BMP3002 Business in Practice: Company Types, Structures, PESTLE

This report provides a comprehensive analysis of different company types, ranging from micro-businesses to large enterprises, detailing their characteristics such as employee count, turnover, and operational scope. It explores various business structures, including sole proprietorships, partnerships, limited liability companies, public limited companies, and cooperatives, highlighting their unique features and legal implications. Furthermore, the report examines the impact of organizational structures, such as functional and divisional structures, on business productivity, and assesses the influence of external factors through a PESTLE analysis, focusing on political, economic, social, technological, legal, and environmental aspects affecting Burberry's business performance. The analysis emphasizes the importance of understanding these factors for strategic decision-making and maintaining a competitive edge in the global market. Desklib provides access to this and other solved assignments for students.

BSc (Hons) Business Management with
Foundation
BMP3002
Business in Practice
Assessment 1
Types of Companies
Submitted by:
Name:
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Contents
Introduction 3
Section 1: Different types of companies and how they work
3
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships 5
Section 3: Different businesses structures and internal factors
affecting business 7
Conclusion 9
Reference List 10
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Introduction
A business organisation is one or group of persons working together with some
common goal. Their objective can be to earn profits or to serve the society by working as per
the laws prevailing in the country. Different corporations follows various structures on the
basis of their size, investment, liability and the business goals (Yuan and et. al., 2020). This
report is based on the Burberry, a luxury fashion store. It is headquartered in London and
deals in various products like ready to wear clothes, accessories, footwear etc. The report
discusses about the workings and characteristics of the different types of companies on the
basis of its size along with an explanation of the variant businesses on the grounds of its
formation. The report also considers the diverse types of organisational structures and its
impact on the productivity of the business in addition to the affect of external factors on the
organisational performance.
Section 1: Different types of companies and how they work
Micro business:
A micro organisation can be defined as an enterprise holding a fewer number of
employees who are specialized in a particular skill. They are generally the family businesses
ran with a view to support the living of their belongings. These firms normally operates their
work by self financing the enterprise. They aims at promoting sustainable development by
providing jobs to many people and increasing the purchasing power of the company.
Characteristics of Micro business
 No of employees- There are usually less than 10 workers working in such enterprises
and it is a labour intensive business.
 Turnover- The investment and income of these business should be less than 2 million
euros.
 Area served- These businesses operates their business in a smaller area normally a
particular location of the city or the whole city.
For example, Castle Hill Fire Protection Ltd.
Small business:
Small businesses are normally the privately owned business in the form of sole
proprietor or partnership with an aim to grow their enterprise continuously by generating
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profits. The operations and employees of the firm are regulated by a single person or some
partners (Aversa and et. al., 2020).
Characteristics of Small business
 No of employees- Small business operates with 10 to 49 employees in the
corporation.
 Technology and Investment- These enterprises are normally labour intensive and the
working capital of these firms is usually greater than their fixed capital. The turnover
of small company is less than 10 million euros.
 Area served- It operates in the smaller area of network, generally the city or the small
areas linked with that city.
For example, Imaginera
Medium size business:
A medium sized enterprise can be defined as a corporation in which the investment in
the plant and machinery should be less than 43 million euros. These industries focuses on the
manufacturing of the products and thus, they are more dependent on the machines.
Characteristics of Medium business:
 No of employees- There are more than 50 but less than 249 members in the medium
sized enterprise.
 Turnover- The income level of this group should not be more than 50 million euros.
 Area served- There is no limit on the area to be served. They sale their production
throughout the state as well as the country.
For example, Captify.
Large size business:
The companies having an annual turnover of more than 50 crore and operates at a
large scale are categorised under large enterprise. There are owners , investors and board of
directors of the business who operates and regulates the finances, operations and employees
of the organisation (Cerra, Fatás and Saxena, 2020).
Characteristics of Large business
 No of employees- These organisations requires a big staff with a limit of more than
249 persons.
 Finance- These companies after becoming public can arrange their funds by offering
their shares to the public.
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 Area served- These companies can operate nationally as well as internationally by
complying with the rules and regulations of the countries in which it is operating.
Example of large business is Burberry.
Section 2: Different companies from sole traders to cooperatives
and Limited Liability Partnerships
Sole trader business:
A sole proprietor is the simplest form of entrepreneurship in which a single person
owns and run the firm to earn profits. An individual can hire someone for help but cannot
give ownership rights to the hired person. This type of business do not require much legal
formalities for its formation.
Characteristics of Sole trader
 Single owner- The business is owned by a single person. That person owns as well as
manages the whole firm.
 Unlimited liability- As the liability of sole proprietor is unlimited, its personal
property can be attached to pay off debts at the time of shortage of funds.
For example, Boutiques.
Partnership:
When two or more persons comes together with a mutual interest to form a firm and
achieve some common goal, then it is called a Partnership. There is an agreement among the
partners governing the rules of the collaboration, which can be verbal or written among the
partners (Baraldi and Lind, 2017).
Characteristics of Partnership
 Sharing of Profits- Partners of the business shares the profits equally or as per the
agreed proportions among them.
 Liability- The liability if the members is unlimited for individual as well as group.
For example, Uber and Spotify.
Limited liability business:
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Limited Liability Company is one of the most flexible type of business which limits
the liability of the owners or the partners of the company. These organisations can be taxed as
a partnership, sole trader or the corporation based on the choice of the owner.
Characteristics of Limited liability business
 Separate legal entity- The entities of owner of the firm and the organisation itself are
different in the eyes of law.
 Limited Liability- The liability of the company is limited to the amount of assets
held by the firm.
For example, Greenergy.
Public limited liability business:
It is a limited liability company which can easily trade its shares to the general public.
This type of organisation needs to comply with more legal requirements as a big number of
people are involved in this form (Julien, 2018).
Characteristics of Public limited liability business
 Convenient Transferability- It can easily transfer the shares of the company to the
public by inviting them to subscribe the shares.
 No. of directors- In a public company, there is no maximum limit of directors but
there should be at least 3 members in the board.
For example, British Petroleum Company Limited.
Cooperative:
A cooperative is a voluntary group of people united to achieve some social, cultural or
economic goal which is controlled democratically by the enterprise. They works on the policy
of one person, one vote for the decision making process of the business (Burrell and Morgan,
2017).
Characteristics of Cooperative
 Open membership- Any person can become a member of this organisation
irrespective of cast, colour, religion or creed.
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 Finances- The funds of the organisation are contributed by the members by buying
the shares of the company.
For example, Channel Islands Co-operative Society.
Section 3: Different business structures and external factors
affecting business
3.1 Identification of different organizational structures and explaining how
does organisational structure affect business productivity
Organisational structure is a method which outlines the manner of the flow of the
work and order in a company and the way all the activities are directed to attain
organisational goals (Taylor, Kalloniatis and Hoek, 2020). There are various types of
structures of which two are discussed below:
 Functional structure- It is a centralised structure in which a business is divided into
different departments according to the similarity of their functions. It brings
specialisation among the employees as there is similarity in the tasks of the whole
department. This structure can create problems when the individuals of the firm starts
focussing on the departmental goals then the organisational targets. For example,
Starbucks.
 Divisional structure- It is also a centralised system in which the organisation is
divided into different divisions according to the products or the area of operation. The
company dealing in variant products prefers to create different divisions for various
goods and the firm which is operating globally opts to make geographical divisions of
the company. It helps in eliminating confusion among the employees of different
divisions and helps in smooth conduct of the business. For example, Amazon
3.2 How different external factors affect the performance of a business –
PESTLE Analysis
External environment of the company directly or indirectly affects the performance of
the organisation. A firm takes any decision by sighting at the impact of the outside factors on
the working of the business (Berry and Berry, 2018). A Pestle analysis is done to analyse the
affect to the various external factors on Burberry.
PESTLE ANALYSIS
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 Political Factor- These factors examines the impact of the government on the
business. Burberry is operating its business worldwide, so it needs to follow
prevailing rules and regulations of different countries. After the confirmation of the
Brexit, the company in deep thoughts that how the change in rules will impact the
profitability of the company and its investors.
 Economical Factor- These factors include change in taxation system or slabs,
currency valuation system, inflation, laws and policies which affects the economical
condition of the company. If the UK administration increase the tax rates, them the
company has to increase the price of its products in order to maintain its profitability
otherwise, it will have to get satisfied by the lower profits.
 Social Factor- Life style of a person, habits, income,education, tastes and preferences
are some of the social factors which affects the demand and decision making process
of the company. Burberry started dealing in different price ranges when it recognised
that there is a huge demand of its product by middle class people but it is out of their
budget. For example, it launched mid range products to capture the market of middle
class consumers.
 Technological Factor- This factor deals with the research and development of the
technology and its implementation. Burberry used e-commerce platform in order to
widen its area of reach and to predict the upcoming trend. It also uses modern
manufacturing techniques to gain competitive advantage (Watkins, 2019).
 Legal Factor- The factor explains that what a company can and cannot do according
to the rules and regulations prevailing in the country. Burberry has to keep an eye on
the changing policies as violation of even a single clause of a law can make a
company to face legal obligations which will tarnish the image of the company.
 Environmental Factor- Pollution , climate, public health, sources of energy etc.
along with all the above mentioned factors are considered as environmental factors.
Burberry always shows a concern towards the nature and keeps it in mind that the
carbon and the other green house gases emitted from the various processes of
production should be minimum. This created a reputation of Burberry among its
society and the customers.
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Conclusion
It can be concluded from the above report that an individual before starting any
business must consider the different types of business according to their size and formation
and check them with its own needs and the availability of the resources. Different sizes of
business demands various amounts of fund for its establishment and operations. The legal
aspects and the liability criteria of all the types of organisations is different which must be
analysed before selecting a particular form. Also, the formation of the company has an impact
on the working of the business as an organisation which deals in heterogeneous products
needs to choose divisional structure. Departmental structure in such firms will create a chaos
in the organisation.
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Reference List
Aversa, P. and et. al., 2020. Customer complementarity in the digital space: Exploring
Amazon’s business model diversification. Long Range Planning, p.101985.
Baraldi, E. and Lind, J., 2017. Value measuring and value appropriation in business
networks. In No Business Is an Island. Emerald Publishing Limited.
Berry, C.T. and Berry, R.L., 2018. An initial assessment of small business risk management
approaches for cyber security threats. International Journal of Business
Continuity and Risk Management. 8(1). pp.1-10.
Burrell, G. and Morgan, G., 2017. Sociological paradigms and organisational analysis:
Elements of the sociology of corporate life. Routledge.
Cerra, M.V., Fatás, A. and Saxena, M.S.C., 2020. Hysteresis and business cycles.
International Monetary Fund.
Julien, P.A. ed., 2018. The state of the art in small business and entrepreneurship.
Routledge.
Taylor, R., Kalloniatis, A.C. and Hoek, K., 2020. Organisational hierarchy constructions with
easy Kuramoto synchronisation. Journal of Physics A: Mathematical and
Theoretical. 53(8). p.085701.
Watkins, J., 2019. Organisational Relativity—Changing Our Perspective on Health and
Health Care. In Embracing Complexity in Health (pp. 257-266). Springer, Cham.
Yuan, H. and et. al., 2020. Analysis of coordination mechanism of supply chain management
information system from the perspective of block chain. Information Systems and
e-Business Management. 18(4). pp.681-703.3
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