These are some helpful word-combinations in addition to the glossary that you should translate, memorize, and use while discussing the questions:

to operate a plant, to do business, to be in keeping with requirements, to resolve problems, to take advantage of (smth.), to exceed a size, to evaluate firms, to use equipment, to employ specialized workers, to achieve production economy, to put limits, to keep track of (smth.), to keep in (constant) touch, to waste resources, to specialize management, to put (the decision) into effect, to bring out a new product, to get service, to employ advertising, to raise capital, to enjoy advantage.

 

1. Prove economic importance of big corporations.

2. Do you agree with the author's reasons for large firms?

3. Explain the notion of specialized management providing illustrative examples.

4. What is your final judgement about the importance of the corporation? Aren’t small-scale businesses equally important?

5. Do you agree with the following statements?

“Today the large organization is lord and master, and most of its employees have been desensitized much as were the medieval peasants who never knew they were serfs.                                                              Ralph Nader

“If small business goes, big business doesn’t have any future except to become the economic arm of a totalitarian state.”                               P.D.Reed

“America can no more survive and grow without big business that it can survive without small business. Every fact of our economic and industrial life proves that the two are independent. You cannot strengthen one by weakening the other, and you cannot add to the stature of a dwarf by cutting off the leg of a giant… The American industrial machine is a unit, just like an automobile. It’s made of big parts and little parts, and each of which does its particular job and all of which are intricately fitted together. You may think that it would be fun to sort them all into neat piles according to size to please the statisticians. You could even pass a law declaring that all the parts must be the same size, and the theorists, no doubt, would be delighted. But when you get through your automobile won’t run and neither will American industry”.                                  Benjamin Fairless

UNIT IX                           REVIEW

 

 

Ex. 1: Vocabulary fills-in. In the following sentences supply the correct verb or noun from the box below.

Differ     continue     equip              bankrupt difference     continuity equipment  bankruptcy             own   decide satisfy     owner    ownership       decision          satisfaction

 

1. The sole proprietor can _____ for himself if he wants to set up a new business.

2. The _____ can keep all of the profits of the business.

3. The proprietor made a _____ to purchase some new _______.

4. The sole proprietorship, partnership, and corporation ______ in the manner in which they raise capital.

5. If the owner makes the wrong decision, it may _____ the business.

6. The proprietor doesn’t wish to _____ his enterprise, because he has been unsuccessful and he doesn’t get any ______ from his efforts.

7. It takes capital to purchase inventory and ______ the workship with the necessary tools.

8. We try to_____ the customers so that they will _____ to shop here.

 

Ex. 2 Building your business vocabulary is very important. The new business terms are printed below, along with definitions. Please match each with its proper definition.

a) sole proprietorship b) unlimited liability c)partnership d) partnership agreement e) corporation f) shareholders (or stockholders) g) corporate charter.

1) A contract between the incorporators and the state that authorizes the formation of the corporation.

2) An association of two or more persons to carry on as co-owners of a business for profit.

3) An oral or written contract between the owners of a partnership that identifies the business and states the partners' respective rights and duties.

4) A legally chartered organization that is a separate and legal entity apart from its owners.

5) A business owned by one person.

6) The owners of a corporation.

7) The concept that the business owner is responsible for
claims against the firm that goes beyond the value of the
owner's ownership in the firm.

Ex. 3 Building your business vocabulary is very important. The business terms are given below, along with definitions. Please, match each with its proper definition.

accounting      bond      entrepreneur   loss        policy             profit venture creditor capital   bankrupt production service   stock

1. Any of the equal parts that the ownership of a corporation is divided into.

2. Money or property and equipment used for production.

3. A person who starts, manages, and takes the risks of running a business.

4. The amount by which income exceeds costs.

5. One to whom the business owes money.

6. Unable to pay one’s debts and legally freed from the responsibility of paying them.

7. Business activity related to providing help, repair or assistance as opposed to selling or producing.

8. A principle, method or rule which determines how an organization is operated.

9. A system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.

10. The amount by which the cost and expenses exceed the income.

11. An interest-bearing certificate of public or private indebtedness.

12. The action of making goods for human wants

13. Total output.

 

Assignment to text 1:

1. Complete the text using the words in the box:

 

losses              financial corporations            partnership premises         creditors issue      liability  registered        shares    sole trader     capital   prospectus      files       bankruptcy

 

Text 1                           T ypes of Business

The simplest form of business is the individual proprietorship or- (1)………….: for example, a shop (US = store) or a taxi owned by a single person. If several individuals wish to go into business together they can form a (2)………..; partners generally contribute equal capital, have equal authority in management, and share profits or (3)………... In many countries, lawyers, doctors and accountants are not allowed to form companies, but only partnerships with unlimited (4) ……….. for debts - which should make them act responsibly.

But a partnership is not a legal entity separate from its owners; like sole traders, partners have unlimited liability: in the case of (5) ……….., a partner with a personal fortune can lose it all.

Consequently, the majority of businesses are limited companies (US = (6) ………..), in which investors are only liable for the amount of capital they have invested. If a limited company goes bankrupt, its assets are sold (liquidated) to pay the debts; if the assets do not cover the debts, they remain unpaid (i.e. (7) ……….. do not get their money back.)

In Britain, most smaller enterprises are private limited companies which cannot offer (8)………..to the public; their owners can only raise capital from friends or from banks and other venture capital institutions. A successful, growing British business can apply to the Stock Exchange to become a public limited company; if accepted, it can publish a (9) ……….. and offer its shares for sale on the open stock market. In America, there is no legal distinction between private and public limited corporations, but the equivalent of a public limited company is one (10) ……….. by the Securities and Exchange Commission.

Founding a Company

Founders of companies have to write a Memorandum of Association (in the US, a Certificate of Incorporation), which states the company's name, purpose, registered office or premises and authorised share (11) ………..

(12) ……….. (always with an У at the end) - is the technical term for the place in which a company does its business: an office, a shop, a workshop, a factory, a warehouse, etc. Authorised share capital means the maximum amount of a particular type of share the company can (13) ………..

Founders also write Articles of Association (US = Bylaws), which set out the rights and duties of directors and different classes of shareholders. Companies' memoranda arid articles of association, and annual (14) ……….. statements are sent to the registrar of companies, where they may be inspected by the public. (A company that (15) ……….. its financial statements late is almost certainly in trouble.) In Britain, founders can buy a ready-made " off-the-shelf company from an agent, that is, a company formed and held specifically for later resale; the buyer then changes the name, memorandum, and so on.

 

Assignment to text 2:

1. Read the following text and then decide whether the statements following are TRUE or FALSE.

· A company can only be floated once.

· Banks underwrite share issues when they want to buy the shares.

· It is easier for a company to be quoted on an unlisted securities market than on a major stock exchange.

· Unlisted companies do not publish annual reports.

· The market price of a share is never the same as its nominal value.

· On the London Stock Exchange it is possible to make a profit.

· without ever paying anyone any money.

· If a company issues new shares, it has to offer them to existing shareholders at a reduced price.

· A scrip issue can be an alternative to paying a dividend.

· American corporations with large amounts of cash can spend it by buying their own shares.

· Companies do not have to sell their shares at their nominal value.

Text 2                      Stocks and Shares

The act of issuing shares (GB) or stocks (US) - i.e. offering them for sale to the public - for the first time, is known as floating a company or making a flotation. Companies generally use a bank to underwrite the issue. In return for a fee, the bank guarantees to purchase the security issue at an agreed price on a certain day, although it hopes to sell it to the public. Newer and smaller companies trade on " over-the-counter" markets, such as the Unlisted Securities Market in London. Successful companies can apply to have their shares traded on the major stock exchanges, but in order to be quoted (GB) or listed (US) there, they have to fulfil a large number of requirements. One of these is to send their shareholders independently-audited annual reports, including the year's trading results and a statement of the company's financial position.

Buying a share gives its holder part of the ownership of a company. Shares generally entitle their owners to vote at companies' General Meetings, to elect company directors, and to receive a proportion of distributed profits in the form of a dividend (or to receive part of the company's residual value if it goes into bankruptcy). Shareholders can sell their shares at any time on the secondary market, but the market price of a share - the price quoted at any given time on the stock exchange, which reflects how well or badly the company is doing - may differ radically from its nominal face, or par value.

At the London Stock Exchange, share transactions do not have to be settled until the account day or settlement day at the end of a two-week accounting period. This allows speculators to buy shares hoping to resell them at a higher price before they actually pay for them, or to sell shares, hoping to buy them back at a lower price.

If a company wishes to raise more money for expansion it can issue new shares. These are frequently offered to existing shareholders at less than their market price: this is known as a rights issue. Companies may also turn part of their profit into capital by issuing new shares to shareholders instead of paying dividends. This is known as a bonus issue or scrip issue or capitalisation issue in Britain, and as a stock dividend or stock split in the US. American corporations are also permitted to reduce the amount of their capital by buying back their own shares, which are then known as treasury stock; in Britain this is generally not allowed, in order to protect companies' creditors. If a company sells shares at above their par value, this amount is recorded in financial statements as share premium (GB) or paid-in surplus (US).

The Financial Times-Stock Exchange (FT-SE) 100 Share Index (known as the " Footsie" ) records the average value of the 100 leading British shares, and is updated every minute during trading. The most important US index is the Dow Jones Industrial Average.

 

 

Assignment to text 3:

1. Match the responses in part B with the questions in part A.

Text 3                        Bonds

A

1. So what exactly are bonds?

2. And how do they work?

3. So you have to keep them for a long time?

4. Why should that happen?

5. Oh, I see. Is that what they mean by below par?

6. But the bond's interest rate doesn't change?

7. How's that?

8. And people talk about AAA and AAB bonds, and things like that.

9. And what about gilts?

10. Not Treasury Bilk?

11. And James Bond?

B

a. Because of changes in interest rates. For example, no-one will pay the full price for a 6% bond if new bonds are paying 10%.

b. Exactly. And the opposite, a bond whose market value is higher than its face value, is above par.

c. I knew you'd finish by saying that!

d. No, not at all. Bonds are very liquid. They can be sold on the secondary market until they mature. But of course, the price might have changed.

e. No, not unless it's a floating rate bond. The coupon, the amount of interest a bond pays, remains the same. But the yield will change.

f. No, those are short-term (three-month) instruments which the government sells to and buys from the commercial banks, to regulate the money supply.

g. That's the name they use in Britain for long-term government bonds - gilts or gilt-edged securities. In the States they call them Treasury Bonds.

h. They're securities issued by companies, governments and financial institutions when they need to borrow money.

i. Well, a bond's yield is its coupon payment expressed as a percentage of its price on the secondary market, so the yield changes if you buy or sell above or below par.

j. Well, they usually pay a fixed rate of interest and are repaid after a fixed period, known as their maturity, for example five, seven, or ten years.

k. Yes. Bond-issuing companies are given an investment grade by private ratings companies such as Standard & Poors, according to their financial situation and performance.

 

 

Assignment to text 4:

1. Read the title. What do you expect to read in this text?

2. Read and translate the subtitle.

3. Read the text and divide it into parts (logically). Justify your division.

4. Mark all pros and cons of any off-the-shelf company.

5. Translate the text. Ensure that you haven’t missed any information.

6. The author writes: “I would think twice before becoming a General Director of a company that is being sold to a new owner”. Explain, why.

7. Is the situation described similar to American realities that you have come to know from the previous units?

 

 

Text 4              Starting Your Own Business in Russia:

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