Business in Practice: Types of Businesses & External Factors Impact

This report provides a comprehensive overview of business practices, focusing on different types of businesses such as micro, small, medium, and large enterprises, as well as sole proprietorships, partnerships, limited liability businesses, public limited liability businesses, and cooperatives. It details the characteristics of each type and offers examples. The report also identifies various organizational structures and explains how these structures affect business productivity. Furthermore, it employs PESTLE analysis to explore the impact of external political, economic, social, and technological factors on business performance, using Tesco as an example. The analysis emphasizes the importance of adapting to changing environments and understanding how external factors can influence business operations and strategies.

BUSINESS IN
PRACTICE

Table of Contents
INTRODUCTION:- ........................................................................................................................3
Definition, characteristics and example of micro, small, medium size and large size business. ....3
Definition, characteristics and example of sole trader business, partnership, limited liability
business, public limited liability business and Cooperative............................................................5
Identify different organisational structures. ...................................................................................7
How organisational structure affects business productivity............................................................8
Explain how different external factors affect the performance of a business using PESTLE
analysis . ..........................................................................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION:-
Business is defined as an administration which is involved in trading of goods & services.
Businesses are of various types such as medium size, micro, small, partnership etc. Businesses
may be profit or non profit entities. Businesses improves the life of an individual by providing
the goods and services to the consumer and it also generates employment opportunities by which
people can earn income and improves their quality of life(Rohn and et. al., 2021). This report
focuses on the micro, small and medium and large sized businesses and their characteristics and
also sole trader, partnership, limited liability partnership and public limited liability business and
their characteristics. Moreover this report also focuses on the organisational structure and how it
affects business productivity and using PESTLE analysis how it affects the company.
TASK
Definition, characteristics and example of micro, small, medium size and large
size business.
MICRO BUSINESS:-
Micro business is defined as a type of small businesses that works on a very small scale.
This is gauged according to number of worker, total worth, money needed to start the businesses.
In this business there are less than 10 employees including the owner (Siti-Nabiha and et. al.,
2021). This business is actually run by single person. It is begin with small amount of capital
which is advanced from financial institution and another organisation.
Characteristics of micro businesses: A few characteristics of micro businesses are below:-
 Ownership:- Micro business is started with single owner. This business is also known as
sole proprietorship.
 Limited reach:- This business has operated in limited area. They run their business like
local shop or an industry located in one area.
 Management:- The management of micro business is managed by the owner itself.
Examples of micro businesses are:- Boss Brewing company, Issoria, Mantons Cards.

SMALL BUSINESS:-
Small business is defined as an partnership, private owned business or sole proprietorship
that has few employees. It has a less annual income than other corporations. This business
includes less capital investment, labour and fewer machines to operate.
Characteristics of small businesses: A few characteristics of small businesses are:-
 Labour intensive:- These businesses are dependent on labours and manpowers. They
have less dependent on technology.
 Flexibility:- These businesses are small and they are in a position to sudden changes.
 Resources:- These businesses requires resources that is available immediately. They
have limited wastage and utilize the natural resources effectively.
Examples of small businesses:- Third way Group
MEDIUM SIZE BUSINESS:-
Medium size business concern are family owned businesses. These businesses are well
constituted and have an noticeable track record which expedited finance judgement by granter or
investors(Ouro-Filho and et. al., 2021).
Characteristics of Medium sized businesses: A few characteristics of medium sized business is
as follows:-
 Life long learner:- These businesses are dedicated to learning and enhancing their
skills . This is the key to success of businesses.
 Be open to change:- These businesses have growth mindset rather than fixed mindset. It
anticipate the changes and try to get ahead.
 Limited investment:- Medium sized business are operated on a small scale and there is
less requirement of capital.
Examples of medium size businesses:- Verdant leisure, Captify, Smith brothers
LARGE SIZE BUSINESS:-
It is a business category with an above ordinary business size and have big dealings .
They also have the high economies of scale. These businesses employ lots of labour and yield

high revenue. These businesses have their target as national or even international market. They
also have the large resources as compared to other businesses.
Characteristics of large businesses: A few characteristics of large businesses are below:-
 They are usually international:- These businesses are based in one country and tends to
function in other countries throughout the world.
 Their owners don't usually run them directly:- The owners usually don't manage the
companies. They appoint a board of directors and project them with all the business
decision making processes.
 They have highly specialized departments:- These businesses have well-defined
departments such as human resource, marketing, finance, sales, production and research
and development. All the department managers managed their departments.
Examples of large size businesses:- Unilever, RioTinto, HSBC.
Definition, characteristics and example of sole trader business, partnership,
limited liability business, public limited liability business and Cooperative.
SOLE TRADER BUSINESS:-
Sole trader is a individual who is the owner of the concern and authorise to keep all the
profits and liable to all losses. This is a easiest type of business to establish and there is lack of
government intervention. As these businesses are not registered and that's why they do not have
government protection.
Characteristics of sole trader business: A few characteristics of sole trader is as follows:-
 Full control:- Sole trader is the owner of the business and have full control on their
business. They don't have to consult with others for making decisions.
 Not a separate legal entity:- Sole trader and the business concern is treated as one and
the same. There is not a separate legal entity and the owner is accountable for all the
proceedings and the action involved in it.
 Unlimited Liability:- Sole trader is personally accountable for the debts as there is no
limit on maximum amount of debts and there personal property may be confiscate to pay
the losses incurred by the business.
Example of sole trader:- Freelancers

PARTNERSHIP BUSINESS:-
It is an agreement between two or more persons to operate the business operations and
share its profits and losses and obligations. Every owner contributes something to the welfare of
the business. These contributions can be in form of ideas, money, property etc.
Characteristics of partnership business- A few characteristics of partnership are mentioned
below:-
 Agreement:- The partners who decide to start the business have to make a formal
contract. The agreement is usually written according to the government act.
 Share of profit:- In the partnership firms the primary feature is to share the profits
among the partners as per the agreed ratios. If there is no agreement related to ratios then
income will be distributed equally.
 Liabilities:- In partnership all the partners are open to liabilities. All of them are jointly
responsible for all debts of the firm if they have to liquidate their personal assets too.
Example of partnership:- Not On The High Street, Social chain
LIMITED LIABILITY BUSINESS:-
In this business losses of owners are limited to the amount of capital invested by them
and it does not extend to their personal assets(Van der Wees and Romijn, 2021). Limited liability
businesses are crossed entity as it combines the characteristics of corporations with those of
partnership.
Characteristics of limited liability businesses: A few characteristics of limited liability
business is as follows:-
 Separate legal existence:- Limited liability has separate legal entity from its members.
This business can transact and enter into contract within its own name.
 Limited liability:- Limited liability members are responsible for their own actions and
not responsible for the actions of other members. It becomes easier for the members to
operate the business without risking the personal property.

 Simplicity in formation and operation:- This business enjoys the simplicity in terms of
forming and operating. Formation facilities and filing requirements are simple as
compared to other businesses.
Example of limited liability:- Oxfam
PUBLIC LIMITED LIABILITY BUSINESS AND COOPERATIVE:-
It is a form of organisation that functions as a separate legal entity distinct from its
owners. It is formed and closely-held by shareholders. Shareholders are liable for the losses on
the amount they have paid for the shares they own.
Characteristics of public limited liability business and cooperative: A few characteristics of
public limited liability business are below:-
 Easy transferability:- Shareholders of public limited liability business can easily
transfer its shares to public. There is no regulation on the transferability of shares or
inviting the public to subscribe shares.
 Perpetual succession:- This means that company can never come to an end. Members,
directors or shareholders may come and go but the company never shut down its
operations.
 Limited liability:- The liability of shareholders are restricted to the extent of shares held
by them. The shareholders are not liable personally in case of loss go through by the
company.
Example of public limited liability business:- British petroleum company limited, Rolls-Royce
holdings etc.
Identify different organisational structures.
Organisational structure is a method by which work flows through an organisation. It is a
system that certifies how certain activities are directed in order to achieve the goals of the
organisation(Katsela and Pålsson, 2021). When organisation have defined structures, it helps the
businesses that all the necessary tasks are assigned. There are different types of organisation
structures. These are as follows:-
 Hierarchical structure:- This is the most common type of organisation structure. It is a
pyramid shaped organisational chart. The chain of command goes from the top down and
each worker has a superior. This type of composition better defines the authority and

responsibility. This also shows who is report to whom and it also motivates the
employees with clear paths and chances of promotion.
 Horizontal structure:- In this structure the level of leadership are comparatively small.
When there are less hierarchical pressures the employees are less stressed and thus
enabling them to work freely. In this structure most middle level management are
eliminated and this helps the employees in taking faster and more efficient. This helps the
employees to feel more valuable and involved in business as their ideas and thoughts are
considered.
Tesco uses the hierarchical structure as its business is very large and this helps the each
department to work freely with their maximum efficiency. This structure ensures that positions
and obligations are divided in the manner to ensure work will be done effectively and smoothly.
How organisational structure affects business productivity.
Organisation structure improves the overall efficiency by providing clarity to all the
employees. This also helps the departments to work more by focusing time and energy on
productive tasks. Organisation structure helps in improving the overall business operations and it
also improves the inter department communication(Umar and et. al., 2021). When
communication is effective there is less chance of mistakes. It reduces the problem in production,
reduces the defects and increases the customer satisfaction.
Explain how different external factors affect the performance of a business
using PESTLE analysis .
PESTLE analysis is a tool to keep a track on the external factors impacting the
organisation. The factors are as follows:-
 Political:- This means the extent to which an industry is influenced by government. This
includes tax policy, environmental regulations, trade restrictions and political
stability(Mani and et. al., 2021). Tesco operates in various countries so it needs to keep
an eye on the changing environment otherwise there might be dilemma related to new
regulation and cause increase/decrease in sales
 Economic:- This includes economic growth, interest, exchange, inflation. These factors
are the determinants to an economy performance that impacts the company. Any

modification in the policies in UK may lead tesco to major change in delivery, extra cost
associated with redesigning the company may be huge.
 Social:- This includes cultural norms and expectations, health consciousness, age
distribution, career attitudes etc. These factors are helpful for companies to better plan
their marketing strategy. Due to fast pace of life people choose to buy in one go and tesco
has planned their stores accordingly. Tesco believes in benefiting the society and thus
generated employment in various countries.
 Technological:- This means the innovation and developments in technologies. These
factors impact the operations of organisation. Tesco has managed to shift the trends of
online shopping and major of the customers are shop from online sites and get the
products home delivered.
 Legal:- This includes changes in legislation impacting employment, access to materials,
quotas, import/export. These factors have both external and internal sides. Tesco is under
the purview of media for a fraud case where it has to pay settlement for result. This
affects the image of the company.
 Environmental:- These factors are concerned with the effect of surrounding
environment and its influence. This includes waste disposal law, energy protection laws
etc. Tesco has undertaken several initiatives to better the environment and creates
sustainable society(Suwelack and et. al., 2022). This will lead to reduce the amount of
wastes.

CONCLUSION
From the above report it has been concluded that there are various types of businesses
that are working. All the business have their own motive but the main motive of businesses is to
provide goods and services to the society and improves the quality of life of every individual.
Some businesses works towards welfare of society and some operates on the motive to earn
money by providing quality goods and services to the general public. This report also concluded
about organisation structure and how organisation structure helps the businesses. Pestle analysis
also affects the business by various factors. Company has to keep an eye on these factors to
tackle the changes as when it comes.

REFERENCES
Books and Journals
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Mani, G. and et. al., 2021. Investigation of kinetic parameters for ammonium perchlorate thermal
decomposition in presence of gCN/CuO by TG-MS analysis and kinetic compensation
correction. Journal of Solid State Chemistry. 301. p.122301.
Ouro-Filho, A.M.D. and et. al., 2021. Impact of Interorganisational Learning Factors on the
Performance of Micro and Small Businesses. Journal of Information & Knowledge
Management. 20(01). p.2150002.
Rohn, D. and et. al., 2021. Digital platform-based business models–An exploration of critical
success factors. Journal of Engineering and Technology Management. 60. p.101625.
Siti-Nabiha, A.K. and et. al., 2021. Social media usage in business decision-making: the case of
Malaysian small hospitality organisations. Asia-Pacific Journal of Business
Administration.
Suwelack, T. and et. al., 2022. Understanding the Outside World: Customers and the
Surrounding Environment. In Creating a Customer Experience-Centric Startup (pp. 53-
84). Springer, Cham.
Umar, M. and et. al., 2021. The structure of knowledge management in inter-organisational
exchanges for resilient supply chains. Journal of Knowledge Management.
Van der Wees, C. and Romijn, H., 2021. Entrepreneurship and Smalland Microenterprise
Development for Women: A Problematique in Search of Answers, a Policy in Search of
Programs. In Women in microand small-scale enterprise development (pp. 41-82).
Routledge.