Who runs a large firm ?, Small firms, Social responsibility...

6.6. Who runs a large company?

Who runs a large firm? Answer: holding companies. They exercise control over other firms as a result of owning a sufficient portion of their ordinary shares. Generally speaking, the holding company should have a controlling stake (51% or more), but due to the fact that the shares are dispersed and there are a significant number of inert shareholders, control is possible with fewer shares. This allows the holding company to own other firms (they are called subsidiaries and grandchildren), spending less money than buying physical assets. Such a kind of financial pyramid enables the holding company to control the management and marketing activities of its dependent firms.

The first holdings arose in the US in the late XIX century. Holding companies of the late XIX - early XX century. markedly different from modern. Acceleration of the processes of concentration and centralization of production and capital, the internationalization of capital and the diversification of production, the creation of closed economic groupings, and the intensification of capital outflows all led to a wide distribution of holdings as effective means of controlling financial and industrial centers for the activities of their branches and subsidiaries. >

The global trend of distribution of holding companies is a direct consequence of the development of large business. It is the basis for combining (merging) the power of large firms with state structures. Such an alliance is called oligarchy. Thus, the oligarchs are the owners of large firms that have support in state structures and can directly influence the adoption of government decisions. In this case, the management of the economy is not in the public interest, but in the interests of oligarchic groups. This is a typical form of government in all developed countries. But it was the most pronounced in modern United States economic development.

6.7. Small firms

In a market economy, along with large companies, hundreds of thousands of small firms appear every year (although the trend towards their consolidation is quite long-term). In developed countries, there are many successful small companies, including both manufacturing firms and retailers. Many of these firms are burned out, but their total number is constantly growing.

It should be noted that in the economy there are often situations where a small firm has obvious advantages over a large one. Let's highlight the following advantages of small business:

o production of non-standard goods - some people want to purchase individual clothes, shoes, jewelry. The market for such goods is always limited, so manufacturers can not use mass production methods;

o non-standard repairs (houses, cars, shoes, watches), so there are many small firms specializing in providing similar services;

o personal services - people prefer to deal with one person. A family doctor or lawyer, a local hairdresser and specialized retail stores provide services with an individual approach to each client;

o in small settlements do not need supermarkets, there are required small business enterprises;

o Production of such goods as luxury yachts, expensive limousines, high-quality sports cars.

Flexibility is the biggest advantage of a small firm before a large one, because a small company can adapt to changes in customer requests much more quickly.

As a rule, the state takes a number of programs aimed at helping small businesses. They are offered administrative support and advice. In addition, those who already have or are about to open a small enterprise are being provided with financial assistance.

You can not think that a small business is a business of the Stone Age: a hammer and a loom. No. He must be at the level of big business, both material and professional. It is shallow only for one attribute: in terms of the amount of advanced capital.

6.8. Social responsibility and ethics in business

Large business receives large profits. But these incomes should go not only to personal enrichment of businessmen and expansion of production, but also to meet social needs. This is called social responsibility and ethics in business, which can manifest itself in the form of charitable activities, to participate in the development and implementation of social programs, together with the State or other companies, increasing the responsibility of the society for environmental state of health not only their employees, but also the population in in general, improving the safety of production and consumption (operation) of goods, observance of civil rights, taking care of the interests of the consumer.

Are such social costs beneficial for firms? Yes and no. No - in the event that they can increase costs and reduce profits in the short run, yes - when these measures increase the company's prestige, its popularity, lead the company to solve a wide range of long-term problems both in the market and in production, increase moral responsibility collective, serve as an additional incentive to work.

Social responsibility in business can only be voluntary. Its roots lie in universal values. The ethics of entrepreneurs is a moral category that occupies an increasingly important place in the economic activity of the subject.

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