Company

A company , also called firm , company or society , or even colloquially box or business , is an organization or an institutional unit, driven by a project broken down into strategy , policies and action plans, the purpose of which is to produce and to provide goods or services to a set of customers , by achieving a balance of its expense and income accounts. To do this, a company uses, mobilizes and consumes resources (material, human, financial, immaterial and informational) which leads it to have to coordinate functions (purchasing function, commercial function, IT function, etc.). It carries out its activity within the framework of a specific context to which it must adapt: ​​a more or less competitive environment, a technical and economic sector characterized by a state of the art, a specific socio-cultural and regulatory framework. It can set itself the objective of generating a certain level of profitability , more or less high. From a legal point of view, a company is a legal entity .

Since the beginning of the 21st ^century ,  companies have been called upon to take into account the requirements of sustainable development , through corporate social responsibility .

Looking for a definition

INSEE definition

The enterprise is the smallest combination of legal units which constitutes an organizational unit for the production of goods and services enjoying a certain autonomy of decision, in particular for the allocation of its current resources (definition consulted inNovember 2020) ^{[ 1 ]} .

The company according to the legal approach

In French law, there is no recognition of the company as a subject, but as an activity. There are several forms of legal subjects that can carry a business. The most common are:

• companies : when the  company is carried by several partners ( public limited company , simplified joint- stock company , limited liability company , professional civil company );
• associations or cooperatives : when the business is non  -profit;
• individual structures: when the company is carried by a single individual ( auto-entrepreneur , liberal profession , craftsman , sole proprietorship , EURL ).

The legal form chosen must be registered with the competent authorities ( register of commerce and companies  ; directory of trades for craft businesses; URSSAF for the liberal professions). This legal form is associated with a distinctive and unambiguous identification (in France for example, registration in the SIREN / SIRET directory ). When it comes to a company, this registration gives it legal personality and a legal status whose form depends on the corporate purpose.of the company, the number of capital contributors, the amount of capital employed, as well as the legislative and regulatory framework in force. The exercise of the company's activity may also be subject to prior authorization issued on a permanent or revisable basis, again within the framework of the legislation in force (examples of banking, insurance, pharmacy, labor temporary, etc).

The question of the company as legal heritage, as property, is still debated in doctrine. In the current state of French law, only the fragmentary aspects of the company, such as capital, customer loyalty and the means of production, are considered as property rights which belong to the operating entity. On the other hand, freedom of enterprise is recognized by the Council of State as a general principle of law with constitutional value.

Through the concept of society, the law therefore identifies the company with its managers. However, the law also regulates the representation of employees within the company (see Works Council ).

Corporate personality in anthropology

The conception of the company as its own entity capable of acting on its own is a cultural construct. The attribution of decisions, behaviors, even emotions, to a company is a belief that assimilates it to a human person. This personalization of the company is found in company law, which uses the image of the legal person . It is also found in marketing with the concept of corporate identity to customers.

This cultural assimilation has legal and economic effects. Thus, the concept of "  limited liability  " and its implementation in the laws of the 19th century ⁽  e.g. in France, laws of theMay 23, 1863then fromJuly 24, 1867 ; in England the Joint-Stock Company Limited Acts of 1856 to 1862) is, according to YN Harari in his book Sapiens , “among the most ingenious inventions of mankind”: “Peugeot is a creation of our collective imagination. Lawyers speak of a “fiction of law”. Peugeot belongs to a particular genre of legal fictions, that of “limited liability companies”. Harari explains: “If a car broke down, the buyer could sue Peugeot, but not Armand Peugeot. If the company borrowed millions before going bankrupt, Armand Peugeot did not owe a single franc to its creditors. After all, the loan had been granted to Peugeot, the company, not to Armand Peugeot, the Homosapiens”.

“Limited liability” is therefore a transfer of criminal liability from the shareholder to the company-enterprise, and of the economic risks to its work group. However, this transfer is not accompanied in return by a transfer of ownership due to the legal non-reality of the company: whatever the amount invested by the shareholder, he always has the power and is the de facto owner. (thanks to its ownership of the shares) of all the means of production (premises, machines, IT resources, etc.), including those acquired thanks to the “millions” borrowed: it is the company, which acquires by borrowing, which reimburses and maintains the means of production at its own expense in addition, of course, to paying wages, charges and taxes.

Thanks to this "limited liability" combined with the legal non-reality of the company, several processes allow shareholders to increase the means of production that they control by minimizing their investment ( share capital ^{[ 2 ]} ): leveraged investing , leveraged buying , stock buyback. It is therefore very understandable that the shareholders resort to these processes rather than issuing additional shares causing the arrival of other shareholders with whom the risks are certainly shared, but also the power and the property. If the company were like a 1901 association, a subject of law, “limited liability” would be replaced by “shared responsibilities and properties” between shareholders and the working collective of the company, each according to his contribution.

The contractor

The concept of entrepreneur designates the one who undertakes , who happens to be at the origin and concretizes a business project  :

• his approach can be innovative when he anticipates a need , or assembles and organizes the tools and skills necessary to meet this need in an unprecedented way. This type of entrepreneur uses notions of creation and innovation ^{[ 3 ]} , and therefore differs from that of an entrepreneur . However, these two terms, although relating to different realities, often characterize the same people: an entrepreneur is an entrepreneur if he pilots his project himself and an entrepreneur can be qualified as an entrepreneur because of the intrinsic objectives of his function;
• the approach can be less original and more conventional when the entrepreneur in question has a project that draws heavily on, or even reproduces or uses, existing business or business models.

In doing so, the entrepreneur takes the risk that the need will not materialize or that the means he puts in place to satisfy it will prove to be inadequate.

Historically, the entrepreneur is an intermediary, a work agent: he is placed with firm orders for goods or services, he looks for the workers who will each produce part of this order and he makes sure of the good delivery. This in a context where the division of labor is not very marked, where the workers work from home, and have their own tools and even their machines (loom for example).

Before the industrial revolution , an entrepreneur was above all a "  man-orchestra  " capable of optimizing capital requirements and human resources to carry out a lawful and profitable activity, the means of production and the labor force not yet being grouped together. within business. We still find this type of organization ^{in the} 21st  century, for example, in the transport industry , services ( engineering , etc.) where alongside large groups, independents own their working tools (for example : trucks , barges or barges) and find their principals through brokers.

With the industrial revolution, entrepreneurs change, they group machines in the same workplace and keep the same workers for a long time, which gives rise to companies in the traditional sense. We then see the figure of the entrepreneur emerge (a well-known example being that of Henry Ford ).

Story

The premises of the company in the modern sense of the term did not appear until the 18th  century ^{[ 4 ] , before that, production and} trade activities were almost exclusively carried out within families or guilds ^{[ 5 ]} . The place of the entrepreneur is therefore essential, he directs all the links in the value chain. Due mainly to industrialization , in the ^19th century  , the organization of companies changed considerably. The family identity of the company and the exclusivity of the power of the entrepreneur-manager are gradually weakening.“large modern companies” ^{[ 5 ]} are developing in the form of public limited companies where the contribution of each shareholder to the losses cannot exceed his share in the share capital . Thanks to this principle, the supply of capital explodes.

Economic typologies

Companies can be classified according to different criteria:

Classification by economic sector

The classification by economic sector is determined by the main activity of the company:

• primary sector  : these are activities related to the extraction of natural resources through agriculture, fishing, forestry or mining;
• secondary sector  : these are activities related to the processing of natural resources from the primary sector (buildings and public works, household appliances, aeronautics,  etc. );
• tertiary sector  : it includes all economic activities that are not part of the primary and secondary sector. These are market activities (sale of product) and non-market activities (sale of non-tradable services).

Beyond this classic division, a quaternary sector is sometimes distinguished, with a definition varying according to the authors.

Classification by size and economic impact

According to the definition of the European Commission in 2011, companies are classified as:

• microenterprise  : sub-category of VSEs defined in France by a turnover of less than 81,500 euros for those carrying out purchase-sale transactions and 32,600 euros for the others;
• very small enterprise (TPE): less than 10 employees with either a turnover of less than 2 million euros per year, or a total balance sheet of less than 2 million euros;
• small and medium-sized enterprises (SMEs), we distinguish between:
  • small business (PE): between 10 employees and 49 employees with either a turnover of less than 10 million euros per year, or a total balance sheet of less than 10 million euros,
  • medium-sized enterprise (ME): between 50 employees and 250 employees with either a turnover of less than 50 million euros per year, or a total balance sheet of less than 43 million euros;
• large company  : more than 250 employees and both a turnover greater than or equal to 50 million euros per year and a total balance sheet greater than or equal to 43 million euros;
• group of companies  : includes a parent company and subsidiaries  ;
• extended enterprise (or networked, or matrix, or virtual): includes a pilot enterprise working with many partner enterprises.

Classification by branch and sector of activity (INSEE classification)

• The sector  : all companies with the same main activity.
• The branch  : set of production units providing the same product or service.

For INSEE , a company is an economic unit, legally autonomous, organized to produce goods or services for the market; it is identified by the SIREN number . An establishment is a production unit geographically individualized but legally dependent on the company, and where all or part of its activity is carried out; it is identified by a SIRET number .

Classification by legal status

According to the legal form

• Sole proprietorships (legal existence through the physical person of the entrepreneur — EI, EIRL).
• Civil societies (example: professional civil society ).
• Commercial companies (of people or capital; sometimes single-member — EURL , SASU ).
• Economic interest groups .
• Associations , private companies whose profits must be fully reinvested.
• Cooperative societies , in which the cooperative members each have only one vote, regardless of the amount of their contributions (employees, consumers, inhabitants, beneficiaries of the service,  etc. ).
• Non -profit mutual companies , registered in the national register of mutuals and subject to the provisions of the mutuality code.

According to the corporate purpose

Another form of classification distinguishes three main types of companies ^{[ref. necessary]} existing in all countries:

• private for-profit companies (example: TPE , SME , group of companies );
• private non-profit enterprises (cooperative societies, associations and mutual societies belonging to the social economy );
• companies entrusted with a public service mission (example: urban transport authority, water authority, public industrial and commercial establishments).

Legal status in France

Economic activity is, in all countries, governed by regulations. Most companies therefore operate within a framework predetermined by law  : company law .

Individual business

In the context of the capitalist economy , it is possible to have a business in a personal capacity. It is then a sole proprietorship, that is to say that the entrepreneur carries out the economic activity directly and in his own name. The exercise of an activity in the form of a sole proprietorship generally concerns VSEs.

Company legal person

It is also possible to incorporate a legal person in the form of a company . This can group several participants in its capital and is able to carry out acts of management. The various forms of companies vary from country to country.

It is therefore necessary to distinguish between the effective ownership of the company and the power to carry out management acts in the name of the company. Depending on the corporate form, the person responsible for the day-to-day running of the business will be called a manager , chairman and chief executive officer or general manager. The holder of this function may hold shares or shares or be mandated to do so by the general meeting of partners.

French company law distinguishes in particular between the statutes of public limited company (SA), limited liability company (SARL), simplified joint-stock company (SAS), civil company (SC), liberal exercise company with limited liability (SELARL) and general partnership (SNC). A special status named Euro 2016 SAS ^{[ 6 ]} was created in 2014 so that UEFA could organize the 2016 European Football Cup in France without having to pay taxes other than VAT (being a regulated tax at the international).

The fact that a company uses a form of corporation does not necessarily imply that those securities are publicly traded (or even that it is considered to be going public ). If this is the case, purchases on the stock market or public offerings can change the majority of control of the company, and also lead to a change in its management.

Purposes

General objectives

The primary function of a company varies by company or even by different points of view within the same company (e.g. shareholder, employee, union, management, etc.). Among the various operational functions usually observed are:

• serve the market , by producing and distributing goods and services corresponding to a solvent demand . This is its only economic justification , no company can survive without making it a priority, unless it is protected and outside the field of competition (example: case of certain public services ), which, from a from a purely economic point of view, can lead it to consume more resources than it is useful;
• make money, i.e. extract financial benefits by “collecting more money than money invested”, in particular to attract institutional investors and small shareholders  ;
• generate excess cash , which will be invested with greater profit in the development of the business or another business (as part of a "group");
• maximize social or environmental utility. Some companies ( mission-based companies ) even statutorily give themselves social utility as an end;
• achieve a technical goal: construction of a structure ( tunnel , bridge , road , etc.), manufacture of a manufactured product , design and production of a service that satisfies a customer. This technical goal can itself be extremely varied, including:
  • activities which are not, for the entrepreneur, the main issue, but a means at the service of another activity: for example, the possession of a press group , production of strategic resources or vector companies images (for example the presence of tobacco companies in the ready-to-wear industry),
  • agricultural cooperatives which are companies that aim to generate a profit not for themselves, but for the member cooperators,
  • the “  integration companies  ” aim to make their employees fit for “normal” work, without seeking in certain cases ( integration worksite workshop ) to generate a profit.

Some companies may be incorporated to divert the primary functions of the business, in particular to camouflage legal or illegal activities (example: certain activities such as gambling , currency exchange , car washing, real estate are known to allow "recycling or the "laundering" of money derived from illegal activities).

Various political views on the functional utility of private enterprise have been formalized throughout history and the development of economic thought:

• of its total uselessness, leading to its suppression or its collectivization  ;
• to its complete usefulness (especially in terms of job creation), resulting in its encouragement and the development of SMEs , VSEs , craft companies and the liberal professions .

Sustainability requirements

Companies are increasingly concerned with relegitimizing their role in society through various vectors  , particularly notable from the end of the 20th  century ^:

• the sustainable development reports drawn up by large companies highlight their social and environmental role. Communication on environmental efforts has become a major argument at the start of  the 21st ^century . In France, it is made compulsory by the law on new economic regulations (article 116);
• sponsorship ( artistic , humanitarian, social, etc.) is as much a means of legitimizing the place of the company as an action of institutional communication in favor of the image of the company;
• in France, the theme of “  corporate citizenship  ”, in vogue at the very beginning of the 2000s, has advanced reflection on the place of business in society.

The evaluation of the triple economic, social and ecological performance (3P for People Planet Profit ) of the company is done by societal rating agencies , which examine the sustainable development reports to rate the companies. Socially responsible investments make it possible to move towards companies with the best social ratings.

Thus, a new form of business is emerging, called upon to take into account the long-term interests of all of the company's stakeholders , and no longer just the short-term interests of the shareholders alone. Indeed, sustainable development involves not only the market , but also the State and civil society .

The mode of corporate governance consistent with sustainable development is called corporate social responsibility .

Company, competition and competitive situation

For competition law , the legal form ( legal person under private law or public law, company , association ) and the purpose (profit-making or not) of the company are irrelevant. Thus for Community law , "the notion of enterprise includes any entity carrying out an economic activity, regardless of the legal status of this entity and its method of financing" (Court of Justice of the European Communities (ECJ), Höffner judgment, 1991) .

Nevertheless, does not exercise an economic activity, and is no longer a company subject to competition law, the body which fulfills an exclusively social function (CJCE, Poucet 1993) or the one which exercises prerogatives of public power (CJCE , Eurocontrol, 1994).

• Acquisition and sale of business
• Competition
• competition law
• Merger
• Monopoly
• Oligopoly
• Marketing plan

Search for profits

Purpose: to remunerate the risk taken by the capital contributor

Among the different possible goals for a company, the search for profit occupies an important place. The company's profit (different from profit) serves above all to remunerate the capital invested.

Companies can take several legal forms corresponding to different characteristics of the capital provider: sole proprietorships, partnerships, capital companies. Large enterprises are generally corporations.

In the case of capital companies, if an investor (one of the people who finance the company) decides to place it in a company rather than keeping it, it is because he wants the money thus placed in the business earns him more. If a company does not generate sufficient profit redistributed in the form of dividends , its reputation tarnishes and it no longer attracts investors. Its capacity for development (generally consuming capital to, for example, open subsidiaries abroad or start new innovation programs), or even its survival, are then burdened, or even can be called into question.

For every line of business, there is a “normal” level of expected profit. Thus, for example, in the pharmaceutical sector of the 2000s, the average level of expected profit was 15% per year of the capital invested. If a company generates less profit, the shareholders who have invested their savings in it (directly or more often indirectly via a bank or a pension fund ) are disappointed, possibly lose confidence in the investment made and sell their shares: the price of the company (whether listed or not) then declines and the remaining investors lose out.

A capitalist enterprise whose profits are low for too long has no economic justification: it is usually closed or taken over. In the case of a social economy enterprise , it will last if it brings social utility to society (example: reintegration enterprise) and if it finds a financial backer able to finance any losses (example: local authority ). Finally, family businesses, both private and unlisted, can find a balance between high profits and social utility, while succeeding in the long term, in particular through their size on a human scale and the proximity of management to - vis-à-vis the employees .

The origin of the profit

In a simplified way, the profitability of an activity is obtained by selling the most expensive product or service possible and by spending as little as possible to produce it.

A distinction is made between normal income and exceptional income:

• normal income is the income from sales and current financial transactions over the current year (customer and supplier credits);
• exceptional income is not, by definition, part of the current operations of the company. This may involve the sale of assets (buildings, machinery,  etc. ), the sale of subsidiaries or various accounting operations (example: revaluation of the financial value of a stock).

The margin , calculated as the difference between the selling price and the cost price of the goods incorporated in the product sold, represents the main contribution to the profit of the company.

To increase this margin, there are only two levers:

• increase the price of the products or services sold (example: selling a motor vehicle at € 15,000  );
• reduce the cost of producing the products or services sold (example: producing the vehicle with € 12,000  ).

The means of action on cost reduction are extremely diverse, including:

• negotiate with suppliers to lower the purchase prices of incorporated goods;
• improve quality to produce with less waste;
• improve machine productivity ;
• improve the productivity of men (improvement of qualification , adjustment of the ratio between fixed remuneration and that indexed to results, improvement of working conditions , audit of practices with the aim of improving them, better personnel management , skills management, tools audit);
• reduce taxes and levies on production (tax on profits, reduction in employee contributions to social or pension funds, benefit from exemptions);
• reduce inventories to reduce tied up capital ;
• negotiate faster payment conditions with customers in order to have less financial costs;
• use free software to reduce the capital tied up by paid proprietary software ;
• establish themselves next to the places of production of the raw materials;
• reduce payroll and benefits;
• use value analysis (this is often the most powerful way since you can sometimes reduce costs in considerable proportions).

Mastery of innovation

Technical and technological innovation

The solution to these global shifts of low value-added production centers involves innovation , the creation of high value-added activities (example: Airbus A380, TGV, intelligent automobiles, microprocessors , new materials, sophisticated software, biotechnologies , armaments, nuclear power plants , robots for assisting the elderly, smart textiles , haute couture , etc.) requiring a creative and highly qualified workforce, as well as the development of local services.

In 2008, services accounted for 70% of the Western world's GDP , which consecrates the evolution of developed countries towards a post-industrial economy ^{[ref. necessary]} .

The company in the implementation of Knowledge

There are always organizations, men and machines. Companies are more and more global (even small) and connected in networks allowing them to react quickly to opportunities and combine good skills to accompany "ideas to success". Knowledge plays a major role in the way of doing business. We begin to take into account not only the financial capital, but also the immaterial capital that must grow. The health and future of companies depend on their ability to innovate and their know-how in transforming ideas into values ​​to be shared for all participants. In this context computers in all their forms play the role of human intelligent assistant ^{[ 7 ] , [8 ] , [ 9 ]} .

Criticisms and defense of the company

Private enterprise, as an entity for creating and sharing wealth, has been the subject of much criticism. Criticism, coming in particular since the 19th  century from the thought of socialism ^and social Christianity , has proved to be more profound in countries with a Catholic culture (where the relationship between morality and money is complex) than in countries of Protestant culture , in which the position and social function of each individual is considered to be the fruit of divine will (according to the thesis of Max Weberon the Protestant ethic and capitalism).

Private enterprise is considered by some detractors as an entity placing its particular interests above the general interest .

• The socialist criticism that appeared in the ^19th century  first focused on the economic consequences with the question of the unequal distribution of the wealth created by the company, to the profit of the capitalists (the return on capital ) and to the detriment of the employees ( who bring their work ). It was notably theorized by Karl Marx .
• Criticisms of corporate influence over political power have been added. In Marxist theory , the social "superstructure", which includes political and religious powers, is at the service of the economic "infrastructure". This criticism, on the link between politicians and companies, even outside the current of Marxist thought, is very much alive at the beginning of ^the 21st  century .
• Companies are accused of playing their own geopolitical game , dictated by their sole interests, independent of, even contradictory to, that of national or international foreign policies (for example, on the question of human rights ).
• Historically, private companies (or companies) have been accused of promoting colonialism and Western imperialism and war . It is, for example, Lenin 's criticism of imperialism, the supreme stage of capitalism.
• From the end of the 20th ^century  , companies have been accused of degrading the environment in the course of their activity.

Other criticisms have focused on the inner workings of private enterprise. We will note in particular:

• the criticism of employee exploitation given the asymmetry of the balance of power between employers and employees, particularly during periods of unemployment  ;
• critiques of the dividing line of wealth ( productivity gains , profits ) between those who provide capital and those who provide labor;
• criticism of the power in the company which traditionally belongs to the agents bringing the capital and not to those who provide their work. Hence the attempts at balancing through, for example, co- management in Germany  ;
• ^{the criticism of the forms of pressure exerted on the employee and} leading to phenomena of stress , evoked in particular from the end of the 20th  century .

In the face of criticism, corporate advocates point out that the private interest is actually in line with the general interest  :

• private enterprise constitutes the most efficient means of allocating resources ( capital , labour , raw materials and energy ) taking account in particular of the constraint of profitability;
• private enterprise is the most effective engine of economic growth and technical innovation . Even when it is not at its source, the company is the vehicle for applying and disseminating technical innovations;
• the company, guided by the concern for its development and its profitability, does not take into account the distinctions of nationality , race or sex to base itself only on personal merit. The company is then considered as a factor of peace and international rapprochement and integration of different people.

With regard to the inner workings of the company , its defenders add that the company can on the contrary be a place of personal fulfillment. The most advanced cases of this trend are in new technology companies , in which the entrepreneurs are often young and the human relationships less formal (the cool startup culture ). The transformation of certain companies into real living spaces, with collective relaxation areas nearby, has been considered by some as an insidious means of employee control.

Some large private companies have developed social and cultural programs for their employees since the 19th  century ⁽ canteens, accommodation, courses, sporting and cultural activities, holidays , etc. ). These practices, sometimes stemming from social Christianity , have been denounced in the West by socialist thought as falling under paternalism ( paternalistic capitalism ). At the extreme, some companies have given birth, with worker housing, to real towns (for example in France, Anzin or Decazeville). These practices tend to disappear with the trend of companies refocusing on their core business.

Organization and operation

Actors: shareholders, managers and employees

The company works with several types of actors:

• shareholders (when the legal form of the business is a corporation );
• the managers (appointed by the shareholders when there are any);
• employees (recruited by company managers) .

Depending on the size and the legal status chosen by the company, these actors are sometimes confused: a shoemaker operating with a single person can either be a craft activity without capital or employee, or be incorporated, the same person being capital holder, corporate officer and sole employee. Larger companies are usually incorporated and these players are differentiated.

Shareholders

The shareholders hold the capital of the company that carries the business. Their role is to provide the funds necessary for the development of the company, to choose the members of the management and to approve, or not, the administration of the affairs by the management. They receive income from the profits of the company, called dividends , and can significantly influence the decisions taken by the board of directors , because it is they who elect it at the end of the annual general meeting.

Leaders

The managers are responsible for managing the day-to-day business of the company and for deploying the company strategy validated by the shareholders. His remuneration is generally made up of a salary, as well as a form of profit-sharing, often in the form of stock options or financial bonuses more or less indexed to the company's performance.

Employees

Employees are generally made up of:

• executives , responsible for the management and conduct of operations by supervising the appropriate human resources;
• employees , responsible for the execution of commercial and production processes in conjunction with management.

They receive a salary in exchange for their work provided within the company.

Actors in cooperation or in competition

Some approaches to business are based on the principle that the three categories of actors in private business (shareholders, management, employees) have divergent interests and they oppose the interests of employees and those of shareholders .

Other approaches to business are based on a systemic vision that is more regulated and more cooperative between the three categories of actors.

corporate governance

The notion of corporate governance ⁽ or governance in Franglais) or Corporate Governance ^{[ 10 ]} appeared at the end of the 19th  century to accompany a reversal of power within the company. This concept only concerns companies whose number of employees is greater than 500 people and which do not exceed the figure of 2000 in France in the statistics of the end of the 1990s ^{[ 10 ]} .

• In the classic business according to the 19th  century model, as in ^SMEs , the power belongs to the shareholders , who are the owners of the business. Even if, from the 19th  century, they delegated management to executives ^and engineers , contacts were frequent and control was tight.
• The growth in the size of companies has led to both an increasing complexity of the management functions of large companies, with specializations, and the dispersion of their shareholders. Real power passed into the hands of the company's operational managers, while shareholder control became more remote, sometimes reduced to the sole ritual of the annual general meeting of shareholders. This era of managers was theorized by James Burnham in 1941, whose French edition was prefaced by Léon Blum in 1947.
• With the “liberal revolution” of the 1980s and the generalization of the principle of the market , it appeared that the interests of managers did not always coincide with those of shareholders. For example, the manager may favor a strategy based on the growth and size of the company, while the interest of the shareholder may favor the profitability of the company and its action . The theme of corporate governance , which appeared in France in the mid-1990s with the Viénot report in particular, tends to give shareholders back some of the power they have lost. It is expressed in several ways:
  • The regulations have been tightened in this direction ( NRE law , in France), reinforcing the obligations of the management to account for its work to the shareholders.
  • The separation of functions between shareholder representation (role of the chairman of the board of directors or of the supervisory board ) and operational management (role of the general manager or the chairman of the management board ) constitutes one form of response.
  • The requirements for return on invested capital ( ROE or ROCE ) mark the taking into account at the level of the financial objectives of the companies of the interest of the shareholder.
  • The development of stock option policies , during these same years, also goes in the logic of linking the interest of the manager with that of the shareholder.

Organization

A business relies on a number of vital functions that ensure its operation. Henri Fayol who described them as “essential” had in his time (1916) distinguished six of them: technical, commercial, financial, security, accounting (informational), administrative (management). They are much more numerous today and it is difficult to give a list of them.

Generally, companies establish a hierarchy among their employees  : those who are at a lower level (example: team members, collaborators, employees, etc.) obey those at a higher level ( managers , executives , project managers, etc.). This hierarchical organization can be justified by the existence of transaction costs , a justification which follows from the Coase theorem and is developed by the work of Oliver Williamson . Hierarchy is combined with a specialization of activities in the organizational structure of the company. This question of organization has been studied in particular by Henry Mintzbergin his book: Structure and dynamics of organizations .

Businesses are usually organized with:

• operational entities , which are generally business -oriented (for example, in 2008, the Danone group was organized into three divisions: fresh dairy products , biscuits and cereal products, beverages). Large single-business companies can be organized into regional entities (for example, Americas , Europe - Middle East - Africa (or Emea, common grouping in companies at the beginning of the 21st  century), ^Asia ) ;
• transversal functions, "head office" functions common to the group, or sometimes decentralized by division or region of the world.

Classically, we find there the functions of general management, financial management (including management , accounting , management control ), human resources , marketing and communication , research and development , IT , etc.

The transversal functions can be:

• exercised internally by employees of the company;
• subcontracted to external service provider companies (example: external communication, research and development services);
• or even carried out by a person working alone, generally acting as an external consultant (example: quality expert).

Management

Management methods

A company must be managed as a whole.

It is therefore necessary to apply all the management methods dedicated to the various component functions of the company:

• human resources  ;
• finance  ;
• accounting services  ;
• commercial services  ;
• technical services;
• general services;
• administrative services  ;
• management of energy consumption and supply (for example, French companies absorb 57% of the energy consumed in this country, and are struggling to reduce their expenses) ^{[ 11 ]} . Moreover in the world, after 30 years of decline, energy intensity ( energy consumption per unit of GDP , which is also a waste index ) in 2011 began to increase again (+ 1.35% in 2010 ^{[ 12 ]} );
• Etc.

It is also appropriate to apply management methods related to business processes , in order to take into account the transversal aspect of the company's activity, and its distribution across functions.

Management IT

There are two types of tools for business management:

• generalist tools, such as office suites that allow the production of documents, tables, commercial presentations;
• management tools.

These make it possible to manage each of the company's functions. Today, most of them opt for an integrated management software package or PGI which has the advantage of centralizing management data within a single database.

Formerly reserved for large companies, these tools are more and more widespread in SMEs and SMIs.

Company performance and valuation

The performance of a company is measured using indicators (productivity concerning production; sales concerning marketing; operating result concerning management; financial result concerning overall profitability; etc.). These indicators are all the more numerous when the activity is complex and diversified. The role of management control is to go beyond the annual accounts (balance sheet and income statement) to develop tailor-made indicators that will make it possible to assess the company's performance in different areas. These indicators will make it possible to set objectives, measure the gaps between achievements and objectives and seek to explain these gaps.

Criteria for measuring the performance of a company

The company is equipped with an information system that allows it to know the state of its operation and to produce relevant dashboards for the attention of decision-makers and operators .

The indicators put forward are multiple:

• primary indicators: turnover , added value , market share , productivity  ;
• financial indicators: financial analysis , net income , profitability , self-financing capacity ( Cash flow ), share prices  ;
• more complex indicators: competitiveness , notoriety , business valuation .

The case of companies in a special situation

The performance of the company must be evaluated in a specific way when it benefits from subsidies , State aid and bank aid or from a "protected" context, which may not be sustainable and end more or less brutal because poorly anticipated.

The case of companies in difficulty

The performance of a company is clearly called into question and the alert must be activated when it has to face problematic situations: cessation of payment , bankruptcy , bankruptcy , receivership .

business communication

Other themes

• Commercial acquisition of goods and means of production
• Alliances and partnerships
• Accounting
• Business background
• Management control
• Finance
• Taxation
• Operation and organization of the company
• Quality management
• Logistics
• Production
• Human ressources
• Corporate social responsibility
• Restructuring

Notes and references

See as well

• All articles beginning with "company"
• All pages with "business" in the title
• Corporate 

Bibliography

• Business management and economics by Gilles Bressy and Christian ^Konkuyt , Sirey editions, 11th edition, Paris, 2014. ( ISBN  9782247139682 )
• The Risks of the Manager by Azad Kibarian and Jean-Pierre Thiollet , collection Lire Agir, Vuibert, Paris, 2008. ( ISBN  978-2-7117-8734-0 ) ( BNF  41333559 )
• Manager with ERP- Companies open to the public, Service-oriented architecture by Jean-Louis Lequeux, Éditions d'organisation, Paris, 2008. ( ISBN  978-2-21254-094-9 )
• ERP and PGI- Integrated Management Software , by JL Tomas, Dunod, Paris, 2007. ( ISBN  978-2-10051-373-4 )
• Piloting an ERP project , by Jean-Luc Deixonne, Dunod, Paris, 2006. ( ISBN  2-10007-028-2 )
• History lesson on the Company from Antiquity to the present day , Michel Drancourt, PUF , Paris, 2002 ( 2nd ed.) ^. ( ISBN  2-13052-519-9 )
• Shared Enterprise? A different practice of social relations , Robert Thomas (pseudonym of a team under the direction of Pierre Beretti and with the assistance of Jean-Pierre Thiollet), Maxima-Laurent du Mesnil editor, Paris, 1999. ( ISBN  2-84001-173 -5 )
• Objective: Business — French for Business, Janine Bruchet, Cornelsen, Berlin, 1992
• Entrepreneurs, businesses. Story of an idea , Hélène Vérin , PUF, Paris, 1982.
• Denis Segrestin , Sociology of business , Armand Colin,1996

Related articles

• Commercial acquisition of goods and means of production
• Business directory
• Ranking of the largest companies
• Company (company)
• Corporate law
• Function (company)
• Company
• Sunrise industry
• sunset industry

external links

• Authority records  :

  • National Library of France ( data )
  • Gemeinsame Normdatei
  • Czech National Library
• Records in general dictionaries or encyclopedias  :

  • Brockhaus Enzyklopädie
  • Historical Dictionary of Switzerland
  • Encyclopedia Universalis
  • Treccani Encyclopedia
• Definition according to INSEE.
• French Institute of Corporate Governance .

• Business portal
• Economy Portal
• Company portal