Report on Company Types, Structures & PESTLE Analysis

This report provides a comprehensive overview of various company types, including micro, small, medium, and large-sized businesses, detailing their characteristics and examples within the UK market. It further explores different legal forms of businesses such as sole proprietorships, partnerships, limited liability companies, public limited liability companies, and cooperative businesses, highlighting their unique characteristics and real-world examples. The report also examines organizational structures, including functional, divisional, and matrix structures, using companies like Tesco, Unilever and Royal Dutch Shell as case studies. Finally, it applies PESTLE analysis to Tesco, evaluating the impact of political and economic factors on its operations, providing a holistic understanding of the internal and external factors influencing business performance. Desklib offers access to similar reports and study resources.

Types of Companies
1

Table of Contents
Types of Companies.........................................................................................................................1
INTRODUCTION...........................................................................................................................3
Section 1 ..........................................................................................................................................3
Definition ...................................................................................................................................3
Characteristics of Small businesses:...........................................................................................4
Characteristics of Medium size business:...................................................................................4
Characteristics of large scale business:.......................................................................................4
Section 2...........................................................................................................................................5
Definition....................................................................................................................................5
Characteristics of Sole trader business........................................................................................5
Characteristics of Partnership business:......................................................................................5
Characteristics of Limited liability business:..............................................................................6
Characteristics of Public limited liability business:....................................................................6
Characteristics of Cooperative business:.....................................................................................7
Section 3...........................................................................................................................................7
Types of organisational structures...............................................................................................7
PESTLE analysis.........................................................................................................................8
REFERENCES...............................................................................................................................10
2

INTRODUCTION
Business is termed as a profession, occupation, trade or as a commercial activity in which goods
and services are exchanged for earning profits. Business can be defined as an organization or
legal entity engaged in charitable, professional or industrial activities where individuals work
towards achieving a common goal to satisfy the needs of the society(Del Baldo, 2020). There are
different types of businesses in the market and have one thing in common that they fulfil the
requirements of the consumers by providing both services and products . The main aim of
business is to operate and conduct the business activities in the long run. The business is mainly
divided in three legal forms such as sole proprietorship, corporation and partnership. The report
outlines the characteristics of micro, small, medium and large size businesses and explained
about the working of different companies. The report also describes about the impact of internal
and external factors on different organizational structures using pestle analysis.
MAIN BODY
Section 1
Definition
Micro business is also known as a micro-enterprise or micro-company which comes as a new
trend in the world of entrepreneur business. Micro businesses can be defined as a type of small
business that operates on a small scale with few number of employees.
Characteristics of Micro-business:
 Micro-business operates with less number of employees that include 1-9 employees.
 They require less capital to run their business that is around $50000.
 They acquire small market area because they do not have much resources to reach.
One of the example of a famous micro business operating in UK is “Mantons Cards”. This
business is started by Chris Beards with a aim of offering the “worlds best selection” of gifts and
greeting cards that has provided customers a different view point. It works with artists and local
suppliers to supply locally-themed products.
Small businesses can be defined as a business which includes less amount of capital, few
number of employees and fewer machines to start its operations (Ding, 2020). This type of
3

business produces products and services on a small scale and also contributes in the development
and growth of the economy.
Characteristics of Small businesses:
 They are operated by a single owner and and are known as sole proprietorship.
 The area is restricted to the area in which they work like local shop or industry in one
area. They utilize natural resources properly with limited wastage.
Example of famous small business in UK is “RH Amar”, which are known as the finest food
importers and distributors which offer premium grocery products to the customers which is
founded by Raoul Amar.
Medium size businesses can be defined according to the companies act 2006 as a business
which operates with a maximum of 250 employees. They are considered as management
businesses and family owned but there are some complex business where ownership is apart
from management.
Characteristics of Medium size business:
 Medium size business is owned by a single person or a group of person that handles the
management.
 This type of enterprise operates its functions at regional level and continue the business
for long period of time which helps in strengthening the relationship with the customers. Investment in plant and machinery or equipment is not more than 50 crore.
Example of medium scale business is “Pharmacy2U”, which is known as largest online
pharmacy in the UK, founded by Daniel Lee. It helps the customers by delivering products
online so that they save the time of patients and money travelling, waiting and queuing at
pharmacies.
Large size businesses can be defined as a corporation, limited liability company, association or
joint venture which consists of large number of employees and with huge capital investment
(Hanson and Kalyanam, 2020). These business are big in size and dominates a large market share
as compared to small and medium enterprises.
4

Characteristics of large scale business:
 Corporate owners do not handle the operations of the company instead they hire board of
directors to take the decisions regarding the business.
 Large organizations captures new markets and usually reaches to a wide range of
customers. They tend to operate its business internationally as they have more number of employees
with different skills and talent
Example of large size business operating in UK is “Turtle Bay Restaurants”, they introduced the
concept of Caribbean in 2010 to hit the street market of UK. It has around 39 restaurants in UK,
which provide best food and customer service to its guests to make them feel relaxed from the
busy world.
Section 2
Definition
Sole trader business can be defined as a type of business which is owned and controlled by
only one person (Hohmann, 2021). There is no separate legal entity in a sole proprietorship
business and the owner is fully liable for all the liabilities that incur in a business.
Characteristics of Sole trader business
 In sole proprietorship business, the owner has full control over the business activities that
are bring carried out in the whole day. The area of working is restricted in case of sole proprietorship because capital investment
and organization skills of an individual is limited.
Example of sole trade business in UK is “Issoria” business, which is founded by Ibi Thomson in
2016 and is known as a Change Management Consulting Industry. It is a consultant firm which
provides flexible on demand service related to management office.
Partnership business can be defined as a relationship between two or more persons that agree to
do business together. It is a type of business structure where people agree to combine their
experiences, investments, abilities and skills with a motive to share the profits and losses of the
business.
Characteristics of Partnership business:
 The main aim of forming a partnership firm is to earn profit by increasing sales.
5

 All the partners are equally responsible for managing the business activities. The liability of the partners is not limited to the amount of money invested and business
can use the personal property of the partners to repay the losses.
Example of partnership firm in UK is “Mumsnet” business, founded by two friends Carrie
Longton and Justine Roberts. The aim of introducing this business is to provide support to
parents by giving parenting tips to handle their child through a website. It creates a large network
for parents in UK by generating around 70m views on the page per month.
Limited liability business is a type of business structure where the liability of the owners or
members are limited in respect to the functions of the company. This business is generally started
with one person and there is no limit on the number of persons they may have. The members of
the limited liability company are liable to participate in the everyday operations to enjoy the
benefits of profits.
Characteristics of Limited liability business:
 In limited liability company, the owners are considered as the members that can either
manage the company by themselves or by appointing one member to manage the day to
day company's operations. Limited liability companies has a separate legal entity from its members. The company
can hire employees, buy and sell property and bring lawsuits to protect itself.
Example of limited liability business in UK is “Virgin Atlantic”, founded by Richard Branson in
1984. It is one of the first airlines in the world which introduce the concept of aircraft cabins and
mood lighting to relax the mood of the people by giving them comfortable environment.
Public limited liability business is a type of business that offers its shares to the public for
purchase. To offer the shares to public it is necessary to get listed on the stock exchange for easy
buy and sell of shares.
Characteristics of Public limited liability business:
 According to the companies act 2013, it is important to have a minimum 3 directors to
start the company. Under the company act it is necessary to issue a prospectus where all the information
related to the affairs of the company is mentioned.
6

Example of public limited liability business in UK is Barclays, which is a British universal bank.
The main aim of the business is to fulfil the needs of the society by supporting small businesses
and consumers by providing retail banking services.
Cooperative businesses are owned and managed by the members, where each member ha one
vote for electing the board of directors (Kidyba, 2021). It is refereed to as a association of
persons that came together to meet the common social, economic and cultural needs through a
democratically controlled and jointly owned enterprise.
Characteristics of Cooperative business:
 Cooperative organizations are set up for achieving a common goal and all the members
work together to support each other. Their main aim is to carry out the activities of the business with the motive of service and
not for profit. The profit is distributed to the shareholders of the organisation in the form
of dividend.
Example of cooperative business in UK is “Union Grocery”, located in Chorlton-cum-Hardy,
Manchester, England. It is known as an independent whole-food store that offers a wide range of
organic, fresh local and wholesome food, which is one of the successful food outlets in the UK.
Section 3
Types of organisational structures
Organisation structure is a method used to define the role, authority, power and responsibilities
in an organization. There are mainly three types of organization structure:
Functional structure
Functional organization structure is defined as a business structure that divides the groups into
different departments on the basis of specific roles and duties (Li and Gao, 2019). For example,
Tesco is a type of company that follows functional organizational structure to define the roles
and responsibilities of the employees. It uses this structure to manage different departments,
countries, stores and people to ensure that the work is done smoothly and efficiently.
Divisional structure
Divisional organizational structure is a type of structure that organization use to divide the
groups on the basis of a specific product, service and geographical locations. For example,
Unilever follows product type divisional structure in their organization to support different
7

global operations. This structure is used by the company to manage the manufacturing,
development, distribution and sale of consumer products.
Matrix structure
Matrix organisational structure is a combination of functional and divisional structure (Madsen,
2021). In this type of structure employees are divided into groups that report to one or more than
two managers. For example, Royal Dutch Shell is a company that follows global matrix structure
to support different business divisions. This structure is used by the companies to collect
information from their subsidiary companies to meet the operational demands and specific
geographic regions of Shell's mixed business operations.
PESTLE analysis
Pestle analysis is a strategic tool used to determine the macro factors that impact the organization
(Ranta, 2021). Tesco is considered as a multinational retailer company, headquartered in
Hertfordshire, England. Tesco uses pestle analysis to analyse the factors that affects its
performance and operations. These factors are discussed below:
 Political factors – There are many political factors that affect the functioning of Tesco
which include Inflation rate, tax rates, economic conditions or political instability. Due to
financial stability in the recent years, government motivate retailers to create employment
opportunities for the people. Tesco plays an important role in creating job opportunities
for the domestic population which in return raise the demand for their products and also
expands its workforce.
 Economic factors – Tesco produces a wide range of products in the market and
economic factors play an important role in the consumption of this large range of
products (Ruiqian, Song and Lian, 2019). Tesco generates most of the revenue from the
market of UK that is around 30%. Diversification and internalization are the two main
strategies that contributes in the success of company.
 Social factors – There are several social changes that influence customers of UK to shift
towards one-stop shopping and bulk shopping. Hence, Tesco has increased the sale of
various food items that are demanded by customers. To satisfy its customers, Tesco has
shifted towards producing organic products to fulfil the changing demands of the
customers.
8

 Technological factors - There are various new opportunities in the market for Tesco due
to technology advancement. The company has introduced and developed online shopping
which offer home delivery to the customers which helps in reducing the labour costs.
They have also invested on energy efficiency projects that helps in reducing the carbon
footprint.
 Environmental factors – There are several environmental factors that affect the growth
of the company such as population, temperature, density or food. Tesco focuses on
reducing the affect of these factors by reducing its carbon footprint and by minimizing
the waste produce in the stores to increase the social values in customers.
 Legislative factors – Any change in the policy of government directly impacts the
company operations. The company needs to follow both local and international market
laws to run the operations smoothly (Laur and Mignon, 2021). Tesco is recently being
sued for giving unequal pay to the men and women working in the company. To maintain
the credibility and reputation of the company its is important to consider the legal laws.
CONCLUSION
It can be concluded that business plays an important role in the society and culture that helps in
improving the living standard of the people by providing good quality of products and services at
the right time and right place. The report evaluates different types of business on the basis of size
and their characteristics that helps in identifying the role and structure of different business. The
report describes about the functioning of different companies and their characteristics that helps
in identifying the competition in the market. The report also evaluates different types of
structures that help the company in diversifying their operations and pestle analysis is necessary
in identifying the external factors that affect the company productivity and growth.
9

REFERENCES
Del Baldo, M., 2020. Sustainable Companies.
Ding, D.K., 2020. The effect of green announcements on stock returns of New Zealand listed
companies. Journal of Sustainability Research, 4(3).
Hanson, W.A. and Kalyanam, K., 2020. Internet marketing and e-commerce.(Student ed.).
Thomson/South-Western.
Hohmann, M., 2021. Ownership structure and tax avoidance: an empirical analysis of listed
Indonesian mining companies (Master's thesis, University of Twente).
Kidyba, S., 2021. Special Representatives of Companies in Disputes with the Company. Studia
Iuridica Lublinensia, 30(2). pp.245-261.
Laur, I. and Mignon, I., 2021. Match or mismatch between gazelle companies’ challenges and
the support provided by intermediary actors–an empirical example of the construction
industry. European Planning Studies, 29(10). pp.1845-1869.
Li, Y. and Gao, L., 2019. Corporate social responsibility of forestry companies in China: an
analysis of contents, levels, strategies, and determinants. Sustainability, 11(16) p.4379.
Madsen, S.R., 2021. Benefits for Companies that Implement Flexibility and Family-Friendly
Policies. LinkedIn.
Ranta, A., 2021. Consumer types of sustainable convenience food companies.
Ruiqian, J., Song, C. and Lian, L., 2019. Impact of patent portfolio on corporate value of
Shanghai listed manufacturing companies. Science Research Management, 40(8). p.198.
10