Different Types of Companies and Their Organizational Structures: A Case Study of Marks & Spencer

This report discusses different types of companies and their organizational structures with a case study of Marks & Spencer. It also covers how external factors affect business performance through PESTLE analysis. The report includes characteristics of micro, small, medium, and large businesses, examples of sole trader businesses, partnerships, limited liability, public limited, and cooperatives. It also explains how organizational structure affects business productivity and evaluates the impact of external factors on business performance.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
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Contents
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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
There are different types of organizations depending upon their size and
scope. Similarly, there are number of businesses incorporated on the basis of sole
trader business, partnership, limited liability business, public limited businesses and
cooperatives. These businesses differ on the basis of their business functioning,
objectives and the organizational structure for managing different business activities.
The business environment consists of different external and internal factors and
forces that can affect the business performance in a negative or positive manner. A
business needs to identify all such factors to formulate strategies in order to
implement flexible business amendments. This report is in the context of Marks &
Spencer which is a British multinational business organisation delivering varieties is
consumer products and services such as apparels, beauty products, home
improvement tools, flowers and gifts, banking services, food services. Marks &
Spencer is headquartered in London, UK. The business is established and founded
in the year 1884 by Michael Marks and Thomas Spencer (Akhmetshin and
et.al.,2017). This report revolves around different characteristics with examples of
micro, small, medium and large businesses, explanation on characteristics of
examples of sole trader businesses, partnership, limited liability, public limited and
cooperatives, organizational structure and how it positively affects the business
activities lastly macro environment analysis to evaluate the impact of the external
business environment on the business performance.
Section 1: Different types of companies and how they work
Micro business:
Micro businesses are defined by such businesses that are operated with a
limited number of capital and employees. The maximum number of employees in
micro businesses are 9 and the minimum number of employee is ateast 1. There are
number of micro businesses in UK wherein such businesses are founded mostly by
sole proprietors, one such micro business organisation in UK is Bass Brewing
Company which is established by Sarah John, founded in Swansea, South Wales,
UK (Belás and et.al.,2019).
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Characteristics
 Annual turnover less than £2 million
 Number of employees less than 10
Small business:
Small businesses are such businesses that are incorporated with little revenue and
operating in a limited scale of market. These businesses are owned by private
owners and sole proprietors or even partners. The large number of emerging small
businesses in UK, there is significant growth and positive contribution of such
businesses towards the economy of UK. The government of UK have formulated
policies for delivering financial and non-financial support to such businesses. One
such example of small businesses in UK is Marshfield Bakery Ltd which is
headquartered in Chippenham, UK. It is a business operating in the food industry
and delivers bakery products to its customers (Čepel and et.al.,2018).
Characteristics
 Number of employees are less than 50
 total annual turnover is less than £10 million
Medium size business:
Medium businesses are such businesses owned by private owners, family owned, it
operates with an annual turnover ranging from twenty-five million pounds to fifty
million pounds. One such example of medium businesses in UK is Verdant Leisure
which is a business founded by Graham Hodgson, Andrew Wall and Bev Dixon in
the year 2010. The business has recorded the annual turnover over of 31 million
pound. The business is operating in the hospitality industry, it delivers holiday Park in
Scotland and north of England (Gaspar and et.al.,2016).
Characteristics
 Number of employees less than 250
 The total annual turnover less than £50 million
Large size business:
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Large businesses such businesses that operates in large markets and makes large
revenue. One such example of large business and in UK is Marks & Spencer which
is a British multinational organisation founded in the year 1884 by Michael Marks and
Thomas Spencer. The number of employees in the business organisation is 75,000.
It is a multinational business with more than 1500 physical outlets in the global
market (Huang-Horowitz, 2015).
Characteristics
 At least 5000 employees
 Total annual turnover of £2 trillion
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
Sole trader business are such businesses that are operated by individual owners. All
the business functioning, bearing the loss, controlling business activities, enjoying
the profitability is being managed and operated by a single owner. The owner can
also deploy a working staff in the organisation for acting as a helping hand in the
business activities. The major activities and the control of the business lies in the
hand of the single owner. Examples of such businesses can be electricians,
gardeners, decorators and others (Khan, Çera and Nétek, 2019).
Characteristics
 Control over the business
 Liable for business activities
 Bears losses and enjoys Profitability by own
Partnership:
Partnership businesses are such businesses that are incorporated by two or more
than two partners who signs the contract for shouldering ratio of responsibilities,
bearing losses and the ratio of profitability distribution among them for managing the
business activities. One such example of partnership firm in UK is Pret a manger
organisation operating in food industry, the business organisation was founded in the
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year 1983 known for delivering food services to its customers in the global
marketplace.
Characteristics
 Liable to pay their own taxes
 Reduces financial burden
Limited liability business:
Limited liability partnership are businesses incorporated with two more partners or
shares the responsibility and profit share as per the ratio determined in the
partnership agreement. Partners in limited liability partnership are not liable to pay
business expenses or liabilities which are not mentioned in the partnership
agreement. All the liabilities of the businesses are fixed. The limited liability
partnership firm examples can be different accounting firms and law firms in UK
(Kobarg, and et.al.,2020).
Characteristics
 The liability is fixed pertaining to the investments made
 Flexibility while dividing the contribution and the profit ratio for each partner
Public limited liability business:
Public limited businesses or such businesses that are listed under the London stock
exchange. Such companies have separate legal existence and can raise the
business finances through public shares. One such public limited company in UK is
Burberry which is a listed company under the London Stock exchange. Burberry
was founded in the year 1856 by Thomas Burberry. The business is headquartered
in London, UK, famously known for delivering apparels, footwear, accessories,
beauty products to its global customers (Lisowska, and Stanisławski, 2015).
Characteristics
 Business can offer shares to both employees and public
 The profit after tax has been distributed as dividends to the shareholders
Section 3: Different business structures and external
factors affecting business
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3.1 Identification of different organizational structures and
explaining how does organisational structure affect business
productivity
Organizational structures are defined by the composition that a business
follows in order to manage all its functional core activities. Organizational structures
cover everything such as accountability to the top executives, communication
channel followed, delegation of authority in so on. In the context of Marks & Spencer
which follows a flat organizational structure in the workplace. Flat organizational
structure is defined there is no or very low middle level management units in the
workplace. Flat organizational structure reduces the bureaucracy rather focuses to
hasten productivity at work. It serves different benefits to Marks & Spencer, supports
for decision making, convenient flow of communication, increases accountability and
answerability. Flat organizational structure is a pyramid shape structure that involves
top executives and low-level working staff with no or very low of middle level units.
As Marks & Spencer is a large business organisation that has to carry different set of
operational activities in a day, thus, too many level of management might cause
delay and further disturb the business functioning. Flat organizational structure helps
to ensure quick decision making, easy flow of communication. Wherein the executive
can directly communicate with the employees and assign important operational task.
Thus, flat organizational structure followed by the Marks & Spencer helps the
business to eliminate levels of management rather helps to keep it short but
productive (Masanja, 2018).
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
In order to evaluate the external macro factors in the business environment,
PESTLE Analysis is being supported to evaluate that how far different external
factors can impact the business performance both in positive and negative manner,
so that the business can take timely measures to formulate flexible decision-making
and organizational strategies. PESTLE Analysis consist of different factors such as
political, economic, environmental, social, technological and legal factors (Robson,
2017). Furthers, PESTLE Analysis on Marks & Spencer is discussed below in brief:
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Political factors
Political factors are determined by such factors that includes all such measures and
policies implemented by the government of a country these might positively and
negatively impact the businesses of the specific geographical difficult location. There
are different political factors that have affected the business performance of Marks &
Spencer in UK. Two political factors such as free trade and Brexit.
Free trade is a governmental measure in UK that supports foreign trade which
further benefits most businesses with little or no government tariff, quotas, subsidies
or any other restriction over exchange in foreign trade.
Brexit is another political factor that have impacted the business performance of
Marks & Spencer. The negative impacts on the business can be listed as: reduction
in the value of pounds which have further increased cost of acquiring raw materials,
reduced business profitability. Other drawbacks faced by the business involved
freezed employment, restrictions over foreign trade and so on.
Economic factors
Economic factors are determined by the economic conditions of a country where the
business operates, the economic stability might positively impact the business
performance wherein the economic downturn can negatively impact the business
performance. With stability of economic conditions in UK, it serves different benefits
to Marks & Spencer for operating in UK, some of these benefits can be listed as
easy availability of laborers and skilled employees, quick response of marketing
activities, enhanced sales and profitability margin, effective supply chain and so on.
Social factors
Social factors are defined by the cultural preferences and social beliefs of people
living in a specific geographical location. People living in UK have higher income
capacities leading to higher purchasing power such factors act as opportunities for
Marks and Spencer in order to enhance its sales and profitability margin.
Technological factors
Technological factors such factors that are defined by the level of technological
advancement in geographical location. With advancement of technology in UK,
wherein it is known as the fourth technological advanced country in the world. Marks
& Spencer uses different technologies in the business activities to game up the level,
bring efficiencies and productivity at work. The business uses different technologies
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such as augmented reality, artificial intelligence, customer relationship management
and others to replace the traditional method with latest technologies to attain
accuracy and effective results of the business activities. Cloud-based computing is
also one of the technological tool used by the business that serves to store relevant
business information in virtual platforms and save the cost for maintaining physical
data centers for restoring business data, cloud-based computing software can be
accessed by executives of the business from remote location with limited or no
Internet connection. Thus, technological tools help to enhance overall business
activities and objectives at limited cost and higher productivity (Safar and et.al.,
2018).
Environmental factors
Environmental factors are such factors that includes weather, climate change,
environmental pollution and so on. With the rising environmental concern in UK, the
government of the country have implemented different measures to promote
prevention of environmental pollution in the country that both businesses and
households have to comply. Marks & Spencer complies with different environment
protection measures and promotes the concept of sustainable approach in order to
establish strong brand identity of the business in the global market. Marks & Spencer
have introduced new product development for promoting sustainable concept
wherein the business has used wind energy for producing electricity. Other
environmental policies adopted by the business involves measuring the carbon
footprints wherein the business have successfully lowered down its carbon footprints
from the business activities, introducing sustainable concept in apparels, complying
with green practices in the workplace, reducing use of polythene, recycling and
reusing materials, proper treatment of waste and so on are some measures taken by
the business in order to promote environment safety and protection. These green
practices taken by the business helps to reflect the corporate social responsibility
and further earns customer reliability in the global market place.
Legal factors
Marks and Spencer complies with different legal factors that have been implemented
by the government of UK for managing the businesses in the country. Marks &
Spencer strictly adheres to all the legal norms and legislations, some of the business
legislation practiced by the firm are national minimum wage act, equality rights act,
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Health and safety act and others. Complying with the legal norms and legislations by
the business helps to reflect the ethical and transparent business practices in the
external marketplace.
Conclusion
In the light of the above discussion it can be said that there are different types
of businesses distinguished on the basis of characteristics, their revenue margin,
size and scope, business functioning, how the business has been incorporated
under sole trader or partnership and other factors that differentiates businesses in
the marketplace. A business sets organizational structure in a way that best suits the
long term objectives and brings productivity in the functioning. The above report also
reflected about PESTLE analysis which is a macro business environmental tools that
helps to evaluate the impact of external business factors on the business
performance, wherein a business needs to analyze all such affecting factors and
take timely measures to combat with challenges in the business environment.
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Reference List
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collaboration with different partner types on ecological process and product
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Lisowska, R. and Stanisławski, R., 2015. The cooperation of small and medium-
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Masanja, N. M., 2018. Introduction to business research. NMM Printers.
Robson, C., 2017. Small-scale evaluation: Principles and practice. Sage.
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