Company Roles, Structures, and Market Dynamics

Posted on Oct 31, 2024 in Economy

Maslow’s Hierarchy of Needs

Primary Needs

These are the needs relating to survival.

Safety Needs

The need to feel safe and protected.

Social Needs

The need for integration and belonging within a group.

Esteem Needs

The need to be respected and valued by others and oneself.

Self-Actualization Needs

The need for self-fulfillment, involving the satisfaction of achieving personal goals and maximizing one’s capabilities.

Roles of Companies

Economic Roles

  • Generate wealth through the production of goods and services.
  • Create jobs and contribute to the development of the economic system.
  • Coordinate, direct, and control the production process.
  • Allocate resources to production, directing the production process, and establishing relations with the rest of the economy.
  • Reduce costs generated by market transitions.
  • Organize activity to seek a compromise in the market.
  • Perform a function of discounting advance product or social needs.
  • Forward production factors to participate in the product before it has been consumed, enabling the ability to acquire expenses for the purchase of products.
  • Assume the risks inherent to the product according to advance social factors, rewarding sales before collecting product revenue.

Basic Tasks of the Employer

  • Plan: Develop plans for the future.
  • Organize: Structure staffing and activities.
  • Motivate: Provide incentives to personnel.
  • Decide: Resolve major issues.
  • Schedule: Coordinate various work streams in the same direction.
  • Report: Communicate internally and externally.
  • Budget: Allocate economic resources to activities.

Qualities of the Employer

  • Adequate financial resources to implement the project and ensure its viability.
  • Technical ability to develop business activity.
  • Ability to build and manage a team.
  • Ability to assume responsibility and risks associated with the creation of an enterprise.

PEST Variables

Political-Legal

Factors include administrative rules and legislation affecting the company in the development of its activity.

Economic

Monitoring of economic indicators to understand the evolution of the economy and how it can affect company activity.

Sociocultural

Understanding the values, beliefs, and attitudes of the community to which the company is addressed, as well as demographic and cultural conditions of society.

Technological

Refers to the scientific and technological framework surrounding the company, which is crucial for managing innovation and avoiding product obsolescence.

Market Structures

Perfect Competition

Characterized by:

  • Homogeneous products: No product differentiation.
  • Market transparency: Agents have perfect information on all market transactions.
  • Low entry and exit barriers: Both buyers and sellers have complete freedom of entry and exit.
  • No restrictions influencing buyer and seller decisions.
  • Many small businesses, so the price is fixed by the balance of supply and demand.

Imperfect Competition

Monopoly

A single company controls the market for a product with no substitutes, with freedom to set the price. Justified only for the provision of public services or for tax reasons. Antitrust laws aim to prevent the formation of private monopolies, which have high entry barriers.

Oligopoly

A small number of corporations control the entire market. They have some power to influence prices and quantities offered. Relations between them can be collusive (agreements to reduce competition) or rivalrous (vying for greater market share). High barriers to entry.

Monopolistic Competition

Many companies produce differentiated but similar products (heterogeneous products) to improve their competitive edge. Low entry barriers.

Respective Shares of the Company

  • Production: Role of supply and transformation.
  • Marketing: Commercial or distribution function.
  • Funding: Function of fundraising and investment.
  • Human Resources: Organization and management of staff.
  • Research and Development (R&D&I): Technological function (Research + Development + Innovation).

Main Variables Influencing Company Location

  1. Estimated Market Demand: Full market analysis.
  2. Labor Market: Proximity of labor to the workplace.
  3. Transport and Communications: Accessibility and infrastructure.
  4. Supplies: Study of the costs of supplies.
  5. Supply of Raw Materials: Proximity to centers for the production of raw materials.
  6. Cost of Land, Building, and Infrastructure: Analysis of land costs.
  7. Legislation: Analysis of planning legislation.
  8. Financing and Fiscal or Economic Aid: Availability of support.

Small and Medium Enterprises (SMEs)

Features

  • Represent more than two-thirds of industrial employment.
  • Capital is owned by one or very few people united by ties of kinship and/or friendship.
  • Have great adaptability to markets.
  • Changes are taking place worldwide due to the great efficiency that SMEs are reaching.
  • Flexible production to fit market conditions.
  • Have great importance to the growth of a country.

Advantages and Disadvantages of SMEs

. BENEFITS: FLEXIBLE-ORGANIZATION. “UNITY AND INDEPENDENCE OF PERMITS MANAGEMENT DECISION rapidly, INITIATIVE, versatility and speed in communication. “Their great flexibility allows you the RAPID ADOPTION AND ACQUISITION OF TECHNOLOGY access to their means. -Easy adaptation to local markets. VERY DIRECT CUSTOMER SERVICE. “Almost total absence of industrial conflict. KNOWLEDGE-CONTROL AND DIRECT CLIENTS. DISADVANTAGES:-Personal Organization. -DIFFICULTY ACCESSING THE FINANCING OF OTHERS. -Little funding and economic capacity. -LACK OF INFRASTRUCTURE IN SCIENCE AND SOME HUMAN RESOURCES SPECIALIST. -FRONT little bargaining power suppliers and customers.