Business in Practice: Evaluating Company Types and Structures Analysis

This report provides an evaluation of different company types, ranging from micro-businesses to large enterprises, and analyzes their working mechanisms. It explores various organizational structures, including divisional and functional structures, and explains how these structures affect business pro...Read More

Business in
Practice

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Section1 Evaluate different types of companies and their working...........................................1
Section 2 Different companies from sole traders to cooperatives and Limited Liability
Partnerships..................................................................................................................................4
Section 3 Identification of different organizational structures and explaining how does
organisational structure affect business productivity...................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business is a commercial act of buying and selling of goods on a regular basis
with the motive of earning money (Simeone, 2020). It includes selling or exchange of
goods and services to the general public with the motive of earning profit. It refers to an
organisation or an enterprise involved in commercial, industrial or trading activities that
facilitates an individual with something tangible or intangible in exchange of money. The
purpose of business is to set an economic production of goods and services (Kiseleva
and et.al., 2018). Business can either be for profit or non-profit but the main motive
behind doing any business is to earn money and facilitate general public through their
production of commodities. Business can also be described as the attempt or action that
are undertaken by an individual to produce and sell goods and services.
MAIN BODY
Section1 Evaluate different types of companies and their working
1. Micro Business:-
It is referred to as small size of business organisation that is formed with a small
amount advanced with a loan taken from a bank or an organisation setted up with the
motive to earn profits in the economy (Church, 2020). These types of business are
small in nature with generally less capital invested in it with less than 4 employees
working in an organisation. These types of enterprises are generally formed by local
individuals to meet the needs of people by providing goods locally in a fixed area.
Characteristics of Micro Business:-
 This type of business organisation generally has a single owner which is also the
manager of enterprise. These types of organisation are small in nature which
does not probably needs another personnel to handle the business. It is also
called as sole proprietor type of business organisation which means sole or
single owner of the firm.
 In Micro Business generally owner is also the manager of enterprise due to the
small nature of the organisation, excessive amount of managers are not needed.
All operations that are needed to run an enterprise are done by sole person that
is generally owner of the company. This is also because as these businesses are
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not that much financially strong to afford someone's salary as a manager
because of their nature.
 The area of operations for micro business is limited up-to an extent as they are
small in nature and cannot work across a larger area. Working among a larger
area will probable require more funds which are limited in these business
because of their local nature. These business mostly operate in goods locally
which prevents them to expand it on larger basis.
Examples: Existing companies that can be stated as micro based companies are:
Broadsword Event House, Davison Canners, Fourex, Imaginera, Marshfeild Bakery etc.
Small Business:-
A small business can be defined as a privately owned business organisation with a few
number of employees and less annual turnover. Small businesses are tend to have less
of human resources and capital as compared to medium or large enterprises. Small
business enterprise have number of employees ranging from 4-49 (Sadiqin, 2020).
These types of business organisations does not require much large of capital and can
be managed by a sole person. However count of managers in the organisation can
exceed the number.
Characteristics of Small Business:-
 Small business often has a sole owner but can also be operated by two or more
than two partners. This is because the capital and finances needed in this type of
organisation is higher than micro businesses. The capital can be fulfilled by a
single owner but in some cases, it may require other individuals too in order to
fulfil financial needs of enterprise.
 Small business generally has small or no team of employees due to less
workload in the organisation. In some cases depending on the size of operations
and diversification of work, the organisation an require some employees.
 Small businesses are observed to adopt labour intensive techniques because of
the high investment are needed to equip their business with advanced technical
machineries. They are most likely to work with human resources because of their
low cost and flexibility in operations.
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Examples:- Some of the examples for enterprises that are considered as small
enterprise are:- CofePod Coffee, Lovethe Sales.com, trustedHousesitter, etc.
Medium Business:-
This is the type of business which has a bigger size than small or micro enterprise.
Businesses that generally have employees count of 50-250 employees falls in the
category of small business enterprise (Mader and Gibson, 2019). These business are
mostly privately owned by an individual or a family and may require quite big amount of
capital for business operations which are generally provided by partners or investors
that are interested in a business investments.
Characteristics of Medium Businesses:-
 Medium Businesses are generally privately owned or owned by a family and
passed on to younger generations time to time. Theses kind of enterprises can
be owned by an individual or some partners who had invested in the businesses
or even also by the investors due to their investment in the business
organisation.
 Medium Business enterprise have a limited area of its operations which generally
within the territorial boundary its city or state or even across the nation. This type
of business may have its coverage across the nation depending on the size of its
operations, turnover and number of employees.
 Management in small business depends on the functioning and area of
operation. Owner can also be the manager of the firm but it may not be possible
in some cases for owner to run the business that is dealing in vast area to
manage every sector on his own.
Examples:- Some of the examples of business that falls in the category of medium
enterprises are John Good Shopping, Smith Brothers(Contracting) Ltd., Checkout.com
Giacom etc.
Large Business:-
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A business is considered to be a large scale business which has its size above average,
high economies of scale, large business operations and have employees more than
250. With the availability in large resources they have high competency in the market.
Characteristics of Large Business:-
 Large business probably keeps a high level of competition in market due to their
high availability of resources and high level of existing business in industry.
 Due to their vast area of operations and high risk involvement, these types of
business require a proper amount of manager and professionals to operate
business in best way possible as it is not possible for few members to control the
business on such a large scale.
 In large enterprise, there is complexity in decision making due to high risk
involved and large scale of operations. The size of enterprise makes it difficult for
managers and owners to chose best effective decision in order for company's
growth.
Examples:- Some of the examples of large business enterprises can be Unilever,
Marks & Spencer, TESCO, Asda, Sainsbury etc.
Section 2 Different companies from sole traders to cooperatives and Limited
Liability Partnerships
Sole Trader:- Sole trader or sole proprietor is a form of business organisation
that has sole or one owner of firm or a firm that is established or owned by an individual
(Kühnle, 2021).
Characteristics:-
 As sole trader is the only owner of the firm, the liability of owner is not fixed to an
extent. Owner of firm is liable for liability of the business as a whole.
 As the only owner firm, the profit they earn from business operations is their own
profit to take home. They are responsible of earning their profit can can enjoy
that profit alone.
When two or more than two individuals enter into an agreement to open a
business firm, that organisation is said to be a partnership firm.
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Characteristics:-
 Nature of liability In partnership firm is unlimited and the owners or partners of
the respective firm are to pay firm's credits in an unlimited extent.
 There is effective decision making in firm's working decisions are taken after it is
considered by all the existing partners and necessary alterations are made
It is a hybrid form of organisation in which owner is not personally liable for
business credits.
Characteristics:-
 Liability in LLB is limited for its owners and they are not liable for firm's credit
with their personal assets.
 The business and its owners are considered as two different persons in the
eyes of law and its owners are not responsible for business actions and vice
versa.
Public Limited Liability Business(PLB):- It is a form of company in which the
liability of its share holders is limited to the capital they paid to against the share.
Characteristics:-
 In PLC, decision making is effective as BOD take the decisions for the
organisation which ensures effective strategies.
 PLC lacks in flexibility in operations due to their huge size which makes it difficult
for directors to make quick changes in working of firm.
COOPERATIVE:- This form of business organisation is formed by a group of people
with the motive of public welfare (Çitilci and Akbalık, 2020).
Characteristics:-
 The motive of this type of firm is to help general public and not to earn profit.
 It has a democratic control as the leader or manager of the firm is formed by
voting process of its members.
Examples:- Some of firms that are counted under cooperative enterprise are
Lincolnshire Cooperative, Midlands Cooperative, ARLA foods etc.
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Section 3 Identification of different organizational structures and explaining how
does organisational structure affect business productivity
Divisional Structure: This organisational structure have their own separate divisional
for the working of the organisation. They as a whole are responsible for resource
management for company. Separate divisions go separately with their own team.
Functional Structure: This organisational structure starts with the highest positioning
of the personnel responsibility at the top flowing downwards as according to level of the
personnel. Separate departments are managed independently.
Effect of organisational structure on Business productivity:-
An effective organisational structure helps and enterprise to work in an effective
way as it will help a company in overall development of company. If a company chooses
best organisational according to its operations and size of company, it will help them in
giving better results and help run the organisation by improving overall operations
company. If there is an effective organisation structure in the organisation according to
business, the decisions taken by the authorities will be carried to appropriate
departments in a better way so that better results can be seen (IQBAL, 2021). A better
organisational structure helps to improve communication held among the departments
as it will help departments to convey proper issues raised by one department regarding
other department leading to increase in interdepartmental communication network.
PESTLE Analysis of Unilever:-
1. Political:- As Unilever's is taken under consideration, this factor plays an
important role in Unilever's functioning as it is mostly related to FMCG products
which makes it important for firm to keep a keen look on rules made on food and
drug trade.
2. Economic:- For a company like Unilever, it is important for them to frequently
look out about change in economic growths which so that necessary changes
can be made at the correct time to reduce losses.
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3. Sociological:- With the global presence of Unilever among 190 countries,
assessment of sociological factors such as customer beliefs, trends,
demographic conditions etc. plays a vital role in companies growth.
4. Technological:- Technology being a basic in every sector makes it crucial for
Unilever to overlook on the invention of new technology and analyse which
advancement can help a company to grow better.
5. Legal:- Legal factors that may affect Unilever are industry regulations in which it
operates, licencing, trademarks, work permits and laws that are related to the
organisation.
6. Environmental:- As Unilever has is devoted to 100% use of reusable plastic, it is
important for Unilever to overlook for best environment effective measure so as
to achieve their this mission.
CONCLUSION
From the above report it is concluded that, there are few options available for an
individual regarding opening a business and every business has its own advantages
and disadvantages which makes it important for the individual to analyse and overlook
all the types of companies so that they can choose the best option in order to set up a
business organisation which can survive in this competitive world. Furthermore, different
types of organisational structures were also discussed which plays a vital role in
company's success. Along with that, a company Unilever was also taken under
consideration so as to explain in brief about the internal factors and their effect on
company.
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REFERENCES
Simeone, L., 2020. Characterizing strategic design processes in relation to definitions of
strategy from military, business and management studies. The Design
Journal, 23(4), pp.515-534.
Kiseleva, I.A. and et.al., 2018. Risk management in business: Concept, types,
evaluation criteria. Espacios, 39(27), p.18.
Church, A.H., 2020. The Meaning of Commercial Organisation. In The Contributions of
Alexander Hamilton Church to Accounting and Management (pp. 3-10).
Routledge.
Sadiqin, A., 2020. MICRO, SMALL AND MEDIUM BUSINESS DEVELOPMENT
(UMKM) AS A MEANING STRENGTH IN THE ECONOMIC PILLAR OF
MEA. MICRO, SMALL AND MEDIUM BUSINESS DEVELOPMENT (UMKM)
AS A MEANING STRENGTH IN THE ECONOMIC PILLAR OF MEA, 4(04),
pp.58-65.
Hurst, J., 2018. Sole proprietors' perceptions of benefits of and barriers to using digital
marketing. Journal of Aesthetic Nursing, 7(2), pp.108-109.
Mader, S.B. and Gibson, C., 2019. Learning in partnership. National Institute for
Learning Outcomes Assessment.
Kühnle, K., 2021, December. Article 86 b Definitions. In European Corporate Law (pp.
403-404). Nomos Verlagsgesellschaft mbH & Co. KG.
Bovay, J. and Pierce, T.M., 2021. Corporate Social Responsibility as a Business
Strategy.
Çitilci, T. and Akbalık, M., 2020. The importance of PESTEL analysis for environmental
scanning process. In Handbook of Research on Decision-Making Techniques in
Financial Marketing (pp. 336-357). IGI Global.
IQBAL, I., Political, Economic, Social, Technological, Environmental, and Legal Analysis
on Dompet Ummat Pontianak Indonesia.
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