Doing Business: How to Shoot Up

Doing Business: How to Shoot Up

DOI: 10.4018/978-1-5225-4978-9.ch005


In addition to defining the seven most used market structures, the author describes the differences between a Limited Liability Company and the Corporation with Variable Capital. In this sense, one of the big mistakes made by SMEs is that entrepreneurs put their assets at risk to get their companies moving forward, which constitutes a significant danger. In the chapter, the author suggests some strategies to reduce this problem of risk exposure with 18 strategies and techniques of negotiation. Then, the author proposes outsourcing as a strategy for both corporate growth and cost reduction and explains how to take business advantages using Giffen goods. The chapter ends with some plans on how to achieve leadership from the application of the RECA matrix.
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Each achievement-whether big or small-has stages of slavery and triumph. A beginning, a fight, a victory. (Mahatma Gandhi)


Llcs And Llps Vs. Corporation With Variable Capital

A fundamental aspect of the creation of a firm is to choose the most suitable legal form to be applied to the business, as this choice determines the amount of risk the entrepreneur assumes. In the business world, the ability to take risks (commercial, operational and financial) will determine corporate policy and capital needs.

Although they have a very local business spirit (e.g., small and remote SMEs that are not of interest to larger companies, and even less, to multinationals), all businesses today, because of economic globalization, are dependent on each other. This interdependence means that exogenous (external to the company) factors can simultaneously influence on both prices and the corporate policy. Exogenous factors that, by definition, are not controllable by the corporation itself, which can generate problems of long-term economic and financial instability. Some examples of economic and business-related exogenous factors that can affect the financial instability of the firm are, among others, increases in the price of raw materials, especially oil; legislative and regulatory changes that have an impact on the enterprise, and natural disasters affecting production or the distribution channels of the company.

Firms can at least partially control this type of adverse consequences at the foundational moment when choosing the legal form for the enterprise. Although from a commercial law point of view we can distinguish up to ten different legal forms, depending on the legal system of the country we consider, almost all the nations in the world share the LLC and the Corporation with Variable Capital. We describe these legal forms in the next subsection.

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