# 1. The Firm: Types and Objectives
###### tags: `Introduction to business`

## Concept and nature of business

One might pose the following question:

> What is business?

A **business** is an economic activity that transforms **production assets** (*labour*, *capital*, etc) into **goods and services** aimed at satisfying customers’ needs.

## Circular flow of income

The **Circular flow of income** is a simple economic model that describes the commercial relationship between ==**consumers**== and ==**producers**==. This relationship is characterized by a **monetary** flow and a **real** flow. The *monetary* flow is all about money in its different forms: =wage, dividends, rents, interests or expenditures; the *real* flow is made up of good and services.

- Business/Firms (companies)
- Households (clients): can turn into shareholders or Investors

graph RL;
%% Comment
%% Create the nodes
id1(Firms);
id2(Housholds)
%% Connect the two graphs
id2 -- Revenue --> id1
id2 -- Factors of production --> id1
id1 -- Wages rents dividends --> id2
id1 -- Goods and services--> id2

## What is Economics?

We define **Economics** as the academic field that studies the interactions between people and how #TODO them as a whole, i .e., as a **society** decide to allocate and use limited resources (the factors of productions) for its own usage.

### Business functional areas
#TODO: What are business functions?
There are several functions that determine business, we classify them into three groups:

* **Real** functions: related to the real activity that is done after receiving the input (**supply**, **production**, **marketing**);
* **Financial** functions: they are related to **financing** and **investment**;
* **Management** functions: they are related to **organization**, **planning** and **supervision/control**.

Real functions are aided by other **support** functions such as IT and HR resources.

### Business goals
Business goals should followed the **SMART** principles:

- *S* for **specific**;
- *M* for **measurable**;
- *A* for **attainable**;
- *R* for **realistic** or **results oriented**;
- *T* for time.

## Business management process

-#TODO KEYWORDS: planning, organizing, leading and controlling

## Role of engineers in the business world

-#TODO

## The enterprise and the entrepeneur

### What is an entrepeneur?

-#TODO

#### The profile of the entrepeneur

-#TODO

#### The functions and responsibilities of an entrepeneur

-#TODO

### What is entrepeneurship ?

-#TODO

## Classification of enterprises
### By legal criteria
Depending on what is the **main form of business ownership**, there can be

## Stages of a company

Phases of a business:

1. Introduction;
2. Growth;
3. Maturity;
4. Decline.

TODO: For Pros and Cons of different companies -> create table comparing all of them


# Rodri:
## Muchas gracias por ir pillando apuntes, que me he retrasado mucho hoy

## Ownership - the agency problem
In the case that ownership is delegated to managers, t

¿Cual es la idea?
la idea?
la idea para que los apuntes sean distintos a los de la clase.

ah, para eos por ejemplo, en vez de hacerlo secuencialmente como lo muestran ellos
especialmente en la parte de comparación
podemos sintetizar todo eso de forma mucho mejor y más legible en tablas o esquemas

CONFLICT OF INTERESTS <-> **Agency problem** (cae siempre en examen)

### Board of directors -> SOLUTION to the agency problem
Link between shareholders and managers, have

### SOLUTION 2: Signing contracts:
This is done by rewarding managers with shares, making managers also be shareholders and start to be interested in stock price and ownership interests

## Types of ownership
### Cooperatives
### Limited partnership
limited liability inside the business.
### Joint Ownership