Business Structures and External Factors: A Comprehensive Analysis

This report provides an overview of different types of companies, ranging from micro to large businesses, and explores various business structures, including sole traders, partnerships, limited liability companies, and cooperatives. It examines how these structures function and the key differences between them. The report also delves into the impact of external factors, such as political, economic, social, technological, legal, and environmental considerations, on business performance, utilizing the PESTLE analysis framework. The analysis includes practical examples relevant to the H&M company, illustrating how these factors influence decision-making and overall business strategies. The conclusion highlights the importance of understanding business structures and the external environment for achieving organizational objectives.

Business in Practice Types of Companies

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Section 1.........................................................................................................................................1
Understanding of the different types of companies.............................................................1
Section 2.........................................................................................................................................2
Explain different companies from sole traders to cooperatives and Limited Liability
Partnerships...............................................................................................................................2
Section 3.........................................................................................................................................4
Different business structures and how external factors affect businesses......................4
CONCLUSION...............................................................................................................................6
REFERENCES..............................................................................................................................8

INTRODUCTION
Business is the term which refer as the place which incorporates various
representatives who are attempting to accomplish extreme objective of association.
There are various acts of business which should be acted in successful and critical way
(Kembauw and et.al., 2020). There are various types business in market area which are
leading its practices and errand to achieve set objectives. This report is based on
Hennes & Mauritz AB company. This organisation was established in year 1947 and
founder of this company is Erling Persson. H&M is well known Swedish company and
its head office is located in Stockholm, Sweden. This company is providing its products
and services in retail market area. This report consist information about different types
of companies. This includes sole traders to cooperatives and Limited Liability
Partnerships. Apart from this, different business structure along with external factors
that affect business has been determined in this report.
MAIN BODY
Section 1
Understanding of the different types of companies
There are different types of organisation which includes micro, small, medium and large
business. These types of companies are explain below in detail –
 Micro business – Micro business are consider as very small business that is
conducting its business activities in limited market reach. This sort of business in
working its practices in under 5 to 10 representatives. Micro business is giving its
items or administrations to extremely restricted market region and thought
process of this sort of association is to meet with fundamental prerequisites. This
type of organisation is able to provide its products and services to few numbers
of customers. Example of micro business is freelance graphic designers or home
based business, Etsy owners and so on.
 Small business – Organisation is consider as small when it is conducting
business activities with few employees and about to offer products and services
to small group of people (Saez and Zucman, 2020). This sort of businesses are
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relatively larger then micro business. These business incorporates in excess of
20 representatives working. Market shops, plumber, hairstylist and other are
example of small business.
 Medium business – Medium size business is refer as the organisation which is
larger than small company yet more modest than large business. This sort of
business incorporates in excess of 100 representatives working to achieve
business goals. The significant focal point of this sort of association is to develop
business rehearses just as acquire more benefits by giving its items and
administrations to clients. Medium size business has potential to increase
business activities and expand in market area.
 Large business – The large business is refer as the worldwide business that is
performing business practices in greater market area. This sort of business have
in excess of 200 number of employees that are using their full capacities and
potential to accomplish objective of association (Cutler, Nikpay and Huckman,
2020). Large business are providing its products and services to multination
market area and have high number of customer base that are interested in
purchasing products and services of company.
Section 2
Explain different companies from sole traders to cooperatives and Limited Liability
Partnerships.
 Sole trader business – Sole trader business is refer to the business in which one
person is responsible for conducting different activities of organisation. A sole
trader is legitimately liable for all parts of their business. A sole trader will by and
large settle on every one of the choices about beginning and maintaining their
business and have the freedom to utilize individuals according to their
requirements (Saez and Zucman, 2020). A sole trader can likewise utilize a
business name other than their legitimate name. In any case, they may need to
legitimately reserve their business name in the event that it varies from their
lawful name.
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 Partnership – A partnership is a connection between people who have consented
to share the benefits of a business carried on by all. A partnership is the
consequence of an understanding between at least two people. It ought to be
noticed that this kind of an arrangement can emerge just from an agreement and
not from status (Kembauw and et.al., 2020). An understanding from which a
partnership relationship emerge might be express. It might likewise be inferred
from the Partnership Act done by the accomplices and from a predictable course
of lead being followed, showing a common comprehension between them.
 Limited liability business – Limited liability organization is a unique and specific
legal component. This suggests that a Limited liability company can get an
appraisal separating confirmation number, open a monetary equilibrium and work
together, all under its own name. Restricted obligation associations are even
versatile with respect to charges, offering lots of decisions so you can make an
appraisal arrangement that works for business. They are coordinated by
recording with the proper state government office, however state laws in regards
to Limited liability business differ.
 Public limited liability business – A public limited organization is a willful
relationship of individuals that are joined and, subsequently has a different
legitimate presence and the liability of whose individuals is limited. Public limited
organizations are recorded on the stock trade where it's offer/stocks are
exchanged publicly. As indicated by the guidelines of the corporate law, a Public
limited liability business needs to mandatorily introduce its monetary details and
position publicly to look after straightforwardness.
 Cooperative – A cooperative is a personal business affiliation that is guaranteed
and obliged by people who use its things, supplies or organizations.
Notwithstanding the way that cooperatives vary in type and interest size, all were
outlined to meet the specific objectives of people, and are coordinated to change
in accordance with part's advancing necessities (Cutler, Nikpay and Huckman,
2020). Cooperatives are outlined by individuals who arrange among level
coordination to achieve vertical blend in their business works out.
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Section 3
Different business structures and how external factors affect businesses.
Organisation structure can be describe as the way or procedure according to which
information or other activities flow in business. This is very crucial and important part of
business as it will lead to have impact over different activities and task of business. It is
important that respective company that is H&M have proper and accurate organisational
structure which lead to successfully carry out different practices of business as well as
help in attaining desired goals. The sorts of organizational structures in business are
similarly just about as significant as its items, advertising plan and long haul system.
Organizations need a durable structure to draw in and hold capable representatives,
just as make a functional organizational order.
 Functional structure – A functional structure is the most expected approach. It
collects for social occasion people who do relative tasks subject to their space of
strength (Barattieri, Cacciatore and Ghironi, 2021). In this type of organisation
structure, business can find all of the accountants in cash and all of the sponsors
in advancing. Employees drove each locale and report up to a managers who
may coordinate unique divisions.
 Divisional structure – This type of organisational structure is includes flow in
information in between different divisions. Various team work alongside to each
other with the motive of accomplishing one common goal. This type of
organisational structure is more significant for more centralized leadership.
 Matrix structure – In this type of organisation, employees are majorly divided into
teams which are responsible for reporting two managers that is project manager
and functional manager. A matrix structure is a half and half of the functional and
divisional structures. It might include workers answering to various managers
relying upon their present task.
 Flat structure – The flat structure sheds the standard progression of a functional
structure, decentralizing administration and getting rid of the requirement for
centre administrator managers (Thomke, 2020). This type of organisational
structure is most effective for respective company that is H&M. Flat
organisational structure is cost effective and it will lead to foster good
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communication. Respective company is able to increase the morale of
employees by considering flat organisational structure. This type of business
structure is significant for faster decision making practices.
Impact of different external factors affect the performance of a business.
External business environment can be describe as the outer surrounding of
organisation that will affect overall performance and productivity. It is crucial for
respective organisation that is H&M to analyse and evaluate different external factors in
order to take correct or accurate business decisions. PESTLE analyses is consider as
effective business tool that is helpful for determining different external factors such as
political, economical, social, technological, legal and environmental. All of these external
factors are mention below in context of H&M company.
 Political factor – Political factors can be describe as different elements which are
associated with government and its policies. It is essential that H&M company is
considering political factor in order to take correct or accurate business decision
which will lead to increase overall performance of business. This factor consist of
government rules, regulations, taxation policies, tariff and so on. For example
increase in taxes will lead to negatively affect business performance and
profitability. Changes in taxation policies will direct impact over business decision
making.
 Economical factor – Economical factor comprise of employment rates, inflation
rates, GDP rates, economic growth and different elements. By considering this
outside factor H&M organization will actually want to take right choice for
upgrading in general execution of business. For instance the ascent in inflation
rates of UK market region will prompt have direct effect over the H&M business
activities. Because of this its exhibition and efficiency will be straightforwardly
influenced.
 Social factor – This refers to the belief or psychology of customers towards the
offering of business products. It is essential for H&M company to consider social
factors as it is dealing in clothing retail sector. For example, respective company
have to consider needs and demand of customers while creating products and
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services. This will lead to have positive impact on overall sales and helps in
developing better relationship with customers.
 Technological factor – Now a days technology play very important role in
enhancing overall performance of business as well as increasing its profitability.
H&M company is conducting its business practices in highly competitive market
area (Thomke, 2020). adoption of new and advance technology will lead to boost
overall performance of business. Through new technology respective company
will be able to enhance production level and able to timely meet requirements of
customers.
 Legal factor – This factor consist of different legislations and laws which is
associated with business and its practices. Employment law will have direct
impact on respective company performance as organisation have to change its
functioning as per new laws.
 Environmental factor – This includes all rules and regulation that is developed by
organisation for benefit of environment. It consist of climate issues, air pollution,
water pollution and so on. H&M company needs to conduct business practices
while considering these issues.
CONCLUSION
From the above report it can be concludes that there are various types of business
that are conducting its activities in different manner with the motive of accomplishing
different objectives. Micro, small, medium and large business are performing activities
as per their business size and scale. Flat organisational structure is cost effective and it
will lead to foster good communication. It is important for organisation to determine
different factors of external business environment that could have impact over business
practices.
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