Meaning of Company

What is a Company:

Company is an entity made up of a group of people who allocate their own financial resources or those of third parties to carry out industrial, commercial or service activities, whether for profit or not.

The word enterprise is also used to refer to a task, activity or action considered difficult, important or expensive.

The term company comes from the Italian printed, which in turn comes from the Latin prehend and it means to take or reach something.

Classification of companies

Companies can be classified according to various criteria ranging from the size of the organization to the type of legal form with which they generate their activities.

Companies according to their size

One criterion for classifying companies is the number of employees they have. In that sense, companies can be of four types.

microenterprise

It is an organization made up of less than 10 employees.

An example of a micro-enterprise would be entrepreneurship or startups.

Small company

It has up to 50 employees.

An example of a small business is family business initiatives.

medium business

They have up to 250 employees. They are companies that probably started in the above categories until they were able to expand.

An example of a medium-sized company is the local supermarket chains.

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Big company

They have more than 250 employees. They are usually the leading companies in their field.

Classic examples of large companies are multinationals and transnationals.

Companies according to the origin of their capital

Companies can also be classified by the economic origin of their funds. They can be of three types.

Public company

In this case, the State is the one who provides the economic resources.

In many Latin American countries, essential service companies are public.

Private company

They are organizations whose capital is from individuals or private companies.

Most companies are of this type.

JV

It refers to those cases in which public and private capital are combined or, failing that, private capital and public (State) management.

In Europe, countries such as Norway have a joint venture model for the management of public services.

Companies according to the sector of their activity

Depending on the type of activity to which the companies are engaged, these can be:

From the primary sector

They are dedicated to the exploitation or extraction of raw materials.

An example of a company in the primary sector are mining companies.

from the secondary sector

They are entities dedicated to the transformation of raw materials into products and services.

An example of a company in the secondary sector is the food industry.

From the tertiary sector

They are the companies that are responsible for marketing services or finished products.

A shoe store or a travel agency are an example of companies in the tertiary sector.

Companies according to their field of activity

Depending on the geographical scope of the company, these are classified as:

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local businesses

Your radius of attention is reduced to a specific area, such as a city or a town.

A bookstore is a local business, for example.

regional companies

In this case, these are organizations that are located in a particular state, province, or region.

Any company that operates only in a part of the national territory is considered a regional company.

National companies

They are companies that have headquarters or branches within the same country. It also applies to organizations whose products or services can be found throughout the territory.

Today, e-commerce platforms allow any business that can sell its products to an entire country to be considered a national company.

transnational companies

They are organizations that have the capacity to operate inside and outside the country, either because they have physical branches or because their products have an international reach.

Franchises are an example of transnational companies.

Companies according to the destination of their profits

Depending on the use or destination of the profits generated, companies can be of two types.

For-profit companies

They are companies whose objective is to multiply their capital for the benefit of their partners or shareholders.

Any organization with commercial purposes is a for-profit company.

Non-profit companies

It refers to private organizations whose objective is not to generate economic profits, but benefits of a social or altruistic nature.

Non-governmental organizations and foundations are examples of non-profit companies

When a company is legally registered, there are usually three legal figures to choose from, depending on the number of partners involved and the objectives of the organization.

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individual companies

It refers to companies formed by a single person. However, not all legislations allow this type of legal figure.

Freelancers or freelancers are an example of sole proprietorships.

Societies

They are companies formed by a group of partners. They can be of two types:

Limited Liability Companies (SRL): they have a maximum number of partners.

In Mexico, General Electric is incorporated as an SRL

Limited companies (SA): They can have an unlimited number of partners.

In Mexico, the Bimbo food company is constituted as SA

Cooperatives

They are organizations of social interest, whose objective is usually the search for economic or labor benefits for a certain group.

In Latin America, it is common for farm workers to join cooperatives to sell their products, receive training or benefits from the State.

See also Types of companies.