Understanding Business: Elements, Goals, and Social Responsibility

Company: Basic Unit of Creation and Distribution of Goods and Services

A company is the basic unit of creation and distribution of goods and services that meet our needs.

Company Elements

Human Resources

• Partners: Provide the capital necessary to launch the company (profit-seeking).
• Managers: Directly responsible for the management of the company (make decisions, receive wages).
• Employees: Contribute their workforce and knowledge, seek promotion, and better salaries.
• External Group: Relate to the company but are not part of it, e.g., clients, suppliers.

Heritage

The set of assets, rights, and obligations of the company. There are three types:

• Material Elements: Economic factors.
• Non-current Capital: Materials that are renewed after a long period.
• Capital Flow: Materials that are continually used (e.g., paper, pens).
• Intangible Assets: Patents, trademarks, publicity.

Financial Resources

The company's ability to grant credits.

Organization

• Common Purpose: Aims and objectives of the people forming the company.
• Combination of People and Media: To work together without problems.
• System of Relationships: To divide the roles and tasks to be performed.

Environment: External Business Factors

External business factors that affect the company.

• General: Regulatory, economic, technological, political, legal, social.
• Specific: Customers, suppliers, competitors, financial institutions.

Company Goals

• Cost-Benefit: Absolute concept. Profitability is a relative benefit.
• Growth and Market Power: Companies grow and strengthen their position in the market.
• Environmental Goals: Respect the laws of the environment, respecting the influence on the environment.
• Social Objectives

Social Responsibility

• Private Cost: Costs that affect the company and are passed on to the price.
• Externality: Costs that affect other companies, which do not affect prices.
• Social Cost: The sum of private costs and externalities.
• Social Responsibility: Coexistence between companies, making decisions respecting the possible effects on the environment.

Location of the Company Depends on:

• Market demand
• Raw materials
• Salaries
• Communication and transportation
• Legislation
• Services
• Economic development