Английский язык. Перевод, межкультурная коммуникация и интерпретация языка СМИ. Учебное пособие

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Partnership is good for people who feel that they can trust each other to share the risks as well as the advantages of running a business. Because all members of a partnership are personally liable for its debts, the choice of partners requires very careful thought. A partner should be able to make an important contribution to running the business in an area which you are unable to take care of. He may have some specialized expertise or have important business contacts to bring in work. He may even be a «sleeping partner» who is doing little apart from putting some money in return for a share in the future profits. To avoid potential disputes it is advisable to compose a formal agreement.

A LIMITED COMPANY (CORPORATION)

The business population in the USA is extremely diverse, ranging from giant corporations like General Motors to small specialty shops and «mom and pop» groceries with only one or two employees.

Economic analysis, however, makes clear the dominant role of huge corporations as providers of income and jobs. Consider, for example, 800 of the largest firms in American economy. Although these 800 firms comprise only 0,01% of the nation’s business population, they have total assets equal to about one half of the nation’s total wealth. In addition, those 800 corporate giants employ approximately one-fourth of the labour force. Speaking more generally, the corporations, constituting only 18% of the business population, produce about 90% of the total business output.

A corporation differs from other forms of business in that the law considers it to be an artificial being, having the same rights and responsibilities as a person. A corporation is a company that is publicly registered, so that it acquires a legal existence separate from that of its owners. It can continue functioning despite the death or withdrawal of any of its owners. As a corporation, a business can buy and sell assets in its own name, make contracts, defend itself in court or to be taken to court. Such a business becomes a separate legal entity. The members of a corporation are liable for its debts up to a limited amount. If a corporation goes bankrupt, the creditors can claim only the assets of the company.

In order to form a corporation according to the US laws, it is necessary to obtain a corporate charter by the state in which the business resides. Each state has its own requirements and fees for the issuance

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of charters. The cost for incorporating a small business usually ranges from $ 500 to $ 1,500.

Each person who owns stock in a corporation becomes its coowner. A share of ownership is represented by a stock certificate given in return for providing some capital for the company. These shares provide the holder with voting rights at the company’s annual general meetings. The Directors develop the company’s policy and establish strategic goals which must be implemented by the executive officers appointed by the Board. The executives provide day-to-day management of the company.

It should be noted that the corporation is the most effective form of business organization for raising money capital. Through organized stock exchanges, corporations can obtain the financial resources of extremely large numbers of people. Therefore it is easier for them to expand in size for their operations. Limited liability is another advantage that attracts investors. The stockholders can share in the company’s profits, which are distributed to them in the form of dividend, while it is not necessary for them to take an active part in management. Furthermore, since stock is transferable, stockholders are free to sell their stock at any time and receive the market value for it.

CLASSIFYING CORPORATIONS

Corporations can be classified as domestic, foreign, or alien. A firm is considered a domestic corporation in the state (administrative unit) where it is incorporated. If it expects to do business in states other than the state of incorporation, it registers there as a foreign corporation. A firm incorporated in one country but operating in another is known as an alien corporation in the country where it operates.

Johnson Products Inc., the well-known maker of personal care products for African Americans, operates as a domestic, foreign, and alien corporation. The company is incorporated in Delaware (domestic corporation), but its headquarters are in Chicago, where it operates a large plant (foreign corporation). It also operates overseas (alien corporation), with a sales unit and distribution in Great Britain and a 40%- owned plant in Nigeria.

STOCKHOLDERS

Stockholders are the people who have bought the shares of the corporation; they are its owners. Some corporations, such as family businesses, are owned by relatively few stockholders. In such a firm –

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known as a close corporation – the stockholders also control and manage the corporation’s activities. But in a larger corporation the ownership is split.

General Motors, for example, has over 1 million stockholders. These people obviously have little individual control over this giant corporation, but there is a ready market for their shares if they decide to sell. Adequate markets are available for the stock of large corporations, so the individual stockholder can sell the stock more easily than if the firm was a small corporation with no public market for its stock.

Corporations usually hold an annual stockholders’ meeting during which the management presents reports on the firm’s activities. At this time any decisions requiring stockholder approval are put to vote. The election of certain directors and the choice of an independent public accountant are the two matters that must be voted on at nearly every stockholders’ meeting.

Stock is usually classified as common or preferred. Owners of preferred stock have the first claim to the corporation’s assets after all debts have been paid, but they do not usually have voting rights at the stockholders’ meeting. Owners of common stock have only a residual claim on the firm’s assets (after everyone else has been paid), but they do have voting rights in the corporate system. When a vote is taken, each share of common stock is worth one vote. For example, a person with 225 shares has 225 votes. If people cannot attend the stockholders’ meetings, they can give their proxy authorization to vote the shares to someone who will attend. Many corporate boards can vote as they choose if the proxies are not returned, thus perpetuating the board of directors’ positions.

BOARD OF DIRECTORS

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The stockholders elect a board of directors, which becomes the governing body of the corporation. The board elects its own officers – usually a chairperson, a vice-chairperson, and a secretary. Most states require a minimum of three directors and at least one annual meeting of the board. Most corporations, other than small or closely held ones, have large boards of directors that meet at least quarterly.

The board of directors must authorize major transactions involving the corporation and must set overall corporate policy. It is concerned with changes in areas such as the firm’s stock, financing agreements,

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dividends, and major shifts in corporate holdings. But its most important role is that of hiring the corporation’s chief executive officer (CEO). This person then hires other top executives. The selection of other managers is left to those executives.

In some corporations, particularly smaller ones, the board of directors plays an active role in the management of the organization, but in most corporations it acts more as a overseeing panel for management decisions. Most boards are composed of both corporation executives and outside directors, people not employed by the organization. Sometimes the corporation president is also the chairman of the board.

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Typically, a big company is owned by a million or more people, many of whom own fewer than 100 shares. Blocks of stock are owned or controlled by individuals, banks, or retirement funds. By the mid1990s more than 40 million people in the US owned common stock.

With shareholders living in all parts of the country, it is impossible for them to know all the details about their business and to manage it properly. In this situation, effective direct control is in the hands of the corporation’s board of directors.

The board of directors develops general policy and places operational control in the hands of a Chief Executive Officer (CEO). This person, who may be the chairman or president, usually supervises a number of vice-presidents who manage various aspects of the corporation and report to the CEO.

The makeup and the role of the board of directors varies from one company to another. Only a minority of board members are internal officers of the corporation. Some directors are selected to give prestige to the Board, other to provide certain skills or to represent lending institutions (like banks).

The board meets monthly or quarterly to consider policies related to operational decisions and to review results. At annual meetings of stockholders new directors are added as needed and major policy decisions are made.

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A limited company has an identity separate from that of the shareholders who are its owners. In case of bankruptcy, the claims of the creditors are limited to the assets of the company. This means that

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shareholders are not liable as individuals their private assets outside company are not touched.

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The Memorandum is a document which sets out the main objectives for which the company is formed and what it is allowed to do. The Articles of Association are prepared together with the Memorandum. They state the rules under which the company is run. They govern matters like issue of the share capital, the appointment and powers of directors and the proceedings at general meetings. When the Memorandum and Articles of Association are ready, you may apply to the Registrar of Companies. A Certificate of Incorporation will be issued, which can be called the birth certificate of your company.

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Limited companies have to show their registration number and the address of the registered office on their stationery.

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If a company’s financial condition is good and it requires additional funds, the stockholders may be asked to vote for the issuing of additional shares of common stock. The decision, however, must be carefully thought out. If too many shares are issued, the basic value of each share is reduced.

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Corporations differ from other legal forms of business by employing specific ways of raising capital. The most common of them are listed below.

Issuing bonds. A bond is a written promise to pay a specific amount of money at a certain date in the future. In the meantime, interest is paid to the bond holder at a fixed rate on specific dates. If the holder of the bonds wishes to get back his money earlier, the bond may be sold to someone else. The disadvantage of this form of financing a corporation is that interest payments must be made on bonds even if no profits is obtained.

Sales of common stock. Stock certificates are issued in order to attract investment capital. Equity investors own shares of the corporation and have certain rights. For example, they elect the Board of Directors

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by whom the company is managed. Stockholders share in the profits of the company by receiving dividends. Dividends on common stock are not paid until interest payments are made on the bonds of the firm.

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The authorized capital of a company may be divided into many different types of shares. Here are the more common ones.

Preferred shares. Preferred shares carry a prior right to a share in the profits of the company. The holders of these shares must receive payment of their dividends before the holders of other types of shares. Normally the rate of return (profit) on preference shares is a fixed percentage of their nominal value. Even when a company has an exceptionally profitable year, the preference shareholders will receive no more than the fixed rate of interest. Preference shareholders usually have little say on the management of the enterprise since their income is less dependent on the amount of profit than that of other shareholders.

Ordinary shares. The dividend on ordinary shares is not fixed and depends entirely on the profitability of the company and the policy of the directors. The dividend may be very high or it may be zero. The ordinary shareholder is entitled to the profits after all other payments and debts have been met. Ordinary shares, therefore, are the riskiest type of investment and dividends on them may vary from year to year. Since they bear major risks, ordinary shareholders have the greatest say in the management and control of the enterprise through voting.

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Because the corporation itself has legal standing, it safeguards its owners, relieving them of individual legal responsibility. Owners of shares of stock have limited liability: they are not responsible for corporate debt. If a shareholder paid $ 100 for 10 shares and the corporation goes bankrupt, he or she will only lose the $ 100 invested.

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As a separate legal entity, the corporation must pay taxes. Dividends paid to shareholders are not tax deductible. When the corporation distributes profits to individuals in the form of dividends, the individuals are taxed again on these dividends. This is known as double taxation.

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Corporate stock is transferable. Thus, the corporation is not broken down by the death or negligence of any person. An owner of stock can sell their holdings at any time or pass it along to heirs (children, relatives, friends).

SMALL BUSINESS

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Small business is one that is independently owned and operated, and is not dominant in its field. Common types of small business include services business, retail business, wholesalers, general construction, and manufacturing.

Small businesses often have the ability to respond better and more quickly to local preferences and conditions.

Most people who start a small business use their own savings. Bank loans are the second most common source of capital. Entrepreneurs may also borrow from friends, private investors, the Small Business Administration (SBA) of venture capital firms.

The Small Business Administration was established in 1953. It extends loans to small businesses, helps firms obtain bank loans by guaranteeing repayment, and provides counseling and management advice. In recent years emphasis has been on aiding minority enterprises.

Venture capital is money invested in new, fielding, or struggling small businesses by groups of investment specialists so that these small companies will grow larger and more profitable and the venture capitalists can then sell their interest in the company at profits commensurate with the large risk. Venture capital firms get their funds from corporations, individuals, pension funds, and other sources. These individuals and firms look for small businesses with the potential for rapid growth (for example, high-technology firms), and rather than loan money, they provide capital in return for an ownership interest.

Large corporations often have departments responsible for finding good venture capital investment. Sometimes, a larger corporation eventually acquires the small venture it originally financed.

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A. About 250 British industrial companies each have an annual turnover over 500 million pounds. Five British firms are among the top

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twenty European companies in terms of capital. Small businesses, however, are making an increasing contribution to the economy. Between 1980 and 1993 the number of businesses, a large majority of them small firms, rose from 2.4 million to 3.6 million. Firms with fewer than 100 employees account for 50% of the private sector workforce and 30% of the turnover. About 97% of businesses employ fewer than 20 people.

B. Most US businesses are small firms. Small businesses are gaining importance because of structural changes in the economy toward service industries (services account for about 80% of the US GDP nowadays). Another factor is the technological revolution that allows small businesses to compete with larger firms. There is also an important psychological reason, which is the desire of Americans to control their own life. In the 21st century small businesses will be the land of opportunity for many Americans.

COOPERATIVES

Another alternative to private ownership is collective ownership of production, storage, transportation, and/or marketing services. A cooperative is an organization whose owners come together to collectively operate all or part of their industries. They are often started by large numbers of small producers that want to be more competitive in the market.

In most cooperatives, owners control their organization by electing a board of directors from the cooperative’s members. The board then hires a team of professional managers to handle the business functions of the cooperative. The funds needed to operate cooperatives come from the owners who usually pay an annual membership fee. Unlike stockholders who invest funds in a corporation to receive dividends, the owners of a cooperative invest funds to assure themselves of markets for their products or sources of supplies and services.

MERGERS

Many well-known firms have become parts of other corporations, or have been split into smaller units. One major trend has been the increased number of mergers and acquisitions among US companies. A merger refers to two or more firms that combine to form one company. An acquisition occurs when one firm purchases the property and assumes the obligations of another company.

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A horizontal merger occurs between firms in the same industry that wish to diversify and offer a complete product line. Reebok International, for example, acquired Rockport, Avia Group International, John A. Frye Company, and Ellesse North America to broaden its offerings in athletic footwear and sports apparel.

A conglomerate merger is a merger of unrelated firm. An example is Eastman Kodak’s purchase of Sterling Drug, a pharmaceutical firm. The primary purposes of most conglomerate mergers are diversification, rapid sales growth, and attempts to profitably use a cash surplus, which might otherwise make the holder a tempting target for a takeover effort.

FRANCHISING

Franchising is actually a business arrangement involving a contrast between a manufacturer or another supplier and a dealer that specifies the methods to be used in marketing a product or service. Franchising started just after the Civil War when the Singer Company began to set up sewing-machine outlet franchises. The concept became increasingly popular after 1900 within automobile industry. Automobile travel led to growing demand on gasoline, oil, and tires, all commodities that employed franchising. Soft drinks and lodging became other popular franchises.

Franchising is also growing rapidly abroad. Some 345 US franchisors operate nearly 32,000 units overseas. Canada is the biggest market for US franchises. Next come Japan, Australia and the United Kingdom.

The two principals in a franchising agreement are the franchisee and the franchisor. The dealer, or franchisee, is a small business person who is allowed to sell goods or services of a supplier, or franchisor, in exchange for some payment (usually a flat fee plus future royalties or commissions). The franchisor typically provides business plans, site selection research, managerial and accounting procedures, and other services to assist the franchisee. The franchisor also provides name recognition for the small business person who becomes a franchisee. This image is created by national or regional advertising campaigns to which the franchisee typically contributes.

The franchisee purchases tangible and intangible items from the franchisor. Some franchisors charge management fees in addition to their initial franchise fee and the percentage of sales and profits. Still others require contributions to a promotional fund. Total costs can vary widely.

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The US Commerce Department says franchisors have a failure rate only one-tenth that of other new businesses. But a franchise is like any other business property: it is the buyer’s responsibility to know what they are buying. Poorly financed or managed franchise systems are no better than poorly financed and managed nonfranchise businesses.

Purchasing a good franchise requires a careful study of the concept’s advantages and disadvantages. The decision which is correct in one set of circumstances may be wrong in a different situation. The franchising concept does not eliminate the risks for someone considering small business investment; it merely gives more opportunities.

The two most common reasons for business failure are lack of money and lack of know-how. A franchisor will not grant a franchisee unless the latter has enough money. Franchisors also train their franchisees in how the business is to be operated.

Among the disadvantages of franchising are the monthly payments or royalties that must be paid to the franchisor and the lack of independence individual operators must put up with. Although many franchises have prospered, anyone contemplating going into a franchise should study the deal carefully before investing.

8.5. Работа компании

(Functioning of a company)

There are many ways of dividing work into operating units. Most companies provide customers with products or services, so the business functions of production and marketing are usually required. These activities require capital, so the financing function must also be performed. These three basic functions of production, marketing, and financing become the necessary departments of a firm.

However, additional work divisions are usually needed. For example, the scope of marketing may be so broad that the work will be subdivided into such units as advertising, sales promotion, and selling. In the production area, the work may be subdivided into such units as research and development (R&D), engineering, manufacturing and purchasing. A company with many products may set up departments to produce and sell different product lines.

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