Company Functions, Components, and Objectives in Market Economy

Item 1: Company Functions in a Market Economy

Directing and Coordinating Production Factors

The pursuit of efficiency in utilizing scarce resources drives the continuous division of labor and specialization, ultimately boosting productivity.

Creating or Increasing Value of Goods

Businesses enhance the ability of goods to satisfy human needs. As goods become more useful, their value and the price consumers are willing to pay increase.

Taking Risks

Companies assume financial risks by paying for production factors (wages, materials, interest) before selling products, uncertain of the outcome.

Creating Wealth and Generating Employment

Businesses play a vital social role by contributing to economic development, creating jobs, generating income, and improving product and service quality, thus enhancing society's quality of life.

1.4 Company Components

The Human Group

This encompasses workers, owners (shareholders), managers, and other stakeholders (consumers, suppliers, financiers).

Assets

Assets are categorized as fixed (buildings, machinery) and current (raw materials, cash, bank balances).

Organization

Effective organization is crucial for achieving objectives. Managers define tasks, relationships, and responsibilities.

The Environment

Companies are influenced by and, in turn, affect the legal, economic, social, cultural, and technological environment.

Company Objectives

Profit Maximization

This involves seeking the maximum return on investment: PROFIT = INCOME OBTAINED / CAPITAL INVESTED.

Growth and Market Power

These objectives aim to secure future benefits.

Stability and Adaptability

Growth requires openness to market changes and technological innovations.

Social Responsibility

Companies increasingly incorporate ethical and social responsibility objectives towards stakeholders and the environment.