Enterprise Classification: Sector, Ownership, Size, and Legal Forms
Criteria for Classification of Enterprises
According to the Economic Sector
An integrated economic sector is a group of companies that perform a similar activity.
Primary Sector
Includes companies engaged in activities related to natural resources, such as agriculture, livestock, fisheries, and mining.
Secondary Sector
This sector includes companies that transform natural resources, such as construction and manufacturing. It encompasses companies involved in housing, infrastructure, and processing activities.
Tertiary Sector
This sector includes commercial firms (e.g., supermarkets) and service companies (e.g., banks, savings institutions).
According to the Ownership of Capital
Private Enterprise
Organized and controlled by private owners, with the primary purpose of profit and commercial activity.
Public Enterprise
Controlled by the state or any other public entity.
Joint Venture
Property and management are shared between the state and private individuals.
Multinational Corporations
Companies operating in various countries, with headquarters in their country of origin.
National Companies
Firms that operate within the national market, often mid-sized businesses.
Local Companies
Firms that limit their activities to the geographical area in which they are located.
According to Their Size
Microenterprise
Typically, the owner works in the company, and the number of workers does not exceed 10.
Small Enterprise
The owner may not necessarily work at the company, and the number of workers does not exceed 50.
Medium Company
The number of workers is greater than 50 and less than 250.
Large Enterprises
The number of employees exceeds 250 people.
Advantages and Disadvantages of SMEs
Advantages
- Better adaptation to circumstances due to greater flexibility.
- Lower costs.
- Specialization in small markets.
- Ability to find market niches not covered by large enterprises.
- Closer relationships with employees, increasing productivity.
- Better market knowledge and customer relationships.
Disadvantages
Technical-Productive
- Major supply problems or vertical integration issues.
- Less specialization.
- Less division of labor and optimization of machinery.
- Lower economies of scale.
- Shortage of resources for R&D investment.
Commercial
- Higher prices for raw materials.
- Less potential in price battles.
- Lower export capacity.
- Less negotiation power.
- Less brand recognition.
Steering
- Inability to decentralize management functions.
- Less attractive wages.
- Inability to develop complex organizational models.
Financial
- Difficulties in finding foreign finance.
- Tendency to get less profit to spend on stocks.
According to Legal Structure
Partnerships
The most important aspect is the partners, the people forming the society, and their management, not the capital provided. These include general and limited partnerships.
Capitalist Societies
The most important aspect is the capital contributed by each partner, regardless of who contributes. These include Limited Liability Corporations and Labor Corporations.
Sole Trader
A person physically in their own name, through a company, makes a trade, business, or is an entrepreneur. They must be of age and have full availability of possessions. No prior constitution is required. The process starts at the beginning of the activity. There is no minimum capital requirement. The employer’s liability is to respond personally to all the obligations of the company with their personal assets, present and future. They are taxed through personal income tax.