A BUSINESS (also known as an ENTERPRISE, a COMPANY or a FIRM) is an organizational entity involved in the provision of goods and services to consumers . Businesses serve as conductors of economic activity, and are prevalent in capitalist economies , where most of them are privately owned and provide goods and services allocated through a market to consumers and customers in exchange for other goods, services, money, or other forms of exchange that hold intrinsic economic value . Businesses may also be social non-profit enterprises or state-owned public enterprises operated by governments with specific social and economic objectives. A business owned by multiple private individuals may form as an incorporated company or jointly organise as a partnership. Countries have different laws that may ascribe different rights to the various business entities .
The word "business" can refer to a particular organization or to an entire market sector (for example, "the finance business" is "the financial sector") or to all economic sectors collectively ("the business sector "). Compound forms such as "agribusiness " represent subsets of the concept's broader meaning, which encompasses all activity by suppliers of goods and services.
Typically private-sector businesses aim to maximize their profit , although in some contexts they may aim to maximize their sales revenue or their market share . Government-run businesses may aim to maximize some measure of social welfare .
* 1 Basic forms of ownership * 2 Classifications
* 4.1 Restructuring state enterprises
* 6 See also * 7 References
BASIC FORMS OF OWNERSHIP
Forms of business ownership vary by jurisdiction , but several common entities exist:
* SOLE PROPRIETORSHIP: A sole proprietorship , also known as a sole
trader, is owned by one person and operates for their benefit. The
owner operates the business alone and may hire employees . A sole
proprietor has unlimited liability for all obligations incurred by the
business, whether from operating costs or judgements against the
business. All assets of the business belong to a sole proprietor,
including, for example, computer infrastructure, any inventory ,
manufacturing equipment, or retail fixtures , as well as any real
property owned by the sole proprietor.
* PARTNERSHIP: A partnership is a business owned by two or more
people. In most forms of partnerships, each partner has unlimited
liability for the debts incurred by the business. The three most
prevalent types of for-profit partnerships are: general partnerships ,
limited partnerships , and limited liability partnerships .
* CORPORATION: The owners of a corporation have limited liability
and the business has a separate legal personality from its owners.
Corporations can be either government-owned or privately owned. They
can organize either for profit or as nonprofit organizations . A
privately owned, for-profit corporation is owned by its shareholders ,
who elect a board of directors to direct the corporation and hire its
managerial staff. A privately owned, for-profit corporation can be
either privately held by a small group of individuals, or publicly
held , with publicly traded shares listed on a stock exchange .
* COOPERATIVE: Often referred to as a "co-op", a cooperative is a
limited-liability business that can organize as for-profit or
not-for-profit. A cooperative differs from a corporation in that it
has members, not shareholders, and they share decision-making
authority. Cooperatives are typically classified as either consumer
cooperatives or worker cooperatives . Cooperatives are fundamental to
the ideology of economic democracy .
RESEARCH AND DEVELOPMENT
Research and development
Research and development
The efficient and effective operation of a business , and study of this subject, is called management . The major branches of management are financial management , marketing management, human resource management , strategic management , production management , operations management , service management , and information technology management .
Owners may manage their businesses themselves, or employ managers to do so for them. Whether they are owners or employees, managers administer three primary components of the business' value: financial resources, capital (tangible resources), and human resources. These resources are administered in at least five functional areas: legal contracting, manufacturing or service production, marketing, accounting, financing, and human resources.
RESTRUCTURING STATE ENTERPRISES
In recent decades, states modeled some of their assets and
enterprises after business enterprises. In 2003, for example, the
People\'s Republic of
Business process management (BPM) is a holistic management approach focused on aligning all aspects of an organization with the wants and needs of clients. BPM attempts to improve processes continuously. It can therefore be described as a "process optimization process". It is argued that BPM enables organizations to be more efficient, effective and capable of change than a functionally focused, traditional hierarchical management approach.
ORGANIZATION AND REGULATION
See also: Theory of the firm
Most legal jurisdictions specify the forms of ownership that a business can take, creating a body of commercial law for each type.
The major factors affecting how a business is organized are usually:
* THE SIZE AND SCOPE OF THE BUSINESS FIRM and its structure, management, and ownership, broadly analyzed in the theory of the firm . Generally, a smaller business is more flexible, while larger businesses, or those with wider ownership or more formal structures, will usually tend to be organized as corporations or (less often) partnerships. In addition, a business that wishes to raise money on a stock market or to be owned by a wide range of people will often be required to adopt a specific legal form to do so. * THE SECTOR AND COUNTRY. Private profit-making businesses are different from government-owned bodies. In some countries, certain businesses are legally obliged to be organized in certain ways. * TAX ADVANTAGES . Different structures are treated differently in tax law, and may have advantages for this reason. * DISCLOSURE AND COMPLIANCE REQUIREMENTS. Different business structures may be required to make less or more information public (or report it to relevant authorities), and may be bound to comply with different rules and regulations.
Many businesses are operated through a separate entity such as a corporation or a partnership (either formed with or without limited liability). Most legal jurisdictions allow people to organize such an entity by filing certain charter documents with the relevant Secretary of State or equivalent, and complying with certain other ongoing obligations. The relationships and legal rights of shareholders , limited partners, or members are governed partly by the charter documents and partly by the law of the jurisdiction where the entity is organized. Generally speaking, shareholders in a corporation, limited partners in a limited partnership, and members in a limited liability company are shielded from personal liability for the debts and obligations of the entity, which is legally treated as a separate "person". This means that unless there is misconduct, the owner's own possessions are strongly protected in law if the business does not succeed.
Where two or more individuals own a business together but have failed to organize a more specialized form of vehicle, they will be treated as a general partnership. The terms of a partnership are partly governed by a partnership agreement if one is created, and partly by the law of the jurisdiction where the partnership is located. No paperwork or filing is necessary to create a partnership, and without an agreement, the relationships and legal rights of the partners will be entirely governed by the law of the jurisdiction where the partnership is located. A single person who owns and runs a business is commonly known as a sole proprietor, whether that person owns it directly or through a formally organized entity. Depending on the business needs, an adviser can decide what kind is proprietorship will be most suitable.
A few relevant factors to consider in deciding how to operate a business include:
* General partners in a partnership (other than a limited liability partnership), plus anyone who personally owns and operates a business without creating a separate legal entity, are personally liable for the debts and obligations of the business. * Generally, corporations are required to pay tax just like "real" people. In some tax systems, this can give rise to so-called double taxation , because first the corporation pays tax on the profit, and then when the corporation distributes its profits to its owners, individuals have to include dividends in their income when they complete their personal tax returns, at which point a second layer of income tax is imposed. * In most countries, there are laws which treat small corporations differently from large ones. They may be exempt from certain legal filing requirements or labor laws, have simplified procedures in specialized areas, and have simplified, advantageous, or slightly different tax treatment. * "Going public" through a process known as an initial public offering (IPO) means that part of the business will be owned by members of the public. This requires the organization as a distinct entity, to disclose information to the public, and adhering to a tighter set of laws and procedures. Most public entities are corporations that have sold shares, but increasingly there are also public LLC\'s that sell units (sometimes also called shares), and other more exotic entities as well, such as, for example, real estate investment trusts in the USA, and unit trusts in the UK. A general partnership cannot "go public".
A very detailed and well-established body of rules that evolved over
a very long period of time applies to commercial transactions. The
need to regulate trade and commerce and resolve business disputes
helped shape the creation of law and courts. The Code of Hammurabi
dates back to about 1772 BC for example, and contains provisions that
relate, among other matters, to shipping costs and dealings between
merchants and brokers . The word "corporation" derives from the Latin
corpus, meaning body, and the
In many countries, it is difficult to compile all the laws that can affect a business into a single reference source. Laws can govern treatment of labour and employee relations, worker protection and safety , discrimination on the basis of age, gender, disability, race, and in some jurisdictions, sexual orientation, and the minimum wage, as well as unions , worker compensation, and working hours and leave.
Some specialized businesses may also require licenses, either due to laws governing entry into certain trades, occupations or professions, that require special education, or to raise revenue for local governments. Professions that require special licenses include law, medicine, piloting aircraft, selling liquor, radio broadcasting, selling investment securities, selling used cars, and roofing. Local jurisdictions may also require special licenses and taxes just to operate a business.
Some businesses are subject to ongoing special regulation, for example, public utilities , investment securities, banking, insurance, broadcasting , aviation , and health care providers. Environmental regulations are also very complex and can affect many businesses.
When businesses need to raise money (called capital ), they sometimes offer securities for sale.
Capital may be raised through private means, by an initial public offering or IPO on a stock exchange , or in other ways.
Major stock exchanges include the Shanghai Stock Exchange, Singapore
Exchange, Hong Kong Stock Exchange,
New York Stock Exchange and NASDAQ
London Stock Exchange
Businesses that have gone public are subject to regulations
concerning their internal governance, such as how executive officers'
compensation is determined, and when and how information is disclosed
to shareholders and to the public. In the United States, these
regulations are primarily implemented and enforced by the United
States Securities and Exchange Commission (SEC). Other western nations
have comparable regulatory bodies. The regulations are implemented and
enforced by the
The proliferation and increasing complexity of the laws governing business have forced increasing specialization in corporate law. It is not unheard of for certain kinds of corporate transactions to require a team of five to ten attorneys due to sprawling regulation. Commercial law spans general corporate law, employment and labor law, health-care law, securities law, mergers and acquisitions, tax law, employee benefit plans, food and drug regulation, intellectual property law on copyrights, patents, trademarks, telecommunications law, and financing.
Other types of capital sourcing includes crowd sourcing on the Internet, venture capital, bank loans, and debentures.
Businesses often have important "intellectual property " that needs protection from competitors for the company to stay profitable. This could require patents , copyrights , trademarks , or preservation of trade secrets . Most businesses have names, logos, and similar branding techniques that could benefit from trademarking. Patents and copyrights in the United States are largely governed by federal law, while trade secrets and trademarking are mostly a matter of state law. Because of the nature of intellectual property, a business needs protection in every jurisdiction in which they are concerned about competitors. Many countries are signatories to international treaties concerning intellectual property, and thus companies registered in these countries are subject to national laws bound by these treaties. In order to protect trade secrets, companies may require employees to sign non-compete clauses which will impose limitations on an employee's interactions with stakeholders, and competitors.
A trade union (or labor union) is an organization of workers who have come together to achieve common goals such as protecting the integrity of its trade, improving safety standards, achieving higher pay and benefits such as health care and retirement, increasing the number of employees an employer assigns to complete the work, and better working conditions . The trade union, through its leadership, bargains with the employer on behalf of union members (rank and file members) and negotiates labour contracts (collective bargaining ) with employers. The most common purpose of these associations or unions is "maintaining or improving the conditions of their employment ". This may include the negotiation of wages , work rules, complaint procedures, rules governing hiring, firing and promotion of workers, benefits, workplace safety and policies.
Main article: Outline of business
* List of accounting topics
* List of finance topics
* List of international trade topics
* List of production topics
* List of marketing topics
* List of real estate topics
* ^ O\'Sullivan, Arthur ; Sheffrin, Steven M. (2003). Economics:
Principles in Action. Upper Saddle River, New Jersey: Pearson Prentice
Hall. p. 29. ISBN 0-13-063085-3 .
* ^ Compare: Aaker, David A. ; McLoughlin, Damien (2010). "1:
Strategic Market Management: An Introduction and Overview". Strategic
Market Management: Global Perspectives. Chichester, West Sussex: John
Wiley & Sons. p. 3. ISBN 978-0-470-68975-2 . Retrieved 2016-11-10.
What is a business? What is a business strategy? Having groups of
managers provide answers to these basic questions shows that there is
little consensus as to what these basic terms mean. A business is
generally an organizational unit that has (or should have) a defined
strategy and a manager with sales and profit responsibility.
* ^ Holloway, S. S.; Parmigiani, A. (2014). "Friends and Profits
Dont Mix: The Performance Implications of Repeated Partnerships".
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