Forms of Business Organization

Most countries allow you to run a business in at least three different ways:

· as a sole trader (especially in British English) or sole proprietorship (in American English);

· as a partnership;

· as a company (British English) / corporation (especially American English).

A sole trader (sole proprietorship) is a firm with a single owner – a proprietor – who has unlimited liability. Unlimited liability is the legal responsibility for all the debts of a firm. Sole proprietorships are the most numerous kind of business organization, but most are very small. They are popular because they are the easi­est – and the least costly – to organize.

Partnerships are the second most common type of business organization. Most law firms and accounting firms are partnerships. A partnership is a firm with two or more owners who have unlimited liability. Partners bring additional funds to a proprietorship. They can also bring fresh ideas and talents to busi­ness organizations.

Corporations are the best known types of business organizations, though they are not the most common. A corporation is a business organiza­tion created under a government charter. Ownership of a corporation is represented by shares of stock, so corporate owners are known as stockholders. Corporate stockholders have limited liability, which means that they have legal liability only for the value of their initial investment. IBM, Exxon Mobil, and Sony are all examples of corporations. Many corporations, including these three, are multinational giants.

A scope of business activity (its turnover and the headcount) is the major criterion for distinguishing small, medium-sized and big business.

A small business is a business that is independently owned and operated, with a small number of employees and relatively low volume of sales. The legal definition of “small” often varies by country and industry, but is generally under 100 employees in the United States and under 50 employees in the European Union.

Small businesses are common in many countries, depending on the economic system in operation. Small businesses are normally partnerships, or sole proprietorships. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen), hairdressers, tradesmen, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing etc. Small businesses are usually not dominant in their field of operation, though they are the major job providers in most economies.

The smallest businesses, often located in private homes, are called microbusinesses (term used by international organizations such as the World Bank and the International Finance Corporation) or Soho’s. The term “mom and pop business” is a common colloquial expression for a single-family operated business with few (or no) employees other than the owners.

SMB is an abbreviation for small and medium-size business, sometimes seen as small and mid-size business. The definition of SMB by the number of employees is generally under 500 in the U.S. and 250 for the European Union.

Big Business is a term used to describe large corporations, in either an individual or collective sense. The term first came into use in a symbolic sense subsequent to the American Civil War, particularly after 1880.

Organizations that fall into the category of “big business” include Exxon Mobil, Wal-Mart, Google, Microsoft, General Motors, Citigroup, Arcelor Mittal and others.

The social consequences of the concentration of economic power in the hands of those persons controlling “Big Business” has been a constant concern both of economists and of politicians since the end of the 19^th century. Various attempts have been made to investigate the effects of “bigness” upon labour, consumers and investors, as well as upon prices and competition.

Vocabulary Notes:

1. sole trader [`səul `treıdə] – індивідуальний підприємець;

2. sole proprietorship [`səul prə`pra ı ətə∫ıp] – індивідуальне приватне підприємство; одноосібна власність;

3. partnership [`pα:tnə∫ıp] / [`pα:rtn^ər∫ıp] – товариство, партнерство;

4. company [`kAmp ə ni] – товариство, компанія, об’єднання (торговельне і т.п.);

5. corporation [ֽkO:pə`reı∫<sup>ə</sup>n] / [ֽkO:rpə`reı∫^ən] – корпорація; амер. акціо-нерне товариство;

6. owner [`əunə] / [`əun^ər] – власник, хазяїн; господар;

7. proprietor [prə`pra ı ətə] / [prə`pra ı ət^ər] – власник, володар; господар;

8. (un)limited liability [An`lımıtıd ֽla ı ə`bıləti] – (не)обмежена відповідаль-ність;

9. legal responsibility [`li:gəl rıֽspOn<sup>t</sup>sə`bıləti] – юридична відповідальність;

10. debt [det] – борг; заборгованість; боргове зобов’язання;

11. costly [`kOs t li] / [`kO:s t li] – дорогий;

12. law firm [`lO: fə:m] – адвокатська контора; юридична фірма;

13. accounting firm [ə`kauntıŋ fə:m] – бухгалтерська фірма;

14. charter [`t∫α:tə] / [`t∫α:rt^ər] – право, привілей, пільга; документ, який дає дозвіл на створення університету, компанії;

15. ownership [`əunə∫ıp] / [`əun^ər∫ıp] – власність; володіння; право власності;

16. share of stock [ֽ∫eər əv `stOk] – частка (пай) в акціонерному капіталі; пай акціонерного капіталу;

17. stockholder [`stOkֽhəuldə] – акціонер; власник пакету акцій;

18. initial investment [ı`nı∫<sup>ə</sup>l ın`ves t mənt] – початкові інвестиції; первісні капіталовкладення (здійснювані у перші чотири роки);

19. multinational [ֽmAlti`næ∫^ən ə l] – багатонаціональний; мультинаціонал, мультинаціональна (багатонаціональна) компанія (корпорація);

20. scope [skəup] – масштаб; розмах;

21. turnover [`tə:nֽəuvə] – обіг; обсяг реалізації; обсяг продажу; товарообіг;

22. headcount [`hedkaunt] – кількість штатних працівників; кількість співробітників за штатним розписом; кількість посад за штатним розписом;

23. employee [ım`plOıi:] / [emplOı`i:] – службовець, працівник, робітник;

24. volume of sales [`vOlju:m əv `seı^əlz] – обсяг реалізації (продукції); обсяг продажу; масштаби збуту;

25. industry [`ındəstri] – промисловість, індустрія; галузь; галузь промисловості; галузь економіки; вид економічної діяльності; підприємство;

26. convenience store [kən`vi:niən^ts] – магазин самообслуговування;

27. delicatessen [ֽdelıkə`tes^ən] – гастрономічний магазин;

28. tradesman [`treıdzmən] – торговець, крамар; ремісник;

29. guest house [`gest haus] – пансіонат;

30. microbusines s [ֽmaıkrəu`bıznəs] – мікробізнес;

31. SoHo (small office, small house; = SoHo, = Soho) [`səu həu] – квартира-офіс (дрібного підприємця);

32. “mom and pop business” [`mOm ænd pOp `bıznəs] – амер. дрібне приватне підприємництво; родинний бізнес, приватна крамничка;

33. colloquial expression [kə`ləukwiəl ık`spre∫^ən] – розмовний зворот (вираз);

34. subsequent [`sAbsıkw ə nt] – наступний; подальший;

35. consequence [`kOn<sup>t</sup>sıkwən<sup>t</sup>s] / [`kα:n^tsəkwən^ts] – наслідок.

Task 11. Complete the sentences with the most appropriate items.

1. Most countries allow you to run a business in …

A. two ways;

B. three ways;

C. at least three ways;

D. more than three ways;

2. A sole trader is a firm owned by …

A. two or more partners;

B. a single proprietor;

C. the government;

D. stockholders;

3. Sole proprietorships are …

A. the second most common type of business organization;

B. the most numerous kind of business organization;

C. created under the government charter;

D. the most costly to organize;

4. Partnerships are owned by …

A. two or more partners;

B. at least three partners;

C. a single proprietor;

D. two partners;

5. Corporate stockholders …

A. are legally responsible for all debts of their organization;

B. bring fresh ideas and talents to business organizations;

C. risk only the value of their initial investment;

D. have unlimited liability;

6. A small business …

A. employs up to 300 workers;

B. is independently owned and operated;

C. usually boasts of huge volumes of sale;

D. is the least common type of business organization;

7. Multinational giants are usually represented by …

A. companies;

B. sole traders;

C. partnerships;

D. sole proprietors;

8. The legal definition of “small business” often varies by …

A. country;

B. industry;

C. economic system;

D. all the above;

9. Typical examples of small businesses include …

A. small-scale manufacturing;

B. convenience stores;

C. delicatessen;

D. all the above;

10. The abbreviation SMB stands for …

A. “sons and moms business”;

B. senior manager of a business;

C. Specialist – Master – Bachelor;

D. small and medium-size business;

11. Middle businesses in the USA usually employ …

A. 250 employees;

B. up to 500 employees;

C. at least 500 employees;

D. fewer than 250 employees;

12. The smallest businesses, often located in private homes, are called …

A. SoHo’s;

B. microbusinesses;

C. “mom and pop businesses”;

D. all the above;

13. Big Business is a term used to describe …

A. sole proprietorships;

B. large corporations;

C. partnerships;

D. sole traders;

14. The term “big business” first came into use soon after …

A. the Gulf War;

B. World War II;

C. the Vietnam War;

D. the American Civil War;

15. Big business is likely to affect …

A. labour;

B. consumers and investors;

C. prices and competition;

D. all the above;

Task 12. a) Match the terms in column A with their definitions in column B:

A

B

1. convenience store 2. initial investment 3. delicatessen 4. headcount 5. turnover 6. liability 7. SoHo

a)the state of being legally responsible for something; the amount of money that a company or a person owes; b)the total value of goods or services sold by a company during a particular period of time; the rate at which goods are sold in a shop and replaced by others; c)a small shop that sells food, newspapers, etc. and often stays open all or most of the day and night; d)an act of counting the number of people who are employed by an organization; the number of people that have been counted in this way; e)a shop selling various foods, especially unusual or imported foods, already cooked or prepared; f)a small business, especially one that is run from somebody’s home, or a person who works at home; a room in somebody’s home that is used as an office; g)the amount of money a shareholder invests in shares of stock while joining a corporation;

b) Translate into English:

1. Власники індивідуальних приватних підприємств і партнерств несуть необмежену відповідальність.

2. Компанія керує мережею магазинів самообслуговування.

3. Гастрономічні магазини є типовим прикладом малого бізнесу.

4. Кількість штатних працівників на великих підприємствах перевищує 500 осіб.

5. Юридична відповідальність акціонерів обмежується вартістю їхніх первісних капіталовкладень.

6. Квартири-офіси – це сучасна тенденція малого бізнесу.

7. Товарообіг малих підприємств незначний, але вони забезпечують основну частку робочих місць.

Task 13. Translate into Ukrainian paying special attention to the words in italics.

1. Convenience store is a shop that has long opening hours, caters to local tastes, and is conveniently situated.

2. I bought some salami from the delicatessen.

3. The company is cutting its headcount to about 45 000.

4. She made an initial investment of £1000 in the new firm.

5. We assumed full liability for our children’s debts.

6. The business has liabilities of 2 million dollars.

7. They developed new software products for the rapidly growing SoHo market.

8. SoHo is a district of central London, in the City of Westminster: a foreign quarter since the late 17^th century, now chiefly known for restaurants, nightclubs, striptease clubs, etc.

9. The firm has an annual turnover of $75 million.

10. The factory has a high turnover of staff.

Task 14. “ Odd man out.” In each line cross out a word or word combination that in its meaning differs from the others. Explain your choice.

1. sole proprietorship – corporation – company;

2. SoHo – SMB – Exxon Mobil;

3. sole trader – unlimited liability – government charter;

4. additional funds – single owner – partnership;

5. corporation – most numerous – shares of stock;

6. stockholders – proprietors – turnover;

7. debts – fresh ideas – liability;

8. limited liability – stockholders – sole trader;

9. partnership – multinational giant – IBM;

10. corporations – bulk of employment – small businesses;

11. convenience store – guest house – company;

12. family – big business – “mom and pop business”;

13. economic power – SMB – big business;

14. Google – Microsoft – General Motors;

15. liability – turnover – headcount.

Task 15. a) Find 10 pairs of synonyms among the words given below.

1. Corporation; 2. ownership; 3. tradesman; 4. organization; 5. sole; 6. trader; 7. company; 8. to create; 9. firm; 10. liability; 11. sole proprietorship; 12. to operate; 13. to organize; 14. owner; 15. proprietor; 16. proprietorship; 17. responsibility; 18. to run; 19. single; 20. sole trader.

b) Use the above words in the sentences of your own.

Task 16. a) Translate the following nouns. Find the paronymous (related) adjectives in the text “Forms of Business Organization” (Task 10).

1. Solo;	3.limit;	5.legacy;	7.society;	9.initiation;	11.difference;
2. type;	4.symbol;	6.privacy;	8.variety;	10.economy;	12.corporation.

b) Use the derived adjectives to make up word combinations with the following nouns. Make up as many word combinations as possible.

_____ ways; _____ sense; _____ homes; _____ liability;

_____ attempts; _____ examples; _____ investment; _____ consequences;

_____ system / power; _____ liability / definition; _____ owners / stockholders; _____ trader / proprietorship.

c) Which of the above word combinations were used in the text “Forms of Business Organization” (Task 10)?

Task 17. Complete the following table with the appropriate Ukrainian noun / verb, noun / adjective forms. Use your dictionary if necessary.

WORD	TRANSLATION
Noun	Verb
run	_______	_______
end	_______	_______
fund	_______	_______
stock	_______	_______
value	_______	_______
attempt	_______	_______
concern	_______	_______
	Noun	Adjective
firm	_______	_______
kind	_______	_______
single	_______	_______
collective	_______	_______
individual	_______	_______

Task 18. Fill in the blanks with the most appropriate terms from the box.

abbreviation	corporations	partnerships	stockholders
advantages	debts	shares of stock	success
corporate	loss	sole proprietors	unlimited liability

(1) _____ own all the profits of their enterprises, and they are their own bosses, free to make whatever changes they please. They also have the opportunity to achieve (2) _____ and recognition through their indi­vidual efforts.

All (3) _____ and problems associated with the business belong to the sole proprietor. If a business fails, he must personally assume the debts. This could mean the (4) _____ of personal property such as automobiles, homes, and savings.

Like the sole proprietorship, (5) _____ are rel­atively easy to form and are not subject to special taxes. In many cases, each of the partners is subject to (6) _____. Partners are individually responsible for all business debts.

A corporation is a business organiza­tion created under a government charter. A corporation may have many (7) _____ or only a limited few, such as the members of a family or a group of business associates.

Although (8) _____ are outnumbered by about four to one by sole proprietorships, they dominate the world business. They are so important because of the (9) _____ they offer.

Unlike the owners of propri­etorships and partnerships, who can be held per­sonally liable for the debts of their firms, the most that (10) _____ shareholders can lose is limited to whatever they paid for their (11) _____.

Limited liability is so important that corporations in most English-speaking countries outside of the United States add the (12) _____ “Ltd.” (for Limited) to their company name.

Task 19. Translate into English.

1. Одноосібні власники несуть необмежену відповідальність. 2. Більшість адвокатських фірм організовані як партнерства. 3. Акціонери несуть обмежену відповідальність за борги компанії. 4. Більшість корпорацій є багатонаціональними гігантами. 5. Обсяг ділової діяльності є основним критерієм для визначення малого, середнього та великого бізнесу. 6. Мале підприємство має порівняно невеликі обсяги продажу. 7. Підприємство, на якому працює менше 50 співробітників, у Європейському Союзі вважається малим. 8. У більшості економік світу малий бізнес забезпечує основну частку робочих місць. 9. Термін “великий бізнес” став вперше ви-користовуватися в символічному значенні після 1880 року. 10. Соціальні наслідки концентрації економічної влади в руках великого бізнесу традиційно турбують економістів і політиків.

Task 20. Tick the correct box: match major forms of business organizations with their relevant features.

Characteristic features	Sole Proprietorship	Partnership	Corporation
1. Has many owners
2. has a single owner
3. is very small as a rule
4. is the easi­est to organize
5. dominate the world business
6. is not subject to special taxes
7. is the least costly to organize
8. is owned by two or more persons
9. is created under a govern-ment charter
10. is represented by multina-tional giants
11. is represented by law firms and accounting firms
12. is the least common type of business organization
13. is the most numerous kind of business organization
14. is the second most common type of business organization

Task 21. Answer the questions.

1. What is the least numerous kind of business organization?

2. What is unlimited liability?

3. Why are sole proprietorships the most numerous kind of business organization?

4. Who undertakes legal responsibility for all the debts of a sole proprietorship?

5. Are corporations the easiest and least costly to organize?

6. How are most law firms and accounting firms organized?

7. What are advantages of partnerships over sole proprietorships?

8. Do partners have unlimited liability?

9. What is the best known type of business organization?

10. What is a corporation?

11. In what way is ownership of a corporation represented?

12. Do corporate stockholders have unlimited liability?

13. What does limited liability mean?

14. What is a small business?

15. How many people does a small business generally employ?

16. Is there one legal definition of “small business”?

17. What are the most typical examples of small businesses?

18. What businesses are major job providers in most economies?

19. How are the smallest businesses called? What is the origin of the term?

20. What does the term “mom and pop business” denote?

21. What does the abbreviation SMB stand for?

22. What business is considered medium-sized?

23. When did the term “big business” first come into use?

24. Why has the issue of “Big business” been a constant concern of economists and politicians?

25. Does “bigness” affect labour, consumers and investors, as well as prices and competition? In which way?

Task 22. Say what you know about:

1. The most common ways of doing business worldwide.

2. Limited / unlimited liability.

3. Advantages and disadvantages of sole proprietorships / partnerships / corporations.

4. The importance of small / medium-sized / big business for the social welfare.

5. Modern forms of microbusiness.

Task 23. Comment on the following statements:

1. Modern world is dominated by big business.

2. Elections are now big business in this country.

3. There have always been links between politics and big business.

4. Big business will never let nationalism get in the way of a good deal.

5. Big business can overcome cultural and political differences between countries.

6. “Well, you know, I was a human being before I became a businessman.” (George Soros – Investor & Philanthropist).

7. “The first rule of business is … do other men for they would do you.” (Charles Dickens – United States President).

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