Industries and companies Going to work fora large company is like gettingion a train. Are you going sixty miles an hour ors the train going sixty miles an hour and you're just sitting still? 4 Paul Getty (1892-1976), American industrialist Industry groups A national econony can be described in terms of ies main sectors and industries. (See the mind map opposite.) This, ‘mind map isa simplified version of the ‘Global Indusiry ‘Classification Standard’, developed by Morgan Stanley and Standard and Poor's and used in publications like Business Week ‘Another way to classify an economy is © Primary inevstries, which include agriculture, forestry and mining. © Secondary industries, which include construction and manufacturing. Manafacturing itsel is often divided into capital goods (eg equipment and machinery used to produce other goods), durable goods (eg cars, washing ‘machines) and non-durable goods (eg food, clothing). © Service industries, which incude banking, entertainment, tourist ‘An economy can also be divided int: © The private sector, which incluaes large corporations, SMEs (= small and medium-sized enterprises) and. individuals working on a self-employed basis. © The public sector, where there are schools and hospitals as well as SOEs (~ state-owned enterprises) such as railways and the post office, Types of business Within each industey there can be a variety of types of business organization, each with their own legal structure ‘A business ean be «© Asole trader (US: sole proprietorship). Here the business is owned by one person, who is seltemployed. That individual has unlimited lability ~ they are personally responsible for any debts, A self-employed professional will :ofee to themselves as a "freelance. © Appartne:ship, Here two or more people run the ‘business together. Lawyers, architects and auditing firms are typical partnerships © A limited liability company. Here there sa legal distinction between the company arid the owners, $0 the company is responsible for any debts, aot the owners “The owners therefore have ‘limited liability’. This type of company is often quite small, and includes many family- ‘un businesses. The company is referred to asa ‘private’ company because shares cannot be sold to members of the public. In official documents, the company name is, followed by Ltd (UK) meaning ‘limited’, or Llc (US) meaning limited lability company’ ‘© A public limited company (US: a corporation). Here the company is owned by shareholders (US: stockholders), who might be: ~ laege financial institutions (eg pension funds or investment banks) ~ other companies — members of the public (and for this reason the ‘company is called a ‘public’ company). ‘The shareholders receive a share ofthe profits every year (paid as dividends), and will algo get a capital gain or loss when they sell their shares (because the price can go up or down on the stock market). These are large companies, and are run by managers under the supervision of a Board. In official documents, the company name is followed by PLC (UK) or Ine or Corp ws). © A franchise. This type of company includes MeDonald’s and the Body Shop. Here the business owner allows other people (franchisees) to set up in business using the company’s brand name, products and reputaiion. The franchisee has varying degrees of conirok ever how products are marketed and sol Business expansion ‘There are various ways that a company can grow: + Internal growth: stay private, The company increases its sales, number of employees, ete, but stays aS a private company, perhaps run by the original founders ofthe business (often family members). 2 Internal growth: IPO. The company moves from being & small, family-owned firm to being a large corporation with a stock-market listing, The process of issuing shares forthe fist time is called an IPO (inital public offering). 3 Internal growth: ‘trade sale’ to a much larger company in the same sector. In this case the original small company is absorbed and its name often disappears Many start-ups in the IT and biotechnology areas sll themselves in this way. (Microsoft, intel anal Google all ‘grew by buying start-ups.) 13 Merger. Two established companies join to form one (3 Mercedes and Chrysler). 5 Acquis |Keover). One established company buys another. The frst step in an acsjisition is often to take a controlling stake in the other company ~ buying a Large number of shares but without complete ownership. The acquired company often keeps its oxiginal trading name, becoming 2 subsidiary of the larger ‘parent company’. © Further information wwwaicsstendardandpoors cam www businessnameusa.com » wawisba govimanasing|) INDUSTRIES AND COMPANIES: Cleaning, auditing, uonan resources ad enploynent, office suplies, security, Household durables Consumer electronics, hensahold appiandes, eto Latsure aquioment and producte “Textiles, apparel and boaury goods Consumer services Chotels and restaurants, ‘eiswre 4acties, edvextion services) Media Cadvertising, broadcasting, movies and entertainnent, publishing? Retailing Cdistributors, Internet and cath ch gee etiarace Necatty read Food, tevers and tbat. production Food and drug retailing Household and personal products Industria! Conglomerates Machinery Trading companies and distributors Health care equipment ae Pharmaceuticals, and life scier Air freight and logistics alee Be ca =e “Transportation Diversified financial services Consumer Finance ee ran se a are We S Electric utilities Gas utilities Water utilities Matti-utilities Internet software and services TT Services Cconsutting, data processing, atc) Software Capplcation, systens, home entertainment Te hardware ana pee, ae et sae Finad-line, fibre-optic and wireless) Wireless teleconmaanication services © swasicorporateinformation com © vnwwcbusinessnameusa com wwwwbusineslink.gouuk (> Grow Your Business)Industries and companies: Exercises 1 Fillin the missing letters, 1 Goods that are carted by ship train or areraft ae called ft 2. A product used in the home is a“ho_____Id product 3 Piece of electrical equipment used in people's homes are ‘app s 4 Toe words ‘clothing’ and ‘drinks’ are conversational. n a business context you often see the wards ‘app. __I' and bev 5. Rooms, equipment or services that are provided for a particular purpose are ‘fac s 6 Another term for ‘property ist. 7 The business of buying and selling shares is called ‘br ___ age 8 Pubiic services used by everyone are u_ 4.2. The words appliance, device, equipment and machinery are similar. Complete the collocations by choosing the best one. 1 kitchen / office / standard 2 heavy / agricultural f construction 32 handheld /labour-saving safety 4 a household / domestic / electricai — ___ equipment 1.3 Underline the correct words. 1 Goods that are needed and used all the time are in the consumer discretionary / consumer staples sector. 2 Goods that are not basic to people's lives are in the consumer discretionary / consumer staples sector. 1.4 First mateh the company names in the box to the descriptions below. Then write the industry group from the mind map (see first example). Cisco Ghigroyp — EmorMobil. GE (General Electric) Inte! Prizer Proctor & Gamble WalMart AC (PiceWaterhouseCoopers) UPS (United Ferces Service) 1 The world’ largest cil producer and distributor Ewonsiob) Oi 2 Provides auditing, tax and consulting services to other businesses, - t= 3. AN international company, its services include curtent ‘accounts (ARE checking accounts), insurance, stock brokerage, investirent banking and consumer finance — 4 Designs and manufactures microprocessors and specialized integrated circuits iy cena 5 The world’ #1 maker of household and personal products; more than twenty ofits brands are billion-dollar sellers {including Ariel, Fairy, Gillette, Pampers and Pantene), — 6 One of America’ largest and most diverse corporations, its products cover power generation, jet engines, financial services, medical imaging, etc. The name ofits industry group reflects the wide range of activities, - s—__ 7. A global health care company, famous for making Viagra; its competitors include Glaxosmithkline and Novartis. , - 8 The largest private employer in the US, $9 out of every $100 that Americans spend an shopping Is spent in their stores, ff 9 Aworldwide delivery company, it also offers customs handling, international trade management and supply chain design, —__ / 10 Manufactures hardware such as switches and routers that allow the Internet to function and computers to talk to each other, 41.5 Complete the definitions using the words in the box. hhousehold appliances business solutions consumer durables fabrication finished goods food and beverages nan-durable goods raw materials 1 Manufacturing isthe transformation of into ee Some industries, ike semiconductors and steel, use the term in place of ‘manufacturing 2 are manufactured goods that are not destroyed by use, such as automobiles, oe ‘or furniture 3 generally ast for only a short time. Common examples are . apparel, office stationery and gasoline. 4 Sometimes a manufacturing company posttans itself as a service company Microsoft, BM and SAP are good ‘examples. They offer not just products, but 4.6 Complete each explanation with a pair of words from the box. The words may not be in the correct order. acquisition /merger debt /liability enterpase venture firm I parmeeship ‘ealancer | soitemployed senior management team / Board a Is elected by the shareholders and is responsible to them. It can hire and fire ‘the CEO, but the (including the CEO) run the company on a day-to-day basis.2A | a new business activity, and it colocates with the word ‘capita’ to mean money available to expand a successful start-up. An either a company, or any large important project. Used without the article it collocates with free’ and ‘private’ to give a synonym for ‘capitalism 3 Ale is simply money that somebody owes. A — refers to ’an amount of money that a company owes, but it can also mean the legal responsibilty for paying for something, 4 Many people work for therrsalves, with the legal status of sole teader. {f they are a plumber or a shop-keeper, they are likely to refer to themselves as If they are @ professional who works for several companies (€9 a journalist or independent consultant), they are likely 10 refer to themselves as a 5 The word — can just be a synonym for ‘company’, But its more often used for & small company providing a professional service, such a5 2 _________ of accountants, lawyers or architects 6A ____ is when two companies join to form one. The suggestion is that the process is welcomed by both sides. An ‘when one company buys another. The process could be ‘unwelcome by the smaller company, who might feel that they are being taken over. s 1-7 The text below explains the process of becoming a pubic company. Fill in each gap with a word from the box. appoint ‘sue constraints guarantee held reinvested run _undenveiting hen a privately-owned company reaches a certain 8ize, it may decide to 'go public’ and 1 shares on the stock market. This process is called an Initial Public Offering (IPO), or a flotation, oF a listing’ on the exchange. The process is complicated, and months of planning {ae inioved, The business is probably being eae ____ by just a few key people who. “were the founding members. Before the IPO, they have to 1 In five years’ time, the industry group I'd most like to work ints ..., because 2. One day | want to be @ freelancer working for myself ~ itll be much more rewartding than being the CEO of @ large corporation. agree © Disagree 1) INDUSTRIES AND COMPANIES assemble an independent board, and one of the first tasks of the board is to® auditors who will check the accounts for accuracy. The frm also needs specialist advice about the best tie tose, the inti offer price ofthe shares, and who to sel them to, Thais al handled by an investment bank, 2130 appointed by the board. The investment bank takes ‘some risk as they *__ that all the shen nl be purchased - lero on oa tes a8 F the issue ~The flaton wil ring a huge amount a new capital into the business. Most of this ig ®___ —— and used for expansion, but some wil 90 fo he people with privately. 7 ___ _— shares who: started the orginal company. Neatly aways these people ‘then continue as part of the management team, although they may init dficut to act to he 768 tape, shareholder pressure, and other 8 falisted company. 1.6 Complete the reasons for a merger or acquisition by matching the beginnings of sentences 1-8 with the best ending a)-h).. 1 To expand the business quickly, particulary ["] 2. To expand more cheaply than by internal growth, although eo 3. To meet the needs of customers who are demanding additional products and services 4 To gain economies of scale, ie have lower costs and [“] To gain control of (] 6 Togain marhet power: the lager, merged company will make the whole market less competitive (_] 7 To gain entry into a foreign market, ot avoid [1] 8 To become and be a) a key supplier of raw materials or components, b) and therefore prices and margins will increase ) seen as a global company, 6) if there is cash avalable on the balance sheet. €) increased efficiency through larger size 4) legal restrictions imposed on foreign-owned companies in that market 9) that the campany can't supply. #) the market thinks a company is a takeover target, its share price will go up and it will become more expensive to buy. 3 If 1 was an entrepreneur with a lot of money, Id create a startup company making / supplying / offering 4 Most mergers fal to produce the expected benefits (fac) Why?