Understanding Enterprises: Functions, Objectives, and Types

Posted on Mar 5, 2025 in Economy

Understanding Enterprises

An enterprise is an economic unit that combines various factors of production to provide goods and services. The main functions of a company include coordinating production factors, producing goods and services, and obtaining economic resources. The primary objective of a private company is to generate profits for its owners.

Starting a business requires initiative from individuals or groups willing to take risks within the economic and tax system. This involves acquiring production factors and planning company activities.

Organization Charts

An organization chart is a graphical representation of a company’s functional areas and authority levels, showing communication channels. A useful organization chart should:

  1. Be easily understandable.
  2. Include the company’s important elements.
  3. Include the name of each item.
  4. Clearly show hierarchy levels.

Types of charts are classified according to their purpose, extent, content, and form.

Key Business Elements

A business develops around four key elements: product, market, legal regulations, and location.

Product

The product is any good, service, or combination thereof that satisfies consumer needs. Products are classified according to their characteristics and purpose. A good is a tangible object, while a service is an activity that fulfills a need.

Market

The market consists of buyers, sellers, and products. Key factors include:

  • Competition: Perfect competition, monopoly, oligopoly, and monopolistic competition.
  • Buyer Motivations: Understanding consumer motivations beyond price is crucial.
  • Market Segment
  • Market Size and Market Share: Number of units sold of the same product. Market share is expressed as a percentage.

CM = Units sold / Market size x 100

Types of Companies

Companies are classified by:

  1. Sector activity.
  2. Dimension.
  3. Legal ownership.
  4. Capital.

Sector Activity: Primary, secondary, and tertiary sectors.

Dimension: Based on the number of employees and turnover. SMEs (0-250 employees).

Ownership of Capital: Private, public, and mixed.

Company Relationships and Business Plans

A business plan is a document that clearly and briefly defines a business idea. It should answer the following questions:

  1. What is the business?
  2. Who are we?
  3. What sets us apart from the competition?
  4. What are our sales expectations?
  5. What resources do we need?
  6. Where will we get them?
  7. What decisions will we make in the short and medium term?

Business Plan Phases

Key phases include:

Concentrating ideas, promoter identification, market analysis, company location, type of product offered, production process, human resources, marketing plan, investment, and finance.

Company Structures

Companies: Commercial, cooperatives, and non-commercial.

Commercial Companies

Commercial companies are voluntary associations that seek profits for their members. Types include general partnerships and limited partnerships.

In a general partnership, partners share labor, capital, or both. Benefits are distributed based on contributions. There are two types of partners: general and industrial.

Limited partnerships have two types: simple and with shares.

Corporations (Sociedad Anónima)

A corporation is a capitalistic society where commercial and social capital is built through member contributions, divided into shares. Partners are not personally liable for accumulated debts.

Features of Corporations

  • Liability: Limited to the contribution of each partner.
  • Minimum of partners: 1
  • Minimum Capital: 60,101.21 €
  • Taxation: Corporation tax.
  • Social Security: General scheme if the partners are workers.
  • Name: Followed by the initials SL.

Features of the Company

  • Disclaimer: Limited to the contribution of each partner.
  • Minimum of partners: 1
  • Capital INIM: € 3005.06
  • Taxation: Corporation tax.
  • Social Security: General scheme
  • Name: Followed by the initials SL or SRL.

Working Society

A working society is characterized by being primarily owned by staff working in it indefinitely and full-time.

Types of Membership

  • Workers: Work and own 51%.
  • Non-Workers: Owners of shares who do not work.

Employees: Work indefinitely but do not own shares.