The Corporation

As business became more competitive, new and more complex corporate combinations appear. Single ownerships and the partnerships have finance weaknesses and that is the reason why the corporation came into existence.

The major simple forms of integration are the following:

• A vertical integration characterizes companies that engage in the different steps in manufacturing or marketing a product.

• A horizontal combination brings under one control companies engaged in the sale of the same or similar products.

• A complementary combination takes place when companies, selling allied but not competitive products, combine.

• A conglomerate combination involves firms in widely diverse industries, such as a motor company owning a food manufacturer or book publisher.

• Of great economic importance are multinational corporations. Such companies maintain extensive business activities and large-scale production facilities throughout the world, and their revenues sometimes exceed the total revenues of some countries in which they operate.

International business is a dynamic activity which changes, adapts and responds according to the conditions. Apart from conventional trade it takes various forms such as franchising, buy-back transactions, turnkey projects, transactions in patents, licences, know-how, services, various joint ventures, joint banks, mixed commissions and many other forms.

Exercise 1 What sort of company is it?

There are many types of business organization and the different terms can be confusing. Read both columns below. The left-hand column gives various types of organization and the other column contains short descriptions of each organization. Match the types and their descriptions

Type	Description
1. charity	A. a friendly association of people
2. company (UK) (corporation US)	B. two or more partners working together for profit, without limited liability
3. cooperative	C. a firm where shareholders' liability is limited
4. enterprise	D. company owned by the state
5. government agency	E. a general word for a company, usually a small one, part of a large group. It also means-activity
6. holding company	F. a company whose shares are publicly available
7. limited company	G. a democratic firm owned by its workers.
8. minority interest	H. firm owned by a parent company.
9. multinational	I. a firm based in a tax haven to avoid higher taxation.
10. nationalized company	J. a new commercial activity
11. offshore company	K. an organization operating in several countries.
12. operation	L. an organization which is part of the state administration.
13. parent company	M. a company whose shares are not publicly available,
14. partnership	N. an organization operating to make a profit.
15. private company	O. a company which owns another.
16. public company	P. a firm, usually without commercial activity, created to be parent to other companies.
17. society	Q. an organization to relieve poverty, advance religion or education, etc; benefits from some financial concessions.
18. subsidiary (affiliate)	R. company in which another firm has less than a 50% interest.