What is a corporation? State corporations. Mortgage Corporation

Business is growing, large companies are growing, but small businesses are harder to survive. What they are - corporations, what they are, whether it is good or bad - to unite, we will consider in this article.

Corporation: definition and essence

In today's market conditions, you understand more and more clearly that it is extremely difficult for small businesses to stay afloat among business sharks, as external factors can easily affect the entrepreneur's activities, but he, in turn, can not turn the environment into the right direction. Therefore, business entities are increasingly united and strengthened.

The meaning of the word "corporation" came to us at the end of the XIX century with the growth of manufactory production. It is clear that since then the concept of production activity and business in general has also changed.

What is a corporation today? This is the combination of a group of elements (in our case, entrepreneurs) that achieve common goals in synergistic efforts. It is important to understand that the owner does not take an active part in the activities of such economic entities, therefore, as managers, the staff is hired separately.

Today, corporate governance is most developed in capitalist countries: Japan, the US and Canada.

What are they like?

According to the current legislation of different countries, in one or another state the permitted forms of the corporation are different, therefore it is more expedient to consider their varieties in the generally accepted world economic theory. So, the most common are the following forms:

1. Limited Liability Company (LLC). As a rule, statutory funds in an enterprise of this type are formed at the expense of the founders' own resources, so all risks are borne by them (like the now popular mortgage corporation).
2. Closed Joint Stock Company (CJSC). As owners, shareholders act, and they distribute the profits among themselves and employees.
3. Open Joint Stock Company (OJSC). Securities of an enterprise of this type are issued through open subscription, so anyone can buy them, including the government, which generates state corporations.
4. Cartel. Occurs if the business entities involved in one industry are united.
5. Holding. A corporation consisting of several companies, headed by a separate branch, which decides the key issues of activity on its own behalf.
6. Pool. A group of enterprises that differs in the distribution of profits (equally).

Internal relations

As a rule, if business entities unite, they become dependent on each other. Although sometimes it happens that each company performs its main activity separately, only by periodically dividing the dividends to shareholders (an example of this is a mortgage corporation). But, nevertheless, there is an algorithm for the relationship between the owner and the subject of economic activity:

• Once an independent legal entity is absorbed by the head representative;
• Financial management becomes corporate;
• The former enterprise is restructured;
• A consortium is created and branches are formed.

The corporate governance system

As a rule, information on the management of joint ventures, as well as the bodies exercising this process, is indicated in the statutory documents of the newly formed business entity.

In the case of CJSC and OAO, similar organizations are managed by hired contractors, with key issues being decided by the shareholders meeting (state corporations in the head office also have representatives of the executive sector of power).

Cartels, syndicates, holdings, pools and other forms of association inherent in capitalist society are structured as follows:

• Board of directors (carries out strategic planning);
• Executive director (gives instructions, bears share of responsibility);
• Other staff (as a rule, has a vertical hierarchy).

Advantages of corporations

What is a corporation? Representatives of capitalist society argue that this is the optimal form of functioning of business entities. And in some ways they are right, because the positive sides are there:

1. The possibility of a continuous increase in production capacity, since large concerns are much easier to survive in a competitive modern market environment.
2. A financial corporation is often an excellent bait for an investor. Nevertheless, there is a high probability that the holder of foreign capital will invest money in a large company, rather than risk, concluding deals with firms that are one-day.
3. Such associations, as a rule, have a long-term long-term perspective and a strategic development plan, which to some extent guarantees reliability and financial stability.
4. What does the corporation mean? Distribution of rights. Therefore, in particular for shareholders, it is much more profitable to bear partial responsibility for the company's activities than the full one.

disadvantages

As it is typical of the absolute form of business activity, corporations have a number of their shortcomings:

1. It should not be forgotten that in such entities, control and management is carried out by various groups of officials, which can lead to contradictory situations and untimely reaction to certain negative aspects.
2. The raised level of the taxation. Since the attribution to the state treasury is subject to both the share of net profit and dividends.
3. A huge level of potential opportunities and ways for managers to abuse their position. For example, if things are not going well in the company, then management can decide on the issue of additional securities, the proceeds of which will later cover the losses that arose earlier.

What is a corporation in Russia?

The principles and forms of doing business in Russia today are so diverse that you can meet here as a lot of private entrepreneurs, and small companies, only the start-ups of holdings and the most powerful sharks in the person of Sibneft and Gazprom.

Despite the fact that each of them pursues different goals and has enormous differences in the volumes of profit and sales, there are still a number of tasks that all of them adhere to without exception:

• Maximization of production and scientific and technical interrelation between the participants of holdings, at the same time, the distribution of responsibility to senior officials and owners is optimized;
• Strategic management bodies with full responsibility control the performance of enterprises;
• At the same time, the local officials are directly involved in the management;
• Especially large corporations are trying to introduce into the company special economic centers that are engaged in the administration of the current activities of the business entity;
• Intercompany trade relations are carried out on special terms.

conclusions

So, we examined what a corporation is, what its variants are, how it performs its functions, and has revealed both advantages and disadvantages of this form of organizational activity.

We must understand that in the regime of our post-Soviet mixed economy we are too far from the capitalist society, and are we striving for this? Too many firms are fly-by-night and small entrepreneurs without special strategic plans. But, nevertheless, the overwhelming majority of the Western business world considers this form of organizational activity to be quite successful.

Who knows, maybe in a few decades, modern entrepreneurs will have nothing left but to unite in larger commercial unions in order to survive in a modern competitive market society, but for now, we are striving for the best.