Business Structures and Global Trade Organizations

Posted on Dec 19, 2025 in Economy

Types of Business Ownership

Sole Proprietorship: A business that is owned and operated by only one person. The owner makes all the decisions and keeps all the profits, but they are also personally responsible for all the business debts. If the business has problems, the owner must pay with their own money or property.

Examples:

  • Bakery run by one person
  • Freelance graphic designer
  • Carpenter with a personal business
  • Clothing seller at a market

Partnership

A business owned by two or more people. They share the work, decisions, profits, and also the responsibility.

  • General Partnership: All partners manage the business and are equally responsible for debts.
  • Limited Partnership: Some partners only invest money and are not involved in daily decisions. They have limited responsibility.

Examples: Two friends opening a café, or a law firm with multiple lawyers.

Corporation

A corporation is a large and complex business that is a separate legal entity from its owners (called shareholders). This means that the shareholders are not personally responsible for the company’s debts. Corporations can be private (shares are not for sale to the public) or public (shares are sold on the stock exchange).

Limited Liability Company (LLC)

An LLC is a type of company that combines features of a corporation and a partnership. The owners are called members, and they are not personally responsible for business debts. LLCs are more flexible than corporations and have fewer legal requirements. They can choose how they want to pay taxes.

Examples: Uber, Zara, Glovo.

Advantages:

  • Limited liability
  • Flexible management
  • Choice in how to pay taxes

Disadvantages:

  • More complex than sole proprietorships
  • Rules may be different in each country

Key Business Vocabulary

  • Shareholder: A person or organization that owns shares in a company. They are part-owners and may receive a share of the profits (called dividends).
  • Liability: The money a business owes. It is the legal responsibility for paying debts.
  • Revenue: The total amount of money a company earns from sales or services before subtracting costs.
  • Profit: The money that remains after all business costs are paid.
  • Assets: Everything a business owns that has value, such as money, machines, inventory, and buildings.
  • Equity: The value of ownership in the company. It’s the difference between total assets and total liabilities.
  • Headquarters: The main office of a company. It is where top managers work and where important decisions are made.
  • Annual Turnover: The total income or sales a company makes in a year.
  • Employees / Workforce: All the people who work for a company.
  • Market Position: The company’s rank or status compared to competitors in the industry.
  • Financial Results: The summary of profits, losses, and other financial data for a period of time.
  • Shares: Units of ownership in a company. Buying shares means you become a part-owner of the company.
  • Founder: A person who starts or creates a company.
  • Competitors: Other businesses that offer the same or similar products or services.
  • Services: Non-physical products provided to customers (like support, maintenance, consulting).
  • Providers/Suppliers: Providers give services, and suppliers give physical goods to the business.

Match the Word Exercise

  1. Founder: (c. A person who starts or creates a company)
  2. Annual Turnover: (f. The total income or sales a company makes in a year)
  3. Shareholding: (b. A part of a company owned by a person or organization)
  4. Subsidiary: (d. A smaller company owned by a larger one)
  5. Division: (e. One of the sectors or parts of a large organization)
  6. Multinational: (a. A company operating in several countries)

International Market Entry Strategies

Expanding into international markets offers businesses opportunities to grow, reach new customers, and increase profitability. However, entering foreign markets requires careful planning and strategic decision-making. Companies must consider factors before choosing the most suitable entry strategy, such as market demand, competition, regulatory requirements, and cultural differences.

  • Exporting: Selling products to other countries.
    • Direct exporting: The company sells directly to customers.
    • Indirect exporting: The company uses local sellers.
  • Importing: Buying products from other countries to sell at home (importación). Examples: Mango exports clothes to 110+ countries; Inditex imports fabrics from Asia.
  • Foreign Direct Investment (FDI): A company opens offices or factories in other countries (inversión extranjera directa). Example: Toyota in the U.S.
  • Joint Venture: Two companies work together in a new market. Example: Telefónica and China Unicom.
  • Licensing: Another company can make and sell your product (concesión de licencia). Example: Disney licenses characters.
  • Franchising: A business lets someone use its name and system. Example: Telepizza in other countries.
  • E-commerce: Selling products online globally. Example: Amazon, Alibaba.
  • Digital Marketing: Online promotion through ads, emails, and social media. Example: Nike uses social media worldwide.

Case Study: Procter & Gamble (P&G)

Procter & Gamble, also known as P&G, is a multinational company founded in 1837 in the USA. It produces consumer goods in areas like beauty, health, and cleaning. Its headquarters are in Cincinnati, and it has more than 100,000 employees working in over 70 countries.

One of the most important things about P&G is the variety of products and services it offers. From shampoos and razors to baby care and cleaning products, the company focuses on quality and innovation. For example, Oral-B created the first smart toothbrush with artificial intelligence, and Pantene’s Pro-V formula makes hair stronger and shinier.

It has a strong market position and competes with companies like Johnson & Johnson. The company also offers services such as research, sustainability programs, and community support.

In 2024, P&G made $84 billion in revenue, mainly selling to families and big retailers like El Corte Inglés and Mercadona. With strong financial results and well-known brands, P&G remains one of the top companies in the world.

National and International Organizations

Small Business Administration (SBA)

The Small Business Administration was founded on July 30, 1953, in the United States. Its creation was prompted by President Dwight D. Eisenhower with the goal of supporting small businesses and fostering economic growth.

  • Headquarters: Washington, D.C., U.S.A.
  • Administrator: Isabel Guzmán
  • Scope: National (United States)

Objectives:

  • Financing: Provide loans and loan guarantees to help small businesses obtain capital.
  • Counseling
  • Government Contracts
  • Disaster Assistance
  • Promoting Entrepreneurship

Chamber of Commerce

  • Training
  • Business Consulting
  • Networking

Headquarters and Infrastructure:

Palacio de Santoña: Located at Calle de las Huertas, 13, in the Literary Quarter, this is the main headquarters. Governance: Ángel Asensio, President.

International Monetary Fund (IMF)

The International Monetary Fund is a global organization that helps countries with their economies.

  • Founded: 1944
  • Headquarters: Washington, D.C., USA
  • Members: 190 countries
  • Main Goal: Help countries keep their economies stable.

How It Helps:

  • Lends money to countries in crisis.
  • Gives advice on economic policies.
  • Provides training and data.

The IMF works to make sure the global economy stays strong and stable. It advises governments on how to improve their economies and reports on the world economy. The IMF does not use regular money; it has its own special currency called Special Drawing Rights (SDR), which is based on major world currencies. The IMF studies economies and can predict financial crises before they happen.

World Bank

Ajay Banga is the current director of the World Bank. The World Bank was founded in July 1944 in the USA. It is an international organization that helps poor and developing countries by giving them money and advice to improve their economies and people’s lives.

It focuses on:

  • Building important infrastructure like roads, schools, and water systems.
  • Helping with education and healthcare.
  • Supporting projects for a better environment.

Its main goal is to reduce poverty and help countries grow. It provides money for projects like schools, roads, and hospitals while protecting the environment.

World Trade Organization (WTO)

The World Trade Organization (WTO) is an international group that helps countries trade with each other. Its main goal is to make trade fair and easy.

  • Founded: January 1, 1995
  • Headquarters: Geneva, Switzerland
  • Members: 164 countries (as of 2024)
  • Director-General: Ngozi Okonjo-Iweala (since 2021)

Main Functions:

  • Help countries make trade deals.
  • Solve problems between countries about trade.
  • Check that countries follow trade rules.
  • Support poor countries in trade.

Main Agreements:

  • GATT: General Agreement on Tariffs and Trade
  • GATS: General Agreement on Trade in Services
  • TRIPS: Trade-Related Aspects of Intellectual Property Rights (protects ideas, inventions, and intellectual property).

Challenges and Criticism:

  • It is often accused of helping rich countries more than poor ones.
  • It is hard to make agreements because many countries have different opinions.
  • Trade conflicts, like the one between the U.S. and China, create tension.
  • Developing countries argue that WTO rules can hinder their economic growth.

The WTO is important for world trade because it helps countries do business fairly, but it faces challenges in solving disputes and ensuring all countries get equal benefits.

Facts About the SBA

  • Offices in every state: The SBA has 68 offices across the US, offering free, personalized advice to entrepreneurs.
  • Instrumental in the COVID-19 pandemic: During the COVID-19 crisis, the SBA administered the Paycheck Protection Program (PPP), providing more than $800 billion in loans to save small businesses.
  • National Small Business Day: Held on the first Monday in May to recognize the importance of entrepreneurs in the economy.