VI. Text d

WHY ARE COMPANIES REFERRED TO AS LTD., INC., GMBH, OR S.A.?

An individual, like Henry Ford, might want to begin a small enter­prise and personally retain total responsibility and liability, but once it starts to grow, a partnership or a "company"—such as Ford Motor Com­pany — 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.

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 equity investors and raise large amounts of funds called equity capital through sales of shares rather than by borrowing money at potentially high interest rates.

The names of companies around the world reflect this guarantee of limited liability. The abbreviations "GmbH" in Germany, "Inc." in the Unit­ed States, or "Ltd:" in most other English-speaking countries indicate that the firm is a 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.

Many countries make a clear distinction between public and private companies, with separate designations, such as AG and GmbH in Germa­ny, . and Ltd. in Britain. Generally, "public" companies are those large enough to have their shares traded -on stock exchanges, while small­er unquoted companies are said to be "private," even though their shares can be held by the public at large. In some countries, a large company is said to be privately owned if its shares are not available to the general public. In the United States, where little distinction is made between pub­lic and private companies, most companies simply bear the title "Incorpo­rated."

1. What do the names of companies around the world reflect?

VII. Read the text. Answer the following questions.

1. Does the board of directors make mostly strategic or tactical decisions?

2. Are there any advantages of the situation that part-time directors can be elected to the board?

The board of directors

The board of directors of a limited company is primarily responsible for determining the objectives and policies of a business. It is the directors who determine the direction the business is going to take. They will need to ensure that the necessary funds are available and will appoint key staff to whom they will delegate the authority to run the business on a day-to-day basis. They will need to design an effec­tive organization structure so that there is both a chain of command linking one level of management with another and an effective communication network so that instructions can be passed downward and information passed upward.

The directors are appointed by the shareholders, normally at the company's annual general meet­ing, at which the chairman of the board will be expected to account for their stewardship the previous year. The company's accounts will be presented to the shareholders at that time so they can judge for themselves whether or not the board has been successful.

Direction in business is like strategy in war situation. The strategic decisions determine the areas in which the company's resources will be employed. Above all it involves planning to ensure that the busi­ness first survives and then flourishes. Strategic decisions, made by the board of directors, are con­cerned with the disposition of resources. These contrast with the tactical decisions by means of which the senior executives (appointed by the directors) carry out in detail the plans conceived or approved by the board of directors.

The fact that boards of directors tend to meet rather infrequently, say once a week, means that part-time directors can be elected to the board. Since they will not have departmental responsibili­ties within the company they are often described as non-executive directors. There are arguments in favour of such directors though they may lack a detailed knowledge of the company's activities. They may bring expertise to the board. Some are lawyers, or experts in tax affairs. Some represent influ­ential groups of shareholders whose support is necessary if the board is going to carry out its plans, while others are directors in a number of companies and are used to interlock boards within a group of companies. For example, a holding (or parent) company may appoint a director from their board to serve on the board of a subsidiary company, with a view to keeping a watching brief on the direc­tors' activities.

Ex. 1.Read the text again and decide which of the following statements are correct.

1. The board of directors of a limited company doesn't determine the objectives and policies of a

2. business.

3. Key staff usually runs the business on a day-to-day basis.

4. The shareholders elect the board of directors at the company's annual general meeting.

5. The board of directors doesn't make any decisions concerning the disposition of resources.

6. The senior executives carry out the plans by means of strategic decisions.

7. Non-executive directors can't be elected to the board of directors.

Ex.2 Translate into English.

1. Единоличное владение - самая простая форма организации бизнеса.

2. Владелец ответственен за все долги компанию

3. Время существования компании может быть ограничено банкротством, уходом на пенсию, прихотью владельца, смертью.

4. Партнёрства не так легко распускаются, как единоличные владения.

5. В компаниях с ограниченной ответственностью собственность представлена акциями акционерного капитала.

6. Акционеры могут только потерять деньги, инвестированные в корпорации.

7. Дивиденды акционеров корпораций облагаются налогом на основе индивидуального принципа.

8. Компания обязана посылать акционерам ежегодный отчет , отражающий финансовое состояние фирмы.

Additional Reading

For you to know

Ericsson one of the largest Swedish companies, is a leading provider of telecommunication and data communication systems, and related services covering a range of technologies, including especially mobile networks. Directly and through subsidiaries, it also has a major role in mobile devices and cable TV and IPTV systems.

Founded in 1876 as a telegraph equipment repair shop by Lars Magnus Ericsson, it was incorporated on August 18, 1918. Headquartered in Kista, Stockholm Municipality, since 2003, Ericsson is considered part of the so-called "Wireless Valley". Since the mid-1990s, Ericsson's extensive presence in Stockholm has helped transform the city into one of Europe's hubs of information technology (IT) research. Ericsson has offices and operations in more than 150 countries, with more than 20,000 staff in Sweden, and also significant presences in, for example, the UK, India, Ireland, the USA, Finland, China, and Brazil.

Nokia Corporation is a Finnish multinational communications corporation that is headquartered in Keilaniemi, Espoo, a city neighbouring Finland's capital Helsinki. Nokia is engaged in the manufacturing of mobile devices and in converging Internet and communications industries, with 128,445 employees in 120 countries, sales in more than 150 countries and global annual revenue of EUR 50.7 billion. It is the world's largest manufacturer of mobile telephones: its global device market share was about 38% in Q3 2009. Nokia produces mobile devices for every major market segment and protocol, including GSM, CDMA, and W-CDMA (UMTS). Nokia offers Internet services that enable people to experience music, maps, media, messaging and games. Nokia's subsidiary Nokia Siemens Networks produces telecommunications network equipment, solutions and services.

Nokia's history starts in 1865 when mining engineer Fredrik Idestam established a groundwood pulp mill on the banks of the Tammerkoski rapids in the town of Tampere, in southwestern Finland, and started manufacturing paper. In 1868, Idestam built a second mill near the town of Nokia which had better resources for hydropower production. In 1871, Idestam renamed and transformed his firm into a share company, thereby founding the Nokia Company, the name it is still known by today.

Motorola, Inc. is an American, multinational, telecommunications company based in Schaumburg, Illinois. It is a manufacturer of wireless telephone handsets, and also designs and sells wireless network infrastructure equipment such as cellular transmission base stations and signal amplifiers. Motorola's home and broadcast network products include set-top boxes, digital video recorders, and network equipment used to enable video broadcasting, computer telephony, and high-definition television. Its business and government customers consist mainly of wireless voice and broadband systems used to build private networks and public safety communications systems like Astro and Dimetra. Motorola's handset division is now focusing on smartphones using Google's open-source Android mobile operating system.

Motorola started in Chicago, Illinois as Galvin Manufacturing Corporation' in 1928 with its first product being a battery eliminator. The name Motorola was adopted in 1930, and the word has been used as a trademark since the 1930s. Founders Paul Galvin and Joseph Galvin came up with the name Motorola when the company started manufacturing car radios in 1930; the name is a combination of "motor" and the suffix "ola" that was used at the time in various product names, including "Victrola.”

The Walt Disney Company, often simply known as Disney, is the largest media and entertainment conglomerate in the world, known for its family-friendly products. Founded on October 16, 1923, by brothers Walt Disney and Roy Disney as an animation studio, it has become one of the biggest Hollywood studios, and owner and licensor of eleven theme parks and several television networks. Disney's corporate headquarters and primary production facilities are located at The Walt Disney Studios in Burbank, California. Mickey Mouse serves as the official mascot (талисман) of The Walt Disney Company.

Fisher-Price is a company that produces toys for infants and children, headquartered in East Aurora, New York. Fisher-Price has been a wholly owned subsidiary of Mattel, Inc. since 1993.

Founded in 1930 by Herman Fisher, Irving Price and his wife, illustrator and artist Margaret Evans Price and Helen Schelle, the name Fisher-Price was established by combining two of the three founders' names. Fisher-Price has created approximately 5,000 different toys since the early 1930s.

Mattel Inc. is the world's largest toy importing company. The products it produces include Barbie dolls, board games and others. It was founded in 1945 by Harold "Matt" Matson and Elliot Handler (hence the name "matt-el"). Handler's wife, Ruth Handler, later became president, and is credited with establishing the Barbie product line for the company in 1959. Today the Barbie line is responsible for more than 80% of Mattel's profits. Mattel closed its last American factory, originally part of the Fisher-Price division, in 2002. As of 2007, Mattel's toys were primarily manufactured by subcontractors in China.

Levi Strauss & Co. (LS&CO) [livai straus] is a privately held clothing company known worldwide for its Levi's brand of denim jeans. It was founded in 1853 when Levi Strauss came from Buttenheim, Franconia, (Kingdom of Bavaria) to San Francisco, California to open a west coast branch of his brothers' New York dry goods business. Although the company began producing denim overalls in the 1870s, modern jeans were not produced until the 1920s. The company briefly experimented (in the 1970s) with employee ownership and a public stock listing, but remains owned and controlled by descendants and relatives of Levi Strauss' four nephews.

Levi Strauss (February 26, 1829 – September 26, 1902) was a German-Jewish immigrant to the United States who founded the first company to manufacture blue jeans. His firm, Levi Strauss & Co., began in 1853 in San Francisco, California.

Nike, Inc. (/’naɪki/) is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered in Beaverton, Oregon. It is the world's leading supplier of athletic shoes and a major manufacturer of sports equipment with revenue of $18.6 billion USD. It employs more than 30,000 people worldwide.

The company was founded on January 25, 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight, and officially became Nike, Inc. in 1978. The company takes its name from Nike (Greek Νίκη pronounced [níkɛː]), the Greek goddess of victory; it is also based on Egyptian usage of "strength", "victory", nakht.

Calvin Klein Inc. is an American fashion brand founded in 1968 by Calvin Klein. Currently, it is owned by Phillips-Van Heusen.

In 1968, Calvin Klein founded Calvin Klein Ltd., a coat shop in the York Hotel in New York City, with $10,000. Legend has it that a year later a buyer from Bonwit Teller got off the elevator on the wrong floor, and ended up placing a $50,000 order. It is more likely though, that Klein showed his work to Bonwit Teller staff, which led to the first Calvin Klein collection: a line of men's and women's coats featured at the New York City store.

In 1969, Mr. Klein, who was later described as "the supreme master of minimalism," appeared on the cover of Vogue magazine. By 1971, sportswear, classic blazers as well as lingerie were added to his women's collection portfolio.

Nestlé S.A. (French pronunciation: [nɛs'le]) is a multinational packaged foods company founded and headquartered in Vevey, Switzerland. Nestlé has a wide range of products across a number of markets including coffee (Nescafé), bottled water, other beverages, chocolate, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food.

It originated in a 1905 merger of the Anglo-Swiss Milk Company for milk products established in 1866 by the Page Brothers in Cham, Switzerland, and the Farine Lactée Henri Nestlé Company set up in 1866 by Henri Nestlé to provide an infant food product. The two world wars both affected growth: during the first, dried milk was widely used but the second war caused profits to drop by around 70%. However, sales of the instant coffee Nescafé were boosted by the US military.

The Coca-Cola Company is the world's largest beverage company, largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups in the world and is one of the largest corporations in the United States. The company is best known for its flagship product Coca-Cola, invented by pharmacist John Stith Pemberton in 1886. The Coca-Cola formula and brand was bought in 1889 by Asa Candler who incorporated The Coca-Cola Company in 1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers nearly 400 brands in over 200 countries or territories and serves 1.5 billion servings each day.

The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory.

The Coca-Cola Company is headquartered in Atlanta, Georgia.

Suchard. In 1824 he left Switzerland to visit the United States. At the end of the year he returned and opened a confectioner's business in Neuchâtel.[2] In 1826, Suchard opened the factory of Chocolat Suchard in Serrières. Chocolate was not cheap or a product for everybody. Suchard struggled financially early in his career as a chocolatier. His success came in 1842, with a bulk order from Frederick William IV, king of Prussia, who was also the prince of Neuchâtel. This triggered a boom and soon his chocolates won prizes at the London Great Exhibition of 1851 and the Paris Universal Exposition of 1855. By the end of the 19th century, Suchard had become the largest chocolate producer. Seventeen years after his death in 1884 in Neuchâtel, his company produced the famous Milka chocolate for the Swiss market. Nowadays the factory belongs to the Kraft Foods group and production has been moved to the Toblerone factory in Bern.

Wal-Mart Stores, Inc. (branded as Walmart) is an American public corporation that runs a chain of large, discount department stores. It is the world's largest public corporation by revenue, according to the 2008 Fortune Global 500. The company was founded by Sam Walton in 1962, incorporated on October 31, 1969. Wal-Mart is the largest private employer and the largest grocery retailer in the United States.

Walmart operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has wholly-owned operations in Argentina, Brazil, Canada, and Puerto Rico. Wal-Mart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.

Walmart has been criticized by some community groups, women's rights groups, grassroots organizations, and labor unions, specifically for its extensive foreign product sourcing, low rates of employee health insurance enrollment, resistance to union representation, sexism, and management efforts to pressure employees to vote for specific parties during national elections. Conversely, others point out that Wal-Mart's rapid growth and logistical efficiency has enabled it to bring lower prices to consumers and more low paying jobs to the communities in which it operates.