Understand the basic differences among the 3 forms of business ownership

Give arguments for their choice of the most advantageous form of business ownership

I. Fill in the gaps with the necessary words:

Businesses are organized in different ways. When there is one owner, the company is called a …(1) proprietorship. If two or more people associate to form a company they make up a …(2). In both these organizations the …(3) supply the capital and as a rule they assume the management of the organization. They also have …(4) liability and are entitled to take possession of all the profits the company makes and all … (5) are borne by them.

On the other hand there are limited …(6) companies. Such types of companies are either …(7) or public. The former type involves that the public has not …(8) to the company, the shares are sold to a restricted number of people. …(9) are the parts into which the assets of a company are divided. The owners of the company are …(10) and they hold shares in proportion with the …(11) they invested in the company. The management of limited liability company is entrusted to a …(12) of directors elected by the …(13) at the Annual Meeting. A shareholder who cannot attend the meeting may vote by …(14).

The shareholders are entitled to the …(15) made by the company and therefore receive …(16). When a stockholder is offered additional stock in advance of public it means that he has a …(17) right.

II. What is the usual antonym in the following pairs?

1. general partner and

2. common stock and

3. private corporation and

4. short-term financing and

5. formation and

6. to borrow and

7. employer and

8. profit and

III. Complete the following chart:

Characteristics	Sole proprietorship	Partnership	Corporation
1. The number of owners
2. Organizational documents
3. Taxes paid
4. Liability
5. Ability to borrow
6. Government control
7. The most widespread form of doing business
8. The most profitable form of doing business

IV. DISCUSSION

1. What kind of organization would you like to work for (as an employee) in the future?

2. What do you think your first position will be?

3. Do you expect to have one immediate boss, to work for more than one superior, or to be part of a team?

4. Would you like to work for an organization where managers and workers are treated as equals or in a company in which there are status symbols such as big offices and company cars for senior staff? Give your reasons.

5. In American corporations employees are offered a considerable opportunity for promotion. What are the chances to advance in our Moldavian corporations, say from a simple worker to a member of the board?

6. If you were to start a business, which ownership form would you use? What factors might affect your choice of ownership form?

V. CASE STUDY

Imagine finding yourself in the following situation: you are an executive vice president in a corporation A, which is not very successful. Another big corporation-competitor B wants to take over the corporation you work in. They propose you to give away all the secret financial information and for this they promise you the position of the chairman of the board in the new big corporation. Besides you will be offered 3% of corporation’s shares. What would you do in this situation?

VI. READING

Arrange the following paragraphs into a coherent text and entitle it:

(1) An individual like Henry Ford might want to begin a small enterprise and personally retain total responsibility, but once it starts to grow, a partnership or a corporation would need to be formed. The key factor in owning any company is the guarantee called limited liability: the owners of a company never have to pay more than they have invested in the company. Their liabilities are limited. When a company goes bankrupt, the owners can never be required to pay its unpaid bills.

(2) Many countries make a clear distinction between public and private companies, with separate designations such as AG and GmbH in Germany, or Plc and Ltd in Britain. Public companies are those large enough to have their shares traded on stock exchanges. The shares of privately owned companies are not available to the general public. In the USA the distinction between public and private companies is not so great, that is why most companies simply bear the title Inc or “Incorporated”.

(3) The heart of capitalism is private ownership and a Limited Liability Company allows people to own almost anything – from skyscrapers to television stations – without risking their personal assets should the company go bankrupt.

(4) The names of companies around the world reflect this guarantee of limited liability. The abbreviations “GmbH” in Germany, “Inc” in the USA, or “Ltd.” in most other English-speaking countries, “SRL” in Moldova and Romania indicate that the firm is limited liability company and investors have nothing more to lose than the money invested in their shares. The “S.A.” in French and Spanish-speaking countries also refers to limited liability by defining shareholders as “anonymous”. Since the identity of shareholders can be kept secret, the creditors of a bankrupt company have no right to pursue them for the company’s unpaid debts.

(5) The worst that can happen to investors in a limited liability company is losing their initial investment if the company fails. By limiting the downside risk for shareholders, companies are able to attract investors and raise large amounts of funds through sales of shares rather than by borrowing money at potentially high interest rates.

VII. FOCUS ON LANGUAGE

Fill in to run or to do in the following sentences:

1. I ………. freelance work in my spare time.

2. I ……….. my own company from home.

3. My friend ………….. an agency for computer programs.

4. What do you …………… for a living?

5. Who ………… the business when you are away?

6. I have been …………….. business with this French firm for 2 years.

7. The business doesn’t…………. itself, you know!

8. The college ……… language courses for foreign students.

9. Our van ……… on diesel.

10. The car was …………….. 90 miles an hour.