Ex. 6.3. Read and translate the following texts

Ex. 6.3. Read and translate the following texts:

TYPES OF BUSINESS ENTITY

In law, there are various types of business entity. For each one there are different legal arrangements to register the company, different requirements for presenting accounts, etc. The main business types are: sole trader (UK)/sole proprietorship (US). A single person owns and operates a business. Legally, the business has no separate existence from its owner (proprietor). This means that all the debts of the business are the debts of the owner. Partnership (UK and US) Two or more people work together and share the risks and profits. Just like a sole proprietor the partners arc fully liable for the debts the business has. This is referred to in law as limited liability. The business is a legal entity that is separated from its owners - the shareholders. The owners are not fully liable for the debts of the business. Instead, then liability (= potential risk) is restricted to their share capital. This is the amount of cash that they have contributed to the company. This is referred to in law as limited liability. There are two main types of companies: private company: the shares are private in the sense that they cannot be bought by members of the public. The vast majority of companies fall into this category. They are often smaller companies, with shares held by a few business associates or family members. Public company: the shares are openly traded on a public stock exchange. They are large, often well-known businesses. The word 'public' should not be confused with 'state-owned'. A 'state-owned enterprise' (SOE) is owned by the government.

The Board

Public companies are controlled by a board of directors ('the Board'), elected by the shareholders. Not all Boards are fully independent, but in general their role is to:

-                 Set long term strategy;

-                 Appoint a Chief Executive Officer (CEO) and other members of the senior management team to run the company day to day;

-                 Ask questions about any short- or medium-terms strategy developed by the CEO, and then support it once they have agreed;

-                 Oversee the preparation of the financial statements;

-                 Appoint and ensure the independence of the company' auditors;

-                 Oversee and manage risk;

-                 Set an annual dividend.

Who chooses the Board? In theory, it's the shareholders. At the Annual General Meeting (AmE Annual Meeting of Stockholders) the shareholders can question Board members, vote to accept or reject the dividend, vote on replacement for retiring Board members, etc. But, in practice, the situation may be different. In particular, most shares are held by large institutions, and these may simply sell their stake if they aren’t happy instead of trying to change the Board. In reality many Board members are chosen by the CEO and the shareholders simply approve these members.

Corporate governance

This whole issue of the role of the Board, how senior managers are responsible to shareholders and how the company is run, is referred to as 'corporate governance'. Traditionally, different regions of the world have had different models of corporate governance.

Nowadays this traditional pattern is breaking down, and the situation is more mixed. However, the following basic principles of corporate governance are widely accepted:

-                 Respect for the rights of shareholders.

-                 A clear definition of the roles and responsibilities of Board members.

-                 Integrity and ethical behaviour.

-                 Disclosure (= giving the full information) and transparency.

The Levi story

There are not many genuinely classic brands, but Levis have earned themselves a place among Coca-Cola, 2CVs, etc. Classic brands used continuously and in an unchanged format for 100 years are exceptionally rare in the clothing market, dictated as it is by the fickle demands of fashion. Levi Strauss’s achievement is formidable: from a small family firm to a massive international concern.

In the early 1960s, Levi Strauss was sky-rocketing. American films and music had spread to Europe and jeans had come to symbolize a new, youth culture. Levi Strauss was still a purely American company, with no overseas operation. Now that a brand new market had presented itself, international expansion had to be looked at.

Initially, the company used local agents to sell the products which were shipped in from the States. There was still no international marketing, let alone international advertising. The whole international success story happened almost by chance, and certainly without any co-ordinated effort from San Francisco.

At the same time, in America, Levi Strauss diversified at a frenetic pace into all sorts of unrelated areas. The Levi label was put on all non-jeans products, and the company grew.

By 1974, now a public company, Levi started manufacturing locally throughout Europe. But the company was coming unstuck:  nobody knew what the Levi name stood for any more. All the advertising for the different products was saying totally different things about the company and the unrelated products had begun to damage Levi’s volume base – its jeans.

Something had to be done – and fast. The diversification program was put into reverse gear, and the Levi name was taken off unrelated products, or made them more jeans-related. Levi Strauss realized that it had to stop trying to drag value out of its most valuable property – its name – and go back to its roots, becoming once again the premier jeans company in the world.