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1

The choice of the form of a

a

all income generated by the business

 

business organisation is based on

 

to keep or reinvest.

 

 

 

 

2

A sole proprietorship is owned

b

for the actions of the other partners.

 

by one person, who has day-to-

 

 

 

day responsibility for

 

 

 

 

 

 

 

 

 

 

3

Sole proprietors receive

 

 

c

information about their finances and

 

 

 

 

 

 

 

activities.

 

 

 

 

 

4

Sole proprietors may

have

d

between the business and its owners.

 

problems in

 

 

 

 

 

 

 

 

 

 

5

In a partnership, the law does not

e

when ownership changes.

 

distinguish

 

 

 

 

 

 

 

 

 

 

6

Partnerships are relatively easy

f

attracting high-calibre employees.

 

 

 

 

 

 

7

Prospective

employees may

be

g

the entrepreneur’s vision regarding

 

attracted to a partnership

 

 

 

the size and nature of the business.

 

 

 

 

 

 

 

 

8

Partners

are

jointly

 

and

h

only for their investment in the stock

 

individually liable

 

 

 

of the company.

 

 

 

 

 

 

 

9

Management

conflicts

in

a

i

running his business.

 

partnership

 

caused

 

by

 

 

 

disagreements may

 

 

 

 

 

 

 

 

10

A corporation does not dissolve

j

to double taxation.

 

 

 

 

 

 

11

Shareholders

are

held

k

to establish.

 

accountable

 

 

 

 

 

 

 

 

 

 

 

 

12

Corporations are subject

 

 

l

adversely affect the business.

 

 

 

 

13

Open (public) corporations are to

m

if given the incentive to become a

 

disclose

 

 

 

 

 

partner.

 

 

 

 

 

 

 

 

Ex.9. Look through the text again and replace the words in bold with the

linking words and phrases given below.

In view of, first and foremost, besides, like, at the same time, obviously, to start

with, since, it is a fact that..., in order to..., generally.

201

1.An entrepreneur may choose to incorporate his business so that he could prevent his creditors from pursuing his personal assets.

2.Shareholders have limited liability for the corporation’s debts. In general, they are accountable only for their investment in the stock of the company.

3.Considering various requirements, sole proprietorships, partnerships and corporations have their advantages and disadvantages.

4.A partnership pays only ordinary income tax because the co-owners use the profits gained as their personal income. Concurrently, they are jointly and individually liable for the actions of the other partners.

5.If we enumerate advantages of a sole proprietorship, more than anything else it is the easiest and least expensive form of ownership. In addition to this, it does not have to pay special taxes placed on corporations.

6.Clearly, corporations have a number of disadvantages. In the first place, the process of incorporation is costly and time-consuming.

7.Similar to proprietorships, in partnerships the law does not distinguish between the business and its owners.

8.It is well known that a lot of partnerships are dissolved at crisis times.

Ex.10. Translate into English.

1.Вибір організаційної форми бізнесу заснований на уявленні підприємця про розмір і характер майбутньої компанії.

2.Існують різні організаційні форми бізнесу: одноосібне підприємництво,

партнерство, акціонерна компанія.

3.Більшість компаній малого бізнесу починають свою діяльність як одноосібні підприємці.

4.Одноосібне підприємництво − найлегша і найменш дорога форма організації.

5.Така форма є більш гнучкою і пристосованою до змін на ринку.

202

6.Недоліком є той факт, що одноосібний підприємець несе необмежену відповідальність за зобов'язання фірми.

7.Важливим аргументом на користь партнерств є те, що їм легше залучати додаткові фінансові кошти.

8.Партнерства платять звичайний прибутковий податок, оскільки співвласники можуть використовувати прибуток компанії як особистий дохід.

9.Акціонерна компанія (корпорація) розглядається законом як самостійне підприємство, окреме від його власників.

10.Власниками такої компанії є її акціонери, які обирають раду директорів

для управління компанією.

11.Однією з вагомих переваг є обмежена відповідальність акціонерних

компаній.

LANGUAGE SKILLS

Ex.11. Ask questions to which the following sentences may be answers.

1.Yes, it is. It helps to bring the other three together.

2.It is based on the entrepreneur’s vision of his future company’s nature and size.

3.They are sole proprietorships, partnerships and corporations.

4.It is the easiest and least expensive form of business organisation to organize and easy to dissolve, if required.

5.Because being small, they can react more quickly and successfully to changes at the market.

6.No, they do not. They have to pay only ordinary income tax.

7.Because they may be interested in owning a part of the business, while sole proprietors cannot provide this.

8.One of them is the fact that partners are personally liable for the company’s debts.

9.Yes, it does. It may end upon a partner’s withdrawal or death.

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10.No, it is considered by the law as a unique entity. 11.Shareholders are.

12.The board of directors is.

13.They can transfer the ownership through selling their securities.

14.No, it is not permanent. It can be changed as a result of the business’s growing.

15.It can be incorporated.

Ex.12. Answer the following questions.

1.Why is entrepreneurship important?

2.Why would people want to launch their own business?

3.What factors do they consider when choosing the structure of their future business?

4.What forms of business organisation are there?

5.What are advantages and disadvantages of these forms?

6.Why are flexibility and adaptability of sole proprietorships an advantage?

7.What does “limited” or “unlimited liability” mean?

8.Why can partnerships attract more high-calibre workers than sole proprietorships?

9.Which form of business organisation can raise investment funds more easily?

10.Why are there more unincorporated businesses than incorporated ones?

11.How is a corporation managed?

12.What does “double taxation” mean?

Ex.13. Make a presentation of the topic “Forms of business organisation”.

WRITING

Ex.14. Write a plan for a summary of Text A. Start with

1.Factors to be considered when choosing a form of business organisation.

2.____________________________________________________________

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3. _____________________________________________________________

Ex.15. Write a brief summary (25-30 sentences) of Text A.

Ex.16. Write an essay “Small business activity in a market economy” (100-150 words).

DISCUSSION POINTS

Ex.17. Discuss the following questions.

1.A real entrepreneur is somebody who has no safety net underneath them”, said

H.Kravis, co-founder of Kohlberg Kravis Roberts & Co. (KKR). What do you think he meant?

2.In what type of a company do people find a better possibility to realize their potential?

3.Prepare a short list of the questions that you would need to ask yourself before starting a business.

Example: How much money will I need?

Compare and discuss the questions you consider important with the questions other students have chosen.

TEXT B: NONPROFIT ORGANISATIONS

Ex.18. Scan the text below and give headlines to each paragraph.

When launching a business, ask yourself, "Who will benefit from the activity?" If the answer is that you or your family will benefit, (0) ___________ rather than a nonprofit organisation. If your answer is that the community or the public at large will benefit, then a

205

nonprofit structure may be the best route. The difference between nonprofit and for-profit organisations is that nonprofits use their profits to advance their programmes, (1) ___________ . Nonprofit organisations fall into five main categories:

1.Trade associations, organized to advance a group of people who have a profession in common (for example, Association of Research Librarians, International Association of Meeting Planners). This group also includes chambers of commerce and unions.

2.Charitable organisations, (2) ___________ . This is a diverse category, including religious groups, museums, environmental and educational organisations, libraries, and a lot of helping groups referred to as "charities."

3.Social clubs, such as country clubs and fraternal organisations.

4.Governmental groups, (3) ___________ .

5.Political groups, generally organized to promote certain policies, issues, or candidates for political office.

While Not-for-profit organisations are able to earn a profit, more accurately

termed a surplus, such earnings must be retained by the organisation for its selfpreservation, expansion, or plans. NPOs have controlling members or boards. (4)

___________ , while others employ unpaid volunteers and even executives who work without compensation.

Profit is not the primary goal of an NPO, (5) ___________ , the term Not- for-profit is often considered more appropriate than Non-profit. The extent to which an NPO can generate income may be constrained, or the use of that income may be restricted. Nonprofits therefore (6) ___________ (which may be tax deductible) from the private or public sector, and are typically exempt from income and property taxation. Some NPOs may internalize profit in the form of comparatively good wages or benefits.

Ex. 19. Read the text. Choose the best sentence A-F to fill each of the gaps 1-7. Do not use any letter more than once. There is an example at the beginning.

206

0 then it's a good idea to start a for-profit company

Awhich must generally demonstrate a benevolent component.

Bbut because an NPO can legally and ethically trade at a profit,

Care funded typically by donations

DMany have paid staff including management,

Ewhile for-profits distribute their profits to their owners or stockholders.

Fincluding city, county, state, and federal agencies.

Ex.20. Answer the following questions. Refer to the text if needed.

1.What is the difference between for-profit and nonprofit organisations?

2.What categories do nonprofit organisations fall into?

3.What groups of people do trade associations unite?

4.What do you think is the aim of charitable organisations? Give examples of such organisations.

5.Can nonprofit organizations earn profit? If yes, what do they use it for?

6.How are most NPOs funded?

7.Do NPOs have to pay taxes?

Ex.21. Find in the text the following phrases and choose the most suitable

explanation:

1.launching a business

a)starting business activity;

b)completing business activity;

c)developing business activity

2.the public at large

a)politicians;

b)powerful and influential people;

c)general public

3.the best route

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a)the best place;

b)the best way;

c)the best management

4.fraternal organizations

a)brotherhoods;

b)fatherhoods;

c)motherhoods

5.benevolent (component)

a)improving a situation;

b)very popular with smb;

c)kind and generous

6.to internalize (profit)

a)to closely connect with smth;

b)make smth international;

c)make smth personal, use smth for one’s own needs .

TEXT C: FRANCHISING

Before reading

Can you explain what franchising mean? Without looking at the logos below, give examples of franchises.

Reading

Read a text from the Franchise Direct website and do the tasks following it.

(1) You want to be your own boss running your own business, but you are not sure where to start, what resources you need, how to market products and services, how to hire and train

208

employees etc. Don’t despair – a franchise opportunity could the right choice for

you.

(2) You’ve seen the slogans:

“Be in business for yourself, but not by yourself.” “When you succeed, we succeed.”

“We’ve been successfully putting people like you in business for 16 years!”

“Be your own boss; we’ll help you get there.”

These quotations from franchisors convey the idea that even though you work for yourself, franchising is first and foremost about partnership. Franchising is everywhere in the first decade of the 21st century so partnership with a proven brand is clearly a winning formula for many small business owners.

(3) When people think of franchising, the most common example that comes to mind is McDonald’s. But franchising has older roots, and it is Isaac Singer, the inventor of the sewing machine in 1858, who is credited with starting the franchise concept. After successfully inventing the new machine, he needed a way to distribute them by people trained to use the machines. So a legal system for selling the rights to distribute a service or product was born.

(4)Put simply, a franchise is a method by which the owner of the business, the franchisor, confers on investors, the franchisees, the right to operate the business in an agreed manner and style in return for ongoing fees. The agreement is governed by a contract, the Franchise agreement, which runs for a defined period of time, generally renewable and ranging from five to 20 years.

(5)What is it you are buying when you invest in a franchise? A franchise operation is a fully operational business concept that is proven, with operating processes clearly mapped out in an Operations Manual. Most franchisors provide comprehensive training in how to operate the business, and give clear instructions on all the visible trappings such as trademarks, logos, uniforms, furnishings etc.

(6)Franchise opportunities are everywhere, and their success and widespread popularity offer endless potential. And you can bet that when new

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trends emerge and grow popular -- be it in food, exercise, home improvement, pet care, party planning, etc. – franchised versions ready to profit from these trends are sure to follow. What types of new franchises will be popular in the near future? Anything that helps busy people manage their home lives and domestic tasks. And the current concerns about global warming are sure to generate companies that offer “green” eco-friendly products and services, such as lawn care, prepared foods, cosmetics, and cleaning supplies. For the individual who wants to start a business, franchising offers a wide array of new opportunities. For the existing successful business, franchising can be the model for rapid expansion.

(7) It should also be noted that there are several types of business opportunities that involve partnership but are not franchises. These include:

Dealerships – where an existing business owner, such as a home décor store, is licensed to sell a company’s line of products, such as floor tiles or paint.

Distributorships – this is an opportunity where a business owner invests in equipment, such as DVD kiosks or coffee makers, and distributes them in high traffic locations, like malls or offices.

Task 1. Look through the text and say what is the main advantage of franchising. Can you think of any disadvantages?

Task 2. Explain slogans of well-known franchises given in para.2.

Task 3. To be credited with smth means

a)to be given money from a bank;

b)to be of a particular type or quality;

c)to be responsible for doing smth, especially smth good. (para.3)

Task 4. In what spheres of business do you think franchising will be most popular

in future?

Task 5. True or false?

1)A franchise is a formal permission given by a company to smb who wants to sell its goods or services in a particular area. (para.4)

2)The franchise agreement is of an idefinite duration. (para.4)

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