II Reading and Speaking

Exercise 6. Skim the text A and be ready to answer the following questions:

1. What is a business?

2. What are main types of businesses?

3. What are main forms of businesses?

4. What is the main objective of any business?

Text A

Notes:

1. inputs- фактори виробництва

2. outputs –продукт вироблення

3. charities- доброчинна діяльність

A business is an organization in which basic resources, called inputs, are processed to provide goods or services, called outputs to customers. People who are engaged in business activity are called entrepreneurs or businessmen. There are three different nature and types of businesses that are operated with the purpose of earning profit.

1. Service Business. This type of business operation provides services to its customers. It includes the following:

• Professionals such Lawyers, Doctors, Accountants, Engineers, etc.

• Hospital

• Hotel and Lodging

• Transportation

• Entertainment

• Banking

2. Merchandising Business. This type of business operation sells products to its customers. They don’t make the products they sell. It includes the following:

• General merchandise such as grocery store and retail business

• Toy stores

• Electronic stores

3. Manufacturing Business. This type of business operation converts basic inputs, such as materials, labor into finished products which are sold to customers. It includes the following:

• Computer and electronic manufacturer

• Car, trucks and vans manufacturer

• Shoe and clothes manufacturer

• Canned goods manufacturer

A business is always owned by someone. It can have a number of different forms of ownership depending on the aims and objectives of the owners. Most businesses aim to make profit. There are three main forms of business organization: sole proprietorships, partnerships and corporations (public or private). Some organizations however will be ‘not-for-profit’, such as charities or government-run corporations.

Exercise 7. Match forms of businesses in column A with their definitions in column B.

A	B
1. Partnership	a). a business owned and run by one person
2. Sole (single) proprietorship	b). a business owned by many people who hold stock, or shares, in it, though the number of stockholders, or shareholders, is limited. Only shareholders can directly sell their shares (stock); they are not sold freely at the stock exchange.
3. Public company (corporation)	c). a business owned by several people (only up to 20) who have agreed to pool their money and efforts.
4. Private company ( privately owned corporation)	d). a business owned by different people who hold stock (shares) in it. The number of shareholders is unlimited. Stock (or shares) is sold, bought, and traded at the stock exchange by brokers.

III Reading

Exercise 8. Read and translate the text B:

Text B Sole Proprietorship and Partnership

From a legal point of view, there are two simplest ways of organizing a business.

The first is sole proprietorship, sometimes called single proprietorship, or individual proprietorship (in American English). It is the simplest and the cheapest method of starting a business, because a sole proprietor invests his or her own capital and personal assets (anything that belongs to the person), or gets a loan from a bank. He or she alone decides what he or she will do to achieve the objective of any business - profit. So, to start a sole proprietorship, you only require the capital to invest and, of course, knowledge of the local laws.

The advantagesof a sole proprietorship are:

• It is easy to start.

• It is inexpensive to start.

• It is flexible, because the sole proprietor himself/herself holds all the authority.

• It is best adapted to a small business because it can provide individualized products and services to their customers.

The disadvantagesare:

• It is unlimited in legal liability because the sole proprietor is personally responsible for all the debts and everything that is done in his or her business.

• It lacks stability and continuity because the sole proprietor's disease is a threat to the business, and his or her death usually stops it.

• The difficulty of raising money and the slow growth of the business: it is often difficult to get loans and credits for the business, and it will grow very slowly because one person can only do a limited amount of work.

• It has a high risk of failure because the competition is usually great.

The second simple form of business organization is a partnership. In a partnership, no less than two, and no more than twenty people (according to the British law) pool their property, capital (including intellectual capital), efforts, and managerial talents to do business and gain profits. The co-owners make a written agreement regarding how to invest capital and share dividends, called an Agreement on Capital and Dividends Share. They also write a Statute of their partnership where all the rights and duties of co-owners are regulated. The Statute is a legal document, and its contents are regulated by law. At least one of the partners has unlimited liability, but quite often every co-owner is liable for all the debts of the partnership.

The advantages of a partnership are:

• It is easy to organize.

• It has potential additional sources for raising investment capital because new partners can be added.

• It does not pay corporate tax (tax on the corporation's profits), as the co-owners can use the profits gained as their personal income, and then only pay ordinary income tax for it.

• Every partner may act on behalf of the entire partnership.

The disadvantagesare:

• The business suffers if partners have serious and constant disagreements over decision -making.

• Senior partners have unlimited personal liability.

• In case of bankruptcy, the co-owners who invested more capital (the senior partners) lose more than the junior partners do who invested less.

• In case of death or incapacity of a senior (major) partner, the partnership may cease to exist (be dissolved).

• It is often difficult to get rid of a bad partner.