The Role of the Company

Posted: 23rd May 2014 by brednane1981 in Super Tool
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Complete-Business-Growth-Package

Company

Type of Ownership

Number of Employees

Wal-Mart

Publicly held

2.2 million

Apple

Publicly held

80,300

JPMorgan Chase

Publicly held

251,196

Eileen Fisher

Privately owned

875

Joe’s Coffee Bistro*

Privately owned

11

What do all of these companies have in common? They all have employees depending on them for jobs and wages. They all look to supply a product to meet consumer needs. They all pay taxes and help stimulate economic growth. They all aim to make money. So what is the main role of the company?

Business is the backbone of our economy. As a capitalistic society, our entire economic model is based off of the growth and success of businesses like those mentioned above. People depend on businesses for wages. Governments depend on businesses for taxes. Businesses depend on government for contract jobs and protection from foreign businesses. Businesses even depend on other businesses.

In order to meet all these requirements, businesses need to generate enough money to satisfy the needs of all parties involved by continuing to grow (pay their employees and their taxes), while at the same time rely upon other parties to obtain that growth (labor). The two sides are connected and when one part stops or slows down, the entire system locks up.

For as complex of a system as a business can be, circumstances can change rapidly. For example, if the cost of living goes up, but wages remain the same, people will spend less, therefore causing the money flow to slow down. This in turn causes the business’s cash flow to dry up causing workers to be laid-off. If this is not carefully and quickly reconciled, then the entire economy hits recessions (or worse, depression). To summarize its importance, we remember what Uncle Ben from Spider-Man told us: “With great power comes great responsibility.” So I amend my original question to: what is the responsibility that business has to us?

From an owner’s perspective, business is a means to create wealth, provide jobs, and create products or provide services to others. The CEOs of the first three companies listed above look to always improve the value of their stock, as these companies are owned by the shareholders. Growth comes from increases in the bottom line of the company. But for the privately held sole proprietorships, such as Joe’s Coffee, growth is often hard to come by. Privately owned small businesses usually have only one location and are interested in increasing the customer base, but really they are trying to stay afloat to make ends meet; it’s much harder for the small companies to compete with the larger ones simply due to physical size and customer reach.

Small businesses are the most important part of our economy as they account for about 99.7 percent of U.S. employer firms and 46 percent of private-sector output, according to the Small Business Association. Small businesses also account for 49.2 percent of private-sector employment. These are huge percentages. How these businesses hire (or lay-off) employees, how much they pay their workers, and the benefits that these companies provide have a huge impact on not only their employees but their success as a whole. People want fair compensation for their work and businesses continuously try to lower costs.

Governments depend on businesses for international trade; the bringing of foreign goods to the domestic home front. Products made in Germany depend on tools manufactured in the U.S. Coffee from Columbia get U.S. workers out of bed in the morning. Taxes from these businesses help fund our education system, healthcare programs, and national security (to name a few). All of this puts business firms at the center of the picture.

So I ask you: What do you think is the main role of the company?
Chadd Brown
Super Tool, Inc.

 

SBA Office of Advocacy site:
http://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

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