BMP3002: Business Structures, Internal Factors, and PESTLE Analysis

This report provides an overview of various company types, ranging from micro-businesses to large corporations, and examines different business entities such as sole traders, partnerships, cooperatives, and limited liability partnerships. It also discusses various organizational structures like functional and divisional structures and analyzes the impact of external factors on business performance using the PESTLE framework, exemplified through a case analysis of Starbucks, highlighting political, economic, social, technological, legal, and environmental influences. Desklib is a platform where students can find similar past papers and solved assignments.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
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Contents
Introduction 3
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 9
Reference List 10
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Introduction
A business is the organisation or separate legal entity which include commercial,
professional and industrial activities. It is not mandatory that business should be done only
for the purpose of earning profit because there are several businesses which do not perform
business operations just to earn profit. In simple words, business is process of arranging
efforts and actions of an individual in order to producing and selling the goods and services
for the purpose of earning profit. Some of businesses perform operations only for the purpose
of development of society. There are several factors have been found in the environment
which effect the business operations. They effect all the operations either internally or
externally which can be analysed by PESTEL analysis. The main objective of presenting this
report is to know about the various types of companies with the several entities from sole
trade to cooperatives. Business structure have been also discussed in this report with the help
of conducting a PESTEL analysis.
Section 1: Different types of companies and how they work
On the basis of purpose of companies, it has been classified in three types which
include charitable companies, profit earning and financial institutions. Types of companies on
the basis of their size and scope are given below:
Micro business:
It refers to the businesses which perform their business operations on a very small
scale. That scale is measurable with the help of knowing about the number of employees
working in the organisation, capital and total worth of business. This business have less than
10 employees and their annual sales is always less than 2 million. Mostly, these businesses
are run by a single individual as the operations are very limited. If the business owner wants
to achieve the long run growth in this business, they are required to decrease the costing
which will result in adding the values of people in the business.
These businesses are operated and managed by the owner or manager of business.
Local grocery store, plumber are the examples of micro business. These business perform
there operations in a limited area. There is negligible use of technology is found. The owner
of such businesses earn small amount of profit so that they can survive their life without
facing any problem.
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Small business:
It refers to those businesses which are large in size as compared to the micro business
as it have more than 10 employees but less than 50 and it include the annual turnover of
almost 10 million. Sole proprietorship, partnership and privately owned company are the
various businesses which comes under small businesses. The area of performing business
operations is small but not smaller than the micro business.
These types of business include less amount of profit and it also include several small
teams of employees. It is well known that these businesses involve less employees as
compared to the medium and large businesses, it means they serve a limited area. They do not
have sufficient resources and capital to perform business operations on large scale. They are
not depend on technology as these businesses are labour intensive and they focus on the work
done by labour or manpower.
Medium size business:
The growth of small business result in the start of medium sized business. It include
large amount of human capital as compared to the small businesses. It include the annual
turnover of 250 million with the inclusion of more than 50 employees but less than 250
employees.
Generally, these businesses are run on the basis of different innovative ideas. It result
in creating more competitive and healthier economy. It also include the high use of
technology as the owner have to do something innovative.
Large size business:
Such business include the involvement of more than 500 employees while performing
business operations. It has been found that the annual turnover of these businesses always
more than 1.5 billion euros. The grand total of their balance sheet has been found as more
than 2 billion euros. Generally, these businesses comes under mining and manufacturing
industries.
These type of businesses are run only with the purpose of creation of revenue. Along
with this, it also provide the employment opportunity to the general public which leads to the
development of society as well. These businesses have a huge brand image which result in
the creation of positive reputation of organisation in the market.
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Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
Sole Trade Business organisation is the business which is owned and managed by an
individual. All the tasks related to the organisation are performed by the business owner. That
individual is only responsible for gaining the profits and bearing all losses. The business
owner is the only task performer in the organisation.
As the business is managed by a single person, hence it is not be considered as the
separate legal entity and the liability of owner is unlimited as it depend on the personal
circumstances of the individual. At the time of winding the business, the owner have to pay
all the liabilities by selling their personal assets.
Partnership:
It can be defined as an agreement which is made between two or more parties for the
purpose of managing and operating the business and sharing the profits. In simple words, it
can be defined as a type of business under which a formal agreement has been made between
two or more people in order to sharing the profit and losses in a specific decided ratio.
The main features of partnership include the agreement among partners, involvement
of two or more people, sharing of profit in a specific decided ratio and many more. The
owners of these businesses are also considered as the agent of business. It is necessary for
partners to have some profit gaining motive.
Limited liability business:
Under this business structure, the owner of organisations are not personally liable to
pay for the debt of business. Such type of companies involve the characteristic of both
corporation as well as sole proprietorship or partnership.
The main feature of these types of businesses is that the owners are not restricted to
pay the liability personally as it gives the features of limited liability of members. These types
of business organisations do not get disturb in the case of insolvency or death of any member.
Remaining members in the organisation can continue the work after fulfilling some
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documentation. Limited liability of members of business organisation implies that in the case
of insolvency of organisation, every member have to pay liabilities as per their limited share
in the organisation.
Public limited
It refers to the large business which are registered under London Stock Exchange and
there shares are to be sold to the general public. It is necessary to use the word PLC after
writing the name of organisation. These type of business organisation arrange the capital by
selling the shares to the general public. It's minimum share capital has been analysed as
£50000.
The characteristics of these companies can be highlight that the shares of Public
Limited Liability can be easily transferable because of presence of separate legal entity of the
organisation. Along with this, the presence of transparency in the performance and decision
making process of organisation can be consider as the another important feature of Public
Limited Company.
Cooperative:
It can be defined as a private business organisation managed and owned by the people
who use it's product, supplies or services. This type of companies are very beneficial as it
bring the people together in a democratic and equal manner.
The members of these companies have common goal and interest having unlimited
and limited liability. The main purpose of cooperative is to serve the society which result in
the development of economy and protecting the customers.
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
A system which create the outlines or boundaries for the process of performing
certain activities in order to achieving the organisational goals and structure are defined as the
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organisational structure. It is very important for the organisation to make outlines so that the
employees can complete their assigned tasks in an effective and efficient manner. These
outlines may be made with the rules, roles and responsibilities. Organisational structure make
easy to evaluate the progress and keep eyes on each and every level of organisation.
Distribution of powers in an organisation is also made on the basis of organisational
structure. Functional Structure: The complete organisation have been divided on the basis of
the specialization of employees which include marketing, IT, Human Resource and
many others. Under this structure, the people having same skills work together for a
common goal so that they can bring the effectiveness in the work.
 Divisional Structure: This structure divide the each and every function of
organisation as a division. These divisions are done on the basis of either on products
or geographies.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
PESTLE analysis is a concept of marketing principle which an be used as tool to
analyse the external factors which influence the business i.e. political, Economical, social,
technological, legal and environmental factors. These factors are flexible and they can change
according to location, type of business. This report include PESTLE Analysis in the context
of Starbucks.
Starbucks is a multinational brand of coffee and beverages, founded by Jerry,
Baldwin, Zev Siegl and Gordon Bowker in 1971, having headquarter in Seattle, Washington,
United States. Starbucks is the largest coffee house having almost 31256 outlets all over the
world.
POLITICAL FACTORS
These are the factors which are made by government of any country. Every business
firm is restricted to follow the rules and regulations made by the government. It include tax
policy, free trade policy, employment law, environment law etc. For Instance Starbucks
follow free trade policy, as it helps the company to expand the business in different countries
also help in the deduction of cost of doing business.
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ECONOMICAL FACTORS
Economic factors are totally depend on the various situations of the economy. These
factors include employment rate, recession, demand and supply, inflation, tax rate, rate of
interest etc. For Example this ongoing economic recession and increasing unemployment
rate is resulting in the deficiency of money in the market, which result in the shifting of
consumers taste to the cheaper alternates. Starbucks decrease the prices of their products, so
that they can maintain their costumes.
SOCIAL FACTORS
Social factors refers to those factors which are related to the society or which can be
change because of customer. It include age group, taste, shopping habits, lifestyle, taste and
trend etc.
It was found that mainly the young age group of people between the age of 18 to 29 are
preferring coffee. They select the location which are nearby to the offices and colleges, in this
way they make easy availability of coffee to the young age people.
TECHNOLOGICAL FACTORS
Technological factors refers to the ways, through which any company do some
changes by introducing some technology for increasing sells of their product.
Starbucks found that people of UK like to read books or to do their work by mobile
phone or laptop while taking coffee. They introduced Free Wi-Fi in their outlets, so that they
can attract customers.
LEGEL FACTORS
Most influencing factors of any business are legal factors. It is the first priority of any
business not to break any law. These factors include business law, consumer protection law
etc.
Starbucks is multinational brand and it is working in different countries by taking
proper licence from government. They are following all legal regulations and trade law of
foreign markets.
ENVIRONMENTAL FACTORS
Business environmental factors plays an important role in determining the success of
any business in the industry of food & beverages. It is the responsibility of every business not
to harm environment while doing trade.
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Starbucks is using disposable glasses for serving coffee, they are completely safe for
the environment. In this way they are following environmental factors of business.
Conclusion
It has been concluded from the above report that the business organisation has been
divided in several parts on the basis of various factors which include size, scope and many
more. This report is explaining all types of businesses and companies along with their
characteristics. PESTLE can be analysed as a very important marketing tool as it highlight
the macro environmental factors of a business organisation which are going to effect the
business operations in near future. By performing this analysis, the organisation get to know
about the various challenges which they are going to face in the near future and provide the
time to prepare themselves.
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