Business Entities and Corporate Strategy
Company
According to the Spanish Royal Academy, a company is an organization composed of labor and capital as factors of production. It is dedicated to industrial, commercial, or the provision of services, generally for commercial gain and with accountability in various aspects:
- Economic/Financial: Creating wealth to give back to the factors of production.
- Commercial/Legal: Consisting of an estate assigned to a commercial order for profit, creating contractual relationships with internal and external agents.
- Productive/Technological: Combining factors of production to obtain goods or services demanded by society or the market.
Entrepreneur
An entrepreneur is the person who makes the decisions necessary to carry out the business and is responsible for it, assuming the risks arising from their decisions.
Legal Person
A company has legal personality when it possesses its own identity, separate from the personalities of its owners.
Corporate Social Responsibility
Corporate Social Responsibility (CSR) refers to the responsibility of conducting business by making ethical decisions (business ethics).
Shares in a Company
A share in a company represents a portion of the capital stock of a corporation. It may be registered or bearer and be totally or partially paid. Possession entitles the holder to a proportionate share in the distribution of benefits.
Shares
Shares are titles representing ownership in limited partnerships. They are cumulative and indivisible. They cannot be called securities actions.
Social Capital
Social Capital is the total face value of the shares of a company at any given time.
Corporation
A corporation is a company in which the capital is divided into shares. The minimum capital is EUR 60,101.21. Partners are not personally liable for company debts; that is, they do not respond with their personal assets.
Limited Liability Company
A Limited Liability Company (LLC), regardless of its purpose, has capital of no less than 3,005 euros. This capital is divided into cumulative and indivisible shares that cannot be incorporated or traded as negotiable shares. Members are exempt from personal liability for corporate debts.
Cooperative
A cooperative is an association of persons or entities engaged in economic activities based on the equal treatment of all its members.
Worker-Owned Company
Worker-owned companies are corporations or limited liability companies in which the majority of the social capital is owned by workers who provide services for them personally and directly, and whose employment is of indefinite duration.
Sole Trader
A sole trader is an organization of capital and labor that produces goods or services for the market. It is exerted by a person with no connection to community property.
Business Environment
General Environment
The general environment includes factors that reflect the major trends in the external reality of the business. The further these factors are from the company, the less influence the company has over them. These factors affect all companies more or less directly.
Specific Environment
The specific environment encompasses factors that reflect the characteristics of the sector in which each company operates. These factors directly or indirectly coincide with the company. Because these factors are closer to the company, the company can exert some influence over them.
Competitive Strategies
Cost Leadership
The cost leadership strategy aims to achieve a final cost lower than the competition, while maintaining acceptable quality and a pricing policy that achieves sales volume and profitable market share growth.
Differentiation Strategy
A differentiation strategy highlights an attribute that can be perceived as unique by buyers, allowing for a higher price than the competition.
Specialization
When a company is unable to serve all market segments, it may employ a specialization strategy, focusing on the most advantageous segments.
Analytical Tools
SWOT Analysis
SWOT analysis stands for Strengths, Weaknesses, Threats, and Opportunities. It is an analysis that helps a business understand itself and its competitive opposition in a particular business environment.
Porter’s Five Forces Analysis
Porter’s Five Forces are competitive forces that determine the degree of rivalry between companies in a sector, specifically within the company’s specific environment:
- Degree of rivalry between existing competitors
- Threat of new entrants
- Threat of substitute products
- Bargaining power of suppliers
- Bargaining power of customers