Today, the determining element of economic activity is doing business. What is considered under the meaning of such a broad concept? The business basis of the economy primarily implies the existence of certain categories of resources, among which a special role belongs to the material, financial, labor and information potentials.
Modern business system
Due to the use of the resources listed above, economic entities try to organize the production of goods (services) for their sale to other economic agents (enterprises, organizations, individuals and so on) in conditions of maximizing profits, but minimizing costs.
It is important to note that, in addition to obtaining an economic effect, it is necessary to highlight additional goals that determine the fundamentals of business development: organizing the safety of doing business, issuing shares, developing strategies to ensure good business results, and so on.
The system of modern business includes three components: business entities, components and integrative qualities. The first category includes enterprises, business owners, credit and insurance organizations, stock exchanges, government agencies, as well as investors. The second group includes the following components: production, trade and commercial intermediation. And, finally, the basis of the business, in accordance with system analysis, is endowed with a considerable number of properties. Among them, the main ones are socio-economic sovereignty and consensus of interests of subjects of business relations.
Entrepreneurship and its legal forms
Entrepreneurship takes place absolutely everywhere where people carry out the production and sale of goods (services) of their own free will. So, entrepreneurial activity should be defined as independent, but at the same time very risky. First of all, it is aimed at making a profit from the sale of products, using property objects, performing a certain number of operations or rendering services by persons who have passed state registration in the prescribed manner.
It would be advisable to consider the legal forms of entrepreneurship on the example of a specific country. The Civil Code of the Russian Federation provides for two categories of entrepreneurial activity without the formation of a legal entity. In addition, there are seven types of organizations with commercial purposes and seven non-profit complexes.
The basis of a business can be built only after determining the legal form of activity. So, a legal entity is not formed in cases of individual entrepreneurship and simple partnership. But it takes place in the formation of commercial and non-profit organizations. The first option provides for the division into three categories: business partnerships and companies (full and limited partnership, as well as companies with a limited or additional nature of responsibility and joint-stock company), unitary enterprises and production cooperatives.
Non-profit organizations and the main aspects of their activities
The fundamentals of the business processes of nonprofit organizations include the exclusion of such a goal of activity as profit. It is important to note that otherwise, the percentage of entrepreneurship is not divided between business entities. But a commercial organization has the right to make such an exception if it is necessary to achieve the goals of its creation through recourse to entrepreneurship.
The decision to form the type of organization in question is made by citizens and legal entities acting as founders. It should be noted that their number is not subject to limitation. As for the location of a non-commercial object, it must comply with the state registration, from the moment of which a legal entity is formed.
In the registration process, a significant role belongs to the constituent documentation, the charter, the articles of incorporation and the decision of the owner, where the following information is mandatory:
- Name of non-profit organization.
- Determining the nature of its activities.
- Development of the rights and obligations of subjects.
- Admission conditions and exclusions from the organization.
- Sources of the formation of the property complex and features of its application.
- The procedure for adjusting constituent documentation.
The basics of small business and its organization
Small businesses can be individual entrepreneurs, microorganizations, or small enterprises, the average number of employees of which does not exceed 15 people. It should be noted that the considered commercial entities play an important role in a market economy, as evidenced by the following factors:
- A large number of the corresponding market segment relative to the total number of market economy entities.
- Significant contribution of small businesses to the formation of GDP.
- Assistance in the formation of the country's budgets at different levels.
- Reducing the number of unemployed by organizing their employment in small businesses.
- Supply of competitive products to the market.
- The basis of business and its study as an important component of human development.
State registration of business entities
Only entities registered in accordance with the established procedure have the right to conduct economic activity (Clause 1, Article 2 of the Civil Code of the Russian Federation). This legalization has as its main objective control over their activities. State registration is subject not only to reorganized entities of economic functioning, but also to corrections in the constituent documentation of active commercial and non-commercial entities.
The basics of your business require the availability of documents proving the legality of the activity. So, when legal entities carry out commercial operations without registration, there is illegality, which entails serious punishment.
The process in question is carried out at the location of economic entities by providing them with relevant documentation to the registration authority. Mandatory founders must submit the following documents:
- Application for a specific sample.
- A copy confirming the decision to form a legal entity.
- Constituent documentation.
- Documents on the formation of the authorized capital.
- Basic information about the owners of the property complex.
- A certificate from the tax authorities regarding the provision of a declaration containing information on income and property.
- A document proving that a legal entity has the right to place it at its location (as a rule, this is a letter of guarantee).
- Confirmation of payment for state registration.
Reorganization and liquidation of business entities
In economic practice, a considerable number of cases of termination of business entities is known. This situation happens for one of the following reasons: the need for reorganization, temporary suspension of activity or liquidation of a legal entity, for example, as a result of bankruptcy.
Termination of activity of a legal entity through reorganization occurs in accordance with the method chosen by the business owner. The most popular options are the merger of a certain number of enterprises into one population, joining a legal entity to a more powerful one in terms of efficiency, dividing the enterprise into several components, separation from other organizations, as well as the transformation of a legal entity (for example, the termination of an LLC and the formation of a public company).
Liquidation is voluntary or forced. In the first case, the implementation of the operation can be justified by certain grounds, among which the expiration of the organization’s activity, achievement of the statutory goals, or the inexpediency of the activity to the extent that the previously set tasks are unattainable. The main reasons for the forced liquidation are unlicensed or prohibited by law activities, the appropriateness of violations in the implementation of economic transactions, the bankruptcy of a legal entity or the loss of its property.
The basics of a business plan and the objectives of its formation
A business plan is an accurate and accessible description of the planned activity. Thus, this document is able to fully manage the business, so it can be confidently called the most important component of strategic planning, as well as a guide for the execution and control of economic operations in conducting a specific business.
This document, as the basis of business, allows you to study the goals of the legal entity and their justification, and then determine the most effective methods for achieving the objectives. Naturally, the choice of these methods is made in accordance with the conditions of maximizing profits and minimizing costs, as well as achieving good financial performance in the process.
Business plans are classified into the following types:
- Document reflecting investments (information for a potential investor or partner).
- The business plan for the development of the organization in accordance with the upcoming planning period.
- A document indicating the formation of a separate division of a legal entity.
- A business plan aimed at obtaining a loan from a bank or participating in a tender.
The role of management in the business system
Management in the system of economic activity is an essential component, because it determines the fundamentals of business management. This category ensures the profitability of a legal entity through the rational organization of the production process and sales of products. In addition, the management service performs many additional tasks, for example, the formation of a plan to improve the technical and technological base of the enterprise.
The manager provides incentives for the organization’s employees through the formation of comfortable working conditions and changes in the payment system, and, if necessary, makes a decision on replacing the organization’s employees with highly qualified ones. The management employee determines the necessary resources and, of course, the sources of their acquisition. In addition, he develops effective strategies for the development of production and sales of products, and also forms the exact goals of the legal entity.
The role of marketing in the business system
An important component that is part of the basics of business organization is marketing. This service optimally implements production and sales operations for sustainable and expanding sales of products.
Marketers of any organization solve a large number of tasks, the main ones of which are:
- A detailed study of the market and its corresponding segments.
- Analysis of its conjuncture and capacity.
- Identification of the behavior of counterparties.
- Formation of a forecast for further market development and its comparison with the enterprise’s ability to produce products.
- Market entry strategy.
- Carrying out activities to increase the demand for products and competent activities in terms of marketing.
- Organization of marketing research.
- Monitoring activities carried out by employees of the unit.
Commercial activity of the enterprise
The success of any organization is determined by the effectiveness of commercial transactions (agreements of two or more parties for the supply of products or the provision of services in accordance with documented conditions).
The totality of commercial operations is divided into main transactions (the process of sale of goods, the provision of services, the implementation of scientific and technical information, leasing of economic facilities, etc.) and auxiliary (intermediary measures for the transfer of goods or work from seller to buyer).
Barter transactions take place in the conditions of cash exclusion during the process in cash or non-cash. That is, the transaction is based on direct exchange of goods. This phenomenon is characteristic of a market characterized by underdevelopment. Nevertheless, developed countries with a market economy accept the practice of barter transactions as an auxiliary element in the implementation of measures for the sale of products (works, services).
The direct type of transactions is appropriate in the case when the buyer independently arranges transportation, storage, insurance of products, as well as assumes the performance of customs operations and bank settlements. As you can see, the process is very costly, so its popularity in society is quite small: it is much more convenient for buyers to resort to the services of intermediaries.
Business infrastructure
The fundamentals of your business should include such an important element as infrastructure, which is a set of enterprises that mediate the interaction of end participants in economic activity, and a complex of processes in which these legal entities play a central role. The main objective of the presented element is to ensure the movement of material, labor and information resources and capital as a whole.
The structure of this component consists of two groups of activity types that create, respectively, two groups of relationships. Horizontal ties suggest economic activities by economic entities in terms of organizing mediation in individual market sectors. The vertical type of relations characterizes the economic activity of institutions of a public or state type, the main task of which is to coordinate and control the interaction between business entities.
Competition as an important element of the system
The market activity of the enterprise practically does not matter without its participation in the competition. Competition serves as an effective mechanism for competition of market participants for the right to search for as many buyers as possible, as well as for the possibility of selling goods (works, services) on the most favorable conditions. It is worth noting that this practice is the best incentive in organizing the quality and optimality of products on the market, because thanks to competition there is an awareness of the need of the manufacturer in his efforts, which means that his products become competitive, and society is fully satisfied.
Competition takes place only with a certain market organization, the opposite of the monopolistic activity of economic entities. So, it can be classified depending on the state of the market and by the methods of competition. In the first case, competition can be perfect, regulated and imperfect. In the second - price and non-price.
Foreign economic activity
The basis of the business are various elements, which include cooperation of legal entities with economic agents of other countries. Its main goals are: changing the volume of exports and imports of products upward, providing the country with the necessary resources for comfortable social functioning, and also adjusting prices at the export and import levels. Thus, to achieve these goals, the organization must solve a number of problems, among which the main ones are the study of theory and practice in terms of international trade, familiarization with pricing methods in other countries, as well as the organization of full awareness about the technique of foreign economic operations.
Thus, in order to begin fruitful cooperation with foreign economic entities, a legal entity needs to carry out a number of measures:
- State registration in accordance with the location of the enterprise.
- Registration through the tax authority.
- Obtaining the seal and stamp of the organization.
- Registration in the state register.
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