Business Structures and Operations: A Comprehensive Look
Company
Definition: An economic unit that combines different factors of production, producing and making goods and services publicly available to meet demand. Firms produce goods and services using several factors of production:
- Labor: The physical and intellectual personnel performing in the production process.
- Natural Resources: Resources that nature makes available to humans to produce what they need.
- Capital: Produced goods that are used to produce other goods.
All these factors combine to:
- Produce: Transform raw materials into finished products.
- Market: Bring produced goods to the place where they are needed.
- Provide a Service: Satisfy a need by putting something at someone’s disposal.
Departments of the Company
Workplaces are in charge of carrying out specific activities, whether or not they are formal departments. This is related to the size of the company and the functions to be developed. Types of departments include:
- Departments according to business functions
- Departments according to geographical areas
- Departments according to the classes of products the company has
Departmental Functions
Supply Function: Provides the material requirements in the company’s production process, contacts suppliers (choosing the best deals and agreeing on price and quality), receives materials (inspecting the quality and quantity and making claims), and stores and manages the materials needed. It supplies each section of the company.
Production Function: Transforms raw materials into finished products using technology.
Marketing Function: Ensures that the products are known and easily distributed.
Financial Function: Responsible for obtaining the necessary financial resources. Some of these resources are provided by the owner, while others come from the sale of products or loans from banks, which are repaid with interest.
Social Function: In charge of labor and social affairs, i.e., contracts, insurance, payroll, etc.
Administrative Function: Carries out the company’s administrative activities.
Typologies of Jobs in the Company
This refers to the company’s hierarchy:
- Higher levels: Responsible for making plans, setting objectives, organizing activities, and distributing work.
- Intermediate levels: Supervise, coordinate, transmit orders, and control the work.
- Employees: Carry out the programmed work.
Four groups of factors are used to differentiate positions:
- Ability and experience
- Responsibility of each position
- Effort required (e.g., treasury)
- Occupational hazards associated with the activity
Basic Economic Concepts
Finance, investment, income and expenses, receipts and payments, amortization.
Legal Forms of Enterprises
The legal form determines the number of partners, how ownership can be accessed, liability to third parties, and the governance and representation of the company.
Individual Company
This is the most numerous type. These cases have few formal requirements, and the simplicity of this legal form makes it preferable to others. It has only one partner who is liable with all their assets if they have debts. The employer’s responsibility is unlimited. The advantage of these companies is that the employer does not have to depend on anyone to make decisions, and the benefits are theirs alone. The drawbacks are that the entrepreneur takes risks with their property because they are responsible for any problems, and the company’s future depends on them. This is why these companies have trouble borrowing and difficulty growing.
Partnerships
These are chosen by professionals. The prestige of the associated individuals is essential to the company’s success. They are formed by two or more partners who come together to carry out a common activity. All partners work, and some contribute money. Industrial partners provide employment, and venture capitalists provide work and capital. The company name is formed by the surnames of those working there and the word “CIA.”
Limited Partnership
This is a variety of a collective partnership, with a difference in the partners that form it. There are general partners, but there are also limited partners who only contribute capital to the company. Limited partners are only liable for debts to a limited extent and only with the capital contributed.
Limited Liability Company (LLC)
These are suitable for small businesses and are very common in family businesses. The partners are not liable with their personal assets for any debts; they can only lose what they have contributed. This company can be formed with one or more partners. If there is only one partner, it is called a sole proprietorship. Access to ownership is by contribution of money. Its minimum capital is 3,005 euros and is divided into shares of equal value. Its disadvantage is the limitations placed on the transfer of shares. Shares can only be transferred to other members, the spouse, parents, or children if a partner wants to sell. The company name can be any, followed by “SL.”
Corporation (SA)
These can capture a lot of capital. Their characteristics are: any name can be used, followed by “SA”; members have access to company ownership through asset contribution; the minimum capital is 60,100 euros and is divided into shares. A share entitles its holder to a share in profits, to vote in shareholder elections, and to be informed of the company’s progress. Shareholders can only lose what they contribute when the company is formed in case of debts. They may sell their shares freely.
Cooperative Society
These bring together people with common socio-economic interests. The objective is to improve the social and economic status of members. Their advantage is that their priority for employment means that adjustments are made by reducing the sharing of benefits when incomes fall. Any person who fulfills the requirements can be a member. The name must include “S. Coop.” A drawback is that members assume the risk of losing capital and labor if problems occur.
Worker-Owned Company
Most of the capital is owned by the workers. It has the same benefits as corporations. The fact that most shareholders are employees makes work one of its priorities.