Tesco: Company Types, Structures, and External Factors Analysis

This report provides an overview of different types of companies, including micro businesses, small businesses, and large-scale businesses, and their respective characteristics. It explores business structures ranging from sole traders to cooperatives and limited liability partnerships, highlighting their unique features and operational differences. The report also examines how external factors, analyzed through a PESTLE analysis, impact business operations, focusing on political, economic, social, technological, legislative, and environmental influences. Specifically, it uses Tesco as a case study to illustrate how these factors affect a multinational retail brand. The report concludes by emphasizing the importance of understanding both internal structures and external environmental factors for effective business management and strategic decision-making.

Types of Companies

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Understanding of the different types of companies and how they work.....................................3
TASK 2............................................................................................................................................5
Different companies from sole traders to cooperatives and Limited Liability Partnerships.......5
TASK 3............................................................................................................................................7
Different business structures and how external factors affect businesses. ................................7
PESTLE analysis.........................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES:.............................................................................................................................10
Books and Journals...................................................................................................................10

INTRODUCTION
Company is a legal organisation formed by number of peoples to carry out the
businesses. It can be said as an artificial person which can be intangible and invisible formed
under a law (Mrňová and Roudná, 2020). Companies include prescribed goals which should be
accomplished by all the members. This report is in context of Tesco, it is a multinational retail
brand which is located in UK. It offer products like food, clothes, toys, supplements, furniture
and many more. This report includes different types of companies and their workings. Different
companies like sole traders to cooperatives and limited liability partnerships will be discussed in
the report. Business structure and factors that affect businesses will also include in this report.
How business productivity hampered by the structures of organisations are also mentioned.
MAIN BODY
TASK 1
Understanding of the different types of companies and how they work.
Company can be defined as an entity which involves group of individuals to incorporate
businesses. All the diversified people in the company contribute their efforts to attain common
goals and objectives. There are various types of companies which includes micro business, small
business and large size business. These are discussed below:
Micro business
Businesses which are carried by sole proprietor or small group of peoples who
manufacture products and services to capture small market area are called micro businesses.
These businesses generally generate low revenues. Companies House of UK set the turnover of
micro business which should not exceed £632,000 (Sarkisyan and Tikhonova, 2021). They also
states that number of employees should be less then 10. Micro businesses can get microloans for
their operations through small business administration. Business which are included in micro
businesses of UK are writers, life coaches, freelance consultant, self-employed trainers. Group of
all the micro businesses contribute good amount in the economy of UK. Characteristics of micro
businesses are:

 Lower profitability: Micro businesses generate low revenues in comparison to other
type of businesses. They capture very small market because they invest extremely low
capital to start their business.
 Flexibility: Member of micro businesses enjoys high flexibility in their operations. They
make changes according to their needs because they do not create any rigid rules and
regulation for their business.
Small business
Businesses who produce goods and services on small scale with limited resources and
minimum number of employees are known as small business. UK companies act 2006 stated
that, small scale businesses should not exceed the turnover of £6.5million with less then 50
employees (Gahm and et.al., 2021). Businesses like grocery stores, convenience stores, bakeries,
guest house, hairdresser and carpenters are considered as small scale business in UK.
Characteristics of small businesses are:
 Limited reach: They operate their business in limited range with less reachability. They
locate their shops and stores at selected area which restrict their operations and reach.
 Management: All the business management and decisions lies in the hands of owner
because they do not invest in human resource department separately. Owner controls all
the operations and formulate plans and strategies for business.
Large size business:
Large size businesses includes high capital investment and produce products and services
on large scale. Large businesses enjoys economies of scale and cover large market area including
national and international boundaries (Iovino and Migliaccio, 2019). Their is no limit of capital
and labour turnover prescribed for large size businesses. Businesses included in this are Wal-
Mart, Tesco, Exxon mobile, General motors and many more. Large business generates high
revenues and profitability. There are various characteristics of large business which are as
follows:
 Legal formalities: Large size businesses have to register themselves in the Companies
Act for their operations. Government of UK formed certain rules and regulations for
businesses which are mandatory to follow.

 Technology: Businesses rely more on technology for their functions and operations. It is
difficult to carry out operations manually on such a large scale. Members of large
business invest huge amount on technology which help them in growth and development.
TASK 2
Different companies from sole traders to cooperatives and Limited Liability Partnerships
There are different type of companies which are different from each other due to their
operations. These companies can be discussed below:
Sole trader business
Businesses which are carried by sole proprietor refer as sole traders business. They have
to registered themselves in HMRC so that they pay taxes and maintain records according to that
(Mataveli, Ayala and Gil, 2020). They pay tax according to their personal income because there
is no as such tax structure maintained for them. Sole traders includes businesses like freelancing,
marketing. Social media guiding and personal trainers. There are some of the characteristics of
sole traders mentioned below:
 Single ownership: Sole trader is fully managed by single owner. They can employee few
persons but management is controlled by owner itself. This will result in better decision
making without any disturbance of others.
 Unlimited liability: In sole trader, owner is only liable to pay off all the liabilities
because they are the single owners of the business.
Partnerships
In this type of business two or more individual run business to achieve common goals.
They share the responsibilities according to their business structure. Partnership businesses are
registered under Partnership Act 1890 in UK. Examples of partnership businesses in UK are
Social chain, Whatsapp, Bremont and Rocket Internet. There are few of the characteristics of
partnership business which are as follows:
 Sharing of profits: Partners share profits which are generated through the business. They
share profits according to their business policies which are decided among the partners.
 Agreement: Before commencement of the operations in partnership business, agreement
should be signed by all the partners who carry out the business.
Limited Liability businesses

In this business, shareholders are liable to their share only. Individual person responsible
for their financial decisions and debts. As the name suggests the liability does not exceed the
limit of investment which is invested by partners (Aksoy and Beaudry, 2021). Blockbuster,
Westinghouse and Anheuser-Bush are some of the examples of limited liability businesses. Few
of characteristics are mentioned below:
 Owners are members: Members of the company are the owners itself. They handle all
the operations by themselves or else they can hire someone else who can manage the
company.
 Separate entity: In limited liability businesses, members and company are different legal
entities. Members only take
Public limited liability business
Companies who offer their shares among public referred as public limited liability
business. They raise funds through public against the shares. This structure of business is very
popular in UK. The shareholders in this type of company do not bear extra losses they only liable
to their shares. Public who invest in the shares of the company become members of the company.
Barclays Plc., J Sainsbury Plc., Rolls-Royce Holdings Plc, Marks & Spencer Group Plc. Are
some of the examples of public limited liability business. Some of the characteristics are
mentioned below:
 Board of directors: Major decisions are carried out by board of directors who owns
more than 50% of company's share.
 Transferable shares: Ownership or shares of the company are easily transferable from
one person to another. This results in high liquidity of capital resources.
Cooperative businesses
In this type of business, company is controlled by person who enjoys the benefits of
products and services of company (Lichtenthaler, 2018). Ownership of company depends on the
equity contribution by each person towards the consumption of products and services of the
company. Members enjoy low risk of debt because they are only liable to their investment. John
Lewis, Ruskin House, Unicorn Grocer and Daily Bread are some of the examples of cooperative.
Some of the characteristics of cooperative businesses are:
 Open membership: Any person can become the member of cooperative business
irrespective of their cast, gender, religion and colour.

 Democratic control: Cooperative businesses are controlled by committee which is
elected by all the members during the annual general meeting. This is a democratic
action.
TASK 3
Different business structures and how external factors affect businesses.
Every business run their functions according to their working culture and environment. It
plays an important role because it affects in day to day operations and decision making process.
Various business structures are mentioned below:
 Hierarchical Organizational Structure: This structure follows the vertical chain to
delegate authorities, orders and commands. This is generally used by large organizations
because it maintains decorum in the organisation (Niskanen and Rohracher, 2020). It
improves the productivity, communication and understanding and reduce the chaos
among the employees in organisation. Tesco uses this structure because it operates on
large scale and hierarchical structure provide smooth operations and increase their profits.
 Horizontal or flat organizational Structure: In this structure, only few levels exists in
the management. It gives employees sense of responsibilities which increase their
confidence level. It also results in transparency and effective decision making.
Productivity will be increased due to reduction in communication chain.
 Functional organisational structure: This is highly followed structure in organisations.
It includes different departments like accounts, human resource, marketing and
purchasing. It enhance the productivity of employees in their respective field. Managers
handle their area of expertise which increase the efficiency of employees.
 Product organizational structure: Under this structure, the functions are carried and
organized by the particular product type (Sarkisyan and Tikhonova, 2021). Organisations
create specific group of individual products which is managed by their respective
managers. It promotes the specialization and allow focus on particular market segment
which increases the productivity of organisation.

PESTLE analysis
PESTLE analysis helps in analysing external factors of the environment which affects the
business operations (Symeonides, Loizia and Zorpas, 2019). External environment of Tesco can
be examined with the help of PESTLE analysis as follows:
 Political factors: Factors such as stability of country, tax rates and act of legislation are
included in political factors. Political stability can be seen in UK which is positive factor
for Tesco. Their tax policies are business friendly which helps in smooth operations.
 Economic factors: This affects the business in terms of demand, supply, prices and
leverage cost (Ricci and et.al., 2021). Tesco maintain their pricing according to the
disposal income of the people. So that are are able to earn good revenues.
 Social factors: Some of the factors like age distribution, health and safety, expectations
and population growth indicates social factors. Tesco offers product of each and every
age group with wide variety of choices. People are becoming health conscious nowadays
so Tesco provide them products which provide them more health benefits. Tesco also
started to produce natural and organic products which results in high sales.
 Technological factors: This includes factors like learning and development, innovation
and advancement in technologies. Tesco upgrades their services like they provide
opportunity of online shopping, self-service checkout points and home delivery facility.
Adoption of new technologies help Tesco in profit maximization.
 Legislative factors: Legal policies like taxes, resources, quotas, export/import and legal
change in legislation impacts business growth (Shergill and et.al., 2022). Tesco follow all
the legal policies like they fulfil the criteria of minimum salaries and wages for their
employees and they do not provide alcohol to underage group segments. These policies
help Tesco to become leader in retail sector in UK.
 Environmental factors: Factors which affects the surroundings and environments like
global warming, waste management, pollution and use of plastic includes in
environmental factors. Tesco is adopting environmental friendly activities for their
operations. They also ban plastic use in their stores and promotes paper bags which is
eco-friendly. In this way they contribute toward the improvement of environment.

CONCLUSION
From the above report, it can be concluded that companies are the legal organisations
which are carried out in different types of structures. This report includes different types of
companies and their characteristics. Every company follows different structure according to their
size. How external factors affect the operations of companies are discussed in the report using
PESTLE analysis.

REFERENCES:
Books and Journals
Aksoy, A.Y. and Beaudry, C., 2021. How are companies paying for university research licenses?
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Technology Transfer, 46(6), pp.2051-2121.
Gahm and et.sl., 2021. A flexible approach for the dimensioning of on-site energy conversion
systems for manufacturing companies. Computers & Industrial Engineering, 159,
p.107470.
Iovino, F. and Migliaccio, G., 2019. Energy companies and sizes: An opportunity? Some
empirical evidences. Energy Policy, 128, pp.431-439.
Lichtenthaler, U., 2018. Beyond artificial intelligence: Why companies need to go the extra
step. Journal of Business Strategy.
Mataveli, M., Ayala, J.C. and Gil, A.J., 2020. An analysis of factors that influence the decision
to export: perspective of Brazilian companies. Academia Revista Latinoamericana de
Administración.
Mrňová, Z. and Roudná, V., 2020. FORMS OF FACILITY MANAGEMENT PROVISION IN
DIFFERENT TYPES OF COMPANIES. International Multidisciplinary Scientific
GeoConference: SGEM, 20(6.2), pp.193-200.
Niskanen, J. and Rohracher, H., 2020. Passive houses as affiliative objects: Investment
calculations, energy modelling, and collaboration strategies of Swedish housing
companies. Energy Research & Social Science, 70, p.101643.
Sarkisyan, Z. and Tikhonova, M., 2021. Individualization of Approaches in Scenarios of
Survival and Development for Companies in the Digital Environment. In Technology
and Business Strategy (pp. 113-126). Palgrave Macmillan, Cham.
Ricci and et.al., 2021, August. PESTLE Analysis of Cybersecurity Education. In The 16th
International Conference on Availability, Reliability and Security (pp. 1-8).
Shergill and et.al., 2022. 3D-printed electrochemical pestle and mortar for identification of
falsified pharmaceutical tablets. Microchimica Acta, 189(3), pp.1-10.
Symeonides, D., Loizia, P. and Zorpas, A.A., 2019. Tire waste management system in Cyprus in
the framework of circular economy strategy. Environmental Science and Pollution
Research, 26(35), pp.35445-35460.