Corporate purposes

Corporate

The primary function of a business varies with the company or even according to the points of view within the same company (eg perspective of the shareholder, employee, union, management. ..). Among the various operational functions usually observed, there are:

  • to serve the market, producing and distributing goods and services corresponding to a solvent demand. This is his only economic justification, no business can survive without making a priority, unless protected and outside the field of competition (eg for some public services), which, from a purely economic point of view, can lead it to consume more resources than it has in use.
  • to earn money, that is to say, to extract financial benefits "raising more money than invested money," particularly to attract institutional investors and small shareholders,
  • to produce a cash surplus to be invested with a greater benefit in development activities or another company (in the context of a "group").
  • to maximize, depending on the status, the social utility (improving the situation of the company) or profit (the difference between the sale price and the cost of resources consumed).
  • to achieve a technical goal: building of a structure (tunnel, bridge, road ...), production of a manufactured product, the design and implementation of a service satisfactory to a customer. This technical goal itself can be extremely varied, including:
    • activities that are not, for the entrepreneur, the main issue, but a means to another activity, eg owning a newspaper group, production of strategic resources or vectors enterprises images (the example of the presence of tobacco in the ready-to-wear industry)
    • agricultural cooperatives are businesses that aim to make a profit not for themselves, but for members
    • the "integration enterprise" designed to make employees able to work in a "normal" work, without trying in some cases (integration project workshop) to generate profit.

Some corporations may be incorporated to divert the first business functions: In particular to cover legal or illegal activities (eg, activities such as gambling, currency exchange, cars, real estate ... are known to allow "recycling" or "laundering" money from illegal activities).

Different political views on the functional utility of private enterprise have been formalized in the history and development of economic thought:

  • its total uselessness, leading to either cancel them or collectivization
  • its complete utility (especially in terms of job creation), culminating in his encouragement and development of SMEs, TPE, craft companies and professionals.

Enterprise, competition and competitive situation

For the competition law, the legal form (private or public corporation, association) and purpose (profit or not) of the company are indifferent. So for community law, "the concept of undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and its method of financing" (EU Court of Justice (ECJ) Höffner stop, 1991) .

However, the organization that fulfills an exclusively social function does not exercise an economic activity, and is no more an undertaking subject to competition law (ECJ, Poucet 1993), same for the one who exercises public authority (ECJ Eurocontrol, 1994).

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