Economics as a science studies the theoretical bases and practical forms of activity of market structures; mechanisms of cooperation of subjects on the basis of the financial work of the elements of society. In the presence of market relations, the main figure is an entrepreneur. This status is acquired by registration with municipal authorities (tax authorities).
Enterprise and its role in a market economy
In section 1 "Enterprise Economics", the main concept is an economic entity that has administrative, organizational and financial independence. A business entity may be an individual or their association.
As a result, an enterprise in a market economy is a business entity. This entity acts independently in order to produce products, provide work or services to meet customer needs and generate income.
The main objective of the enterprise in a market economy is to maximize profits through the sale of goods, on the basis of which the needs of staff and business owners are satisfied.
The company also has common goals, which are determined by the founder, the size of the authorized capital, the impact of the external and internal environment on the company.
Firms have a different orientation, the main directions in their work are:
- marketing and market research;
- innovation as research;
- production of products, product range;
- sales, which are aimed at the sale of goods, works, services;
- Logistics, which provides production with all necessary resources;
- finances include pricing, accounting, study, planning;
- service as a guarantee method of servicing products, providing spare parts for repairs;
- social activity, which is aimed at supporting a decent level of work, the creation of social infrastructure facilities of the company, etc.
Company classification
Companies for classification purposes are grouped in accordance with various aspects.
By accessory:
- private companies that operate independently;
- budget companies in which capital consists of municipal funds, and management is entirely in the hands of the state;
- mixed, in which the municipal part prevails.
By company size:
- small (small);
- medium;
- big ones.
By the nature of the work:
- product of goods;
- provision of services.
By industry:
- insurance;
- industrial;
- agricultural production;
- trading;
- banking.
In accordance with the legal status:
- Individual entrepreneurs. This form is characterized by commercial work without registering a legal entity.
- Business partnerships and societies.
Basic legal forms
We will describe the most popular legal forms.
A simple partnership may be concluded in the form of an agreement between two or more persons combining their contributions without forming a legal entity to organize activities and generate income.
Full partnership: at the conclusion of the contract, its participants carry out activities on behalf of the partnership and bear responsibility with all their property. When managing commercial work, all opinions of those involved are taken into account, and a decision is made with their general consent. Usually these are small companies that are easy to manage, they are common in agriculture and the provision of services.
A partnership based on faith. Activities are carried out on behalf of the partnership, full partners are liable for obligations with all their property and deposits only within the limits of the amounts paid without a role in commercial work. This form of partnership is inherent in big business.
Limited liability company. This is the fundamental form in which capital is distributed among participants in agreement with the constituent documents. At the same time, all participants do not bear responsibilities, but bear the risk of loss as part of their own payments. This form of commercial activity is typical for medium and small companies.
Joint-stock company. Share capital is divided into shares. Owners of shares in this company are not liable, but bear the risk of losses in the framework of existing shares. This form is characteristic mainly of large companies that need cash resources.
Production cooperatives. This is a form of voluntary association of people, members of a cooperative, for the mutual production of products and the provision of services. This activity is based on equity participation of investors.
Non-profit organizations conduct activities that are not focused on generating income.
The essence of the idea of a company’s economy
In the modern world, an enterprise is the main link in the entire economy, because thanks to companies, goods are created that people need, jobs and services.
We live in a market economy, and only those who skillfully respond to changes in the market, production mechanism, and can ensure profitability and efficiency survive. These are the difficulties that the company’s economy helps to solve.
The enterprise as a financial object is located in the center of the entire financial life of the state, as it provides state revenue. The success of each company will affect the level of GDP, the social development of society as a whole, as well as the level of satisfaction of residents of the state.
In principle, it is assumed that the enterprise development economy uses scientific and technological progress. In this situation, the optimal combination of low production costs and high levels of profit in the production of quality products.
Many scientists have been examining the essence of the term under study for more than a century.
The concept of enterprise economics in the works of C. McConnell and Brue S. is associated with studies of human behavior in the production, distribution and consumption of material goods and services in the world of rare resources. Resource scientists include: land, capital, labor and the ability of an entrepreneur.
Under the economy of the enterprise understand the knowledge system that is associated with the process of development and decision-making by an economic entity in the process of its activities.
The term under study implies a connection with a number of other economic definitions.
The enterprise economy is mainly widely used in conjunction with the concepts of managing the subject of market relations.
Any enterprise characterizes the form of organization connecting the user and the manufacturer with the help of the market in order to solve the main financial difficulties:
- What to produce? This issue is resolved through a daily study of residents' purchases.
- How to produce? This question characterizes the presence of competition between manufacturers, since everyone chooses his own strategy of struggle (price, competition, know-how), while increasing profit and reducing costs.
- For whom to produce? In this case, market conditions are determined.
Course subject and objectives
Currently, the traditional definition of the concept is interpreted in the textbook “Enterprise Economics” by Samuelson as follows. Economics is the science of how society uses certain limited financial resources to produce the right goods and distributes them among different groups of people.
Depending on the level of research into the actions and phenomena of financial life, the economy is divided into macro- and microeconomics.
Macroeconomics: The Essence
Macroeconomics examines the formation of complex supply and demand of state income and GDP, the level of inflation and unemployment, analyzes the impact of state fiscal policy on economic development. In other words, it sets itself the task of presenting the general picture of the development of the state economy and the interconnections between its sectors.
Microeconomics: The Essence
Microeconomics studies how the production volumes of certain products and their prices are set, how the industrial sectors, commodity and money markets, and households develop and function.
The company’s economy is studying the organizational and legislative forms of business, the material and technical basis of production, ways to determine its productivity, questions of pricing and formation of industrial costs, ways of feasibility study of investment projects, resource conservation and environmental productivity of secondary material and energy resources.
The economics of enterprises and organizations are closely connected with such disciplines as “General Economic Theory”, “Management”, “Marketing”, “Accounting”.
The relationship between micro-, macroeconomics and the term in question
Of course, macroeconomics, microeconomics and company economics are interconnected.
Currently, in the market conditions of companies, the requirements for managers and specialists are increasing sharply, since any company directly depends on the competence of personnel, on knowledge of the theory and practice of market relations. If earlier the formation of the ability to think was economically considered the main thing in the training of a specialist, then in modern criteria this is no longer enough.
In any production sphere, a young specialist will have to join the system of new financial relations on economic and management issues at the enterprise, in other words, the system of relations between business people. A modern specialist should be entrepreneurial, ready to tempt fate, to feel personal responsibility for his actions.
Principles of enterprise economics
Among the main principles distinguish:
- Independence. The company itself manages its resources, chooses what to create and in what quantities, which counterparties will work with it.
- Isolation. All decisions that relate to the work of the company correlate with its capabilities.
- Revenue generation. This principle allows us to realize the economic growth of the company. A profitable enterprise can ensure its development and pay its obligations as a taxpayer.
- Self-financing. The financial development of the company due to income and depreciation.
- Planning. Improving the dynamics of the company's economic indicators and its ability to adapt to market conditions.
- Predictability. Making forecasts, different options for the economic growth of the company.
- State regulation.
General scientific methods of economics as a science
In the textbook "Enterprise Economics" section 2, as a rule, is devoted to the study of scientific methods.
In economic research works, general scientific and specific methods and methods are used.
General scientific methods include:
- The method of scientific abstraction. It consists in distracting in the process of cognition from small phenomena, non-essential qualities and identifying common, significant signs, in knowing the essence of phenomena.
- Induction method - a general conclusion is made on the basis of some reasons, in other words, decisions are made from the personal to the general, from facts to theory.
- The method of deduction implies the opposite approach - from the general to the particular and the personal.
- A hypothesis is a scientific conjecture that has been put forward to clarify a phenomenon and that requires testing in practice and theoretical justification in order to become a reliable scientific theory.
- A method of comparative study is a comparison of personal and general characteristics to determine the best results.
- Experimental - verification of the validity of hypotheses.
Specific methods
Specific methods include:
- statistical-economic method for the development of phenomena and actions based on large-scale digital data (methods: financial grouping, average, relative values, graphical);
- monographic method - the study of some parts of the total population, which are characteristic of the characteristics of the studied objects;
- design-and-constructive allows you to find the real methods of scientifically-reasoned solutions;
- balance method of coordination of all characteristics that reflect the essence of a phenomenon or process;
- economic and mathematical - allows you to use computers to solve multifactorial financial issues.
Conclusion
The enterprise economy is the financial result of work in the past and current time period, expressed in the efficiency of the use of resources for each studied interval.