BMP3002 Business in Practice Report: Types of Companies and Structures

This report provides a comprehensive analysis of different types of companies, including micro, small, medium-sized, and large businesses, along with their respective characteristics. It explores various business structures such as sole traders, partnerships, limited liability partnerships, and cooperatives, highlighting their features and operational aspects. The report also delves into how organizational structures, including functional, divisional, team, and virtual structures, affect business productivity and efficiency. Furthermore, it applies a PESTLE analysis to examine the external factors influencing businesses, such as political, economic, social, technological, environmental, and legal factors, using Sainsbury as a practical example. The conclusion summarizes the key findings, emphasizing the impact of macroeconomic factors on organizational structures and the importance of being adaptable to external influences.

TYPES OF COMPANIES

Table of Contents
INTRODUCTION...........................................................................................................................4
Different types of companies......................................................................................................4
Different business structures and external factors affecting business.........................................7
PESTLE Analysis...................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
This study examines the type of companies, their characteristics, employee structure
present in various divisions. The working of the organisations have been discussed. The
study explains different organisational structures and the way in which productivity is
affected. The various organisational structures according to the size of the organisation
have been discussed. The external factors affecting macro-economically have been
elaborated. There has also been an example taken of Sainsbury company which is
influenced by the macro-economic factors.
Different types of companies
Micro business
Micro business is a business operating at a very small scale. The scale is generally
measured according to the total worth, number of employees, and the capital required
for starting the business (Lenaerts, Kilhoffer and Akgüç, 2018). According to
Companies House, the micro enterprise should meet two of the following conditions:
a) Turnover has to be less than £632,000.
b) The total of balance sheet has to be less or equal to £316,000.
c) The number of employees on an average have to be less than 10.
Small business
They are privately owned corporations which operate on a small scale and annual
revenue is less than a regular business. The company is small if it has two features out
of the three:
a) Turnover of less than £ 10.2 million.
b) About £ 5.1 million or less than on balance sheet.
c) 50 employees or less.
Medium-sized companies
Medium sized companies having turnover which is less than £ 25 million, has less than
250 employees and assets calculated grossly being less than £ 12.5 million. These

companies have potential to become successful business as and when the companies
gain more profit or income.
Large sized business
They can be defined as companies which have annual turnover of more than £ 50
million and have 250 employees or more than that. These businesses have large
operating scale and majorly having presence in other countries. The multi-nationals
come under the large business (Simion, Popescu and Bucovețchi, 2019).
Sole traders, cooperatives and Limited Liability Partnerships
Sole trader
Sole trader can be said to an individual who being the business owner exclusively can
keep profits after tax which have been paid but liable for losses too (Lenaerts, Kilhoffer
and Akgüç, 2018). For example: a person owning a furniture shop will receive profits as
own but is also responsible for the loss which can occur to the business.
For being a sole trader one must fulfill the conditions:
a) If one has got income more than 1000 speaking of self-employment between 6 April
2019 and 5 April 2020.
b) one needs to prove that one is self-employed.
c) one wants to make voluntary class 2 National Insurance Payments to help qualify for
benefits.
Partnership
When two or more people join hands to conduct business operations and thus share the
liabilities and profits. As of general partnership, the members take responsibility of both
liabilities and profits. Professionals form a limited liability partnership to run the
business.

Characteristics of partnership:
a.) Membership: It requires by the least two persons to start the partnership business
with members confined to limit of 100. The people starting the partnership have to be
competent legally to do so as they have to enter in a contract to become partners.
b) Unlimited liability: Members of the partnership have liability unlimited as they are
collectively as well as liable individually for firm's debt as well as obligations. If the
business assets cannot repay liabilities, the personal assets get claimed by creditors to
get the amount which is outstanding (Simion, Popescu and Bucovețchi, 2019).
c) Profit and loss sharing: The main purpose is to sharing profit in ratio which is agreed.
In the agreement absence between partners, the profit or loss have to be divided
equally between the partners.
Limited Liability partnerships
It is a business structure in which the owners do not stand liable for company's liabilities
or debt. They are a hybrid entity that combine the characteristics of corporation with that
of partnership or sole proprietorship.
Public limited liability business
It is a company which is limited according to the liability of whose shares can be freely
sold and traded with public taking minimum share capital to be £ 50,000 (Nisar,
Prabhakar and Strakova, 2019).
Cooperative
It is the business organization being controlled by the people using its products,supplies
and services. The cooperatives vary in type and size and all are formed to meet the
objectives of members and are defined in a way to meet the changing members of the
members.

Different business structures and external factors affecting business
The organisational structure binds people in a way that owner thinks can best boost
productivity. Employees will be able to share ,communicate the resources, coordinate
different activities and also prove efficiency. The different ways in which organisation
can be structured is:
a) Functional: It is the most efficient and structure which is productive in organization.
The employees are grouped by work speciality, this type of structure generally features
departments like marketing and then is still classified further if needed into subgroups
like sales. As specialists together work, coordination and communication increases. The
hierarchy which is strong in management ensures there is policies' adherence and the
procedures. Standardization and mechanization are encouraged for oversight and job
specialization. These characteristics are efficiency promoting and enhance productivity
(Duffy, Godwin and Cardinale, 2017).
b) Divisional: If a business is having product more than one or service, the work can
get easy if every product has set of own employees which are dedicated. It is the
description of structure which is divisional. The divisions work like business which is
independent where reporting is done by heads of division to the owner. The division
then organises as if it being an organisation which is functional, but having adaptability
which is improved as the dedication of division to one product and the buyers alone.
The divisions, as a matter of fact, are not much productive as in straight structure which
is functional, because there is a loss in some economies of scale. Different market
locations use the divisional structure (Nisar, Prabhakar and Strakova, 2019).
c) Team: This structure does not hold good in productivity terms regarding functional
structure. In the responsiveness to the market, the innovation, flexibility and the
satisfaction of employees which beat the functional design hands down. The structure
of the team can achieve its merits by getting the experts which are functional together
in teams tackling projects, the company goals and processes of work. The owner does
team formation according to need basis and empowering the teams with the authority

of decision-making. Teams have to spend time communicating although there is some
productive time spent in meetings. Speaking of unstable markets' companies, the
teams' ability to quickly and innovatively react to market forces dissuades the demerits.
d) Virtual: Talking of chart of organization, the structure which is virtual is not a regular
structure. The framework is generally followed by a small time owner who employing a
small group, which outsources the work as per organization requirements. The
company outside might handle its books while other handles production and yet another
supervises the shipping. The main point of using this frame work is that a small
business can expand quickly through means of contract or outsourcing without
worrying to take on permanent employees, the machinery, facilities and equipment. The
productivity stays with the companies the business owner hires. Virtual structure thus is
also known as network or modular structure.
PESTLE Analysis
Political factors
These are the factors which determine to an extent to which government and its policy
which an organisation or specific industry may be impacted. This also includes political
stability and policy plus the fiscal,trade and taxation policies too. The political relations
of the country with other countries affect the trade happening between the countries
(Perera, 2017).
Taking example of Sainsbury, it can be said that UK political relations will
influence company's expansion policy in adjoining nations. The tariff rates can increase
in European nations with UK exit from European Union. A stable government in UK will
also influence the company's business.
Economic factors
These factors are those impacting the economy and the performance which can impact
the profitability of the organisation. The factors can include employment or
unemployment rates ,interest rates, the costs of raw material and forex rates. Any

increase or decrease in these factors influence the company's business positively or
negatively. The purchasing power of the customers is also a deciding factor here as the
country with higher purchasing power will see the business growth as well with increase
in demand of goods and services.
Sainsbury being working in a developed economy like UK, would not have to
face the issue of less purchasing power of customers. The Great British Pound is also
valued high which will mean exports from Sainsbury will receive higher dividends.
Sainsbury although would get affected by the tariff rate increase from adjoining nations.
It would have to decrease on the operating costs to maintain the margin.
Social factors
The factors are related to the social and culture trends in public. The public buying
behaviour is a prominent factor in social factors. These factors depict the emerging
trends in the market. This helps a marketer to understand the customer wants and
needs. Factors include education levels, family demographics, trends in culture, attitude
changes in attitude and lifestyle changes (Perera, 2017).
Sainsbury has diversified its product range from grocery to many product
categories in retail. Thus, it has understood the buying behaviour of the customers who
like to do bulk shopping in one go. The company has also started its segment of organic
products which is the new fitness trend being seen in customers.
Technological factors
These factors involve technological innovation making an impact on consumer
behaviour and changing the market trends in the industry. The factors can include
digital technology changes, artificial intelligence, research and development. The
technology adaptability of the company decides the future of the organisation. Equal
consideration also has to be given in methods of using technology in distribution and
logistics.
Sainsbury has taken to online selling and promotion of products through e-
commerce. The company uses digital marketing techniques to minimise online traffic on

its website, uses advertising of mass mailing as well as personalised mailing. Company
has listed the product visuals and specifications meticulously on their website.
Environmental factors
These factors are the surroundings in which the company operates in. Companies have
to perform their duty of corporate social responsibility as a part of their duty towards the
society and country. Environmental issues taken up by the company influence the
sustainability approach taken up by the company. The factors include climate being
influenced by industrial activities, the recycling methods taken up by the company,
carbon footprint of the industries (Fozer and et.al., 2017).
Sainsbury has taken the sustainable method by vowing to reduce its carbon print
and also taking up issues of environmental concerns. It has taken to sponsoring of
environmental events and formed its image of sustainability.
Legal factors
The organisation has to follow the legal procedures within the country it operates. It has
to bind by the laws and regulations of the country. Organisations also have to be aware
of the changes occurring in legislation and the impact they can have on the business
operations. The factors include employment legislation, labour policies being followed,
environmental clearances, trade regulation and restrictions.
Sainsbury has followed the legal regulations of UK and has made a name for
itself. Company has followed the tax policies and other policies related to commodities.
CONCLUSION
Thus, it can be concluded that there are a number of organisations following different
organisational structures as per the size and nature of the business of the organisation.
Although, all of them are influenced in a way because of the macro-economic factors.
The organisations have to be alert of the factors influencing and accordingly make
decision-making.

REFERENCES
Books and Journals
Lenaerts, K., Kilhoffer, Z. and Akgüç, M., 2018. Traditional and new forms of
organisation and representation in the platform economy. Work Organisation,
Labour and Globalisation. 12(2). pp.60-78.
Simion, C.P., Popescu, M.A.M. and Bucovețchi, O.M.C., 2019. Analysis of Different
Change Types in the Management Process of an Organisation. In Advanced
Engineering Forum(Vol. 34, pp. 326-332). Trans Tech Publications Ltd.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Fozer, D. and et.al., 2017. Life cycle, PESTLE and multi-criteria decision analysis of
CCS process alternatives. Journal of cleaner production. 147. pp.75-85.
Duffy, J.E., Godwin, C.M. and Cardinale, B.J., 2017. Biodiversity effects in the wild are
common and as strong as key drivers of productivity. Nature. 549(7671),
pp.261-264.
Adler, G. and et.al.,2017. Gone with the headwinds: Global productivity. International
Monetary Fund.
Nisar, T.M., Prabhakar, G. and Strakova, L., 2019. Social media information benefits,
knowledge management and smart organizations. Journal of Business
Research. 94. pp.264-272.