The significance of the corporate business organization 2010
A corporation is a company organized and owned by stockholders. A stockholder is a person who buys shares and receives dividends. Stockholders own the corporation, but they do not necessarily work in it or run it. The corporation is usually run by employed directors or managers.
There are different types of corporations. The private business corporation is known as one type of corporation but there also exist other types, for instance, public corporations owned by governmental bodies. The Tennessee Valley Authority formed in the 1930s in the USA can be mentioned as an example of a federal corporation which is to provide power, control floods, and provide irrigation.
The majority of corporations in the USA are small and they make up approximately twenty five percent of all business companies, however, this figure understates the real economic significance of the corporate business organization. Corporations have great financial power to research, develop and produce goods, and the best opportunities of using talents, knowledge and experience of an unlimited number of people for that. Modern technological developments largely account for the appearance of corporate giants in such sectors of the economy as manufacturing, transportation and utilities, mining, banking and insurance, and retail trade.
In view of the growing importance of corporations, society is faced with three major problems. First, the growth in corporate size has brought about an increasing separation of control from ownership. In large companies a stockholder no longer performs effective control; actual control belongs to management, which tends to be self-selecting and responsible only to itself. Second, the size of many corporations gives them economic power that permits to ignore the discipline of the competitive market, because it is large corporations that have real control over the prices charged for the goods they produce. Finally, society cannot be sure that the corporate performance serves the public interest.
Public interest requires organization and operation of business to be subjected to governmental regulation. Government regulation, particularly in the USA, attempts to prevent the formation of monopolies that totally control a particular branch of industry such as steel, petroleum, or automobile production. Governments also regulate public utilities and transportation, guarantee loans to home owners, subsidize shipping, build highways and airports.
Do the tasks:
1. Find the equivalents of the following words:
1. people who own shares in a company
2. profits which is paid to people who have shares in the company
3. possess
4. an important service such as water, electricity, or gas that is provided for everyone, and that everyone pays for.
5. a guarantee of compensation for specified loss
6. the act or right of possessing something
7. allows
8. stop , stop (someone) from doing something
9. control
10. a thing that is borrowed; money lent
1. Make the best choice:
1. A corporation is a company:
a. owned by a person who is usually employed;
b. which can’t insure great profits;
c. organized by shareholders.
2. Corporations appear in different sectors of economy due to
a. modern technological development;
b. the number of important problems society has;
c. economic significance of the corporate business organizations for the Government.
3. With the appearance of corporate giants society is faced with
a. an increasing separation of control from ownership;
b. the rise of the discipline in the competitive market;
c. more responsible attitude to public interest.
4. The majority of corporations in the USA
a. make up 55% of all business companies.
b. have great financial power.
c. are owned by the state.
5. Government regulations in the USA
a. promote the rise of capital of corporations;
b. provide financial support to the corporations;
c. attempt to prevent corporations from controlling certain branches of industry.