The Functional Organization of the Company

Larger companies often raise money by selling shares in the business. The people who buy the shares become shareholders. A company is owned by the shareholders who elect a Board of Directors at a general meeting. The Board is responsible for the general policy of the company, formulating plans to achieve objectives. To some extent the company’s success is dependent on the leadership of the Board of Directors.

The Board chooses a Chairman, who may chair meetings of the Board and deliver the annual report. To ensure that the Board has knowledge of the company’s operation when reaching its decisions there must be executive directors, usually the managing director and the managers of the most important departments.

The managing director sees how the decisions of the Board of Directors are carried out. Moreover he plays a key role in coordinating the work and views of the departmental managers.

Under the managing director there is a horizontal organization of department heads: Production Manager, Marketing Manager, Sales Manager, Chief Accountant, Personnel Manager.

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18 Set – up of British Companies

Most of the British companies are private. The number of state owned companies as telecommunications, water, gas has decreased lately.

Companies in the private sector consist of two basic types: public and private. Public companies in general are large-scale organizations such as banks, insurance companies and others. The number of public companies is fewer than that of private companies. Private companies on the whole are smaller or family-run business.

The difference between private and public firms on paper at least, can be found in their names. The word “limited” (often shortened to “Ltd”) after a company’s name shows that it is private. On the other hand, the status of a public company is shown by the letters “plc” after its name. This is short for “public limited company”. In practice, however, the real difference between the two arises from the fact that private companies cannot raise money by selling shares to the public, in contrast to public companies, which can do so by issuing shares and bonds to be offered for sale on the Stock Exchange.

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Retailing

The retailer performs the last stage of the production process for it is he who puts the goods in the hands of the actual customers. His work is “ to have the right goods in the right place at the right time”.

There are four types of retail institutions: 1) specialty stores, 2) supermarkets, 3) general merchandise stores, 4) non-store retailing.

Often specialty stores sell one type of product, such as clothing, jewelry, furniture, books. These stores have a better feeling of their market, and they compete against giant department stores. They can adjust more quickly to market conditions.

Big supermarkets are usually well located. All the goods are arranged on trays and shelves. All the prices are clearly marked. The goods are ready-weighed and beautifully packed. There you can find everything you need. The prices are reasonable.

General merchandise stores (GMS) have a wide variety of products. There are three types of GMSs: a) department stores, b) discount stores, c) hypermarkets. Big department stores started in America more than 50 years ago, and then the idea was brought to European countries. These stores are wonderful places. People can do all their shopping under one roof. All the things for sale are displayed so that they can be easily seen, and the customers walk around and choose what they want.

The store is divided into departments: women’s clothes, men’s clothes, shoes, toys, sports goods, china and glass etc. There may be a restaurant with an orchestra and sometimes a tea -room as well. You will also find a room where you can rest if you are tired. There’s an office where you can book seats for the theatre or arrange to travel anywhere in the world.

Low price is the major attraction of the discount stores. These stores sell the most popular items, colours and sizes. The stores work till late in the evening and are usually open on Sundays. Hypermarket is a type of discount store that was developed in Germany. They are very large stores with low-price and high-turnover products. Hypermarkets achieve cost savings by simplifying their unpacking and display.

There are three major types of no-store retailing:1)vending machines, 2)door-to-door sales, and 3)catalogue sales.

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Wholesaling

Wholesalers are the institutions, which stand between the manufacturer and the retailer. The wholesaler buys goods in bulk from producers and sells them in small quantities to retailers. In doing so he helps the production process. If you had an intention to be a successful manufacturer, you would make high quality products at a reasonable price for selected markets. If you intended to be a wholesaler, you would learn how to serve the market.

Wholesaler economizes distribution. The most important function of a wholesaler is to conduct manufacturers and potential customers. For example, nine contacts and deliveries are necessary if three firms supply directly three retailers; whereas each producer deals only with a wholesaler, reducing the total number of transactions to six.

Wholesalers are used also for information and advice. Suggestions, which customers make to the retailer, are passed to the wholesaler who conveys them to the manufacturer. Thus the latter can improve his product.

The wholesaler keeps stocks. Shoppers like to obtain goods immediately. This requires stocks. Often however neither the producer nor the retailer has extensive storage facilities and responsibility falls on the wholesaler.

Moreover he arranges imports from abroad. Foreign manufacturers do not like to ship small parcels to individual retailers abroad. They prefer to deal with a wholesaler, an import merchant with established trade connections.

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Poverty

Poverty is a huge problem in the world today. Figures say that three billion people or half the world’s population live in poverty. Poverty exists in developing countries and in industrial nations. One in every ten Americans lives in poverty. However, poverty means different things to different people.

One measure of poverty is absolute poverty. People live in absolute poverty when they live on or below the poverty line. This is a level of income that is so low that people cannot afford the basic necessities to live, such as food, clothing and shelter. According to the World Bank, these are people who are living on two dollars a day. However, there are one billion people in the world who live on less than one dollar a day. The World Bank defines this as extreme poverty.

Few people in industrialized countries live in absolute poverty, but many live in relative poverty. This measure of poverty takes into account the differences that exist in a population between the rich and the poor. For example, some economists say that people who earn less than half the average income live in relative poverty. In Britain, this means 14 million people.

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