What is a company

A company is a structured assembly of productive components focused on creating goods and providing services, primarily for the purpose of selling them in the market to generate profits, all while operating within a risk environment.

Purpose of a company

The purpose or MISSION of the company is its reason for existing as an economic entity. Every company is created to achieve what its founders intend. The business purpose will influence the objectives set by the organization. It is important to emphasize the goal of profitability.

Objectives of private companies

Profit and profitability maximization objectives.
Profit = Income - Cost
Profitability = (Profit / Invested Capital) * 100
Growth and market power objectives.
Stability and adaptability to the environment objectives.
Social or CSR (Corporate Social Responsibility) objectives.

Roles of a company in a market economy:

Coordinates, directs, and controls the production process: Entrepreneurs make decisions regarding the allocation of productive resources to create goods and services that fulfill consumer needs.
Companies create or enhance the value of goods and services: They add value by transforming raw materials into products.
They create employment opportunities and generate wealth.
Drive significant innovations.
Anticipate social output: Companies assume risks by paying for production factors in advance without knowing the outcomes.

Hint

Traditionally: Entrepreneur = Business Owner = Owner of the company An entrepreneur-capitalist would be someone who initiates a business project by risking their capital.

Currently (especially in large companies): Owner: Capitalist partner who provides capital. Entrepreneur: Manages and directs the company.

The spillover effect

The spillover effect occurs when a company develops knowledge, but that knowledge doesn't remain confined within the company itself. Instead, it "overflows" its boundaries and unintentionally becomes public knowledge. In this way, through this indirect effect, other companies can benefit from this surplus of knowledge.