The diverse nature of business (Part II)

Survival

This must be as important an objective for a business as it is for individuals. The need to survive can override the profit motive in the short term. The divorce of ownership and control – where a business is owned by one group of people and managed or controlled by another – can lead to a conflict of objectives. The management might be more interested in survival strategies to secure their jobs. Survival can be a short-term objective to achieve future profits. It can also be seen as a subversive, unrecognized objective arising out of the personal experience and objectives of the people employed. The desire to protect their employment can lead to a reluctance to take necessary risks. When it is the latter it can be described as sabotage – an action designed to hinder the achievement of a stated objective.

Prestige

The desire for prestige, i.e. to be held in high regard by other people whose opinions you value, does not seem at first sight to contribute a great deal to either the profit motive or survival. It can, however, contribute to both, and some businesses actively seek to enhance their prestige in order to increase sales. Businesses might seek prestige from high quality products, from care for the environment, from the use of the latest technology or from care for its employees. Essentially it is attempting to build up an image for excellence in one area of its operations that will attract potential customers, or present a more favourable impression of its operations to the world. If customers believe that the activities of a business, undertaken to acquire profit, are in some way dishonourable, they may withdraw their custom from that business.

The pursuit of prestige could lead to lower profits in the short term when money might be spent on advertising, improving quality control or the provision of better employee services. In the long term a company with prestige can expect to find a better quality of applicants for any jobs they advertise, an increase in sales and, potentially, an increase in profits.

Growth

The objective of growth might be rationally based on the fact that if the business grows larger the cost of each item it produces will fall (economies of scale). It might also be the result of a personal desire on the part of the owner for more power or it might be a desire to take over and eliminate competitors so that there will be more scope for greater profit. In the first and last cases the profit motive dominates. In the second case it is an example of personal motives subordinating purely business motives.

Society

A business can be defined as a person or group of people who offer goods and services to the rest of the community in return for payment. From our analysis of business objectives we could add ‘for a profit’ to this definition. Profit can be seen as an advantage derived from an action, not necessarily expressed in monetary terms. The social benefits derived from a nationalized industry, such as cheap transport services or lower fuel costs, can be interpreted as a ‘profit’ to the community. A nationalized industry may run at a loss over a number of years and receive payments from the Treasury to cover the losses (subsidies). The extent of this is a political decision.

1. Which of these statements expresses the main idea of the text?

1. The desire for prestige does not seem at first sight to contribute a great deal to either the profit motive or survival.

2. Survival can be a short-term objective to achieve future profits.

3. A business can be defined as a person or group of people who offer goods or services to the rest of the community in return for payment.

4. The desire to protect their employment can lead to reluctance to take necessary risks.

2. Find in the text English equivalents of these words and phrases.

не приймати до уваги	11. небажання	21. відкликати
розподіл власності	12. саботаж, диверсія	22. клієнт
призвести до конфлікту	13.заважати, перешкоджати	23. погоня
отримувати роботу	14. сприяти, робити вклад	24. реклама
майбутні прибутки	15.збільшувати, посилювати	25.поліпшення контролю якості
руйнівний, підривний	16.добиватися, домагатися	26.поліпшення обслуговування службовців
невизнаний	17. службовці	27. знаходити кращих претендентів
що випливає з власного досвіду	18. створювати імідж	28. рекламувати
бажання, прохання	19.одержувати прибуток	29. збільшення продажів
захищати, охороняти	20. безчесний, ганебний	30.потенційно збільшити прибуток

3. Are these statements true or false? Correct the false ones.

1. Survival is considered to be an important objective for a business and for people.

2. The want to survive can predominate over the income reason in the short term.

3. The contradiction between ownership and control can lead to a conflict of targets.

4. Survival is a short-term aim to achieve future profits.

5. The pursuit of prestige could lead to higher profits in the short run.

6. The desire to protect their employment can lead to reluctance to take necessary risks.

7. The company builds up its image producing high quality goods, taking care of the environment, using the latest technology.

8. In the short term a company can expect to find high quality workers for any jobs they advertise.

9. If the business grows larger the cost of each item it produces will fall.

10. The social benefits received from a nationalized industry is considered to be a ‘profit’ to the community

4. Answer the questions.

1. What can lead to a conflict of objectives?

2. What can lead to a reluctance to take necessary risk?

3. What could lead to lower profits in the short term?

4. Why might a business be prepared to accept a reduction in short-term profits to achieve objectives relating to prestige and social approval?

5. Write a summary of the text.

Text 4.