Fundamentals of Business Structure and Entrepreneurial Success
The Company Structure
1.1 Corporate Functions and Objectives
Any company performs two basic functions: buying and selling.
Firms sell goods and services demanded by households. In turn, firms need to buy productive assets held by families, mainly labor (manpower) and capital (money). Households consume and pay for these goods or services using the wages and interest they receive from the firms.
1.2 Essential Business Elements
A company is typically composed of four main groups:
A. The Team (Human Resources)
Composed of all persons who have a direct link with the company. They include the owners, workers, managers, and administrative staff.
B. Capital Goods
These are the assets owned by the company. Capital goods can be differentiated into non-current capital and flow (current) capital.
- Non-current Capital
- Consists of goods or equipment designed to contribute to a sustainable productive activity (long-term assets).
- Flow Capital (Current Capital)
- These are goods renewing every few years or those in constant circulation (short-term assets).
C. The Organization and Functional Areas
This involves the coordination, authority relations, and communication established by the employer to structure and organize the business. Key functional areas include:
- Procurement: Controls the purchase of necessary materials and supplies.
- Production: Prepares the product or service constituting the object of the business.
- Human Resources: Organizes and manages the team.
- Marketing: Responsible for all aspects of marketing and product distribution.
- Financing and Investment: Captures the necessary funds for the acquisition and maintenance of investments and infrastructure.
- Management/Direction: Organizes and coordinates the other fields to achieve overall corporate objectives.
D. The Business Environment
The context in which the firm operates. We differentiate between two types of environments:
- The General Environment
- Affects all companies operating within a specific location or market (e.g., economic or political factors).
- The Specific Environment
- Only exerts its influence on a particular group of companies (e.g., competitors, suppliers, customers).
Understanding Entrepreneurship
2.1 Entrepreneurial Motivations
The interest of the entrepreneur to create a company can stem from personal or material motives.
A. Personal Motivations
- Accomplishment: Satisfaction derived from working in an activity that one enjoys.
- Social Recognition: As social beings, entrepreneurs often seek acceptance and validation from others.
- Tradition: An immediate family member conveys their passion for the company or industry.
- Personality Traits: Features like independence, autonomy, or capacity for leadership are key traits for creating a business.
B. Material Motivations
These relate to the financial needs of individuals.
- Market Opportunities: Locating a business opportunity with strong economic prospects often leads individuals to start a business.
- Self-Employment: Creating a job and becoming one’s own boss is an alternative when facing difficulties in the traditional labor market.
- Income/Revenue: Increasing or maintaining income is often a decisive reason for starting a business.
2.2 Characteristics of the Entrepreneur
These characteristics fall into two main categories: biographical and personal.
A. Biographical Characteristics
Circumstances related to experience that may help in the entrepreneurial process:
- Specialized Experience: Experience related to optimizing a product or process.
- Previous Business Experience: Individuals often learn more from past mistakes than successes.
- Training and Education: Training promotes both technical expertise and personal skills.
B. Personal Characteristics
These originate in the personality of the individual:
- Initiative: The ability to anticipate people or events.
- Work Capacity: Dedication and perseverance in the company.
- Creativity: Original products and solutions are often crucial for adapting to new markets.
- Willingness to Negotiate: It is important to understand and be understood by others to enhance personal and business relationships.
- Flexibility: Adapting the project to changing realities is imperative.
- Organizational Skills: Everything must be fitted to perfection for efficient operation.
- Positive Spirit: The entrepreneur must trust themselves and remain optimistic.
- Leadership: The entrepreneur must be a good leader.
2.3 Essential Social Skills
Entrepreneurial activity requires relationships with other people. To this end, three different skills are crucial:
A. Teamwork
Teamwork is more than just meeting. To create a company, one must know how to work together to consolidate a good job.
B. Cooperation
Cooperation is the first step in achieving the objectives set.
C. Communication
All communication requires interactivity. Good communication is crucial for achieving the goals we pursue.