A company is an association of people who come together to achieve common goals, and from this, obtain benefits. If you plan to undertake, before starting your career to success you must be clear what is a companyhow many types exist and how the elements that make it up work.
In the world of entrepreneurship, the concept ‘company’ has very varied definitions, since different criteria are taken into account, such as its size, organizational structure or the nature of its activity to arrive at a definition.
Although you may already know or have heard hundreds of definitions, you need to have a clear concept of what a company is, preferably before starting your business or venture, in order to manage it better, know the elements that make it up and give it the future projection it deserves.
You want to know what is a company, how many types exist and the most important elements that are part of it? Keep reading!
What is a company?
The shortest definition of company could be this: organization of people who share certain common goals in order to obtain economic benefits.
But we know that those who are dedicated to entrepreneurship prefer more complete and developed definitions to better understand their segment, for example, this one: A company is an organization, entity or institution dedicated to productive activities that seek to generate an economic or commercial benefit.
There are different meanings of company, depending on its activity, organization chart and size. In general, a company is defined as a group of people, material and financial goods, whose objective is to produce something or provide a service that covers a need, and for which they will obtain economic benefits.
What are the definitions of company?
Although it is possible to find very diverse definitions of what a company is âincluding those of important authors of commercial lawâ there are three specific definitions based on different laws in force in Mexico:
I explain them in more detail below:
1. Maritime Navigation and Commerce Law
Section IX of its article 2 defines the “shipping company or maritime company” or “shipowner or shipping company” as “an individual or legal entity that has one or more vessels and/or naval artifacts under its ownership or possession, and without necessarily constitutes its main activity, performs the following functions: equip, supply, supply, provide crew, maintain seaworthiness, operate by itself and operate vessels.
2. Federal Labor Law
Its article 16 defines the company as the âeconomic unit of production and distribution of goods and servicesâ. This law distinguishes the company from the establishment.
3. Tax Code of the Federation
In its article 16, it defines the company as “an individual or legal entity that carries out activities referred to in this article, either directly or through a trust or through third parties.” The business activities listed in this article are: commercial, industrial, agricultural, livestock, fishing and forestry activities.
If you want to know more about this, I invite you to read our article. It will surely clear all your doubts! đ
What is a company for?
It is true that a company aims to produce goods or services that meet a need, and obtain economic benefits for it.
However, companies serve to identify and satisfy the needs of the market economy: the game between supply and demand, which is part of the social and economic system in which we live.
Its function is to achieve certain commercial and economic objectives to satisfy both their needs and those of the society in which they develop.
Companies also serve to contribute to the progress of societies, boost the economy, and even promote social and personal values. They are a key piece in the growth and development of any country.
What elements make up a company?
The set of means used to carry out a business activity are also known as elements of the organization, entity or institution.
The most important elements that are part of a company (human, technical and material) are grouped and organized by categories for the purpose of producing or exchanging goods or services.
According to a , these elements are classified into three main categories:
- Material or corporeal elements
- Immaterial or incorporeal elements
- personal items
1. Material or corporeal elements
It refers to those who occupy a place in the company space, are visible and tangible. Within this category are:
- Raw Materials: Any material extracted from other materials, which is used or transformed to make other materials that will become consumer goods.
- Movable and immovable property: Movable goods are those that by their nature can be moved from one place to another; buildings are those that cannot be moved from one place to another, such as land, buildings, fixed telephone lines, etc.
- Products: It is everything created or produced by the company in accordance with its strategies.
2. Immaterial or incorporeal elements
Those that are not visible or tangible, and therefore their existence is merely legal. The main intangible assets of a company are:
- clientele or avio: Refers to consumers, suppliers or any third party with whom it carries out commercial operations.
- Intellectual Property Rights: Rights acquired over any work created or invented. They are classified as: industrial property rights and copyrights.
3. Personal items
It is about the company’s personnel and all the workers, processes and concepts on which it is based for , therefore it does not matter their name, salary, skills or activities they perform. In this category fall:
- Organization chart: is a graphic scheme that represents the structure and internal organization of a company’s staff.
- : It is the reason for being of the company, the description of what it tries to do for its clients today.
- The vision: refers to where the company is heading, and therefore, how it wants to be seen in a defined future.
- Human capital: refers to the skills of the staff, the productivity of the workers, their work experience and training.
- CEO: in Spanish, âexecutive directorâ, refers to the person with the highest responsibility in a company.
- : A company’s ability to generate sufficient utility or profit.
- Organizational culture: is the set of ideas, practices and with which a company and organization is governed.
- Planning: refers to the forecast and projection of the company, based on what has already been lived and experienced.
- : process by which the members of the company select, among several alternatives, the one that is best aligned with the company’s objective.
- Management control: consists of designing and applying a set of procedures and especially quantitative techniques for verifying activities, which help create the necessary corrections for better efficiency in achieving objectives.
- Evaluation: are the systems that allow to measure and analyze work performance.
What is the turnover of a company?
Continuing with the mission of classifying, it is important to identify the concept to designate the type of activities, both productive and economic, that a company has.
The turnover of a company is the classification given to a business or enterprise depending on the economic activity it performs.
Therefore, companies are classified according to their economic activity in three main categories: primary, secondary and tertiary.
From these three, a long list of subcategories linked to the specific activity of the company emerges, so the line of business can be very varied. Below I share the types of companies and classifications that exist.
How many types of companies are there?
Companies are classified based on very specific criteria that help differentiate businesses within branches of multiple industries.
The most common way in which companies are classified is according to its economic activity, its legal form, its size, its geographical scope, the origin of its capital and the use of technology.
From these six basic categories, 12 types of companies emerge, which as a result give the most common companies in Mexico:
- Service company
- Manufacturing company
- commercial enterprise
- Industrial company
- Socially responsible company
- Small company
- Multinational company
- Transnational company
- Public company
- Private company
- unicorn company
- sustainable company
1. Service company
They are those that offer intangible elements or solutions âfinancial resources, electricity or the Internet, for exampleâ to satisfy market needs. Find out more about them in our article
2. Manufacturing company
Next we have the one that transforms raw materials (vegetables, wood or metals) into finished products or bases to generate other products.
3. Trading company
Likewise, companies dedicated to the acquisition of some good âfinished products or even raw materialsâ enter to sell them to consumers or other companies.
4. Industry company
As part of this idea, these are dedicated to the acquisition of goods or raw materials to transform and market them.
5. Socially responsible company
They are those that comply with a set of rules and principles that support their commitment to policies, programs and actions that have a positive impact on social reality, the environment, the economy and the communities in which they develop.
6. Small business
When we talk about the starting point for size, we have companies that have between 11 and 30 workers, and their sales range from $4 to $100 million MXN per year.
7. Multinational company
Companies whose expansion reaches other countries, but the headquarters of its operating center remains in the nation of origin.
8. Transnational company
They are the ones that reach different countries and their operation is decentralized, that is, each global region operates independently.
9. Public company
It refers to companies that operate with capital that comes from the government. Therefore, it means that the company belongs as such to the State.
10. Private company
Companies that work with capital from the private sector, that is, their creators, shareholders and owners do not belong to the government.
Probably among the most popular, as they refer to emerging companies or startups that reach a valuation of USD $1,000 million without having a presence on the Stock Exchange, and that take advantage of new technologies to innovate and offer their services.
12. Sustainable company
Finally, there are the companies whose philosophy and work culture seek to balance…
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