Factors of Production

Labour

Labour, in economics, is some effort necessary to satisfy human needs. It is one of the three leading elements in production, the other two being land (natural objects) and capital.

In industry, labour has a great variety of functions, which may be classified as follows: production of raw materials, as in mining and agriculture; manufacturing in the widest sense of the word, or transformation of raw materials into objects serviceable to humans; distribution, or transference of useful objects from one place to another, as determined by human needs; operations involved in the management of production, such as accounting and clerical work; and personal services such as those rendered by physicians and teachers.

Many economists distinguish between productive and unproductive labour. Productive labour consists of those kinds of exertion that produce utility embodied in natural objects. Unproductive labour, like that of the musician, is useful but does not add to the material wealth of the community. As a result of the Industrial Revolution at the end of the 18th century, most workers were employed in large factories and similar undertakings. Those workers were not protected from economic exploitation or from the consequences of illness, disability, or unemployment. In the early decades of the 19th century, increasingly prevalent ideas of freedom caused great changes in the conditions of labour. Workers began to form trade unions and cooperative societies that enabled them to participate in many types of political activities and to protect themselves by political and economic means. Laws for the regulation of labour are now intended not to fix wages as formerly, but to protect the workers.

Notes:

raw – сырьевой

exertion – усилие, физическая нагрузка

utility – польза, полезность

conditions – условия

Unit 10

Forms of Business

Large Corporations in the USA

Although there are many small and medium-sized corporations, bigger business units are needed to perform certain services in the vast economy. Large corporations can supply goods and services to a greater number of people across a wider geographic area than small businesses. They serve consumers across the nation and across the world. Corporate products tend to cost less per unit sold. Moreover, consumers benefit from the availability of corporate “brand names”, which they recognize as guaranteeing a certain level of quality wherever purchased.

Large corporations also have the financial strength to research, develop and produce new goods. Their scientific know-how, innovation and technical capability are critical to maintaining the nation’s competitiveness and productivity.

In the USA, a corporation is a specific legal form of organization of persons and resources chartered by one of the 50 states for the purpose of conducting business. When people and resources are brought together, the result in the eyes of the law – is a person (Indeed, the Latin word “corpus” means “body” or “person”). A US corporation, distinct from any individual human being, may own a property, sue or be sued in the court and make contracts. For this reason, a corporation is an ideal vehicle for the conduct of business by many smaller enterprises as well as larger ones.

The corporate form of business is a more flexible instrument for large-scale economic activity than the sole-proprietorship or partnership.

First, the corporation itself has legal standing, it safeguards its owners. Second, the owners of shares of stock have limited liability; they are not responsible for debts. Third, corporate stock is transferable. An owner of stock can sell his or her holdings at any time or pass the stock along to heirs.

Note:

to sue – подавать в суд

heir – наследник

A Business Plan

Life may be very chaotic when you are starting or running a small business. The telephone calls to make, the letters to write, the decisions to take – all the day-to-day emergencies can push aside the sort of long-term strategic planning which is essential to keep your enterprise on the right track.

Doing a business plan before you start your firm is vital because it will spotlight potential problems before they arise and suggest ways to solve them – saving your time, money and headaches. A business plan consists of organized answers to a series of carefully thought-out questions vital to starting any successful company. Assembling this plan will be your first opportunity to manage your new business.

When people talk about a business plan they are usually referring to a formal written document. A written document helps to focus your thinking and gives you something to refer to later. Doing a business plan you write long-term objectives, estimates and forecasts on paper. There is nothing like writing something down to help clarify your mind and reveal your uncertainties and weaknesses.

But a business plan is more than a document, it is the entire process you go through to clarify and evaluate your prospective company. Once you have put down your plan, do not necessarily accept that it is set in concrete. Forecasts and objectives change as new bits of information and your better experience emerge.

As it is important for your plan to look professional, you may consider seeking advice and help on its production. This is available from enterprise agencies and training courses, accountants and corporate finance specialists. If your forecasts are likely to be fairly complicated and need changing, you might consider using a computer programme designed to enable you to produce forecasts and to examine the effect changes will have on the results.

Notes:

to spotlight – сделать что-либо центром внимания; выдвинуть на первый план

to manage – управлять, руководить

to refer to something – ссылаться на что-либо

to evaluate – оценить

to be set in concrete – быть неизменным, не подлежать изменениям

Unit 11

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