Scan the text to determine whether these statements are true (T) or false (F), and if they are false say why.

e.g. In my opinion it is true that... / I’m afraid it is false that... because...

1. (F)	If the business has debts and one of the partners dies, the others are barely responsible for his debts.
2. (F)	Corporations Partnerships are easy to organize, decisions can be made quickly, profits are shared with only a few people, and the owners are responsible for success or failure of the business.
3. (F)	If the corporation goes bankrupt or is sued, the stockholders lose the value of their stock. They are personally responsible for any money the corporation owes.
4. (F)	Bonds Shares represent ownership in the corporation.
5. (T)	In corporations with many owners or stockholders the individual share of profits in the form of dividends is comparatively small.

Match each of the phrases on the left with an appropriate explanation on the right. Use the grid below:

1.	company (UK) / corporation (US)	C	an organization operating to make a profit
2.	public company	O	a company whose shares are publicly available
3.	private company	A	a company whose shares are not publicly available
4.	cooperative	N	a democratic firm owned by its workers
5.	enterprise	I	a new commercial activity
6.	government agency	B	an organization which is part of the state organisation
7.	limited company	E	a firm where shareholders’ liability is limited
8.	offshore company	M	a firm based in a tax haven to avoid higher taxation
9.	minority interest	K	company in which another firm has less than a 50% interest
10.	parent company	D	a company which owns another
11.	partnership	H	two or more partners working together for profit, without limited liability
12.	subsidiary (affiliate)	F	firm owned by a parent company
13.	company accounts	G	documents showing income, expenditure, assets and liabilities, sales records, etc.
14.	fixed assets	L	items of value which are not easily changed into cash but which the business needs.
15.	current assets	J	cash items, or items that can easily be changed into cash for the present financial year

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C	O	A	N	I	B	E	M	K	D	H	F	G	L	J

2.4.5  There are five main types of legally constituted company. Tick the correct characteristics for each business type, or write “possibly” if the characteristic could apply. Give a brief description of the companies:

	public limited company	private limited company	sole trader	partnership	co-operative
single individual owns a company		possibly	Ö
two or more owners / directors	Ö	Ö		Ö
quoted on stock exchange	Ö
workers run the company					Ö
unlimited libility			Ö	Ö
limited liability	Ö	Ö			possibly
owner is self-employed			Ö	possibly

2.4. 6 Scan the text again and find the English equivalents for the following:

A.

1. оборотный капитал, оборотные фонды, оборотные средства current assets

2. мобилизовать необходимую сумму денег to raise the amount of money needed

3. устав акционерной компании Articles of Association

4. передача собственности ownership transfer

5. норма прибыли на акцию/ облигацию the rate of return on stocks / bonds

6. единоличное владение (хозяйство) a sole proprietorship

7. нанимать и увольнять служащих to hire and fire workers

8. разрешенный к выпуску акционерный капитал authorized share capital

9. организации, вкладывающие средства в создание новых компаний, часто с повышенным уровнем риска venture capital institutions

10. быть оштрафованным to be fined

11. имущество, активы, фонды, капитал, ресурсы компании the assets of a company

12. вести подробные учетные записи to keep detailed records

13. нести ответственность в пределах инвестированного капитала to be liable for the amount of capital somebody has invested

14. полное товарищество (с неограниченной имущественной ответственностью) general partnership

15. акционерная компания с ограниченной ответственностью (США) - corporation

16. выступать в качестве ответчика в суде to be sued

17. часть прибыли компании, распределяемая среди акционеров - dividend

18. ограниченная ответственность (акционера)-limited liability

19. получить сертификат об инкорпорации (лицензию)- to obtain a charter of incorporation

B.

A private limited company (private joint stock company) in England can have from two to fifty members (this figure does not include those who work in it). A private company does not have to send accounting records to the Registrar of companies (the Registrar), but every year it must state that it had not offered its shares or bonds to the public. A private company is often a family affair, whose capital was raised among the family members who, as a consequence, own shares in the company. But the shares ownership may be transferred to other people only with the consent of the Board of the company. Of course, it's a big disadvantage for the holder of the shares of private companies. Since each share has one vote, the holder must own at least 51% of the shares, to get the majority of votes required for permission to transfer shares to another person. Shares of the public limited company (PLC) can be freely sold on the stock exchange or during private negotiations.

PRACTICE

Language focus

 

2.5.1	d. Read the extract and fill in prepositions wherever necessary.
	e. Discuss the text.
	f. Give the text the appropriate heading.

_________________________________

To operate the business successfully, the manager needs to make decisions that maximize the returns to the owners of the company. Such decisions range from buying supplies from high-quality, low-cost suppliers, to hiring   the best available workers, to investing in the best available projects.

The first form of equity is owner’s capital. This is the most exposed form of capital since a return is received only after all other calls on a company’s profits have been satisfied.

Then in an extreme case – bankruptcy – the owner’s equity will be repaid only after everyone else, including employees, creditors, banks, etc., has received what they are owed.

In successful times, the owners have a claim on all the net profit of the company. They can go to other sources of equity finance: firstly, venture capital (it is usually provided by venture firms interested in financing high-growth companies). However, the provider usually demands a much faster and higher rate of return than an owner would expect to form his /her own capital. On the other hand, the venture capital company doesn’t usually interfere in the running of the company.

 

2.5. 2	a. Complete the text by using the following word combinations from the box and fill in the grid.
	b. Explain why, despite the technical and financial advantages of large firms, there are so many small firms.
	c. Make a list of advantages and disadvantages of small businesses in relation to large firms.

 

A	a small percentage	J	to be dominated by
B	to stimulate the supply side of the economy	K	the division of labour
C	on advantageous terms	L	encourage
D	exploit economies of scale	M	the unemployed
E	reduce	N	benefit
F	share of the market	O	a low rate of interest
G	amounts of capital	P	have access
H	capital	Q	the cost advantage;
I	employ

Small businesses are managed by their owner(s) and have a relatively small (1) … share of the market. Small manufacturing firms (2) … employ fewer than 200 people. Large firms are typically incorporated (limited companies), where ownership and management are separated. Large companies that (3) … exploit economies of scale enjoy a cost advantage over small firms in the same industry. In particular, large firms have access to the following technical and financial economies.

Technical economies occur in the production of a good. As the firm expands, there is greater scope for specialisation and (4)… the division of labour. Large factories can employ specialist skilled workers to do the same job all day with no time lost in changing tools or doing unfamiliar tasks. The indivisibility of certain types of (5) capital means that many production processes are impossible on a small scale. Large firms can (6) benefit by linking production processes that would otherwise be car-ried out in separate factories (a large manufacturer of shirts can (7) reduce transport costs by combining the weaving and cutting of cotton under the same roof).

Financial economies allow large firms to raise capital (8) on advantageous terms. Large firms are considered to be reliable and are therefore charged (9) a low rate of interest and (10) have access to capital markets such as the stock exchange. Selling shares is a relatively inexpensive method of raising large (11) amounts of capital. Despite (12) the cost advantage to large firms of producing in bulk, small businesses find a niche by providing specialized products for small markets (e.g. hairdressing cannot easily achieve a large scale of operation, and tends (13) to be dominated by small firms). An irregular or limited demand for a product pre-vents mass production. Small firms have the required flexibility and low over-heads. Often small firms survive by accepting subcontracting work from large companies. In printing, where fixed costs form only (14) a small percentage of total costs, low set-up costs (15) encouragethe development of small firms. Where the market for a good is restricted and highly localized, small firms survive, e.g. village shops. In an attempt (16) to stimulate the supply side of the economy the government has introduced a number of schemes to help small firms to survive: the Enterprise Allowance is a weekly sum paid to (17) the unemployed while they are setting up their own businesses; the Business Expansion Scheme provides relief against income tax to investors in unquoted companies.

 

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f	i	d	k	h	n	e	c	o	p	g	q	j	a	l	b	m

Skills focus