Business Classification: Size, Production, and Legal Status

Company

Definition: A company is an organization with a performance objective, producing goods and services. It is the basic unit of production. Companies work to select products and combine factors of production to achieve their objectives.

Through production activities, raw materials and intermediate products are transformed into end products using capital, labor, technology, and knowledge.

Business Classification Criteria

1. Goods and Services Produced

Businesses are classified according to the goods and services they produce.

2. Economic Sectors

Businesses are categorized by their economic sector.

3. Sub-sectors

Companies are defined by their specific activity within a sub-sector.

4. Legal Status

• Individual Companies: Private companies, often small in size.
• Public Limited Company (PLC): Ownership is divided among shareholders and decisions are made by the General Assembly. The minimum capital is 6,010.50 euros. Shares are freely accessible on the stock exchange.
• Limited Liability Company (LLC): Not all owners can purchase participation. Partners or family have purchase priority.
• Cooperative: All employees are also owners of the company, with profits distributed among them.
• Public Companies: These are managed by the state. Management is determined by civil servants through competitive examinations.
• Multinational Companies: These are companies operating in multiple countries.

5. Number of Employees and Annual Turnover

• Micro-enterprise: Fewer than 10 employees and an annual turnover of up to 2 million euros.
• Small Business: Between 10 and 50 employees and an annual turnover between 2 and 10 million euros.
• Medium-sized Company: Between 50 and 250 employees and an annual turnover of up to 50 million euros.
• Large Company: More than 250 employees and an annual turnover exceeding 50 million euros.

6. Production Stages

• Vertical Integration: A company controls all stages of its production process.
• Horizontal Integration: Businesses combine to control a specific part of the production process.

7. Factors of Production

• Capital-intensive Firms: A significant portion of the total capital cost is invested in automation.
• Raw Material-intensive Firms: The majority of profits are derived from raw materials.
• Labor-intensive Firms: Labor costs constitute the largest portion of the value of goods produced.