Report: Understanding Companies and External Business Factors

This report provides a comprehensive analysis of different company types, ranging from micro to large businesses, and their operational structures. It details the characteristics of sole traders, partnerships, limited liability businesses, public limited liability businesses, and cooperatives, offering insights into their functionalities and legal aspects. The main body further explores how external factors, as analyzed through a PESTLE framework (Political, Economic, Social, Technological, Legal, and Environmental), affect business performance, using Morrisons as a case study. The report highlights the impact of these factors, such as government policies, economic conditions, social trends, technological advancements, legal regulations, and environmental concerns, on business operations and profitability. The conclusion summarizes the key findings, emphasizing the significance of understanding company structures and external influences for effective business management and strategic decision-making.

Report plan and
evaluation of sources
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Table of Contents
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Section 1: You are to show an understanding of the different types of companies and how they
work.............................................................................................................................................4
Section 2: You are required to explain different companies from sole traders to cooperatives and
Limited Liability Partnerships.........................................................................................................5
Section 3: To consider different business structures and how external factors affect businesses.
.....................................................................................................................................................6
How different external factors affect the performance of a business – PESTLE Analysis.........6
CONCLUSION................................................................................................................................8
REFERENCE................................................................................................................................10
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INTRODUCTION
Business report is defined as evaluation of particular issues, collection of circumstances
and financial report that plays an important role in any organisation which can help to increase
the organizational productivity (Wu, Xuand Zhang, 2018). This report is based on large
multinational company that is Morrisons which is large size retail sector company selling variety
of products and services. This report covers understanding of different size of companies,
different companies from sole traders to cooperatives, and how external factors affects
businesses.
MAIN BODY
Section 1: You are to show an understanding of the different types of companies and how they
work.
Micro business: This means a small size business which is operating at very small scale.
This type of business is having less than nine number of people who understand the needs and
wants of their customers who are residing at lower scale that increases performance. For
example, a small café and small crockery shop (Radicchi, Henckel and Memmel, 2018).
Small business: This is defined as a small business which involves sole proprietorship,
partnership and corporation which can help to manage all activities and functions effectively.
The numbers of employees in small business are more than 10 but less than 50 employees that
supports to run a business. For example, Brightstar, consultant company (McCormick and James,
2018).
Medium size business: This means a business which is organised and managed for the
purpose of running a business in medium size organization which can help to attain the business
goals and make efforts to convert in to large business. the number of employees in such
organisation are more than 50 but less than 250 which can help to operate a business and develop
the productivity. For example, Verdant Leisure, Captify, and Smith Brothers (Chen, Li and Lu,
2018).
Large size business: In the business environment many businesses are running that can help
to operate a business and develop the activities in changing environment. In large size business
there is need high investment and resources which can help to organise and run continuously.
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This involves more than 250 employees who are working continuously and develop the all
activities effectively. For example, Morrisons, Tesco, ford
Section 2: You are required to explain different companies from sole traders
to cooperatives and Limited Liability Partnerships.
Sole trader business: This means a organisation in the simple form which is started by a
single person in order to operate and manage the all business activities. This person is legally
responsible for all aspects in the business and arranges all activities effectively. The person has
no limited liability as all activities depends on such person and running all functions effectively.
If any losses incurred while running a sole business then person is responsible.
Partnership: This mean when two and more than two people are working collectively by
sharing a ratio of profit and loss which can help to operate and manage the all activities
effectively. This can help to develop the all activities and function by managing all task and
entering in to partnership deed. In this, partners share their profit and losses in equal ratio and
decided ratio (Freudenreich, Lüdeke-Freund and Schaltegger, 2020).
Limited liability business: This is other type of business which involves number of people
to run a business up to limited liability which can help to operate a business effectively. In this
partners who are involved and engage in business activities that have limited liability to manage
all activities and bear the losses as well as profitability up to a limit. This can help to develop the
business by increasing investment and resources effectively.
Public limited liability business: This means public limited liability company that signifies
business offers shares to the public. For arranging the funds and capital there is need to sale
shares publically that can help to operate a business regularly and manage the business
effectively. This type of company listed on the London stock exchange that increases the all
activities and functions in changing environment and maintains the good performance (Zahari
and Romli, 2019).
Cooperative: This business is related to cooperation, farm and business which is owned and
run jointly by its members who shares profits and benefits. The main purpose of cooperation is to
understand the needs of its members and make efforts to fill the all needs which can help to
operate a business and increase the organisational productivity (Weygandt and et. al., 2020).
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Section 3: To consider different business structures and how external factors affect businesses.
Business structure is defined as important business decision which made by business owners
in order to operate the activities and functions which can help to develop the business effectively.
The structure of organisation and business might be affects safety of personal assets, smooth
continuation and taxation by operating all activities and develop the all functional effectively. In
context to Morrison, which is large size organisation in business industry is following different
types of organisational structure that are as defined:
Functional organisational structure: This is type of organizational structure that uses to
manage employees and meet their business goals. This structure is uses to operate a business by
dividing a task among employees and make efforts to complete the task in given period. This
structure is based on hierarchy that involves different departments under the direction of
management and leaders. Morrison is large size organisation that can adopt functional structure
in running their business by assigning the role and responsibilities effectively. This helps to
increase the productivity, maintain clarity, minimized cost of operation and skill development
which develop the organisational performance and profitability (Gomez, 2018).
Divisional organisation structure: This is another type of organisational structure that uses
to organize the activities of a business around the geographical, product and services, market
which can help to develop a business and maintain higher brand image. Morrison can adopt this
structure for running all functions and complete the task in certain period of time. This divide the
functions in commercial, international division, retail division, and marketing functions which
are important to run and develop the all activities effectively (Divisional organisation structure,
2020).
From the above Divisional structure is adopted by chosen organisation which can help to
operate and run a business effectively. This helps to increase the competition, productivity, sales
and profitability in changing environment.
How different external factors affect the performance of a business – PESTLE Analysis
PESTLE Analysis:
Pestle Analysis is a marketing tool which is used to identify the overall aspect of an
organization. This involves all the factors which can affect the end results and growth of any
entity or small businesses. Small sectors can use the advantages of these factors and can be saved
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by crisis faced in future. These are the following factors of Pestle Analysis that are applying by
Morrison is defined below.
Political Factors : Government stability, Law and order, Tax regime, changes in
regulations all are political factors affecting businesses. Small or large every organization is
affected by political changes. The level of effect can be different such as Morrison is affected by
the changes of governmental policies after the Brexit in their business that has affected the
business negatively as it become difficult to operate the business. On the contrary, if the
government regulations are stable in UK then it will help to take the competitive advantages by
running business and growing at other places (Tahernejad-Javazmi, Shabani-Nooshabadi and
Karimi-Maleh, 2018).
Economical Factors : Policies of government ,inflation rates, Employment rates, Interest
rates , exchange rates all are the major factors affecting small businesses economically. In UK,
mostly SME sectors are established which have taken a wider place in competitive environment
such as almost 60% of all businesses are small businesses. After Brexit, the exchanges rate in
UK has been reduced that have impacted positively Morrison to run their business by
maintaining good relation with other country and increases the profits due to low exchange rates.
On the other side, increasing inflation rate in such country can reduced the demand of products
and services as income level of people decreases.
Social cultural factors : Demographic changes , attitude towards product , population
growth, lifestyle , believes all these factors affect business organization. Morrison is also affected
by these factors the one of the factors which is being followed by the company is etiquettes. In
UK small companies follows etiquettes culture where they believe that by maintaining etiquettes
in meetings are beneficial for the small and large business. It build an indirect relationship
between clients and customers. This lead to increase the sale of the organization and increase
profitability. Oppositely, occurring of COVID-19 currently has reduced the demand of products
as people so much aware and curious to buying the products. This affected the productivity and
profitability negatively.
Technological factors : Research and development, Different technologies, changes in
technology all are affecting factors that has impacted on business. As in order to be in the market
small business also need to adapt the technological changes in the market. Morrison is also
adapting all the technological changes and also digital changes of the market in company with
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latest thinking and creativity. It can be partnered with various companies and stores in order to
remain competitive by adopting digital technology. These initiatives are working and increasing
their client base for the company. As COVID-19 affected many businesses as by using digital
technology it positively run their business and maintain the all activities effectively.
LEGAL Factors : These are the regulations which are enforced by government in order
to maintain the uniformity of the organizations. Legal factors include all the legislations rules
followed in the countries. Morrison is managing their operations and business activities by
following the employment, health and safety, data protection, financial management, anti
discrimination and other laws which affected small business positive as it is maintaining the high
performance in challenging environment. On the other side, in case of not following regulation
might be affected the business negatively (Damean and Popa, 2020).
Environmental factors : It includes weather conditions, climate change, pollution
conditions, wastages, carbon effects etc. in the country. All these factors affects small business as
it will create an impact on the production and growth of small businesses. Morrison is also facing
the issue while running a business as well as they are building solution to solve it. It can run
business by connecting with many clients so that they can build good environments which will
less impact on economy and small businesses. The company wants to change the environmental
barriers to by taking initiatives of changing the environment. The management of chosen
organisation are building the strategies which will be based on low carbon economy and shifting
the strategic thinking towards the environmental issues.
From the above factors it can defined that all businesses are affected the organisation
positively and negatively that can help to run a business and increase the organisational
productivity and profitability effectively.
CONCLUSION
From the above report it can be concluded that many businesses are related to industry
that covers micro, small, medium and large size organisation which are operating their business
by arranging all activities and resources effectively which helps to manage the business. Sole
trader is a type of business that is handled by a person, partnership involves more than two
person, and in limited company partners have limited liability and responsibilities sin
organisational performance that helps to operate a business and increase the organisational
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productivity. Moreover, external factors are in environment might be affected the business is
shown above.
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REFERENCE
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Radicchi, A., Henckel, D. and Memmel, M., 2018. Citizens as smart, active sensors for a quiet
and just city. The case of the “open source soundscapes” approach to identify, assess and
plan “everyday quiet areas” in cities. Noise mapping. 5(1). pp.1-20.
McCormick, R. and James, M., 2018. Curriculum evaluation in schools. Routledge.
Chen, Y. J., Li, P. and Lu, Y., 2018. Career concerns and multitasking local bureaucrats:
Evidence of a target-based performance evaluation system in China. Journal of
Development Economics. 133. pp.84-101.
Freudenreich, B., Lüdeke-Freund, F. and Schaltegger, S., 2020. A stakeholder theory perspective
on business models: Value creation for sustainability. Journal of Business Ethics. 166(1).
pp.3-18.
Weygandt, J. J., and et. al., 2020. Managerial Accounting: Tools for Business Decision-Making.
John Wiley & Sons.
Gomez, R., 2018. Negotiating the Euro-Mediterranean partnership: strategic action in EU
foreign policy?. Routledge.
Zahari, A. R. and Romli, F. I., 2019. Analysis of suborbital flight operation using
PESTLE. Journal of Atmospheric and Solar-Terrestrial Physics. 192. p.104901.
Tahernejad-Javazmi, F., Shabani-Nooshabadi, M. and Karimi-Maleh, H., 2018. Analysis of
glutathione in the presence of acetaminophen and tyrosine via an amplified electrode with
MgO/SWCNTs as a sensor in the hemolyzed erythrocyte. Talanta. 176. pp.208-213.
Damean, X. and Popa, M., 2020. Metoda PESTLE-strategie importantă în identificarea
avantajelor comparative și competitive a sectorului vinicol în diverse economii naționale.
In Simpozion ştiinţific al tinerilor cercetători (pp. 181-184).
Online
Divisional organisation structure. 2020. [Online]. Available through:
< https://www.accountingtools.com/articles/2017/5/13/divisional-organizational-structure
>
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