Text 3 - modern business community

In order to be able to understand the work performed by managers and the importance of their activities to any organization, an understanding of the environment in which they may be employed is necessary. And for that, an introduction to the subject called commerce is required, as it is a subject which is concerned with the methods by which raw materials, goods and services are transferred - bought, sold, and distributed - to consumers from those who produce the raw materials or goods, or provide certain services.

In most countries there are two distinct types of enterprises. First, there is what is known as the ‘public sector’, and it is run for the benefit of the population as a whole, e.g. a national health service, or to provide security for the nation and its citizens, like the police or the armed forces. The second type of enterprise makes up the ‘private sector’.

Despite the huge variety of objectives, the many enterprises - which collectively form the modern commercial world - can be broadly divided into four large groups: industrial, trading, service-providing and mixed-type enterprises.

Into the group of industrial enterprises there fall businesses such as mines, which extract raw materials (oil, gas, coal, iron ore, etc.) that are in general sold to other enterprises for use as power or in manufacturing. Agriculture and fishery are also classified as extractive.

The range of trading enterprises in this group is very wide, but the common activity is buying and selling of materials, components and products manufactured by the industrial enterprises.

Frequently the services provided by the service enterprises include the performance of some work such as banking, finance, agricultural extension service, real estate agency, transport, maintenance of machinery, etc., or the provision of insurance cover.

There are, of course, some enterprises, which fall into more than one of the above groups. For example, a business may run a poultry-raising farm, processes the poultry produced there on a small plant, and sell the products from its own shop or warehouse, and it is thus a mixed-type enterprise.

All three divisions of businesses are dependent upon each other. For instance, if there were no industrial enterprises there would be no materials available, and there would be few, if any, goods for the trading businesses. Services would have no clientele if not for basic enterprises that produce and trade. At the same time, no industrial enterprise could possibly operate without services of related organizations, or with little assistance of trading companies who ensure the complete turnover of goods and monies.

Text 4 - business partnerships and joint stock companies

In most countries the law defines a business partnerships as ’that relationship which subsists between two or more persons carrying on business in common with a view to profit’. There are great many reasons why two or more persons may get together to start (or take over) and run a business. It may be a matter of knowledge, experience, contacts, finance, assets or a combination of any two or more of those factors.

In some cases, one or more of the partners may provide the skill, experience or technical know-how, whilst others may provide some or all of the finance. Not all partners in a particular business necessarily are involved in the management of the business. Some, commonly known as ’sleeping partners’, may provide the capital and leave the day-to-day running of the enterprise to the ‘working’ partners or to non-partner hired managers. All the partners in a partnership share any profit made by the firm, but not necessary in the same proportion. All the partners, generally in the same proportion as they share profits, share any losses faced by the business. But the liability of each partner is unlimited and in the event of insolvency a wealthier partner could be called upon to meet personally any of the debts of the business, which the other partner(s) cannot afford to meet.

Advantages of partnership firms include the possibility of spreading the workload and responsibilities, whilst at the same time often allowing for specialization by different partners, and of course the short absence of one partner due to holiday or illness may not be felt as seriously as in a one-man business. There may be merit in consultations and discussions before decisions are made, so long as that does not entail lengthy delays and/or inaction. Efficient management is as important in a partnership as in any other business. In case where the partners do not have management ability or training, or where they wish to concentrate on their specialist functions, non-partner managers may be employed and be directly responsible to one or more of the partners.

The capital and ownership of a joint-stock company are divided into ‘shares’ (or ‘stocks’). The quantity and value of the shares in a particular company are generally a matter of convenience or commercial viability, and there is no fixed rule. Those who purchase shares in a company are called shareholders (or stockholders in some countries) or members, and they will in general share - in the form of dividends - the profits made by the company in proportion to the number and value of shares owned by each. Typically, the shareholders elect a board of directors to run the business on their behalf and to protect their interests, although the directors may be shareholders themselves, and that is especially true in smaller companies.