2. Grammar Revision. Participle I.

Ex.1. Read the text paying particular attention to the words given in italics. Consult a dictionary if necessary.

The Business of a Market Economy.

Enterprising individuals who put their creativity to work into both big and small companies are the masterminds for a new and larger menu of goods and services. They are entrepreneurs, developing ways to make more efficient use of resources. They see opportunities and take risks in hopes of earning profits. Adding to the efforts of entrepreneurs in recent years has been the birth of e-commerce, which is rapidly changing the way businesses operate.

Most business firms are organized as sole proprietorships, partnerships and

corporations.

A sole proprietorship is a business owned by one person. This form of business

is the easiest and typically the least costly to start, and gives one full control over

operations. Sole proprietorships are the most numerous kinds of business organiza-

tions, but most are very small.

A partnership is a business organization owned by two or more people who sha-

re ownership and control over business. Proprietorships and partnerships outnumber

corporations by almost four to one. They have been a major source of new ideas

and jobs in the economy, but corporations continue to produce more goods and

services.

A corporation is a business organization managed on behalf of its owners, who

provide the funds. The law requires a corporation to obtain a state charter to

operate. Ownership of a corporation is represented by shares of stock, so stock-

holders are its owners. Corporations have the advantages of unlimited life and

limited liability. This enables them to raise sums of money well beyond the limits

of partnerships and proprietorships.

The organization of large corporations enables them to run efficiently despite having thousands of owners called stockholders. Management and ownership are separated through the use of such devices as boards of directors, proxy voting, and annual reports to the stockholders. Stockholders can influence management decisions through the buying and selling of a company’s stock.

Ex.2. Agree or disagree to the following:

1. Entrepreneurs are individuals whose purpose in business is to enrich the society.

2. Sole proprietorship is the most profitable kind of business.

3. Corporations are not many as they are costly and not easy to manage.

4. Stockholders can hardly be considered owners of a corporation.

5. In a corporation management and ownership are not separated.

Ex.3. Answer the questions:

1. Who do you call an entrepreneur? Should he possess special qualities?

2. What are the most widely spread types of business? Why?

3. What are the advantages of a sole proprietorship? Partnership? Corporation?

4. Which of the businesses is the easiest to start and expand? Which one would you like to work for? Why?

5. Do you know how corporation is managed?

f) Who do you call a stockholder?

Ex.4. Using a special dictionary study the following words and the combinations of them. Translate them into Russian.

To earn, earnings, earner, earnest.

Earnings per hour, earnings per share, average industrial earnings, equity earnings, gross earnings, net earnings, earnings-flow, taxable earnings.

Advantage, advantageous, disadvantage

To take advantage of, to turn to advantage, tax advantage, advantages of location.

Liability, liable.

Liable to duty, liable to taxes, liabilities on bills of exchange, accrued liabilities, deferred liabilities, direct liabilities, fixed liabilities, tax liabilities, public liabilities.

Stock, stockbroker, stockbroking, stockbuilding,

Stockholding, stocking, stockjobber, stockkeeping, stockman, stockout, stockpile, stock-watcher, stocktaking, in stock, from stock, stock in trade, stock in transit, stock on hand, to clear the stock, to be out of stock, stock of buildings, stock of tangible assets, available stock, common stock, listed stock, surplus stock, voting stock.

Ex.5 Match each term in column A with its definition in column B.

A B

1. board of directors a. Seeing new opportunities and assuming risk to

pursue them.

2. dividends b. License allowing a business to operate as if it

were part of a larger chair.

3. entrepreneur c. Owners of a corporation who may share in the

profits.

4. non-for-profit d. Obligation to cover debt is limited to the extent of

ownership.

5. insurance e. Profits distributed to the owners of a corporation.

6. stockholders f. A share of ownership in a corporation

7. franchise g. Type of business organization that typically uses

revenue for charitable or religious purposes.

8. limited liability h. Business organization that enables many owners

to hire specialists to manage it for them.

9. stock i. Method of turning the risk of a big loss into the

certainty of a small periodic one.

10.corporation j. Elected representatives of a corporation

shareholders.

Ex.6. Arrange the letters in brackets into definitions of given statements.

1.A share of ownership in a corporation or goods ready for sale (toskc). 2. A group of organizers in control of a business (sdicotrer fo oardb). 3. Be subject to paying a tax or a tariff (ableli). 4. A way of protecting one’s business from damage or loss (iuercsnan). 5. An organization owned by two or more people who share ownership and control business (ipshnerpart).

Ex.7. Translate the sentences paying particular attention to the translation of underlined words (Participle I, ing-forms).

1.Looking for an opportunity of setting up one’s own business a man is to think about many things. 2.Managing a corporation is executed by a Board of Directors. 3.Being an entrepreneur means possessing a creative spirit in producing goods and serving other people. 4.The shareholders owning the company may have different number of shares. 5.Having taken advantage of the situation on the market the manufacturing company raised the prices for its goods. 6.Often businessmen become accomplished in business without special training or start their own business after working in a large corporation. 7.Hiring professional consultants may help decide many problems. 8.A legally binding partnership agreement among all the partners can clarify the amount of time and energy spent by each partner in the business. 9.The top three problems facing small business are related to financing – insufficient capital, slow sales, and heavy debt.10.Large firms can anticipate future hiring needs. 11.Organizing a corporation is more complicated and costly than other forms of business. 12.While creating new products and inventing new methods of production the entrepreneurs think of expanding business.

Ex.8. Complete the sentences using ing-forms of the words given below.

1.… small business the government gives a tax advantage to the entrepreneurs for the first two years. 2.To-day, McDonald’s is a worldwide operation (to sell) millions of hamburgers a year. 3.The 3M Company encourages creativity by its researches by … them to spend 15 per cent of their time on any project that interests them. 4. … is a method of product or service distribution that is governed by a contract. 5.Isaac Singer started the first franchises in 1858 when he came up with an idea of … the rights to sell his … machine. 6. Coca-Cola has used franchising to expand by … the burden of … , … , and … its product to local business people who acquired … rights. 7.After … a franchise contract many franchisers provide … programs, financial assistance, and other kinds of help in … and … the business. … campaigns, name recognition, and reputation bring increased sales to franchisees as well.

(to advertise, to franchise, to sell, to shift, to distribute, to encourage, to allow, to sew, to make, to train, to manufacture, to bottle, to store, to manage, to operate)

Ex.9. The various forms of business ownership have advantages and disadvantages. Classify each characteristic listed below as an advantage or disadvantage for the different forms of business by writing the number into appropriate space. Some of the characteristics may be used more than once.

Advantages Disadvantages

Sole proprietorships - -

Partnerships - -

Corporations - -

1. Owner can always be the “boss”

2. Can continue operations indefinitely.

3. Funding limited by amount of personal savings and ability to borrow.

4. Each owner acts on behalf of personal savings and ability to borrow.

5. Lack of opportunities for employees since firms are generally small.

6. Easiest kind of business to organize.

7. Limited liability.

8. Ownership can be easily transferred through transfer of stock.

9. Often requires a lawyer to formally set up the business.

10. Unlimited liability.

11. People can buy and sell their shares of ownership without the business ending.

12. Business profits are made by individual owner(s).

13. The death of the owner can result in the termination of the business.

14. Double taxation.

15. It can grow to be very large.

16. Owner(s) can quickly react to business problems.

17. Must pay a special tax on the profits.

18. Management is often separated from ownership.

19. It does not have to pay corporate income tax.

20. Combines funds of more than one person for a start-up or expansion.

Ex.10 Have you got what it takes to run your business? How do you rate as an entrepreneur? Use your answers to the following questions as the guiding lines when speaking about entrepreneurship.

1.Are you a self-starter?

2.How do you get on with other people?

3.Can you lead and motivate others?

4.Can you take responsibility?

5.Are you a good organizer?

6.How good a worker are you?

7.Can you make decisions?

8.Do you enjoy taking risks?

9. Can you stay the course?

10.Are you motivated by money?

11.How do you react to criticism?

12.Can people believe what you say?

12.Can people believe what you say?

13.Do you delegate?

14.Can you cope with stress?

15.How do you view your chances of a success?

16.If the business was not making profit after five years what would you do?

Ex.11 Read the text. Which of the entrepreneurial features of Henry Ford can you point out while reading the text? Speak on them.

The founding of the Ford Motor Company was to have an importance in the field of motor cars not only from the point of view of mass production, but above all because it highlighted, right from its beginning, the philosophy of the car for masses. Along with these revolutionary ideas, Henry Ford, creator, animator, and commander of the company throughout, introduced a number of other novel concepts. In particular he believed that not only the largest possible number of people should enjoy the products of his factory, but also that the largest number of people should share in the material benefits created by the production itself.

The Ford Motor Company was founded on the 16^th June of 1903 with a capital of $150,000. Henry Ford became Vice-President and also assumed the post of Chief Engineer and General manager. Among the shareholders were the Dodge brothers, ex-mechanics, who opened a workshop in Detroit after having for some years manufactured bicycles which used ball-bearings of their own design. Though the new Ford Company was too much a risk the Dodges accepted Ford’s offer of 10 per cent of the shares in return for providing the machine tools for the factory he was building and for beginning the production of Ford engines in their own workshop.

The beginning was not easy. There was strong competition from such established companies as Cadillac, Oldsmobile, Reo and Packard. Ford distinquished his models in the way which was unique in those days when other manufacturers were applying names to impress the public. Ford gave letters to his cars.

Model “N” was produced in1906 and represented Ford’s first attempt to enter the mass market. Its price was as low as $600, which was the direct competition with the single –cylinder cars of other manufacturers (the “N” was a four-cylinder). It was well accepted by the public but was not a commercial success. Ford had not yet introduced those productive techniques which were to allow him to reduce manufacturing costs considerably, as he did with the later model “T”.

Text 2.

In 1994 Ford designated the Russian market as a strategic one and began assessing the opinions for organizing production in Russia. However it was resolved to send up a “trial balloon” from neighboring Belarus. In the fall of 1997 Ford Union began assembling Ford Transit mini-buses in the Minsk Region. That production survived only three years. During the service period Ford Belarus managed to make only 3,600 vehicles, after which it had to stop production as it appeared to be losing money. Ford Union is currently operating in Minsk, but now only as a dealer.

By that time Ford already selected the site for the Russian plant, in Vsevolzhsk, 20 kilometers away from St. Petersburg. In the spring of 1999 Ford signed an investment agreement with the Russian government and construction started in 2000. The plant arose from half-finished workshops which Ford had bought from Russky Diesel, a St. Petersburg-based company which went into liquidation. Within two years Ford spent $150 million to create a full-circuit production with the capacity of 25,000 cars per year. The production in Russia concentrated on the Ford Focus model.

In September 2001 Ford signed its first contract with a Russian supplier, Bor Glass Factory, from which the carmaker buys the glass for the doors of its Vsevolzhsk-assembled Focuses. Currently Ford has seven contracts with Russian manufacturers but they are making just minor parts, unable to materially influence the cost of the cars. Russia supplies rubber mats, splash aprons, brackets for the batteries, caps for the plus battery terminals, and small stamped parts of the car body. The car body, the running gear and the engine are supplied from the corporation’s European plants.

Ex.12 Read another text. See if there is anything in common between the text above and this one. Speak on the similarities.

Silicon Valley. Home of the hi-tech dream. Birthplace of the computer age. In the early 1980s this strip of land just south of San Fransisco was compared to Florence at the height of the Renaissance. It was alive with new money, new ideas and new technology. The Valley’s young entrepreneurs truly believed that their revolutionary computers would change the world.

But, by the 1985, that dream lay in ruins. In a sensational industry shakeout thousands lost their jobs and hundreds of brilliant companies went to the wall. The story of “Apple” –a company that made it through all that slump – is a good example of tough decisions that ensured the company survival.

In the early 80^th, Apple had been the darling of Silicon Valley. The company was founded in 1977 by a young computer enthusiast, Steve Jobs. At first, Jobs and his colleagues worked out of a suburban garage, but in less than 5 years Apple had grown to be one of America’s top 500 companies and by 1983 was the computer industry’s main challenger to IBM, with a turnover of more than $1bln. But success hadn’t really changed Apple that much. It was still far from being a conventional American corporation. Apple was a company of ideas and ideals its aim was to shift the focus of computers away from institutions and onto individuals. For Apple, the personal

computer was “a set of wings for the mind” –a tool which allowed people to develop their ideas and realize their true potential.

After hiring John Sculley as Apples’s chief executive officer in 1983 there began an unprecedented boom for the home computer business. Early in 1984,using some of the most innovative advertising ever seen, the new Apple Mackintosh computer was launched. The Macintosh looked set to be a runaway success. It sold 50,000 units in a mere 74 days and Apple’s revenues to the year ending in September jumped by staggering 54%. Sculley and Jobs forecast confidently a turnover of $1bln for the peak Christmas quarter.

Ex.13. Read and translate the texts given below.

1. See if there is an idea common for all of them.

2. Speak about the peculiarities of business described in the texts.

3. See if every business has its advantages and disadvantages. Speak about them.

Text 1

One of the most important topics covered in traditional law or business school corporation or business organization courses is the selection of the most appropriate business form for a new venture. The choices that are usually considered are: general partnership or proprietorship, limited partnership, and corporation. The corporate form may be further subdivided on the basis of an important tax election. To choose the most form of business it is necessary to take into consideration the important economic, legal, and tax differences between these forms of organization. The following factors are the most significant ones:

1. considerations of internal efficiency, operational cost, and organizational convenience;

2. considerations of limited liability and the responsibility of the owners of a business for its debts;

3. the minimization of federal income taxation; and

4. considerations relating to the ease of raising capital in the future.

Text 2

Traditional corporation texts also discuss the differences between the forms of business organization partially in terms of legal differences (i.e., “continuity of life”, “centralization of management,” and “free transferability of interest”). These factors are less important than the functional differences listed above because they are not truly unique characteristics of a specific form of business enterprise.

There are only a limited number of organizational forms suitable for most modern business, and each form combines in a unique way the considerations discussed above.

Text 3

The nature of a fictitious entity that is a corporation is never precisely defined. A corporation can be envisioned as an artificial person having most of the same power, rights, and duties that an individual has. The artificial person has no flesh, no blood, no eyes, or mouth but it may nevertheless do many things that real people do: it may sue and be sued, enter into contacts, purchase property, run a business, and so forth.

In considering what it really means to conduct business in the corporate form, it is useful to consider the one-person corporation, that is, a corporation in which one single individual owns all the outstanding shares of the corporation. In effect, the business is an incorporated proprietorship. One should understand precisely what the notion of a fictitious entity means in the situation. In practical and economic effect, the shareholder runs the business much as though it were a proprietorship. He or she decides what business the corporation should be in, whether it should enter into specific contracts, what price to charge for its products, and so forth. The shareholder in a sense also owns the entire corporation since he or she owns the outstanding shares.

Text 4

A proprietor may conduct business either in his or her own name or in a trade or assumed name. There are few restrictions on the use of trade or assumed names: as long as the name is not misleadingly similar to the name of a competing business or otherwise used in a deceptive manner, a person may conduct business in any name he or she wishes.

The owner of a proprietorship may act individually or employ one or more agents, employees, or managers to act on his or her behalf. As a result, the proprietor can delegate business-related activity and decisions freely to subordinates or employees and may take a vacation without the business shutting down if they are agents he or she trusts. The owner of a proprietorship is entitled to the fruits of the business, that is, its income and cash flow without any formality or difficulty.

For legal purposes, a proprietor is not a separate unity. For example, the owner of a proprietorship is liable for any business debts. A proprietor of a business may borrow money on his or her personal credit either for personal use or for use in business, may purchase inventory, supplies, or machinery in the assumed name on credit secured by a loan or security interest in the property being purchased, and he is personally liable on these obligations.

Similarly, if the business becomes involved in litigation, the proprietor is the appropriate plaintiff: if the business is sued, the proprietor is the proper defendant.

Text 5

Many cases involving partnership-like relations describe the relationship as a joint venture rather then a partnership. If there is any difference, it is that a joint venture involves a more limited business purpose than a partnership –perhaps a partnership for a single transaction. Most partnership rules are applicable to joint ventures, the major difference being in the scope of the actual and apparent authority that each joint venture possesses to bind the venture.

A joint venture agreement is likely to be referred to as a joint venture rather then a partnership by the courts. However, there appear to be relatively few practical differences in the legal principles applicable to a partnership and to a joint venture.

4. Make up a written report on the basis of all five texts.

Ex.14. Questions and assignments for economic reasoning and discussion:

1. Have you ever operated your own business? If not, would you like to have a

try? Can you compare the advantages and disadvantages of working for a

large corporation or being self-employed?

3. Make up questions for interviewing local businessmen to determine:

a) how they started their own business;

2. b) their schooling, training and/or experience they had to help them in their business:

3. c) advice for young people who might be thinking of starting a business some day.

4. What do you think of personality characteristics of entrepreneurs?

Ex.15. Choose the letter of the item that best completes the statement or answers the question.

1. Entrepreneurship is

1. Is always profitable.

2. Limited to those with wealth.

3. A personality style.

4. Never without risk.

2. Market economy today is much different from what it was years ago. Which of the following best describes a reason for these changes?

1. Entrepreneurs discovered and developed new things for the marketplace.

2. Luck.

3. Risk has been eliminated.

4. Sole proprietorships now produce more than corporations.

3. Which of the following is not true about small business in a market economy?

1. Small businesses have a higher failure rate than larger businesses.

2. Smaller businesses have been providing most of the nation’s new jobs.

3. Most start businesses start out with sufficient financing but still end up failing.

4. Small businesses typically have a greater ability to adapt to change than do large companies.

4. Sole proprietorships are

1. Difficult and costly to organize.

2. The most numerous kind of business organization.

3. Businesses with more than one owner.

4. Mostly used by large business organizations.

5. One advantage of a partnership is that

1. Adding partners brings more funds to the business for startup or expansion.

2. Each partner is subject to unlimited liability.

3. Partners are likely to agree on all business decisions.

4. The business continues even if one partner dies.

6. Young business lady recently bought a store that carries the name of a well-known national ice cream company. She will buy her equipment and supplies from the company and pay for using its name. Her business illustrates a

1. Cooperative.

2. Franchise.

3. Not-for-profit corporation.

4. None of the above.

7. In a large corporation

1. Stockholders run the company.

2. The directors are the owners.

3. Ownership and management are separated.

4. There are no shares of stock.

8. A corporation is a legal “person”. This means the corporation

1. Is difficult to organize.

2. Can raise only limited capital.

3. Is the most common form of business organization.

4. Can sue or be sued, enter into contracts, and must pay taxes.

9. If you buy a share of stock in a corporation,

1. You have no risk of losing your money.

2. You would be assured of receiving back more than you invest in the stock.

3. You would not share in the company’s future profits.

4. You could not lose more than the money you spend for the stock.

10. Junior Achievement organizations world-wide are examples of a

1. Cooperative.

2. Franchise.

3. Government-owned corporation.

4. Not for profit.

Use your answers as the basic points when speaking about different forms of business.

UNIT IV. 1. Money and Business.