Module Name: Business în practice

Module number: BMP3002

Module Leader: Fahim Shahabudeen, Dr. Sumesh Dadwal,
Jean Paul Anne, Ogbonda Ogoloma, Dr. Umair S. Choksy,
Hasnain Qayyum, Hasnain Qayyum

Types of companies
By Ioniță Simona Elena

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 CONTENTS INDEX
 Introduction: pag 3
 Section 1: Different Types of Companies depending of
their size and how they work: pag. 4- 5
 Section 2: Different Types of Companies and how they
work depending of the ownership over the capital:
pag. 6 - 9
 Section 3: Different business structures and how
external factors affect businesses: pag. 10 - 11
 Conclusion: pag. 12
 Reference List: pag. 13

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 INTRODUCTION

There are many types of companies: micro-enterprises, large companies,

public, private, mixed, local, national, multinational, sole proprietorship, corporate,
cooperative ...
The classification of companies can be made according to: the activity
carried out, the size, the ownership over the capital, the sector of activity and its legal
form, among others.

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 SECTION 1

Companies can be classified into different categories depending on their

size; Different criteria can be used for this purpose. These criteria include the number
of employees, employees, total balance of the administration, investments, etc.
However, the most common context is the number of people employed.

Big companies
In general, they have at least 250 employees. They are characterized by
large capital management and financing; they also have their own facilities and fairly
advanced operations.

Small and medium enterprises

They employ between 50 and 249 employees. These companies are said to
be responsible for stimulating innovation and competition in many sectors of the
economy. They are known as SMEs.
These companies generally work in the field of trade and not in industry.
Also, by the same definition, they will never be able to exceed the annual sales or the
quantities determined by the staff.
If they are sorted more precisely, it seems that a medium-sized company
has between 50 and 249 employees, while a small company has between 10 and 49
employees.
Many local brands can be classified in this category. In the case of the textile
sector, it is common to find examples of national trade stores, ( Zara, Bershka, H&M,
etc.)

Micro
There are small businesses that have at least nine people. In general, most
micro-enterprises are family businesses that employ one or two people.
Many small business owners have a vested interest in earning enough
money to support their families.

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 In developing countries, micro-enterprises represent the vast majority of the
small business sector. For this reason, micro-enterprises tend to be the most
common enterprises in these regions.

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 SECTION 2:

Entrepreneurs and small business owners are usually respected in America.

According to key findings published in the Global Entrepreneurship Monitor United
States Report 2017, "75% believe that entrepreneurs receive a high status in society,
a figure higher than the average of the 23 innovation-based economies." In addition,
the report noted that most Americans believed that there were many opportunities to
start a business in which they lived and that entrepreneurship was a good career
choice.
Aspiring entrepreneurs may be wondering what type of company or
organization might best suit them. Some entrepreneurs may want to be the only
employee or key officer in their organization, and as such, there is probably a type of
business structure that would be more beneficial to them. Others may have plans for
ambitious growth. In this case, another type of business organization may be more
beneficial; one in which he may need to hire dozens, potentially hundreds, of
employees.
People who intend to become entrepreneurs must carefully consider the
different types of companies and organizational structures before starting their own
business. Current entrepreneurs also need to consider whether it may be beneficial
to change the type or structure of the company to prepare for future challenges and
opportunities.
We details the different types of companies, their unique characteristics and
attributes, and what entrepreneurs should consider before adopting a type of
structure for their own business.

Unique property

This type of organization is ideal for people who will be the only person who
actually leads the organization. For example, someone who is an independent
wedding photographer - where they do all the business themselves, pay their own
supplies and do not pay the salaries of other employees - can benefit from a sole
proprietor. However, a person who runs a wedding photography company that hires
more than one photographer may not find this type of organization or structure best
suited for their business goals.

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 There are both potential financial benefits and disadvantages that can come
from a single property. For example, the wedding photographer without other
employees can keep the profits and gains from the business as income. However, if
that wedding photographer were to incur debts that could not be repaid, the owner
would be held personally liable.

Corporations

Corporations are types of business organizations that, unlike individual

businesses, are distinct from their owners and may be legally liable, the US Small
Business Administration reports. There are often more requirements for setting up a
corporation, but at the same time, corporations often have a greater opportunity to
raise capital and finance.

Limited Liability Company Single

This type of organization is ideal for people who will be the only person who
actually leads the organization. For example, someone who is an independent
wedding photographer - where they do all the business themselves, pay their own
supplies and do not pay the salaries of other employees - can benefit from a sole
proprietor. However, a person who runs a wedding photography company that hires
more than one photographer may not find this type of organization or structure best
suited for their business goals.

Partnerships

The individual who owns the aforementioned wedding photography business

and the person who operates the camera corporation may decide to combine their
skills and business acumen to form their own wedding photography agency. This
type of company could be considered a partnership.
The website Entrepreneur notes there are two types of partnerships: general
and limited. “In a general partnership, the partners manage the company and

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assume responsibility for the partnership’s debts and other obligations. A limited
partnership has both general and limited partners.” In a general partnership, the
wedding photographer and the camera equipment owner would both be liable if their
agency was to fail or not be able to pay its debts.
Partnerships also provide unique tax opportunities to the partners involved.
According to the IRS, partnerships must file annual information returns, but the
partners themselves include “his or her share of the partnership’s income or loss on
his or her tax return.”

Joint Venture

Joint ventures are arrangements where two parties agree to pool together
their resources and efforts to achieve a common task or goal, according to
Investopedia. A sole proprietorship, corporation, LLC, or partnership could all
participate in a joint venture.
The liabilities for joint ventures fall upon the organizations participating in the
venture. The joint venture itself does not have tax liability, according to Inc. Instead,
that depends on what is determined in the contractual obligation between the
organizations participating in the venture.

Nonprofit

These types of organizations exist to provide or achieve a goal for the

betterment of society and humanity, such as eradicating a certain disease or
improving living conditions for a specific population. If it has obtained 501(c)(3) filing
status with the IRS, this means the nonprofit is not required to pay certain federal
taxes.
Generally, the mission of a nonprofit is not solely to generate revenue or
profit, but to raise money to help address certain societal issues and needs. While
someone who runs a sole proprietorship or partners in a joint venture may receive
profits from said venture, members of a nonprofit organization do not receive any of
the income or profits from the organization itself—although they are generally paid a
salary

Cooperative

A cooperative, or co-op, is a type of business organization where individuals

and parties come together to use the products and services of that organization while
also acting as its owners/investors. “These businesses are different from other types
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of companies, because they are formed and operate for the benefit of their members.
In that sense, they are nonprofits,” according to the Houston Chronicle.
There are both benefits and disadvantages to participating in a cooperative.
For example, many people participate and contribute to cooperative voting decisions,
allowing for many voices to be heard. But for a single entrepreneur who wants more
control over a business, this may not be the best type of organization.
The Houston Chronicle notes that “cooperative businesses also exempt
members from income tax, up to a point. The members will only be taxed based on
the income they receive from the cooperative and not individually or on the corporate
level.”

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 Section 3:
The company organizes and carries out its activity under the impact of the
conditions, concrete aspects of the environment or environment.
The environment represents a set of heterogeneous factors of economic,
social, political, scientific-technical, legal, geographical and demographic nature that
act nationally and internationally on the enterprise, influencing market relations. The
enterprise is an integral part of the environment, it is an economic component of it.
In the current conditions, the environment is characterized by an
accentuated dynamism, by a spectacular increase of the frequency of changes.
The environment is of three kinds:
- stable environment, where changes are rare, small and easily visible;
- changing environment, where changes are frequent, of varying magnitude,
but generally predictable;
- turbulent environment, where changes are very frequent, large-scale, with
profound incidents on the company's activity and difficult to anticipate;
The components of the company's environment are: microenvironment,
mesomedium, macroenvironment.
The microenvironment of the enterprise includes all the components with
which it enters into direct relations. These are::
- suppliers of goods that are economic agents that provide the necessary
resources of raw materials, materials, equipment and machinery;
- service providers represented by companies or individuals who offer a wide
range of services useful for achieving the company's objectives;
- the providers of the labor force are the educational units, the labor force
offices and the persons looking for a job;
- customers who are consumers, industrial users, commercial enterprises or
government agencies for which the goods produced by the enterprise are offered for
consumption;
- public bodies - professional associations, consumer associations, mass
media and the consumer public;
- the competitors are companies or private persons that dispute the same
category of clients, and in frequent situations the same suppliers or service providers.

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 The mesomedium is an intermediate notion that is becoming increasingly
necessary in explaining the macroeconomic evolution of the enterprise.
The connection that is established between the enterprise and these factors
is usually industrial, the influence being exerted on the long term and forming the
macroenvironment of the enterprise, which includes a series of economic, technical
and technological, management, demographic, political, legal, socio-cultural factors. ,
of the natural environment.
The PEST analysis is a cornerstone of the external scanning environment,
as it looks outside the organization and focuses on the large-scale macroeconomic
area outside the industry surrounding a company. The applicability of factors may
vary by industry or market, but it is important to know what factors we need to study
to analyze the marketing environment.

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 Conclusions

Each of the businesses and types of companies described here can be

beneficial to entrepreneurs. They each allow for unique profit- and revenue-
generating situations, but also come with their own restrictions. Regardless of what
type of company an entrepreneur chooses, they should also consider the following
points of information.

Among the best individuals to provide advice regarding entrepreneurship and

starting a small business are current entrepreneurs themselves. These professionals
have experienced firsthand the difficulties and unique circumstances that befall small
business owners, and often have found successful strategies to triumph over these
particular challenges and issues.

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 REFERENCE LIST
 Website Entrepreneur.com
 Houston Chronicle
 Online Masters.Ohio.Edu
 The inovator’ s dilemma by Clayton M. Christensen
 Global Entrepreneurship Monitor United States Report 2017

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