B. Understanding details. Mark these statements T (true) or F (false) according to the information in the text.

1. There is resurgence of interest in operations management in universities.

2. Competition is pretty tough in US.

3. Japan, Germany and Korea products do not compete with US products.

4. Neither more investment, nor more R & D will impinge on operations.

5. Creating a positive work environment is necessary for good production.

Vocabulary tasks

A. Match these words as they occur in the text:

B. Word search

Replace the underlined items with words and phrases from the text that have a similar meaning:

1. There has recently been a revival of interest in operations management.

2. The current interest in operations is being increased by the lackluster performance of industry.

3. Foreign competition is flooding many of the basic industries.

4. Many economists promote more investment.

5. All these solutions influence operations.

6. Productivity growth in US manufacturing and service industries has been falling behind that of other countries.

7. Much has been written about how to solve economic problems.

Speaking

Work in groups and discuss the role of operations management.

Unit 7

Forms of Organization

Before you read

Discuss these questions:

1. What forms of organization do you know?

2. Which of these forms would you like to be engaged in?

Now read the text

The finance function may be carried out within a number of different forms of organizations. Of primary interest are the sole proprietorship, the partnership, and the corporation.

Sole Proprietorship. The sole proprietorship form of organization represents single-person ownership and offers the advantages of simplicity of decision making and low organizational and operating costs. Most small business with 1 to10 employees are sole proprietorships. The major drawback of the sole proprietorship is that there is unlimited liability to the owner. In settlement of the firm’s debts, the owner can lose not only the capital that had been invested in the business, but also personal assets. This drawback can be serious, and the student should realize that few lenders are willing to advance funds to a small business without a personal liability commitment.

The profits or losses of a sole proprietorship are taxed as though they belong to the individual owner. Thus if a sole proprietorship makes $25.000, the owner will claim the profits in his or her tax return. (In the corporate form of organization, the corporation first pays a tax on profits, and then the owners of the corporation pay a tax on any distributed profits).

Partnership. The second form of organization is the partnership,which is similar to a sole proprietorship except there are two or more owners. Multiple ownership makes it possible to raise more capital and to share ownership responsibilities. Most partnerships are formed through an agreement between the participants, known as the articles of partnership, which specifies the ownership interest, the methods for distributing profits, and the means for withdrawing from the partnership. For taxing purposes, partnership profits or losses are allocated directly to the partners, and there is no double taxation as there is in the corporate form.

Like the sole proprietorship, the partnership arrangement carries unlimited liability for the owners. While the partnership offers the advantage of sharing possible losses, it presents the problem of owners with unequal wealth having to absorb losses. If three people form a partnership with a $100.000 contribution each and the business loses $100.000, one wealthy partner may have to bear a disproportionate share of the losses if the other two partners do not have sufficient personal assets.

To circumvent this shared unlimited liability feature, a special form of partnership, called a limited partnership, can be utilized. Under this arrangement, one or more partners are designated general partners and have unlimited liability for the debts of the firm; other partnership are designated limited partners and are liable only for their initial contribution. The limited partners are normally prohibited form being active in the management of the firm.

Reading tasks

A. Understanding main points. Answer these questions:

1. What advantages does a sole proprietorship offer?

2. What businesses are called sole proprietorship?

3. What are the disadvantages of the sole proprietorship?

4. What is the difference between sole proprietorship and partnership?

5. What are the articles of partnership?

6. Are there any similarities between sole proprietorship and partnership?

7. What is a limited partnership?

8. What form of partnership allows some of the investors to limit their liability?

Date: 2016-04-22; view: 1367