Business and Economy

Different Types of companies

Different Types of companiesA company is an economic production entity that is dedicated to combining capital, labor, and natural resources in order to produce goods and services to sell on the market. Different types of companies are provided here.

This post includes:

  • Companies Definitions
  • Types
  • Examples
  • Characteristics
  • Classifications of companies
  • Purpose of companies
  • Lots more

If you want to learn about Types of Companies In detail, Then you’ll love this Post.

Let’s Dive Right in..

Different Types of companies

Some common types of companies are:

  1. Unipersonal: they are those companies that belong to a single individual. It is he who must respond unlimitedly with his assets against those individuals harmed by the actions of the company.
  2. Collective Society: these are companies whose property is owned by more than one person. In these, its partners respond unlimitedly with their assets.
  3. Cooperatives: they are companies that seek to obtain benefits for their members and are not for profit. These can be made up of producers, workers, or consumers.
  4.  Limited companies: in these companies there are two types of members: on the one hand, there are the collective members who participate in the management of the company and have unlimited liability. On the other, the limited partners, who do not participate in the management, and their responsibility is limited to the capital contributed.
  5. Limited liability company ( SRL ): in these companies, the partners only respond with the capital they contributed to the company and not with the staff.
  6. Public limited company ( SA ): these companies have limited liability to the contributed capital and their owners are those who participate in the share capital through shares or titles.

See Also: Types of cooperatives

Company types according to size :

1) Micro-enterprise: they are those that have up to 10 workers and are generally individually owned, their owner usually works in it and their turnover is rather low. They do not have a major impact on the market, they have few types of equipment and manufacturing is almost artisanal.

2) Small companies: they have between 11 and 49 workers, they aim to be profitable and independent, they do not have high specialization in work, their activity is not capital intensive and their financial resources are limited.

3) Medium-sized companies: they are those that have between 50 and 250 workers, tend to have areas whose functions and responsibilities are defined, and commonly have a union.

4) Large companies: they are those that have more than 250 workers, generally have their own facilities, their sales are very high and their workers are unionized. In addition, these companies have the possibility of accessing important loans and credits.

And finally, according to the activity :

1) Primary sector companies: they are those that, to carry out their activities, use some basic elements extracted from nature, be it water, minerals, oil, etc.

2) Secondary sector companies: they are characterized by transforming the raw material through some procedures.

3) Tertiary sector companies: these are companies in which the human capacity to perform physical and intellectual tasks is their main element.

Also according to the origin of the capital :

1) Public companies: they are those in which the capital comes from the State, be it municipal, provincial or national.

2) Private companies: their capital comes from individuals.

3) Mixed companies: in this case, the capital comes from both individuals and the State.

Importance of the company

The company is a social unit in which a series of people agree to form an organization, each individual contributing a certain amount of resources in order to achieve a series of objectives, and taking responsibility for the effects that eventually produce actions taken in pursuit of the objectives pursued.

The company is a central component in modern societies and the main engine of today’s central economies . Much has been theorized about the role of the company: probably the most recognized is related to the possibility that the company gives to maximize production efficiency and profits from a rational and efficient use of the material and intellectual resources, which allows meeting the stated objectives.

But beyond its first intention, the company fulfills a series of very outstanding functions in modern society. Organizing for common goals or interests is inherent in the human condition.

The transactions between people exist as long as we are all aware that on our own we are not able to meet our needs to the full, and that the exchange is an essential tool for this. However, only with the individual exchange, it is not enough, and that is why (among other causes) companies exist.

Differentiate between Capitalists and shareholders

One of the main functions of the company is to give work. The immense number of people in the world who are not self-employed are organized in the form of companies, which can take on different names (factories, companies, workshops, etc.), receiving a salary and sometimes commissions.

Businesses can be small, even family-based, or they can be large emporiums with branches in different parts of the world and with huge numbers of employees and departments.

In companies, there are some individuals who are not in charge of activities aimed at achieving the main objective, but rather to seek that the work circuit is carried out in the most effective way possible.

Those who initially provide the resources are the so-called capitalists, many times they do not participate in any part of the labor circuit, but for providing the money necessary for the company to start operating, they receive as a reward the profits produced.

The immense world of the stock market in which companies buy and sell parts of their property means that hundreds of thousands of people in the world become owners of parts of companies and that there may be the concept of betting on the success of a company that already exists choosing to buy a part of its property, in the form of shares. Those who own those shares are called shareholders.

What are Non-profit companies?

In addition to companies whose purpose is to make a profit (in fact, these are the vast majority), there are other types of companies that work differently because they have other purposes: they are public companies and cooperatives:

  • Public companies are those that are state-owned, at least in more than half of their share package: this means that the business strategy is decided based on the public interests, so these companies deviate from the principle of reproduction of capital. There are great debates in the economy about the role of public companies. There is a general consensus that these should appear in cases where the market action itself generated technical failures, or in the face of a monopoly situation.
  • The cooperative company is a community of people who associate freely to carry out tasks of economic content whose function is to produce, but does not have the ultimate goal of obtaining profit: all its members aim to work in the same way and preserve that source of work, so there is a situation of equality. Democracy is practiced for the direction of the company’s directions and conciliatory collaboration is promoted against the traditional competition.

The role of the company in the economy

The economy is generally boosted by the existence of companies. In any of the cases, the company assumes a double function: it creates work and, therefore, gives people money, which moves the economy, and in turn incorporates goods and services into the economy.

Starting from the idea that there will rarely be a single company, but that companies dedicated to different areas generally coexist, the reproduction of this process makes an economy grow and that more and more work is being demanded and new goods are being produced and produced. services to the extent that many companies intervene in the market.

The amount of money that the partners of the companies decide not to withdraw for their own benefit, but to return them to the business of the company in order to optimize some work factor: the hiring of personnel, the purchase, is known as an investment. Machinery or a new plant are examples of investments that contribute to the economic growth of countries.

Purpose of a company

Every company operates in pursuit of a series of purposes, which can be divided into four categories:

  • External economic purpose. The company produces valuable goods or provides services to satisfy a specific demand of society.
  • Internal economic purpose. The company obtains an added value from its goods or services and with that surplus-value, it remunerates its members: some in the form of dividends (partners and investors) and others in the form of wages, benefits, and benefits (employees and workers).
  • External social purpose. The company contributes to society as a whole, not only generating employment and trying not to violate its principles based on its economic activity but even promoting them when there is an opportunity.
  • Internal social purpose. The company contributes to the development of its members, their growth as professionals and their social advancement.

Sectors of the company

The companies are dedicated, according to the nature of the activity they carry out, to any of the four productive sectors:

  • Primary. Extraction of raw materials or their transformation into semi-finished products.
  • Secondary. Manufacture of final products from raw materials or semi-finished products.
  • Tertiary. Services to individuals, other companies, or even the State.
  • Quaternary. Information management services and other intangible assets.

Another way of looking at it is that there are industrial companies (extractive or manufacturing), commercial companies (wholesalers, retailers, and commission agents) or services companies (transport, training, administration, public and private services, etc.).

Classification of companies

There are various ways of classifying companies, namely:

  • According to its relations with the client and with other companies
    • Isolated or closed loop. It does not require any other entity to carry out its economic process.
    • Business or open-loop networks. Strategic business unions to distribute the tasks and manage themselves efficiently towards the end customer.
  • According to your size
    • Microenterprise. Fewer than 10 workers.
    • Little. Between 10 and 49 workers.
    • Median. Between 50 and 250 workers.
    • Big. More than 250 workers.
  • According to its legal form
    • Singles. They belong to a single owner.
    • Societies. They belong to an organized set of investors.
    • Cooperatives. They are part of community models of social economy.
  • According to their role in the market
    • Applicant or Startup. Young companies, recently formed, trying to open a market niche in the face of competition.
    • Specialist. They have an important role in the local market and in some cases have a certain monopoly on it.
    • Leader. They are at the forefront of their local markets and set the conduct of the competition.
    • Follower. Important companies in the specific niche, but not enough to relieve leaders from command.
  • According to its scope of action
    • local
    • Nationals
    • Multinationals
    • Transnationals

Types of resources in the company

For its operation, every company requires two types of resources:

  • Material resources. They range from initial capital to start the business and raw materials, to a physical space to operate, and a series of tools for employees to work.
  • Human resources. Employed personnel, both workers or workers, and administrative and managerial personnel.

Investors of a company

The current business model is based on the sale of financial securities to gather, among the various possible investors, the capital necessary to start operations. Then, and according to the percentage that their invested capital represents, these investors will receive part of the profits that the company makes.

These investors may be individuals, other companies, or even the State, all at the same time and in different proportions. According to the origin of the investment capital, we will talk about private, public, and mixed companies.

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