Unit 4: TYPES OF ECONOMY; COMPANY TYPES;

STARTING A BUSINESS

CONTENTS

4.1 Objectives of Unit 451

4.2 Types of economy...........................................................................................................51

4.2.1 Vocaburary practice.....................................................................................................52

4.2.2 Vocabulary practice.....................................................................................................53

4.3 Company types.................................................................................................................53

4.3.1 Enrich your vocabulary...............................................................................................53

4.3.2 Exercise..................................................................................................................... .54

4.4 Starting a business.................................................................................................54

4.4.1 Vocabulary exercise........................................................................................54

4.4.2 The business plan: its purpose and structure..................................................54

4.4.3 Business plan outline 1 for a start-up business............................................... 55

4.4.4 Business plan outline 2....................................................................................57

4.4.5 Draw up your own business plan.....................................................................59

4.5 Grammar: The Conditional (IF-) Clause..............................................................59

4.5.1 Grammar practice.............................................................................................60

4.5.2 IF + Modal Verbs.............................................................................................60

4.5.3 Grammar practice.............................................................................................60

Self-assessment test 4 .................................................................................................... ......61

Bibliography for Unit 4........................................................................................................62

4.1 Objectives

The objectives of Learning Unit 3 are

- gradually introducing students to the basic vocabulary of economics; - developing students fluency and accuracy of expression in debates on general economic

topics;

- developing students study and self-assessment skills

4.2 Types of economy

There are two oposite types of economy, market economy (also known as free-market economy) and

planned economy ( also known as centrally-planned or command economy), associated with the 2

main economic systems, capitalism and socialism, where the means of producing and distributing

goods are privately owned and controlled (in the former) or state-owned and controlled (in the latter).

Lying at the very centre of a market economy is the self-regulating mechanism of the market, which

means that the production volume, the quality of goods and services, the price level, etc. are all

determined by competition and the two main market forces of supply and demand. By contrast, a

centrally-planned economy is totally directed by the state: there is tight government control in all

economic areas, and no market in the real sense of the word (there is no real competition as the state

cannot compete against itself).

Economists, however, agree that there is no such thing as a purely market economy in the real

world, not even in the most developed Western economies, but mixed economies combining

varying degrees of free market and planned economy traits (some of the services being provided by

both the private sector and the state) although the expression market economy is often used as a

synonym for mixed economy. Government not only has a regulatory role (i.e. it exerts control over

the economy by enforcing basic rules for all economic participants) but also provides public services

in such areas as education, health care, etc. (as democratic alternatives to the private ones, and based

on the principle that certain services should be available to all citizens, regardless of their income); on

the other hand, the state provides services that cannot be left to the public sector (such as defence,

environmental protection, the administration of justice, scientific research involving years of work

with no immediate return on investment), and takes care of peoples needs beyond the reach of market

forces (e.g. through the social security system). There are differences among western economies as

regards the degree of government control: some people believe that there is more government

regulation in US economy than in many economies in Western Europe. One thing is however certain:

in times of economic downturn, governments tend to increase their involvement in the economy.

As a matter of fact, government in any type of economy is called upon to protect public health and

safety in various ways: by banning harmful drugs, by protecting workers from hazards on the job, by

enforcing limits on pollution, by setting minimum standards for wages and hours on the job, by

providing social security.

4.2.1 Vocabulary practice. What would you associate the following words and phrases with: market

economy (M) , or centrally-planned economy (CP)?

1. job security

2. entrepreneurship

3. prices determined by the interaction of supply and demand

4. bankruptcy of unprofitable businesses

5. private ownership state ownership

6. inefficiency

7. competition

8. high quality goods and services

9. state ownership of all enterprises

10. wide range of products and services

11. mergers

12. free enterprise

13. corporations

14. profit

15. overstaffing

16. shortage of basic goods

4.2.2 Vocabulary practice. How would you define Romanias economy?

4. 3 COMPANY TYPES

4.3.1 Enrich your vocabulary. In a developed mixed economy, there is a diversity of company

types. Match up the words on list 1-8 with the definitions on list A-H to identify the company types:

1. sole trader/sole proprietor

2. partnership

3. family business

4. joint venture

5. franchise

6. multinational

7. limited liability company

8. public limited company

A. A large company that operates or has investments in several different countries, but has its

headquarters in one country.

B. An association of two or more persons as co-owners of a business enterprise who share its profits

and losses (e.g. lawyers, architects, auditing firms, etc.)

C. A large limited liability company whose shares are quoted on the stock exchange and can be

bought by anyone. In the US it is also called a corporation.

http://www.businessdictionary.com/definition/limited-liability.htmlhttp://www.businessdictionary.com/definition/securities.htmlhttp://www.businessdictionary.com/definition/stock-exchange.htmlhttp://www.businessdictionary.com/definition/bought.html

D. An association (a strategic alliance) of two or more companies that contribute goods, services

and/or capital to a common business enterprise, and share in its profits and losses.

E. A type of business in which only one person owns all the assets of the business, with no other

shareholders. In other words, that person is self-employed, and has unlimited liability (is fully

responsible for the companys debts with his/her personal wealth); e.g. professionals, consultants, and

other service businesses that require minimum amounts of capital fall into this category.

F. A company (also known as a private company) whose owners are responsible (liable) for the

debts it may incur only to the extent of the amount they have invested in the business in the form of

shares; the companys shares cannot be sold to members of the public.

G. A business licensed to sell a companys products exclusively in a particular area or to operate a

business under that companys name.

H. A business which is owned and/or managed by members of the same family.

4.3.2 Which of the company types described in the above exercise have their names ending in the

following abbreviations:

1. Corp. 2. Llc. 3. Inc. 4. Ltd. 5. Bros. 6. & Co. 7. Plc.

4.4 STARTING A BUSINESS

4.4.1 Vocabulary exercise. Complete sentences 1-5 with the appropriate words from the box:

business plan

start-up loan facilities

entrepreneurs

submitted

take out a loan

start-up capital

1. People who set up their own companies are called .. 2. Starting a company is not so easy: in

order to do that, one needs money which is commonly referred to as . 3. Many people do not

have that capital, so they have to .. from the bank. 4. Banks that offer .. usually request a

. before deciding to give such a loan. 5. If the business plan . by the entrepreneur does not

look well-grounded and realistic, the entrepreneur will not be considered for a loan.

4.4.2 The business plan: its (a) purpose and (b) structure

a) A business plan is a document which describes what an entrepreneur/business owner plans to do

and how they plan to do it. A business plan is needed in various situations. For instance, it can be used

by companies or investment-seeking entrepreneurs to convey their vision to potential investors, or it

can be used by entrepreneurs who need a bank loan to start a business.

b)The structure of a business plan

A business plan usually includes the following elements:

http://www.entrepreneur.com/startingabusiness/businessplans/article38290.html

general information about the future company (name, line of business, type of company)

the product/service that will be provided, and data about the market for that particular product/service

premises (location, type of property needed: office, plant, factory, warehouse, etc.)

equipment needed

workforce (number of employees/the companys organizational structure (including titles and responsibilities)

the business goals/ short-, medium- and long-term objectives

the strategies that will be used to meet those goals

potential problems that may confront the business and ways to solve them

the capital required to finance the venture and keep it going until it starts making a profit.

The above elements can be re-arranged to form different structures depending on the purpose of the

business plan. Here are 2 more possible business plan formats:

1)

Vision statement

The people

Business profile

Economic assessment

2)

Executive Summary

Business Description

Competitive Analysis

Operations and Management Plans

Financial Components

4.4.3 BUSINESS PLAN OUTLINE 1 FOR A START-UP BUSINESS . Choose the appropriate

headings from the list below to complete the business plan outline:

1. Management Plan 2. Market Analysis 3. Executive Summary 4. Competitive Analysis 5. The Industry 6. Operating Plan 7. Marketing Plan 8. Appendices 9. Financial Profile

A. .

- a summary of the key elements of the entire business plan.

B. .

- an overview of the industry sector that your business will be a part of, including

industry trends

http://www.entrepreneur.com/startingabusiness/businessplans/article38308.html#exechttp://www.entrepreneur.com/startingabusiness/businessplans/article38308-2.htmlhttp://www.entrepreneur.com/startingabusiness/businessplans/article38308-4.htmlhttp://www.entrepreneur.com/startingabusiness/businessplans/article38308-6.htmlhttp://www.entrepreneur.com/startingabusiness/businessplans/article38308-7.htmlhttp://sbinfocanada.about.com/cs/businessplans/a/bizplanmanage.htmhttp://sbinfocanada.about.com/cs/businessplans/a/bizplanmarkanal.htmhttp://sbinfocanada.about.com/od/businessplans/a/execsummary.htmhttp://sbinfocanada.about.com/cs/businessplans/a/bizplancompanal.htmhttp://sbinfocanada.about.com/cs/businessplans/a/bizplanindustry.htmhttp://sbinfocanada.about.com/cs/businessplans/a/bizplanoperplan.htmhttp://sbinfocanada.about.com/cs/businessplans/a/bizplanmarkplan.htmhttp://sbinfocanada.about.com/cs/businessplans/a/bizplanfinanc.htm

major players in the industry

estimated industry sales;

C. .

- an analysis of the target market for your product or service in terms of

geographic location

demographics

consumer needs

how these needs are being met currently.

D. ..

- your direct and indirect competitors, their competitive advantage - ways to overcome entry barriers to your chosen market.

E.

- your sales strategy - pricing plan - proposed advertising and promotion activities - your products/services benefits

F. .

- an outline of your business's legal structure and management resources, including

your management team,

human resources needs.

G. ..

- a description of your business's

location

facilities and equipment

categories of employees needed

inventory requirements and suppliers

- any other operating details (e.g. a description of the manufacturing process)

H.

- funding requirements

I. .

- any additional information that may help establish the credibility of your business idea, such

as marketing studies, statistics, etc.

4.4.4 Business plan outline 2. Heres another, more detailed, business plan outline:

Richards Business Centre

Richard Kane

Unit 2A-3435 Main Street,

Oakville, Ontario L6L 2V7

Richardk@abc.com

Table of contents:

1. Executive Summary 2. The Team 3. Business Environment 4. Marketing Plan 5. Operations 6. Finance 7. Risks & Conclusions

1. Executive Summary

Richards Business Centre is a start-up business, providing clients with photocopying, fax transmittal

and reception services...

The Canadian retail business services industry currently generates $350 million in annual sales.

Annual revenue for the Oakville market is estimated at $3 million. The major growth trend toward

self-employment and home-based businesses has created a need to provide specialized support

services...

As sole-proprietor, I bring over 20 years of both technical repair and sales experience from a large

office equipment manufacturer. I have a Bachelor of Science degree from the University of Toronto

and my technical background will give me great skills to manage the operation of the photocopy

equipment...

Based on the size of the market and our defined trading area, our sales projections for the first year

are $335,000. My salary will be $40,000.

To date, I have completed market research and secured the lease at an exceptional location in the

core of Oakvilles downtown shopping and business district..

As a retail store with a first-class location, the company will enjoy walk-in traffic but will focus on

newspaper advertising, direct mail and direct selling to aggressively build our client base within the

first year.

2. The Team

Management Team Profiles & Ownership Structure

Advisors: ..

Human Resources Requirements

3. Business Environment

http://www.rbcroyalbank.com/RBC:THz4vo71A8UABJAkMWA/sme/bigidea/michaels.html#executivehttp://www.rbcroyalbank.com/RBC:THz4vo71A8UABJAkMWA/sme/bigidea/michaels.html#teamhttp://www.rbcroyalbank.com/RBC:THz4vo71A8UABJAkMWA/sme/bigidea/michaels.html#environmenthttp://www.rbcroyalbank.com/RBC:THz4vo71A8UABJAkMWA/sme/bigidea/michaels.html#marketinghttp://www.rbcroyalbank.com/RBC:THz4vo71A8UABJAkMWA/sme/bigidea/michaels.html#operationshttp://www.rbcroyalbank.com/RBC:THz4vo71A8UABJAkMWA/sme/bigidea/michaels.html#financehttp://www.rbcroyalbank.com/RBC:THz4vo71A8UABJAkMWA/sme/bigidea/michaels.html#risksconc

Business Summary & History: Richards Business Centre is a start-up business .. To date, I have

completed market research

Industry Overview.

Consumer Trends ..

Seasonal Factors

Position in the Industry.

Legal Issues

Competition

Use of Technology..

4. Marketing Plan

Target Markets: There are three main target markets for Richard's Business Centre: .

The Competition . The company's main competition comes from..

Services: The quality of my service is paramount to ensuring that customers return. I will be

providing

Pricing Strategy

Sales/Distribution Plan.

Advertising and Promotions Plan. Here are some of the ways we will promote our service:.

5. Operations

Stage of Development. To date, market research has been completed.The next steps are as

follows: Suppliers: .

Quality Control: ..

Land and Equipment Requirements: .

Contingency Plans: If the demand for my initial service fluctuates, I could introduce value-added

graphic design service and act as a broker for offset printing and liaise with a trade printer.

6. Finance

Income Statement: Richard's Business Centre requires equipment to operate. The major start-up

cost will be equipment and store space for which I will invest personal funds of $.... Initial start-

up costs include $...... in leasehold improvements to the rental space and $...... for two used and

two new computer workstations, a fax machine, and store fittings. Variable costs include paper

and toner, repair and maintenance, sales and marketing expenses. Regular monthly expenses are

estimated at $..... and miscellaneous start-up costs relating to administration will also be covered

by my capital injection and cash-flows from operations. Wages are budgeted to be $..... per year.

Richard's Business Centre will generate $...... in its first year of operation, with an estimated

gross profit of 30%, yielding approximately $..... to cover administrative expenses. Based on the

assumptions contained in this plan, I estimate that the business will break-even in its first year of

operations.

7. Risks and Conclusions

Marketing Risks : ..

Operational Risks .

Human Resource Risks ..

Conclusions: It is my goal to start a business to provide business services such as photocopying,

fax and computer workstation access to the Oakville business community. I believe that it is an

opportune time to start a business like Richard's Business Centre since the retail services

industry in Canada is currently worth $350 million; in Oakville, the industry is estimated to be

worth $3 million. Furthermore, since new small businesses are being launched with great

frequency, the potential market for our services is growing exponentially. I bring more than 20

years of technical repair and sales skills to the table and am investing $60,000 personally to start

this business.

4.4.5 Draw up your own business plan. Suppose you are an entrepreneur on the point of starting

your own company. In order to get the much needed bank loan, you need to submit a business

plan. Use one of the above outlines to write a convincing business plan.

4. 5 Grammar: The Conditional (IF-) Clause

MAIN CLAUSE

CONDITIONAL CLAUSE

(introduced by IF, UNLESS, PROVIDED

THAT, ON CONDITION THAT, IN CASE,

SUPPOSING THAT)

Future

Youll get the loan

Present Conditional

They would set up a family business

I wouldnt complain

Perfect Conditional

He would have been promoted

Present Tense

IF you submit a good business plan.

Present Subjunctive (Past Tense)

IF they had enough money.

IF I were you.

Past Subjunctive (Past Perfect)

IF he had worked harder.

4.5.1 Complete the following sentences with the right form of the verbs in brackets.

1. If you .. (hurry), youll catch the 3 oclock train. 2. I would have convinced him to join us if you (not interfere). 3. If I (be) younger, I would have applied for that job. 4. If it (not be) for him, we would never have pulled it off 5. If she (be) rich, she would travel round the world. 6. If I .. (not raise) any objection, they would have gone ahead with the deal. 7. Im sure she (succeed) if she were more persistent. 8. If I .. (run) out of time, Ill ask John to help me. 9. I wouldnt be surprised if you .. (get) the job. 10. What .you. (do) if they hadnt approved your project?

4. 5.2 IF + Modal Verbs

IF + WILL/WOULD + Infinitive (polite request)

If youll give me your address, Ill send you all the details.

If you would kindly follow me, Ill show you to your room.

If you would wait a moment, Mr. Brown will give you all the information you need.

IF + SHOULD + Infinitive (possible but unlikely action/event)

I think the book is out of print, but if you should find it anywhere, buy it for me, please.

As far as I know, she is on holiday, but if you should see her, tell her to get in touch with me

at once.

4.5.3 Grammar practice. Translate into English:

1. Dac suntei amabil s ateptai, v voi da o copie a documentului.

2. Nu cred c va veni mine la conferin, dar dac se ntmpl totui s l vd, i voi transmite mesajul

tu.

3. Cred c vom avea vreme frumoas, dar dac cumva va ploua, vom lua masa nuntru.

4. Probabil c vom ajunge nainte de amiaz, dar dac se ntmpl s ntrziem, nu ne ateptai cu

masa.

5. Dac suntei amabil s ma ajutai s car bagajele acestea, v voi fi recunosctoare.

6. Cred c ai destui bani la tine, dar dac cumva i mai trebuie, poi s te foloseti de cardul meu.

Self-assessment test 4

I. Fill in the blanks with the listed words:

A. purpose B. convey C. funding D. entrepreneurs E. venture F. business G. bank loans H. investors I. seek J. startup

Business plans are needed in various situations and serve a variety of purposes: from (1) . seeking

funds - in the form of either (2) or capital put up by interested (3) - in order to start a

new (4) . to established firms long past the (5) stage that are seeking help (for instance,

companies trying to find (6) .. for growth). Business plans may also be used as ways to (7)

a companys mission and prospects to customers and suppliers, or even to attract key

employees. Although the format and length of business plans are determined by their (8) .,

certain rules apply to all. For instance, an entrepreneur who wants to use the plan to (9) .capital

to start a risky venture may have to do a lot of explaining and convincing, whereas those who want to

use the plan for internal purposes to manage an ongoing (10) can write a shorter version in

just a few pages.

II. Complete the following sentences with the right form of the verbs in brackets:

1. No one will understand anything unless you (explain) what has happened. 2. Well have to put some of the companys shares up for sale unless we ..... (find) an

investor.

3. Who would hire him if he (not be) such a talented designer? 4. What would happen if we (not repay) our debt on time? 5. If the device doesnt work, I .. (return) it to the store and get a refund. 6. If they . (not invite) you to the party, would you have felt offended? 7. Who (take care) of all these little details if your sister hadnt been there? 8. Would you have met them at the airport if you .. (know) they were coming?

9. If you keep wasting your time playing computer games, you . (fail) your exam tomorrow.

10. I wouldnt be surprised if he (ask) me to cancel the meeting.

Bibliography for Learning Unit 4

Emmerson, Paul, BUSINESS ENGLISH HANDBOOK ADVANCED, Macmillan, 2007

Vince, Michael, ADVANCED LANGUAGE PRACTICE, Heinemann, Oxford, 1994.

Tomooiu, Nora, GHID PRACTIC DE GRAMATIC ENGLEZ, Ed. Petrion, 2004.