1. To say that the fourth factor of production.
2. Identify the key issues facing entrepreneurs.
3. Talk about ways of organizing firms.
4. Describe the procedure for registration of a company.
5. Explain what the "economy of scale".
6. Define the concept of "income", "cost", "profit", "turnover."
1. The fourth factor of production:
Enterprise
In Chapter 1, we considered three main factors of production: natural, human and production resources. What drives them? What makes the work such a large and complex organism, as a market economy?
These are the people we are. Among the skills that we use in the case, there are: common sense and the ability to take risks, the ability to manage and use their facilities for a particular purpose. The sum of these abilities is called enterprise, and can rightly be regarded as the fourth factor, the driving force of production.
Of course, not all of us have these qualities. Some people like to have their life was going to once and for all established pattern and do not want to change anything, other irksome responsibility, others tend to perform and obey, and not to manage. Such people, perhaps the majority. Those who have the above skills, and not only has, but also put them into practice, are called entrepreneurs. Finally, the involvement of entrepreneurs in any sector of the economy in general in every sphere of human life is called enterprise or business. (In our country, more common is the first name. We are going to use both.)
Risk
Activities of entrepreneurs are always an adventure. Of course, there is a risk, in the life of any person. We run the risk of getting the flu, appearing in the midst of the epidemic in public. Crossing the street, we run the risk of getting run over. But what is the risk in the economy?
To explain this, it is necessary to define the concept of "cost" and "profit." They will now need us constantly throughout the book. Costs - this means that we put into the case.
Suppose you decide to open a cafe. You need the tools to:
rent, buy or build a room;
purchase all the necessary equipment, furniture, food, drinks, utensils, napkins, etc.;
hire employees: bartender, cooks, waiters, cleaners;
promote your institution.
The money that will be used for this purpose, and will be your cost.
Now the cafe is open and starts to bring you income - money that visitors will pay for your services. At some point, the amount you received income equal to the cost that you have done, and then there will be more. At this point your cafe begins to make a profit.
The difference between income and expenses is called a profit, of course, only if it is positive. If this difference is negative, it is called a loss (see 3.1).
It is the desire to profit forces the entrepreneur to take risks. He invests in the hope to return more than the cost, and wins or loses.
2. What is a business and how does it occur?
Firm
Large factory, which has branches in many countries around the world, and a small laundry room, where he works only a few people, a bank, an advertising agency, studio and network of food - in business
they are all called the same word - Company Registration firm. A firm may consist of one person or a few people, and serve residents of a small district or city. At the same time, in today's economy there are firms that produce more than an entire country, even in such a developed, such as Denmark or the Netherlands.
When and in what circumstances an individual entrepreneur or a group of entrepreneurs become firm?
Suppose you decide to earn extra money at home and bake cakes and waffles, or sew the family clothes and backpacks, or winter break new ground and track vokrugsvoego liboshko home-ly. Does this mean that you can call yourself a company for the production of pies, sewing or cleaning the streets?
In our country, instead of the word "company * often use the term" owned enterprises, "and this is not only a plant or factory. Now be called a company operating in agriculture, medicine, transportation and advertising.
In order to separate the entrepreneur or his family, and in general, any number of people who decided to start with some work, were firm, they should register it according to the laws and regulations that apply in the country. In different countries, the rules are not very different from each other. In order to register, the future of the firm must submit a Statement following information and documents:
♦ The names of the founders, that is, the creators and the future owners of the company.
♦ Name and address of the future company.
♦ The document defining the relationship between the future of the company and the community.
♦ The document defining the relationship between the founders of the firm.
Who makes the decision on registration (or refusal of registration) of the company? In our country - the authority of a district or city government.
Let us consider the latter two documents. In different countries, these documents are of different names. In our country, the document that defines the relationship between the company and the society of the future, called the charter company, and the document that defines the relationship between the members within the firm - the memorandum of association of the company. Development and approval of these documents - an important point for the establishment and registration of the company.
Charter
The statute is written:
♦ Who is the owner of the company. If more than one, they are called co-owners.
♦ Why create a company that is, what products it will produce or what services to provide.
♦ The authorized capital of the company and the share of each owner.
For example, when creating a company-all teaching
neg - so they have an equal share in the total capital of the company.
Memorandum of association
In the memorandum of association of the company is recorded, which control rules define themselves by the owners.
For example, in the memorandum can be written that all owners have equal rights in the discussion and decision-making that are important to the company, and such decisions can be made only with the consent of its owners. The memorandum of association set out the rules under which will share the profits that will bring the owners of the firm. Special rules also provides for a variety of situations in the life of the firm, for example, what happens in the event that one or more parties to decide to leave the firm.
Current account
Once the company is registered, the owners of a certificate of registration that allows her to industrial, commercial and other activities
Companies can go to the bank and open a bank account in the name of his company. The owners of the company have to do to make to your account the amount of money that is defined in the statutes of the firm as its capital. This amount is called the authorized capital. Now, customers of the company can pay with it for its products or services are not
cash and transfer money to her bank account. The same will be done and the very new company.
It is important to understand that from this point the owner and his company - not the same, the company comes into existence as if by itself. This means that the money that lie on its current account in the bank - not personal money of the owner or co-owner (unlike, for example, our accounts at the box office of the Savings Bank), and the money of the company, and you can use them, subject to certain rules. This means that if you sign a contract with any other company and violated its obligations, it can file a lawsuit, but not on you personally and to your firm.
In economics, there is a special term for this state of economic actors - of them say that they are legal entities. Entities are not only industrial and commercial firms, and even not the firm, and state and public organizations and institutions, such as schools.
3. Signs of differences in the size of firms:
• First, the company may differ drugotdruga / w.% Re / hshsh of factories, shops and other industrial and commercial units, the number of the working people, the number of manufactured goods or services (this is called the volume of production or the amount of work, or issues), the amount of capital invested in the business. Second, firms are diverse types of products they produce or services they provide. Recall the sectoral structure of the economy (Chapter 1). Eating), firms that specialize in the production of only one product or several products, but in the same industry. For example, a firm can produce a variety of cosmetics, or food, or sporting goods. Others produce a variety of products in the most various fields. This is usually large firms with many companies around the world.
For example, the major car companies in the U.S., such as the "Ford" and "Chrysler", produce computers and agricultural equipment, known Italian car company "Fiat" is the chemical industry, and the Japanese "Honda" in addition produces more cars and appliances (eg, refrigerators), and clothing. This phenomenon is called in the business diversification.
♦ Third, firms differ in how they Druten ownership.
We'll talk more about that. In the second chapter, you've already met with the concept of "property". Who owns the company? Tom (or those) who built or bought it, you answer. This is true, but it turns out that owning his own firm, and thus dispose of it can be different.
Ways to own property
Here is what are the main ways of ownership of the company:
Individual (or family), a private company. This is - the # old "form of organization of the company in the history of business.
In order to create such a company, the employer uses its own funds or funds of his family or can, say, take their friends. The owner is fully responsible for all the affairs of the company: making the necessary costs; independently disposes profit firms and covers of their funds debts and losses, personally makes all decisions relating to the activities of the company, such a company may close or sell it.
In the modern economy, such firms are usually small, though not necessarily to their size limited to members of the same family: in the individual firm may be employees.
Individual firms - a fairly common form of organization
business in the West, especially in services, and trade. These are small shops, cafes, hotels, motels. But they are also the most often "burn out", unable to compete majors. Even if the case of individual firms are successful, it is unlikely that it will ever become a large firm, without changing the shape of the organization. The reason is that the money one, even well-to-do family is not enough to build a large-scale production. Hence, there is no possibility for the rapid growth of the company and the "struggle" with the competition.
However, entrepreneurs have a way to increase the flow of funds to the firm and to expand business by others, improper means. To do this, first of all, you can take the credit, and secondly, a number of "individuals" can unite and form a partnership.
In a partnership, a partnership can combine a few people or businesses. For this, they enter into an agreement.
The establishment of such firms, each member of the partnership is making money, which is called the contribution (or shares). Together, the contributions of the share capital of the company.
Relations between members of the partnership can be different: in full
partnership (or a partnership with unlimited liability), all participants are fully responsible for the affairs of the company. This means that if the company will suffer great losses, each participant it may have to reimburse the company for an amount far greater than his own contributions. Into a limited liability company owners are responsible for the affairs of the company and obligations only to the extent of their contribution. Hence, if the firm goes wrong, they can lose the amount of money is not greater than that which made when creating it.
Partnership - the more "promising * form of business organization than the individual firm. For such companies more money, which it can invest in business to increase the scale of production. Larger production more profitable, so there are new opportunities for further growth of the company.
A public company. Company as a partnership can be created by several people or firms. The owners of the company are called shareholders.
Entrepreneurs who have decided to create a company issue shares. Action - is a security bearing the cost of her (it's called nominal) and the company name. Shares offered for sale, and each person who buys share, thus making contributions to its capital and became a shareholder that is a co-owner of the company. Deposit amount of the shareholder (or shareholder, as it is called) is called shares. If this amount is large enough to provide a shareholder practices
cally the sole control of the company, it is called a controlling interest. If a company has a lot of small shareholders, to obtain a controlling interest may be sufficient to purchase less than half of the shares.
Why do people buy stocks? The shareholders are entitled to receive part of the profits of the firm. This part is called the dividend, and its value depends on the firm's profits and the value of shares. The greater the stake holders, the more dividend.
Manages the affairs of the company Board of Directors headed by the Chairman, as a rule, are the largest shareholders of the company. Each year the Board of Directors shall convene all the shareholders at a general meeting. Shareholders to discuss the firm and decide what portion of the profits used to pay dividends to shareholders, and which to expand and develop production.
Company, up to the individual companies and associations, has the greatest opportunity to raise capital and expand production. Why firms almost always want to do that? The answer to this question can be found in the next section.
State and municipal companies. These firms differ from the first three in that they do not belong to one or more people and the state, or city, or district.
State firm created by the State. Money belonging to the state, called the state budget. It is formed and replenished by taxes paid by the state all firms, organizations and institutions of the country, as well as population. The funds that the state invests in the creation of the company, called the budget allocations.
Municipal company formed by means of the city or region, the funds allocated for her city or district authorities from local budgets.
State and municipal firms may be sold to private ownership. Sometimes the workers themselves partially redeem the firm, in which case they become collective owners.
State and municipal firms can also be rented to individual entrepreneurs or teams of workers. In this case, the firm does not become the property of the tenants, the latter concluded with the State or local government lease, stating the lease and the rent, which the company is obliged to pay to the state. Tenants will own the products of the company and income received from its sale.
In business, there are also different forms of association of firms - the unions, associa-
dissociation, and concerns. For such networking company (public or private) enter into an agreement and develop charter association. In these documents, the company - founders of the association agree on what tasks they will decide together.
For example, several similar firms may join a union or association to create a common information service or to share training firms. As concerns usually the "center" will convey a number of tasks related to the management of one of the parties to the business activities of firms participating, such as all foreign trade and foreign exchange.
4. The questions that the entrepreneur decides:
What?
What products will make your company, what services to provide? Will it be a sweet shop, a bike repair shop, the videotapes?
Imagine this situation. In one not so fine morning all business in your city or area suddenly decided not saying a word, to do the same thing. After a while, all the shops in the area are bakeries, and there is a huge amount of hair salons, or, say, electrical shops are full of irons and vacuum cleaners. Is it possible?
Remember, as mentioned at the beginning of Chapter 1. Economy exists to serve the needs. Then you meet with the concepts of supply and demand.
When an entrepreneur creates a new business or already operating company is going to develop a new product or service, it must first of all have a good idea of what he will do. In other words, it must identify the potential consumer soego product or service. How great is the need for them in the market will demand. If the product is in demand, then the entrepreneur made the right decision.
Businessmen say that the company should focus on the market. How could "guess" the needs of the consumer in order to properly plan its activities? On this, the ways and methods of market research, we will discuss in more detail in Chapter 7, "Marketing *.
How much?
What will be the production of goods or services of the company? What is the size of capital, that is, the funds spent on equipment, machinery, computers? How much profit the entrepreneur expects to receive from the firm? These three issues are closely related. The size of the capital of the company depends on the outputs and profits depend on both of them. The magnitude of the profit depends how much additional money can be invested in the business and how much to increase its size.
In Section 3.3. etoyglavy we talked about the size and growth potential of different types of firms. Whether the firm is always looking to increase their scale?
Small firms exist and will exist, they are more at risk, but they are still a lot in the business world. The need for a small company can often be dictated by the demand for its products and services, or individual business needs.
For example, in a quiet provincial, unremarkable town does not need a huge hotel, but rather a small hotel. Or the owner of a small cafe can be proud that there are several dozen regulars and knows them all by name, and does not dream of a great restaurant.
Yet most companies seeking to expand their production if the market allows. The fact is that with the growth of the company and increase revenues, and, of course, the costs, but revenues are growing faster. This means that the cost per unit of production are reduced. Thus increasing the profits derived from the sale of each unit of production. Hence, the total amount of income will also increase.
Where?
Where is the best positioned company in the center of the city or on the 'edge? And maybe in the countryside? In the north or the south?
Sometimes it happens that we have no choice and there is only one solution to this problem, at least for today. But if we do have the ability to choose the location of your company, what factors are taken into account by solving the problem of locating production iplstva?
