This report aims to examine the different forms of companies and business environment in a better manner. In this, all the businesses are classified with the help of size and legal entities which involves examples. The report describes the various business structure, functional and departments and also analyzes PESTLE analysis that is used to recognize the different external factors which may directly influence the business’s operations and its functions.
It is that form of small business that employs less than 10 people in an organization. In this, size and scale are the major differences in both the micro-business and small enterprises. The annual turnover of the business is more than €2 million. It has been analyzed that most of the micro-businesses are in the construction sector, retail, social support, and health care industry. This type of business is also regulated in the same manner as the other companies’ forms and they are taxed depends on the business type that is chosen by a sole owner, partnership, corporation, and LLC (Achinas, et. al., 2019).
It is the privately operated and regulated associations, partnership, corporation which has a limited number of workers who are performing work for gaining high income for an organization. Such industries play an essential role in the development of the economic and growth level of the country. The owner invests the required amount of money in the plants, machinery, and sectors. A small enterprise is such a business whose annual turnover is around Rs. 5 crores to Rs. 75 crore. It is an independent business that is governed and owned by a single proprietor that gain and bear both profits and loss amount.
Medium size business:
It is one of the growing businesses and also provides job opportunities for a large number of people in different sectors. The businesses employed 100 to 499 employees to perform work in reaching the desired goals and targets of an organization. The total turnover of the business is between $10 million to $1 billion (Adagba, et. al., 2017). In 2018, the center predicted around 2,00,000 US companies are meet and achieve potential targets effectively. These businesses are focus on managing their income, assets, and employees properly. Such a form of business plays an important role in the economy and contributes a higher amount to the country’s development.
Large size business:
It is such businesses which are regulated mining and manufacturing sectors and it employs around 500 employees to reach with desired growth of the companies. These businesses do not produce products and have $7 million in turnover annually. Large businesses need a huge amount of capital to be invested in operating companies (Aziz, et. al., 2019). This will offer various employment opportunities for the people along with getting the required output. Such forms of sectors are established across the world such as Germany, Russia, the UK, the USA, Australia, and Japan.
Sole trader business
It is the easiest and simplest type of business structure that can be easily implemented and lower in cost for the execution. The various aspects of the business will be the legal responsibility of the sole trader in this business structure. The sole trader will be the one for decision making, business activities, and hiring of people for the business operations. The sole trader business is controlled and owned by a single person who provides a special service. For instance, photographers, hairdressers, and plumbers are some of the types of sole traders (Gantenbein, et. al., 2019). Sole trader business is the business in which the owner is considered to be a self-employed person who is fully liable for the business operations, functioning, debts, and personal assets in the business processes.
Partnership business is a type of business structure in which two or more parties are involved in the management and operation of the business and sharing of the profits in business. This is a formal arrangement in which the parties are legally joined together for doing business according to the share of investment in the business capital. The partnership business includes the sharing of liabilities, profits on an equal basis in some arrangements while this can differ in a varied arrangement for the partnership business (Iriyadi, et. al., 2018). Examples of partnership businesses are accounting groups, law firms, real estate investment firms, and physician groups.
Limited liability business
The limited liability business is a type of business structure in which the business structure is a combination of the sole trader business and partnership business which does not make the owners of the business liable for the liabilities or debts of the company. This specific form of the private limited company comes from the United States. Various organizations work with the label of limited liability business such as blockbuster, Westinghouse, etc. the limited liability business is very important to type in which the business owners are not liable for any liabilities and debts of the business organizations.
Public limited liability business
The public LTD business is a type of business that is designated as the limited liability company which offers the general public shares of stock of the company. The buyers of the shares of stock of the company will have limited liability as they will not be responsible for any kind of losses or debts of the company other than the price of the share stocks of the company (Ishengoma, 2018). There are various types of public limited liability company working all over the world such as Cadbury Nigeria plc, rolls-Royce holdings plc, Burberry Group plc, fidelity bank plc, etc. this type of business structure is based on the united kingdom company law in which the general public can have their shares in the globally leading organizations without being liable for the losses of the company.
It is a private business structure of the organization in which the owners are the service users of the company and controls the various operations of the company. The cooperative business firm works for meeting the needs of the members and the members are expected to understand the purpose of fulfilling the tasks for capital enhancement of the business organization (Yacob, et. al., 2020). There are various businesses concern such as blue diamond, land O’Lakes are examples of the cooperatives in the producing field which works for meeting the needs of the various members of the organization and raising the capital interest for the business processes. The cooperative business works with the contribution of the various members for meeting the needs of the business and make profits for the company.
3.1 Identification of different organizational structures and explaining how does organizational structure affect business productivity
Functional organizational structure:
It is the most important organization structure in a company that used to operate and maintain employees’ performance and defined roles. This structure is grounded on the level of business hierarchy which involves various divisions under which leaders provide direction to achieve goals. The functional structure is important for achieving high operational goals; also workers have performed a great job with the assistance of skills and develop their knowledge in a better manner (Islam, et. al., 2017). This division helps in increasing employees’ efficiency and competencies which are required in a company. In terms of productivity, this structure disappointment of creativity and adoption of the market place in which there is too much job specification that also reduces the staff members’ morale and lower productivity.
Divisional organization structure:
It is that form of organizational structure that develops groups of each organizational operations and functions into a department. Such divisions can communicate with both products and geographies. This structure is useful as the failure of one department does not affect the other departments and also does not develop issues. It helps in providing capabilities to different sections of an organization concerns with semi-autonomous groups. In this structure, all the departments consist of required resources and functions that help in the managing product line and assist in understanding how to perform better work efficiently. There are different divisions involves such as IT, marketing, sales, finance, and production. The divisional department’s structure has a separate management system in which team members allow to make decisions for the company and there is no need to take one suggestion or approval for this action (Kunc, et. al., 2017). In this, employees can perform the specialist work that helps them in increasing their skills and demonstrate talent in an organization. It has been examined that divisional structure does not help in productivity as it is supported straight functional structure because certain economies of scale have vanished. This structure can be best used when a company has diverse locations and customers.
Organization structure assists in providing correct direction to the companies as they can easily flow of required data and information within an organization with the use of these structures. Along with this, it assists in making an accurate decision that can lead the company to the right path and gain high income or profitability.
PESTLE analysis is the tool that is used to identify the external resources and impact that are directly influencing the business operations and its functions. This is the framework that assists in analyzing the major key factors such as political, economic, social, technological, legal, and environmental factors.
Political factor: In this, an organization needs to focus on government made policies and strategies based on this company require to take necessary action and perform their business operations (Mukherjee, 2018).
Economic factor: This is such factor that is directly impacted by the inflation rate, interest rate, and demographic situation, and recession conditions to the business functions. If the economy is reduced then the demand of customers will also lower and this will influence the company growth and income level.
Social factor: It is that factor where the company should concentrate on the latest trends and fashion that help gain the attention of a large number of customers towards their services or goods. When an organization offers trendy items to their clients then this will assist in increasing goodwill and profitability (Pauw, et. al., 2018).
Technological factor: In this, the company needs to adopt the latest and advanced technology that can help them in improving their services and attract several buyers. Also, a firm develops innovative products for gaining and building a customer base.
Legal factor: It is important for businesses are to adopting legal laws and by this, they can smoothly run their company’s operations effectively. The government developed legislation and rules that help in directing business.
Environmental factor: In this factor, companies should focus on developing environmentally friendly products or items which do not affect the external environment and nature of the place (Samantha, 2018). Besides this, businesses require to follow all the ethical rules and norms for properly regulating their activities.
The report concludes the various kinds of business formats such as small, medium, large along with the various structural forms of business organizations that are working currently. The report also concludes the organizational structures with the pestle analysis on the business performance of the organizations are discussed. The report concludes a different kind of business formats such as cooperative, limited liability, sole trader, partnership, and public limited liability business. This shows the variation in the business operations and functioning based on a kind of format business owners are following for the daily activities of business organizations.
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