Corporate Alliances and Acquisitions.

Companies are a very important part of a country`s economy. Businesses produce goods and services, and they come in every shape and size. Although the vast majority of the world`s companies are small, in many countries the economy is dominated by large firms. Large businesses differ from small ones in a wide variety of ways. In many countries there are nationalized companies belonging to the state, as well as private companies. A private company might be a small firm with just one owner or a very large firm with thousands of shareholders `owning` the firm.

A company is a legal entity quite separate from its owners with many of the same rights as an individual. It is entitled to all the assets of the business and is responsible for any liabilities. The law recognizes that the company is separate from the shareholders who own the company.

In very large firms the shareholders have very little to do with the day-to-day running of the firm

The legal status of companies offers a major benefit to the shareholders. They are granted the protection of limited liability. This means that the shareholders are only responsible for their company`s debts up to a certain amount equal to the sum of money they have invested in the company. In case the company goes out of business, they do not have to sell their personal assets to repay the company`s debts.

As business and the world economy become increasingly competitive, more and more companies have to strengthen their operations to remain profitable. They expand opening new offices and stores, building new factories. However, there is another, more effective, way for a business to grow: one firm may acquire another, which is known as a combination. When businesses combine, their production costs decrease and profits increase. Meanwhile, competition becomes not so pressing because the number of competing firms is reduced and the newly formed combination can charge higher prices for its products. If a very large company controls business activity in a country and other companies do not compete with it, we can say that the company has monopolized the market and become a monopoly. A monopoly can charge excessive prices operating against public interest. In most developed countries there exists an anti-monopoly legislation to limit any abuses of monopolies.

There are several ways in which business firms can combine, three of them are regarded as the main ones:

· Joint venture (the type of combination where two or more companies invest together in a separate business project);

· Merger (two or more companies join together to form a larger company which allows them to increase market share and cut costs in certain areas, such as research and development);

· Acquisition or takeover (the combination when one company buys another one to take control and ownership).

Questions:

1. Are large businesses similar to small ones?

2. Can you give a definition of the term `company`?

3. Do shareholders have to participate in day-to-day running of a company?

4. What major benefit does legal status of large companies offer to the shareholders?

5. What is the reason why more and more companies have to strengthen their operations?

6. What is more effective, to set up a new subsidiary, or to combine with another firm?

7. What is the situation called when a company dictates its prices on the market?

8. What are the three major ways of combination?

Exercise 1. Find the English equivalents of the following Russian words or word groups:

акционеры; юридическое лицо; иметь право на; активы; управление фирмой; правовой статус; выгода; ограниченная ответственность; обанкротиться; личное имущество; конкурентный; прибыльный; расширяться; приобретать; объединение (присоединение); производственные затраты; назначать цену; чрезмерно высокие цены; анти-монопольное законодательство; злоупотребления; совместное предприятие; слияние; доля рынка; поглощение;

Exercise 2. Translate the following sentences into Russian:

· In our country economy is dominated by many private companies.

· This rule is recognized everywhere.

· New offices and stores are opened every month in the city.

· Shares are bought by people who are called shareholders.

· When one firm is acquired by another it is known as an acquisition.

· When two companies merge, production and development costs are cut.

Exercise 3. Find the sentences in the text where the Passive Voice is used. Can you say how the Passive Voice is formed? Now make up two sentences where the predicate is used in the Passive Voice and translate them into Russian.

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