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Economy of Great Britain

Forms of Business Organization.

One of the major economic institutions is the business organization, a profit-seeking enterprisethat serves as the main link between scarce resources and consumer satisfaction. These businesses compete with one another for the chance to satisfy people's wants. There are three major kinds of business organizations: thesole proprietorship, the partnership and the corporation.

Sole- Proprietorship

The most common form of business organization is the sole proprietorship — a business owned and run by one person. The main advantage of a sole proprietorship is that it is the easiest form of business to start and run. There is almost no red tapeinvolved. Most proprietorships are able to open for business as soon as they set up operations. In the event that the owner wants to dissolve the business, a sole proprietorship is as easily dissolved as it is formed.

Sole proprietors own all the profits of their enterprises and are free to make
whatever changes they please. They have minimal legal restrictions and do not
have to pay the special taxes placed on corporations. They also have the
opportunity to achieve successand recognition through their individual efforts.
Sole proprietorships are generally found in small-scale retail and service '

businesses such as beauty salons, repair shops, or service stations. The major disadvantage of a sole proprietorship is the unlimited liabilitythat each proprietor faces. Since the business and the owner are legally the same, the sole proprietor is liable forall financial losses or debts that the business may incur. If a business fails, the owner must personally assume thedebts .This could mean the loss of personal property such as automobiles, homes and savings.

A second disadvantage of the sole proprietorship is that it has limited financial resources. The money that a proprietor can raise is limited by the amount of savings and ability to borrow. Another serious problem faced by the sole proprietorship is the lack of continuity of the business. When the owner dies, the business also legally terminates.


A partnership

A partnership is a business that is jointly owned by two or more people who have combined their talents and resources for the purpose of earning a profit. Partnerships are most common in such professional fields as medicine, law, accounting, stockbrokerage , but they are also found in manufacturing, wholesaling and retailing .

The most common form of partnership is a general partnership .General partners own the business, work in it and share the profits and losses. They are responsible for the management of the business and usually agree with each other before making any major decisions. There may be a special type of partnership, called limited partnership. Limited partners are only liable for the amount they have invested in the business. They are usually not involved in the management of the firm. Partnerships have more advantages than sole proprietorships. Like sole proprietorship they are easy to form and often get tax benefits from the government.

Partnerships have certain disadvantages too. The major disadvantage is unlimited financial liability It means that each partner is responsible for all debts and is legally responsible for the whole business. But one of the greatest problems in partnerships is that partners may disagree with each other causing management conflicts.



Nearly 90 per cent of all business is done by corporations. A business corporation is an institution established for the purpose of making profit. It is operated by individuals. People, who would like to form a corporation, must file for permission' in the state where the business will have its headquarters. It approved, a charter, government document that gives permission to create a corporation, is granted. The charter states the name of the company, address purpose of business etc. The charter specifies the number of shares of stock, or ownership parts of the firm. These shares are certificates of ownership and are sold to investors called shareholders or stockholders . The money is then used to set up corporation. If the corporation is profitable it will eventually issue dividend or a check, representing a portion of the corporate profits to shareholders.

There are several advantages of the corporate form of ownership. The major advantage is the ability to acquire greater financial resources than other forms of ownership. The next advantage is that the corporation attracts a large amount ot capital and can invest it in plants, equipment and research. It can offer higher salaries and thus attract talented managers and specialists. Corporations have great capacity for growth and expansion.

Corporations face some major disadvantages. It is difficult and expensive to organize a corporation. The process of obtaining a charter usually requires the services of a lawyer. Most small firms prefer to avoid these expenses by forming proprietorships and partnerships. There is also an extra tax on corporate profits.
The government taxes corporate income in addition to the taxes paid by
shareholders on their dividends.


M a r k e t I n g

What does the term marketing really mean? Many people mistakenly think of it as advertising and selling, giving the number of commercials on television, in magazines and newspapers and all signs and offers in and around the shops and this is not surprising. However, advertising and selling are only two of several marketing functions, and not necessarily the most important one.

The most basic concept underlying marketing is that of human needs. We have many needs including ones such as affection, knowledge, and a sense of belonging as the physical need for food, warmth and shelter. A good deal of our lives is devoted to obtaining what will satisfy those needs.

Marketing can thus be defined as any human activity that it directed at satisfying needs and wants by creating and exchanging goods and values with others.

Marketing has become a key factor in success of the western businesses. Today’s companies face stiff competition and the companies that can best satisfy a customer’s needs are those that will survive and make the largest profits.

For an exchange to take place, four conditions must exist. First, an exchange requires participation by two or more individuals, groups, or organizations. Second, each party must possess something of value that the other party desires. Third, each must be willing to give up it’s “something of value” held by the other. The objective of marketing exchange is to receive something that is desired more than what is given to get it that is a reward in excess of costs. Fourth, the parties to the exchange must be able to communicate with each other to make their “something of value” available. Note, though that an exchange will not necessary take place just because these four conditions exist. However, even if there is no exchange, marketing activities still have occurred. The “something of value” held by the two parties are most often products and financial resources such as money or credit. When an exchange occurs, products are traded for either other products or financial resources.



There are many ways in which an organization can recruit personnel. Posting a list of vacancies on the company notice-board or publishing it in employee magazines is fairly common and gives current employees theopportunity of applying for a position. Similarly, a subordinate may be referred for the position by his or her superior.

Another means of recruiting internally is to search in the organizations existing files. Some companies have a data base of their employees' skills and special interests. Reviewing these files periodically may reveal employees who are well-suited to a particular position.

Although recruiting people within the organization can have many advantages, it does have its limitations. If companies wish to be dynamic it is essential to inject new blood from time to lime. Similarly, existing employees may not have the necessary skills that the position requires. Consequently, it is often necessary to recruit people from outside the organization.Advertising is a commonly used technique for recruiting people from outside. The advertising medium should be chosen according to the type of public the organization is aiming at. If a highly specialized person is required, a specialty publication such as a trade magazine may be most appropriate. National newspapers and magazines sometimes carry a Senior Appointment section for specialized personnel. Many national and local newspapers have a General Appointments section or a Classified Ads section for less specialized personnel. Radio and television Advertising of vacancies is relatively underdeveloped in most countries.Employment agencies may be another source of recruitment. State-backed agencies compete with private agenciesin many countries. In general, private agencies charge a fee whereas public sector agencies offer their services free of charge. Another difference is that private agencies tend to offer more specific services: for example, they may specialize in a particular area of recruitment such as temporary secretaries, middle managers or senior executives. They may also include search services, otherwise known as headhunting, or provide management consulting.Current employees are sometimes encouraged to refer friends, family and ex-colleagues to fill a particular vacancy. This is particularly true in occupations such as nursing where there is a shortage of trained people.Other valuable sources of recruitment may be university campuses, trade unions, professional organizations and unsolicited applications.


transportation as a factor

of economic: development

Transportation has always been a vital factor in the cultural and economic development of the human race and the effort to improve transportation has occupied much of man's time and effort through the centuries. Nations, regions, cities, industries, and business firms have grown or failed to grow because of the presence or absence of adequate transportation facilities. Those areas of the world that have developed culturally and economically the earliest and fastest have been those that have adequate transportation. Hence the great old cities of die world were all located where adequate and long-distance water transportation was available. Those areas without adequate water transportation had to wait the coming of other modes of transportation before their development could, really begin. In modern times we find that the interior of the continent of Africa is still to a great extent underdeveloped culturally and economically partly because it has been in the past, and still is to a some degree, inaccessible.

The only acess to villages, agricultural and other productive areas in Africa are earth roads. They account for a considerable proportion of the road network, but most of them are generally operable only during the dry season. A large proportion of the fleet remains immobilised for long periods, a situation which adversely affects the overall economic performance of developing Africa.

The African railway system is composed of several short inde­pendent national systems of different gauges, which makes it difficult to promote socioeconomic integration at the national, subregional and regional levels. Also, because of the old age of rails, the poor alignment and the low construction standards, the average operating speed of the railway system is only about 40 km/h. The railway traffic is also very low.

In the area of air transport, while 40 foreign airlines and 51 Af­rican airlines serve the continent, only 20 per cent of the total air transport operations involve direct links among African countries. In maritime transport, the volume of Africa's seaborne trade has increased only marginally. The low level of the shipping capacity of Africa explains the very large share of Africa's seaborne trade handled by foreign vessels.

So. if appears that economic progress is inevitably tied to transportation. This is basically because trade or commerce cannot flourish without an adequate transportation system at reasonable cost, and without trade there can be little in the way of industrial activity and the employment and income that this brings about.

European Union

The European Union is a family of democratic European countries, committed to working together for peace and prosperity. It is not a state intended to replace exiting states, but it is more than any other international organization. Its Member States have set up common institutions to which they delegate some of their sovereignty so that decisions on specific matters of joint interest can be made democratically at European level. Initially the EU consisted of just six countries: Belgium, Germany, France, Italy, Luxemburg and Netherlands Denmark. Ireland and the United Kingdom joined in 1973. Greece in 1981. Spain and Portugal in 1986. Austria, Finland and Sweden in 1995.The entry new countries into the EU is a historic achievement ending countries of division. Europe reunited means a stronger, democratic and more stable continent with a single market providing economic benefits for all its 450 million citizens. The present enlargement from 15 to 25, is the biggest in Union history. It has its roots in the collapse of communism, symbolized in the full of the Berlin Wall in 1989, which offered an opportunity to extend European integration into central and eastern Europe. The ten newcomers Cyprus the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia, join formally on 1 May 2004. The economic impact of enlargement will be significant as a bigger and more integrated market boosts economic growth for new and current members alike. The newcomers stand to benefit from investments from firms based to western Europe and from access to EU funding for their regional and social development. Integration of their economics with the rest of the EU is already under way, as trade agreements, negotiated and applied in advance of membership, have already removed virtually all tariff and quota barriers on their exports to current member states.

The Treaty on EU says that any European state which respects the principles of liberty, democracy, human rights and fundamental freedoms and the rule of law may apply to join the Union.

The Union has a number of specific pre-accession programmes to help the candidates prepare for membership. The best-known and longest-running one providing the financial and technical cooperation to the candidates is Phare. There are also programmes to fight corruption and organized crime. The experience of previous EU enlargements has shown how well the EU integration process works. Bulgaria and Romania joined the EU in 2007. The EU is commited to providing maximum support in this process. A third candidate, Turkey, has not yet been given a firm date for accession negotiations. EU relations with Ukraine are to a large extent based on the Partnership and Co-operation Agreement which entered into force in 1998. Both sides have clarified their position towards each other in internal political strategies.



Adam Smith


Adam Smith (baptised 16 June 1723 – died 17 July 1790) was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. It earned him an enormous reputation and would become one of the most influential works on economics ever published. Smith is widely cited as the father of modern economics and capitalism.


Smith studied social philosophy at the University of Glasgow and the University of Oxford. After graduating, he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time he wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day. Smith returned home and spent the next ten years writing The Wealth of Nations, publishing it in 1776. He died in 1790.

The Wealth of Nations, published as a five-book series, sought to reveal the nature and cause of a nation’s prosperity. Smith saw the main cause of prosperity as increasing division of labor. Using the famous example of pins, Smith asserted that ten workers could produce 48,000 pins per day if each of eighteen specialized tasks was assigned to particular workers. Average productivity: 4,800 pins per worker per day. But absent the division of labor, a worker would be lucky to produce even one pin per day.

Just how individuals can best apply their own labor or any other resource is a central subject in the first book of the series. Smith claimed that an individual would invest a resource—for example, land or labor—so as to earn the highest possible return on it. Consequently, all uses of the resource must yield an equal rate of return (adjusted for the relative riskiness of each enterprise). Otherwise reallocation would result. George Stigler called this idea the central proposition of economic theory. Not surprisingly, and consistent with another Stigler claim that the originator of an idea in economics almost never gets the credit, Smith’s idea was not original.



Economy of Great Britain

Great Britain lives by manufacture and trade. Apart from coal and iron ore Britain has very few natural resources and mostly depends on imports. Its agriculture provides only half the food it needs. The other half and most of the raw materials for its industries such as oil and various metals (cooper, zinc, uranium ore and others) have to be imported. Britain also has to import timber, cotton, fruit and farm products. The greater part of land is used for cattle and sheep breeding, and pig raising. Among the crops grown on the farms are wheat, barley and oats. Britain produces high quality expensive goods, which has always been characteristic of its industry. A shortage of raw materials, as well as the high cost of production makes it unprofitable for British industry to produce semi-finished goods or cheap articles. Britain mostly produces articles requiring skilled labour, such as precision instruments, electronic equipment, chemicals and high quality consumer goods. Britain produces and exports cotton and woolen goods, leather goods and articles made of various kinds of synthetic (man-made) materials. The original basis of British industry was coalmining, and the early factories grew up not far from the main mining areas. The main industrial centers are Glasgow, Newcastle, Lancashire, Yorkshire, Sheffield, London.

Little more than a century ago, Britain was 'the workshop of the world'. It had as many merchant ships as the rest of the world put together and it led the world in most manufacturing industries. This did not last long. By 1885 one analysis reported, "We have come to occupy a position In which we are no longer progressing, but even falling bock.... We find other nations able to compete with us to such an extent as we have never before experienced." Early in the twentieth century Britain was overtaken economically by the United States and Germany. After two world. wars and the rapid loss of its empire, Britain found it increasingly difficult to maintain its position even in Europe.



Economy of USA

The USA is a highly developed industrial country. It is rich in most of the metals and minerals needed to supply its basic industries. The nation produces more than 75 mln tons of iron every year. Coal is the second major natural resource in the country. Oil wells produce more than 2 700 million barrels of petroleum a year. There is also natural gas and other basic natural resources in the USA. The manufacture of the machinery is highly developed. Other industries produce food, clothing, metal goods, electrical machinery, furniture, textiles and other products. Nowadays, the number of engineers and scientists increases because the companies developed the labour saving machinery.

The United States Of America (USA) is the largest and most technologically powerful economy of the world. The per capita Gross National Income of the country has reached at US $37,610 in the year 2003,


which is much higher in contrast to the other developed economies of the world. The average annual growth rate of GDP of the country was 2.9% during 2003, while GDP per capita grew at 2% in the same year. The growth rate of output projected for year 2005 was 3.5% for the country. Among the various sectors of the economy, the service sector has the highest contribution to the US GDP, followed by Industry. Being an industrialized nation agriculture accounts for a very marginal share in the total national income.

British industry


Great Britain is known to be a highly-developed industrial country. The main branches of industry are ship-building, machine-building, metal industry, chemical and textile industry. The main industrial centres are London, Birmingham, Manchester, Leeds, Glasgow, etc. The leading centres of the textile region are Liverpool and Manchester. Manchester is the chief cotton manufacturing city. Every town produces certain kinds of yarn and fabrics. Plants producing textile machinery not only satisfy the needs of British industry, but also export great quantities of machinery to other countries. Great Britain exports motor-cars, agricultural tractors, railway and motor vehicles, cotton and wollen fabrics and other things. About 1/4 of its gross domestic product comes from the export of goods and services. The notable growth has been seen in electrical and instrument engineering, mechanical engineering, food, paper, printing and publishing. It is the world’s tenth largest steel producer and a major producer of alloys used by the aerospace, electronic, petrochemical and other industries. Its chemical industry is the 3rd largest in Europe and the 5th largest in the western world. The British aerospace industry is the 3rd largest in the world. The clothing industry, one of the largest in Europe, meets about 2/3 of domestic demand, and the wollen industry is one of the world’s largest.

Great Britain is the 5th largest trading nation in the world. Export of goods and services is equivalent to 1/4 of gross domestic product. Banking, finances, insurance, business services account for 14 percent of the British economy’s total output. Over 3/4 of Britain’s landscape is used for agriculture.


Industry of USA


Although the United States remains one of the world's

Between 1979 and 1998, manufacturing employment fell from 20.9 million to 18.7 million, or from 21.8% to 14.8% of national employment. Throughout the 1960s, manufacturing accounted for about 29% of total national income; by 1987, the proportion was down to about 19%. In 2002, manufacturing was experiencing a decline due to the recession that began in March 2001, according to the Institute for Supply Management's (ISM) gauge of manufacturing activity.


Industrial activity within the United States has been expanding southward and westward for much of the 20th century, most rapidly since World War II. Louisiana, Oklahoma, and especially Texas are centers of industrial expansion based on petroleum refining; aerospace and other high technology industries are the basis of the new wealth of Texas and California, the nation's leading manufacturing state. The industrial heartland of the United States is the east–north–central region, comprising Ohio, Indiana, Illinois, Michigan, and Wisconsin, with steelmaking and automobile manufacturing among the leading industries. The Middle Atlantic states (New Jersey, New York, and Pennsylvania) and the Northeast are also highly industrialized; but of the major industrial states in these two regions, Massachusetts has taken the lead in reorienting itself toward such high-technology industries as electronics and information processing.

Large corporations are dominant especially in sectors such as steel, automobiles, pharmaceuticals, aircraft, petroleum refining, computers, soaps and detergents, tires, and communications equipment. The growth of multinational activities of US corporations has been rapid in recent decades.

In the 1980s and 1990s, the United States was the world leader in computer manufacturing. At the beginning of the 21st century, however, the high-tech manufacturing industry registered a decline. Employment in high-technology manufacturing fell by 415,000 jobs from January 2001 to December 2002, a decrease of 20%. Semiconductor =

The United States has a total of 153 oil refineries, with a production capacity in 2002 of 16,785,000 barrels per day. Crude oil and refined petroleum products are crucial imports, however.


Staff Management
Organizing is a basic function of management. In order for people to cooperate effectively, they must know their roles, their objectives, their responsibilities, and their authority. This requires a formal structure to define relationships and facilitate the communication of decisions. Such structure is efficient if it makes it possible for individuals to contribute to the attainment of the objectives of the enterprise with minimum costs.
A small enterprise may have a very simple, centralized organization with a single manager, but if the enterprise grows beyond a certain limit, the manager will be unable to supervise everyone effectively and will have to appoint subordinate managers. This limitation is commonly called the manager’s span of control. As the organization grows further, the subordinates will eventually reach the limits of their own spans of control, which will necessitate the establishment of a third level of managers. The span of control varies in different organizations and is generally wider at lower levels. Thus, a top executive may have from three to eight subordinates, whereas a lower- level supervisor may manage from twelve to thirty persons.
As the number of levels increases, administrative costs rise, and communication, planning, and control become more difficult. Therefore, an enterprise will try to have the minimum possible number of levels, which means that the span of control of each manager should be as broad possible. In order to manage more subordinates, a manager must limit the time spent with each one. To avoid waste of time, the superior must, assign clear responsibility for certain tasks to each subordinate and must delegate to each the necessary authority to achieve those tasks. If she subordinates are properly trained for their duties, if they have clear objectives and understand the objectives and policies of the enterprise, much of the superior’s time can be saved. Good communications with a minimum of face-to-face meeting, are another time-saving factor.
In order to perform effectively, an organization must have clear and realistic goals. Managers at every level must have a part in setting objectives for themselves, so that they will have a sense of responsibility for achieving these aims. Such system is called Management by Objectives or MBO.
As the first step in MBO, a manager at any level meets with his or her immediate superior to agree on specific goals which the subordinate manager will try to reach during a certain period of time. For a relatively high-level manager, this period might be a year; for a lower level superior, it could be only a few weeks. The superior helps the subordinate set objectives that harmonize with the organization’s overall goals and are not too difficult to attain. The mutually agreed objectives are then recorded.




When we see or hear the word 'business', however we think first of all not of different shops, factories or mines, but of offices. A day of modern businessmen is a day spent at an office. This is probably why business people pay so mach attention to the way their offices look like. You can easily imagine this place.

Usually it is situated in a large or not very large well-planned building somewhere in yhe centre or in a prestige district of the city. How large the office itself is depends on the dimensions of the firm , which, the businessman owns. But in any case it should be light and clean and have not necessary very chic and expensive but comfortable furniture of good quality. One more very important thing is the air . It should be always be fresh and naither hot not cold.. For this purpose a lot of modern businessmen use various types of air-conditioners/

Office work usually means different forms of communication. A businessman often needs to speak to other people and he can do this by using the telephone, which is an important part of the communications system.The head of a large firm usually has two telephones on his desk. one, is a usual telephone, which connects the businessman with other people in the town and in other countries. But the other one is connected to a privat internal system and this makes is possible for a members of the staff in different parts of the same building to talk to one another without leaving their rooms. A businessman also communicates by writting. But he doesn't write his letters himself, he dictates them to his secretary, usually a woman ,who types them on a typewriter or a computer, and then takes them to be signed.

Date: 2015-12-17; view: 1608

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