III. Business / Entrepreneurship:

III. Business / Entrepreneurship:

1) Business is a word that is commonly used in many different languages. But exactly what does it mean? The concepts and activities of business have increased in modern times. Traditionally, business simply meant exchange or trade for things people want or need. Today it has a more technical definition. One definition of business is the production, distribution, and sale of goods and services for a profit. To examine this definition, we will look at its various parts. First, production's the creation of services or the changing of materials into products. One example is the conversion of iron or into metal car parts. Next, these products need to be moved from the factory to the marketplace. This is known as distribution. A car might be moved from a factory in Detroit to a car dealership in Miami. Third is the sale of goods and services. Sale is the exchange of a product or service for money. A car is sold to someone in exchange for money. So, business is a combination of all these activities: production, distribution, and sale. Still, there's another important factor. This factor is the creation of profit or economic surplus. A major goal in the functioning of an American business company is making a profit. Profit is the money that remains after all the expenses are paid. Creating an economic surplus or profit is, therefore, a primary goal of business activity. (Проф. общение, стр. 10-11)

2) Management the series of activities guiding a company in order to accomplish its objectives

Finance the acquisition and utilization of capital to start up, operate, and expand a company Marketing the movement of goods and services from manufacturer to customer to satisfy the customer and to achieve the company's objectives

Accounting the measurement and communication of financial information

Data Processing the handling of large amounts of information generated by business operations (Проф. общение стр. 12-13)

3) Goods are products that people either need or want; for example, cars can be classified as goods. Services, on the other hand, are activities that a person or group performs for another person or organization. For example, an auto-mechanic performs a service when repairing a car. A doctor also performs a service by taking care of people when they are sick.

4) The different types of business organisation to be found in the UK and most other capitalist countries may be classified under five headings: the sole proprietor, the partnership, the joint stock company, the cooperative society, and the public corporation.

Types of organization	Legal form	Ownership	Sources of finance	Liability	Who runs the business
Sole trader	Little or no legal form	The proprietor	Personal savings, bank loan	Unlimited	The owner
Partnership	Partnership Act 1890, written agreement among partners	2–20 partners	Capital provided by partners	Unlimited, although some partners can have limited liability	The partners
Private Limited Company (LTD)	Registered under Companies Act 1985	Shareholders 2 or more (no maximum)	Issuing shares (restrictions on selling them), bank loan	Limited	The board of directions. Although the day to day running is done by the directors. Directors are elected by shareholders
Public Limited Company (PLC)	Registered under Companies Act 1985	Shareholders 2 or more (no maximum)	Issuing shares (can be freely sold), bank loan	Limited
Nationalised	Industry Act of Parliament	State owned	Governme nt assistance	Limited	Board of directors appointed by the government
Co-operative	Industrial and Provident Societies Acts	Owned by members, whether the customers or workers	Shares, £1 each with an upper limit of £10 000	Limited	Management Committee elected by the members

Sole Trader

Advantages	Disadvantages
1. Only a relatively small amount of capital is needed to start up the business	1. Unlimited liability – could lose everything
2. The owner works for him or herself	2. If the owner dies or is ill, hard to continue the business
3. Decisions can be taken quickly	3. Difficult to obtain extra capital for expansion
4. Profits are not shar ed	4. May lack ideas, as less people to ask

Partnership

Advantages	Disadvantages
1. More capital available	1. Unlimited liability
2. Each partner can specialise on a particular task	2. Action of one partner binding on others
3. Range of ideas available	3. May be problem of continuity on the death of a partner or if disagreement among partners
4. Partners can share any losses	4. Capital may still be difficult to raise
(and profits!)
5. Accounts need not be published

Private Limited Company

Advantages	Disadvantages
1. limited liability	1. Less control for owners than in sole trader/ partnership
2. Still more capital available as more owners (shareholders)	2. Capital less easy to raise than in public limited company as shares cannot be sold to general public
3. Company has its own legal identity so can continue beyond a death or disagreement
4. Accounts need only be published in brief form

Public Limited Company

Advantages	Disadvantages
1. Limited liability	1. Large firms may suffer from diseconomies of scale
2. Easier to raise capital as shares can be sold to the general public	2. Easy transfer of shares makes takeover bids possible
3. These firms can often grow very large, benefiting from economies of scale	3. Full accounts must be published

5) There are various ways of defining small and medium businesses, but according to the US Small Business Administration (SBA), if a small business is defined as one employing fewer than 500 persons, then there are roughly as many people employed in small businesses in the United States as there are in large ones. (If small business is defined more narrowly, as employing fewer than 100 employees, about 36 percent of all workers are employed in small business.) Furthermore, small businesses (employing fewer than 500 employees) accounted for 60 percent of all new jobs created in the years between 1976 and 1988, according to the SBA. During the decade of the 1980s, there was a net growth of 7 million new businesses in the United States, about half of which were self-employed businesses.

Self-employed businesses are famous for being able to respond almost instantly to changes in demand. There are some economic contributions of small business. They are: a small business is often the starting point for developing a new product or service. One person tries out an idea. If it is successful, the business grows, or the product may be bought by a larger firm. The small business can give an individual a chance to gain experience, which the person may use later on a larger scale. Small business are particularly well suited for meeting specialized local needs. Artisans can provide individualized products for customers who have grown weary of mass-produced goods. Small businesses provide a service where knowing one’s customers is important.

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