How to define business

London from a hot air balloon

A business is an institutional unit, driven by a project based on a strategy or policies and action plans, the goal being to produce and supply goods or services to a set of customers or users. To do this:

  • the company is organized, uses, mobilizes and consumes resources (material, human, financial, immaterial and informational);
  • the company operates within a specific context to which it must adapt: a more or less competitive environment, technical-economic sector characterized by a state of the art, a specific socio-cultural and regulatory framework ;
  • the company can create a goal to reach a certain more or less level of profitability.

No company can be exempt from the balance between the level of income and its expenses. If deficit gap, it must be reduced or filled by external input (eg a balancing subsidy) under penalty of unsustainability and more or less imminent disappearance.

In search of a definition

The company according to the legal approach

The company is a socio-economic reality (a project, a decision-making and economic management). From a legal point of view, it has strictly speaking no consistency or reality.

  1. To exist in law, the company must choose one of the forms provided for which it must take necessarily exist and develop legally.
  2. The legal form chosen must be registered with the competent authorities.
  3. This legal form is associated with a distinctive and unambiguous identification.

When it comes to a company, this recording gives it legal personality and legal status whose shape depends on the objects of the company, the number of providers of capital, the amount of capital committed, and the legislative and regulatory framework in force.

The company's activity exercise can also be subject to prior authorization or adjustable permanent basis. Again in the context of existing legislation (eg banking, insurance, pharmaceuticals, temporary work, etc.).

The best-known legal forms that carry a "business" are:

  • companies: where the business is carried by several partners - anonymous by shares, limited liability.
  • associations or cooperatives: where the social object has certain characteristics (including lack of profit)
  • individual structures: when the business is carried by a single individual: entrepreneur, professional, craftsman, sole proprietorship.

The company according to pragmatic point of view of the entrepreneur

The concept of the entrepreneur means one who "undertakes," which happens to be at the origin and materialize a project of 'undertaking'.

  • His approach can be innovative when he anticipates a need, or assembles and organizes the tools and skills needed to meet this need in a new way. This type of "entrepreneur" uses concepts of creation and innovation and therefore differs from that of chief executive officer. Yet these two terms, although under different realities, often characterized the same people: an entrepreneur is a chief executive officer, if he pilot himself his project and a chief executive officer can be described as "entrepreneur" due to the intrinsic goals of its function.
  • The approach may be less original and more conventional when the entrepreneur has a project that draws heavily (uses or reproduces) patterns of activity or existing business.

In doing so, the contractor takes the risk that the need does not materialize or that the means he puts in place to meet will be inadequate.

Historically, the entrepreneur is an intermediary, a working broker: it is passing to him firm orders for goods or services, he searches the workers who will produce each part of this order and ensures the proper delivery. This in a context where the division of labor is too little marked, where workers work at home, and have their tools and even their machines.

Before the Industrial Revolution, an entrepreneur was essentially a "one-man band" capable of optimizing capital requirements and human resources to conduct a lawful and profitable activity, the means of production and labor power not being yet consolidated within the company.

During the twenty-first century is still found this type of organization, for example, in the transportation industry, services (engineering ...) where, next to large groups, independents are owners of their working tool (for example, trucks, barges) and find their contractors through brokers.

With the industrial revolution, entrepreneurs changed, they include machines on the same workplace and retain the same workers long time, giving rise to companies in the traditional sense. We then see immerse the figure of the chief executive officer (a known example being that of Henry Ford).

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