Comprehension

Ex. 1. Read the information about four companies below and say which matches each of the following terms: a sole trader/sole proprietor; a partnership; a limited company; a plc.

1. Mike Gobb set up an art gallery last year. He owns the gallery and managers it by himself.

2. Craftplay is a medium-sized firm whose shares are available on the stock market.

3. Ovenclean went bankrupt last year, but its shareholders were not made responsible for all the money it owed.

4. Brothers Gianfranco and Giancarlo Belew recently set up an import-export company. They run the business together.

Ex. 2. Complete the sentences using information from the text.

1. Business entities can be grouped according to …

2. A single proprietorship is a business….

3. A sole proprietor often has to rely on….

4. The major disadvantage of partnerships is ….

5. If one of the partners cannot meet his share of the debts….

6. Complementary management skills are ….

7. Shareholders of corporations can only lose….

8. If an incorporated business goes bankrupt, owners….

9. Limited companies are subject to….

10. Limited companies are taxed twice: ….

Ex. 3. Say if the statements are true or false:

1. The revenues, expenses, assets and liabilities of the sole proprietorship are also the revenues, expenses, assets and liabilities of the owner.

2. A sole proprietorship cannot be dissolved as easily as it can be started.

3. The major advantage of partnerships is that partners are legally liable for all debts of the firm.

4. Partnerships are as easy to dissolve as sole proprietorships.

5. Limited companies are the most risky from an owner’s point of view.

6. If an incorporated business goes bankrupt, owners have to meet the liabilities with their own personal holdings.

Ex. 4. Dwell on the following questions.

1. What are three most common types of business firm?

2. What factors affect the decision to choose a legal form of business?

3. What kind of firm is a sole proprietorship?

4. What is the proprietor solely responsible for?

5. How does a partnership differ from a proprietorship?

6. What is the procedure of starting a business as a limited company?

7. What are the advantages of doing business as a limited company?

8. What are the advantages and disadvantages of each type of business firm?

9. What is the most risky form of ownership? Why?

Ex. 5. Speak on three main forms of business organizations, their advantages and disadvantages.

Text 2

After reading the text comment:

• on the functions of the board of directors;

• on the company structure.

Shareholders, since they provide the capital, chooose the people who run company for them, i.e. the board of directors. The directors are appointed by the shareholders, normally at the company's annual general meeting, at which the chairman of the board will be expected to account for their stewardship during the previous year. The company's accounts will be presented to the shareholders at that time so they can judge for themselves whether or not the board has been successful.

The board of directors of a limited company is primarily responsible for determining the objectives and policies of a business. It is the directors who determine the direction the business is going to take. They will need to ensure that the necessary funds are available and will appoint key staff to which they will delegate the authority to run the business on a day-to-day basis. They will need to design an effective organisation structure so that there is both a chain of command linking one level of management with another and an effective communication network so that instructions can be passed downward and information passed upward.

Most organisations have a hierachical or pyramidal structure, with one person or a group of people at the top, and an increasing nuber of people below them at each successive level. There is a clear line or chain of command running down the pyramid. All the people in the organization know what decisions they are able to make, who their superior (or boss) is (to whom they report), and who their immediate subordinates are (to whom) they can give instructions. It is the so called line structure.

Some people in an organization have colleagues who help them: for example, there might be an Assistant to the Marketing Manager. This is known as a staff position: its holder has no line authority, and is not integrated into the chain of command, unlike, for example, the Assistant Marketing Manager, who is nuber two in the marketing department.

Today, most large manufacturing organizations have a functional structure, including (among others) production, finance, marketing, sales, and personnel or human resources departments. This means, for example, that the production and marketing departments cannot take financial decisions without consulting the finance department.

If a company has matrix structure work is structured around specific projects, products or customer groups. People with variet backgrounds are assigned together because the expertise is required for the project or to serve the customers. The assigmnets may be temporary or long-term.

Text 3

Read the text and answer the following questions:

1. What is the difference between a limited company and a public limited company?

2. What is flotation?

3. What are the steps of flotation?

4. What details does the company propectus include? What are potential investors supposed to do?

5. What occurs on the day of flotation?

6. What does the underwrite guarantee?

7. What happens to the price of the shares if the share issue was under- or oversubscribed?