Forms of Business Organization

A business may be privately owned in three different forms. These forms are: the sole proprietorship, the partnership and the corporation.

The sole proprietorship is the simplest organizational form. There is one owner who makes decisions without consulting anyone. Most private businesses are sole proprietorships. First of all, they are service industries, such as beauty shops, different repair shops, restaurants. But they account for only small part of all business receipts.

A partnership is an association of two or more partners to carry on business for profit. When the owners of the partnership have unlimited liability they are called general partners. If partners have limited liability they are limited partners. There may be a silent partner – a person who is known to the public as a member of the firm but without authority in the management, and a secret partner – a person who takes part in management but who is not known to the public. The advantages of this form are obvious: it can provide a big capital, diversified management, tax benefits from the government. Partnerships have certain disadvantages, too. One is unlimited liability. Other disadvantages are division of profits, disagreements between the partners and difficulty on terminating the business.

A business corporation is an institution established for the purpose of making profit. It is operated by individuals. Their shares of ownership are represented by stock certificates. A person who owns a stock certificate is called a stock-holder. The advantages of this form are the following: 1) the ability to attract financial capital; 2) the possibility to invest the capital in plants, equipment and research, 3) the possibility to offer higher salaries and attract talented managers and specialists.

It is obvious that there are some disadvantages to incorporating. Here are a few of them: 1) initial cost and paperwork as incorporating involves expensive lawyers and detailed accounting records; 2) double taxation as incorporate income is taxed twice, first as corporation’s income and then as shareholders’ income; 3) size as large corporations sometimes cannot respond quickly to market changes.

Except privately owned business corporations there are some other types too. Educational, religious, charitable institutions are also incorporated. There may be governmental corporations. Such corporations do not issue stock and are nonprofit.

Exercise 3. Answer the following questions:

1. What forms of ownership do you know?

2. Why is the sole proprietorship the simplest organization form?

3. What are partnerships organized for?

4. What kinds of partners do you know? State the difference between them.

5. What are the advantages and disadvantages of a partnership?

6. What institution is a business corporation?

7. What are the advantages of a corporation?

8. Can you name any disadvantages of a corporation?

9. What corporations do not issue stock?

Exercise 4. Translate into English.

Найпростіша організаційна форма; не радячись ні з ким; перш за все; ремонтна майстерня; об’єднання; людина, що відома громадськості; розгалужене керівництво; втрачати зацікавленість; заклад, утворений з метою; окрема особа; здатність залучати капітали/ спеціалістів; наукове дослідження; благодійний заклад; безприбутковий.

Exercise 5. Translate into Ukrainian.

Sole proprietorship; to make decision; beauty shop; business receipt; to carry on business; the advantages are obvious; unfortunately; to disagree with each other; a share of ownership; to be represented by a stock certificate; to invest the capital; to offer a higher salary; except; to be nonprofit.

Exercise 6. Match and learn the synonyms.

A: owner, benefit, shareholder, person, receipt, obvious;

B: advantage, income, clear, proprietor, stock-holder, individual.

Exercise 7. Match and learn the opposites.

A: advantage, agree, obvious, private, limited, profit;

B: unlimited, nonprofit, secret, disagree, disadvantage, public.

Exercise 8. Complete the sentences with the proper words from the list below:

fail; proprietor; tax benefit; advantages; limited; general

1. If you establish a partnership you can get … from the government.

2. The possibility to attract big capital is one of the … of a corporation.

3. A sole … can make decisions himself. 4. … partners have unlimited liability for their business. 5. Your business may … if you lose interest in it. 6. The letters Ltd stand for … partnership.

Exercise 9. On the basis of the text define the following terms:

general partner; limited partner; secret partner; silent partner.

Exercise 10. Group the terms given in ex.9 a) on the basis of liability and explain the difference; b) on the basis of authority and explain the difference.

Exercise 11. Characterize the advantages and the disadvantages of each form of ownership.

Exercise 12. Translate into English.

1. Одноосібний власник несе необмежену відповідальність за свій бізнес. 2. Цей ресторан дає велику частку прибутків нашої фірми.

3. У Великій Британії партнерством називають об’єднання від 2 до 20 осіб. 4. Наш таємний партнер може забезпечити фінансовий капітал. 5. Які ваші повноваження у керівництві фірми? 6. Компанія має можливість інвестувати капітал в нове обладнання. 7. В чому перевага партнерства з обмеженою відповідальністю? 8. Корпорації закладів освіти є неприбутковими.

Grammar point:* Passive constructions with modal verbs.

The Present Continuous Tense: Active and Passive forms (p.137-138)

*The structure to be going (to do something).

Exercise 13. Give corresponding passive infinitives as in the model: to invest – to be invested

to attract, to call, to carry, to establish, to incorporate, to know, to lose, to offer, to own, to provide, to represent, to take, to sell.

* In a passive construction after a modal verb we use a passive infinitive (without to)

e.g.We can make a decision.- A decision can be made ( by us).

Mind the translation: A decision can be made. - Рішення можна прийняти. A decision must be made. - Рішення треба/потрібно прийняти.

Exercise 14. Make the following sentences passive and translate them.

1. We can call him a silent partner. 2. Stock certificates must represent his share of business. 3. They must attract talented specialists. 4. We must provide additional capital. 5. She can offer this beauty shop for sale. 6. Public must know the owners of this company. 7. To win the market we must establish the corporation. 8. For better control they must diversify management. 9. To attract more capital the corporation can issue stock. 10. This talented manager can direct our company.

Exercise 15. Translate into English.

1. Незабаром можна утворити партнерство. 2. Без прибутку можна втратити зацікавленість у бізнесі. 3. Потрібно запропонувати вищу зарплату. 4. Ці акції можна купити і продати на фондовій біржі. 5. Потрібно залучити найкращих спеціалістів.

Exercise 16. Read the following sentences and compare the use of tenses. Pay attention to adverbial modifiers of time.

1. They always discuss their plans with the partners. – They are discussing their plans with the partners at the moment. 2. Students generally take 3 to 5 courses a year. – This year we are taking 5 courses. 3. They often deal with local customers. – This time they are dealing with Bukovel Co. 4. We usually do research at our practical lessons. – We are doing research on inflation indicators this semester. 5. Our shareholders have meetings once a year. – Our shareholders are having a meeting right now. 6. He never consults anybody about his business. – He is busy now. He is consulting with his lawyer.

Exercise 17. Make the following sentences passive.

1. The secretary is typing a letter to our stockholders. 2. He is signing the document. 3. We are copying the task. 4. They are writing a test paper. 5. We are installing computers in our office. 6. I am analyzing your report. 7. She is defining the problem. 8. They are working out a new plan. 9. The owner is making the order on the phone. 10. The shareholders are discussing the annual report. 11. They are distributing the report among the shareholders.

Exercise 18. Use the verb in brackets in the correct tense form: Indefinite or Continuous.

1. Don’t enter the room. The manager (to hold) a meeting with the staff. 2. What she (to be busy) with at the moment? – She (to call) our customers in Rivne. 3. Can you hear that noise in the next room? – They (to discuss) our tomorrow’s presentation. 4. Why is there so much light? – We (to prepare) for the student party. Our group (to decorate) the walls, while others (to arrange) the scene for the concert. 5. Listen. He (to sing) a very popular song. The song (to sing) in Italian. It (to sound) beautifully. 6. The book (to read) aloud so that everybody (to hear) it. 7. Where Peter (to be)? – He (to work) at the library at the moment. He (to write) a report on multinational corporations for tomorrow’s seminar. 8. Look at Jane and John. They (to dance) so perfectly that I (to think) that the prize (to be) theirs. 9. Who (to stand) in the doorway? – This (to be) Kate. She (to look) for somebody. 10. Why Peter (to be) absent? He (to take) his exam in math this morning. 11. What you (to do) tonight? – I (to be) too tired to go anywhere. 12 What time you (to leave) tomorrow? – The train (to start) at 7, so we (to leave) around 6.30.

* Sometimes we are talking about the present and the future together – present-future. This happens when a) we are making plans or are talking about things already arranged or b) there is something in the present situation that makes us sure what will happen in the future. In such cases we use the structure to be going (to do something). Study the following examples.

a) There is an interesting film on TV tonight. I am going to watch it. -Я збираюсь подивитись його /план на майбутнє/.

b) Look at those clouds – it is going to rain. – Напевно, піде дощ /впевненість, що дія відбудеться/.

Exercise 19. Use the verb in brackets in the correct form and translate the sentences.

1. He (to be) going to sign the contract tomorrow. 2. We (to be) going to meet on Tuesday. 3. She (to be) going to send this information directly to the manager. 4. If Tom doesn’t study hard he (to be) going to fail at the examinations. 5. If you don’t hurry you (to be) going to miss the meeting. 6. These goods are not very popular. We (to be) going to make losses on them. 7. As the problem is very urgent they (to be) going to discuss it with the manager. 8. To save his business he (to be) going to incorporate with this company. 9. It is very difficult to manage such business solely so she (to be) going to form a partnership. 10. Last year the company’s profit was not big and I (not to be) going to receive high dividends on my shares.

Exercise 20. Translate into English.

1. Він збирається розпочати нову справу. 2. Я збираюсь виступити на зборах акціонерів. 3. Вона отримала найвищу оцінку. Здається, вона буде найкращою в групі. 4. Майк втратив інтерес до свого бізнесу і певно він розвалиться. 5. Чи збираєтесь ви інвестувати гроші в цей бізнес? 6. Він, здається, збирається залучити цих спеціалістів до нового проекту.

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