Internal organization and control in business.

As a first step in considering internal organization and control of business it is logical and necessary to understand the com­ponent sections or groups of people who are, or who become involved in various ways in the activities of a business company.

The prime aim of any business company is to make a profit to be used by the Directors in further development and to reward those who have invested capital in the company.

To achieve this aim, however, the Directors must have the participation of the various groups who themselves contribute both outside and within the business. Whilst this contribution of effort and purpose leads to the success of the business, the groups may well have their own reasons or motives irrespective of the business. This important principle is illustrated in Table 1.

Group	Action	Aim
Shareholders	Purchase of shares	Dividends and capital gain
Debenture Holders	Purchase of debentures	Interest on investment. Possible profit on sales of debentures.
Senior Executives	Professional skill or knowledge	Salary, and progression. Progressive career. Security.
Other Employees	Effort and skill	Wages. Security.
Suppliers	Equipment, or materials, or services	Profit. Continued business connection.
Customers, or Clients	Payment	Satisfactory goods or services
Directors	General control of all departments, i.e. ‘direction’ by Directors	Company growth (and personal gain on own shareholding).

Table 1. Group participation in business.

All the foregoing is a simple exposition of an economic principle, but is set out to show that the ultimate necessity in any business is the final control of the Directors to ensure the fullest participation of all the component groups.

This study is concerned only, at this stage, with the control factor and it will be helpful to the student to consider the range of such control throughout the usual departments of a normal manufacturing concern. This range is summarized below in a logical sequence.

• Finance. Capital raised by shares or debentures.

• Planning. Research or projects. Tests of materials and processes.

• Market Research. Designing of models, packaging, sizes, etc.

• Purchasing. Supply of best materials at economic price and at required time. Stock control.

• Marketing. A complex and essential function.

• Manufacture. Producing the finished goods in the required range of sizes, packets, etc. at the required time.

• Personnel. Assembly of adequate numbers of staff and workpeople to operate fully every department. The filling of vacan­cies, training schemes and liaison with appropriate Industrial Training Boards, welfare schemes, canteen facilities.

• Secretarial Services. All administrative and clerical arrangements. Legal requirements and liaison with appropriate Government departments, directors' meetings and committees.

• Registrar. The maintenance of shareholders' and debenture holders’ register and compliance with Company Law. Payment of dividends and interest to shareholders and debenture holders respectively.

• Accounting. Maintenance of all accounting books and records, pro­duction of financial results each half year, receipts and payments, salaries, wages, banking.

The extent of control over all these departments at director, executive and supervisory level must always be such as to ensure that each department is able to play a full part in the success of the whole enterprise. The strength of any chain is that of its weakest link - thus the strength of the enterprise is the strength of the weakest part. As with the chain, so with the business and any weakness must, therefore, receive prompt and effective attention to ensure the continued strength and progress of the remainder. Control, therefore, is a fundamental necessity in the success of any business.

Exercise 3. Give the definitions to the words in italics.

1. Coca-Cola, Boeing and McDonald’s all reported strong profits in the latest quarter.

2. Hammond Co. will need to raise $2 million to finance the offer.

3. Webb issued 2.5 million new shares of common stock.

4. She is 45% shareholder in the company.

5. Coca-Cola Enterprises issued $750 million of 30-year debentures yielding 8.61%.

6. The next payment to debenture holders is due in February.

7. Consolidated Press forecasts a dividend of 29.8 cents a share.

8. Weak dividend payments may be one indication that profits are in a downtown.

9. The company lacks cash to make interest payments of its junk bonds.

10. Market research showed «good potential» for marketing the aftershave to Hispanic men.

11. He will take responsibility for Laura Ashley’s purchasing, distribution and stock control.

12. Any spare cash is best put in a savings account where it will earn interest.

Exercise 4. Complete the passage using the following words and phases:

subordinate, the shareholders, an organization, the chief executive, the Directors, the Managing Director, the Board of Directors, external side of the business, internal side of the business.

Departments in the organization.

1... of any size must divide its activity in order to specialize and ensure responsibility for various aspects of work. Even a small firm containing two partners will tend to divide in this way, through one partner concentrating upon the production or 2... ... ... and the other occupying himself with selling the product and 3... ... .

4... are the owners of the company and the elect from among themselves a Chairman and Board of Directors. One of 5... will become the Managing Director, who is 6... ... of the Company. That is to say, he takes command of the daily running of the organization, interprets the policy decided by 7... ... and translates it into practical effect. Theoretically he is just a director like the others when in the Board Room and has only one vote, but in practice he is a very powerful voice and cares greater weight. Sometimes working directors are appointed to the Board, such as the Accountant or the Marketing man. These are theoretically equal to 8... ... in the Boardroom, but of cause are 9... to him in their daily work. The Company Secretary is a legal requirement for a company and he attends the Board Meetings too.

Exercise 5. Match the words and phrases with their corresponding definitions.

1. director

2. managing director

3. board of directors

4. senior executive

5. chief executive

6. supplier

7. subordinate

8. customer

1. the person who has a high position in an organization

2. the group of people who have been elected to manage a company by those holding shares in the company

3. the person on charge of the daily management of the company

4. one of the committee of top managers who control a company

5. someone who has a lower position and less authority than someone in an organization

6. a person or organization that buys goods or services from a shop or company

7. the person who has the highest position in a company or other organization and who makes all important decisions about how it is run

8. a company that provides a particular type of product

Exercise 6. Complete the sentences using the phrases (1-8) from Exercise 5. Change the form of the words where necessary.

1. She is the ... ... of the one of the company’s largest charities.

2. With California’s orange crop halved, local ... have had to find alternative sources.

3. Supervisors are regularly evaluated by their ... .

4. We try to keep regular ... happy.

5. Bank of Boston’s ... ... will vote on the merger proposal at a meeting today.

6. She is now a ... ... having worked her way up through the company.

7. All the company’s cheques have to be signed by two ... .

8. There’s a board of five directors, but she is the ... ... .

Exercise 7. Translate into English.

A. 1. Директор компании должен быть уверен в том, что вся работа будет выполнена вовремя.

2. Генеральный директор отвечает за управление компанией и отчитывается перед советом директоров.

3. Он член правления компании.

4. руководитель высшего ранга может возглавить технологический отдел,

5. Главный исполнительный директор компании принимает на себя ответственность за прибыль и убытки.

6. Эта фирма предоставляет услуги.

7. Эта компания является единственным поставщиком продовольственных товаров.

8. Вы должны делегировать полномочия подчиненным.

9. Всем постоянным покупателям предоставляется 5 – 10% скидки на товары и услуги.

10. Он чудак.

11. Он грубиян (опасный противник).

12. Он Тяжелый (непокладистый) человек.

B. 1. Акция – часть собственности компании. Акции могут принадлежать частным лицам или другим компаниям.

2. Процент – плата, взимаемая за кредит, помимо выплаты заимствованной суммы. Ставка процента является дополнительной оплатой за единицу ссуды и рассчитывается в виде годовой ставки.

3. Облигация – это обеспечиваемый активами облигационный заем компании, как правило, под фиксированную процентную ставку и, иногда, с фиксированным сроком погашения.

4. Дивиденд – выплата компанией дохода акционерам. Доход акционеров получил название «дивиденды» в связи с тем, что компания по закону обязана делить любую подлежащую распределению сумму между акционерами пропорционально количеству принадлежащих им акций.

5. Акционер – лицо или компания, владеющее акциями компании.

6. Высшее руководство компанией находится в руках ее акционеров, которые имеют право менять руководство компании либо путем использования своего права голоса на собрании акционеров, либо путем принятия предложения о поглощении (takeover bid).

7. Прибыль – разница между доходами и расходами компании за определенный период времени. Прибыль за период времени равна разнице между величиной чистых активов на конец и начало периода.

8. Исследование рынка – количественный и качественный анализ одного рынка или совокупности рынков, проводимый с целью изучения потенциального объема рынка, спроса на товары и услуги, конкурентной среды.

9. Управление запасами – регулирование объема товарного запаса компании таким образом, чтобы любые товары можно было поставить без задержки.

10. Готовая продукция – товары, предназначенные для использования конечными потребителями, т.е. собственно потребителями, инвесторами, государством и экспортерами.

SECTION 2.

Exercise 1. Read the following text. Company organization.

I’d like to say a few words about the organizational structure of Rossomon. Mr. Bunce is managing director. He is responsible for running the company and is accountable to the Board.

He is assisted by four executive departments. These are Human Resources, which is responsible for personnel, training and management. then there is the Finance Department which takes care of corporate finance and accounting. Next we have the Management Service Department led by Peter Jenkins. Finally there is the R & D Department - research and development - which works with five regions on the new product development.

Directly under the managing Director, there are five Regional Managers. Each of them is responsible for the day-to-day management of a territory - these are geographically split into North, South, East, West and Central regions.

The five regions are supported by two sections - Marketing and Technical Services. The section leaders are accountable to the Regional Managers. They work closely with the regions on the marketing and technical side.

In addition to the parent company, Rossomon has three subsidiaries, namely Rossomon France, Germany and Japan. The subsidiaries report to the Export Sales Department, which in turn is accountable to the Board.