Different Types of Companies and Organizational Structures for Better Productivity

This report discusses different types of companies based on their sizes and ownership structures. It also explains the impact of organizational structure on business productivity and includes a PESTLE analysis of TESCO to understand how external factors affect business performance.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
ID:
Contents
1

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
Introduction
2

The aim of this report to examine the different types of organizational structure which
helps in better productivity of a business organization. In this report different types of
companies have been discussed according to there sizes and the work thy do. It is
important for a owner to know the organizational structure according to the size of
the company B(Akopova and et. al., 2020). This will ensure better productivity in the
business operations as well as helps in reducing defects and complaints from the
customers. This report also describes various types of companies according to there
ownership and PESTLE analysis on TESCO which helps in identifying external
threats to the company.
Section 1: Different types of companies and how they work
Micro business:
A micro business can also be defined as a micro- enterprise, which requires a capital
amount of less than $50000. It refers to as small business which operates with less
than 10 people and had started the business with less capital. The micro enterprises
are particularly providing products and services in their community or local areas.
Characteristics of micro business-
simple business structure- The micro businesses operate with very less number of
employees and are having a simple business structure. The business usually
operates in the local community thus the operations not time consuming and include
sale and purchase.
Specific customer focus- Micro enterprises operates in local areas so there
targeted customers are specific. The main aim of the micro business owners is to
provide the products and services to the local customer base and fulfil there needs
and wants.
The various examples of micro businesses in United Kingdom are CafePod Coffee
Co., Davison Canners, Imaginera and Lovethesales.com.
Small business:
Small businesses can be defined as the sole proprietorship or privately owned
corporations which have less employees as well as revenue. The size of the small
enterprises vary from the different countries and industries (Eller and et. al., 2020). In
3

wholesale and trade industries the small scale industries have less than 100
employees and have $6 million average annual revenue.
Characteristics of small business are-
Management- In small scale businesses the management is in the hands of the
owners as there are not many employees which have to be managed as well as the
business operations are also at small scale which can be handled by a single
person.
Labour intensive- The small scale industries are highly dependent on labourers as
they do not have huge amount of capital to adapt to different technologies with the
changing trend. The small businesses do not depend on technologies for there
operations as they need more manpower for there activities.
The various examples of small businesses in United Kingdom are Craft stall, Online
trader or Caterers which include Fourex, Marshfield Bakery and TrustedHousesitters.
Medium size business:
Medium sized businesses are the enterprises which operates with less than 250
employees. These businesses can be owned by the families or have the separate
ownership among different partners. Medium size businesses have high- growth
markets and have a mature market base.
Characteristics of medium size businesses-
Location- The business operations are held to a limited geographic location and are
operating there businesses within a company. Medium size businesses are restricted
to a small geographical location.
Privately owned- The medium size businesses are mostly privately owned as the
enterprises are managed by the owners or the founders (Eva and et. al., 2018). The
medium size businesses can have multiple locations across a country so the
founders appoint managers for each unit to manage their business.
The various examples of medium size businesses are Crawford Healthcare, Verdant
Leisure and Trak global group.
Large size business:
Large businesses have larger size and operate in high economies of scale. The
large size businesses have at least 5,000 employees and have an average turnover
4

of 1.5 billion euros. These businesses can also have internation trade relations as
they operate in large scales.
Characteristics of large size business-
International trade- Large enterprises have international trade relationships as the
business is expanded globally. The large size business can be directed from many
countries but have headquarters in a single country. Large size businesses have
business operations in various geographical locations.
Have specialized departments- Large organizations tend to have specialized
departments in their organizations. Each department includes a head and members
which are specialized in a particular field. Large businesses have distinct
departments like marketing, research, sales and human resource.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
A sole trader business owned and managed by a single individual,
where the owner and the business entity are same in the eyes of law
(Fazzini, 2018). A sole trader business is the simplest type of business
which have easy entry and exit.
Characteristics of sole trader business-
Full control- The sole traders have full control over there business as
they don't have to consult with others for decision making. The owner is
having full control over business operations and activities.
Unlimited liability- Sole traders have unlimited liability as they are not
having separate identity from there business. If the company is facing
any losses then the sole trader is responsible to sell the personal assets
and pay the losses.
The various examples of sole traders in United Kingdom are financial
planners, event managers and housecleaning services.
5

Partnership:
Partnership is an agreement within two or more parties to operate a
business. In partnership business all the partners share profits and
losses equally.
Characteristics of partnership business-
Existence of an agreement- In a partnership business an agreement is
made between two or more partners (Huntington, Gordon and Plamping, 2018) .
The agreement made can be oral or written.
Sharing of profits- The main purpose of partnership is to earn profits
and to share it with the partners. If the agreement is not made then the
partners will share the profits and losses in equal proportions.
Limited liability business:
In a limited liability partnership the company is formed by a group of
people and each partner has to pay the tax on their share of profits. In a
limited liability partnership the partners are not liable to pay for the debts
from their personal assets, as they have a limited liability to pay the
debts.
Characteristics of limited liability business-
Separate legal existence- A limited liability partnership is a separate
legal entity. The partners do not have the same legal identity but can
enter in the agreement in there own name.
Limited liability- In a limited liability business the partners have limited
liability except for one partner (Lee, 2022). LLC offers there members with
limited liability and they have to pay the debts for which they are
6

responsible. Because of limited liability it becomes easier to secure
personal assets of the partners.
The various examples of limited liability partnership in United Kingdom
are Virgin Atlantic, John Lewis Partnership and Anglian Water.
Public limited liability business:
A public limited liability business offers there shares to the general public. Those
shareholders have limited liability and are not responsible for any business
operations and losses.
Characteristics of public limited liability business-
Easy transferability- The shares issued can be easily transferable to the general
public. There are no limitations on the transfer of shares as the company is inviting
the general public to give applications for the shares.
Limited liability- The shareholders have a limited liability to the extent of the shares
which they are holding. The shareholders do not have to pay for the losses which the
business has incurred.
Cooperative:
A cooperative business is owned by a group of members to meet the
needs of customers. Profits are shared by the members in the ratio of
shares they are holding and have to pay the tax on there profits.
Characteristics of cooperative business-
Voluntary membership- In a cooperative business the members come
together if they have a common interest (Lim, 2018). The individuals come
voluntarily to join the society and serve for the society.
Liability of members- The members in a cooperative society can form
the organization on the basis of limited liability or unlimited liability. In
cooperative societies the limited liability is more popular between the
members.
7

The various examples of cooperative businesses in United Kingdom are
Central England Co- operative, Chelmsford Star Co- operative society
and Lincolnshire Co- operative.
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
[Note: discuss functional and divisional structures and explain in general, how
organizational structure affects business productivity. Please delete this note from
your assignment before submission.]
Functional structure- In this type of business the company divides its departments
on the basis of experience and expertise. In a functional structure the employees
report the head of there department, who will report to the top management
directors.
Divisional structure- It is the organizational structure where the activities are
grouped together depending on the product and services served by the company.
The organizational activities are on the basis of specialized divisions. Divisional
structure is used in large and dynamic organizations.
Impact of organizational structure on business productivity-
Helps improve overall operations- Organizational structure ensures that the tasks
and operations which have been assigned are working with great productivity.
Proper organizational structure helps a company to eliminate the risks.
Reduces defects and complaints- Organizational structure helps in reducing the
defects and complaints from the customers. As it helps in better communication
between the managers and the employees.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
Pestle analysis of TESCO
8

Political factors- Political factors plays a significant role on the performance of
TESCO. The political factors involve the tax rates, policy making and legislative acts
which hinders in the business operations. Many governments allows subsidies to
businesses which encourages them to set up there businesses in those countries.
TESCO is involved in creating employment for the individuals which helps in
increasing the sales through the diversified workforce.
Economical factors- These factors are the main important concern for the TESCO
as they directly affects the demand and prices of the products. TESCO should pay
attention to the changing policies and taxation rates so that they can not affect the
company financially. TESCO is focusing on advertising strategies to attract more
customers and retain existing customers.
Social factors- The changes in tastes and preferences of customers due to
changing technologies is affecting TESCO (Rye, 2020). The marketers of the
company have to focus on designing new innovative products according to the
changing trends in the market. So if the company is not aware about the needs of
the customers it cannot provide appropriate products to the customers.
Technological factors- The enhancements in technologies have brought many
opportunities for TESCO. As the company is engaged in using best technologies in
there business operations to provide better quality to its customers at lower costs.
TESCO is using self- checkout points which are convenient for the customers and
have also reduced the labourer costs.
Environmental factors- TESCO have to make sure that the business operations
are not harming the environment and the surroundings. The company is adopting
various techniques which are helping society and are also minimizing the waste
products. TESCO is also engaged in recycling its waste which increases awareness
among the customers.
Legal factors- Government policies and rules are directly affecting the business
operations of TESCO. The company have to make sure that all the laws have been
followed and is not breaching any laws. TESCO is providing its customers good
quality products at lower costs which help the company to attract more customers.
Conclusion
From this report it is concluded that the different types of
companies follow different legal structures as well as organizational
structures. It is important for businesses to know there organizational
structure according to the size of there company. The various types of
companies are sole trader company, partnership company and public
9

companies which are based on there sizes. The organizational structure
followed by a business is important for increasing productivity in
business operations. Small and medium sized companies can follow
functional structure whereas large size companies involved in
manufacturing can follow divisional structure to improve there
productivity and reduce defects.
Reference List
Akopova and et. al., 2020. Marketing of healthcare organizations: technologies of public-
private partnership. IAP.
Eller and et. al., 2020. Antecedents, consequences, and challenges of small and medium-sized
enterprise digitalization. Journal of Business Research, 112, pp.119-127.
Eva and et. al., 2018. Creating strategic fit: Aligning servant leadership with organizational
structure and strategy. Personnel Review.
Fazzini, M., 2018. Business valuation: Theory and practice. Springer.
Huntington, J., Gordon, P. and Plamping, D., 2018. Managing the Practice: whose business?.
CRC Press.
Lee, S., 2022. The myth of the flat start‐up: Reconsidering the organizational structure of
start‐ups. Strategic Management Journal, 43(1), pp.58-92.
Lim, W.M., 2018. What will business-to-business marketers learn from neuro-marketing?
Insights for business marketing practice. Journal of Business-to-Business Marketing,
25(3), pp.251-259.
Rye, J., 2020. What is the difference between a sole trader and a limited company?. In Setting
Up and Running a Therapy Business (pp. 132-134). Routledge.
10