Company

We explain what a company is and the different types of companies. Sectors of activity, structure, social and economic purposes.

What is company?

The concept of company refers to an organization or institution which is dedicated to the production or provision of goods or services that are demanded by consumers; obtaining from this activity a economic returnthat is, a profit. For the correct performance of production, these are based on previously defined planning, strategies determined by the work team.

The success of a company will require clear and well-established objectives in addition to a pre-established mission. On the other hand, they must define the policies and regulations according to which they will be managed. However, beyond the regulations they decide internally and informally, they must be governed above all by the laws that determine the regulation of their activity and operation in the jurisdiction in which they operate.

Perhaps from a more technical perspective It can be defined as a socioeconomic unit. According to this form, it will use all the resources at its disposal to transform raw materials into a good or service that it can introduce into the supply and demand market to obtain a profit.

It is important to clarify that the term socioeconomic is used given that the group of individuals that are part of it is identified as the social part of this unit, and as the economic component of capital that is sought to be obtained.

• See also: Mission and vision of a company

Activities of a company

In this way, three areas are differentiated in which they carry out their activity, and by what they are usually classified.

• Primary sector. Its area of ​​action is the primary sector if it uses as raw materials any element obtained directly from nature. An example in this case would be companies that produce cereals, or any other harvested product.
• Secondary sector. If, on the other hand, it covers the secondary sector, its task will be based on the conversion of raw materials obtained through third parties into a final and total product capable of being sold on the market.
• Tertiary sector. But there is still a third sector in charge of both the marketing of products manufactured entirely by other companies (suppliers), and the offer of services to satisfy desires and needs.

Structure of a company

The structure of a company can be constituted in different ways There are both hierarchical relationships (president, vice president, directors, managers, etc.) and linear relationships. In the latter, there will be no positions of greater importance than others, so all employees will enjoy the same benefits and will be required to cover the same obligations.

At the moment The so-called SMEs are very common. The acronym corresponds to Small and Medium Enterprises, which tells us that these are those that, although they share most of the characteristics with the rest of the companies, fundamentally have a limited production capacity and budget.

But also, one of the most important limitations is occupational, that is, its ability to hire personnel; and it is of utmost importance since for the growth of a company human capital will always be a fundamental factor.

Companies according to origin of capital

• Public companies. Public companies are those that belong to the public sector of each State, central or local administration. These may sell their shares on the stock market to private individuals, but they will continue to be considered public as long as 51% of their shares remain in the possession of the public sector. This type of company's main objective is to generate the general interest of the specific community of which it is a part. The State makes the decision to start the company and must establish its objectives and then control its activity.
• Private companies. Private companies, on the other hand, are those that are run by private individuals. In addition, the shares of these companies can be sold on the stock market. Its main objective is to maximize its profits and sales, as well as its market shares.
• Joint ventures. Because the division between private and public companies is not so simple, in most cases there is a third qualification that describes a company, where both the public and private sectors have a stake in it. Furthermore, the private sector can make the decision to nationalize a private company; Just as it also happens in the opposite way, when the private sector decides to privatize a public company.

Companies according to their size

There are various ways to classify companies according to their different characteristics. For example, depending on its size:

• Large companies. It will be determined that a company is large when it has great technological capabilities, human potential and when its capital is large. Being a large company, its obligations, planning and organization needs will be greater than in others.
• Medium companies. They will require technological capabilities, but to a lesser extent than large companies. Human potential and a significant amount of capital will also be necessary.
• small businesses. They will be those that, to carry out their economic activities, do not need a large amount of capital, nor human potential, nor a great capacity in terms of technology.

Social and economic purposes

Companies have external and internal purposes that relate to the social as well as the economic.

As for the economic purposes, they must serve the men who work inside and those who work outside the company, and we can find the following:

• External economic purpose. It is the production of goods and services in order to satisfy all the needs that arise in society.
• Internal economic purpose. We will seek to obtain added value to then be able to remunerate the people who are part of the company. The forms of remuneration can be in the form of profits, dividends, salaries, wages, as well as benefits. This is intended to provide the opportunity for investments and jobs to workers.

The social aspects in a company are just as important as the economic ones because it is made up of people and is directed at other people. It is usually called social responsibility, which even includes ecological issues.

The internal and external social purposes of a company are:

• The external social purpose. It consists of the contribution to the development of each society; an attempt must be made to ensure that social and personal values ​​that are considered fundamental are also taken care of in economic performance. In order to do this satisfactorily, employees and partners must be encouraged to ensure that this is fulfilled and carried out.
• The internal social purpose. It is one in which we contribute to the full development of the people who are part of the company. It must be ensured that fundamental human values ​​are not vulnerable and that, in turn, they can be promoted through employees and partners.