BSc (Hons) Business Management: Types of Companies, BMP3002 Report

This report, prepared for a BSc (Hons) Business Management course, provides an in-depth analysis of various company types, including micro, small, medium, and large businesses, along with their operational characteristics. It explores different business structures such as sole proprietorships, partnerships, limited liability companies, and cooperatives, highlighting their key features and examples. The report also examines organizational structures like functional and divisional structures, assessing their impact on business productivity. Furthermore, it applies PESTLE analysis to evaluate the external factors affecting business performance, using Tesco as a case study. The report concludes by summarizing the key findings and emphasizing the importance of understanding both internal structures and external influences for effective business management.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
ID:
Contents
1

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 4
Section 3: Different businesses structures and internal factors
affecting business 6
Conclusion 9
Reference List 10
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Introduction
Business environment is term refers to collection of all external forces and
factors which are beyond the control of organisation and also have notable influence
on its functions and growth. Internal factors of business environment also have
impact on business. It also helps business in analysing their competitors and their
strategies and future actions, so company can create their strategy accordingly (Abd
Ghadas and Ariff, 2018). Business environment also helps in identifying new
growth opportunities and can improve the overall performance and profitability of
business. Formation of business organisation depends on different criteria like size,
scale and nature of the business (Daas and de Wolf, 2021). This report includes
the explanation of different types of companies and their working culture with proper
example. It also evaluates the various forms of companies and different structures.
At last it simplifies the impact of external factors on business environment.
Section 1: Different types of companies and how they work
Micro business:
Micro business generally defined as small business which operates with few
employees 9 or may be less than this. This type of business requires less amount of
capital and provides goods and services at local area level. Micro level business
owns simple business structure, it covers the small market area and has low revenue
and profitability in market compare to their investment. Micro business must not
exceed the limit of turn over less than £632,000. CafePod Coffee Company is best
example of micro business in UK.
Small business:
Small business refers to the companies which operates in small scale level,
requires less capital investment with less number of employees and requires
machines to function. Small business are privately owned corporation with less
annual revenue (Fath, 2022). This kind of business run with employees between 0
to 49. These type of companies plays vital role in economic development of country.
It serves local area with their own manufactured products. This small business are
managed and controlled by their owner only. They use local and immediately
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available resources and good at utilising natural resources at fully. Marshfield bakery
is best suitable example of small business in UK with not much capital investment
and serving local areas with their bakery products like cakes, breads, biscuits and
bars.
Medium size business:
Medium size business defined as companies that have to maintain their
revenues, assets and number of employees to the certain level. Medium size
business has employees between 50 to 249 (Iovino and Migliaccio, 2019). These
medium size business plays important part in economy of country and provides more
employment opportunities. They are more financial supportive to community and
have focus on sustainability in business more than generating revenues and
investing.
Large size business:
This type of business category with more than average business size, has
large operations with high economic scale. Large business have employees more
than 250 people. Employment rate in large business are always high and they also
generate lot of revenue (Julien, 2018). This type of business operates at national
level as well as in global market. Large companies have huge production capacity
and have high rate of competition than small or medium size business. Unilever and
Tesco are appropriate example of large size business.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
Sole trader business:
This type of company is also known as sole proprietorship or individual
entrepreneurship. It is type of company owned and controlled by single person which
does not have any legal contrast between owner and business entity (McKenzie,
2021). The only owner is entitled of all profit earn by business and is the only one
responsible for its debts incurred. All decisions are solely made by owner and since
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the individual is owner, there is freedom of work. Sole trade business are low budget
start ups and requires minimum usage of paper. This sole trader business does not
requires many regulations of government and also have less tax responsibilities. Hair
dressers, plumbers and electricians can be defined as sole trader businesses.
Partnership:
Partnership is relationship between two or more person with the purpose of
business trading. Each person contributes in capital, property, land and labour, skills
and shares the profit and loss of the business according to their shares (Nam and
Bao Tram, 2021). Partnership must be contain written or verbal agreement
between all the concerned person. Yoomoo, Bremont and Mumsnet are some
example of partnership firm based in UK.
Limited liability business:
Private company is firm comes under private ownership of company. These
companies can issue stock and can have shareholders. Private sector plays
important role on developing economy of country and can contribute to national
income (Purnomo, Suryana and Sari, 2018). This type of private company held
under the control of individual with the primary objective of generating more profit
with proper utilisation of available resources. It also presents high level of
accountability to its shareholders. Some examples of privately owned companies in
UK are EG Group, Pentland Group and Dyson.
Public limited liability business:
Public company is firm that has sold all or maximum shares of itself to public
through Initial Public Offering. IT is also called a publicly traded company whose
shareholders claims to be a part of their assets and profits. Public corporation also
requires to shoe or disclose their financial and business information to public in
regular interval. Public companies has ability to raise their financial through share
capitals. Liability of share holders are limited in public sector.
Cooperative:
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It is business owned and managed by members for their own benefits. In
other words, it is an association of person with limited means to achieve a common
objective of growth. The word co-operation means to the idea of living and working
together. It has objective to provide better living, business and farming in society.
Cooperative society has willingly associated with person not with capital or profit
generating. Capital in this type of company is raised from members through share
capital.
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
Organisational structures is term used to define certain activities within the
organisation in order to achieve goals and objectives. These activities includes roles,
rules and responsibility of company. Organisation structure also determines the flow
of information between all levels of company. Centralised structure has defined chain
of command, similarly decentralised structure allows high level of personal agency to
every employee (Salman, 2020). Organisational structure helps business to run
smoothly and works more efficiently. Good organisational structure may affect
business by making them more cost efficient, boost good communication method,
increase in employees morale and also helps in improving decision making
strategies in business. Types of organisational structures includes functional,
divisional and matrix structure. Some brief explanation of functional and divisional
structure with their impact on business productivity are as follows -
 Functional Structure – This type of structure help business organisation in
organise their different departments based on expertise areas. Functional
structure is important as they have specialised skill persons that allows them
to work more effectively and faster in comparison with those who are
unfamiliar to subject. Functional structure is probably most productive
organisational structure among others. It involves classification of employees
according to their work speciality and this structure has classified departments
such as marketing, operations and all these grouping of employees and
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departments accordingly can increase the production results in more sales
and growth of organisation.
 Divisional or Multi-divisional structure – This structure is more common in
large scale companies which have many business units in international
market. This divisional method of structure is based on leadership approach
based on specific product, market, projects or branch where they operate.
This structure is important as it allows company to grow through diversification
of their products and generate high profitability. Division of company in
different branches, as they can help each other in all tasks and responsibilities
of each other and can finish production with efficiently and effectively.
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
PESTLE ANALYSIS
It is important for the organizations to analyse the environment in which it
operates, on a regular basis. There are various factors, both internal and external,
which affects the working of an organization. PESTLE analysis is a tool used by the
entities to analyse the external factors which operate in the business environment
and has the capability of affecting the work of the entity (Torfing, 2019). Tesco is a
British multinational grocery retail store and is the largest among the ones which
operate in the United Kingdom. PESTLE analysis in relation to Tesco is discussed
below: Political factors – The government actions which directly or indirectly affects
the working of any organization are known as political factors. These include
factors such as fiscal policy initiatives, corporate taxation, etc. The political
stability in UK helps Tesco to carry on its business operations smoothly. Economic factors – The functioning of the organizations affects with the
changes in the economic factors such as growth of country, economic
stability, rise in GDP and so on. These economic factors have the power to
influence the decisions of the organizations. Enhanced employment in UK
help Tesco to increase their potential sales as the earning power of the
consumers has been enhanced. Social factors – Every organization is usually, customer oriented and hence
produces goods after considering the needs and preferences of the
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consumers. Behaviour of consumers have the power to impact the working
and production strategies of organizations. Tesco looked down to rise in
health consciousness among consumers, as an opportunity to earn profits by
serving the needs of the customers. Technological factors – All the technological tools and technologies plays a
crucial role in the production activities of organizations. Every entity wants to
avail the most benefit from these technologies as it makes the work easier
and faster thereby saving a lot of time. Tesco has continuously increasing its
investment in the field of research so that it can serve its customers with what
they expect. Legal factors – Every lawful entity has to follow certain rules and regulations
in order to operate in the country legally. These laws and rules prescribed in
the jurisdiction are the legal factors as it directly affects the working of the
company. The Employment Act 2010 is followed by Tesco which makes the
company take fair decisions without any partiality.
 Environmental factors – The surroundings or the nature around sometimes
impacts the functioning of the entity. These are environmental factors and
include global changes in climate, afforestation and so on. Tesco has started
to minimise the use of plastic and has also started to recycle the old products
as the company wants to make the best use of resources.
Conclusion
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From the above management report, it has been analysed that Business with
multinational operations have to compete with different types and sizes of companies
like micro level, small business, medium sized company and large scale business
with their importance in business and with relevant examples. This report also
evaluates the various forms of companies like sole proprietorship, partnership,
limited liability business or cooperative society. Afterwards, it describes different
organisational structures such as functional and divisional structure and how the
affects organisation and also with their impact on business productivity. At last it
clarifies the external and internal factors by PESTLE analyses that can affect the
whole performance and operation of business organisation.
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Reference List
Abd Ghadas, P. and Ariff, Z., 2018. Indoctrinating Limited Liabilty in
Partnership Business Entities: The Development in Malaysia.
Daas, P. and de Wolf, N., 2021, June. Identifying different types of
companies via their website text. In Symposium on Data Science &
Statistics: Beyond Big Data-Shaping the Future.
Fath, R.A.R., 2022. Civil Liability for the Establishment of a Micro, Small,
and Medium-sized enterprise sole proprietorship. Jurnal Hukum dan
Kenotariatan, 6(2). pp.815-825.
Iovino, F. and Migliaccio, G., 2019. Energy companies and sizes: An
opportunity? Some empirical evidences. Energy Policy, 128.
pp.431-439.
Julien, P.A., 2018. The state of the art in small business and
entrepreneurship. Routledge.
McKenzie, D., 2021. Small business training to improve management
practices in developing countries: re-assessing the evidence for
‘training doesn’t work’. Oxford Review of Economic Policy, 37(2).
pp.276-301.
Nam, V.H. and Bao Tram, H., 2021. Business environment and innovation
persistence: The case of small-and medium-sized enterprises in
Vietnam. Economics of Innovation and New Technology, 30(3).
pp.239-261.
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.
Salman, N.S., 2020. Case Study: Gading Aqua Company “Sole
Proprietorship”.
Torfing, J., 2019. Collaborative innovation in the public sector: The
argument. Public Management Review, 21(1). pp.1-11.
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