Types of Companies: Understanding Different Business Structures

This report explores different types of companies, their characteristics, and how they operate. It also examines the impact of external factors on business performance. Learn more about business structures and their effects on productivity.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Contents
Introduction 2
Section 1: Different types of companies and how they work
2
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Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships 3
Section 3: Different businesses structures and internal factors
affecting business 5
Conclusion 7
Reference List 8
Introduction
A company is a judicial entity which is formed by the combine contribution and
unification of group of different people who wanted to work together for the accomplishment
of joint objective. Companies can be categorized into different types like industrial or
commercial and the tax revenue of these firms also differ. On the basis of the tax imposed on
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the industry their categories are defined. It is a corporate or integrated commercial governing
body which is certified by companies act. They could be private, government, limited, or
share capital company etc. The aim of this report to examine the understanding of various
type or companies and their functioning and characteristics. Further the report will also
determine the structural formation and the impact of external factors on the company.
Section 1: Different types of companies and how they work
Micro business:
These are generally small type of commercial enterprises. Their initial investment
capital is low and the employee count is is around 10 or lower than that. Sometimes these
businesses have only sole owner without any employee. It has lower revenue generation with
very minimal customer base. Generally they don't have any extended business in different
locations, it is limited to their domestic area or locality. Example: Tikog product making,
small eatables kiosk, Tie & dye shops, tailoring etc.
Small business:
This is defined as individually held, partnership or private corporation. They have
less workers and small annual turnover. In U.K. and U.S they have different characteristics
of small firms according to their line of work for example: manufacturing firms have around
400-500 staffing and wholesalers can have not more than 100 workers. Their initial
investment is little more than the micro-enterprise and they also have more customer count
and may have more than one or two extended outlets. Example: Accommodations, cafe's, day
care services etc.
Medium size business:
This particular scale size enterprise have more than 100 and less than 250 employees.
It is enrolled under the companies act. It can be family owned but the possession and
ownership is completely detached from the administration. They have systematically
structured infrastructure and the capitalist and lenders are also involved in the financial
decision making of the business (Cavalieri and et. al., 2018). Such entities operate their
functions in high potential market which have high profit and growth possibilities. Example:
furniture, leather products manufacturers, textile industry etc.
Large size business:
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These industries have more defined hierarchical structure. It has complex
management as they undertake operations and functions in a huge quantity on a daily basis.
There are large number of employees in these organizations as they carry out numerous
functions and have expanded business. The consumer base is strong as they cover large part
of market segment. Market acquisition and commercial relationship with different enterprises
and stakeholders. Their annual turnover is very high in comparison with any other type of
companies. Examples: Google, Walmart, Microsoft etc.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
The sole trader is an individual who runs business on their own. They are responsible
for any lose and profit or any occurrence happen within their commercial enterprise. Their
business will be at risk if they fail to pay all the debts. The sole owner is liable for every
misshapen in the enterprise. Sole trader doesn't have any separate identity they are the owner
and the business themselves. They have full control over every single action taken in the
company. Being a lone owner is of huge responsibility because all the important decisions
and function are to be carried out buy them only all by their own self (Frank, Dalenogare and
Ayala, 2019). Main characteristics of such establishment is that, it is not mandatory to do
registration and enrollment of the firm with other companies, they also don't have any board
of directors etc. All the investment should be arranged or done by the individual itself they
generally don't have any investors or stakeholders to do the financing Example: beauty
saloons, boutiques, confectionery or candy shops etc.
Partnership:
Its is a formal agreement between two or more separate group or entities who decided
to form a arrangement and work together to run a establishment and have equal share in all
the lose and profits. Partnership is basically divided into two categories i.e. general and
limited. In general concern the partner run and operate the functions and anticipate financial
obligation for the association on the other hand the limited partner look after all the
investments and they don't have any power in regards of company and are not eligible for
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the liabilities (Brownlee, Dmytriyev and Elias, 2017). Example: Red bull & Go Pro, Spotify
& Uber etc.
Limited liability business:
It is a commercial structure where the proprietor are not responsible for any of the
financial obligation. They consist of the characteristics of both partnership and sole owner.
LL C's are permitted under the government legislative authority. The laws and guidelines for
these business entities differ in states and are solely depend on their political and legal
policies (HIBRET, 2017). The people who are the part of such enterprises are known as
members. It is less complex to establish and the functionality is more safe and flexible.
Example: Sony, eBay, Amazon are some of the examples of LLC companies.
Public limited liability business:
A PLC are those organization which our governed by the public or government
entities. They offer their shares and holding to the general public. These are listed or
sometimes unlisted on the stock market. In UK it is mandatory for the enterprises to add PLC
after their company name and all of their activities are strictly monitored. They are advised to
publish their annual or quarterly reports in public domains and to their shareholders. The
positive side of being a public limited enterprise is that they can raise funds by availing
shares to the public (Salehyfar and Rostami, 2020). They are obligated to conduct yearly
meetings for their should be transparent in all their resourcing and accounting. Example:
Rolls-Royce holdings, British petroleum etc.
Cooperative:
It is a private commercial establishment which is managed and possessed by the
consumers who utilizes its products and services. These corporations differ in the size and
functioning although they all are directed towards achieving the same objective (Imaz and
Eizagirre, 2020). They are advantageous for the uplifting of the specific segment who posses
less power over the business market i.e. farmers, agriculture-rs, labors, workers etc.
Example: Credit unions, agriculture co-operatives etc.
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 structure determines the functioning of various activities include the
task allocation, management and combine efforts towards the accomplishment of determined
objective (Nwachukwu and Chladkova, 2019). It provide the basic composition on which all
the main activities of the business construct on. Two of the main structures are discussed
below:
Functional structure: Establishment which lie in of this particular type of structure have
divided into subgroups based on their specifications and functionality like, marketing,
operation, human resources, finance, information technology etc. These segregated
departments have their separate functions, structure and objectives to fulfill. Each of these
department is managed by designated departmental manager or leader. Those leaders posses
specialization in that particular department and they are solely liable for the performance and
activities of that specific division. The degree of efficiency and effectiveness is higher in this
establishment formation this will impact the overall productivity and growth as people with
similar set of skills and abilities are arranged in common group so their efficiency is
increased and having similar skillets and understanding will prevent conflict and leads to
better adjustment and combine efforts (Stadtler and Van Wassenhove, 2016).
Divisional structure: This segregate various business functions into commodity and
territorial divisions. Each of the single section consist of all the essential resources and
utility to assist the goods line. These can be characterized in two segments:
Product departmentalization: It refers that all the activities regarding the commodity under
the supervision of individual head. For example: If a automobile manufacturers launch a
sport utility vehicle than the promotion and sales function and team is specifically formed
separately for that sports car. If in a establishment there are several products it will be
beneficial as commodity will have their assigned employees to manage that. As each section
is dedicated to promote and handle specific service or product which will be beneficial and
will also increase sales growth and profitability.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
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Political: Amazon is a multinational establishment and they have to face various political
restrictions and regulations in order to operate. Company is criticized by the government as
they haven't paid trading tax which are mandatory for each business organization to pay to
function legally and ethically no matter they are national or international establishment.
The rise in cyber safety, data and identity theft government imposed several laws and rules
on the companies to update and develop their online portals and websites which have
advanced security and privacy system which will restrict the hacker to break into their
websites and keep the consumer and companies data and information safe and secure. In
terms of safety Amazon is appreciated as they are rated as one of the safest digital platforms
to carry forward transactions and online purchases.
Economical: The continues change in the exchange of foreign currency rates influence the
financial condition of the company and reflect on the overall productivity and the operative
expenses of the organization as they conduct business on global and national level (Pan,
Chen and Zhan, 2019). Also the demand of increased wages from the workers will also effect
the monetary condition as the increased inflation will decrease the purchasing power of
people and to fulfill their basic need they required to earn more.
Social: The establishment consider all the social components while conduct any operation of
their industry. Company avail various offers and discounts on various cultural and traditional
occasions in accordance with the country they operate in. The generation is now more
techno-savvy as they use various electronic and technologically advanced gadgets and spend
most of their time on online websites and in their busy schedule they like to make every
single possible purchase through online mode as it is more convenient and time saving.
Amazon have a great advantage that it have a large distribution channel an d they deliver in
almost every part of the world and their delivery process is comparatively strong with their
competitors.
Technological: Their work is totally dependent on the technology. Adaptation and proper
utilization of advanced application and engineering will be a key to success and growth for
every industry. Every retailing firm is using the e-commerce platform to run their business
activities more efficiently to reach out to huge customers base and attain high percentage of
market share. Now a days nearly every company have their own mobile applications through
which people can get easy access to their product range and can make purchases from any
part of the world.
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Environmental: Managing sustainability and catering to the consumers efficiently both
activities are equally important for an organization to perform. They are actively indulged in
various environmental safety, security and betterment initiatives by waste management and
decomposing and recycling their discarded materials and wastage's. On e of the backdrop of
the company is that, they haven't publicized any of their property document ever in any of
the government or public platform.
Legal: The juridical guidelines and norms are mandatory to be followed by every
establishment. To tackle all the legalities they have assigned legal team for their industry.
Abiding any of the regulations will put establishments existence in danger and can demolish
its reputation and good will in the market (Sankar, 2019). Amazon deal in cross boarders so
they have to make adjustments with heir particular laws and rules.
Conclusion
The above report has conducted a assessment which will help in better understanding
of different types of companies their characteristics and functionalities. Further it has also
evaluated the structural formulation of the organizations and what influence they reflect on
the growth of the establishment. Lastly the external analysis of an enterprise was conducted
and identified all the major factors which impact the macro components of the industry.
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Reference List
Brownlee, E.R., Dmytriyev, S. and Elias, A., 2017. Integrative Stakeholder Engagement:
Stakeholder-Oriented Partnership Between the Coca-Cola Company and World
Wildlife Fund. In Stakeholder engagement: Clinical research cases (pp. 339-367).
Springer, Cham.
Cavalieri, S. and et. al., 2018. Service transformation in industrial companies.
Frank, A.G., Dalenogare, L.S. and Ayala, N.F., 2019. Industry 4.0 technologies:
Implementation patterns in manufacturing companies. International Journal of
Production Economics.210. pp.15-26.
HIBRET, E., 2017.ASSESSMENT OF TRAINING AND DEVELOPMENT PRACTICE IN
SATCON CONSTRUCTION PRIVATE LIMITED COMPANY(Doctoral
dissertation, St. Mary's University).
Imaz, O. and Eizagirre, A., 2020. Responsible Innovation for Sustainable Development Goals
in Business: An Agenda for Cooperative Firms. Sustainability.12(17). p.6948.
Nwachukwu, C. and Chladkova, H., 2019. FIRM RESOURCES, STRATEGIC ANALYSIS
CAPABILITY AND STRATEGIC PERFORMANCE: ORGANISATIONAL
STRUCTURE AS MODERATOR. International Journal for Quality Research.13(1).
Pan, W., Chen, L. and Zhan, W., 2019. PESTEL analysis of construction productivity
enhancement strategies: A case study of three economies. Journal of Management in
Engineering.35(1). p.05018013.
Salehyfar, A.R. and Rostami, M., 2020. Liability of Public Limited Companies Inspectors
and Auditors in Iran and United Kingdom. The Quarterly Journal of
Interdisciplinary Legal Research.1(3). pp.32-48.
Sankar, R., 2019. Factors Influencing Sole Proprietors Business Performance. Journal of
Entrepreneurship and Management.8(3). p.55.
Stadtler, L. and Van Wassenhove, L.N., 2016. Coopetition as a paradox: Integrative
approaches in a multi-company, cross-sector partnership. Organization
Studies.37(5). pp.655-685.
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