Business Legal Structures and Pricing Strategies

Determining the Legal Form of a Company

7.1. Determination of the legal form of a company. Companies may take different legal forms according to their size, the amount of initial capital, the number of partners, and the activity the company will pursue. The most common legal forms are:

Common Legal Structures

Legally:

• Sole proprietorship.
• Community property.

With legal personality:

• General partnership.
• Limited partnership.
• Limited liability: Limited Partnership and New Business Limited Company.
• Public Limited Company.
• Limited partnership by shares.
• Worker-owned companies: Limited work partnership and labor limited company.
• Cooperative Society.

Legal Forms and Main Characteristics

Individual Entrepreneur

An individual entrepreneur is a natural person who regularly exercises a constitutive business activity on their own behalf. Liability is unlimited.

Community Property

Community property is an association of people who pool their assets to perform an activity. The physical character of this association involves unlimited liability.

Limited Liability Companies

In Limited Liability structures, the partners contribute capital, and social debts are responded to only with the contribution made. Liability is limited. Its features are:

• It is a capital company; its capital is divided into equal shares.
• The company is governed by the will of its partners, meeting in a general meeting. This body can be a management board, a single manager, or two or more managers acting jointly or severally.
• Legal limitations: capital cannot be less than €3,005.00.

Pricing Strategies and Competition

5. Pricing strategies in relation to competition.

• Higher prices than the competition: For this strategy to be successful, it is necessary that the price difference is justified in the minds of buyers.
• Lower prices than competitors: Applied to compensate for the disadvantages of the company's market offering relative to competitors.
• Similar prices to competitors: Price fixing at levels similar to those of the competition.

Psychological Pricing Strategies

6. Psychological pricing strategies

• Perceived Price: The price of the product or service as perceived by the customer. This is the price they consider appropriate to pay. If exceeded, the buyer may not be willing to purchase.
• Quality Association: High prices are often synonymous with quality, while low prices are associated with lower quality.
• Price Endings: Prices ending in certain digits. Odd numbers are perceived as lower, while rounded products are associated with quality and prestige.

Methods for Determining Prices

C. Pricing methods.

1. Price perceived by the market.
2. Method based on the cost of required return.
3. Break-even point or impasse system.
4. Method based on competition.

Organization and Sales Planning

6.3 Organization and planning sales. The organization of a sales system involves establishing how vendors are going to relate to the customers of the company.

The Sales Network

A. Sales network. The sales network consists of all persons performing the operations of selling products and services.

Types of Sales Organization

• Organization by geography
• Organization by customers
• Organization by products
• Combination of designs