Forms of Business Organization
Lead in
1.Discuss the questions in pairs. Then present your ideas to the whole group.
What famous companies do you know?
What is their activity?
What other forms of business organization do you know?
Reading
2.Read the text. Find definitions of each form of business organization. Make a list of advantages and disadvantages of each form. Discuss them.
Forms of Business Organization
A Sole Proprietorship.
There are several forms of business organization. The most popular of them are: a sole proprietorship or individual proprietorship; a partnership; a corporation.
They all have their advantages and disadvantages.
A sole proprietorship is a business owned by one person. Sole proprietorships are the most numerous kind of business organization, but most are very small. The reason for their popularity is that they are the easiest and least costly to organize. There are other advantages. Sole proprietors own all the profits of their enterprises, they are their "own bosses", free to make whatever changes they please. They do not have to pay the special taxes placed on corporations. Sole proprietors also have the opportunity to achieve success and recognition through their individual efforts.
There are also disadvantages. A very serious one is the unlimited liability that each proprietor faces. All debts and all problems associated with the business belong to the owner. If a business fails the owner must personally assume the debts. A second disadvantage is that it has limited capital. The money is limited by the amount of his or her savings or ability to borrow. Other disadvantage may include lack of opportunities for employees, limitations of size and growth .
A Partnership.
A partnership is a business organization that is owned by two or more persons. Partnerships offer certain advantages over sole proprietorships:
- partners bring additional funds to a proprietorship,
- partners can bring fresh ideas and talents to business organizations,
- like the sole proprietorship, partnerships are relatively easy to form and are not subject to special taxation.
There are the following disadvantages:
-in many cases each of the partners is subject to unlimited liability. Partners are individually responsible for all the debts of the business. In other words, if the business were to fail, its creditors would have the right to recover their money from any, or all of the partners,
-the amount of capital that a partner can raise is limited. Exactly what that limit is will depend on the earnings of the business, the wealth of the partners and their ability to borrow;
- partners may disagree, causing management conflicts that could threaten the firm's existence.
A Corporation
A corporation is a business organization created under a government charter. Ownership of a corporation is represented by shares of stock and for that reason corporate owners are known as stockhokders.
Although corporations are outnumbered by about four to one by sole proprietorships, they dominate American business. Corporations are so important because of the advantages they offer over sole proprietorships and partnerships:
- limited liability. Unlike the owners of proprietorships and partnerships, who can be held personally liable for their debts, the most that corporate shareholders can lose (their liability) is limited to whatever they paid for their shares of stock (Ltd);
- ease of transfer. Stockholders can enter or leave a corporation at will simply by buying or selling shares of stock in that corporation;
-unlimited life .When the corporate stockholders die, their shares of stock are passed on to their heirs.
- tax advantages. In certain instances individuals can reduce their tax liability by incorporating.
Disadvantages of the corporation are:
- it is difficult and expensive to organize a corporation,
- corporations are subject for special taxes,
- corporations whose stock shares are sold to the public give up their privacy The law requires that these large, open (or public) corporations disclose information about their finances and operations to anyone interested in reading about them.
Speaking
3. Think over and say what form of business organization you would like to be engaged in and why.
4. Read and act out the dialogue.
Jim: Hi, Alice. How are you getting on?
Alice: Fine, as usual, thanks, Jim. What about you?
Jim: I’m OK. It’s nice to see you.
Alice: You too. I’m glad you are not in a hurry and we have time to talk today.
Jim: Sure.
Alice: Can you give me a piece of advice?
Jim: Well, I’ll try if I can.
Alice: You know I’ve been always good at cooking. It interests me. I am thinking of starting my own business – a café.
Jim: It might be a good idea.
Alice: I guess I must learn about the responsibilities of going into business.
Jim: Are you going into this business by yourself?
Alice: Exactly. I’d like to have a café with my name on it where I make the decisions and where I control the profits.
Jim: You seem to be resolute so I’ll try to help you. If you go into business alone, it is called sole proprietorship. In such case you needn’t consult a lawyer to form the business. You can start or you can stop your business whenever you like.
Alice: It sounds encouraging. What else can you tell me?
Jim: There is no need to consult partners or a board of directors. So you can put your policies into effect quickly. You decide on your vacation, hours, salary, hiring and firing.
Alice: Well, that’s not bad.
Jim: Wait a moment. I believe I have to tell you about the risk involved.
Alice: What do you mean?
Jim: First of all, the most important risk is that you have unlimited liability. It means that you are responsible for all your business debts.
Alice: So, if the business fails, I have to declare personal bankruptcy, don’t I?
Jim: That’s what I mean. You can lose your personal assets.
Alice: Well, it’s rather disappointing. What other things should I know?
Jim: You won’t get tax benefits which partners or corporations get.
Alice: I know about it. By the way do you know of a good accountant to do my taxes?
Jim: Of course. You’ll also have to hire a good book-keeper if you can’t do your books yourself.
Alice: I can’t say anything definite about that. I have to think it over. What else, Jim?
Jim: Well, I am a bit hungry, why don’t we have a snack together and discuss the things in the café.
Alice: You are right as usual.
5. Make up a similar dialogue about other forms of business organization.
6. Do you know that each company has its structure? What departments does a company have? Unjumble the letters in brackets to give the names of departments in a company.
COMPANY DEPARTMENTS
1. This department sells the products. (elass). sales
2. If there is a serious problem with late payments,
this department deals with it. (laleg)
3. This department sends all the bills, (toncacus)
4. This department makes the products, (nodurpocit)
5. This department deals with suppliers, (haspcurgin)
6. Employees are the first priority in this department.
(namuh escrouser)
7. Read the text. Are the statements below true or false? Mark them T or F.
COMPANY ORGANIZATION.
When most people hear the word Guinness, they think of the Irish beer of the same name, but in fact the Guinness company is now a multinational with a vast network of joint venture companies, distributors and subsidiaries, and an annual turnover of more than £4 billion. Its products are sold in over 200 countries worldwide.
Guinness operates mainly in the alcoholic drinks market. Its brands include a number of famous names like Johnnie Walker, Bell's Scotch whisky, and Gordon's gin. It owns United Distillers, the most profitable spirits company in the world. It also has a 34% stake in Moet Hennessy, the French champagne and cognac company, whose owner, LVMH, has a 20% share in Guinness. About three quarters of Guinness group's profits come from spirits. Guinness beer (called 'stout') is produced in more than 50 countries, and sold in 150. For the moment, the beer company represents only 25% of the group's profits.
Apart from alcohol production, the company owns Gleneagles, the world-famous golf hotel in Scotland, and runs a division which publishes The Guinness Book of Records.
Guinness PLC is based in central London. The company has offices in over 50 countries around the world, with 23,000 employees. Tony Greener is the chairman of a Board which is made up of 6 executive and 6 non-executive directors.
* * *
a About 75% of Guinness' profits are from spirits.
b Guinness doesn't only operate in the drinks market.
с United Distillers is a shareholder of Guinness.
d Guinness owns LVMH.
e Guinness beer is made in more than 100 countries.
f The company produces The Guinness Book of Records at Gleneagles.
g The Head Office of Guinness PLC is in London,
h The Board of Directors has twelve members.
8. Find words or phrases in the text which mean:
a a company with subsidiaries in a number of countries
b value of sales in a year
с all over the world
d strong alcoholic drinks such as gin or whisky
e a minority share in a company
f controls / manages
g consists of
h the group of people who are responsible for company decisions
i not full-time and not responsible for day-to-day decisions
Vocabulary Work
9. For each question, choose a pair of words from the list to complete the spaces in the two sentences. Decide which of the two words you need for each space. The first is done for you as an example.
salesman/retailer consists/divided accountant/accounts
sells/buys produce/products share/subsidiary
education/training manufactures/factory
1 There are 300 machine operators in our factory.
The company manufactures children's toys.
2 The Purchasing department...... products.
Guinness......... its beer all over Europe.
3 The......... of staff in our company is the responsibility of
the Human Resources department.
Schools are responsible for children's.......
4 We......... 300 units per hour in our factory.
Bell's Whisky is one of our most profitable.....
5 We can't give you exact sales figures now because our. is on
holiday.
The tax inspector came last month to look at our......
6 ICL is a........ of the Japanese Fujitsu company.
LVMH has a large........ of the perfume market.
7 A......... has a shop which sells directly to the public.
A.......... is a person who sells to shops or companies.
8 Our electronics division is...... into a number of
autonomous companies.
The company......... of five operating divisions.
Follow up
10.Imagine you are going to start up your own company. Tell the class about its structure, departments, type of business etc. You may prepare a computer presentation.
Unit 5
Company History.
Lead in
1.Discuss the following questions in pairs.
What do you know about Canon company?
What do they produce?
What is its origin?
Listening
2.Before you listen, match the words on the left with the definitions on the right.
a start up 1 around the world
b a plant 2 grow bigger
c overseas 3 begin/establish (a company)
d entirely 4 factory, production centre
e expand 5 abroad, in a foreign country
f worldwide 6 completely
3. Listen to Mr. Cassidy telling about his company Canon. Complete the table below.
| Event | Year | Place |
4.Listen to the text again and be ready to answer the following questions.
1) When did the company start up?
2) What was its origin?
3) How did they start in America?
4) Do they produce many of their products overseas? Where?
5) How big is the company now?
6) How many people work for this company worldwide?
Speaking
5.Using the information from the text tell about Canon company.
A FAMOUS COMPANY
6. Read this information about the Motorola company. Then complete the dialogue between Person A and Person В (an employee of Motorola). Choose words from the list.
COMPANY- PROFILE
MOTOROLA
Head office Schaumburg, Illinois, USA
ProductsWireless communications, semi-conductors, advanced electronic systems
Turnover $ 22.2 billion
Profits$1 billion
CustomersComputer manufacturers, electronics distributors, telephone companies, automobile
manufacturers
Employees 132,000
products offices employ located sell
specialize customers Motorola sales profits
A: Who do you work for?
B: Motorola
A: Isn't that an American company?
B: Yes, it is.
A: Do you work in the States?
B: No, I work in one of our...... (2) in Europe.
A: Where's it......... (3), exactly?
B: In Paris, France.
A: And you make electronic...... (4)?
B: Yes, that's right. We....... (5) in wireless communications and advanced
electronic systems.
A: And who are your main....... (6)?
B: We.......... (7) a lot to computer manufacturers.
A: How many people work for Motorola around the world?
B: In total, I think we....... (8) about 132,000 people.
A: And what's your annual turnover?
B: Well, this year we have...... (9) of $22.2 billion with
........ (10)of $1 billion.
Follow up
7.Using the Internet or other resources prepare a presentation about any famous company.
Unit 6