Introduction to Economics and Business Structures

Posted on Sep 21, 2024 in Law & Jurisprudence

Economic Activity

Economic activity involves producing goods and services for society. This activity is studied within the field of economics.

Economics

Economics is a social science that studies the satisfaction of human needs.

Needs

A need is a feeling of lacking something, coupled with the desire for it to disappear. There are three types of needs:

  • Vital needs (essential for life)
  • Cultural needs (related to education and personal growth)
  • Superfluous needs (not essential for survival)

Goods

Goods are anything that satisfies a need, whether material or immaterial.

Factors of Production

These are the elements used to produce goods and services:

  • Nature (natural resources)
  • Capital (means of production, including produced goods used for further production)
  • Labor (human effort)

Economic Units

  1. Consumption units (families)
  2. Production units (businesses)
  3. State (both consumer and producer)

Companies

A company is a union of the factors of production dedicated to producing goods and services to be sold for profit.

Classification of Companies

1. Based on Activity Sectors

  • Extractive companies (primary sector): Perform activities related to nature (agriculture, livestock, fishing, mining, forestry)
  • Industrial companies (secondary sector): Acquire raw materials and transform them into finished products.
  • Tertiary sector companies:
    • Service companies: Produce services instead of goods (e.g., transportation, education).
    • Commercial enterprises: Buy and sell products without processing them (wholesale or retail).

2. Based on Company Size

  • Micro: Less than 10 employees and billing no greater than €2 million.
  • Small: 10 to 50 employees and billing no more than €10 million.
  • Medium: Between 50 and 250 employees and billing up to €43 million.
  • Large: Over 250 employees and billing over €43 million.

3. Based on Ownership

  • Private companies: Belong to individuals.
  • Public companies: Owned by the public administration (state, autonomous communities, municipalities).

4. Based on Scope

  • Provincial or regional companies: Operate within a specific region or province.
  • National companies: Operate within the country.
  • International companies: Operate in several countries.

5. Based on Legal Form

  • Sole proprietorship: The owner is an individual entrepreneur (a natural person who regularly carries out a business activity).
  • Social enterprise or company: A legal entity formed when several people pool resources to carry out a business and share profits. There are two main types:
    • Limited Liability Company (SL): Capital is divided into shares, and partners are not personally liable for debts. Minimum capital is €3,005.
    • Corporation (SA): Capital is divided into shares, and partners are not personally liable for debts. Minimum capital is €60,101.

Social Organs of Companies

  • Board of partners: Makes decisions, meets at least once a year.
  • Administrators: Manage the company and are its legal representatives.