Text 2 2 . Forms of Business Organisation
There exist the following basic forms of business organisation: proprietorships, partnerships, private and public joint stock companies and corporations.
The legal procedures for starting a proprietorship are limited to registering the company’s name. Starting a partnership is less complex than starting a corporation. Ways of raising capital are different under different forms of business organisation. The source of capital for a proprietorship usually is the owner’s own savings and loans from banks. More capital can be raised by bringing in partners or by incorporating. A major difference among organisational forms is the degree to which owners are personally liable for debts of the business. If a proprietorship fails, creditors can claim the owner’s property to pay off the debts of the business. For a partnership liabilities can also be a serious problem. The limited liability of the corporation is its biggest advantage. A corporation unites a few firms or companies and its main source of capital is public offering of shares or the sales of other securities.
A private joint stock company is not listed at the Stock Exchange and is not entitled to have public offerings of its stock. It distributes the shares among the founders or participators and has no right to raise capital from selling equities. On the contrary, a public joint stock company is listed at the Stock Exchange. It has public offerings of its stock to raise capital for the company’s development.
There are three basic organisational forms which are wide spread in international business. Setting up a joint venture is the most popular form of attracting foreign capital, advanced technology and management expertise from abroad. A representation office is not entitled to trade, to produce or to manufacture any product. It only has the right to make and sign contracts. A consortium is a temporary alliance of a few companies to perform a contract or to construct a project.
Questions for discussion:
1. What are the basic forms of business organisation?
2. What are the legal procedures for starting a proprietorship?
3. What is the major difference among organisational forms?
4. What is the main advantage of a proprietorship?
5. What are the strong sides of a corporation?
6. What are the advantages and disadvantages of a private joint stock company?
7. How does a public company raise capital?
8. What is a consortium?
9. Why is a joint venture set up?
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10. What is a representation office entitled to do?
Text 2 3 . Types of Business Correspondence
Letter writing is the essential part of business communication. A cheque, a contract or any other business paper sent by mail should always be accompanied by a letter. Nowadays more and more agreements are made in English, for English is a universal business language.
A well arranged letter will make a better impression on the reader, thus good letters make good business partners. A business letter is a letter written in a formal language, usually used between organisations and their customers, clients and other external parties. Business letters usually follow a block format. They may be divided into official and semi-official. Official letters may be subdivided into such groups as inquires, offers, orders, reclamations, and letters of adjustment.
The inquiry letter is useful when you need information, advice or directions. Be careful however not to ask for too much information or for information that you could easily obtain in some other way. There are two types of inquiry letters – solicited and unsolicited. You write a solicited letter of inquiry when a business or agency advertises its products or services. For example, if a software manufacturer promotes the new package it has developed and you can’t inspect it locally, write a solicited letter to that manufacturer asking specific questions. Your letter of inquiry is unsolicited if the recipient has done nothing to prompt your inquiry. For example, if you have read an article done by an expert, you may have further questions or need more information. Try to seek help from these people in a slightly different form. Construct your unsolicited letter more carefully. Identify who you are, what you are and why you need the requested information.
The second phase of business correspondence is the answering letter. It is very important, because it adjusts the relationships between two partners. It not only characterises the company, but also advertises it. The purpose of the letter is to persuade the partner that you are the best in business. The letter contains the quotation in reply to an inquiry. It shows the customer that he has met the seller who uses every opportunity to stimulate the correspondent's interest in his goods by including the sales message.
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Questions for discussion:
1. What is the main part of business communication?
2. What language is usually used in business correspondence?
3. Why is English a universal business language nowadays?
4. Where do we usually use a formal style of writing?
5. What types of official letters can you name?
6. What types of inquiry letters do you know?
7. What should you take into consideration writing a solicited letter?
8. How should you construct your unsolicited letter?
9. What is the second phase of business correspondence?
10. What is the purpose of the answering letter?
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