Types of Companies: Different Business Structures and External Factors Affecting Business

This report discusses different types of companies, including micro, small, medium, and large businesses, as well as sole traders, partnerships, and limited liability companies. It also covers organizational structures and external factors affecting business, such as political, economic, social, technological, legal, and environmental factors.

Business Management with Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
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Contents
Introduction 2
Section 1: Different types of companies and how they work
3
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships 5
Section 3: Different businesses structures and internal factors
affecting business 6
Conclusion 8
Reference List 9
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Introduction
The business is defined as the organization which is engaged in the commercial,
industrial and professional activities. The business organization can be profit and non- profit
organizations. There are various types of companies which exist into the business it is very
essential to understand the types of the business for the manager to conduct the various
activities. Also, it is important to evaluate the external factors which can impact the business
operations of the company. It is also very important that the organization follows a
organization structure in order to have a flow of communication between the managers and
employees(Gitman, McDaniel, and Shah, 2018). This report will include various topics such
as explanation of different types of companies, different companies from sole trader to
limited liability partnership, different business structures and at last external factors which
can impact the business organization.
Section 1: Different types of companies and how they work
Micro business:
Micro business is that type of business which involves nine employees or less
than nine employees in its business. It is having a balance sheet less than a
particular limit. In UK, there are number of micro business established in the country
which plays an important role for the overall growth of economy. This sort of
business is best suitable for those persons which cannot afford high investment for
their start-ups (Manab, Aziz and Jadi, 2020). These are mostly family organisations
which hires only one or two persons. Owners in micro business earns revenue for
the purpose of their own living or to support their family members. Iy may involve
businesses such as shoe-makers, independent mechanics, plumbers, small farmers
and many more. Marshfield Bakery is an example of micro enterprise.
Characteristics:
 It involves nine or less than nine employees in its business.
 It does not exceed the limit of £2 million in its annual turnover.
 The business requires minimum investment.
Small business:
Small business involves less capital investment, less amount of employees
and lesser machines to be equipped in the business. These kind of businesses
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produces goods and services on a small scale. These organisations are important to
the development of an economy (Puzakova and Kwak, 2021). These are privately
owned corporations, partnerships or sole tradership. It may take government support
and qualify for advantageous tax policies. Brainlabs is a good example to understand
small business enterprise.
Characteristics:
 They have restricted areas of business operations. It may be local shop or
that locates in one areas.
 Dependency on labour is quite minimal.
 It must not exceed the limit of £10 million in its annual turnover.
 The maximum number of labour must not exceed the limit of 50 employees.
Medium size business:
Medium size business can be referred to that organisation which is larger than
small-sized business. This sort of companies are progressively growing as they gets
a support from government and helps in providing employment for the people.
Verdant Leisure is a medium sized organisation in UK market.
Characteristics:
 It involves 250 or lesser employees within the business.
 The annual turnover of the company must be within the limit of £10 million to
£50 million (Bencardino and Vitali, 2019).
 This businesses grows through trading activities across the national boundaries.
Large size business:
Large business enterprises plays an important role in the development of
global economy. The contribution rate is also high for the GDP. It is vital for the big
companies to follow the rules, regulations and laws of country where they operate
their business. It also faced several challenges in the business environment but it
also offer more growth opportunities for the business. Unilever is a larger consumer
brand in UK.
Characteristics:
 It can exceed the limit of hiring 250 employees.
 The annual turnover rate also goes beyond £50 million.
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 The main agenda behind this organisations are to gain more annual profits that is why
they are more focused on their promotional activities.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
A sole proprietorship is also named as individual entrepreneurship, sole
tradership and proprietorship. It is that of business that is ruled by single owner and
which has no separate legal identity from their business. It may also employs other
people for their support in the business. The sole trader has unlimited liabilities but
enjoys profits all alone (Mukhamedov and Souissi, 2020). The sole trader may
exploits trade name or brand name other than its legal name.
Examples: Beauty parlour, sweet shop, general retailer and many more.
Partnership:
A partnership is formed with an arrangement by two or more than two parties
to tackle and operate their business. They aimed to share profits and loss as per
their pre-decided ratio in the partnership agreement. It is found as two of
partnerships; general partnership and limited partnership. In general partnership, the
partners shares equal amount of responsibilities and rights in the business. Similarly,
they shares profits, liabilities and debts equally in the enterprise. While, limited
partnership involves the features of both general and limited partners. The general
partner has unlimited liabilities and overlooks the business and other members.
Limited partners have minimal control over the corporation.
Examples: Red Bull and GoPro, Hindustan Petroleum, Levi's Pinterest and many
more.
Limited liability business:
Limited liability business refers to any legal structured business where a
business loss will not goes beyond the limit of amount that invested in a partnership
or in limited liability company. It is form of private limited company. They are well-
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known for their flexibility that they offer to business owners. It has a certain
characteristics of both corporation and sole proprietorship or a partnership.
Examples: Anheuser-Busch, Blockbuster and many more.
Public limited liability business:
A public limited company is used for public company under UK Company' law.
It is a limited company whose shares sold independently and traded to the public. It
involves minimum shares of capital Euro 50,000. It also uses PLC after the end of
business name (Rout, Chakraborty and Goswami, 2020). They also have separate
legal entity.
Examples: British Petroleum Company, Tesco and more.
Cooperative:
It is also known as co-operative business. It is a business that involves
persons voluntarily to meet their general social, economic and cultural needs and
goals through mutually owned association. It may include:
 Associations are managed by their members itself.
 Hybrid cooperatives that shares possession between several stakeholder
categories
 Platfrom cooperatives that exploits a cooperatively rules and governed
website, protocol and mobile application to help the sale of products and
services.
Examples: Housing Cooperatives, retail cooperatives are few examples of
cooperative association.
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
Organisational structure – It is defined as a system which outlines how the certain
activities are directed in order to achieve the goals of the business organisation. This is
concerned with the flow of information which is needed to be passed from the different levels
it is very important for the organisation to have a structure for the easy flow of information.
The two types of structure is been explained below:
Functional structure- It is the business structure which groups the employees on the
basis of their skills or according to their job roles. Here the manager divides the flow of
information on the basis if the different department which are of the similar profiles. For
example, the human resource department deals with the issues related to the HR such as
hiring the right candidate, training and development of the employees and various other
activities. Similarly, the other departments are concerned with their work according to the
skills and knowledge. Through this structure the organisation can achieve its target as people
from the same department can communicate with each other in order to provide any
information(Yasir,. and Majid, 2017)
Divisional structure- It is a type of the structure which is adopted by the various
business organisation where it categorizes on the basis of the products and services. This kind
of structure is helpful for the large companies where there are different product lines. It
specifies on the basis of the specific region or the product. The flow of the communication is
between the employees are they are well skilled then it is easy for the organisation t achieve
the goals and increase n the productivity for the business organisation(Romero-Silva, , Santos
nd Hurtado,, 2018)
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
Its is a tool which is used by the various organizations in order to evaluate the
external factors which can impact the business operations and the different activities.
This is the important tool which needed to be used by the marketers. The pestle
analysis is explained in the context of Marks and Spencer. The various factors are
discussed below:
Political- These factors are related to the extent to which the government policies
may interfere the business organization. Such factors include the tax policy, trade restrictions,
etc. In context of the Marks and Spencer the company has the negative impact of the Brexit
move where it was unable to to the trade outside the European Union. This impacted the
business organization.
Economical- This factor take into account the various aspect related to the economy. Here
the performance of the economy impact the business organization. Such factors include
inflation rate, interest rate, unemployment rates etc. The impact of the covid-19 lead to the
inflation in the economy die to which the company was affected. As increase in the prices
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and loss of jobs for many people lead into the decline of the purchase of the products which
impacted the Marks and Spencer(Meng, and et.al., 2019).
Social- this is related to the social trend. This factor helps the marketers to understand
the market and the trend which is been followed by the people. Such factors include change
in lifestyle, attitude, behavior, cultural aspects etc. it is very important for the organization to
consider this factor as the trend which is been followed by the young generation. The
company need to evaluate the perceptions and kind of the material hey are looking for. This
will help the organization in meeting to the expectations of their customers.
Technological- this is the factor related to the innovation and development in the
economy can impact the business organization. Such factors include research and
development, artificial intelligence, digitization etc. The marks and Spencer can use the latest
technologies such as self check in and out so that the customers do not have to stand in queue
for the billing for the long hours.
Legal- This is related to the certain laws which need to be followed by the business
organization in which they are operated in. such factors include industry regulation, licensing,
employment safety laws etc. IN the past years the Marks and Spencer is been involved in
multiple legal disputes. This can impacted in the brand image of the organization. So it is
very important for the company t abide to the certain laws.
Environmental- These factors are related to the ecological impact on businesses.
Such factors include the climate change, sustainability, pollution, natural dusters etc. the
marks and Spencer is highly concerned with the sustainability. To promote such practices the
organization is involved in the sustainable development for the safety of the
environment(Banda, Nyeinga and Okello, 2019).
Conclusion
From the above report it is conclude there are different form of the business
organization such as micro, small business, medium business, large companies. It is very
important for the owner t define the type of business in order to conduct the various activities.
The various types of business can be sole trader, partnership, limited liability. This is
important to categories the business whether its is sole trader, partnership or the limited
liability. There are different organizational structures such as functional and divisional. It is
important to choose the right structure in order to have an effective flow of the information
within the organization. The pestle analysis helps in evaluating the external factors which can
impact the business organization. The various factors are political, economical, technological,
social, legal and environment which have impact on the business.
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Reference List
Banda, M.H., Nyeinga, K. and Okello, D., 2019. Performance evaluation of 830 kWp grid-
connected photovoltaic power plant at Kamuzu International Airport-
Malawi. Energy for Sustainable Development, 51, pp.50-55.
Bencardino, D. and Vitali, L.A., 2019. Staphylococcus aureus carriage among food handlers
in a pasta company: pattern of virulence and resistance to linezolid. Food control,
96, pp.351-356.
Gitman, L.J., McDaniel, C. and Shah, A., 2018. Introduction to business. Rice University.
Manab, N.A., Aziz, N.A.A. and Jadi, D.M., 2020. Sustainability risk management: an
integrative framework to evaluate emerging risks and other non-quantifiable risks
affecting company survival. World Review of Science, Technology and Sustainable
Development, 16(2), pp.87-104.
Meng, F., and et.al., 2019. Virome analysis of tick-borne viruses in Heilongjiang Province,
China. Ticks and tick-borne diseases, 10(2), pp.412-420.
Mukhamedov, F. and Souissi, A., 2020. Types of factors generated by quantum Markov
states of Ising model with competing interactions on the Cayley tree. Infinite
Dimensional Analysis, Quantum Probability and Related Topics, 23(03), p.2050019.
Puzakova, M. and Kwak, H., 2021. Two’s Company, Three’sa Crowd: The Interplay between
Collective versus Solo Anthropomorphic Brand Appeals and Gender. Journal of
Advertising, pp.1-21.
Romero-Silva, R., Santos, J. and Hurtado, M., 2018. A note on defining organisational
systems for contingency theory in OM. Production Planning & Control, 29(16),
pp.1343-1348.
Rout, C., Chakraborty, D. and Goswami, A., 2020. An EPQ model for deteriorating items
with imperfect production, two Types of inspection errors and rework under
complete backordering. International Game Theory Review, 22(02), p.2040011.
Yasir, M. and Majid, A., 2017. Relationship between determinants of organisational structure
and knowledge sharing. International Journal of Business Excellence, 12(3), pp.294-
307.
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