Entrepreneurship is one of the most important mechanisms of a market economy. If you follow the letter of the law, then only individuals and legal entities specially registered by the state can conduct business. A particularly important role in the economy is played by commercial organizations - enterprises. It is they who produce the bulk of goods and services, create jobs, and form the standards of society.
Enterprise as a way of organizing entrepreneurial activity
Entrepreneurial is the activity that business entities perform at their own risk while maintaining independence. Such activities are aimed at the systematic extraction of profits from the provision of services, the sale of products, the performance of various types of work, as well as from the use of property. The subject of entrepreneurial activity can be a person who is registered in this capacity in accordance with the law. The income received from entrepreneurial activity is called profit.
In Russia, enterprising people are often referred to as businessmen. However, this epithet of American origin has not found application in domestic legislation. The term "entrepreneur" has become its replacement.
If an individual opens a business, he becomes an individual entrepreneur. An enterprise (firm, company) will be considered a legal entity conducting entrepreneurial activity. In any case, the basis for such activities is the entrepreneurial ability of a person who opens his own business. As an independent participant in market relations, the enterprise acts in economic relations on its own behalf and bears property responsibility for a number of obligations.
Types of enterprises and signs of entrepreneurial activity
Individuals and legal entities have the right to engage in various types of entrepreneurship. Entrepreneurship can be:
- commercial;
- production;
- innovative;
- financial.
Often in the press you can find various names of legal entities engaged in entrepreneurial activity: firm, company, enterprise, organization, corporation, etc. It must be remembered that in the most general sense, an enterprise is understood as an independent subject of economic activity that produces products, services, work with the aim of making a profit and meeting the needs of society.
One of the essential features of an enterprise can be expressed by the concept of "property complex". This is the name of real estate and movable property, which together form a single whole. This complex should be used for a specific technological or production purpose. The elements of the property complex can be plots of land, buildings and structures, equipment, aircraft, space and sea vessels. Separately, intangible assets are taken into account in the property complex of the enterprise, which include trademarks, licenses, copyrights, and the like.
In most cases, an enterprise is registered as a commercial organization, although in some cases non-commercial organizations can conduct business activities. The concepts of "firm", "company", "corporation" can serve as a synonym for the concept of "commercial organization". The differences between them are determined by the peculiarities of the legislation of individual countries. In most cases, it would be incorrect to call a branch or a subsidiary of a dependent company a firm. A factory may well be called a company. A corporation is an association of legal or natural persons, usually in the form of a joint stock company, and is usually governed by a board of directors.
The role of enterprises in the economy
An enterprise in the modern economy becomes the main consumer of resources, acquiring raw materials, materials, assemblies, parts, components. Another function of an enterprise, which determines its role in the economy, is that it is a supplier of goods, works, services in the same market.
The overriding goal of any commercial enterprise is to make a profit. To do this, it is necessary to identify a social need, find a way to satisfy it and offer consumers products that can fulfill this task. Being engaged in the production and marketing of products, enterprises have to conquer and hold some market share, increase profitability, optimize costs, and take care of the formation of their business reputation. Western models of doing business presuppose that an enterprise has a special mission, which spells out the meaning of the creation and existence of a commercial organization. The philosophy of the enterprise is usually to bring something into the world that has value and unconditional usefulness.
Functional subsystems of the enterprise
The creation of products is provided by the production department of the company. Sales and marketing structures of the enterprise are responsible for the sale of finished products on the market. In general, an industrial enterprise has three main subsystems with independent functions. These include:
- supply system;
- production system;
- distribution system.
Procurement is responsible for acquiring the resources that production needs. The latter, in turn, modifies the resources so that they become finished goods. The sales structure is in charge of promoting products to the market and delivering them to the final consumer.
Classification and forms of enterprises
Enterprises operating in a market economy differ in size, industry, business practices, and organizational and legal form. In Russia, the classification of enterprises in terms of their organization is enshrined in the law. However, other forms of classification are quite possible.
According to the goals of their activities, all organizations that have the right to conduct business are divided into:
- commercial;
- non-commercial.
From the point of view of belonging to the industry, there are enterprises in labor-intensive industries (for example, in the service sector); enterprises in capital-intensive industries (this includes mechanical engineering, mining); enterprises in knowledge-intensive industries (for example, information technology companies).
Depending on the form of ownership, enterprises are distinguished:
- state;
- individual;
- private;
- collective;
- joint.
By the scale of their activities, enterprises are traditionally subdivided into small, medium, and large. Large enterprises that are able to control a significant share of the market have the greatest stability and viability. Transnational corporations enjoy particular advantages in the market, many of which have branches in different parts of the world. Small businesses are more flexible and relatively easy to set up or close. Such firms are easier to adapt to constantly changing conditions of economic activity, they are much more mobile in terms of management.
The advantage of large enterprises lies in the fact that they have the opportunity to spend funds on development and research work, which allows them to gain special competitive advantages and produce better quality products. However, these advantages of large-scale enterprises have their limits, upon crossing which the unity of production activity and the production management system may well be disrupted.
Features of the activities of enterprises
The activities of enterprises are significantly influenced by their legal status and form of ownership. Depending on these characteristics, a strategic management system and mechanisms for making managerial decisions are built.
The products manufactured by the enterprise largely determine its profile and belonging to a particular industry. It is rather difficult to build a unified classification according to some criterion, since the economies of countries are constantly in the process of structural restructuring. From time to time, both the names of the industries and the content of their activities change.
Each enterprise independently builds economic ties, focusing on the specifics of legislation, the course of social processes, factors of macro- and microeconomics.
A significant proportion of enterprises perform intermediary functions. The task of such intermediaries is to establish contacts between product manufacturers and end users. Competent intermediary activity allows you to reduce total costs, reduces the costs of consumers to find the goods they need. Such cooperation based on the provision of intermediary services is beneficial to all parties to economic activity.
