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What is the meaning of enterprise?

What is the meaning of enterprise?

Some concepts have a very long history of use by people. People in society are part of that concept, they give it meaning, and beyond that, even without knowing its real name, they use it and try to expand and optimize it. Just like a farmer who knows a lot of medicinal plants and is well aware of the use of each one. But when a scientist asks him the scientific name of the same plant, the farmer gets confused and just looks at him. “Enterprise” is  one of those concepts. We are members of businesses and we help them grow and grow without knowing much about them.

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Lee Ayakoka, former CEO of the Ford plant:

Finally, all economic activities can be summarized in three words: “Humans, products and profits” Humans are in the first stage. If we do not have a good team, the other two parts will not work for us.

Economic Firm

An enterprise  can be defined as an organization or set of resources, including financial resources, human resources, production tools, technical knowledge, and anything needed to produce goods and provide services, together with a specific product or service Make a profit, offer. Typically, businesses are set up with the goal of working over a long period of time. The most striking sign that sets a  business  apart from other organizations is its direct emphasis on profitability and monetization. That is, social, cultural groups or associations, and even non-governmental organizations are an  economic enterprise They are not counted because they have no income. On the other hand, forming a business does not mean that many people have to come together and start a large economic activity in the form of a company or organization. Even if several people run a small shop together, we can still  call them a  business . Businesses are divided into three categories in terms of type of activity: services, trade and production.

The triple wheel of the economy, the family and enterprises

Family and businesses are interestingly intertwined. We live in a family; Whether this family is single or multiple, each of us has a role to play in this social definition. On the other hand, companies are made up of people who are each a member of a family. As a result, we put ourselves and our family members at the disposal of businesses so that we can make money. What is more interesting is that we spend the income from our economic activity in one firm to buy products or services from other firms. Businesses also turn to household finances when they have little money to make up for this shortfall. This state of circulation between the family and the firm is called the  “economic cycle  .” Of course, the story of the economic cycle is a little more complicated than that. Because we have the impact of a role called “government” and  “economies of other countries” We have not considered. But even without these two sectors, the family and the business are completely intertwined. It can be understood that a long time has passed since we became acquainted with economic enterprises. In the economic cycle, we are part of the firms that we buy from. Maybe that’s why economists like the word  “enterprise”  so much.

A look at the criteria of individuals in economic enterprises

Each country, depending on the context, economic conditions and countless other cases, has a specific criterion for considering the dimensions of an economic enterprise. Let’s take a list of some countries in the world and their criteria for large and small enterprises:

  • China: Small enterprises between 50 and 100 people and medium enterprises between 101 and 500 people
  • Japan: Small Businesses, Less Than 20, and Medium-Sized Enterprises, Between 20 and 300
  • Canada: Small business with less than 100 employees with sales of less than 5 million Canadian dollars and medium enterprise with 100 to 500 employees with sales of 5 to 20 million Canadian dollars
  • USA: Small and medium enterprise: less than 500 people


Get acquainted (gain, obtain) with present-day techniques that came from Businesses

Each business falls into one of the following three main structures. These structures give firms a legal identity and determine the direction of its development. Before choosing any structure, you should consider its advantages and disadvantages and choose the appropriate type according to the current situation and goals that you have from starting a business. These structures include the following:

1- Individual property

Only one person owns and controls this structure. This type of business is one of the most common forms of business in countries like the United States. The biggest advantage of an individual ownership structure is that the owner or manager owns all the business and thus all the profits go to him. In this type of business, there is a lot of freedom in choosing the method of running the business. In addition, due to the limited and small activities of this structure, the number of employees is small and it is much easier to manage. Flexible working hours are another advantage of this type of business. Although starting a business in this type of structure requires permits, the owner can start or finish work at any time. Another advantage of this business is keeping trade secrets and competitors have very limited information about domestic adventures. Many independent entrepreneurs believe that the best feature of individual businesses is the sense of satisfaction they get from doing so. Apart from the advantages that exist in the individual structure, the existence of three weaknesses can not be denied:

  • Unlimited liability

This can be both an advantage and a disadvantage. Unlimited liability becomes a weakness when the business is in crisis and has a high debt. In this case, all the fingers are pointed at one person; Enterprise Manager.

  • Limited size

Solo business is a one-on-one struggle. History has shown us that no single army can conquer great victories. As a result, individual businesses also have very limited growth potential. Because the manager has to play several roles at the same time. For example, he is a manager, a salesman, an accountant and sometimes even a producer. If a person who owns a sole proprietorship wants to grow his business, he must leave the banner of individual structure.

  • Limited life

The life glass of an individual enterprise is tied to the life of its owner. If the manager of this company dies, is imprisoned or any other accident happens to him, his business will also fall with him.

2- Partnership

This structure is an institution that consists of two or more people as working partners. These people work together for profit. The partners agree on how to divide the profit and loss, the entry and exit conditions of a partner, the scope of each partner’s duties, the methods of resolving unforeseen disputes, and the method of dividing assets at the time of termination of the partnership. The advantages of this structure include the following:

  • Increase resources and credibility

In the individual structure, the sole proprietor, who was only one person, had to work to finance his firm, often using personal savings. But in a partnership, several people invest in the same business. As a result, the burden of financing does not fall on one person.

  • Enhance the ability to make the right decisions

Decisions made in a partnership structure will be more specialized and intelligent due to consensus among partners.

  • Increase the possibility of economic growth and development

Due to the increase of capital resources and the improvement of decisions, the possibility of growth and development of the firm in the partnership structure is much higher than the individual structure.

Disadvantages of a partnership

The bigger a business gets, the bigger the pros and cons. Partnership business also has serious drawbacks. For example, those known as public partners will be liable both individually and collectively for the payment of partnership debts. This means that if each of the public partners fails to pay their share of the loss, the other public partner must take his share. Another problem in this structure is the continuity of the company. If one of the partners dies, goes to prison or for any reason wants to cancel the business partnership, the life of the partnership will end. Unless the remaining partners agree to buy his share. In a partnership structure, there are three types of partners:

  • Public partner

Individuals who are public partners have unlimited responsibilities and contribute to most of the organization’s activities. In any partnership business, there is at least one public partner. These people have the most responsibility for business commitments. If all the partners of a company are public, the partnership business becomes a public joint stock business.

  • Partners Ltd

People are told that they are reluctant to take responsibility for the risk of a business. In fact, their responsibilities are limited to the amount of money they have invested.

  • Other partners

In addition to the two main categories, there is a third category including silent, secret, nominal or inactive partners. A silent partner is a person who is considered by the public as a business partner but does not have an active role in running a business. A secret partner is someone whom the general public does not recognize as a business partner, but unlike a silent partner, he or she plays an active role in running the business. An inactive partner is a person who is neither recognized by the general public as a partner of an economic enterprise nor plays an active role in running a business. But the nominal partner that represents the most interesting type of partnership is a celebrity who has no role in running the business and has not invested any money in the firm, and only allows business owners to use his name as Use partners to increase the credibility of their business.

3- Company

The company is the most popular structure of the firm that can enter the business under its name as a legal entity.

Ilan Mask:

Creating a company is like baking a cake. You have to have all the raw materials in proportion.

Benefits of starting a company

  • limited responsibility

The shareholders of the company share in the profits and losses of the company only to the extent of their shares.

  • Unlimited life

Unlike both individual and partnership structures, the life of a company is unlimited. Because in the event of the death of one of the shareholders, his shares will be transferred to his heir. The heir can also keep the share or sell it if he wishes. In any case, the absence of one shareholder does not affect the performance of the company.

  • Development capability

Companies can increase their capital by selling stocks and drive for growth.

  • Applied Management

In a company, ownership is separate from management. This means that large corporate shareholders do not typically manage the business. This increases the opportunity to use expert managers.

Weaknesses of the company

  • Heavy taxes

Compared to individual and corporate businesses, companies pay more taxes.

  • Costs to organize

Starting a company can be costly. Examples of these organizational costs include obtaining the necessary permits, purchasing office equipment, and hiring employees.

  • Do not hide company information

Companies must provide their tax information to the government. On the other hand, annual reports to shareholders also reveal a large part of the company’s secrets to the public.

Different styles of enterprise management

No business can achieve the expected end result without proper management. According to Steven Covey, effective leadership is the only advantage that will remain in the competition because it has two-way leadership; The first direction refers to a person’s personality and the second direction refers to his ability to do things. There are different styles for managing businesses that, depending on the circumstances, the type of business and the person who is responsible for management, express their own positive and negative points. Let’s take a look at some of these styles.

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Different styles of business management

1- Authoritarian management

In this management style, managers have no trust in their subordinates. For this reason, the relationship between them and their employees is one-way and from the manager to the others. The manager’s entire focus is on producing and increasing it, and he does not care much about the people who work for him. The rules that exist in the firm determine the duties of individuals and how to do it. The goal of managers who follow this style is to achieve maximum efficiency.

2- Indifferent management

The indifferent manager does not make much effort to develop his business and does not care about the efforts of his employees. He avoids any change in his work situation and his only goal is to maintain the status quo.

3- Club management

In the club management style, the manager attaches great importance to his employees and wants to increase the speed of work and the quality of the result by creating a friendly atmosphere in the workplace.

4- Intermediate management

The manager who adopts the intermediate style does his best to keep everyone happy and tolerant of his employees. This failed attempt to keep everyone happy has a direct impact on his performance. As a result, the manager stays in the current position instead of moving forward. Such a manager is popular with his employees, but he can not help the business and its growth.

5- Team management

The manager who chooses the team leadership style, wants to achieve his goals through the participation, cooperation and commitment of his people and succeed in both production and attention to his employees. This style is known as the most ideal management method. Many managers like to be known as a team leader, but it is their behavior and performance that reveals the truth of the matter.

Leadership Writer John W. Gardner:

Leaders come in many forms. They have a variety of styles and characteristics; Some are calm and quiet, and the voice of others is heard; Some seek power in eloquence, some in courage, and some in judgment!


  • An enterprise is an organization or set of human resources that work together to provide a specific good or service for profit.
  • The family and businesses have a direct relationship with each other. In this way, family members are people who work in economic enterprises and spend the money obtained in this way to buy goods or services produced by other enterprises.
  • Each country considers a different number of people as an enterprise depending on its economic situation. In China, for example, small businesses employ between 50 and 100 people.
  • The ownership of enterprises is divided into three categories: public, cooperative and private.
  • The three main structures of enterprises include individual ownership, partnership ownership, and corporate ownership.
  • There are different styles of managing businesses. But its five major styles include authoritarian, indifferent, club, intermediate, and team management.

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