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Файл:Introduction into Business
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6. Take turns to ask and answer these questions. When you answer, use
1. Is this your first visit here?
A In England or the United States?
2. How was your flight?
B Is there a special exhibition on?
3. I’m from Birmingham?
C No, it’s my third visit actually.
4. What was the weather like?
D Rained all the time.
5. Do play football?
E No, but I’m Juventus supporter.
6. How long are you staying?
F Just how I like it.
going to if you have already taken a decision and will or won’t if you haven’t
decided.
1. What are you going to do this weekend?
2. Where are you going to go on your next business trip?
3. What is your next car going to be?
4. Are you going to work late any night this week?
SOCIAL AND BUSINESS SKILLS
Breaking the ice
1. Topics of conversation. When you go out for a business lunch or dinner,
what do you expect to discuss? Here are few ideas.
Economics family only business sport politics news
Art films food people you know
2. Talking about interests. Listen to the extracts from a conversation be-
tween two businesspeople in a restaurant and answer the questions.
1. Which of the topics of conversation in the box above is being discussed?
2. Which phrases from the list below are used in the conversation?
A How do you find that?
B Did you watch the news this morning?
C Have you seen the new Spielberg movie yet?
D What did you like about it?
E Are you interested in sport?
F What do you do in your spare time?
G What do you play?
H What do you think?
3. Write the letters of the phrases in the appropriate place.
Introductory questions Being more specific Asking for an opinion
4. Match the conversational exchanges.
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7. You must visit the new art gallery
while you are here.
G I’m going back tomorrow morning.
8. How was the coffee?
H Delayed as usual.
9. What are your children doing these
days?
I She’s just been promoted.
10. How’s your wife?
J Oh, they’ve both at college now.
5. Do you come here often? At your office you meet a visitor. Here are five
things you could find out about this person. What questions would you ask?
Name _______________________________________________________
Home town ___________________________________________________
Reason for visit ________________________________ _______________
Length of stay _________________________________________________
Interests _____________________________________________________
Listen to the conversation. In which order do the five subjects occur? Put
them down.
6. The Player. In the film The Player Griffin Mill an executive at a Holly-
wood film studio goes into his boss office and meets a visitor. Read the script and
complete the profile of the visitor.
Name _______________________________________________________
Home town ___________________________________________________
Reason for visit ________________________________ _______________
Length of stay _________________________________________________
Interests _____________________________________________________
LEVENSON Griffin, I don’t think you’ve met Reg Goldman. You know
his father, Harvey.
GRIFFIN Yes, of course. Hi, Reg. you’re from the bank in Boston.
LEVENSON Reg is out here for a couple of weeks/
GRIFFIN Great. Business or pleasure?
REG A little of both, I hope.
LEVENSON Reg is thinking of getting into production, Griffin.
GRIFFIN Oh, really?
REG It beats work, doesn’t it, Griffin? I’d like to play some
tennis though. Do you play tennis?
GRIFFIN No, no, no. I’m too busy.
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7. Food and drink. Match the two parts of the conversational exchange.
1. How do you take your coffee? A No, thanks. I’m driving.
2. It’s my round. B It’s very spicy.
3. Sorry, sir. The fish is off. C White, no sugar. Thanks.
4. Another whisky? D Well-done, please.
5. How would you like it? E No, this one is on me.
6. What does it tastes like? F In that case, I’ll have the steak.
MAKE UP YOUR OWN SITUATION OF BREAKING THE ICE
READING
I
The Pillars of Free Enterprise
In the United States, out economic system capitalism or free enterprise, and
our social and political institutions answer those questions. They have enabled our
country to produce more goods and services than any other nation in history.
The free enterprise system rests on certain traditions, beliefs and practices
that set it apart from other economic systems. These “pillars” of our economic sys-
tem are private property, the price system and competition.
Private property. Unlike people in many other parts of the world, Americans
are able to own property for business purposes and use it to produce income. Nearly
90% of the goods and services produced in this country each year come from privately earned firms.
The right to private property gives the owners of natural resources and capital
the incentive to use their assets as efficiently as they can. Why? Because property
owners know they will make profit if they can produce goods and services that buyers want, at a price they are willing to pay. The advantages of private property and
its incentives were summarized by “the father of modern economics”, Adam Smith,
in his famous book The Wealth of Nations.
1. What are the “pillars” of American economic system?
2. What does the right to private property give the owners of natural re-
sources and capital? Why?
3. What book summarizes the advantages of private property and its in-
centives?
Free Enterprise: the Theory and the Reality
Adam Smith, the father of economics described a world in which the economy ran itself. Government played only the smallest role. Smith described this point
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of view by relating the story of a French official who asked a manufacturer what the
government could do to help him. “Laissez-nous faire” (“leave us alone”) was his
reply. To this day, the term “laissez faire” refers to a policy of limiting government’s ability to regulate business.
Government in America functions at three levels: federal, state and local. Despite the fact that ours is a free enterprise system, buyers and sellers must share
economic power with government. This sharing of power places limits on the freedom we associate with private property, the price system, and competition. For
example, governments:
compel people to sell their property for public use through the power of
eminent domain;
decide who may sell electric power in a geographic region;
control which machines may be sold commercially;
license certain businesses (such as banks, barber shops, taxi cabs and res-
taurants);
pay dairy farmers for not producing as much milk as they can;
forbid export of certain machinery to specific foreign countries;
establish the minimum wages employers must pay;
issue permits for and inspect construction of homes and buildings.
1. What is the essence of the term “laissez faire”?
2. What are the three levels of American government?
3. In what cases does the government show its power?
II
The Price System. One of the remarkable things about the American eco-
nomic system is that it seems to run by itself. No central economic agency dictates
responses to What, How and Who questions. Yet the questions are answered.
Prices determine what we are willing and able to buy. They influence us to
continue in school or to accept a job. Prices help to determine what and where factories will be built, which businesses will succeed, which will fail, and even the
color and style of the clothing that will be manufactured.
Prices, the money value of goods and services, carry so much information and
so affect the behavior of buyers and sellers that economists often describe our economy as a price-directed system.
The price system provides the answers to the fundamental questions of What
goods and services will be produces, How they will be produced, and Who will receive them.
1. What is the role of prices in American economic system?
2. Why is American economic system called price-directed system?
3. What are the fundamental questions that price system provides the an-
swers to?
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How the price system answers the What question. When buyers want more
of a product, they are willing to pay more for it. Higher prices attract other producers.
As production increases, the need for additional workers causes wages to rise within
the industry. When demand for the product fails, the opposite happens. Prices fall,
producers who can no longer operate profitably shut down, or switch to other products, and production falls enough to meet the reduced demand.
How the price system answers the How question. The price system encourages sellers to produce in such a way as to costs and maximize profits.
Stanly Lee owns a newspaper delivery service. Stanly used to rely on 10 to 15
kids with bicycles to deliver the newspapers before and after school. One day Stanley
calculated that it would cost less to use one adult with an automobile than 15 kids on
bicycles to deliver his newspapers. He laid off the school kids and hired the adult.
How the price system answers the Who question. Those who graduate from
high school earn more, on the average, than those who drop out. Many professional
athletes earn more than letter carriers. Physicians and attorneys earn more, on the
average, than stenographers and building superintendents.
Since they earn more, professional athletes, physicians and attorneys can afford
to buy more goods and services than people earning less than they do. Thus, by assigning values to the work people do, the price system answers the Who question.
Answer these questions using your knowledge and experience.
III
Competition refers to the rivalry among buyers and among sellers. Sellers
compete by trying to produce the goods and services buyers want at the lowest possible price. Those unable or unwilling to sell at a price low enough to attract buyers
will be unable to dispose of their goods and services. This rivalry benefits us all.
It benefits us by giving us the goods and services we want, when and where we
want them. Producers know that if they don’t satisfy consumer demand, their compet-
itors will.
It benefits us because producers must constantly strive to operate more efficiently. The quest of greater efficiency conserns scarce resources, increases output
and raises living standards by reducing costs.
Buyers compete with one another because there is never around everything to
go around. Those willing to pay the price can buy a steak. Those unwilling or unable
to pay will substitute a less costly product like chopped meat, chicken or hot dogs. In
other words, in the rivalry among buyers of steak, those unable to pay the price will
lose to those who are able to pay.
If we think of private property, the price system and competition as providing
the foundation of our free enterprise economic system, then profits and other econom-
ic incentives supply the cement that holds the structure together.
The role of economic incentives. Economic incentives influence our decisions
about what and where to buy. For example:
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Consumers will travel to a store across town if they can save enough money to
offset the travel expense and the cost of their time or receive better goods and services.
Employers will increase wages and/or improve working conditions as means of
attracting additional and/or better trained workers.
Savers will switch their deposits from one bank to another to receive higher interest rates.
Entrepreneurs will try to run their businesses to earn the greatest profit.
The desire to achieve the greatest profit for our efforts is the principal economic incentive in the American and other market economies. Economists refer to this as
economic self-interest.
Of course economic self-interest cannot explain human behavior. Workers may
pass up the chance to earn more simply because they don’t want to move to another
region. Business firms often reduce their profit by contributing to charitable or other
public service organizations. Many parents forgo job opportunities to raise their children at home. And for many reasons other than price, consumers may prefer to shop
at one store rather than another.
1. What does competition refer to?
2. How does the rivalry benefit us all?
3. Why do buyers compete with one another?
4. How do economic incentives influence our decisions?
5. What is economic self-interest?
IV
The role of profit. Profit is what remains after the cost of production has been
deducted from sales.
One summer day Charley took the $12 he had saved and bought lemons, sugar,
ice, and a box of paper cups. He used the ingredients to make lemonade, which he
sold for 25 cents a cup. By the end of the day the lemonade was gone, and Charley
had a total of $25 in coins and small bills. “Let me see”, Charley said as he figured
out the results of his day’s work, “the lemonade cost $25 to make and sell, and I took
in $25. I think I did pretty well. In this instance, Charley’s production costs were $12
whereas his sales totaled $25. the difference,$13 represented his wages and profits.
The quest for profits, or the profits motive as it is often called, is the force that
drives our economic system. You will recall that the job of an economic system is to
allocate (distribute) the scarce resources that go into the creation of goods and services. These resources are land, labor, capital and entrepreneurship.
People in business buy and sell land or other natural resources if they think
they can profit from the transaction. They also put those resources to use in such a
way as to make the greatest profit.
Elise Ackley decided to sell the old family farm to the Froebel Development
Company. This company was planning to build a shopping centre on the site. Elise
knew that she could receive much more by selling the property than if she continued
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to farm it. Just as the profit incentive led Elise to sell the property, so the thought of
profits lay behind Froebel’s decision to build a shopping centre.
Profits also affect the allocation of labor.
Sanford Shumway lost his job when the TV factory closed. Unable to compete
with Japanese, the company had to go out of business. Sanford took a job as a manager of one of the new fast food franchises. In this instance the inability of the firm to
earn profits forced it to lay-off workers. Meanwhile, profit opportunities in the fast
food business allowed another firm to hire additional help. In both instances, we see
how the presence or absence of profit opportunities affected the allocation of labor.
Profits also influence the allocation of capital resources.
Sammy’s Super Saver Supermarket recently installed an automatic scanner at
its checkout counter. Sammy figured that by scanning bar codes rather than reading
printed prices, his food checkers could work faster, sell more food and earn greater
profits.
Profits drive entrepreneurs to risk capital, hire employees and purchase the
things they need to produce goods and services. Profits also provide the incentive to
improve products, reduce costs and outsell the competition.
1. What is profit?
2. What drives our economic system?
3. What are the scarce resources that go into the creation of goods and
services?
4. What do profits drive entrepreneurs to do?
V
Business responsibility to the consumer
Like other groups in the economy, the majority of Americans in business are
honest, hardworking men and women who want to treat the consumer fairly. They are
concerned about earning a profit for their efforts, but they are also concerned about
their responsibilities to the consumer. Concern for responsibility, which we call busi-
ness ethics, goes hand in hand with concern for profit. Sooner or later consumers will
identify irresponsible firms and refuse to trade with them. By contrast, those firms
that acquire a reputation for high quality, informative and convenient packaging, and
labeling and consumer safety are likely to profit.
Product quality A consumer has the right to expect uniform product quality.
A consumer has the right to expect that the product will do what it is advertised to do
for a reasonable length of time. Firms that pay close attention to quality and develop
procedures for monitoring the quality of their products and services are likely to be
more successful than those who don’t.
Product packaging and product labeling. Packaging can perform a number
of valuable functions. It can protect the product from the time that it is manufactured
until it is sold. It can inform the consumer about the quantity and quality of the contents. And it can enhance the appearance of the product to increase sales. Some prod-
37
ucts carry informational labels or testing labels from trusted, private, consumer testing organizations. Consumer relations departments operate to see that statements
made by their companies are accurate. Misrepresentations about a product or service
are illegal.
Consumer safety. Each company has the responsibility to safeguard consumers from unique hazards in the storage and use of the product. A company even has a
responsibility to warn against a misuse of the product. During production consumer
safety is best protected by keeping products free from defects. Companies must warn
against potential hazards in using their products.
1. What are all businessmen concerned about?
2. What do we call business ethics?
3. What is the role of product quality, product packaging, product labeling
and consumer safety in a free enterprise system?
VI
Profit at any price?
Part A
For many years, sales of cigarettes in western countries have been falling, because people know more about the dangers of smoking. Because of this, one large
tobacco company has increased its marketing activities in Asia and Latin America.
In these parts of the world, people know less about the danger to their health from
smoking. At the moment, about 150000 people a year in Latin America die from
smoking-related illnesses. This number is going up every year. The tobacco company knows this, but it continues to sell more and more cigarettes in these countries.
The pressure group ASH (Action on Smoking and Health) says tobacco companies
use the fact that people don’t understand the dangers. They believe this is unethical
as it puts profits before people.
Part 2
Each year, farmers in Africa and Asia sell most of their crops (e.g. rice, corn),
but save a small amount to grow the next year. Now, a US company has developed
a new plant gene called the Terminator. If a plant has this gene, it produces seeds
which won’t grow again after the first year. This means the farmers must buy new
seeds every year. This is good for the company’s profits. But pressure groups like
Greenpeace say this is irresponsible. They say that it kills the natural plants and
means farmers have to get their seeds from the company. If farmers can’t afford to
buy the company’s seeds, they will have no crops to grow. That result could be that
people die from hunger.
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1. What is the problem with each situation?
Option 1:
manufacturing in the USA
Option 2:
manufacturing
in Indonesia
For the customers
More expensive shoes
Cheaper shoes
For workers in the USA
Jobs with good pay conditions
Lose their jobs
For workers in Indonesia
No new jobs
Jobs with low pay, long
hours, bad conditions
For the shareholders
Lower profits, company is
not competitive
Higher profits, company
is very competitive
2. What pressure groups are mentioned? What do they do?
*Look at the information below and discuss the questions.
1. Which option is better for:
A the customers?
B workers in the United States?
C the shareholders?
2. Is it ethical to exploit the low cost of labour in Indonesia? Why/Why not?
3. What do the company X should do?
Company X produces sports shoes. It has factories in the USA, but labour costs
in the USA are high. This means its shoes are very expensive. The company is thinking about moving its manufacturing operations to Indonesia, where labour costs are
very low.
Read these two quotes about a company’s responsibilities. Which one is
closer to your opinion?
1. In business, profits are more important than people?
2. A company must look after its customers first, its workers second, and its
shareholders last.
UNIT 2
TYPES OF BUSINESS ORGANISATION
Before starting your own business you have to choose the type of proprietorship in which you will own it. You should know that any business should be privately
owned in three main forms. These forms are: the sole proprietorship, the partnership
and the corporation.
The sole proprietorship. The sole proprietorship is the simplest organizational
form. There is one owner who takes all profit after paying income taxes, and who is
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responsible for all business debts. He or she can make decisions without consulting
anyone.
The strength of this form is in the direct personal interest of the proprietor in
the efficiency of his business.
The great disadvantage of the sole proprietorship is that the proprietor is personally responsible for the debts of his firm and his liability is unlimited. Another
disadvantage of this form is the strict limitation of its ability to acquire capital for
expansion.
One-person business is widely used in farming, retailing, building, repair work
and personal services such as hair dressing, beauty shops and the like.
The partnership. Partnerships are voluntary combinations of from two to twenty persons formed for the purpose of carrying on business with a view of profit. Partners share responsibilities for decision making, profit and debts. They usually get tax
benefits from the government. There are two types of partnerships: with limited and
unlimited liability. It depends on the fact if partners are responsible for all business
and for all debts or not.
Partners usually specialize in one or more aspects of the business: one may be
responsible for buying, one for selling, one for production and so on.
The disadvantage of partnership is that partners may disagree with each other.
Where trading risks are great partnership is not a very stable type of organization.
Partnership is a common form of business organization in such professions as
law, accountancy, medicine, insurance, stockbrokerage and real estate.
The corporation. A business corporation is an institution formed by two or
more shareholders, who put money into business and get a share of profit. Their share
of ownership is represented by stock certificates. This form of ownership allows attracting financial resources, investing a large amount of capital into production,
equipment and research, offering high salaries and attracting talented managers and
specialists. Except privately owned corporations there are some other types two, such
as educational, religious, charitable and governmental ones. Usually they don’t issue
stock certificates and are non-profit.
Also a business may be owned in the form of franchising and other miscellaneous forms.
Active vocabulary
proprietorship – собственность
to own – владеть
sole proprietorship – частная собственность
partnership – партнерство
corporation – корпорация
income tax – налог с доходов
debt – долг
to acquire – приобретать
expansion – расширение
to carry on – вести
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