We explain what a company is, its purposes and sectors that comprise it. Also, what are its characteristics, classification and more.

What is a company?

A company is a type of human organization dedicated to activities for economic or commercial purposes . It is, although it may not seem like it, a very non-specific term, since numerous human groups can meet the previous definition.

Companies normally function from the use of certain inputs ( raw material or semi-finished products, in the case of the manufacturing company) and the employment of certain labor, more or less qualified, in favor of the satisfaction of certain consumption needs. the society in which they find themselves.

A company ensures the continuity of the productive-commercial cycle (profitability) and its necessary investments , remuneration and profits.

Next, we present its general characteristics.

Company definitions

company definitions

There are numerous definitions of a company, according to the area of expertise from which it is approached. They all have in common, however, their systemic functioning, their economic vocation and their ultimate goal of satisfying a community need .

In terms of International Law , a company is understood as the set of capital, administration and work dedicated to satisfying a need in the market .

A more sociological definition, on the other hand, would understand it as a human group organized in order to generate goods or services in a given community .

Purpose of a company

Every company operates in pursuit of the realization of a series of ends, which can be divided into four categories:

  • External economic purpose. The company produces valuable goods or provides services to meet a specific demand of society.
  • Internal economic purpose. The company obtains an added value from its goods or services and with that added value pays its members: some in the form of dividends (partners and investors) and others in the form of salaries, allowances and benefits (employees and workers).
  • External social purpose. The company contributes to society as a whole, not only by generating employment and trying not to violate its principles through its economic activity, but also by promoting them when there is an opportunity.
  • Internal social purpose. The company contributes to the development of its members, their growth as professionals and their social advancement.

Sectors of a company

Sectors of a company

The companies are dedicated, according to the nature of the activity they develop, to any of the four productive sectors:

  • Primary. Extraction of raw materials or their transformation into semi-finished products.
  • Secondary. Manufacture of final products from raw materials or semi-finished products.
  • Tertiary. Services to individuals, other companies or even the State .
  • Quaternary. Information management services and other intangible assets.

Another way of looking at it is that there are industrial companies (extractive or manufacturing), commercial companies (wholesalers, retailers and commission agents) or services companies (transport, training, administration, public and private services, etc.).

Classification of companies

There are various ways of classifying companies, namely:

  • According to their relationships with the client and with other companies

    • Isolated or closed loop. It does not require any other entity to carry out its economic process.
    • Business networks or open loop. Strategic unions of companies to distribute the work and manage efficiently for the end customer.

  • according to its size

    • Microenterprise. Less than 10 workers.
    • Little. Between 10 and 49 workers.
    • Median. Between 50 and 250 workers.
    • Big. More than 250 workers.

  • According to its legal form

    • Individuals. They belong to a single owner.
    • Societies. They belong to an organized group of investors.
    • Cooperatives. They are part of community models of social economy .

  • According to its role in the market

    • Aspirant or Startup . Young companies, recently formed, trying to open a market niche against the competition.
    • Specialist. They have an important role in the local market and in some cases have a certain monopoly on it.
    • Leader. They are at the forefront of their local markets and set the behavior of the competition.
    • follower Important companies in the specific niche, but not enough to take over from the leaders.

  • According to its field of action

    • local
    • Nationals
    • multinationals
    • transnational

Types of resources in a company

Types of resources in a company

For its operation, every company requires two types of resources:

  • Material Resources. They range from the initial capital to start the business and raw materials, to a physical space to operate, and a series of tools for employees to work.
  • Human Resources . Employed personnel, both workers or laborers, as well as administrative and managerial personnel.

Investors of a company

The current business model is based on the sale of financial securities to gather, among the various potential investors, the necessary capital to start operations. Then, and according to the percentage that their invested capital represents, these investors will receive part of the profits that the company makes .

These investors can be individuals, other companies or even the State , all at the same time and in different proportions. According to the origin of the investment capital, we will talk about private, public and mixed companies.

Corporate social responsibility

Corporate social responsibility

The company weaves a relationship of reciprocal dependence with society . Society gives her the opportunity and the personnel for her functions and in return she generates employment and wealth.

Even so, those who see society as something more than a production and market environment are privileged, and for this there is the figure of Corporate Social Responsibility: a name for the level of commitment shown by a company with the improvement of society: support for educational or cultural initiatives, investment in public works or non-profit foundations.

history of companies

Although it already existed in colonial times and played an important role in the dynamics of European imperialism , the birth of private enterprise as we know it occurred hand in hand with the Industrial Revolution , in which man understood his abilities to modify the environment and manufacture different goods for consumption .

From then on, some time would pass until the institutionalization of a consumer society, which would see in the company the possibility of satisfying its needs .

A new thrust in the business world would be represented by the arrival of information technologies , which globalized business possibilities , allowing an incomparable proliferation of international companies through the Internet .

Studies in the area

Studies in the area

 The branch of science responsible for studying the different modes of human organization that give rise to companies , organizations and the like, are called Administration and Management Sciences. This branch contains various disciplines such as finance, marketing , human resources, logistics, organization theory, accounting, etc.

Paradigm shift

The hyper - technological and computerized times of today represent a panorama of challenges and opportunities for the business organization . On the one hand, the large information networks that sustain the so-called global village have inaugurated a field of entrepreneurship unparalleled in business history, given the multiple implications that software and microelectronics have today in everyday life .

At the same time, it has meant brutally fast margins of competitiveness and obsolescence , in a consumer market that is increasingly more dispersed and more avid for novelties.

The above content published at Collaborative Research Group is for informational and educational purposes only and has been developed by referring reliable sources and recommendations from experts. We do not have any contact with official entities nor do we intend to replace the information that they emit.


Abubakr Conner brings a diverse skill set to our team, and covers everything from analysis to the culture of food and drink. He Believes: "Education is the most powerful weapon that exists to change the world." .

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