Question 1. Now you have some idea about what a company is.

Could you repeat and explain this once

again in your own words:

Question 2. Please give an example of a company and its structure.

It is possible that a company gets into a crisis, even though on the first impression you seem to have done
everything right. Please give your opinion about what the first signs are that a company has troubles:

Company - What is a company?

To explain what a company is, you must first think about a machine, or exactly about the mechanism of a
machine. Look at the mechanism of a clock. All the parts of it work together. And if you take out one detail it
will either not work at all or it will not work in the right way, just like the departments of a company. If one
part of it is missing, your company will have some errors in its algorithm. Like a clock it wont show right
time.

Company - What is a company?

In the business sphere every businessman should understand and have an oversight into his financial,
intellectual, HR, and material resources, He should also understand how to get them, and also how to
manage them effectively. He must understand how to use all these points effectively in order to accumulate
the profits for his company. Have you ever thought of a company as a mechanism? How does this
mechanism function? What are its components?

Company- What is a company?

A company is a sort of business unit or organization. It can also be called a partnership, union, association,
or corporation (depending on its features). When a group of people spend time together to work towards
common ideas we can also call this company.

In official business language a company is identified as a legal person, or a so called artificial person. You
cannot touch a legal person because it is invisible and intangible but still you consider it as a property. (Quiz
1)

Company- What is a company?

But as you can imagine, there are many different types of companies and they are split into types
depending on their structure.

Here are some examples of different types of company:

 Limited by guarantee: This type is mostly used for non-commercial purposes, such as charities.

Limited by shares (business ventures): This means that the liability of each companys shareholder is
limited to the amount personally invested.

Limited by guarantee with a share capital: This type of company is a mixture and is usually
used for non-commercial goals. However, some of activities of the company are partly
sponsored by investors who wait for return.
A limited-liability company means that the liability is limited and managed by members, and
there are limitations on ownership transfer", i.e., L.L.C
An unlimited company with or without a share capital: This type of company represents a
mixture as well, here the liability of members for the debts of the company are not limited.

Company - What is a company?

There are some types of company that are not commonly seen. You will find the examples below:
Companies formed by letters patent. Most corporations by letters patent are corporations
sole.
Charter corporations: You will come across these types of companies relatively rarely,
except for some very old companies that still survive (e.g. some British banks) or some
modern societies that fulfill a regulatory function.
Statutory Companies: These companies are also quite rare and they are formed by a
private statute passed in the relevant jurisdiction.

Company - What is a company?

If the letters ltd. appear after a company's name this means that the company is significant
limited. If there is PLC (public limited company) next to the name this indicates that the companys
shares are widely held."
A person who owns a company are referred to as "members". For companies that are limited and
unlimited by shares, the owners becomeshareholders. And a company which is limited by
guarantee gets guarantors.
We should additionally mention that there are some other sub-categories of a company. These are
usually formed in various jurisdiction forms throughout the world.

Company - What is a company?

You should clearly understand what a public company means and what private means. Are you
already able to explain the difference between the two? Public companies have shares which can
be publicly traded, and often on a regulated stock exchange. Private companies do not have
publicly traded shares; moreover they contain restrictions regarding shares transfer.
But take into consideration the quote at the beginning of the chapter and the first example of a
company mechanism. It reflects the hidden essence of a company. The non-official boss is the
customer, no matter which form the company has.

Company - What is a company?

How does it function?
You and your best friend have a business idea. Both of you decided to invest some money in it and
to open a company. Your next step is to go to the company registrar, to fill in an application for
opening a new company, attach the documents that are needed and pay the fee for registration.
Now the company is registered and represents an independent identity. The Company is fully
voluntary, and it is controlled by a board of directors (you and your friend in this situation).

Company - What is a company?

What are a companys features?
A company is a separate entity
It has property
Its liability is limited
Thelife cycle of a company is rathersuccessful then mans life.
A company has a seal. Any document issued by a company is valid only if it has the
companys seal on it.
A company can sue in court with other parties to protect its property.
Every company has a structure, or hierarchy.

Company - What is a company?

3 main levels of a company structure are:
Shareholders
Management
Workforce
A workforce is represented by employees or staff. It's a relationship
between superior and subordinate.
On a management level there are also subgroups: top management, middle management and
lower management.

Structure itself is also different and varies depending on the company type.
There are several types of company structure.
Hierarchical (pyramided)
 Functional (classified according to peoples function they perform in the company)
Decentralized (suitable for big companies when there are north, west, east and south
zones)
Matrix (combination of structures)
Team (line structure)

Company - What is a company?

If the sales department is behind your development department, you have to rethink politics of your
company. If something is not sold on the market, maybe there is just no demand for it. It is
important to do market research in the beginning.
The Marketing department does not work properly, or you do not have one at all.
Always take care of your computer hardware and system update.
Company - What is a company?
Monitor communications between departments. Once you decided to add some new feature to your
old product but the sales department had no idea about it. This should not happen in a successful
business: the departments should communicate with each other so they each know exactly what is
going on.
Carefully target your customers, instead of diving in blindly without knowing your customers
preferences.

Company - What is a company?

Try to get into the market. It is easier to build up business when you have strong connection or
relation with some market players.
And lastly, maybe you dont make profit anymore, you should think seriously about continuing the
business. Well, it is quite normal not to make profit during the beginning of your companys
existence. But if your profit suddenly goes down, it is a bad sign.
And remember, detect crisis in time. You should detect the crisis itself, if a crisis occurs, by
analyzing some of the factors that can alert you to it in advance.