Business Report: Different Forms, Structures and Influencing Factors

This report provides a detailed analysis of various business forms, including micro, small, medium, and large businesses, outlining their characteristics and contributions to the economy. It explores different types of companies such as sole proprietorships, partnerships, limited liability businesses, public limited liability businesses, and cooperatives, examining their structures and liabilities. The report also delves into organizational structures, comparing functional and divisional structures and their impacts on business operations. Furthermore, it utilizes a PESTLE analysis to evaluate external factors influencing business performance, providing insights into political, economic, social, technological, legal, and environmental factors. The report uses Marks & Spencer as a case study to illustrate how these external elements affect a company's performance.

Business in Practice

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION 1......................................................................................................................................3
Working of Different Forms of Business...............................................................................3
SECTION 2......................................................................................................................................5
Different Types of Companies...............................................................................................5
SECTION 3......................................................................................................................................7
Organizational Structure.........................................................................................................7
External Factors Influencing Business Performance..............................................................8
CONCLUSION..............................................................................................................................10
REFERNCES.................................................................................................................................11

INTRODUCTION
The purpose of the report is to present a comprehensive picture on various forms of business
that exist in the environment. The report examines how businesses are classified based on the
nature and liability as well as providing instances. The relevance of the organizational structure
is also highlighted along with the brief explanation of two main structures. This report also
includes a PESTLE analysis to evaluate the external factors present in the changing environment
that influence business activities.
SECTION 1
Working of Different Forms of Business
MICRO BUSINESS
A micro business is a subtype of a small business that meets the following criteria in
order to be classes as a ‘micro- entity’. The criteria includes that the employees must not exceed
more than ten in number (Obrecht, 2021). The annual turnover must not be more than £632,000
and total of balance sheet must not exceed £316,000. This micro business is often started with
same capital worth and the same person operates, relates and controls. This form of business is
even regarded as family businesses or innovative start- ups founded by people of young age who
have strong desire to succeed in the competitive market. However, there are 5.7 million micro
businesses in United Kingdom with 95.72 percent of them are privately owned. Approximately
9.1 million individuals are employed in this type of businesses. As a result the economy of the
UK benefits from such micro businesses. The micro business plays critically towards nation’s
economic viability. It contributes towards the economy by balancing the social stability among
areas of UK. Furthermore, it is beneficial for economy by focusing on the rural as well as
underprivileged urban areas.
SMALL BUSINESS
This type of business are privately owned businesses with fewer employees accompanied
by lower annual revenues as compared to large businesses. The Companies Act, 2006 of UK
provides that the employees must not be more than fifty. Further, the annual turnover must not be
more than £6.5million and the total of balance sheet must not exceed £3.26 million. Small
businesses are self-sufficient in terms of income and size. Even this form of business makes a
significant contribution to the nation’s economy. On a local and national level, the company

hopes to assist by creating jobs and perhaps contributing more funding. One of its main
characteristics is that the small enterprises adjust to the changing demand and environment more
quickly since they are not hampered by the bureaucratic lethargy. As a result, they help to assist
economy of local area. A sole proprietorship, partnership, or corporation are examples of
privately owned businesses. The small business includes bakery shops, privately owned
restaurants, firms of architectures and so forth. Broadsword Event House, CafePod Coffee Co.
are some illustrations of small businesses.
MEDIUM BUSINESS
The Companies Act 2006 of the United Kingdom defines a medium-sized business as the
number of employees require not be more than 250, the annual turnover must not exceed £25.9
million and the total of balance sheet must not be more than £12.9 million. This style of business
begins with the gradual and steady expansion of the profitable small businesses, with the
corporation receiving a major percentage of the cash generated through sales and profits (Sen,
2021). The medium- sized enterprise aims to fills the gap between small and large enterprises.
According to the source, they contribute for 45 percent of total job opportunities and 33 percent
of GDP. Therefore, this form of business is known as the economy’s backbone since they
promote growth through variety of employment opportunities and fulfils the customers’ demand
by opening new markets with high competitive spirit. Northern Monk Brew Company which
engages with approximately 250 employees, Verdant Leisure, and so on are some examples of
medium businesses.
LARGE BUSINESS
Large Enterprises, in contrast to other forms of enterprises, prefer to offer broad selection
of products or services to its potential customers. Large businesses, defined as those which
employs more than 250 members, account for 40 percent of total employment opportunities and
more than half of overall turnover in the United Kingdom. These companies usually have a wide
distribution network and a strong presence across the country. Furthermore, huge corporations
assist and even encourage small and medium-sized firms. This type of enterprise possess a
hierarchy with dynamic management along with well- suited organizational structure and an
effective channel of communication between customers and company (Di Pietro and et. al.,
2021). AS a result it helps to attain economic opportunity, environmental protection and other

competitive advantage. Some of the examples are Diageo (£67.89 billion), Unilever (£113.85
billion), British American Tobacco (£61.61 billion), AstraZeneca (£104.73 billion) and so forth.
SECTION 2
Different Types of Companies
SOLE PROPRIETORSHIP
It is the common sort of business in which a single person contributes, owns and manages
the company, whole and solely. The liability under this type of business is unlimited and the sole
trader is personally liable for company’s debts and obligations. As the owner and the entity are
virtually one and same, the notion of single entity concept does not apply to this type of business.
The formation of the company is easy with less legalities and formalities. Even the cost
expenditure on starting the sole proprietorship is less as compared to other forms. One of its
merit is that the sole trader need to publish the accounts or other relevant documents publicly and
thus, enjoys the perquisites of confidentiality (Forrest, Murie and Williams, 2021). Some of the
examples are farmers, carpenter, freelancer work, electrician and others.
PARTNERSHIP
In order to pursue partnership firm, it must comprise of two or more partners each
contributes to the capital value and share profit or loss as agreed in the partnership deed. In this
type of business, the partners are individually and jointly liable for the obligations and even their
liability under this form is unlimited. It is likely to form partnership deed in order to reduce
conflicts, it can be either orally or in written form. Unlike the other forms of business, the
partnership entity is easy to form with simple procedures. One of its benefit is that the business is
supported financially by number of partners engaged. Even this form enjoys the flexibility in
work without any interferences of the government. Furthermore, the amount of risk is also
distributed among partners as agreed upon. One of its other unique aspects is the ability to
transfer interest to an outside entity subject to the mutual permission of all partners. Partners take
part in the decision-making process together. Some popular examples are WhatsApp, Red Bull,
Spotify and others.
LIMITED LIABILITY BUSINESS
The limited liability business comprises the traits of both partnership firm as well as
corporation. This sort of partnership consist of two or more members in which one is the general

partner and one is considered as limited partner. In addition, the liability under this form of
business is limited which means that the partners are not liable to sacrifice personally for the
company’s debts. This form of business enjoys the concept of ‘perpetual succession’ which
means partners may come and go but the company remains to exist. These companies are
required to adhere by corporate regulations but they have more leeway when it comes to taxation
along with suitable tax plans (Rajagopal, 2021). Furthermore, they are supported by large
financial resources. They are not cost effective as compared to other forms of businesses. Some
of companies are Oxfam, Barclays Bank, Sainsbury And so on.
PUBLIC LIMITED LIABILITY BUSINESS
This form results in the split of ownership into shares that are available for public trade
on a stock exchange. The owner can raise funds by issuing bonds and assure long-term survival
by dispersing risk among the company's owners. In the marketplace, this form of firm has more
prospects for growth and expansion. When compared to other types of enterprises, this type of
business has greater potential for growth and development in the marketplace. In both the
decision-making process and the company outcomes, the owner must display transparency level
and thus, lacks confidentiality. In this type of business the funds are generally obtained from
various sources and the financial institutions including bank is the most common to provide
financial support. Popular examples are HSBC Holdings, Rolls- Royce Holdings Plc., Royal
Dutch Shell and so forth.
COOPERATIVE
A Cooperative is also a legal personality and voluntary organization which is suitable for
purpose other than profit making. The aim of the cooperative is to voluntary associate on basis of
equality and even encourages the economic interests of the members. Profitability is the second
concern for these businesses (Hribar, Podbregar and Rosi, 2021). Cooperative encourages the
local culture and value in the society. Furthermore, adopts democratic management with
effective leadership style. In In addition, because the return on equity capital is low, the return on
investment in the form of dividends is likewise low. Some examples are Lincolnshire Co-
operative, Weaver Street Market, Select Machine, Do it Best, and many others are examples.

SECTION 3
Organizational Structure
The organizational structure aims to outlines the roles and responsibilities as well the
delegation of power with effective channel of communication among different hierarchical order
in the organization. Employee moral diminishes when there is no suitable organization structure
leading to ineffective decision making (Bao and Zhong, 2021). Furthermore, it may cause
negative impact on work environment and thus, it is required to devise effective organizational
structure so as to achieve desired goals for long term. The two most frequent types of
organisational structure are functional and divisional, as detailed below.
FUNCTIONAL ORGANISATIONAL STRUCTURE
Figure 1: Functional Organizational Structure, 2019
This type of structure it divides the organization's key functions into separate groups, this
structure is the most prevalent and oldest. In order to attain desired goals effectively and
efficiently, the model seeks to divide the major functions into many specialised job functions. It
groups the employees according to their specialization which helps to meet organization
objective of customer satisfaction. Under this structure the roles and responsibilities are defined

clearly which led to less confusion and work efficiency. Furthermore, it handle the situations
expediently and helps in improving employment relations. On the other hand, it may affect the
business as employees become isolated. The main disadvantage is that the lack of effective
communication causes misunderstandings among employees. Even employees may lack creative
skills and less work efficiency.
DIVISIONAL ORGANISATIONAL STRUCTURE
Figure 2: Divisional Organizational Structure, 2021
Each organisational function is divided into divisions by the divisional structure. This
organisational structure is best suited for businesses that want to expand and succeed over time.
This organisational structure splits the company into various divisions depending on resources,
goods, services, or geographic regions. Within this framework, each division manages its own
resources and tasks accordingly (Berkowitz, 2021). To achieve organisational goals, the structure
gives a clear line in respect of ownership as well as a strategic view of operation and
organizational benefits. One of the structure's flaws is that duplication of functions inside each
division leads to unhealthy relationships, rivalry, and politics within divisions.
External Factors Influencing Business Performance
A range of external elements have an impact on an organization's performance. The
PESTLE analysis is used to evaluate external environmental variables (Spencer, 2021). By

taking into account the changing environment and the activities that an organisation undertakes,
it's a smart way to determine how valuable it is. Further, Marks & Spencer is taken to better
understand the external factors exists in the business environment.
Figure 3: PESTLE Analysis, 2021
 Political: The government's intervention has a significant impact on the business. As a
result of the long-awaited Brexit impact, the company's revenues have suddenly fallen.
Furthermore, the COVID-19 epidemic hit the company hard, inflicting havoc.
 Economic: The epidemic, for example, has resulted in inflation, lowering consumers'
purchasing power. Inflationary pressures and a spike in fuel prices are two more
concerns.
 Social: Despite the pandemic, the company seeks to retain social elements such as greater
product quality and adherence to social distance standards.
 Technological: Customers at Marks & Spencer were able to pay with only one click
when they first started buying online. This helps to ensure the market's long-term
sustainability (Strangmueller, 2020).
 Legal: The government's rules and regulations must be followed by the company. In the
event of a pandemic Company adheres to pandemic regulations.

 Environmental: In order to achieve a competitive advantage in the market, most
businesses now support sustainability practises. M&S, for example, has formed a Green
Policy and even takes steps to have a beneficial impact on society and the environment.
CONCLUSION
The report concludes with a brief overview of the many sorts of businesses, including their
primary characteristics and examples. A number of aspects that influence growth and
organisational structure were also discussed. The relevance of organisational structure is further
demonstrated in the study in order to attain desired goals effectively and efficiently.

REFERNCES
Books and Journals
Bao, Y. and Zhong, W., 2021. Public service motivation matters: Examining the differential
effects of challenge and hindrance stressors on organizational identification and turnover
intention. Public Management Review. 23(4). pp.545-566.
Berkowitz, E.N., 2021. Essentials of health care marketing. Jones & Bartlett Learning.
Di Pietro and et. al., 2021. Business Entities. In New Dimensions of Information Warfare (pp.
197-226). Springer, Cham.
Forrest, R., Murie, A. and Williams, P., 2021. Home ownership: Differentiation and
fragmentation. Routledge.
Hribar, G., Podbregar, I. and Rosi, B., 2021. A model of citizens’ trust in intelligence
services. Security Journal. pp.1-22.
Obrecht, J.J., 2021. Environment for entrepreneurship. In World encyclopedia of
entrepreneurship. Edward Elgar Publishing.
Rajagopal, A., 2021. Understanding Micro and Small Enterprises. In Epistemological
Attributions to Entrepreneurial Firms (pp. 1-31). Palgrave Macmillan, Cham.
Sen, Y., 2021. Essentials of Sustainability: A Roadmap for Businesses. Sustainable Management
for Managers and Engineers. pp.67-88.
Spencer, A., 2021. External Factors: The Digital Divide, Closing the Gap. In Technology
Adoption in the Caribbean Tourism Industry (pp. 111-126). Palgrave Macmillan, Cham.
Strangmueller, M., 2020. A PESTEL Analysis of the company Siemens.