Comprehensive Report: Types of Companies and Business Structures

This report provides a detailed overview of various types of companies, including micro, small, medium, and large businesses, along with an analysis of different business structures such as sole proprietorships, partnerships, limited liability companies, and cooperatives. The report delves into the characteristics of each type, examining their advantages and disadvantages. It also explores different organizational structures, like functional and divisional structures, and how they impact business productivity. Furthermore, the report discusses the influence of external factors, such as political and economic factors, on business performance, using H&M as a case study to illustrate these concepts. The content is structured to provide a comprehensive understanding of the business landscape, making it a valuable resource for students studying business development.

Types of Companies

Table of Contents
Introduction......................................................................................................................................3
Different Types of Companies.........................................................................................................3
Micro Business............................................................................................................................3
Small Business............................................................................................................................3
Medium Size Business................................................................................................................4
Large Size Business....................................................................................................................5
Different Companies from Sole Traders to Cooperatives and Limited Liability Partnerships........5
Sole Trader Business...................................................................................................................5
Partnership...................................................................................................................................6
Limited Liability Business..........................................................................................................6
Public Limited Liability Business...............................................................................................7
Cooperative.................................................................................................................................7
Different Business Structures and Internal Factors affecting Business ..........................................8
Identification of Different Organisational Structures and Explaining how does organisational
structure affect business productivity..........................................................................................8
How Different External Factors affect the performance of a business.......................................9
Conclusion.....................................................................................................................................10
REFERENCES..............................................................................................................................11

Introduction
Business is an activity in which products are purchased and sale in respect of exchange of
money (Esaulova, 2020). The aim of this report is to determine different types of companies and
Business structure. The report also consist different external factors which could affect the
performance of Business.
Different Types of Companies
A Company is an Entity that offers or buys goods or services in exchange of money.
Group of Individuals collectively work together to achieve goals and objectives of company. The
purpose of Firm is to gain more and more profit by increasing their brand value. There are
different types of companies they are as follows-
Micro Business
Micro Business is also known by name Micro Enterprise, it is a business in which the
employees are fewer than 10. It consists Freelancers, small organisation and Independent
Contractors.
Characteristics of Micro Business
Low Expenses-
The owner of Micro Business face low expenses as comparison to other type of business
as they have less umber of employees in respect to Medium and Large size of business. Micro
enterprise have less operating expenses as their operation activities are simple.
Interdependency-
Micro Business owners enjoys Freedom to Choose Career path even their employees also
have right to choose their future goals and live Independent Lifestyle (Moellers, Visini and
Haldimann, 2020).
Personal Satisfaction-
If a new business get successful it provides personal satisfaction as it is a life long dream
of owner. Personal satisfaction allows an individual to learn or develop skills that helps in
providing personal growth and pride.
Small Business
In Small Scale Business activities are performed on small scale level which includes
fewer machines, less capital and less labour. It is a Business which consist fewer than 50

employees in a unit. The few examples of small business are Photographer, Interior Designer,
tutor, a local shop, Caterer, etc.
Characteristics of Small Businesses
Management-
In Small Business all the management is controlled under owner. They look out and
handle all the activities related to functioning of business. The owner maintain and allocate
resources to achieve Business goals and objectives (Sanasi et. al., 2019).
Labour based-
In small business there is less use of equipments and machinery, they requires more
labour for functioning of business. The nature of Small Business is to involve more in physical
work as compare to Intellectual work. Due to lack of machinery workers manage their work
manually.
Limited Reach-
Small Scale Business have limited reach as compare to Large Business because they have
restricted area for continuing their operational activities. They establish their business in one
specific local area it could be a local shop or an Industry of small size.
Medium Size Business
Medium Size Business have less than 250 workers and their turnover must be under £50
million. They operate their business at medium level and aims to earn revenue by achieving their
goals.
Characteristics of Medium Size Business
Flexible-
Medium Size Business is more flexible due to their simple structure and size through
which they have a capacity to adapt changes. It also helps in Building a strong bond with
customers which helps them to know market variations (Swaffield et. al., 2019).
Quick Decision-
Medium Size Business can quickly made decision regarding the welfare of organisation.
They have a power to take decisions and also they involve employees in decision making process
so that they feel valuable in Business.
Effective communication-

In Medium Size Business the communication between employees and superiors are
effective as compare to large business. As there are few employees which enables to flow proper
communication and solve the problems frequently.
Large Size Business
Large Size Business have more than 250 employees. The aim of owner in Large Business
is to generate Huge profit with increasing their operation activities (Saito, 2019).
Characteristics of Large Size Business
Large Sale production-
In large Size business the production level is large due to its size and structure. They
produce large amount of products and also earn huge profit.
High Investment-
Large Size Business requires huge investment to establish because its operation activity is
on large scale which needs a lot of fund to run business effectively and efficiently (Abbasi et. al.,
2020).
Different Companies from Sole Traders to Cooperatives and Limited Liability
Partnerships
Sole Trader Business
Sole Trader is a Business structure in which people owns and run their business
individually. The owner of Sole Proprietorship makes all the decisions of Business. It is simple
form of business structure which is easy to established and inexpensive in nature. The person
who engages in functioning and activities of business without formal organisation and keep the
revenue generated by them is called Sole proprietorship. In this form of business the owner
depends on own resources and its operation is generally at small scale basis. The examples of
Sole traders are Beauticians, Grocers, small retailers, etc.
Characteristics of Sole Trader Business
Small Size-
In Sole proprietorship the business operations is generally small and they have power to
make decisions of organisation. Due to the single owner they arrange limited funds, if any loss
occurred in business activities they have to bear the loss with their invested income or wages.
Single owner-

Sole proprietorship is run by single person he/she is responsible for managing business
activities and bearing loss. They start the business individually and make blue print of Entity.
The authority and responsibility will be in the hand of owner only.
Partnership
Partnership is a form of business in which two or more individuals work mutually in
respect of sharing profit and loss. The people who indulge in forming partnership is called
partner. They provide capital and take responsibility for running activities of organisation on an
agreed basis (MacDonald, Clarke and Huang, 2019). There are various types of partnership such
as Active partnership, Nominal partnership, Sleeping, Limited , Secret, etc. The Few examples
of partnership are Uber and Spotify, Apple and Mastercard, GoPro and Redbull, etc.
Characteristics of Partnership
Agreement based-
Partnership is formed on the basis of agreement when two or more than two person are
carrying the functioning of Business. The agreement can be oral or written basis. The agreement
is made for solving disputes between individuals. In this agreement all the rules and regulation
are drawn which must be followed by partners.
Profit Sharing-
A partnership deed is formed in which ratio of partners profit and loss sharing are written
according to that ratio profit is distributed among partners. If there is no agreement the partners
shares equal profit and loss.
Limited Liability Business
Limited liability Business operates their activities like traditional partnership. In this
company the main aim is to distribute profit among the partners but also protect from paying
debts by their personal liabilities. The company have to maintain documents of Article of
Association and Memorandum of Association for limited liability company agreement (Jarwal,
2020).
Characteristic of Limited Liability Business
Owners as Managers-
In Limited Liability Business owners are considered as Members. They are responsible
for managing organisation Functioning themselves or they can also appoint a person for
managing day to day activities of Firm.

Separate Legal Entity-
Limited Liability Company is a separate legal entity from its members. They can hire
employees, sell and buy properties and bring lawsuits. As Limited Liability company is separate
from its members they can continue their business even after an owner withdraws.
Public Limited Liability Business
Public Limited Liability Business is a form of business in which the company have
separate legal existence which means that they are apart from its owners. There functioning,
formation and winding up are governed by laws, rules and regulation. The public limited
Liability Business must have seven members minimum and there is no limit in number of
members (Villaluz and Hechanova, 2019). In this business liability is limited according to the
face value of shares members owns.
Characteristics of Public Limited Liability Business
Easy Share Transferability-
In Public limited Liability Business the shareholders can easily transfer their shares to
public. In this business there is no restriction of transferring and inviting public for subscribing
shares.
Limited Liability-
The members of Public Limited Liability Business have limited liability which means
they are not liable personally for bearing loss and debt occurred in organisation.
Cooperative
A Cooperative Business is owned and controlled by its members, they can also use the
products, services and supplies of the cooperative. These business are formed for the benefit of
people and it is non profit organisation (Van Dijk, Sergaki and Baourakis, 2019). The main
purpose of cooperative business is that it helps in improving better quality of product or services
and bargaining power of members.
Characteristics of Cooperative Business
Voluntary Members-
In Cooperative Business the individual can join business any time and can also leave it at
any time. When the person leave business they can withdraw their capital from society and they
can't transfer their shares to other person.
Finances-

In Cooperative Business all the members contributes Fund by purchases of shares. The
members can buy limited shares in cooperative business. The government also helps cooperative
business in terms of loans from banks.
Different Business Structures and Internal Factors affecting Business
Identification of Different Organisational Structures and Explaining how does organisational
structure affect business productivity
Organisational Structure describes how activities can be conducted to achieve goals and
aims of Entity. There are various types of organisational structure they are Functional, divisional,
Matrix and Flatarchy structure. The organisational structure affects the productivity of company
as all individuals works collectively which increases communication and coordination among
them that helps in enhancing the productivity of Business (Brogi and Lagasio, 2019).
Different types of Organisational Structure
Functional Structure-
In Functional organisational structure departments are formed on the basis of their
functions. Each department have functional manager and team is divided as per their role. The
employees in functional organisational structures use their skills in which they are best and can
give productive outcomes to company so that they can achieve organisational goals and increase
productivity (Owen and Taylor, 2019). In functional Structure the roles are divide into President,
sales department, finance department, Vice president, Marketing department, customers service,
etc. The productivity in functional department is high s employees are very skilled and have
experienced in same work.

Illustration 1: Functional structure
(Source: Functional Structure, 2021)
Divisional structure-
In Divisional Structure organisation functions are grouped into divisions, these divisions
can be on the basis of products or geographies. In this structure several teams are focusing on
single product line. It is useful when the organisation has many markets and products. Divisional
structure offers a flexibility to organisation by allowing each divisional company to operate its
activity and report to parent company.
Illustration 2: Divisional: Geographical Structure
(Source: Divisional :Geographical Structure, 2021)

H&M have Divisional organisational structure as it has multiple outlets in different countries and
regions.
How Different External Factors affect the performance of a business.
Generally Pestle analysis is conducted to know external situation that could impact the
performance of Business (Manzaneque et. al, 2020). H&M is a Sweden Based Clothing company
and one of the largest importers of organic cotton.
Political Factor-
H&M was in pressure for opening stores in Israel as there is no respect of International
Laws. The force was made by the International community. H&M also faced political
controversy of racism and hurting sentiments of the country. For example- An incident was
happened were H&M apologized for an image appearing in its online store that showed a black
child model wearing a hoodie that said "Coolest monkey in the jungle".
Economic Factor-
The products of the company is accepted by the customers due to the good quality and
affordable price. It is one of the strength of business that they can perform well despite of
influencing economic factor like rising maintenance cost, Inflation rates, taxes, increasing labour
cost, etc.
Social Factor-
H&M performs various social activities and even they have tied up with NGO's. The
organisation have its own foundation in which they focus on Education, Equality, Planet and
Water. There main aim is to inspire people to recycle their old clothes even the company have
organised a campaign in which people are invited in store by bringing their old garments and
they will also receive a certain discount.
Technological Factor-
H&M must use latest technology to attract more customers in their outlet. They should know the
latest trends and fashion.
Environmental factor-
H&M have to makes sure that there must be no environmental hazardous while making the
products. They must follow government rules and regulations related to environment damages
control.
Legal factor-

H&M must follow legal laws and regulatory policies of countries in which their outlet is
established. They have to work under legal compliance and ethical value which is beneficial for
increasing the brand value of company.
Conclusion
From the above information it is been conclude that there are various types of companies
each companies have their own characteristic, advantages and disadvantages. There are different
types of Organisational structure which helps in increasing the productivity and profitability of
organisation. But there are external factors which should be assessed as these factors might affect
the performance of business.

REFERENCES
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