BSc Business Management (BMP3002) Types of Companies Report

This report provides a comprehensive overview of various business types, including micro, small, medium, and large businesses, detailing their characteristics and impact on the economy. It examines different company structures, such as sole proprietorships, partnerships, limited liability businesses, public limited liability businesses, and cooperatives, highlighting their key features and differences. The report also delves into organizational structures, specifically divisional and functional structures, explaining how they affect business productivity. Furthermore, it utilizes PESTLE analysis to assess the impact of external factors on business performance, offering a holistic understanding of the business environment. The report aims to provide a clear understanding of different business types and how they work in practice.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
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Contents
Introduction 2
Section 1: Different types of companies and how they work
2
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships 4
Section 3: Different businesses structures and internal factors
affecting business 6
Conclusion 8
Reference List 9
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Introduction
The aim of this report is to give a rapid overview of the various types of
businesses that exist in today's marketplace. The study analyses how firms are
categorized based on their nature and obligations using many instances. The
relevance of organizational structure is also highlighted in the report, with the two
most important types being outlined. The report also includes a PESTEL analysis to
help you understand the impact of external influences on the organization.
Section 1: Different types of companies and how they work
MICRO BUSINESS
A micro business is a type of small firm that meets the standards to be
classified as a "micro-entity." One of the requirements is that there are;-
 No more than ten employees
 The annual turnover can't be more than £632,000, and
 The total balance sheet can't be more than £316,000.
Anecdotally, these micro-businesses contribute to the Overall economy.
Microbusinesses are critical to the country's economic sustainability. Furthermore, it
benefits the economy by targeting on neglected rural and urban areas. This form of
microbusiness is typically started with the very same amount of capital, and it is
managed, operated, and controlled by the same individual (Aula and Mantere, 2020).
There are roughly 9.1 million individuals employed by these businesses. However,
there are 5.7 million micro businesses in the United Kingdom, with 95.72 percent of
them being privatized. It impacts the economy by ensuring social cohesion across
the British regions. This sort of business includes small companies’ usually family
entities and unique start-ups founded by ambitious people with a strong desire to
compete in a competitive environment.
SMALL BUSINESS
This category includes privately owned organizations with fewer workers and
lower annual revenues than larger businesses. In the United Kingdom, the
Companies Act of 2006 mandates that the:-
 Number of employees must not exceed fifty
 The annual turnover shall not exceed GBP 6, 5 million and
 The balance sheet total must not exceed GBP 3, 26 million.
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Small enterprises are self-sustaining in relation to income and scope. The
company intends to contribute both domestically and internationally by stimulating
the economy and possibly contributing more through financial resources. Even this
type of business makes a major contribution to economic development. As a result,
they contribute towards the long-term sustainability in local economy. Since they're
not constrained by bureaucratic inertia, small enterprises can respond more quickly
to changing market conditions and the economy (Chaturvedi and Karri, 2020). Sole
proprietorships, partnerships, and corporations are some forms of private enterprises
which includes bakeries, privately operated eateries, architecture firms, and other
small businesses fall within this category. Marshfield Bakery and Trusted
Housesitters are two small enterprises in the United Kingdom.
MEDIUM BUSINESS
The Companies Act, 2006 of UK defines medium- sized enterprises is, as
follows:-
 Companies having less than 250 workers,
 An annual sales of less than £25.9 million, and
 A total balance sheet of less than £12.9 million
The medium-sized firm is regarded as the nation's economic support structure
because it supports growth by providing a varied range of work opportunities and
provides customers ’ satisfaction by developing new markets with challenging
business possibilities. They account for 45 percent of total employment generation
and 33 percent of Gross domestic product, depending on the country. The medium-
sized business is aimed to fill the gap between small and large businesses (Choi and
et. al., 2018). The business strategy under this form of business starts with the slow
and steady growth of valuable small businesses, with the corporation receiving a
major percentage of the sales revenue as well as growing operating margins.
Verdant Leisure which holds approximately 250 staff, Northern Monk Brew
Company, etc., are some examples of medium-sized companies.
LARGE BUISNESS
Large enterprises, unlike other types of firms, engage in offering a diverse
variety of products and services to its target consumer. Large businesses, regarded
as those with more than 250 employees, account for 40 percent of the overall
employment opportunities and more than half of country's GDP turnover. They have
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a wide product range and a significant influence across the country combined with
good communication channels. Furthermore, huge corporations assist and benefit
small and medium-sized businesses. This type of firm has a hierarchical framework
that allows it to respond to changing business environment, as well as an effective
organizational structure and a reliable customer-company communication network.
As a result, it contributes to the creation of economic opportunities, environmental
protection, as well as other market opportunities. Burberry, Marks & Spencer,
Diageo, British American Tobacco, etc. are some popular brand exist in the UK
marketplace.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships
SOLE PROPRIETORSHIP
This is the sort of organization in which just one person contributes to,
controls, and runs the entire business. The sole trader's liability is unlimited in this
type of business, and he or she is individually liable for the company's obligations
and liabilities (Kartashov and et. al., 2021). The concept of a single entity does not
apply to such an enterprise because the owner and the entity are basically identical.
With fewer formalities and straightforward legal procedures, it is simple to start a
firm. Sole proprietorships have cheaper start-up costs than other business
structures. One of its drawbacks is that the responsibility is limitless, forcing sole
traders to give up private assets to cover the company's debts. One of its benefits is
that the sole trader is not compelled to publicly disclose his or her accounts or other
relevant documents, enabling for confidentiality. Carpenters, plumbers, electricians,
freelancers, and other sole traders are examples of sole proprietorship.
PARTNERSHIP
A partnership firm needs two partners, each of whom participates to the
capital value and shares profits and losses in a fair and equitable manner. In order to
reduce conflicts, it is likely to constitute an act of partnership through a partnership
agreement, either verbally or in writing (Lewis, Benschop and Simpson, 2017). In
contrast to other types of business, the partnership business is straightforward to
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form and maintain. Because the liability is unlimited, the partners are jointly and
severally liable for the business's debts. One of its benefits is that the company is
funded depending on the percentage of partners. Even without government
interference, such kind enjoys flexible working. Furthermore, as agreed, the level of
risk is evenly allocated among the partners. Another distinguishing feature is the
capacity to transfer interests to a third party with the consent of all partners. In
addition, partners collaborate in the decision-making process. Facebook, Red Bull,
Twitter, Spotify, and others are just a few instances.
LIMITED LIABILITY BUSINESS
Limited liability corporations combine the features of a partnership and a
corporation. A limited partnership is made up of two or more partners, one of them is
the general partner and the other is considered a limited partner. Furthermore,
liability is limited in this type of business, which implies that the partners are not
obligated to individually bear the company's debts. This type of company benefits
from the concept of "perpetual succession," which means that partners can come
and go, but the company continues to function. These businesses must adhere to
corporation standards, but they have more flexibility when it comes to taxation and
proper tax strategies (Müller, Buliga and Voigt, 2018). They also have substantial
financial resources to back them up. In comparison to other types of businesses,
they are not price effective in terms of time and effort. Barclays Bank, Oxfam, M&S,
Sainsbury's, and other companies are among them.
PUBLIC LIMITED LIABILITY BUSINESS
This is defined as the division of ownership into share that can be traded
publicly on a share market. The owner can raise funds by issuing stock or bonds,
and safeguard the company's long-term existence by sharing risk amongst these
shareholders. This line of business provides more potential for long-term success
and expansion in the industry. This type of business has a higher potential for market
advancement and growth than other types of enterprises. The owner must be open
and, as a result, not confidential in both the decision-making process and the
company's performance. Funds are typically received from a variety of sources in
this sort of organization, with financial organizations, such as banks, being the most
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prevalent source of financial support. HSBC Holdings, Rolls-Royce Holdings Plc.,
Royal Dutch Shell, and others are some of the most well-known examples.
COOPERATIVE
A cooperative is a corporate entity as well as a non-profit organization with a
purpose other than profit. The cooperative's purpose is to improve members'
business interests by allowing them to engage in free and equal exchanges.
Profitability is a secondary consideration for these businesses. Within society,
cooperatives promote local culture and value (Muthuveloo, Shanmugam, and Teoh,
2017). Adopt a democratic management style that includes an appropriate
organizational structure and organizational culture. Furthermore, a poor return on
equity means a low return on investment in the form of dividends. Weaver Street
Market, Do it Best, Lincolnshire Co-operative, and others are examples of UK
cooperatives.
Section 3: Different business structures and external
factors affecting business
3.1 Identification of different organizational structures and
explaining how does organizational structure affect business
productivity
The organizational structure is critical for defining roles and duties, since a
lack of one can result in an inadequate chain of command and an unproductive
management process. The company's structure defines the delegation of
responsibility, positions, and responsibilities, as well as the flow of information within
an organization The lack of structure has a negative impact on the company.
Businesses must design and enforce an effective organizational structure in order to
achieve specific goals successfully and efficiently (Ponte, 2019). The two major
organizational structures are detailed further below.
DIVISIONAL ORGANIZATIONAL STRUCTURE
This structure is excellent for long-term corporate development and growth.
Each organizational responsibility is divided into multiple divisions by the divisional
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structure. For companies that want to expand and develop over time, this is the best
organizational structure. Under this organizational structure, the firm is split into
different divisions based on capital, goods, services, or geographic locations. In this
system, each division manages its own resources and responsibilities. In order to
fulfil organizational goals, the structure establishes a clear line of duty as well as a
strategic perspective on activities and objectives. The disadvantage of this structure
is that it duplicates functions within, resulting in dysfunctional relationships, rivalry,
and other negative effects on segments.
FUNCTIONAL ORGANIZATIONAL STRUCTURE
Because it organizes the organization's main functions into discrete classes,
this is the most common and effective structure. In order to achieve the required
goals effectively and efficiently, the organization structure aims to segregate
important operations into several diverse business functions. In this system,
employees were arranged according to their areas of specialization, which resulted
in consumer satisfaction. Moreover, through a well-thought-out decision-making
process, this structure excels in quickly resolving difficulties. It also helps to maintain
and improve business relationships. As the roles and responsibilities are clearly
defined which led to no ambiguities or arguments. The problem of the structure is
that it separates employees, resulting in insufficient channels of communication and
ambiguities. The framework is rigid due to a lack of creative qualities at work (Pop
and Ţîţu, 2018).
3.2 How different external factors affect the performance of a
business – PESTLE Analysis
The organizational performance is influenced by a variety of external factors.
External environmental influences are assessed using the PESTLE approach. It's an
outstanding strategic tool for establishing a company's worth while keeping in mind
the changing environment and the operations that it performs since it takes into
consideration the dynamic environment and the activities that it performs oversees.
In order to appreciate these factors, Sainsbury Company is also used to detect
market circumstances and make appropriate changes.
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 Political: It involves government participation, such as the impact of Brexit,
which has resulted in a decrease in income for the corporation. The pandemic
issue was also catastrophic and had a detrimental influence on the business.
 Economic: Economic factors influence business activity, such as the
epidemic-induced inflation, which resulted in a decrease in customer spending
power.
 Social: As a result of the pandemic, people have become increasingly more
health conscious, and they are now looking for high-quality products and
services at a fair price.
 Technological: Sainsbury's began giving online shopping to their clients due
to the rapid growth of technology. Technology must be updated in order to
remain competitive in current marketplace (Rowlinson, 2020).
 Legal: The Corporation must abide by all legislative requirements. Sainsbury
Company, for example, is sticking to social distance rules in the case of a
pandemic.
 Environmental: Environmental behaviors must be promoted to get a
competitive advantage in the market. Disposable packaging is used by
Sainsbury's, for example, with the purpose of recycling waste.
Conclusion
The report concludes with a brief examination of various business sizes and
types, as well as applicable examples. A variety of factors that influence
organizational growth and structure have also been addressed. Main organizational
structures are also covered, as well as a PESTLE analysis to better analyze the role
of numerous external factors on business activities.
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Reference List
Books and Journals
Aula, P. and Mantere, S., 2020. Strategic reputation management: Towards a
company of good. Routledge.
Chaturvedi, R. and Karri, A., 2020. Organization Design for Contemporary
Organizations: Review and Projection. Journal of Commerce and
Management Thought, 11(1), pp.63-70.
Choi and et. al., 2018. Dynamic capabilities of project-based organization in global
operations. Journal of Management in Engineering, 34(5), p.04018027.
Kartashov and et. al., 2021. Competitiveness of the Organization of Consumer
Cooperation: Effective Management in the Modern Market Sector. In Frontier
Information Technology and Systems Research in Cooperative
Economics (pp. 643-652). Springer, Cham.
Lewis, P., Benschop, Y. and Simpson, R. eds., 2017. Postfeminism and
organization. Routledge.
Müller, J.M., Buliga, O. and Voigt, K.I., 2018. Fortune favors the prepared: How
SMEs approach business model innovations in Industry 4.0. Technological
Forecasting and Social Change, 132, pp.2-17.
Muthuveloo, R., Shanmugam, N. and Teoh, A.P., 2017. The impact of tacit
knowledge management on organizational performance: Evidence from
Malaysia. Asia Pacific Management Review, 22(4), pp.192-201.
Ponte, S., 2019. Business, power and sustainability in a world of global value chains.
Zed Books Ltd..
Pop, A.B. and Ţîţu, A.M., 2018. Implementation of an integrated management
system: quality-information security in an industrial knowledge-based
organization. Calitatea, 19(166), pp.87-93.
Rowlinson, M., 2020. Business history and organization theory. In Management and
Industry (pp. 7-38). Routledge.
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