What are the firms?

Every day, people are faced with the manifestations of firms in their lives. Restaurants, shops, banks, factories, farms - all these are firms (enterprises) that carry out business activities. A firm is a legally defined business unit, i.e. economic link, which realizes its own interests through the manufacture and sale of goods and services by comparing the factors of production. An enterprise is also an economic unit, but within the framework of which a combination of factors of production takes place for the creation of goods and services. And if an enterprise is a legal entity having its own interests, then it is a firm, and if not, then it is part of the firm. In more detail what firms are, we will consider in this article.

Market economy enterprises

  • Private commercial enterprises. Extract profit, which is the main purpose of the organization. Activity is determined by the market.
  • Private non-profit enterprises. The main goal is not profit. Created in order to satisfy any social needs. Profit is a related goal.You can not distribute the profits of the enterprise among the founding members. Such enterprises include charitable foundations, public organizations, etc.
  • State. May be commercial and non-commercial. As a rule, activity is determined by political decisions.
  • Mixed.

Types of firms in the economy

  • Individual. It is created by a citizen who carries out entrepreneurial activity without forming a legal entity. Responsible for its obligations with its own property. Property that cannot be recovered by law is not included here.
  • Full partnership. Its participants are engaged in entrepreneurial activities, are liable with their property.
  • Limited partnership. Participants are engaged in business, are liable with their property for the obligations of the partnership. At the same time, there are investors who risk their contributions, but do not engage in entrepreneurial activity.
  • Limited liability company. The authorized capital is divided into certain certain shares. Members of the organization are not liable, they risk only their contributions.
  • Additional Liability Company.The responsibility of the participants of such a company is not limited only to deposits, it extends to property.
  • Joint-stock company. Capital is divided into a number of shares. Shareholders risk within their deposits.
  • Production cooperative. Citizens unite and carry out a certain economic activity, which is based on their labor participation and the unification of shares.
  • Unitary enterprise. A commercial enterprise that does not own the property that is assigned to it. Property is indivisible.
  • Concerns. Large monopolistic type superunification. The most important feature is the unity of ownership of its member enterprises, firms, banks. Holds a controlling stake holding company.
  • Holding Carries out the redistribution and centralization of financial assets of the group participants.
  • Consortia. Temporary association of enterprises. They are created to solve specific tasks, to implement large investment, social and other projects.
  • Cartel. It is a contractual association of enterprises, based on an agreement on quotas on production volumes, terms of sale,sales prices, the delimitation of markets. Each company is legally independent.
  • Syndicate. The merger of enterprises involves the centralization of the supply of participants and the marketing of their product. Members of the syndicate may be enterprises, associations, concerns, trusts.
  • Trust. Association of enterprises, in which they lose any of their independence and are subject to a single management.

Joint stock companies

  • Closed Joint Stock Company. Shares are divided between a certain number of participants. Not allowed to participate in the activities of such a society of unauthorized persons. It is this kind of activity that allows it to be stable, to manage a controlling stake.
  • Open Joint Stock Company. Shares are distributed among an unlimited number of participants. Performs open activities. In the media must be published profits and losses of the enterprise, the balance of the enterprise, that is, any information that may interest the owners of the shares. Shareholders can be any person who has acquired shares of the company.

All the listed main types of firms are just the legal side of some business activity. And the economic importance and economic power of the company are determined by its size and position in the market.

What are the firms

  • Small. The number of employees is up to 100 people. Does not require a lot of money initially. Does not need a management staff.
  • Average. Employees from 100 to 499 people. It is either a growing and successful small company, or a narrowly focused enterprise that holds a dominant position in the market.
  • Large. From 500 employees. Much more stable. To a lesser extent subject to bankruptcy. Large income, part of which is invested in the further development of the company. Success in big business very often brings not only economic power, but also some political influence. It is a very difficult process.

Different types of firms exhibit 3 main types of economic activity: they place demands on factors of production, organize production and sales of products, and invest.

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