Understanding the Business Environment and Company Organization
Topic 1: The Company and Its Environment
Concept and Scope of the Company
The Core Elements
- The Idea: Meeting individual needs for mutual benefit.
- The Entrepreneur: A skilled individual or group capable of launching and developing a business opportunity.
- Resources: Human and material resources needed for profitable development.
Company Concept
A company organizes resources and combines means of production to deliver goods and services that meet public needs, aiming to achieve predefined objectives. Economic efficiency is the primary goal, alongside:
- Meeting market needs
- Generating jobs
- Stimulating local society
- Growing and expanding into new markets
- Building prestige
Company Functions
- Organizing economic production factors
- Generating wealth
- Taking risks in research, development, and innovation
Defining a Business
Fields of Activity
- Primary Sector: Extracts natural resources (e.g., agriculture, livestock, fishing, mining).
- Secondary Sector: Transforms raw materials into consumer goods (e.g., manufacturing, construction).
- Tertiary Sector: Provides intangible products or services (e.g., banking, insurance, hospitality, education).
While companies often specialize in one sector, large corporations may operate in multiple sectors.
Size
- Microenterprise (fewer than 10 employees)
- Small (25 to 50 employees)
- Medium (50 to 250 employees)
- Large (more than 250 employees)
Scope
- Local (city and surrounding areas)
- Regional (several provinces)
- National (many provinces)
- International (foreign customers and suppliers)
- Public (in some countries)
- Global (five continents)
Legal Status
- Individual (natural person)
- Company (legal entity)
Ownership of Capital
- Public (state-owned)
- Private (privately owned)
The Commercial Offer (Portfolio)
The total goods and services a company offers to meet customer needs.
Product Properties
- Goods
- Services
Product Utility
- Consumption (durable or perishable)
- Industrial (raw materials, components, equipment)
Portfolio Characteristics
- Size: Broad (many product lines) or Narrow (few product lines)
- Depth: Deep (many models per line) or Shallow (few models per line)
The Business Environment
External forces impacting a company’s activity.
Microenvironment
- Suppliers: Provide resources.
- Intermediaries: Facilitate promotion and distribution.
- Customers: Purchase products to meet needs.
- Interest Groups: Influence the market (e.g., media, consumer associations, unions).
Macroenvironment
- Population Structure: Market composition.
- Economic Environment: National wealth, growth, and consumption capacity.
- Legal-Political Environment: National political and legal systems.
- Social and Cultural Environment: Lifestyle and consumption patterns.
- Technological Environment: Innovation and product obsolescence.
- Environmental Concerns: Market changes related to environmental protection.
Company Location and Size
Geographical Location
Factors
- Investment
- Distance between company, suppliers, and customers
- Accessibility
- Industrial infrastructure
- Population
- Business areas
- Cost and availability of land and buildings
Sector-Specific Considerations
- Primary Sector: Located at the resource extraction site.
- Secondary Sector: Proximity to suppliers, industrial infrastructure, and investment are key.
- Tertiary Sector: Customer proximity, population, and commercial areas are prioritized.
Sectoral Location
Criteria
- Entrepreneur’s training
- Activity life cycle (introduction, growth, maturity, decline)
- Required investment
Company Size
Factors
- Availability of material resources
- Type of activity
- Competitive landscape
- Market size and location
- Business objectives (primarily economic benefits)
Organization of the Company
Types of Organization
- Hierarchical/Linear Model: Top-down command structure.
- Functional Model: Based on specialized expertise.
- Mixed Model: Combines hierarchical and functional elements.
- Divisional Model: Autonomous divisions coordinated by central management.
- Collegial Model: Decisions made by a committee.
Functional Organization
- Supply: Purchasing materials and services.
- Production: Transforming raw materials into products.
- Marketing: Sales and distribution.
- Finance: Securing financial resources.
- Human Resources: Workforce management.
- Administrative: Accounting, controls, and taxes.
- General Services: Essential services (e.g., cleaning, maintenance).
- Directive: Setting objectives, organizing factors, and monitoring performance.
Organizational Chart
A visual representation of the company’s formal structure.
Types of Charts
- Transcripts: Detailed analysis for organizational experts.
- Bulletins: Basic overview for the public.
- General: Represents the entire organization.
- Partial: Focuses on a specific function.
- Circular: Hierarchy from center outwards.
- Horizontal: Hierarchy from left to right.
- Vertical: Hierarchy from top to bottom.
- Mixed: Combination of different formats.