Business Structures, Types, and Key Concepts
Joint Undertaking
A joint undertaking involves human and material resources to produce goods or services, aiming to achieve economic benefits. These objectives can be categorized as:
- Technicians: Meeting societal demands.
- Human: Self-help for individuals.
- Social: Generating employment and paying taxes.
Environmental Factors Affecting Business
Several environmental factors affect business functions, over which there is no direct control:
- Technology: Character and computer technology.
- Legal: Labor, fiscal, and environmental regulations.
- Demographics: Age distribution.
- Sociocultural: Fashion and personal aesthetics.
- Economic: Income distribution and interest rates.
- Political: State and EU interventionism.
- Competition: Market fundamentals.
Market Fundamentals
A combined market consists of buyers and sellers of a product.
- Market Share (Cuota de Mercado): (Units sold / Market size) x 100.
- Market Size (Tamaño de Mercado): Number of units of the same product sold at a given time.
Types of Companies
According to Economic Activity
- Primary: Raw materials extraction.
- Secondary: Processing of products.
- Tertiary: Services.
According to Size
- Small-Medium: Fewer than 250 employees.
- Large: More than 250 employees.
According to Ownership
- Private: Owned by a group or an individual.
- Public: Owned by the state.
- Mixed: Part private capital and part public sector.
According to Liability
- Limited: The entrepreneur’s liability for debts is limited to the company’s assets.
- Unlimited: The entrepreneur is liable for debts with present and future property.
According to Legal Form
- Sole Proprietorship: A single-person company.
According to Territorial Scope
- Provincial (Local).
- National: Assets owned by private resources of a country.
- Multinationals.
Organizational Structures
Hierarchical
Based on hierarchy and control. Advantages: Clear responsibilities. Disadvantages: The head controls everything.
Functional
Supported by specialists, each responsible for their area. Advantages: More efficient. Disadvantages: Loss of overall vision.
Joint
Hierarchical but with external advisors. Advantages: Access to needed specialists. Disadvantages: Potential intrusion into company administration.
Divisional
Divides the company into autonomous divisions. Advantages: More efficient for large organizations. Disadvantages: Potential issues with inter-divisional relationships.
Collegiate
Decisions made by a working group.
Company Functions
- Procurement: Buying goods or services.
- Production: Transforming raw materials.
- Marketing: Managing the sales department.
- Finance and Human Resources: Obtaining economic resources and managing company staffing and paperwork.
Authority management involves planning, organizing, and controlling.
An analytical organizational chart provides a detailed structure of the company.
Sole Trader (Empresario Individual Autónomo)
An adult individual with full legal capacity who conducts business on their own behalf. They are subject to income tax and must enroll in the special regime for self-employed workers. Advantages: Full ownership and rights to commercial activity. Disadvantages: Assumes all losses, obligations, and ultimate responsibility for management. No minimum share capital is required. Taxed under income tax.
Steps to Create a Sole Proprietorship
- Obtain a Negative Name Certificate (Certificado Negativo de Nominación – CNN) from the Commercial Registry.
- Deposit funds into a bank account.
- Draft the company’s incorporation document (unregistered).
- Obtain a copy of the incorporation document.
- Order a provisional Tax Identification Number (CIF).
- Pay the tax on capital transfers and documented legal acts.
- Sign the definitive company constitution.
- Obtain the definitive CIF.
- Register the company in the Commercial Registry.