THE 5 MAIN TYPES OF BUSINESS ORGANIZATION - DUDAS - 2025

The types of business organization can be classified according to several factors; according to its legal status, its size (number of members and employees), its economic activity, the origin of capital, sector of the economy, among others.

The business organization or company is the axis of economic activity in most of today's societies. It is one of the means by which human activity is sustained, since the company allows the satisfaction of the needs of all individuals.

The company is a for-profit social and economic unit, which depends entirely on economic capital, human capital and resources to survive. This must have a direction that allows it to be more efficient according to the needs of the market. Its main objective should be to serve the common good.

No business organization is structured by itself, it requires the intervention of multiple individuals to be managed. This management finally determines the type of company that is being established and its most representative characteristics.

Classification of types of business organization

- According to its legal form

Business organizations are divided as follows according to their legal form:

Limited

They are business organizations that have two different types of partners. Some partners participate in the management of the company and have full responsibility for the company (the general partners), and the other partners do not participate in the management of the company and their responsibility is partial according to the capital they contribute (the limited partners).

Collective society

It is the type of business organization that belongs to more than one individual. The partners have the obligation to respond unlimitedly with their assets.

Cooperative

They are non-profit business organizations that seek the well-being of their members.

One-person

It is the type of business organization that belongs to a single person. This single partner must be liable without limitation with his belongings in the event that an individual is harmed by the company's decisions.

Limited liability company

It is a type of business organization where the partners are responsible for responding only with the capital they initially contributed, but not with their equity.

Anonymous society

They are organizations where the responsibility is limited to the patrimony contributed. The owners of the company are those who bought shares or titles belonging to the company.

- According to its size

Business organizations are divided as follows according to their size:

Micro-enterprise

They are business organizations that have a workforce made up of a maximum of 10 workers. They generally belong to a single person and their owner usually also works in the company.

Their annual turnover is low and they do not affect much the way the market behaves. They are companies with few equipment and technological development, and their production processes are mainly artisanal.

Small company

It is the type of organization that has a minimum of 11 workers and a maximum of 49. They are profitable and independent institutions, with limited financial resources and not very intensive activity in terms of capital. They don't particularly specialize in one line of work.

Medium company

They are organizations that have a minimum of 50 workers and a maximum of 250. Due to their size, they usually have specialized areas and a union. Workers have well-defined responsibilities.

Big company

It is the type of organization that employs more than 250 workers. It usually has its own facilities, has large sales, is divided into specialized areas and also has a union.

It is the type of company that can apply for loans and credits of great value, since its financial activity is important.

- According to the sector of the economy

Business organizations are divided as follows according to the sector of the economy to which they belong:

Primary sector

They are companies that are mainly dedicated to the extraction of raw materials. They use basic technical tools and systems.

Secondary sector

They are organizations that are dedicated to the transformation of raw materials extracted by companies in the primary sector. They use processes of medium complexity to carry out their functions.

Third sector

This type of organization is not limited only to physical tasks, it is also dedicated to the execution of intellectual tasks and technological development.

- According to the origin of the capital

Business organizations are divided as follows according to the source from which their capital comes:

Private

They are business organizations in which the capital that constitutes them comes from private individuals.

Public

They are business organizations that depend on capital investment by the State to survive. They can be local, regional or national.

Mixed

They are business organizations that depend on the capital contribution from both the State and private entities.

- According to the interaction of its members

Business organizations are divided as follows according to the way their members interact with each other:

Formal

They are highly structured organizations where the way individuals interact is legitimately regulated. There are corporate activities, roles, departments, and a hierarchical structure defined and endorsed within the limits of local law.

It is a type of static and conservative organization, where participants agree to abide by existing formal documents and the contract that they signed when they entered the institution.

Informal

It is the type of business organization whose dynamics are most flexible. The behaviors, interpersonal relationships, and interactions between individuals that take place in the day-to-day running of the company are more open and flexible.

These types of organizations are usually flexible, spontaneous and in a constant process of evolution. Its members are usually young creatives whose behavior is regulated by general parameters and agreements.

Usually, informal organizations take some parameters and references from formal organizations, and adapt them according to their needs.

References

1. (2017). Directorate General for Industry and Small and Medium Enterprises. Obtained from Types of company: portal.circe.es
2. Classifications, E. d. (2017). Encyclopedia of Classifications. Obtained from Types of companies: typesde.org
3. Económica, Z. (August 3, 2009). Economic Zone. Obtained from The Business Organization: zonaeconomica.com
4. Hernandez, VM (2017). com SA Obtained from The company and the types of business organization: monografias.com
5. (2017). OBS Business School. Obtained from Business organization: characteristics, types and objectives: obs-edu.com.