities, buying power of the customers,
purchasing behavior, demographic and geographical considerations contained by
the ASDA. In order to gain more profitability, company conduct small scale
market research which can useful to identify the exact preference of the
customer.

 Technological Factors - As per this factor, technological advancement &
modification in technologies are considered by the ASDA. Company adopts high
level of technologies and promotes their products and services via online method
to direct connect with the large number of population all around the world
(Pradabwong and et. al., 2017).
 Legal Factors - The main concern of this factor is to consider legal legislation,
lawful activities, policies and procedures. ASDA maintain all the requirement of
legal consideration and also follow specific text which can help to maintain health
and safety , data protection & also provide safe and secure environment.
 Environmental Factors - This factor is involved with specific factors like climate
change, pollution rate, population level etc. ASDA is properly maintained all the
environmental consideration and also take green Marketing initiative in order to
gain more environmental sustainability (Thorlakson, de Zegher and Lambin,
2018).
Conclusion
According to this project, it can be concluded that involvement of various types of
companies are more in the development of the United Kingdom economy. Micro, small,
medium & large enterprises are operating by entrepreneurs with a specific motive.
Entrepreneurs can establish business with a specific business structure such as sole
proprietorship, partnership firm, public limited liability business, corporations and many
more ownership structure. With the help of this project, all the specific characteristics of
companies and its owners with structured are discussed. This project also so
determined organizational structure and discussed most appropriate fracture for the
welfare of the company. This project also applied PESTEL analysis so that company
can effectively identify the impact of external factors on the performance and also
productivity of the business.