BMP3002 Business in Practice: Types, Structures & External Factors

This report provides an analysis of different company types, including micro, small, medium, and large businesses, and their operational characteristics. It further discusses various business structures such as sole proprietorships, partnerships, limited liability companies, public limited companies, and cooperatives, highlighting their features and legal implications. The report also examines the impact of different organizational structures, like functional and divisional, on business productivity. Finally, it explores external factors affecting business performance through a PESTLE analysis, considering political, economic, social, technological, and legal elements.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
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Contents
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Introduction 2
Section 1: Different types of companies and how they work
P
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships p
Section 3: Different businesses structures and internal factors
affecting business p
Conclusion p
Reference List p
Introduction
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Businesses practices are generally set of practices that need to be followed in order to
gives the best outcome to the consumer. Business practices includes standards, protocols and
different set of procedure that must be followed by that particular business. Business practice
can only be developed by setting goal for the organization. This report will be discussing
different type of companies and how they work in the global environment. It will also be
addressing the different business structure and all the factors that affect businesses. At last
report will address the PESTLE analysis that impacts the performance of the company.
Section 1: Different types of companies and how they work
The different types of companies work differently according to their purpose and the
goal of the organization. Basically there are four types of businesses that work in the external
environment and that are as follows-
Micro business:
Micro businesses are businesses that are smallest of small businesses. This business
works at small places and works in every sector be it retail, construction, social or heath care.
Further, the micro business is the one business that has less than 10 employees and turnover
of which is less than pound 2 million. These businesses run on small scale with fewer people
so that risk associated with can be minimized easily. Further, the businesses are smallest of
small businesses. They work on very small scale but their Is capability to make this business
a large size business if the employees and owners give their 100% to the company.
Small business:
Small businesses are those business that work with fewer than 49 employees and has
turnover less than pound 25 million. Though, These businesses works on large scale than the
micro businesses but still there are not enough to beat medium size businesses and large
sector businesses. The structure of these businesses are defined in such a way that the risk
associated with these businesses is not that large and it can be avoided easily by the company
they work in (Julien, 2018).
Medium size business:
The Medium size company can be defined as the business with up to the 250
employees. These businesses can be family owned (Ali and Saeed). These businesses can
also be said as a complex entity which means that ownership in the business is separated that
from the management. The structure of this business organization is divisional in nature
means that medium size businesses are divided into separate divisions on the basis of
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products and services that the organization provides to them. There are various branches that
works in the same direction for achieving the goal for the company. This can also be divided
on the functional reporting means the organization will be divided into the department on the
basis of different functions.
Large size business:
Large size businesses are those businesses who have more than 250 employees and
these businesses account for the 40% employment of. Growth of large size businesses has
increased suddenly in market after globalization as large size business generally work in
more than one country, the risk associated with these businesses are quite high. The business
structure of this organization is divided into both the divisional department and the functional
department. It is very difficult to survive in the market as competition is also high and this
can only be avoided by innovating different products that fulfils the demand of the consumer.
This organization also tries to fill the gap between demand and supply. It also invests heavily
into the research- development department.
Section 2: Different companies from sole traders to
cooperatives and Limited Liability Partnerships.
There are various types of companies that operate in market today and the explanation
regarding those companies is given below-
Sole trader business:
Sole trader business are those business where one person takes the sole responsibility
to start a business (Rye 2020). These businesses are managed by the single person and the
power, accountability and responsibility lie with that person only. Business of sole ownership
has some features that are as follows-
• Simple formation to start and close a business as there is no law to register such
business.
• The liability in this business is very high means there is concept of unlimited liability.
• There is no separate legal entity means the business and owner of business is a same
person.
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• The control and authority of this business totally relay on that single person.
• There is high risk involved with tarting such business.
Partnership:
Partnership is defined as the company where more than one person starts a business.
There may be two individuals or more than that, and they are called partner. Partnership deed
is signed between all the partners that defines rules and regulations of the business.
Partnership agreement is sole record of the partnership that should be framed in order to
avoid conflicts that may occur In the organization. The features of partnership are as follows-
• Partners share profit and losses as mentioned in partnership deed.
• There must be mutual benefit means the goal of all the partner must be same and they
should work in same direction.
• Unlimited liability is another feature that is associated with such businesses.
• This is defined as the lawful businesses as the contract must be signed between all the
parties that will work in partnership businesses.
Limited liability business:
Limited liability businesses can be defined as the company where owners are not
liable for all the acts done in the name of the company. This system work on the model of
hybrid system means the characteristics of sole trader, partnership are amalgamated to start
such a business. The simple meaning is that the owners has limited liability that is up to the
amount that have invested in the company. Features of limited liability business are as
follows-
• There is concept of separate legal entity means both owner and business is different
from each other.
• Limited liability is another feature that is associated with limited liability business
(Amirian 2020).
• Flexibility in starting business and working in the direction of the business as there is
less risk involved in it.
Public limited liability business:
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Public limited liability business is the business is the company that is registered in the
companies act. This company offers shares to the general public by listing themselves on the
London stock Exchange. The retail investor can easily buy the stock of the Public limited
company (Halliday and Okara 2022). The buyer has limited liability means they are not
responsible for the acts done by the company and which also defies that are not responsible
for the losses that occurred in the name of the company. Feature of Public limited company is
as follows-
• The liability of members is limited up to the amount that they have invested in the
company.
• Company can issue shares for the public by offering Initial Public offer.
• There are no restrictions for transferring hares to the another person and at the same
time it is easy process.
• Separate legal entity is the another feature that is associated with the company
(Ochola, M.J., 2019.).
•
Cooperative:
Cooperatives businesses are defined as the businesses that are owned, controlled and
managed by the members of cooperative for their benefit (Knežević, 2021). They work either
for their own members or for their surrounding community. These cooperatives should be
registered to avoid conflict of interest. The features related to the cooperatives are as follows-
• Cooperative society are open for the voluntary associations as anyone can join this
society and leave it whenever they feel.
• The democratic environment is the best part of this society.
• The equitable distribution of resources is another feature of the cooperative society.
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.
There are mainly two types of business structure that helps organization to achieve
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target of the business and the detailed analysis of this stricture are as follows-
Functional Structure- The functional structure of the company divides work on the basis of
different operations like there are various management system that works side by side, for
achieving the efficiency level the businesses design this system. There can be any type of
department but generally departments are divided into operation, production, human
resource, finance etc. all the departments in the company work for the same goal and in the
same direction. The productivity and efficiency of company can be raised by separating
departments, but this is not enough as department should also coordinate with each other in
order to avoid conflicts in the organization and also to provide the best outcome and best
results to the consumer of the organization (Islami and et.al., 2021). Every functional
department is managed by the functional manager of the company. The features of functional
structure is as follows-
• Roles and responsibilities are clearly defined in order to avoid duplication of work
and to make every person accountable for the work they do in the organization.
• Employees specialize in particular field are sent to that particular department in order
increase efficiency of the company.
Divisional structure- Divisional structure of the organization meaning that the organization
will be divided on the basis of the products and services they provide to its consumer Because
of growing global competition companies today not only deal in particular product instead
they try to increase their product ranges time to time and on the basis of which different
departments will be created). This helps company to provide the best product and services in
the market and the features of divisional structure are as follows-
• Divisional structure are created in such a way that it increases accountability of every
department.
• This structure gives organization a competitive advantage over others at the same time
it helps business to raise their product ranges in order to earn more profits.
3.2 How different external factors affect the performance of a
business-PESTLE Analysis.
The different external factors definitely affect the performance of the company (Matovic,
2020) and the PESTLE analysis of the organization is as follows-
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Political -
Political factors are all those factors that are related with policies of the government of
the country where business is operating. This political factors have both positive and the
negative impact upon the performance of the company as there are laws that support the
organization like the rules related to the less trade barriers but sometimes this law can also be
dangerous to the company like the rules related to environmental impacts.
Economic -
Economic factors are related to the economy of the particular country. This also
measures the financial performance of the country in terms of GDP. The higher inflation rate
has negative impact upon the country as higher inflation rate reduces power of purchasing
and that in turn reduces profits of the company.
Social –
Social factors involves life style, cultural values and behaviours of the people in the
particular country. These factors impact the decision-making of the country takes this
consideration into mind before launching any new product in any new country.
Technological -
Technology today has become an very important phenomena and raising technologies
are helping business to reduce the cost of the products they serve in market and that in turn
increases profits of the company. There are both favourable and unfavourable impact upon
the company.
Legal -
Legal factors are all those factors that affect the consistency of business in particular
country. There are various laws that need to be complied like the consumer laws, labour laws
and different safety and security laws.
Environmental -
Environmental concerns are raising environmental laws in all the country and that
need to be complied by every business that operated in that particular country. Business
analysis all this laws before entering into any global market.
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Conclusion
As mentioned business practice are the reasons behind the success of the company. The
above report has mentioned the different types of business structure that work in the market
today. The different sizes of businesses are small- size, medium-size and large size of
businesses. Further, this report also addresses the business structure of functional and
divisional and at last, PESTLE analysis has been taken into context.
Reference List
Ali, E.J.M. and Saeed, M., A STUDY OF FIRM GROWTH IN THE SMALL AND
MEDIUM-SIZE BUSINESS: A CRITICAL REVIEW.
Amirian, I., 2020. Limited Liability: Brief Historical Review and Analysis of Rationales.
Available at SSRN 3834225.
Halliday, C.E. and Okara, G.C., 2022. Challenge and Prospects of the Limited Liability
Partnership and the Limited Partnership as Vehicles for Business in Nigeria. Journal
of Commercial and Property Law .9(2). pp.70-81.
Islami, E., and et.al., 2021. The Role of Departmentalization, Divisional Structure and
Strategic Business Units (SBUs) in Enterprises in Kosovo. Calitatea .22(183). pp.18-
22.
Julien, P.A., 2018. The state of the art in small business and entrepreneurship. Routledge.
Knežević, M., 2021. Cooperative in the modern economic environment. Naučne publikacije
Državnog univerziteta u Novom Pazaru. Serija B, Društvene & humanističke
nauke, 4(1), pp.53-63.
Matovic, I.M., 2020. PESTEL analysis of external environment as a success factor of startup
business. ConScienS, p.96.
Ochola, M.J., 2019. The Effect of Business Model Innovation on Performance at Safaricom
Public Limited Company (PLc) (Doctoral dissertation, United States International
University-Africa).
Rye, J., 2020. What is the difference between a sole trader and a limited company?. In Setting
Up and Running a Therapy Business (pp. 132-134). Routledge.
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