The economic cycle at a glance

In the simple model of the economic cycle A companies produce goods (products and services) that are bought by private households (including you and your family). So the main task of the companies is the production of products and services. To do this, they employ employees and pay them salaries for their work.

With this paid employment, people in private households (eg single persons or families) have the opportunity to buy AG goods that they need for their private consumption (consumption). With the remunerations they receive for their work, private households also pay their taxes, that is, the taxes to the state.

One of the important tasks of the state is to determine certain framework conditions for the actions of companies and private households. For example, the state issues health and safety laws (eg the prohibition of child labor) and environmental protection provisions.

In addition, the state produces goods which, in contrast to the goods in dispute, are public goods. Public goods are all those economic goods that can be used simultaneously by one or more other persons when used by one person. This means, first, that consuming a public good does not reduce the amount of good that can be consumed by another person. Secondly, it is not possible or too laborious to exclude persons from the consumption of a public good who have not paid for it.

Examples of public goods

Simple examples of public goods are state education or the security that the state provides to its citizens. For example, policemen and soldiers are needed, who of course have to be paid. Of course, this also applies to your teachers and those members of your family who work as civil servants or employees in public service for the state.

In addition, the state offers benefits in the form of subsidies, eg. For example, to strengthen economically weaker regions or to promote environmentally friendly behavior and production techniques. In order to fulfill these and other tasks, the state needs revenue. He receives these taxes by levying charges in the form of fees, contributions and taxes on companies and private households.

Some of the tasks are not carried out by the A State itself, but it is awarded in the form of A government contracts to companies, eg. When building new schools or roads.

Gross domestic product (GDP)

When statisticians consider the economic performance of a country, they often speak of gross domestic product. Gross domestic product (GDP) gives the total value of all A goods (goods and services) produced within a year in one economy and used for final consumption. The GDP in Germany is calculated by the Federal Statistical Office in Wiesbaden and its statistical regional offices (in Rhineland-Palatinate in Bad Ems). Unpaid activities (eg home work or voluntary work) and so-called black work are not included in GDP. Of undeclared work is spoken when a paid work is not registered, so for them no Abga¬ben (Asteuern and contributions to ASozial insurance) are paid. Thus, undeclared work is a great harm to the economy and the ASolidar community.

Definition “gross domestic product”:

Gross domestic product (GDP) is the sum of the economic services rendered in the country.

How can companies / company / company be distinguished?

We have already got to know companies and their main task in the model of economic circulation. In general, a company is an economic entity that is run by a company management. The company employs employees (this is also referred to as the labor production factor) in order to have goods produced by them. Companies aim to generate profit. The profit results from the difference of the proceeds by the selling of products or

ADservices of a company and the costs incurred.


Profit = revenue – costs

However, there are also ANon-profit companies; These are companies that are committed to charitable social, cultural or scientific goals and whose purpose is not the generation of profits.

The term A operation refers to the location where a company produces its products or services. This can be the case at several different locations: the chemical group BASF operates around 360 production sites worldwide in addition to Ludwigshafen (for example in the USA, in Malay-sia and in China).


Now – where – after detailed consultation – the plan for your own company stands, the capital needs identified and – together with banks, savings banks and development banks – financing was made possible – the way is clear. The way to the market. But with the preparations, the work of the entrepreneur is not done. After the start of the company many tasks and challenges await the founders of existence. And here too they are confronted with situations that are new and unknown to them: the attitude and the handling of personnel, the controlling and the acquisition of customers through advertising and marketing.

3.1 Market entry – the first impression counts

When the company starts doing business, you can finally show everyone what the business looks like, what the business looks like, which products are sold. As many customers as possible should get to know the new company, the new shop and its products and services. In the trade, the shops are often celebrated with a business opening. Perhaps those who have had positive experiences with the business on the opening day will come back and recommend the company to friends and acquaintances. Of course it is also helpful if you manage to get your business idea in the regional newspaper or on the radio. You can hardly get better advertising.

The start of business activities is also an important formal date. Depending on the legal form in which the company is operated, the entry in the market must be entered in the A commercial register or a trade license before entering the market

be made. Anyone wishing to practice an agency within the meaning of the craft code must have passed the master examination in some crafts branches and be entered in the “craft role” by the local Chamber of Crafts. The handicraft role is a directory in which all craftsmen of the district of the respective chamber of trade are registered. All other commercial companies are members of the respective Chamber of Commerce and Industry. As a result of the obligatory business registration for the registration office of the municipality in which the company is established, the following institutions are officially informed: employment office, professional association, tax office, commercial register, chamber of commerce or chamber of commerce and industry Statistical State Office. Self-employed professionals who you will get to know in greater detail do not have to submit a business license.

3.2 Advertising and PR – always keeping an eye on customers

Customers like to buy products and services that they know. Especially in newly founded companies, there is usually a lack of clear information about the offer of the company. The basis for effective advertising and successful PR (public relations) is to give the company a specific image. Every company – no matter if single

Trading business for exclusive designer fashion or manufacturer of tractors – needs a uniform appearance, a corporate identity. And one that the customer recognizes again and can assign to the company! Since a distinction between advertising and PR is often difficult, you will find below an overview with the respective characteristics and some examples.