Н.П. Морозова Limited Liability Companies in the ГюЛ. Mergers and Takeovers. Fundamentals of Entrepreneurship

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many countries. Countries that have high tax rate, particularly for individuals, can suppress company creation because a significant monetary gain cannot be achieved, but the financial, psychic, and social risks are still present.

The entrepreneur should also have the necessary professional background. An education and previous business experience give a potential entrepreneur the skills that are necessary to overcome all the difficulties in creating and managing a new enterprise.

Marketing experience also plays a critical role in creating a new company. The only presence of an idea to create a new product or service is not enough. For successful product launching to the market, there should also be a certain practical knowledge of marketing (so called know-how) necessary to choose the best total combination of product, price, distribution, and promotion. A company is more successful if there is a market demand rather than a demonstration of technological capabilities of the producer.

Financial resources are necessary for a new company creation. While most of the start-up money for any new company comes from personal savings, credits, friends, and relatives, there is often a need for additional start-up capital. Each new venture has a common trait - the need for risk capital. Risk-capital investors play an essential role in the development and growth of entrepreneurial activity. When start-up capital is readily available, more new companies create.

Finally, a role model (a live example of entrepreneurial success) can be one of the most powerful influences in making company creation seem possible. To see someone else succeed makes it easier to picture yourself engaged in a similar activity - of course, even more successfully. A frequent comment of entrepreneurs when asked about their motivations for starting their new venture is: “If that person could do it, so can I!”

THE FUTURE OF ENTREPRENEURSHIP

As evidenced by the many different definitions, the term entrepreneurship means different things to different people. However, in spite of the differences, there are some common aspects: risk taking, creativity, independence, and rewards. These common aspects are supposed to be the driving force behind the notion of entrepreneurship in the future. One thing is clear - the future for entrepreneurship appears to be bright. We are living in the age of the entrepreneur, with entrepreneurship endorsed by educational institutions, governmental units, society, and corporations. Entrepreneurial

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education has never been so important in terms of courses and academic research.

Various governments have also taken an increasing interest in promoting the growth of entrepreneurship. Individuals are encouraged to create new businesses and are provided such government support as tax incentives, buildings (space), roads, and a communication system - a strong government infrastructure - to facilitate this creation process. The encouragement by the federal and local governments is supposed to continue in the future as more law-makers understand that new enterprises create jobs and increase the economic output in an area.

Notes:

disruption - change of job or life-style

Yellow Pages - telephone directory that lists businesses according to the goods and services they offer

layoff period - the stopping by a business of a worker’s employment at a time when there is little work

peer - an equal in rank, age

C

ENTREPRENEURSHIP IN RUSSIA

The role of entrepreneurship is of interest to business people, politicians, college professors and students.

While entrepreneurship research has focused on entrepreneurs and their businesses in the Western countries, the aspects of entrepreneurship in Russia have received limited attention. The dramatic changes that have occurred in the once controlled economy of Russia in the 1990s have raised many questions. Can entrepreneurship in Russia change the traditional statedominated system with limited economic freedom and contribute to global market developments? What is the profile of Russian entrepreneurs? What is necessary to successfully carry out entrepreneurial activities in Russia?

Entrepreneurship as a social phenomenon reflects the basic conditions that foster the economic development as a result of human creativity, new ideas, and innovations. There is a general agreement among the scholars that entrepreneurship facilitates economic freedom and economic creativity. Economic freedom makes available a certain amount of rights that guarantee independent decision-making in choosing the type and field of economic

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activity and methods of operation. Economic creativity results in the new businesses and jobs being created and the resulting new products and services.

In the Soviet Union the phenomenon of Russian entrepreneurship was not emphasized primarily due to the following factors. First, from the point of view of economics, the state was the only employer legally capable to exploit economic freedom and creativity disregarding the illegal " shadow economy." Second, the Communist Party monopolized responsibility for management development and economic transformations resulting in censorship of Russian economic history. Only in late 1980s were a few books on management by Western authors finally translated into Russian.

DEVELOPMENT of RUSSIAN ENTREPRENEURSHIP

In Imperial Russia, the Soviet Union, and post Socialist Russia there was and still is a great amount of entrepreneurial potential. In the medieval Russian cities of Kiev and Novgorod not only did merchants and artisans have political power and wealth, but almost everyone above the lowest level of peasants was engaged in entrepreneurial activities. Entrepreneurs in the time of Peter the Great were traders who created Europe’s strongest militaryindustrial complex for Imperial Russia. Only the Industrial Revolution (which started in Russia half a century later than it started in England) brought the real spirit of private enterpreneurship to Russia. In the late nineteenth and early twentieth centuries talented businessmen like S.Morozov were successful entrepreneurs in Russia. P.Stolypin and S.Witte were bright members of government who initiated economic reforms. After the Revolution, except for a short period of NEP, most entrepreneurial activities were destroyed. A transformation of the labor market and its monopolization occurred. The state was the only recognized legal employer and they did not provide the environment for entrepreneurship.

The reforms of N. Khruschev and A. Kosygin started a new wave of economists, such as L.Abalkin and Y.Gaidar who tried to foster the role of enterpreneurship in economic development of the country. However, the Communist Party still was the dominant depersonified entrepreneur that was responsible for economic education. In the Soviet economy, the overwhelming majority of its resources and industrial areas, such as construction, mining, trade, and power engineering were under the control of a small group of monopolistic coalitions. During the mid-1980s, in the Soviet Union, there were two main retail networks, one airline company, one oil-extraction ministerial monopoly, and nine ministerial firms in defense industries.

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In 1987, after the official acceptance of the need for economic changes, there was an unprecedented growth of business activities in the form of cooperatives, individual labor activity, and joint ventures with foreign capital. The absence of modern business practices resulted in the total breakdown of traditional economic ties. Bankers appeared as super entrepreneurs due to their role in economic development. Economic creativity was reflected in the new businesses being created either in start-ups or within large-scale amalgamations. New business associations were facilitated by: (1) former political structures organized by former Party and Comsomol leaders; (2) government business alliances, such as the Ministry of Foreign Economic Relations; and (3) independent leaders, such as V.Bryntsalov, who proved their talents with sky-rocketing profits. After the adoption of the laws on cooperation, individual labor activity, and enterprise by the Parliament in the early 1990s, the concept of dominating form of ownership was changed. Even foreign businesses were able to participate in privatization. For the first time since 1917, private property was officially recognized. The privatization process resulted in thousands enterprises being privatized. Many shareholders appeared in Russia and thousands of enterprises with foreign capital were created. The 1990s gave birth to many successful entrepreneurs. One visible difference was the success-orientation and source of profits of the main two groups of entrepreneurs - whether in the short or long term. The first group (speculative entrepreneurs) tended to make profits from financial operations, weaknesses in the legislation and taxation system, or by adding value by trade operations. The country’s frantic privatization created a class of politically connected bankers and business people who got rich buying assets on the cheap. The second group (pragmatic entrepreneurs) worked hard to create the industrial base for business development and struggle against huge state bureaucracy while developing healthy ethical standards.

After seventy years under the communist rule and five years of economic reforms, Russia was joining the modern world. Inflation was down, the ruble strong. At long last, Russia was stable. The West’s leading financial institutions could bank on its potential. They threw themselves at the Russian leading companies. Companies like Gasprom and Lukoil found their shares trading on American stock exchanges. By December 1997 the Russian stock market was the best performing emerging market in the world.

Then, on August 17, 1998 the Russian government made a stunning decision to devalue its currency and default on its domestic debt. None of the

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emerging markets imploded with the mind-boggling speed and force of Russia. The 1996-to-1998 window in Russia will be viewed as one of history’s great bubbles.

One of the tragedies of the collapse in Russia was that many companies that did attract foreign capital for the right reasons - they had been privatized and restructured and were run, typically , by new managers under the age of 40 - were buried. About 50% of small businesses that did not attract foreign capital also collapsed.

The country is still paralyzed by what has come to be known as nonpayments crisis. The vast majority of companies in Russia either do not pay their bills or pay them with barter. Some do so to avoid the punitive tax rates that still exist in Russia - but most do it for a different reason: it is the only way to keep operating.

Business people accept the idea that Russia will return to a period of warmed-over communist economics. Their only consolation is in the idea - given what Russian ex-prime minister Yevgeny Primakov said - that the new government would stop short of massive denationalization of property.

RUSSIAN ENTREPRENEURIAL PROFILE

Russian entrepreneurial profile has its own unique background because the Russian Empire acquired new territories, it absorbed the ethnic entrepreneurial spirit of Jews, Armenians, Germans, and others. Russian entrepreneurship history has always been a struggle against monopolism. In the Russian and Soviet societies a narrow group of people (the imperial family or the Party elite) directly affected economic policy, ownership, legislation, and culture.

The results of the research into Russian entrepreneurs, who created new businesses, provided an entrepreneurial profile. The majority of the entrepreneurs (85%) were male with an average age of 35 years. Their fathers typically had an equivalent of a high school or college degree and had professional employment. The entrepreneurs’ mothers were slightly less educated than the fathers. The entrepreneurs were more highly educated than their parents. Most of them had a college degree and the remainder had a high school degree.

Most of the businesses (about 60%) were service and the rest were manufacturing. The money invested in small businesses were for the most part from the owners’ personal savings. (In the United States most start-up ventures are funded with bank loans because of low interest rates). In

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reference to inherent weaknesses, the Russian entrepreneurs felt they had a lack of business experience in finance and marketing first of all. Secondly, they also did not have effective management skills in dealing with people.

SUMMARY

Russian entrepreneurship is on the edge of radical economic and political transformation of the society that should lead to new business developments, and improved quality of life as well as the decline and eventual defeat of the Mafia structures. It is impossible to create successful small and medium-size businesses, to develop financial infrastructure, and transform large industrial businesses without high quality management and entrepreneurship.

Russian entrepreneurship as a phenomenon does not differ much from what is occurring in other countries. In Russia entrepreneurs desire economic freedom, innovations, and organizational creativity. The transition to a fullfledged market-based economy will give birth to a great diversity of entrepreneurial profiles, different forms of ownership, and a variety of strategies. The business activity and the business mentality of Russian entrepreneurs have been strongly influenced by the country’s historic heritage (state-centered country, multi-cultural society, and weak middle class), the communist ideology, and the absence of reliable business laws.

Business people are still in search of the best strategy for entrepreneurship development in Russia - the country of opportunities and human potential, but also the country of risks.

The risk in Russia is not a return to Soviet communism and the GULAG. If repressive communism really is dead in Russia, it is by no means assured that democracy is the future.

History has been so cruel to the Russians that their ability to endure - to suffer - has become a cultural cliche. The optimist about Russia says hope for the best. The realist expects something else entirely.

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Список используемой литературы:

1. Боганский И.С., Дюканова Н.М. Бизнес-курс английского языка: Словарь-справочник. – Киев: Логос, 1997.

2.Кумарова М.Г. Новый бизнес английский. Курс деловой. лексики английского языка.- М.: АКАЛИС, 1997.

3.Английский язык: Приложение к газете "Первое сентября". – 1999. - № 4; 2000. - № 6, 7.

4.Словарь активного усвоения лексики. Лонгман Груп Лимитед, Харлоу. - М.: Рус. яз., 1988.

5.Шевелёва С.А., Стогов В.Е. Основы экономики и бизнеса: Учеб. пособие по англ. яз. - М.: Культура и спорт ЮНИТИ, 1996.

6.An Outline Of The American Economy.- United States Information Agency. 1992.

7.Lees G., Thorne T. English on Business. Practical English for International Executives. -Обнинск: Титул, 1997.

8.Mack Angela. The Language of Business. BBC English by Radio and Television, 1990.

9.Norman S. We're in Business. English for commercial practice and international trade /Student's Book.-England: Longman, 1990.

10.Rachman/Mescon/Boree/ Thill. Business Today. Sixth Edition Study Quide. USA, 1992.

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Составители

Наталья Петровна Морозова Любовь Кузьминична Чадина

Limited Liability Companies in the U.K. Mergers

and Takeovers. Fundamentals of Entrepreneurship.

Компании с ограниченной ответственностью в Соединённом Королевстве. Слияние и поглощение компаний. Основы предпринимательства.

(английский язык)

Методические указания для студентов экономических специальностей 2 курса

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