BUSINESS ORGANIZATION

The particular way of organizing and controlling business depends on its size and activities.

There are four types of business organization: 1. the one man business (sole trader); 2. the partnership; 3. the private limited company; 4. the public limited company.

The one man business is the smallest type of business organization. It is owned and controlled by one man. It is often a retail shop such as a grocer, butcher, newsagent, etc. When starting a one man business, a man raises the capital from his own resources or by borrowing from friends and relatives. He may have difficulty in obtaining bank loans.

It has the following advantages:

1. The owner has full control and takes all of the profits.

2. He sets his own working hours, conditions, holidays and so on.

3. The business succeeds or fails according to the efforts made by owner.

1. The main disadvantage of a one man business is its “unlimited liability”. If a business goes into debt, the creditors can lawfully take the owner’s private assets. An unsuccessful businessman has to sell his house, car, etc. to pay his business debts.

2. If the owner is ill the business may have to close down.

3. He may have to work very long hours.

4. If he makes no profit he gets no wages (90% of one man businesses become insolvent in their first 12 months’ trading).

A successful one man business may often grow into a partnership. Ideally partners may bring more capital into the business, have an expert knowledge which will help the firm.

As for its advantages, the business will grow and the profits will be larger; the original owner can now delegate responsibility to the new partners; the business has more capital available for expansion.

Its disadvantages include the following:

1. The original owner now has to share ownership, control and the profit of the business with the new partners.

2. The original owner is not the sole master of the destiny of the firm.

The partnership may include up to twenty partners. They must draw up a “deed of partnership” setting down full details of arrangements between the partners.

The private limited company. Before the 1980 Companies Act the maximum number of shareholders permitted with a private company was 50. The 1980 Act changed it to an unlimited number. Shares in the company may not be sold without the permission of the company. The main advantage of this form of ownership is the company’s independent legal status and its limited liability.

The one man business, the partnership and the private limited company are all limited in their ability to expand because they may lack sufficient capital. They must therefore raise it by offering shares for sale to the public and becoming a public limited company. Any member of the public buying shares in it becomes a “part owner” of the business. Thus a firm that started as a one man business may eventually be owned and controlled by hundreds or thousands of shareholders. The public limited company is the largest kind of company.

Vocabulary:
business - бизнес, коммерческая деятельность
particular - особенный, специфический
one man business - предприятие с одним занятым
sole trader- единоличный производитель, торговец
partnership - партнерство, товарищество
private limited company - частная компания с ограниченной ответственностью
public limited company - открытая (публичная) компания с ограниченной ответственностью
grocer - торговец бакалейными товарами
butcher n - мясник
newsagent - газетный киоскер
raise v - зд. собирать, добывать
to raise capital - мобилизовать капитал
borrow v - занимать
loan n - ссуда
set v (set) - устанавливать
succeed v - иметь успех, преуспевать
fail v - потерпеть неудачу
debt n - долг
to go into debt - влезть в долги
lawfully adv - на законном основании
asset(s) n - зд. имущество; мн. активы
wage n - заработная плата
insolvent a - неплатежеспособный
original a - первоначальный
responsibility n - ответственность
to delegate responsibility- передавать полномочия
expansion n - расширение
share - 1. v делить 2. n доля, акция
destiny n - судьба
deed n - документ, договор, акт
deed of partnership - договор о партнерстве
draw up v (drew; drawn) - составлять (документ)
arrangement n - соглашение, договоренность
Companies Act - Закон о корпорациях
shareholder n - акционер
permit v - разрешать, допускать
independent a - независимый
legal status - юридический статус
lack - 1. недостаток (чего-либо) 2. испытывать недостаток (в чем-либо);
immediately adv - немедленно, сразу
eventually adv - в конечном счете; со временем

Respond to the following statements:
1. It’s easy for the sole trader to raise capital by obtaining a bank loan. 2.  One of the disadvantages of the partnership is that there may be conflicts between the partners. 3. Shares of private limited companies may be obtained through the stock exchange. 4. Buying shares in a public limited company means becoming a part owner of the business.