Business

An organization in which basic resources are collected and processed.

What is a company?

A business is an organization in which basic resources, such as materials and labor, are gathered and processed to provide goods or services to customers. The main objective of these is to obtain economic profits.

A utility is a difference between the amounts received from customers, in exchange for goods and services provided, and those amounts that are paid and realized for the inputs necessary to provide such products or services.

On the other hand, a company involves structured and integrated activities through individuals who work together or cooperate in interdependent relationships.

Characteristics of the companies

The main characteristics of the companies are the following:

• Every company has a name or business name that identifies it both internally and externally.
• Companies can be incorporated as partnerships, limited liability companies, corporations, or other forms of association or legal forms, which may vary according to the legal system of the country where they operate.
• There is always a reason, a foundation, and certain goals for which a company is created, called mission and vision.
• Organizations must have a business strategy that is reflected in the integrated set of plans and actions designed so that it has advantages over its competitors and thus optimizes its utility.
• Organizational culture is the social or normative glue that holds a company together. This expresses the values ​​or social ideals and the beliefs that the members of the entity come to share manifested in symbolic elements such as myths, rituals, stories, legends, and a specialized language.
• Companies can be organized under vertical or horizontal schemes represented in organizational charts. An entity with a vertical organizational structure is one where there is a well-defined distribution of power and a line of command from top to bottom, that is, pyramidal. In horizontal structures, the company gives employees a greater ability to make decisions without relying on executive approval, so the shape of the organization tends to be flat.
• Business organizations display different functions, such as production, management, Human Resources management, marketing, administration, and finance.
• Companies seek to harmonize the numerous and divergent interests that revolve around them, as well as shareholders, managers, workers, and consumers.
• They have internal and external factors that have an impact on the management and performance of their objectives.

Types of companies

According to the economic sector of production

The companies that are classified according to the economic sector of production are:

• Primary or extractive: companies dedicated to the extraction or exploitation of raw materials.
• Secondary or industrial: organizations dedicated to the transformation of raw materials into finished products through manufacturing processes.
• Tertiary or services: entities that are responsible for marketing products or services.

Depending on the size of the organization

The companies that are classified according to the size of the organization are:

• SMEs refer to small and medium-sized companies, those that have between 1 and 250 workers. Among these we can find:
  • Microenterprises: companies with 10 or fewer workers.
  • Small: companies with between 10 and 50 workers.
  • Medium: entities between 50 and 250 workers.
• Large companies: Organizations with more than 250 workers.

According to your field of activity

The companies that are classified according to their field of activity are:

• Local: their sphere of action is limited, generally reduced to a specific area or a city.
• Regional: they have a greater scope than the previous ones since they carry out their activities in a particular state or province.
• National: companies whose products are distributed and marketed throughout the entire territory of a country.
• Transnational: companies that operate both inside and outside the country in which they have their main domicile.

Based on the activities carried out

The companies that are classified based on the activities they carry out are:

• Industrial: those companies that carry out manufacturing and manufacturing processes to produce the products that will later be sold.
• Commercial: those that buy and sell merchandise, without carrying out productive manufacturing processes. They are intermediaries between the producer and the consumer.
• Of services: they do not produce or sell physical products, but rather provide services, such as transport companies, banks, educational entities, or hotel chains.
• Mixed: Organizations that combine some of the above activities.

By origin of capital

The companies that are classified by the origin of the capital are from:

• Public companies: those whose capital comes from companies in the hands of the State.
• Private companies:  when the partners of the company are individuals.
• Mixed companies: organizations that combine public and private capital in their shareholding structure.

For the opening of the heritage

The companies that are classified by the opening of the equity are:

• Open capital companies: companies that are listed on stock markets, stock exchanges and that receive funds from those who are interested in investing them.
• Closed capital companies: family-owned organizations that are located in the SME sector (small and medium-sized enterprises), whose capital is closed to third parties.

According to their relationship or links with other companies

The companies that are classified according to their relationship or links with other companies are:

• Independent: companies that have financial autonomy in their decision-making.
• Related without a dependency relationship: companies that have economic ties in their share capital with other entities, but that maintain decision-making in their organizations since third parties own less than 50% of the company's equity.
• Controlling and controlled companies: the controlling companies are those that own others in a percentage greater than 50% of their share capital, so they have power when making relevant decisions. Similarly, controlled or subsidiary companies are subject to the decision-making of the parent or controlling company.

Importance of companies

A company will have importance according to the interest groups that revolve around it, that is, the people or entities that care about its economic results: owners, administrators, workers, clients, creditors, various levels of government, and to society in general.

• Owners: those who invest resources in a company and who have a clear interest in its economic results.
• Administrators: people whom the owners authorized to manage the company.
• Workers: employees and workers who provide services to the company in exchange for a wage or salary.
• Clients: those who buy the goods or services that the company generates and who are interested in the continued success of a business, since bankruptcy could cause serious problems in their production processes.
• Creditors: Like the owners, creditors invest resources in a company by extending loans, so they are interested in the good performance of the entity.
• Levels of Government: Local, municipal, state, and national governments receive taxes from companies operating in their respective jurisdictions.
• Society: these organizations must keep in mind their corporate social responsibility, trying to act in the interest of the general public and contribute to the solution of social and economic problems.

It should be noted that companies are vital for the good economic performance of countries since they are important employers of the economically active population and a strengthened productive sector, which generates a virtuous circle in many other areas.

For example, if a company produces at high levels and with good yields, it will have high profits, which will cause it to pay more taxes to the State and be able to pay better wages and salaries to its workers.

By having a nation with a solid business apparatus, the macroeconomic indices will surely be favorable; and this, together with a dynamic and growing economy, will make foreign investors look at the country and proceed to make relevant monetary contributions for the creation of new companies, which is an excellent source of foreign exchange earnings.

Similarly, if domestic companies are efficient and competitive internationally, they will be able to export their products abroad, triggering the need to hire more staff and generate more foreign exchange.

business examples

Some examples of companies are:

• Oil companies: Exxon – Mobil, Rosneft, Shell, Chevron, PDVSA.
• Automotive industry: Ford, General Motors, Toyota, Volkswagen, BMW.
• Vehicle tire manufacturers: Bridgestone, Michelin, Goodyear, Pirelli, Continental.
• Fast food chains: McDonald's, Subway, Domino's Pizza, Burger King, Kentucky Fried Chicken (KFC).
• Sportswear brands: Nike, Puma, Adidas, Reebok, New Balance.
• Airlines : Lufthansa, Iberia, Air France, KLM, Delta Air Lines.
• Tech companies: Amazon, Apple, Google, Microsoft, Huawei.
• Entertainment industry: Walt Disney, Netflix, DIRECTV, Viacom, Spotify.

 

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