Understanding Market Economy, Business, and Entrepreneurship
Long Questions:
The Market Economy System: Characteristics, Advantages, and Disadvantages
Features:
- Exchange
- Freedom of Free-Trade
- Free Enterprise
- Free Market
- Equality under the Law
- Property Accumulation of Capital (Savings Reinvestment)
- State Intervention Beyond Police and Justice
Benefits:
- Growth (Maximum Continuous), Production
- Low Prices
- Minimum Costs (No Waste)
- Null-Benefit in the Long Term
- Better Motivation and Innovation
- Fewer Taxes, Less Corruption
- Better Cohesion and Democracy
Disadvantages:
- Environmental Problems
- Business Concentration Controlling Governments
- Lack of Goods and Services
- Undesirable Situations: Drugs, Weapons, Prostitution, Child Labor, Surrogate Mothers, Genetically Modified Organisms, Smoking
- Externalities and Pollution
- Mismatch, Economic Crisis
Legal Forms of Business
- Formed by Individuals
- Form with No Responsibility for Capital Partners
- Entrepreneur: There is no minimum capital requirement for an individual entrepreneur, and liability is unlimited.
- Community: A minimum of two individuals is required. Liability is unlimited, and the minimum capital is determined by the society’s agreement.
Medium Questions:
Different Concepts of Capital
Social capital is the monetary amount or value of property that members of a society contribute without the right of return. It is recorded in the accounts under the same name and identifies the rights of members within the venture. It also represents a debt to society before the partners, caused by their contributions to the development of economic activities aligned with the social objective.
Marketing: Concept and Method
Marketing is the management of the market within an organization. The direct method is the most common, involving no intermediate communication method. It is sent directly to the consumer, making it fast and economical.
Business Goals
Maximum benefits and results are the desired outcomes for some companies, while others may prioritize survival.
Balance: Concept and Structure
Highly manipulated to maximize profitability, there are non-profit entities, public companies, and other companies that may simply aim to survive or even provide self-employment.
The Concept of Benefit
The profit and loss account is highly manipulated to maximize profitability. There are non-profit entities, public companies, and other companies that may simply aim to survive or even provide self-employment.
Differentiation Strategies
Understanding customer needs while distinguishing oneself from other companies in terms of brand, comfort, size, and price is crucial. Products should be affordable and available in various sizes.
Short Questions:
Definition of Economics
Economics is the science that deals with the creation, development, and management of resources, goods, and services to meet human needs.
Definition of Entrepreneur
An entrepreneur is the owner or manager of a company, industry, or business. They may also be responsible for operating a public spectacle.
Definition of Undertaking
An undertaking is an action or task that involves difficulty and requires determination and effort for its implementation. It is an entity composed of capital and labor as production factors, engaged in industrial, commercial, or service provision activities.
Difference Between a Sole Proprietor and a Corporation
A sole proprietorship is formed by a single person, while a corporation is formed by multiple partners. A sole proprietor has no minimum capital requirement, whereas a corporation (SA) requires a minimum capital of €60,101, with 25% paid upfront. A sole proprietor has unlimited liability (and may need to put property in a relative’s name), while a corporation has limited liability. Taxation for a sole proprietor ranges from 24% to 43% in income tax, while a corporation is subject to corporate income tax (IS) at 30% or 25% for SMEs. A sole proprietor is not required to hire an accountant, while a corporation must deposit accounts in the commercial register. Finally, a sole proprietor does not need to register the constitution, whereas a corporation must register its constitution in the commercial register.
Difference Between an SA and an SL
An SA (Sociedad Anónima) has a minimum share capital of €60,101, with 25% disbursed, while an SL (Sociedad Limitada) has a minimum capital of €3,005.06. An SA has more stringent accounting requirements than an SL. An SLNE (Sociedad Limitada Nueva Empresa) is a type of SL with limited partners who are typically capitalists, and it is often used for smaller, more personalized businesses. In an SL, capital is divided into shares that are not freely transferable, while an SA can go public. An SL cannot.
Difference Between an SA and a Cooperative
An SA has a fixed share capital, while cooperatives have free membership, voluntary redundancy, and variable equity. In an SA, voting power is proportional to the number of shares held, while in a cooperative, each member has one vote. An SA is registered in the commercial register, while a cooperative is registered in the cooperative register. An SA can have a minimum of one member, while a cooperative requires at least three. In an SA, the governing bodies are the general meeting and the board of directors, while in a cooperative, they are the general assembly and the governing board.