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Thus the structure of a company is quite complicated. This structure and hierarchy is called “ the chain of command” and ensures the company’s efficient functioning.
ØQuestions for comprehension check-up and discussion:
1. What is the highest executive body in a company?
2. Is the Board of Directors accountable to stockholders?
3. Who is the nominal head of the company? Is he elected?
4. Who supervises the day-to-day running of the company?
5. What are the departments of the company that are found most frequently?
6. What are the responsibilities of a Public Relations Manager?
7. What is an affiliate?
8. When does an affiliate appear?
9. FORMS OF BUSINESS
Lead-in:
1. sole proprietorship – власність одної особі
2. assets – майно, активи
3. loan – позика
4. customer – покупець, замовник, споживач, клієнт
5. liability – відповідальність, забов’язання, заборгованість;
6. partnership – товариство
7. property – власність, майно
8. pool – об’єднувати
9. rіghts and duties – права і обов’язки
10. debt – борг
11. stock – акції, акціонерний капітал
The simpliest and the cheapest method of starting a business is a sole proprietorship because a sole proprietor invests his or her own capital and personal assets (anything that belongs to the person), or gets a loan from a bank. He or she alone decides what to do to achieve the objective of any business – profit.
The advantages of a sole proprietorship are:
- It is easy to start.
- It is inexpensive to start.
- It is flexible, because the sole proprietor holds all the authority.
- It is best adapted to a small business because it can provide individualized products and services to their customers.
The disadvantages are:
- It is unlimited in legal liability because the sole proprietor is personally responsible for all the debts and everything that is done in his or her business.
- It lacks stability and continuity because the sole proprietor’s disease is a threat to the business and his or her death usually stops it.
- It has a high risk of failure because the competition is usually high.
The second simple form of business organization is a partnership. In a partnership, no less than two and no more than twenty people (according to the British law) pool their property, capital (including intellectual capital), efforts, and managerial talents to do business and gain profits. The co-owners make a written agreement regarding how to invest capital and share dividends, called an Agreement on Capital and Dividends Share. They also write a Statute of their partnership where all the rights and duties of co-owners are regulated. The Statute is a legal document and its contents are regulated by law. At least one of the partners has unlimited liability, but quite often every co-owner is liable for all the debts of the partnership.
The advantages of a partnership are:
- It is easy to organize.
- It has potential additional sources for raising investment capital because new partners can be added.
- Every partner may act on behalf of the entire partnership.
The disadvantages are:
- The business suffers if partners have serious and constant disagreements over decisions-making.
- Senior partners have unlimited personal liability.
- In case of bankruptcy, the co-owners who invested more capital lose more than the junior partners who invested less.
A corporation (or company) is the most expensive way to organize a business. Corporations issue stock in shares, which are certificates of owing part of the corporation’s capital. Shares certify that a definite sum of money has been invested by a shareholder, who may own one or many shares and has the right to definite annual dividends. Stockholders (shareholders) also have the right to attend the stockholders’ meetings, which are nominally the supreme governing body of a corporation.
Corporations have great advantages that make them the strongest and most powerful form of business ensuring the greatest profits.
But there are also great disadvantages:
- It is difficult and expensive to start.
- It is difficult to control.
- It has much less freedom of operation than a sole proprietorship or partnership does.
- It has to pay corporate tax.
ØQuestions for comprehension check-up and discussion:
1. What is the simpliest and the cheapest method of starting a business?
2. What are the advantages of a sole proprietorship?
3. What are the disadvantages of a sole proprietorship?
4. What is the second simple form of business organization?
5. What are the advantages (disadvantages) of a partnership?
6. What is the most expensive way to organize a business?
7. What is the strongest and most powerful form of business?
8. What are the advantages (disadvantages) of a corporation?
10. Business strategy
| Lead-in: 1. overall method – загальна метода, загальний спосіб 2.to achieve an objective – досягати мети 3. flexible – гнучкий 4. long-term – довгостроковий, довготерміновий 5. short-term – короткотерміновий, короткостроковий 6. profit- прибуток, дохід 7. share of the market– частина, частка, пай, акція 8.to reduce – зменшувати, скорочувати 9. margin - 1) грань, край, запас, маргінес 2)точка монетарного прибутку, нижче якої продукція є неприбуткова 10.to increase profits –збільшувати прибуток 11. to manufacture – виробляти 12. loss – втрата, збиток 14. secure– безпечний, міцний, гарантований 15. advantages and disadvantages – переваги і недоліки |
Every company or firm develops its strategy, i.e., its overall method of achieving its objectives. The strategy must be very flexible, because only a flexible strategy permits taking into account market conditions, which are constantly changing.
Strategy depends on long-term and short-term objectives and prospects. The long-term objective is always profits. But a company may be ready to cut its profits for some time to have a greater share of the market to sell its products. Greater market share means greater profits in the future. So, a company may put gaining market share as its short-term objective. To achieve this, the company has to reduce its prices. But then, the margins will be lower. Margins are the differences between what it costs to manufacture a product and the price at which it is sold. Lowering the margins means cutting the profits.
In this case, in order to increase profits over the long term, the company needs to increase production. Gaining market share allows it to increase production, and that increase cuts of the unit cost (i.e., the cost to manufacture one unit of what the company produces).
On the other hand, increasing production may cut profits as well, because the increased production requires new investments into machinery and technology.
The strategy, then, has to be oriented in two directions – the market and the manufacturing process. If we focus on the market, then the strategy is to gain market share. If we focus on manufacture as a source of profitability, then the quality of products should be improved. In that case, prices may be raised as well, in their turn raising the profits.
But this strategy does not work well if the market is competitive. Price increases, whatever the quality, may result in a drop in sales. A firm that does not increase prices, or the one that even reduces them, adapts to the market more easily.
To reduce costs without increasing (or even reducing) prices, companies often have to sub-contract some of their production. That means job losses in the company itself, though the remaining jobs become more stable and secure.
It may be said that developing a sound and flexible strategy is very difficult, because every strategy has its advantages and disadvantages. Many factors have to be taken into account.
ØQuestions for comprehension check-up and discussion:
1. What is a business strategy?
2. What are the objectives that every strategy depends on?
3. Name two directions a stategy can be oriented in.
4. Why do companies have sometimes to sub-contract their production?
5. What factors, in your opinion, have to be taken into account in order to develop a sound strategy?
11. FRANCHISING
Lead-in:
1. franchising – привілей, ексклюзівні права і привілеї на переведення торгівлі чи бізнесу
2. agreement – згода, договір, угода
3. accounting – бухгалтерія, облік, розрахунок
4. bookkeeping – бухгалтерія
5. penalty – покарання, кара, штраф
6. trademark – фабрична марка, торгівельна марка
7. marketing strategy – стратегія торгівлі (маркетингу)
8. operating manual – підручник, посібник
9. quality control – контроль якості
10. renewal – відновлення
One of the fastest-growing and most important segments of business is franchising.
There are many different franchise agreements.
Franchising is a marketing system based on a legal arrangement that permits one party – the franchisee – to conduct business as an individual owner while abiding by the terms and conditions set by the second party – the franchiser.
The franchise is the contract granting the right to do business and specifying the terms and conditions under which the business will be conducted.
The franchisee is usually an independent local business person who agrees with the franchise owner to operate the business. The franchiser is the company that owns the franchise’s name and distinctive elements (such as signs, symbols and patents) and that provides operating systems, such as accounting, advertising, bookkeeping, marketing and other services. While the franchisee is given the right to produce and market the franchiser’s designated goods or services, that production and marketing must be done according to the terms of the licensing agreement. The contract specifies what the franchisee can and cannot do and prescribes certain penalties for non-compliance.
There are two types of franchising systems: product and trademark franchising and business format franchising.
Product franchising is an independent sales relationship between the franchiser and the franchisee in which the latter is given the right to use some of the franchiser’s identity.
Business format franchising is characterized by an on going business relationship between franchiser and franchisee that includes not only the product service and trademark (or trade name) but also the other components of the operating system: marketing strategy and plan, operating manuals and standards, training programs for operating the system, quality control, and communication between franchiser and franchisee.
Franchisees get training from the company that helps them to manage their business and advertising. This continuous support is one of great advantages of franchising. Not less important is using the brand name of a company that is known and advertised nationally, or even worldwide. It is easier for a franchisee to raise money from banks than it is for a sole proprietor because a franchisee has a large company’s support.
But there are disadvantages as well:
- A franchisee has less independence than other sole proprietors;
- He or she has to pay part of his or her profits to the company (royalty payments).
- A franchisee cannot sell his or her business if he or she does not have a franchiser’s agreement of doing so;
- Renewal of the franchise is not automatic, so a franchisee can lose his or her franchise.
ØQuestions for comprehension check-up and discussion:
1. What is franchising (the franchise)?
2. What is the franchisee?
3. What is the franchiser?
4. How many types of franchising systems do you know?
5. Is it easier for a franchisee to raise money from banks than it is for a sole proprietor? Why?
6. What are advantages and disadvantages of franchising?
12. GOODS MANAGER
Lead-in:
1. spice – приправа
2. starch – крохмаль
3.confectionery – кондитерські вироби
4. crockery – фарфор
5. knitwear – трикотажні вироби
6. haberdashery – галантерея
7. stationery – канцелярські товари
8. hosiery – панчішні вироби
9. durability – довговічність
10. demand for the goods – попит на товари
I am a student of the faculty of Marketing, Trade and Customs Activity at Donetsk State University of Economics and Trade named after M. Tugan-Baranovsky. There are 3 departments here: the department of Marketing, Goods Management and Customs Activity.
My speciality is Goods Manager. It seems to me that our speciality is the most interesting and necessary for people engaged in trade. Our faculty prepares 2 types of goods managers: Goods Managers of Food products and Non-Food Stuffs. Food is the source of energy for the maintenance of life. That's why there are many kinds of foodstuffs in the world. We get food from animals and birds, plants and fish. Goods Managers of food products study 9 different groups of food products: 1) milk products, 2) meat products, 3) fish products, 4) grain products, 5) vegetables and fruit, 6) oils and fats, 7) drinks, beverages and spice, 8) starch and sugar containing substances and confectionery, 9) egg products.
The work of Goods Managers of food products is very important and many-sided. We study useful properties of goods; determine the most rational ways of food-products usage. Goods managers must know the regime of food-products storage for preserving their quality.
The ability to know some new wants and demands of customers, to recognise new trends and developments is very important. So Goods Managers of Food Products study physical, chemical and biological properties of goods and change of these properties while moving from producers to customers.
Goods Manager of Non-Food Stuffs also study different groups of products: plastic goods, consumer service chemicals, crockery and glassware, ceramics, building materials, furniture, electrical appliances, textile goods, ready-made garments, knitted garments, footwear, fur, haberdashery, stationery, hosiery, perfumery and cosmetic, gold and silverware and so on.
Clothing traditionally may be divided into ready-made clothes, hosiery, knitwear, hats, linen. According to the sex and age of a person clothing may be divided into: men's wear, women's wear and children's wear. But nowadays women's wear is gradually becoming identical in many cases with men's wear. The names of many articles of clothes are the same in men's and women's wear; for example, heavy-weight coats, lightweight coats, raincoats, anoraks, cloaks, cardigans, pullovers, sweaters, shirts, etc. The name "trousers" may include slacks, pants, jeans, cords.
The dressing of children moves now towards the miniaturization of adult fashion, including cords, velour skirts, jeans, dresses and suits.
Most people try to have in their wardrobes clothes in natural colours and made of natural materials, the prices on such clothes are rather high, but it would be probably explained by the fact that consumers are looking for durability, value and quality and are prepared to make a purchase which will cost them more but which is expected to last longer.
To be a qualified goods manager means to know if there is any demand for the goods, what the market potential is, to know local conditions and preferences, local trading customs and habits, what seasonal factors should be taken into account and the like.
In order to be specialists our students study foreign languages, mathematics, chemistry, psychology. Besides, great attention is paid to the special subjects.
I like my future speciality and I think that we, young specialists, must do all we can to meet the requirements of Ukraine in full.
ØQuestions for comprehension check-up and discussion:
1. What is the name of your faculty?
2. What are the names of your faculty’s departments?
3. What is the name of your speciality?
4. What is the work of Goods Manager connected with?
5. What types of Goods Managers do you know?
6. What kinds of foodstuffs are there in the world?
7. What groups of non-food goods do you know?
8. What subjects do you study?
13. MY SPECIALITY. MARKETING MANAGER
Lead-in:
1. business dealing – угода
2. demand – попит
3. target market – цільовий ринок
4. marketing mix – комплекс маркетингу
5. joint-venture – спільне підприємство
I am a student of the faculty of Marketing, Trade an Customs Activity at Donetsk State University of Economics and Trade named after M. Tugan-Baranovsky. There are 3 departments here: the department of Marketing, Goods Management and Customs Activity.
My speciality is Marketing Manager. It seems to me that our speciality is the most interesting and necessary for people engaged in trade. I am going to specialize in marketing.
Marketing is an activity that includes different kinds of business dealings with the movement of goods and services from producer to consumer. It surrounds our everyday life.
The students who graduate from our department deal with market research. The ability to know some new wants and demands of customers, to recognise new trends and developments is very important in marketing. Those who produce must know what goods and services, where, at what prices, why, for what purpose their customers would like to buy. Marketing research in this respect helps producers very much.
But it is a poor strategy to try to produce something for everybody or to serve all customers. You cannot satisfy everyone. That is why, to be successful, businesses usually select certain customer groups on which to concentrate their attention, i.e., groups of population that have something in common and with whom a certain product or service is most likely to succeed. Examples of such groups may be: middle-aged housewives, or university students, or retired people, etc. Every such customer group is called a target market. Obviously, different marketing approaches (for instance, different advertising) may be needed to attract people from different target markets to the same product or service.
To be a good Marketing Manager means to know the ABC of marketing (so-called Marketing Mix). It includes the Four P's: product, price, place and promotion. So in order to be specialists the future marketing managers study special subjects. We must know if there is any demand for the goods, what the market potential is, what sort of competition we’ll meet, i.e. how the price of our goods compares with other competitive products, local conditions and preferences, local trading customs and habits, what seasonal factors should be taken into account and the like.
Besides, great attention is paid to foreign languages, mathematics, history, philosophy and so on. After graduating from our faculty we are sent to work at the shops, at the joint-ventures, at the advertising companies, at the marketing departments of different enterprises, companies and firms. I like my future speciality, and I think that we, young specialists, must do all we can to meet the requirements of the population in full.
ØQuestions for comprehension check-up and discussion:
1. What is the name of your faculty?
2. What are the names of your faculty’s departments?
3. What is the name of your speciality?
4. What is the work of Marketing Manager connected with?
5. What customer groups do you know?
6. What does it mean to be a good Marketing Manager?
7. What subjects do you study?
14. MY SPECIALITY. CUSTOMS INSPECTOR
Lead-in:
1. Goods Management – товарознавство
2. Customs Activity – митна справа
3. cargo – вантаж
4. to prevent smuggling – запобігти контрабанди
5. various duties – різноманітні збори
6. drug law enforcement – виконання закону про наркотики
I am a student of the faculty of Marketing, Trade an Customs Activity at Donetsk State University of Economics and Trade named after M. Tugan-Baranovsky. There are 3 departments here: the department of Marketing, Goods Management and Customs Activity.
My speciality is Customs inspector. Until recently Ukraine had no institution to train Customs specialists. But now some higher educational establishments, and Donetsk State University of Economics and Trade among them, train such specialists.
The work of Customs inspectors is very important and many-sided. They deal with passengers, cargoes, transport. The passengers going through customs have to declare certain items they are bringing into the country. Customs inspectors are trained to recognize the passengers who are carrying things into a country illegally to prevent smuggling.
As with merchandise processing, modern computer technology and communications are being used extensively to facilitate the processing of the ever - increasing numbers of travellers entering different countries.
Besides, working with passengers, checking imports and exports there are many other types of work done by Customs inspector. They control payments of various duties, see that appropriate licences are held, inspect the books and accounts and see that the right amount of tax is paid.
According to Customs regulations, one of the duties of a Customs inspector is to prevent drug smuggling. Drug smuggling is a very serious problem nowadays. Drug traffickers use any and every means of transport to smuggle drugs from source area to their market destination.
There are many effective ways of detecting cases of drug smuggling but the best tool for drug law enforcement is a well-trained and experienced Customs experts. The majority of the drugs seized resulted from the work of such officers.
In order to be specialists our students study foreign languages, mathematics, chemistry, psychology. Cooperation between Customs services in different countries is an important element in this work, that is why foreign languages are very important for Customs inspectors. Besides, great attention is paid to special subjects.
I like my future speciality and I think that we, young specialists, must do all we can to meet the requirements of Ukraine in full.
ØQuestions for comprehension check-up and discussion:
1. What is the name of your faculty?
2. What are the names of your faculty’s departments?
3. What is the name of your speciality?
4. What is the work of Customs inspectors connected with?
5. What is the most important duty of Customs inspectors?
6. What subjects do you study?
15. MARKET
Lead-in:
1. goods and services – товари і послуги
2. spot market – ринок наявного товару, “спот”
3. futures market – ф’ючерсьний ринок
4. commodity market – товарна біржа, ринок товарів
5. foreign exchange market – валютна біржа
6. Exchange Rate Mechanism – механізм валютного курсу
7. exchange rate fluctuations – коливання валютного курсу
A market is gathering of people for buying, selling and exchanging goods or services. So in economics it is the network of dealings between buyers and sellers. These dealings may be regular and organized, spasmodic and unsystematic.
According to the character of concluded contracts, markets can be divided into 2 types: spot markets and futures markets. The spot market is a place where goods, currency and securities are available for immediate delivery.
The futures market is a place where goods, currency and securities are available for delivery at a future date for a price fixed in advance.
There are 3 types of markets according to their function: commodity markets /exchanges, stock markets/exchanges; foreign exchange markets.
Commodity markets/exchanges are the places where raw materials and some manufactured goods are bought and sold for immediate or future delivery.
Stock markets/exchanges are the markets where stocks and shares are bought and sold under fixed rules, but at prices controlled by supply and demand. Supply – the behaviour of sellers and demand – the behaviour of buyers are essential features of the maket. The main idea of stock exchanges is to enable public companies, the state and local authorities to attract capital by way of selling securities to investors. Stock markets are secondary markets by their nature. Secondary markets trade in existing securities, as opposed to new issues traded on a primary market. New issues make up an insignificant part of the market turnover. The development of the secondary market provides for liquidity and reducing the risks of investments.
Foreign exchange markets are the markets where foreign currencies are traded. Market makers acting on foreign exchange markets are either dealers, firms or foreign-exchange brokers.
Such markets are not entirely free as free markets where prices are allowed to rise and fall according to supply and demand, without prices being fixed by governments. Such a situation is called “clean floating”. Though many countries removed all exchange controls, i.e. a set of restrictions imposed by a government on buying and selling foreign currencies, the Central Banks of various countries influence to some extent the market situations, influence the Exchange Rate Mechanism. The Exchange Rate Mechanism it is the scheme used by countries in the European Monetary System to keep the relative values of the currencies within agreed limits. The aim of the Exchange Rate Mechanism is to stabilise exchange rate fluctuations. Such currencies are called “currency snakes” and the rate of exchange is called “a managed currency”.
So the market reflects any change in the economy. It is sensitive to interest rates, inflation, employment and political events in any country.
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