Report on Various Types of Companies, Structures, and PESTLE Analysis

This report provides a comprehensive overview of various company types, including micro, small, medium, and large businesses, as well as sole trader, partnership, limited liability, public limited liability, and cooperative structures. It defines their characteristics and provides examples. The repor...Read More

Types of Companies

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Task 1...............................................................................................................................................1
1.1 Definition, characteristics and example of micro business, small business, medium size
business and large size business..................................................................................................1
Task 2...............................................................................................................................................2
2.1 Definition, characteristics and example of sole trader business, partnership, limited
liability business, public limited liability business and Cooperative..........................................2
Task 3...............................................................................................................................................5
3.1 Identify different organisational structures and explain how organisational structure
affects business productivity.......................................................................................................5
3.2 Using PESTLE analysis explain how different external factors affect the performance of a
business.......................................................................................................................................5
CONCLUSION................................................................................................................................7
References:.......................................................................................................................................8

INTRODUCTION
Business entity is an organisation created by one or more individuals with some motives
of profit earning, welfare of society and to create reputation (Mrňová and Roudná, 2020).
Companies are separate entity from their owner and different types of companies are based on
number of owners and their main objective of performing the business. Asda is an British
supermarket chain which is located in Leeds, UK. This company was founded in 1949 by Noel
Stockdale and J.W. Hindell. The following report consist of definition and characteristics of
different types of businesses, organisational structure and their effect on business productivity,
PESTEL analysis of Asda company.
MAIN BODY
Task 1
1.1 Definition, characteristics and example of micro business, small business, medium size
business and large size business
Micro business- These are the businesses which is handled by less than ten employees.
The members of this businesses are basically seen as family members. Micro businesses are the
part of small business(Andrews and et. al., 2020). One of the company of micro business in UK
is Mantons Cards which is a very small gifts card making enterprises.
Characteristics of micro business-
 Less than six employees handle whole business functions. A less amount of investment is required for start up of micro business.
Small business- These are those companies which did not exceed more than 50
employees to handle their daily operational activities. The best example of small business in UK
is CAFEPOD Coffee Co. which is managed by 15 employees and it is one of the most successful
small business with good amount of profit earning ratio in UK.
Characteristics of small business-
 Small businesses considered less than 50 employees.
 Their owners are willing to take risk.
Medium size business- The definition of medium sized business is defined under
companies act 2006 which states that medium sized companies are those companies which has
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less than 250 employees(Davenport and Bean, 2018). Verdant Leisure is a holiday park company
operated in UK with 104 employees.
Characteristics of medium size business
 It considered less than 250 employees operating within a country. They are considered with skilled employees in different areas.
Large size business- These are those businesses which is having more than 500
employees with wide range of skilled and talented employees. Asda is an British supermarket
chain with more than 1,40,000 employees.
Characteristics of Large size business-
 It require more than 500 and unlimited in maximum number of employees.
 This companies are expended in many countries.
Task 2
2.1 Definition, characteristics and example of sole trader business, partnership, limited liability
business, public limited liability business and Cooperative
Sole trade business- These are those businesses which is owned and managed by a single
person(Paredes and et. al., 2018). All the liabilities are paid by owner and all the profit is taken
by owner which means risk is high in this business. In case of big loss, owner is liable and has to
pay from its personal property. This type of businesses require less investment and require less
time to start up. Jason Donervan is an sole trader business in UK which is handled by Mustapha
who is its owner . who deals in selling chicken products like chicken burger and many others.
Characteristics of sole trade business-
 This business contain only one employee and that is its owner.
 All the official work is handled by its owner.
 There is no legal existence of these companies.
 All the profit and loss is shared by its owner.
Partnership business- These are those businesses which is managed by two or more
owners who came together with a agreement signed by all owners to perform business operations
(Stverkova and Pohludka, 2018). Uber and Spotify are the firms who came under partnership
business. Spotify is a digital music streaming service providing company and Uber is a ride-
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hailing and food delivery providing company. These two companies came into partnership to
share their profits and loss together and to provide their services to their customers.
Characteristics of partnership business-
 Agreement is an essential part of of partnership business which provide all terms and
conditions of partnership firm which is compulsorily signed by all partners of the firm.
 The owner of partnership firms share their profit and loss according to their
agreement(Funminiyi, 2018).
 All the decisions related to company is taken only after all partners are agreed.
 All operations are managed by all partners equally or according to their signed
agreement.
Limited liability business- These are all those companies whose owners are called the
members of the companies and their members are not liable for loss in the company which
means excess loss of business is not managed by using owners personal property. Greenery is a
British company who is a distributor of petrol and diesel for motor vehicles. Main share holders
of this company are Tesco, Owen's family and Caradog.
Characteristics of Limited Liability business-
 These companies has separate legal existence because its owners are separate from the
company. Company has its own identity which is different from owners identity and no
member is liable to pay any loss from their personal property(Phan, 2021).
 Formation and operation are simple with full flexibility because members are not liable in
case of loss. Hence they perform with the main aim of achieving goal without any fear or
liability. There operation is simple. With few formalities its formation is also easy.
 The owner of the company are called its members. LLC can be performed by individual as well a group of individual.
Public limited liability company- These are the companies whose shares are freely sold
to general public of particular country. The use of plc after the name of company who deals in
public limited company is Maryland. The buyers of these companies have limited liability. Next
plc is an retailing company based in UK, this company is an perfect example of LLP.
Characteristics of Public Limited Liabilities company-
 PLC is a separate legal entity which has different identity from its owners(Darmansyah,
2018) .
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 It consist of easy transferability which means there is no restriction on transferring shares
to the public.
 PLC is an perpetual succession which means company stays for longer period of time, it
never come to an end. Due to the death of any member or shareholder company never
pause its functioning.
 The members of this companies enjoy the limited liability feature which means the
members of this company are not supposed to bear the loss by selling their personal
properties.
Corporative- These are the companies who offer its services to its members only.
Cooperatives are created by many people basically more than 100 people who is called its
members who come together to fulfil their common needs(Kasahun, 2020). The co-operative
Group in an British retailing company who provide its more than 80,000 members to buy any
product available with them at reasonable prices.
Characteristics of Corporative-
 Cooperatives allow easy entry to its new member, the only condition is they must have
common interest and follows the rules and regulations made by the existing member of
cooperatives.
 Financing of cooperative organisations are contributed by its members through the
purchase of its shares.
 They have both limited as well as unlimited liability condition, it depends on the aim of
members and their wish.
 These companies are managed by the directors of company which is elected by its
members only (Purnomo, Suryana and Sari, 2018).
Task 3
3.1 Identify different organisational structures and explain how organisational structure affects
business productivity
Organisational structure defines how all activities within a company is conducted and in
which direction they are conducted. Different types of organisational structure and their impact
on business performance are explained below-
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Functional organisational structure- This structure follows a formal way in which
powers and responsibilities are distributed according to positions from higher to lower.
Employees of same skill and talents are arranged in a single department and same for different
skilled employees. Each separate department is assigned by a supervisor who handle all activities
of that particular department (Mrňová and Roudná, 2020). Asda is a company which follows this
structure and because of their organisational structure they have done well. This structure helps
the company to work efficiently by dividing work in department wise and due to this they are
successful in managing the company perfectly. The supervisors of every department handle each
issues very politely that it does not impact in any negative way to company.
Horizontal or flat organisational structure- It contain only few levels between upper
management and staff level employees. This structure is basically used by start up companies.
This structure is basically followed by those companies who need less supervision. In this
structure a single senior authority manages a large amount of employees. The advantage of using
this structure is that it contain less time in reporting to senior because of less number or reported
senior in organisation. Employees perform more better when there are less supervisors and they
can focus more on their work(Andrews and et. al., 2020).
3.2 Using PESTLE analysis explain how different external factors affect the performance of a
business
PESTLE analysis is an external analysis of a business which help them to take corrective
measures to make any strategy for company. PESTLE analysis of Asda are explained below-
Political factor- This factors consist of political issues of a company, like political
stability, tax policy, trade restrictions, fiscal policy and many others. In context of UK, they have
political stability and there is no interference of any political party in any company's operational
management. There is no restriction for trade in UK which help the business to expand freely.
Hence, political factor is favourable Asda.
Economical factor- This factors include GDP, interest rate, unemployment rate and
many other(Davenport and Bean, 2018). Interest rate of UK is 0.1% which is very favourable
and unemployment rate is 5.1% which is less than many other countries. Hence, economical
condition is favourable for Asda. The economical condition of UK always tries to help the
corporate world to develop more at rapid speed.
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Social factors- This factor considered with social behaviour of customers, norms,
religion, purchasing power, standard of living and etc. For UK, their citizens enjoy life by living
high standard of living. Due to this they are ready to pay for qualitative life which increases their
standard of living. Purchasing power of UK citizens is high. On the other hand there are many
strikes for religional issues and on skin colour like strikes on inequality of black and white
people in the country. Hence, this factor is quite favourable for Asda.
Technological factor- UK is an developed country with new and advanced
technology(Paredes and et. al., 2018). They are very quick to adopt technology as soon as new
technology entered. The companies in UK take benefit of this factor by using advanced machines
and tools which help them to produce good quality products in short period of time. Hence,
Technological factor of UK is beneficial for Asda.
Legal factor- This are those factors which include legal laws of a country like labour law,
health and safety law, equal pay law and many others. UK is favourable in legal factor because
their laws are made with the main aim of providing benefit for employees and workers. Their
labour law consist of
Environmental factor- This factor includes climate, whether, pollution of
country(Stverkova and Pohludka, 2018). UK is considered as unfavourable in this content
because the rate or occurrence of storm in UK is high and the air pollution is considered as
biggest disaster because 8.1% people die every year because of asthma, lungs problem and etc.
which is caused by air pollution. Hence, environmental factor are unfavourable for Asda.
CONCLUSION
From the above information it has been concluded that there are different types of
companies based on number of employees and the main aim of their formulation which called
profit earning company or non profit earning company. There are different types of
organisational structure which helps in increasing performance of employees. It is also
concluded that external environment impacts upon business functioning. PESTLE analysis is
helpful to determine all those factors which impact positive or negative on company.
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References:
Books and Journals
Andrews, R. and et. al., 2020. Corporatization in the public sector: explaining the growth of local
government companies. Public Administration Review. 80(3). pp.482-493.
Darmansyah, A., 2018. Comparative analysis of bookkeeping at sole proprietorship and
partnership small and medium enterprises: Study on culinary sector in Greenville,
Jakarta. Scientific Research Journal (SCIRJ). 6(6). pp.1-10.
Davenport, T.H. and Bean, R., 2018. Big companies are embracing analytics, but most still don’t
have a data-driven culture. Harvard Business Review. 6. pp.1-4.
Funminiyi, A.K., 2018. Impact of Organisational Structure on Employee Engagement: Evidence
from North Central Nigeria. International Journal of Advanced Engineering,
Management and Science. 4(8).
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Kasahun, A.K., 2020. The Impact of Working Capital Management on Firms’ Profitability-Case
of Selected Sole Proprietorship Manufacturing Firms in Adama City. IOSR Journal of
Economics and Finance (IOSR-JEF). 11(1). pp.45-55.
Mrňová, Z. and Roudná, V., 2020. FORMS OF FACILITY MANAGEMENT PROVISION IN
DIFFERENT TYPES OF COMPANIES. International Multidisciplinary Scientific
GeoConference: SGEM. 20(6.2). pp.193-200.
Paredes, S.S. and et. al., 2018. Comparative study of innovation factors in the small and medium-
sized textile manufacturing enterprise Abstract: The context of innovation has changed
and one economy that demands permanent adaptations should consider it as the
principal core of its competitiveness; this requires improving its capabilities for
innovation as a source of competitive advantage and survival strategy. The objective of
this research was to determine what factors of innovation are statistically significant
among small and .... Contaduría y Administración. 63(3). pp.22-23.
Phan, S., 2021. The effect of PESTLE factors on development of e-commerce. International
Journal of Data and Network Science. 5(1). pp.37-42.
Purnomo, D.S., Suryana, Y.S. and Sari, D., 2018. The effect of business partnership and
innovation management to business performance of business units of multiplay provider
In Indonesia. Academy of Strategic Management Journal. 17(2). pp.1-12.
Stverkova, H. and Pohludka, M., 2018. Business organisational structures of global companies:
Use of the territorial model to ensure long-term growth. Social Sciences. 7(6). p.98.
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