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Ex. 13. Insert the missing words given below.
Consumption, take account of, manager, state, environment, include, capital, macroeconomics, economy
In a simplistic … in which individuals or families produce primarily for their own …, economy-wide phenomena are of little importance. On the other hand, the complex financial … and production process that characterizes an advanced economy in the 1980s requires individual decision makers … both the current economic environment and forecasts of the economic environment. Decisions that require an understanding of the overall functioning of the economy … business decisions such as whether firm should sell bonds or stock to raise new … and individual decisions such as whether to change jobs or purchase a new home. Whether a person «wears the hat» of an entrepreneur, a business …, or a head of a household, it is important to be aware of the … of the economy as a whole. Specific factors that determine the advisability of these and other decisions are studied as part of … .
Ex. 14. Add an appropriate preposition to each of the following sentences where indicated.
1. This refers … the interactive effect of the parts of the system working together.
2. They decorated the house regardless … cost.
3. Economic forms range … the mixed private enterprise … completely controlled economies.
4. Everyone, irrespective …means or occupation, shall have an equal opportunity.
5. This function is basically performed … the price mechanism.
6. This simply means that demand … and supply … goods and services interact.
7. Gradual change is preferable …sudden, large-scale change.
8. Such a system affects … every link in the distribution chain.
9. They have to satisfy their wants and needs … the consumption of such products and services.
10. It has also made it easier …the same time.
11. The political system is coupled … the economic system.
12. Organization must have access .. modern technology.
13. All organizations depend … supply of labour force.
14. The economic system is concerned … the allocation of scarce resources.
15. We must try to cope … our problems.
16. The entrance door gives access … the living room.
Ex. 15. Open the brackets.
The Price System
Who (to tell) workers where (to work) or what occupation to choose? Who (to declare) haw many cars should (to produce) and how many homes should (to built)? Who (to specify) the predominant style of women’s dresses or men’s suits?
The greater the degree of competition the more these matters (to decide) impersonally and automatically by the price system or the market system. This may ( to view) as a system of rewards and penalties. Rewards (to include) profits for firms and people who (to succeed). Penalties (to include) losses, or probably bankruptcy, for those who (to fail). The price system (to be) fundamental to the traditional concept of market economy.
The price system basically (to operate) on the principle that everything that (to exchange) – every good, every service, and every resource – (to have ) its price. In a free market with many buyers and sellers, the prices of these things (to reflect) the quantities that sellers (to make) available and the quantities that buyers (to wish) (to purchase).
Thus, if buyers (to want) (to purchase) more of a certain good than suppliers (to have) available, its price (to rise). This (to encourage) suppliers (to produce) and (to sell) more of it. On the other hand, if buyers (to want) (to purchase) less of a certain good than suppliers (to prepare) (to sell), its price (to fall). This (to encourage) buyers (to purchase) more of it.
This interaction between sellers and buyers in a competitive market, and the resulting changes in prices, (to be) what most people (to refer) to by the familiar phrase “supply and demand”.
1.Read the text once again and answer the following question: “What role does the price system play in the market economy?”
Ex. 16. Study the following words and word combinations. They are used when you are to describe different trends of economic development. Consult a good dictionary and put down all their derivatives. Make your own sentences using these words. You can do it in the form of a question to your partner.
increase, raise, put up, step up, extend, expand, rise, grow, soar, boom;
decrease, drop, put down, cut, reduce, fall, go down, decline, collapse, slump; remain stable, hold, maintain, stay constant.
to stand at
to reach a peak of
dramatic(ally)
rapid(ly)
quick(ly)
vast(ly)
huge(ly)
enormous(ly)
substantial(ly)
considerable(ly)
significant(ly)
moderate(ly)
gradual(ly)
slight(ly)
a little
slow(ly)
Ex. 17. A picture is worth 1000 words. Economists, being efficient, like to present ideas in graphs, which are a type of picture. But graph is worth 1000 words only if a person looking at it knows the graphical language (graphish). Study the following information to be able to read any graph. Find the Russian equivalents for the highlighted words.
Graphs are used in two ways: 1. to present an economic model or theory which focus on hypothetical relationships; 2. to present real-world data visually. Actually, these two ways of using graphs are related. They are both ways of presenting visually the relationship between two things.
Graphs are built around a number line, or axis (axes, pl). Axes are called vertical and horizontal. We can plot the information on two axes. When we connect two points we have a line. Even if the line is straight, economists call any such line drawn on a graph a curve. A curve can bea linear curve, a downward-sloping curve, an upward-sloping curve, a nonlinear curve.
Economists use the following graphs in presenting actual economic data:
Line graph Bar graph
Flow chart Pie chart
Ex. 18. Give the English equivalents to the following.
Приобретает все возрастающее значение; альтернативные издержки; при таких условиях; который должен быть принесен в жертву; постарается быть самодостаточным; тарифы; квоты на импорт; условия торговли; нетарифные барьеры; навязывать ограничения; защитить отечественную промышленность; таможенные пошлины; налог на единицу товара; в определенный период; установить более высокий стандарт качества на товары.
Ex. 19. Translate the following sentences into English.
1.Это следует рассматривать с точки зрения действия всей системы. 2.Одна из ее функций – эффективное размещение ресурсов. 3.Рыночная цена – результат взаимодействия спроса и предложения на товары и услуги. 4.Экономика не может существовать без системы распределения. 5.Все решения – это отражение всех компонентов культуры. 6.Когда мы говорим о государственном секторе, мы подразумеваем бюрократический аппарат. 7. Если происходит нарушение закона, они знают, что у них есть защита. 8.Чтобы успешно конкурировать, организация должна иметь доступ к современным технологиям. 9.Все организации зависят от предложения рабочей силы. 10.Руководитель должно четко реагировать на все изменения в деловой среде. 11.В конечном итоге, успех организации определяют потребители.
Ex. 20. Let’s review the core concepts of economics. Translate the following into Russian.
1. Economics is the study of how people, individually and collectively, allocate their limited resources to try to satisfy their unlimited wants.
2. Scarcity occurs because human wants exceed the production possible with our limited time and resources.
3. A good is any item or service that satisfies a human want and, in so doing, adds to human happiness.
4. Production entails using technology to apply energy to materials in ways that make the materials more valuable, or that otherwise help satisfy human wants.
5. Labour resources are the physical and mental talents that people can make available for production.
6. Opportunitycost is the value of the best alternative surrendered when a choice is made.
7. Absolute prices are prices in terms of some monetary unit.
8. Relative prices are the prices of goods or resources in terms of each other, and are computed by dividing their absolute prices by one another.
9. Economic efficiency is achieved when we produce the combination of outputs with the highest attainable total value, given our limited resources.
10. Inputs are resources used in the production process, such as labour and raw or semifinished materials.
11. Outputs are transformed materials; the results of production.
12. Demand is the quantity of a specific good that people are willing and able to
buy during a specific period, given the choices available.
13. Supply refers to the quantity of a specific good that sellers will provide under alternative conditions during a given period.
14. Market equilibrium occurs at the price-quantity combination where the quantities demanded and supplied are equal.
15. Asurplus is the excess of the quantity supplied over quantity demanded when the price is above equilibrium.
16. Gross Domestic Product (GDP) is the total market value of goods and services produced within a country during some period, usually one year.
17. Gross National Product (GNP) is the value of all output produced by resources owned by the citizens of a country.
18. Economic growth is a positive quantitative change in an economic system; occurs when a society acquires greater productive capacity that can be used for consumption or investment.
19. Capital is all physical improvements made to natural resources that facilitate production, including buildings and all machinery and equipment.
20. Wealth is the value of the assets owned by an individual or a group of individuals.
SPEAK AND WRITE
1.Why is it important to view organizations open systems interacting with their environment?
2. Do you know any closed systems? Give some examples.
3. Give your own examples of the environmental influence on a business / on an individual.
4. Prepare a short report on the biography of a famous economist.
5.What would happen to standards of living in your country if all foreign trade were prohibited? How significant do you think this would be? In what areas would this impact be the strongest?
6.Does everything have a price? Are there some things you would not do regardless of price? Remember: prices and money are not synonyms; prices may be nonmonetary.
7. Summarize the information of the Unit to be ready to speak on Economics. The first step to be done is to write the plan of your future report.
8. Choose any question (problem, topic) relating to Economics and prepare a 5-7 minute report. Refer to different additional sources to make your report instructive, interesting and informative.
UNIT 2
BUSINESS ORGANIZATION
The world is a chain, one links another.
Your vocabulary
Business
– work relating to the production, buying, and selling of goods and services;
– an organization which produces and sells goods, or which provides a service;
– important matters that you have to discuss or deal with.
Businessman, Businesswoman – a person engaged in trade or commerce.
Business cycle
– process by which investment, output, and employment in an economy tend to fluctuate up and down in a regular pattern causing boom and depression, with recession and recovery as intermediate stages.
Organization
– a large group of people that has particular aims.
Organizer
– the person who makes all the arrangements for something and makes sure that happens as planned.
Ex. 1. Study the following words and word combinations and translate the sentences given below into Russian. Consult a good dictionary if necessary.
mean business, none of one’s business, go out of business, businesslike, be busy with, have no business to do, be in business, like nobody’s business, mind one’s own business
1. Mother has busied herself with our affairs for too long.
2. When traveling on business I take my tiny travel kit.
3. Let’s get down to business.
4. She had no business to publish his letters to her.
5. 50% of these stores were not in business five years ago.
6. They are working away like nobody’s business.
7. Umbrella sellers went out of business.
8. Stop teaching me! It’s none of your business.
9. Listen to me! I mean business!
10. The visit to Copenhagen was brisk and businesslike.
Ex 2. The words given below are the synonyms to the word organization. In what do they differ? Give your own definition to each of them.
Institution, council, body, entity, fund, trust, party, club, society, association, league, federation, union.
Ex. 3. Match thewords listed below with the dictionary definitions which follow.
accountability, effort, pattern, requirement, accomplish, existence, consumer, foster, affect, establish, benefit, involve
1. Create or set it up in a way that is intended to be permanent.
2. Help its development or growth by encouraging people to do or think about it.
3. Something that you must do or possess in order to be allowed to do some other thing.
4. The state of being real, alive, or actual.
5. Energy in the form of thought, action, time, or money that people use in their work.
6. It influences someone or something or causes them to change in some way.
7. Succeed in doing or finishing something.
8. Being responsible for and prepared to justify one’s actions.
9. A good result of something.
10. A person who buys things or uses services.
11. A particular, recognizable way in which something is done or organized.
12. To include somebody or something as a necessary part or use them in some way.
Ex. 4. Make the following words negative. Use prefixes -un, -in, -mis, -dis, -ir, and so forth.
Human, existence, enable, realized, regard, responsible, careful, systematic, effective, mature, aware, understand, loyal, formal, direct, continuous.
Ex. 5. Give the opposites to the following words. Use each of them in your own sentence.
Flexible, voluntary, to share, to adhere to, enjoy, confidential, consensus, versus.
Ex. 6. Be sure you know the meaning of the words given below. Give their derivatives.
Existence, accomplishment, benefit, authority, obligation, responsibility, extend, consider, favour, perception, value, equal, assume, conscious.
Ex. 7. Give the synonyms to the following words. Make up your own sentences to show the shades in their meaning.
To handle, to accomplish, goal, benefit, coerce, to achieve, to purchase, output, affect, to establish, to enhance, power.
Ex. 8. Translate into Russian. Pay attention to the economic and business terms.
1. Business is the production, buying, and selling of goods and services.
2. A business, company, or firm is an organization that sells goods or services.
3. A business is also may be referred to as an enterprise to emphasize its adventurous, risk-taking qualities, and business in general may be referred to as free enterprise and private enterprise.
4. Large companies are referred to as corporations, especially in the US.
5. Large companies operating in many countries are multinationals.
6. An entrepreneur is usually someone who builds up a company from nothing: a start-up company.
7. The people legally responsible for a company are its board or board of directors.
8. When a private company is bought by the state and brought into the public sector, it is nationalized.
9. When the state returns a company to the private sector in a sell-off, it is privatized.
10. A holding or holding company is one that holds stakes in one or more subsidiaries.
11. A holding company’s relationship to its subsidiaries is that of parent company.
What words and word combinations from ex. 8. do you consider to be economic and business terms? Explain what they mean.
Ex. 9. Translate the following text in written form.
The Interdependence of Society and Organizations
Modern societies have been called organizational. Unlike so-called prim–itive societies, modern ones produce most of their goods and services through special-purpose organizations that are, in the main, neither famil–ial nor tribal. Some of the organizations of a modern society are meant to earn a profit and some are «not-for-profit».
The organizational mode of conducting society's affairs means that virtually everyone in modern societies depends mightily upon how well organizations function. We look to them for goods and services of ade–quate quantity, quality, and a low enough price. We look to them for jobs to earn the money to buy what we need. We depend upon them for decent and healthful environments on and off the job.
In turn, organizations depend upon the contributed talent and effort of people who work in them. Every organization must obtain these con–tributions and other resources and convert them into some outputs that yield sufficient rewards to keep the organization alive and functioning. In a word, the relationship of society and organizations is one of interdependence. But what kind of interdependence?
Managerialism ( the ideological principle on which the economic, social and political order of advanced industrialized societies is actually based) proclaims that the society is made up of organizations, corporations, associations, and so forth – not individuals. Social decisions are a consequence of the interactions of the managers of the social units – not the will of the people, the demands of consumers, or the needs of workers.
1. Do you share the point of view of the author of the text?
LET’S READ AND TALK
1. Why do people try to «organize» themselves?
2. What formal and informal organizations do you know?
3. “Informal groups develop in order to meet a variety of individual needs which are not met by the formal organization.” Do you share this opinion?
TEXT 1
Read the text. Define the main idea of each paragraph. What are the key sentence(s) of each paragraph?
ORGANIZATION
Early in human existence people learned that their individual efforts often fell short of success. They found that they were unable to accomplish many tasks that require more than individual effort. The result was that only limited goals could be attained. Therefore the necessity of group activity was discovered relatively early in human existence.
Group activity could be aimed at some higher, more complex set of goals and could thus bring greater benefits to all concerned. This quality of group activity must be counted as one of the chief requirements for success. Cooperation is a prime element of a group of people who want to achieve more than they can acting individually. A system of group relationships built upon and fostering cooperation, then, is basically the meaning of an organization.
This system of cooperation consists of several parts: the human element, the physical element, the work element, and the coordination element. All of these elements, taken collectively, can be thought of as an organization. Today, this system of cooperation is much more complex than it was in the first attempts at organization.
Thus, organization is an open, dynamic, purposeful social system of cooperation designed to enhance individual effort aimed at goal accomplishment; consists of the human element, the physical element, the work element, and the coordination element; transforms resources into outputs for users.
It is important to examine the various parts or components of organization theory in order to outline its broad scope. These components are:goals, work, power and authority, delegation, structure.
It was stated earlier that organizations were established to enable an individual to accomplish more in a group than he could as an individual. In other words, organizations are devices for pooling talent and ability into an effective whole that can accomplish some desired objective. Every organization is initially built to accomplish some goal. The goal or purpose is an unrealized state or condition that the members do not possess but which they deem desirable. It is imperative that organizational goals be clearly defined and communicated to all organization members who are to be affected by them. Goals are the starting point for the design and maintenance of the organization itself. At the same time, these goals must meet a need that society has defined as important. Thus, consumer needs play a crucial role in organization.
Once the goal of an organization is established, it is time for the members to decide on the type of work activity that will be necessary to accomplish these goals. Basically, any organization must perform two fundamental types of work: primary and secondary. The primary work (it also commonly referred to as line work) consists of production and distribution of goods and services that will satisfy consumer needs. The secondary work (it is often termed staff work) consists of all those activities that support and extend the operations of primary work. For example, in a manufacturing firm, the secondary work would include accounting, personnel and quality control.
No theory of organizations would be complete without a treatment of the roles that power and authority play in organizational activity. These two components of theory help explain the network of relationships that tie the other components of an organization together into some logical pattern.
Power is the ability to influence others successfully. It comes from any single or combination of possible sources. For example, one can have power over others because of one’s intelligence, skill, or money. Regardless of its source, power enables its holder to exercise one’s will over others. Thus, in order to understand the total workings of an organization, one must have an appreciation of the role that power plays in these workings.
Authority can be defined as power that has been given official recognition bythe organization. Once an organization legally authorizes an individual to act on its behalf, that person is said to possess authority. Every member of the organization has some amount of authority to take action necessary to carry out his responsibility. The concern of the theorist is to understand how authority comes to be officially recognized by the organization and what considerations should be made regarding its use.
Organizations that enjoy any measure of success find it necessary to increase their membership and to assign duties to these additional members. The process that is used to add members to the organization will result in the necessity to divide the work of the organization into sub-units or groups. Each of these groups will be under the direction of a manager or managers. In order for these managers to perform their managerial duties properly, they must be granted appropriate responsibility and authority. The means for making these assignments is termed delegation. In general, delegation may be defined asthe process of transferring an obligation (responsibility) and anaccompanying right(authority) from a superior to a subordinate position in the organization. It is this basic process that enables an organization to grow. Without delegation, an organization simply cannot exist and prosper.
The patterns of work divisions and their hierarchical arrangements constitute the basic components of structure. Structure, then, is the hierarchical pattern of authority, responsibility, and accountability relationships designed to provide coordination of the work of the organization. It is basically a managerial tool that aids in guiding the organization towards its goals and can be considered the skeleton of the organizational body. The idea of hierarchy of authority, the division of organization by function, the differentiation of responsibility of the line (doers) and the staff (the advisors) are all inventions of the church and military leaders who were faced with the need to manage large aggregations of human, technical, and material resources. Organizations create an officially sanctioned structure known as the formal organization or de jure organization. This structure is often depicted by a chart as that seen in Fig. 1.
A formal organization is only half the story, for superimposed on these relationships is a whole series of informal or de facto relationships that are not sanctioned by the organization. These include informal work groupings of employees, informal leaders, informal channels of communication and informal power and status differentials. Usually the structure of an organization is rather permanent and stable but in some cases a temporary, ad hoc, organization may be created. The organization exists to reach a certain goal or set of goals and disbands once the goal is achieved.
1. What did people find early in human existence?
2. What is the meaning of the organization?
3. What is an organization?
4. What are the components of organization theory?
5. What role do power and authority play in building every organization?
6. What is the starting point for the design of an organization?
7. What is delegation and why is it necessary in today’s organization?
8. Which is more important: formal or informal structure?
9. Can you give any example of an ad hoc organization?
TEXT 2
Read the text and be ready to answer what theory you would follow as a manager. Give your reasons.
PEOPLE IN ORGANIZATION
If there is any one characteristic of people which is universally valid and important, it is that they differ. To say that all persons are created equal is a statement of human rights under the law. It communicates nothing at all about human nature. As a matter of fact, people differ greatly in intelligence, aptitudes, physical strength, manual dexterity, knowledge, skill, interests, personality traits, motivation, and many other attributes which potentially influence behavior and productivity.
We are rational – but only to a point. We plan, set goals, think, reason, and live by creeds and values. But we also become frustrated and behave in ways that can be perceived as rational only by someone who understands all our deeply embedded, sometimes conflicting needs, aspirations, and perceptions. In many situations our motivation is unconscious so that not even we understand our own actions.
The fact that one’s environment strongly influences behavior is indisputable. A number of prominent psychologists have assumed that human freedom is an illusion. Human choices are thought to be totally determined. This, of course, is an assumption. Many people do not subjectively perceive themselves in this way. It is significant that behavior and expectations are strongly influenced by what a person believes to be true. Individuals feel responsible for their actions. Also, people consciously believe that their choices are real, regardless of any awareness of philosophical arguments to the contrary. Organizations cannot function optimally without these pragmatic assumptions.
There are, of course, innumerable statements which one might make about human nature, but they would not all have a direct influence on how people should be dealt within the work environment. The late Douglas McGregor did an excellent job of conceptualizing some of the assumptions about human nature which are relevant to organizational behavior. He labeled these, Theory X, the classical or traditional view, and Theory Y, a progressive view upon which he believed a new model for human relations in organizations could be developed.
Theory X. This theory holds that the average person inherently dislikes work, is innately lazy, irresponsible, self-centered, and security oriented, and consequently is indifferent to the needs of the organization. Because of these characteristics, the average person must be threatened, coerced, and controlled. In fact, most people prefer to be directed and controlled. They seek security above all, prefer to avoid responsibility, and both want and need external control in the work situation. Because people are basically cunning and immature, management should experience little difficulty in using a highly directive and manipulative style of supervision.
Theory Y. Experience has shown that Theory X assumptions result in a great deal of difficulty for management although they remain popular with some managers. McGregor’s Theory Y makes the opposite assumptions. People do not inherently dislike work and are not inherently lazy. Rather they have learned to dislike work, to be lazy, and to be irresponsible because of the nature of their work and supervision. They have a high capacity for developing an intrinsic interest in their work, for committing themselves to organizational objectives, and for working productively with a minimum of external controls.
Two points should be made with reference to these theories. First, the Theory X characteristics are said to be inherent or innate. To be such, they would necessarily apply to everyone, which is obviously absurd. On the other hand, under Theory Y, people are said to have the potential or capacity for the responsible behavior and attitudes described. If anyone possesses these qualities, and a great many people do, then everyone has the potential for them. Second, McGregor speaks of assumptions about the average person, and one must ask, «Average on what dimensions?» Are we talking about intelligence? education? experience? Average is a statistical concept. The average person is nonexistent, hypothetical construct. When we make assumptions about the average person, at best we are referring to most people, and in doing so must recognize that there are exceptions.
TEXT 3
Here is one more text about people in organization. Read it and say whether you can take the information seriously.
When might you need to give blood for a personality test? The answer to that question may puzzle you more than the question itself: when you apply for a job. What’s more, your blood group could seriously influence your career prospects. Some people believe your blood group hides no secrets. It reveals the “real you” – a person who gets things done, a good salesman, a creative person or a problem-solver – that is why you could be asked to state your blood group when completing a job application form. This growing trend was first used in Japan and now management consultant firms in other parts of the world have joined in. Someone, somewhere has spent some time working out statistics regarding who’s who in the blood group system. The owners of certain group tend to be particularly good or bad at certain tasks. In fact, one major Japanese firm is so well informed about blood groups that the company is quite specific about its needs: “We must have 30per cent of blood group A and 15 per cent of AB, 25 per cent of blood group 0, and 30 per cent of blood group B among echelons of our management personnel”. Apparently, if you belong to blood group 0 you get things done and sell the goods. Blood group A are thinkers, while blood group B are highly creative. And if you got problems, ask the Abs to solve them.
TEXT 4
What is meant by «organizational climate»? Why is it important? What part does an organization’s culture play in the daily lives of its members?
Read the text and be ready to discuss each point of cultural values. Can you add any more?
ORGANIZATIONAL CLIMATE
Although the concept of organizational climate is somewhat nebulous, it is valuable in understanding several aspects of organizational behavior. Organizational climate is the overall favourability of member attitudes and perceptions with reference to specific activities and featuresof an organization.
Organizations tend to have their specific culture: a peculiar mix of values, attitudes, norms, habits, traditions, behaviors and rituals. Some organizations are well aware of their culture and regard it as a powerful strategic tool, used to orient all units and individuals toward common goals, mobilize employee initiative, ensure loyalty, and facilitate communication. They aim at creating a culture of their own and making sure that all employees understand it and adhere to it. The specific cultural values of an organization may concern, for example:
• the organization’s mission and image ( high technologies, innovative spirit, superior quality);
• seniority and authority (respect for seniority; seniority as a criterion of authority);
• the treatment of people ( concern for people and their needs, equitable treatment or favouritism, privileges, respect for individual rights, training and developing opportunities, how people are motivated);
• the importance of different management positions and functions (authority of personnel department; importance of different vice-presidents’ positions; respective role and authority of research and development);
• work organization and discipline (voluntary versus imposed discipline; punctuality; use of time clocks; flexibility in changing roles at work; use of new forms of work organization);
• decision making process (who decides; who has to be consulted; individual or collective decision making; need to reach consensus);
• circulation and sharing of information (employees amply or poorly informed; information readily shared or not);
• communication pattern (preference for oral or written communication; rigidity or flexibility in using established channels, use of meetings; who is invited to what meeting; established behaviour in the conduct of meeting);
• ways of handling the conflicts (desire to avoid conflict; preference for informal or formal ways; involvement of higher management);
• performance evaluation (confidential or public; by whom carried out; how results are used);
• socialization patterns (who socializes with whom during and after work; facilities such as separate dining rooms or reserved clubs);
• management and leadership style (paternalism; authoritative, consultative or participative style; flexibility and adaptability);
• identification with the organization (manager and stuff adherence to company objectives and policies; enjoying working with organization).
TEXT 5
Read the text and be ready to define: 1. what a business entity is and 2. three main types and forms of business organizations.
TYPES AND FORMS OF BUSINESS ORGANIZATION
A business organization is frequently referred to as a business entity. A business entity is any business organization that exists as an economic unit. Business entities can be grouped according to the type of business activity they perform.
1. Service companies perform services for a fee. This group includes companies such as accounting firms, law firms, repair shops, and many others.
2. Merchandising companies purchase goods that are ready for sale and sell them to customers. They include such companies as auto dealerships, clothing stores, and supermarkets.
3. Manufacturing companies buy materials, convert them into products, and then sell the products to the companies or to the final customer. Examples are steel miles, auto manufacturers, and so on.
The business entity concept applies to all forms of businesses – single proprietorship, a partnership, and a corporation.
A single (sole) proprietorship is business owned by an individual and often managed by that same individual. Single proprietors include physicians, lawyers, electricians, and other people who are ‘in business for themselves’. In a single proprietorship, the owner is responsible for all debts of the business. Operating as a proprietorship is the easiest way to get started in a business activity. Other than the possibility of needing a local license, there are not any prerequisites to beginning operations.
A partnership is a business owned by two or more persons associated as partners. Partnerships are created by an agreement. Included in the agreement are such terms as the initial investment of each partner, the duties of each partner, the means of dividing profits or losses between the partners each year, and the settlement to be made upon the death or withdrawal of a partner. Accountants, attorneys, and other professionals frequently operate their firms as partnerships.
A corporation is a business owned by a few persons or by thousands of persons. The owners of the corporation are called shareholders or stockholders. They buy shares of stock. If the corporation fails, the owners lose only the amount they paid for their stock. The personal assets of the owner are protected from the creditors of the corporation. The stockholders do not directly manage the corporation; they elect a board of directors to represent their interests. The board of directors select the president and vice president, who manage the corporation for the stockholders.
TEXT 6
WHY ARE COMPANIES REFERRED TO AS LTD., INC., GMBH, OR S.A.?
An individual, like Henry Ford, might want to begin a small enterprise and personally retain total responsibility and liability, but once it starts to grow, a partnership or a «company» – such as Ford Motor Company – would need to be formed. The key factor in owning any company is the guarantee called limited liability: the owners of a company never have to pay more than they have invested in the company. Their liabilities are limited. When a company goes bank–rupt, the owners can never be required to pay its unpaid bills.
The worst that can happen to investors in a limited liability com–pany is losing their initial investment if the company fails. By limiting the downside risk for shareholders, companies are able to attract equity investors and raise large amounts of funds called equity capital through sales of shares rather than by borrowing money at potentially high interest rates.
The names of companies around the world reflect this guarantee of limited liability. The abbreviations «GmbH» in Germany, «Inc.» in the United States, or «Ltd.» in most other English-speaking coun–tries indicate that the firm is a limited liability company and investors have nothing more to lose than the money invested in their shares. The «S.A.» in French – and Spanish-speaking countries also refers to limited liability by defining shareholders as «anonymous». Since the identity of shareholders can be kept secret, the creditors of a bankrupt company have no right to pursue them for the company's unpaid debts.
Many countries make a clear distinction between public and pri–vate companies, with separate designations, such as AG and GmbH in Germany, or Plc and Ltd. in Britain. Generally, «public» companies are those large enough to have their shares traded on stock exchanges, while smaller unquoted companies are said to be «private,» even though their shares can be held by the public at large. In some coun–tries, a large company is said to be privately owned if its shares are not available to the general public. In the United States, where little distinction is made between public and private companies, most com–panies simply bear the title «Incorporated».
1. What do the names of companies around the world reflect?
TEXT 7
JOB SPECIFICATION
An interesting feature of the labour markets is that many organizations do not specify the type of person they require instead they will give the details of a job in a job specification. The Department of Employment has given the following definitions of a job description and job specification:
Job description: a broad statement of the purpose, scope, duties and responsibilities of a particular job.
Job specification: a detailed statement of the physical and mental activities involved in the job. The specification is usually expressed in terms of behaviour: what the worker does, what knowledge he uses in doing it, the judgments he makes and the factors he takes into account when making them.
The great variety of job specifications which exists in business illustrates the range of specification in occupation. The five categories given below do not cover this wide range, but can become a guide to the role of manpower in organization.
1.Unskilled. Many jobs do not require any training or previous experience, for example manual labour or assembly work. These occupations are often highly repetitive and boring, as well as being poorly paid.
2.Mechanical or motor skills. There are some tasks in business which are performed by machines which require an operator. The more complicated the machine, then generally the more the operator must be.
3.Intelligence and knowledge. Occupations which require a high level of motor skill sometimes also demand a high level of intelligence and aptitude. But there are jobs which do not need mechanical skills but make demand on people’s knowledge.