By the end of this Unit you will be able to

- know the types of business organization;

- knowpros and cons of different forms of business organization;

- list typical business functions (departments of a company);

- understand the structure of a plant;

- make a presentation about a company where you would like to have a job.

Companies in the UK, Corporations in the USA

The most common type of a company in the United Kingdom is the limited liability Company. Many of such companies are joint-stock companies owned by shareholders.

Limited liability Companies are divided into private and public ones. Only public companies can offer shares to the public at the stock exchange. The names of such companies end in “plc” which stands for public limited company. For example, John & Michael plc. Limited liability Companies are headed by the board of directors, elected by shareholders.

Private limited liability Companies may not offer shares to the public. At the end of the name of such companies the word “Ltd.” is used. For example, Wilson & Sons Ltd.

Corporations are a popular form of businesses in the USA. A corporation is owned by persons, called stockholders. The stockholders usually have certificates showing the number of shares which they own. Each stockholder is liable only for the amount of his investment in the business.

The stockholders elect the director to operate the corporation. Most corporations are closed corporations with only a few stockholders. Other corporations are owned by many stockholders who buy and sell their shares at will. Usually they have little interest in management of the corporations. All the corporations are created by state or federal law and are to receive their charters from the appropriate authorities. The charters state all the powers of the corporation. The names of the corporations’ end in “Inc.”, which means incorporated.

 

Questions

1. What are the most common types of companies in the UK?

2. How are Limited Liability Companies subdivided?

3. By whom are Limited Liability Companies headed?

4. Who usually owns corporations in the USA?

 

Lead-in

Answer some questions before you start reading the Texts.

What is a company?

What types of business organization do you know?

What is difference between them?

What is the simplest and oldest form of business enterprise?

What are typical departments of a company?

Do you know the plant structure?

 

Task 1.1. Read the text first.

The different types of business organization may be classified under five headings: the sole proprietor, the partnership, the joint stock company, the cooperative society, and the public corporation.

The sole proprietor

This is the simplest and the oldest form of business enterprise and often referred to as the one-person business. A single person provides the capital, takes the decisions, and assumes the risks. He or she is solely responsible for the success or failure of the business and has, therefore, the sole rights to such profits as may be made, or, alternatively, bears the sole responsibility for such losses as may accrue. The one-person business is still far more numerous than any other types of business organization, but in terms of total output employment, value of capital employed, or value of total output, it is relatively unimportant compared with the joint stock company.

The strength of this type of firm lies in the direct personal interest of the proprietor in the efficiency of his enterprise. Ownership and control are vested in one person who enjoys all the fruits of success and hence has a great incentive to run the firm efficiently. Since the proprietor is the sole decision-taker and has no need to consult colleagues when changes

of policy are required we should expect this type of organization to be extremely flexible and capable of quick and easy adjustment to changes in market conditions.

The great disadvantage of the sole proprietor from an enterprise lies in the fact that the owner is personally liable for the debts incurred by his firm and his liability is unlimited. All his personal possessions are at risk and may be seized to meet creditors demands in the event of the business becoming insolvent. Another disadvantage of this type of firm is the strict limitation of its ability to acquire capital for expansion. Finance is restricted to the amounts which the entrepreneur is able to provide from his own resources and whatever sums he can borrow on his own security.

We find the one-person business prevalent in farming, retailing, building, repair and maintenance work, and personal services such as hairdressing [1].

 

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