Business in Practice: Types of Companies and PESTLE Analysis Report

This report provides a comprehensive overview of different types of companies, including micro, small, medium, and large businesses, along with their characteristics. It explores various business structures such as sole trader, partnership, limited liability, public limited company, and cooperatives. Furthermore, the report delves into organizational structures, focusing on functional, matrix, and divisional structures, using Sainsbury as a case study. A significant portion of the report is dedicated to PESTLE analysis, examining the impact of political, economic, social, technological, legal, and environmental factors on business performance, with specific examples related to Sainsbury, such as the effects of Brexit and the COVID-19 pandemic. The analysis highlights how these external factors influence the company's operations, sales, and profitability, offering insights into the challenges and opportunities faced by businesses in a changing environment.

Business in
Practice

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Section 1: You are to show an understanding of the different types of companies and how they
work.............................................................................................................................................4
Section 2:.........................................................................................................................................5
Section 3:.........................................................................................................................................6
Using PESTLE analysis explain how different external factors affect the performance of a
business........................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCE..................................................................................................................................1

INTRODUCTION
In the changing environment there are different types of organization which are
running business by managing all functions and activities. Types of companies are private,
public, and voluntary which are operating their business by offering better quality of products
and services. If people have good knowledge and skills then it will be a great opportunity to
run their business (Dukoski, 2019). To start any business there is need to get permission that
support to operate the functions in other country. This can be understand by using Sainsbury
organization that is larger size super market in UK, operating its business privately by
offering range of products and services. The report highlights on types of company, structure,
and external factors that affected the organizational performance.
MAIN BODY
Section 1:
Micro business – This is a subset of the small business community based on the
number of employees within the organization.
Characteristics - This is kind of start-up where less than four employees and earn
less than $ 25,000, and having low start up cost under about $5000. This is very small type
business which can be operate by single person for the purpose of living their daily life. For
example, barber, bakery and others
Small business – A business which functions on a small scale level considering less
capital investment, less number of labour, and fewer machines to operate the business.
Characteristics - In this type of business, less than 10 number of employees works
collectively and attain their goals. This can help to fill the needs of their customers who
belongs to a community and manage the higher productivity. Few examples of small scale
industry are pen, local chocolates, general store and others that offers products. In this, people
are doing day to day transaction, daily sale, and cash management.
Medium size business – This can be explained as normally a family ownership run
by brothers, father and son (Tumbas, Berente, and vom Brocke, 2020).
Characteristics - This can be defined as business where less than 100 employees are
working and focusing on their performance which can help to develop the organizational
performance. The management of small organization is require to understand the needs of
their customers and attain the higher performance. For example, whole sellers, transport

companies, engineers, manufactures, and recruitment firm that are operating their business
effectively.
Large size business – This can be defined as business which is operating by high
range number of employees which can help to develop the organizational performance
(Riswanto, Hurriyati, Wibowo and Gaffar, 2019).
Characteristics - The number of employees in large size organization is more than
1000 and annual revenues are more than $ 1 billion. This type of organization brings the
innovation and new technology that can help to operate the business and attain the higher
profitability. The main purpose of to attain the competitive advantages and develop
profitability in changing environment. For example, Sainsbury, tesco, Bentley motors, Rolls
Royce and others
Therefore, different types of organization with their characteristics are different who
operates for different purpose and goals.
Section 2:
Sole trader – Sole trader is a business concern that carries on business exclusively by
organising and managing the all functions and activities. This can help to operate the business
by using own skills and abilities.
Characteristics – Sole trader is having single ownership which is wholly owned by
individual, One man control, no legal entity, unlimited liability, small size and no legal
formalities that are operating business (Yang and Aggarwal, 2019).
Partnership – This is a kind of business where formal agreement between two and
more than two people agrees to do their business. The partners of selected partnership decide
the agreement and distribute responsibilities which can help to operate the business and attain
the higher profitability.
Characteristics – Agreement between partners, sharing of profit, two and more than
two person, business motive, mutual business and unlimited liability that helps to operate the
business effectively.
Limited liability business – This business is the business structure where owners is
personally liable for organization’s liabilities and debts (Marek, and et.al., 2019).
Characteristics - Limited liability company is hybrid entity that combine the traits of
corporation with partnership. Herein, more than two partners are involved in business
activities in deciding the ratio of profit which can help to develop the organizational profit.

Public limited company – This type of business, offers shares of stock to the general
public for the purpose of filling their needs and wants. Characteristics –In this minimum
number of members are 7 and no maximum limit. This can help to develop the organizational
productivity and profitability (Ananjeva, Persson and Bruun, 2020).
Cooperatives – This explained as people centred enterprise which is owned,
managed, and controlled for the purpose of running their business and managing all functions
effectively.
Characteristics – in this, number of people works collectively which can help to
manage the business effectively. For example black star Co-op and Brewery, south mountain
company and others.
Section 3:
Organizational structure is a system that outlines how certain activities and functions
are directed in order to achieve goals and objectives. The management of such organization
should be follow all regulation and proper structure which can help to develop the
organizational productivity. Different types of organizational structure are as explained:
Functional organization structure – In this structure, all department of organization
are interlinked with each other and helps to operate the business effectively. herein, high
specialization of employees are working which can help to managing the all functions and
activities effectively (Yang, and Aggarwal, 2019).
Matrix structure – This defined as structure where in more than one line manager is
require to report from their employees. When organization follow this structure can be
challenging situation as employees get confused to who they should report and how. This is
mainly follows by small or medium size organization where number of employees are less
(Walser, Reisinger, Hartmann, Dierolf, and Sauer, 2020).
Divisional structure – This is another type of organizational structure which is used
by business concern for the purpose of running their business. in business organization
number of employees works where allocation of roles and responsibilities is important as it
bring all staff together and getting the work done. This is adopting by larger size organization
where larger number of employees are working and need of allocation of roles and
responsibilities.
From the all above, Sainsbury is following the Divisional structure that can help to
allocate the role and responsibilities of employees as per their skills and abilities which can
help to develop the organizational productivity and profitability. the management of such

organization understand the needs of their customers and provide the products or services
accordingly which attracts large number of customers and increase the profitability.
Using PESTLE analysis explain how different external factors affect the performance of a
business.
PESTLE Analysis – This can be explained as framework which is used by business
concern to analyse the key factors that influences an organization from an outside. This is
important for organization to conduct the environment and industry analysis to know that
which factor might be affect their business. The PESTLE analysis of Sainsbury is defined
below:
Political – This factor involves government policy, foreign trade policy, tax policy,
government stability and other regulations that are important to follow and managing the
business. Political factor affected Sainsbury currently is the imminent Brexit. Due to this, UK
or England will not longer remain part of EU that has reduced the organizational sales and
profitability. On the other side, it might be affected positively in case of stability of UK
government that support the organization to operate its business in different countries and
increase the profitability.
Economical – This factor is related to economy of country, interest rates, inflation,
income distribution and others that should be focused while operating the business. In UK,
there is low interest rate where Sainsbury is highly dependent on road based transport while
delivery the products across UK that can help to increase the organizational productivity and
profitability. Oppositely, if the inflation rate has been increased then prices of petrol and
diesel will be increase that can bound the organization to increase product pricing and sales
of organization will automatically will be decreased (Yang, and Aggarwal, 2019).
Social – This factor mainly focuses on social aspects such as age distribution, career
attitudes, lifestyle, and buying behaviour of customers which is changing day by day. In UK,
population is increasing and shifting towards as health conscious diet where management of
Sainsbury understand the needs of their customers and provide the products and services
accordingly. This can help to increase the organizational sales and profitability. Oppositely,
Covid-19 is the situation in which central government has declared to stop their business and
other activities. This affected the organizational performance negatively as buying behaviour
of customers automatically stopped and reduced that created challenges to operate it
continuously.

Technological – This factor is related to technology which is require to adopt by
organization for the purpose of providing different and unique products. This support the
organization and its business by managing all functions and attaining the productivity. It
focuses on technological advancement, automation, level of change, R&D activity.
Considering this factor, Sainsbury recently introduced the e-commerce store which is highly
helpful towards catering to the current tech friendly generation. This can help to attracts the
large number of customers and increase the organizational sales. In the situation of Covid-19
it satisfied the customers that organization it providing safety and contact less products with
contactless payment which can help to improve brand image.
Legal – While running a business it is important to have focus on rules and
regulations that are formulated by top authority for the purpose of running their business
effectively. Sainsbury is focusing on changing needs and demand of customer base and get
the approval which can help to operate the business effectively and maintain higher
performance. The management of selected organization should be followed all laws which
supports to run their functions.
Environmental – This can be explained as environmental aspects which used by
business concern for running and managing their business. Sainsbury is using this factor by
producing a high level of carbon foot prints which are highly adversarial to the current
environment condition. And changing in climate and environment can be challenging for
Sainsbury to run its business in the changing environment. for running its business,
management of such organization making sure their customers that organization is
participating in CSR, use fossil based transportation method and others which can help to
managing all functions and provide competitive advantages.
From the above analysis it can be evaluated that there are some factors which might
be affect the Sainsbury and its performance in the environment. There is need to take
corrective action and attaining the higher performance.
CONCLUSION
From the report it can be concluded that different types of businesses are exists in the
environment where it is important to have good knowledge to operate. The types are micro,
small, medium, and large that can help to developing the organizational performance by
managing all functions and activities. Micro business is operate by less than 5 people and
small are less than 10 that arranging all function. Organizational structure is the system where
flow of information is going on in same direction and attaining the higher profitability. This

also helps to maintaining all function and business activities by following the appropriate
structure and this helps to develop the organizational productivity. PESTLE analysis is used
to conduct the market and industry analysis that states which factor might be affect the
organization negatively.

REFERENCE
Books and journal
Dukoski, S., 2019. THE ROLE OF CAPITAL IN THE COMPANY AND ITS
TYPES. Knowledge International Journal, 30(1). pp.141-145.
Tumbas, S., Berente, N. and vom Brocke, J., 2020. Three types of chief digital officers and the
reasons organizations adopt the role. In Strategic Information Management (pp. 292-
308). Routledge
Riswanto, A., Hurriyati, R., Wibowo, L. A. and Gaffar, V., 2019. Empirical Assessment of the
Role of Product Innovation in Dynamic Marketing Capabilities and Company
Performance. Quality-Access to Success, 20(173).
Yang, L.W. and Aggarwal, P., 2019. No small matter: How company size affects consumer
expectations and evaluations. Journal of Consumer Research, 45(6). pp.1369-1384.
Marek, J., and et.al., 2019, September. Ditching labor-intensive paper-based processes: process
automation in a Czech insurance company. In BPM (Industry Forum) (pp. 16-24).
Ananjeva, A., Persson, J.S. and Bruun, A., 2020. Integrating UX work with agile development
through user stories: An action research study in a small software company. Journal of
Systems and Software, 170. p.110785.
Yang, L. W. and Aggarwal, P., 2019. No small matter: How company size affects consumer
expectations and evaluations. Journal of Consumer Research, 45(6). pp.1369-1384.
Walser, T., Reisinger, M., Hartmann, N., Dierolf, C. and Sauer, A., 2020. Readiness of Short-
term Load Forecasting Methods for their Deployment on Company Level.
Sansa, M., Badreddine, A. and Romdhane, T. B., 2019. A new approach for sustainable design
scenarios selection: A case study in a tunisian company. Journal of Cleaner
Production, 232. pp.587-607.
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