Business in Practice: Company Types, Structures and Factors Analysis

This report delves into the realm of business practices, exploring the diverse landscape of company types, ranging from sole traders to cooperatives and Limited Liability Partnerships. It meticulously examines the characteristics of Small-Medium Enterprises (SMEs), categorizing them into micro, small, and medium-sized businesses. The report further analyzes various business structures, including functional, divisional, and matrix structures, highlighting their impact on organizational productivity. A key component of the report involves a PESTLE analysis, which identifies the external factors – political, economic, social, technological, legal, and environmental – that significantly influence business performance, using Unilever as a case study. The report also discusses the concept of organizational structure, its different types, and how they affect a business's productivity. Finally, the report explores the different business structures and internal factors that affect business.

Business in Practice

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................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................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business refers to the activity in which an individual is engaged to provide its good
produced or services offered with an aim to earn profits. In wider sense it refers to an
organisation or entity which conduct themselves in commercial, industrial or professional
activities. Sometimes business is carried out aiming not to earn profit and thus, called non-profit
organisation. Further to conduct a business effectively and efficiently it is required to inherit best
business practices. These may be devised by, the business or entity establishing authorities or
according to the rules and regulations established by the governing bodies. Although the
companies are required to act in accordance with the provisions of the Companies Act, 2006. The
report examines the type of companies and the organisation structure they form.
MAIN BODY
Section 1: Different types of companies and how they work
Small-Medium Enterprises are the firms in which few members are employed. The
Companies Act, 2006 of United Kingdom under section 382 ans 465 defines SMEs mainly for
the purpose of accounting requirements (Chakraborty, Gao and Sheikh, 2019). In order to
understand the SMEs, it is bifurcated into three categories which are as follows:-
Micro Business
The term derives as small business i.e. enterprises which engages small number of
people. It consist the count of employees ten or less with an annual turnover of €2million.
Further they engage to conduct business in their local areas with an aim to provide the goods or
services effectively by improving the quality life of people living in their localities. The micro
credit method provides finance facilities like small loan to these enterprises as to help the
business to grow. The micro enterprises are small in size and have limited scope and thus,
portrays and contributes a small potion in an economy. Boss Brewing Company a beer industry is
one of the example of micro business in UK. Such businesses are carpenters, plumbers, cobblers,
small farmers etc. Its main characteristics are:
 number of employees must not be more than ten
 annual turnover must no be more than £632,000
 the total of balance sheet must not exceed £316,000

Small enterprises
Small enterprises engages limited number of employees accompanied by limited amount
of capital and resources. Imaginera a software consultancy firm is an example of small
enterprises in UK. The company conducting business is labelled with the main characteristics,
which are as follows:
 number of employees must be more than ten but not exceed fifty
 annual turnover must no be more than £10 million the total of balance sheet must not exceed £5.1 million
Medium enterprises
These enterprises are considered to be well establish and mature enough to handle the
competitive market. Their organisation structure are managed by the professional in order to
meet its organisational objectives. They are considered as financially sound enterprises and grow
highly in the business environment. Further can be easy financed or can influence to finance
through bank loans, cash flow finance, trade credit etc. Verdant Leisure an holiday operating
company is an example of medium sized enterprises in UK. The Medium sized enterprises
consists of the following main characteristics:-
 number of employees must be more than fifty but not exceed two hundred and fifty
 annual turnover must no be more than £50 million
 the total of balance sheet of the enterprise must not exceed £12.9 million
Section 2: Different companies from sole traders to cooperatives and Limited Liability
Partnerships
Business can be:
 Sole Trader
 Partnership
 Limited Liability Partnership Limited Liability Company
Sole Trader Business
Meaning: It is considered as most famous business of the UK as under this type of
business, an individual performs its business or entity solely. In simple words, the individual
conducts its business solely which derives that an individual is the solo owner of its entity or

business. An individual solely is responsible for the loss or profit incur during the course of
trade.
Capital: An individual does not require any minimum share capital to start up the
business and thus, a sole trader business can be started with any personal savings of the owner.
The owner need to borrow or invest a large amount in its business or entity.
Management, Ownership and Control: The sole trader business is managed solely by the
owner or may employ other members to help in the conduct of business and thus, not such
professional are required to manage and control its business activities. Such businesses are
photographers, carpenters etc.
Legality: The business is considered as single entity which means the owner and the
business or entity are not legally distinct.
Liability: The owner of the sole trader business has unlimited liability. Further on being
the same i.e. single entity, the owner is considered to be personally liable for the loss or debt of
the business or entity (Cornielje and van de Ven, 2020). Thus, it can be challenging for the
owner to conduct such type of business.
Example: Plumbers, cobblers, small farmers, free lancers etc.
Partnership
Meaning: Partnership is formed where two or more persons gets engaged in the conduct
of business or entity with an aim to achieve desired goals. Thus, keeping in view the rights and
duties of the partners and business practices the parliament of UK formulated an act called The
Partnership Act, 1890.
Capital: No minimum capital is required to form partnership business. Together the
funds of partners are generally invested in the business.
Management, Ownership and Control: In partnership, their must be atleast two or more
members to conduct the business. Further as the management is in the hands of partners, thus
controlled and managed by them.
Legality: A deed is formed before entering into a partnership which consist of number of
member, capital to be invested, about the share of profits and loses, rights and duties of partners,
other relevant clauses and method of dissolution.
Liability: They are also subject to unlimited liability. Partners are jointly and severally
liable for the debts or losses the business incurs. Further in case of income tax liability the

partners are not jointly and severally liable as it is the responsibility of each partner to pay their
tax from their own share of profits. Although sleeping partners are not active in the conduct of
business but they still held liable for the debts.
Example: Professional services are the main example of such business like attorneys,
doctors etc.
Limited Company
There company has a limited liability which means that the owners of the entity are not
liable for the debts or losses of the business. Thus, personal assets of the owners are not used to
pay off the business debts (Jelassi and Martínez-López, 2020). To be noted here owners are
considered as shareholders. Unlike above two they are registered at Companies house. The
limited liability companies are further bifurcated into two types:-
Private Limited Companies
Capital: Under this the company raise its capital from its known people not from the
public. They do not trade on stock exchange. It is less expensive to start the company.
Control: The company is overall controlled by the directors, as they have the power to
control the shares of the company.
Liability: As discussed the owners are not legally bound to pay off company's debt from
its own shares or personal assets. Thus, the liability is considered to be limited.
Public Limited Companies
Capital: Under this the company trade on stock exchange and thus, offers its shares to the
public. Thus, the conducts bids and seek investors to make investment in the company.
` Control: As the company has more owners i.e. shareholders so more they have control
over the business conduct. It is considered disadvantage as the ability to take decisions fluctuates
and weakens.
Cooperatives
Meaning: These operates for the benefits of its members or its users benefits. The
cooperatives are of many types such as consumer cooperatives, housing cooperatives societies.
Capital: The member of cooperative contribute its own share in the equity capital and the
dividend is paid accordingly along with the remuneration.

Management and Control: They can have thousand of members unlike partnership and
sole trader and managed by them accordingly. Further member contributes have control of firm
on the basis of one vote principle.
Legality: As they are owned, managed and controlled by the members thus act as a
company limited by shares, guarantee etc. Thus, considered legal entity.
Liability: Liability depends on its formation of the entity. It may be partnership, company
limited by shares etc.
Examples: Edinburgh Student Housing Co-operative, John Lewis Partnership etc.
Section 3: Different businesses structures and internal factors affecting business
3.1: Identification of different organizational structures and explaining how does
organisational structure affect business productivity
It is important to establish organisation structure in order to achieve desired goals
effectively. Organisation structure portrays the levels of delegated authorities with the
responsibilities along with their communication in an organisation. The organisation structure are
formed after monitoring the internal and external factors of the environment (Mohapatra and
Sundaray, 2017). Unilever plc is a British multinational consumer goods company located in
London, England. The company ensure to promote its goods and services effectively by adapting
proper organisation structure. The structure formulated by the company helps to cope up in the
changing environment and thus, led to attain its desired goals.
Types of Organisation Structure
The organisation structure differs according to nature of the company. The different types
of organisational structure are :-
 Functional Structure
 Divisional Structure
 Matrix Structure (combo of functional and divisional)
 Flat Structure
Functional Structure
It is considered as one of the efficient and strong organisation structure among the others.
It groups its members according to their skills, ability or roles they play in the organisation. It
forms levels of different departments under the supervision of their respective leaders. The

drawback of the structure is that the organisation becomes less flexible and enable to adapt
changes easily which adversely effects the productivity(Waddell and et. al., 2019).
Divisional Structure
The divisional structure is adopted by the organisation offering more than one products
and services. Each product or service has its own employees, thus forming separate divisions.
Such is used by the company covering global market (Gupta, 2017). The Unilever Plc is the
famous example, as it has a division for personal care products and home products. The product
type division helps the company to work effectively and maintain sustainability in the
competitive market.
Further the organisation structure has a great impact on the productivity of the business,
such as:- Influencing power of managers: The bad decisions is of the managers is one of the
element of weak organisation. The efficiency of managerial staff plays a crucial role in
organising the work of the company and help to meet the objectives (Watson, 2017). Flaw in organisational structure: If the structure is not properly formed it can create
inefficiency in performing duties delegated and will lack the communication between the
management which ultimately affect the productivity of an organisation (James, 2017) .
3.2: How different external factors affect the performance of a business – PESTLE Analysis
The PESTLE analysis helps to identify the external factors affecting the working of the
organisation. Unilever's external factors vary significantly keeping in mind the change in the
environment (Agwu, 2018). This PESTLE analysis examines the external factors of Unilever, as
follows:-
 Political Factors: Mostly the guidelines issued by the European Unions causes restrictions
for the company operating in other countries.
 Economic Factors: During the pandemic situation, the cheaper goods were in demand
thus caused increase in the potential sales. Also the unemployment led the Unilever to
reduce the cost.
 Social Factors: The main focus is not to detriment the sentiments of the people. Thus,
provides the advertisement in different languages. During covid the company expressed
the desire to help and maintain the quality life.

 Technological Factors: Improvements in process may help the usage of sufficient
resources with an division of new products as to meed upcoming consumer trends. Using
digital marketing to provide the products easily.
 Legal Factors: Each brand follows the protocols of the act such as health and safety acts
etc.
 Environmental Factors: The company believes in the re-usage of waste materials and
thus, forms eco friendly packaging in order to make consumer aware about the
environment.
CONCLUSION
From the above report it is concluded that, the companies are regulated to act in order to
raise the standards of corporations and to create legal framework. The organisation structure
plays utmost important role in the working of an organisation. It helps the company to prioritise
their members, products or services according to their role in the organisation. The type of
structure differs depending on on the nature and maturity of the organisation.. On the other hand,
PESTLE analysis somehow helps to create organisation structure as it identifies the external
factors affecting the organisation. Thus, best structure helps to attain goals efficiently.

REFERENCES
Books and Journals
Agwu, P.E., 2018. Analysis of the impact of strategic management on the business performance
of SMEs in Nigeria. Academy of Strategic Management, 17(1).
Chakraborty, A., Gao, L. and Sheikh, S., 2019. Corporate governance and risk in cross-listed and
Canadian only companies. Management Decision.
Cornielje, M.F. and van de Ven, B., 2020. Ecolabelling: The Moral Responsibilities of Food
Companies.
Gupta, P., 2017. Organisational Structure and Management: In Reference of Banking Sector.
James, P.S., 2017. Organisational Behaviour, 1e. Pearson Education India.
Jelassi, T. and Martínez-López, F.J., 2020. External Analysis: The Impact of the Internet on the
Macro-environment and on the Industry Structure of e-Business Companies.
In Strategies for e-Business (pp. 49-95). Springer, Cham.
Mohapatra, I. and Sundaray, B.K., 2017. Strategic Employee Empowerment Initiatives towards
Organisational Performance.
Waddell and et. al., 2019. Organisational change: Development and transformation. Cengage
AU.
Watson, T., 2017. Sociology, work and organisation. Taylor & Francis.