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Manufacture, customer, product, temporary, tangible, durable, service, intangible, classify, nondurable, generalization, exampleScientists … similar plants and animals into groups to study them. Marketers classify goods and services into groups to develop … about desirable marketing mixes for the different groups of … . Thus, … can be grouped into three classes (1) durable goods, (2) nondurable goods and (3) services. Goods have a … form—that is, you can see, hear, feel, taste, or smell them. … goods,such as automobiles and refrigerators, last over an extended period of time. …goodsare quickly used, worn out, or outdated and are consumed in a single usage or a few uses. Chewing gum, paper towels, and hand soap are … of nondurables. A …is any task (work) performed by another person or business. A service may provide a product or facility for someone's … use, but ownership is not transferred to the customer. Services differ from goods because they are … . A company that produces intangible services operates its business differently than one that … durable or nondurable goods. 8.Read the text attentively. There are some mistakes in spelling. Find and correct them. Logistics Logistics is the entire prosess of moving row materials and component parts, in-process inventory, and finished goods into, through, and out of the firm. The term logisticsis brod in scop. It includes managing the movment and storige of raw materials and supply parts neded during the prodaction processes. It also includes planing and coordinating the phisical distribution of finished goods. Inventory or materials management consists of those activities performed up to the production point, whereas physical destribution includes activities that occure after production, namely geting the product or service to the castomers. Collaborators such as transpartation campanies are vital to these processes. 9.Complete the table Verb Noun Adjective consume ----- ----- substitute ----- ----- consist ----- ----- ----- nation ----- produce ------ ----- ------ difference ----- ----- quality ----- ------ quantity ------ ------ ------- identifiable compete ------ ------ ------ ------ preventive ------ ------ symbolic ------ recognition ------ ------ ------ typical rely ------ ------ ----- facility ----- ----- character ----- Customize ----- ---- ----- duration ----
10. Read the following words. Translate them into Russian. Then add the prefix en- .What meaning have the words gained? Make your own sentences with these words. Able, cage, chase, cipher, act, chain, circle, close, courage, danger, durable, force, slave, large, sure. 11. Give the Russian equivalents to the following Battle for dominance; complementary parts; delivery of goods; when times get tough; defer purchases; convert raw materials into finished goods; inputs, outputs; an input-transformation-output system; in terms of benefit; measure of productivity; to screen the ideas; time-consuming; satisfy stated or implied needs; maturity; primary objectives; generic products; plain packaging; uneven quality; generate more sales. 12. Fill in the blanks with the necessary prepositions. 1.Think twice … you do it. 2.We’ve decided to go there regardless … their strong opposition. 3.I’m sure he will stick … his point of view. He is so stubborn. 4.I can’t give you any answer right now … … the uncertainty of the possible development of the situation. 5.We are to deal … this problem in any case. 6.This is his fault. He has done it … the wrong time. 7.It will have an adverse affect … the whole business situation. 8.The problem should be subject … thorough consideration. 9.They tried to hold the inflation … constant rate but failed. 10.It is difficult but we’ll do our best to compensate … all your losses. 11.We must focus our attention … the main financial problems. 12.The firm agreed to do it … exchange … better conditions on the market. 13.These two sectors are very important, both dependent … each other. 14.We are interested … buying goods … high quality. 15.Producers convert raw materials … finished goods. 16.These goods seem to be absolutely the same. … what do they differ? 13. Give the definition or explain in your own words the following terms. Consumer, custom goods, intangibles, life cycle, maturity stage, brand name, logo, JIT, logistics, offering, product development, standard products, customizing 14. Translate the following sentences. Pay attention to the Complex Subject. 1.The producer is not likely to make a great profit during this phase. 2.The market is said to be at equilibrium because the quantity supplied is equal to the quantity demanded. 3. They are supposed to set up a joint venture. 4.He happened to be there when they were discussing the situation. 5.The problem proved to be a difficult one. 6.She seemed to be a good manager. 7.This policy is unlikely to be a success. 8.Customers seem to be satisfied with our product. 9.The market is said to be at equilibrium at the moment. 10.This type of service is believed to be more competitive. 15. Use the English equivalents of the Russian subordinate clauses in brackets. 1.I have seen (как они встречали своих партнеров в аэропорту). 2.They didn’t expect (что цены так быстро возрастут). 3.They wanted (чтобы мы закупили оборудование по более высокой цене). 4.We would like (чтобы вы проверили все данные еще раз). 5.Do you want (чтобы мы сами сделали это)? 6.We expected (что они начнут выпуск новой продукции в конце года). 7.We heard (как они обсуждали новы проект с директором фирмы). 8.We’d like (чтобы вы начали разработку новой упаковки для нашего товара). 9.We didn’t expect (что этот товар так быстро устареет). 10.We’d like (чтобы вы составили перечень услуг, которые наша фирма может предложить своим клиентам). 16. Read the following sentences. Pay attention to the translation of the Gerund. 1.Revenues and expenditures forecasting is the most fundamental step in the process of budget preparation. 2.Adequate planning of capital expenditures depends crucially on an accurate forecast of revenue availability. 3.Reading much is a great habit. 4.He likes going to the cinema once a week. 5.Please, leave the room without banging the door. 6.I don’t feel like laughing over it. 7.The financial director insisted upon investing into this project. 8.He seemed to enjoy being deliberately impolite. 9.She couldn’t help noticing the shallowness of this person. 10.I remembered being here with my grandmother. 11.I shall never forget seeing the Alps for the first time. 12. You should not risk going out if you have a cold. 13.I prefer seeing a play to reading it. 17. Make up sentences of your own using these verbs and phrase, followed by a Gerund Phrase or a Gerund Construction. To succeed in; to complain of; to look forward to; to see to; to believe in; to be afraid of; to be interested in; to be ashamed of; to get used to; to be tired of; to be in the habit of; to be on the point of; to be in danger of; to have an objection to; to put up with. 18. Translate the following sentences into Russian in written form. 1.A consumer is a person or business who purchases goods or services for personal or organizational use. 2. A nation’s resources are used to produce goods and services that will meet people’s needs and wants. 3.Consumerism includes the activities of individuals, groups, and organizations aimed at protecting consumer rights. 4.Production is the total process by which a company produces finished goods or services. 5.Manufacturing refers only to the physical process of producing goods. The word manufacturing comes from the ancient Latin word manu (hand) and facto (create, or make) – in other words, handmade. 6.Operations are the functions needed to keep the company producing, literally any function or series of functions enacted to carry out a strategic plan. 7.The rate at which goods and services are created is called productivity. 8.In a healthy economy, productivity must be high and also steadily increasing. 9.A product consists of all the tangible and intangible characteristics provided in an exchange between a seller and a buyer. 19.Make up sentences of your own using your active vocabulary and these phrases, followed by the Gerund. To succeed in; to complain of; to look forward to; to see to; to believe in; to be afraid of; to be interested in; to be ashamed of; to get used to; to be tired of; to be in the habit of; to be on the point of; to be in danger of; to have an objection to; to put up with. 20. Give the English equivalents to the following: состояние экономики, равновесие между этими секторами, потребление товаров и услуг, осязаемые товары, неосязаемые услуги, проходит через руки посредников, полный пакет услуг, оправдать капиталовложения в продукт, протестировать несколько образцов, прогнозировать объем продаж, отслеживать реакцию потребителей, крупномасштабное производство, различать сорт и качество, прибыльный, прекратить выпуск товара, продлить на несколько лет 21.Translate the sentences into English 1.Материалы, которые идут на производство товаров, мы закупаем во Франции. 2.Процесс создания нового товара требует огромных затрат времени и средств. 3.Из ста предложенных идей только одна воплощается в товар. 4.Услуги не подлежат транспортировке и хранению. 5.Компания надеется, что новый продукт будет прибыльным и долго продержится на рынке. 6.Снижение продаж происходит в силу разных причин: изменение моды, демографический спад, и т.д. 7.Владельцами брэнда могут быть не только производители, но и продавцы. 9.Производители ревниво защищают свою торговую марку. 10.Экономика практически любой страны состоит из производственного сектора и сектора услуг. 11.Производство товаров и услуг должно быть ориентировано на покупателя. 12. Потребитель может оценить качество товара без участия его производителя. 13.Потребителя интересует прежде всего качество товара или услуг. 14.Экономисты используют статистические данные, чтобы доказать свои теории. 15.У них достаточно сил, чтобы контролировать этот сектор экономики. 14.Монополии установили эту цену, чтобы максимизировать прибыль. 15.Новая продукция требует больших инвестиций для того, чтобы покрыть издержки на ее разработку и продвижение на рынок. 16. Маловероятно, что эти услуги будут пользоваться популярностью у населения. 17.Вероятно, им придется закупать новое оборудование. 18.Оказалось, что эта торговая марка зарегистрирована. 19.Мне было необходимо увидеть директора, чтобы обсудить с ним все вопросы заранее. 20.Ситуация была слишком сложной, чтобы разобраться в ней за такое короткое время. 21.Наши ресурсы слишком малы, чтобы начинать такой сложный проект. 22.Это необходимо сделать для того, чтобы увеличить производство наших товаров. 23.Для них важно было закупить все необходимые материалы до конца года. Speaking 1. Make a short report on the topic “Goods and services: what is common and in what do they differ?” 2. Speak on the production development. Give your own examples. 3.Compare Product Life Cycle and Business Cycle. What do they have in common? In what do they differ? 4. Take as an example any product you like and describe how the principles of product identification work. 5. If you are to choose between goods and service sector to work in, what would you choose? Give your reasons. 6. The production process is thought of as “an input-transformation-output system” Explain each element of this definition. 7. What are the differences between standard and custom-made products? Give your own examples. 8. In which areas of production does the law of supply and demand have the greatest influence on prices? How do you account for this? 9. Decide on the criteria for evaluating a product/ service. 10. Speak on different types of products. Use the information from both the Unit and Appendix. 11. Sum up the information of the Unit (100-120 words). Writing 1. Give your arguments in favour of creating product identification. Do it in written form (150-200 words) 2. Explain the importance of product design. Give your point of view in written form (150-200 words). Key Vocabulary goods volatile quality warranty customize label purchase collaborator trademark brand finished goods consumer grade costly custom-made guarantee packaging mature services ergonomics consumption complementary custom products product life cycle tangible ratio standard products intangible customer-oriented increase (v, n) inputs average decrease (v, n) output time-consuming offering production shelf life wholesaler seller generic products retailer buyer hazard decline UNIT IV BUSINESS ORGANIZATION Lead-in 1.What forms of business organization do you know? 2.Which of them are more common in different spheres? Give your examples. 3.What characteristics should a person have to be in any type of business? 4.“If you don’t like problem solving, you shouldn’t be in business, because every day is filled with problems”. Give your arguments. Reading Text 1 Read the following text. Find the key words and answer the question “What is organization?” Use the information from the text on Henry Ford’s example
What is organization? Despite the great number of organizations, the term organization is elusive and somewhat difficult to define. This difficulty is pointed up by the fact that a variety of definitions have been suggested by sociologists, psychologists, and organization and management theorists. Chester I. Barnard’s definition, though put forth many decades ago, still remains popular among organization and management theorists. Barnard defined an organization as “a system of consciously coordinated activities or forces of two or more persons”. In other words, when people gather together and formally agree to combine their efforts for a common purpose, an organization is the result. Although Barnard’s statement is a good general definition, it is necessary to go a step farther and identify some important common denominators of organizations. According to Edgar Schein, a prominent organizational psychologist, there are four characteristics common to all organizations: 1) coordination of effort 2) common goal or purpose 3) division of labor 4) hierarchy of authority. As the old saying goes, “Two heads are better than one”. When individuals join together and coordinate their mental and/or physical efforts, great and exciting things can be accomplished. Coordination of efforts multiplies individual contributions. Coordination of effort cannot take place unless those who have joined together agree to strive for something of mutual interest. A common goal or purpose gives organization members a rallying point. For example, Nucor, a small but highly successful steel company, prints the name of every Nucor employee on the front and back pages of its annual report. By systematically dividing complex tasks into specialized jobs, an organization can efficiently use its human resources. Division of labour permits each organization member to become more proficient by repeatedly doing the same specialized task. The advantages of dividing labor have been known for a long time. One of its early proponents was the pioneering economist Adam Smith. According to traditional organization theory, if anything is to be accomplished through formal collective effort, someone should be given the authority to see that the intended goals are carried out effectively and efficiently. Organization theorists have defined authority as the right to direct the actions of others. Without a recognized hierarchy of authority, coordination of effort is difficult, if not impossible, to achieve. All four of the four characteristics are necessary before an organization can be said to exist. Through the years, many well-intentioned attempts to create organizations have failed because something was missing. For example, in 1896 Frederick Strauss, a boyhood friend of Henry Ford, helped Ford set up a machine shop, supposedly to produce gasoline-powered engines. But while Strauss was busy carrying out his end of the bargain by machining needed parts, Ford was secretly building a horseless carriage in a workshop behind his house. Their organization never got off the ground. Although Henry Ford eventually went on to become an automobile-industry giant, his first attempt at organization failed because not all of the pieces of an organization were in place. Ford’s and his partner’s efforts were not coordinated: they worked at cross-purposes, their labor was vaguely divided, and they had organizational intentions, but not an organization. Text 2 Read the following text and answer the questions that follow it. Sole Proprietorship The three most common forms of business ownership are sole proprietorship, partnership and corporation. Each form of ownership has a characteristic internal structure, legal status, size, and field to which it is best suited. Each has key advantages and disadvantages and offers employees a distinctive working environment with its own risks and rewards. Sole proprietorship. The oldest, most common form of private business ownership is the sole proprietorship. A sole proprietorship is a business owned and managed by one individual. That person may receive help from others in operating the business but is the only boss; the sole proprietor is the company. Typically the sole proprietor owns a small service or retail operation, such as a roadside produce stand, hardware store, bakery, or a restaurant. The sole owner, often aided by one or two employees, operates a small shop that frequently caters to a group of regular customers. The capital (money) needed to start and operate the business is normally provided by the owner through personal wealth or borrowed money. The sole proprietor is usually an active manager, working in the shop every day. He or she controls the operations, supervises the employees, and makes the decisions. The managerial ability of the owner usually accounts for the success or failure of the business. Advantages of sole proprietorship. The sole proprietorship has a number of advantages. One is ease of establishment. In essence, all you have to do to launch a sole proprietorship is to open your door and start selling your goods and services. Your financial investment need not be large, and the legal red tape is minimal. A second advantage is independence. As a sole proprietor, you have the satisfaction of working for yourself. You can make your own decisions - what hours to work, whom to hire, what prices to charge, whether to expand, and whether to shut down. You can see directly the results of your own efforts and keep all the profits. Secrecy is another benefit of sole proprietorship. You do not have to reveal your performance or plans to anyone except the Internal Revenue Service. Furthermore, sole proprietorships present tax advantages, because proprietors pay taxes only on the personal income they earn from their businesses. As business grows and become more profitable, proprietors have the option of incorporating to obtain other kinds of tax advantages without giving up ownership. Disadvantages of sole proprietorships. There are also some disadvantages in operating a proprietorship. Sole proprietorships usually start with limited resources as well. Not only is an individual likely to have less capital than a group of individuals, but banks are also less willing to lend money to individuals that to large corporations; and lending institutions charge higher interest rates to smaller companies, too. The sole proprietor’s independence may be a negative as well as positive feature - the prosperity of the business depends largely on the talents and managerial skills of one person. If managerial problems crop up, the sole proprietor may be too personally involved in the business to seek aid. In addition, qualified help costs money, which the proprietor may be unwilling or unable to pay. Another major disadvantage is the proprietor’s unlimited liability. Any damages or debt that can be attributed to the business can also be attached to the owner. The two have no separate legal existence. If the business suffers big operating losses, the owner is liable and might have to sell personal assets, like the family’s home, to satisfy a business debt. A final disadvantage is that proprietorships have a limited life. When the proprietor dies, the business often dies, too. Generally, owners who want to make sure their businesses grow and continue without them must form a partnership or corporation or merge with a larger business. 1. Who owns a sole proprietorship? 2. Who keeps the profits of a sole proprietorship? 3. Why are sole proprietorships easy to a) set to and b) run? 4. What happens to a sole proprietorship if the owner falls ill or dies? 5. Why do sole proprietors often find it difficult to raise the money to start a business? 6. What are advantages and disadvantages of a sole proprietorship? Text 3 Read the following text and be ready to speak on partnership focusing on advantages and disadvantages of this form of business organisation. Partnership A partnership is a legal association of two or more persons as co-owners of a business for profit. The partners share the profits and losses of the business and often the management responsibilities as well. Partnership range from small, two-person operations to international businesses with hundreds of employees. They are formed for many purposes such as sharing in the ownership of property, making contracts, and operating businesses. In a general partnership, all partners are legally equal and are liable for the business’s debts. In a limited partnership, however, one or more people act as general partners and run the business; the remaining partners are passive investors whose liability is limited to the amount of their capital contribution. Advantages of partnerships. Partnerships share many of the advantages of proprietorships. They are easy to form, although it’s wise to get a lawyer’s advice. In addition, partnerships may provide tax advantages, since profits are taxed personal-income-tax rates rather than corporate rates. A partnership has greater profit potential than a proprietor does, since two or individuals are pulling their talents. Partnerships also have a built-in incentive for talented employees. In fields such as accounting, law, and finance, the prospect of becoming a partner in an established firm attracts top-quality employees. Partnerships also have the benefit of a definite legal standing. Usually the partners have entered into a specific explicit agreement; and even if they have nor done so, there is often an implied agreement that would be upheld in court if a legal question arose. Moreover, partnerships generally have a high credit rating since the typical partnership has several owners. Thus, a partnership can raise money more easily than a proprietorship can. In fact, many deal makers operate through limited partnerships, which raise huge pools of capital for investing in leveraged buyouts and takeovers. Another contrast to the sole proprietorship is that a partnership may have an unlimited life span, because new partners can replace retiring ones. Disadvantages of partnerships. A fundamental drawback of the partnership arrangement is the unlimited liability of the active partners. Doctors in a partnership, for instance, may all suffer financial disaster if even one is hit with a large malpractice suit. A number of precedent-setting suits against accountants and lawyers have made those professionals aware of the hazards of unlimited liability. As a consequence, many professionals are establishing corporations as opposed to partnerships. Another disadvantage of partnerships is the potential for interpersonal problems. No two people see things exactly the same way, and conflict among partners may hurt the company. From another point of view, a large partnership has the disadvantage of being extremely competitive. Except for its clerical staff, a large partnership is said to have two kinds of people - partners and aspiring partners. Since junior employees are in competition for a limited number of partnership slots, they must work long and hard to convince the partners of their superior ability. Another major disadvantage is the management problem inherent in partnerships. If too many partners have a say in the business’s daily operations, confusion is apt to result. Thus, many partnerships name a managing partner. Text 4 Read the following text and answer the questions that follow it. Corporations A corporation is legally chartered enterprise with most legal rights of a person, including the right to conduct business, to own and sell property, to borrow money, and to sue or be sued. A corporation have five important characteristics: 1. It is an artificial person with specific legal standing. 2. It has an unlimited life span. 3. It is empowered by the state to carry on a specific line of business. 4. It is owned by shareholders (stockholders). 5. Its shareholders are usually liable for damages only to the extent of their holdings. The relationship between the company and its shareholders, or owners, is central to the enormous strength of the modern corporation. Since ownership and management are separate, the owners may get rid of the managers (in theory, at least), if the owners vote to do so. Conversely, because shares of the company (known as stock) may be bequeathed or sold to someone else, the company’s ownership may change drastically over time while the company and its management remain intact. This unlimited life span gives a corporation unlimited potential for growth. Types of corporations. The giant organizations are almost all public corporations - that is, companies owned by large numbers of public investors. These investors buy stock on the open market, thereby providing public corporations with large amounts of permanent capital. In return, the shareholders receive the chance to share in the profits if the corporation succeeds. But not all corporations sell shares on the open market. Private corporations (also known as closely held corporations) withhold their stock from public sale, preferring to finance any expansion out of their own earnings or to borrow from some other source. Thus, a private corporation’s executives who control the majority of the stock are assured of complete control over their operations and are protected from being bought out by people who might dismantle the company. Some small corporations, known as S corporations (or subchapter S corporations), are even more closely held. These corporations have no more than 35 shareholders. They have one chief advantage: they may be taxed like partnerships, at rates lower than other corporations. Not all corporations are profit-making institutions. There are many non-profit corporations as well, some owned by the government and others formed to pursue noneconomic goals in such areas as social service and the arts. Finally, not all corporations are independent entities. Subsidiary corporations are partially or wholly owned by another corporation known as a parent company, which supervises the operations of the subsidiary. A holding company is a special type of parent company that exercises little operating control over the subsidiary, merely “holding” its stock as an investment. Advantages of corporations. No other form of business ownership can match the success of the corporation in bringing together money, resources, and talent; in accumulating assets; and in creating wealth. The corporation has certain significant advantages that make it the best vehicle for accomplishing these tasks, a main one being its limited liability. Although a corporate entity can assume tremendous liabilities, it is the corporation that is liable rather than any of the private shareholders. Another important advantage is liquidity, meaning that an investment in a publicly held corporation can easily be converted into cash through trade on the open market. A corporation’s unlimited life span is another important advantage. It allows a firm to make long-range plans and to recruit, train, and motivate the best employees. Disadvantages of corporations. Corporations are not without some disadvantages. One is their public disclosure requirements. Publicly owned companies are required by the government to follow certain rules and to publish information about their finances and operations. These reporting requirements put corporate managers under pressure to achieve short-term growth and earnings targets in order to satisfy shareholders and attract potential investors. The cost of incorporation are burdensome also. In addition to charter fees and lawyers’ fees, the cost of making a public stock offering may be very high. Although the tax rates for small corporations have declined in recent years, incorporated businesses still suffer from relatively high taxes when compared with unincorporated businesses. Some large corporations claim that they are taxed too heavily and that society would benefit if companies could retain more of their earnings for reinvestment. Many critics of business counter that corporations have evaded their social responsibility by employing various tax-minimization techniques, such as doing business in Panama, the Bahamas, and Bermuda, which impose no income taxes. 1. Who owns a company? 2. What characteristics has a corporation? Speak on each. 3. What are the main types of corporations? 4. Explain the difference between an open and a closed corporation. 5. Describe some of the advantages and disadvantages of a corporation. Text 5 Read the following text, make a plan and use it while speaking on multinationals. Multinational Companies The multinational label has been attached to a growing number of privately owned corporations over the last decades. These multinational corporations (MNCs) have many characteristics in common. They tend to be quite large in terms of assets they control: they tend to wield a great deal of social, political and economic power on a global scale; and they tend to be the subject of controversy and criticism. One authority has defined the multinational corporation as “…a number of affiliated business establishments that function as productive enterprises in different countries simultaneously. To have such capacity the firm must possess host-country-based production units such as factories, mines, retail stores, insurance offices, banking houses, or whatever operating facility is characteristic to its business”. All major industrialized countries have their own multinational companies, owned by shareholders in their own countries, but operating internationally. Some multinationals have major shareholders in several other countries as well. Multinational companies often have complicated structures. There is likely to be a parent company. This is a company with shareholders which owns other companies called subsidiaries. In a mature MNC, capital, technology, goods and services, information, and managerial talent flow freely from one country to another as business conditions dictate. Profit potential rather than national boundaries determines the multinational manager’s strategies. Full-fledged multinationalism does not occur overnight. Instead it is the result of an evolutionary “internationalization” process with six identifiable stages. Stage 1. Licensing. Companies in foreign countries are authorized to produce and/or market a given product within a specified territory in return for a fee. Stage 2. Exporting. Goods are produced in one country and sold for use or resale to one or more companies in foreign countries. Stage 3. Local warehousing and selling. Goods that are produced in one country are shipped to the parent company’s storage and marketing facilities located in one or more foreign countries. Stage 4. Local assembly and packaging. Components rather than finished products are shipped to company-owned assembly facilities in one or more foreign countries for final assembly and sales. Stage 5. Joint venture. A company in one country pools resources with one or more companies in a foreign country to produce, store, transport, and market products with resulting profits/losses shared appropriately. Stage 6. Direct foreign investment. A company in one country produces and markets products through wholly owned subsidiaries in foreign countries. According to traditional international management theory, each successive stage in this internationalization process increases the parent firm’s political and economic risks. However, many argue which stage is more risky. But many support that direct foreign investment, or multinationalism, is recommended as the way to protect the fir’s technology and competitive knowledge advantage, because management can directly oversee and control its application. The growth of multinationals has had both benefits and drawbacks. On the positive side it has tied the world more closely together economically and has helped spur development in poor nations. It has also increased free-market competition by providing consumers with greater choice in the goods they may buy. Among the drawbacks, especially for home-country firms, have been a great outflow of money for overseas investment and a net loss of jobs to foreign workers. Some firms locate plants abroad in regions where labor is cheaper and ship the products back to the home country to compete with more expensive domestically made goods. Text 6 Read the following text and answer the questions that follow it. Franchising One way to avoid some of the management headaches associated with starting a business is to invest in a franchise, an approach that enables you to use a larger company’s trade name and sell its products or services in a specific territory. In exchange to this right, the franchisee (the small-business owner) pays an initial fee and often monthly royalties as well to the franchiser (the corporation). There are three basic types of franchises. In a product franchise, the franchisee pays the franchising company for the right to sell trademarked goods, which are purchased from the franchiser and resold by the franchisee. Car dealers and gasoline stations fall into this category. In a manufacturing franchise, like a soft-drink bottling plant, the franchisee is licensed by the parent company to produce and distribute its products, using supplies purchased from the franchiser. In a business-format franchise, the franchisee buys the right to open a business using the franchiser’s name and format for doing business. Franchising is not a new phenomenon. It has been around since the 19th century, when such companies as Singer and international Harvester established dealerships throughout the world. Early in the 20th century, Coca-Cola, General Motors, and Metropolitan Life Insurance Company, among others, used franchises to distribute or sell their products. But the real boom in franchising began in the late 1950s, with the proliferation of hotels and motels. The latest trend in franchising has been diversification in the variety of products and services offered. Today, over 2,000 companies offer franchises, ranging from day-care centers and health clubs to dental clinics, video-tape rental outlets, and funeral parlors. Advantages of franchising. Why is franchising so popular? According to the president of the International Franchise Association, franchising has triple benefits: “The franchiser win because he builds a strong foundation for his company. The franchisee wins because he can take advantage of the franchiser’s proven business system. And the general public benefits from the consistency of the product or service”. The biggest winners are generally the franchisers, who are able to expand their business through franchised outlets without depleting their own capital. Franchisers not only expand their business using other people’s money, they also receive regular income from franchisees, who pass on a percentage of their gross revenues and help pay for advertising and promotional costs. Investing in a franchise can also be good for the franchisee, because the risk is reasonably low. 92 % of all franchise outlets make it through their fifth year. When you invest in a franchise, you know that you are getting a viable business, one that has “worked” many times before. You also have the advantage of instant name recognition and mass advertising. In addition to giving you a proven formula, buying a franchise helps you solve one of the biggest problems that small businesses face: lack of money. Besides financial aid and advice, the franchiser gives a new franchisee training in how to run a business. Many franchise organizations offer advice on advertising, taxes and other business matters, as well as instructions in the day-to-day operation of the franchise. Disadvantages of franchising. Although franchising offers many advantages, it is not the ideal vehicle for everyone. For one thing, owning a franchise is no guarantee of wealth. It may be the safest way to get into business, but it is not necessarily the cheapest. According to some analysts, it costs 10 to 30 percent more to buy a franchise than to open a business independently. And not all franchises are extremely profitable operations. One of the most significant financial variables is the monthly payment or royalty that must be turned over to the franchiser. The fees vary widely, from nothing at all to 20 percent of sales. High royalties are not necessarily bad - if the franchisee gets ongoing assistance in return. Another drawback of franchises is that they allow individual operators very little independence. Franchisers can prescribe virtually every aspect of the business. Franchisees may be required to buy the products they sell directly from the franchiser at whatever price the franchiser feels like charging. Franchisers may also make important decisions consulting franchisees. Although most franchise opportunities are legitimate, it pays to be wary. Franchises and “business opportunities” are occasionally fraudulent. The best way to protect yourself from a poor franchise investment is to study the opportunity very carefully before you commit yourself. 1. How is a franchise business set up? 2. What are three basic types of franchises? 3. Who controls a franchise business? 4. What is the difference between a franchiser and a franchisee? 5. What may the franchiser provide for the franchisee? 6. What are some advantages and disadvantages for both parties? Language 1.Practise reading the following words correctly. If necessary, use a dictionary. organization; effort; authority; characteristics; bargain; sole proprietorship; incentive; partnership; proprietor; employee; employer; customer; home country; acquisition; independence; limited resources; unlimited liability; private; public; host country; non-profit; subsidiary; holding; parent; governance; shareholders; frnachiser; franchisee; multinational; multinationalism; licensing; ware-housing; joint venture; entrepreneurship; franchiser; franchisee; entrepreneur; entrepreneurship; co-operative; merger; take-over.
2.The word companycan be used in many word combinations. Consult the dictionary and give the Russian equivalents of the following word combinations. Affiliated/subsidiary ~; holding/controlling ~; bogus/bubble ~; chartered ~; forwarding ~; full-line ~; incorporated ~; indigenous ~; insurance ~; joint stock/stock ~; letter-box ~s; manufacturing ~; mortgage ~; multinational ~; one-man ~; operating ~; parent ~; real-estate ~; safe deposit ~; shipping ~; short-line ~; surviving ~; top-notch ~ies; trust ~; wild cat ~. 3.Look at the four diagrams showing corporate relations and complete each sentence with one of the terms below. sister companies, group, associated companies, holding company
Co: company; Ss: subsidiary. 4. Complete the sentences using the words from the list below. associated company; acquisition; chief executive; big business; subsidiaries; mergers; chairperson; corporations; shares; company; 
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