Anglais - Langue & Affaires

1. INTRODUCTION

→ The purpose of this lesson is to discuss the main business organizations in Britain and in
America. Before studying the various types of businesses in Britain or in the US, we will
first give a short definition of the business and then give an overview of the three sectors of
economic.

“Business is an organize effort whose produces goods or services which

Déf. Business :
can be supplied to satisfy the needs of ones of customers, in exchange for a reward or
payment which will give the producer or supplier an adequate return on his
investment, it's called a profit.”

→ The different types of businesses are :

• Sole traders
• Public Limited Companies or PLCs
• Franchising
• Private Limited Companies (société privée limitée à 50 actionnaires qui ne peuvent céder leurs parts
sans l'accord de la société)
• Partnerships
• Business Structure in America
• Mergers and acquisitions (fusions et acquisitions)
• Groups, Parent Companies and Subsidiaries
• Holding companies (sociétés de portefeuille)
• Multinationals and Conglomerates
• Blue chips (valeurs immobilières de premier ordre / acquisition des grandes sociétés industrielles)

a) Finance : Finance is usually the hardest thing the opened a start up business.
b) Labour : to help develop the service and then to produce delivery
c) Customers, without whom the business will fail.
d) Suppliers who provide many of inputs such as raw materials.
e) Premises and equipments : This can be a simple office or a large modern factory.
f) Management organization instruction : A business may although need to protect his
ideas or products. It can do it through copyrights and patents, which make it illegal from the
firms who copies, by keeping new products and produces secret until they'r ready to launch,
by focusing on retailing key staff.

Besides a business needs to clearly definite his objective : the target may be short term or
long term. The target must be regularly reviewed, so that the business and measure his
progress.

→ A business's objective can be : to survive in the market, to break even (atteindre le seuil de
rentabilité), to improve his image, to have high motivation among his employees, to
maximize profits, to increased market shares, to sale broad, to diversify and sale different
products to make returns to shareholders (actionnaires) or limited companies by giving out
dividends.
Location is although a key element : how to decide where to located ? A number of factors are
involved in such decisions. They vary, depending on, on what business produces : ED, primary
sector, secondary sector or tertiary sector. Possible reason of proximity of the market, proximity of
raw materials, re ability of skills labour (main d'oeuvre qualifiée), local pay rates, cost of land,
government support, subsidize (subvention), transports links … .

→ Let's turn on the three sectors of the economy ...

A business activity can be devised into 3 sectors ( Primary, secondary and tertiary sector )

a) The Primary Sector / The Extractive

The Primary Sector is the extraction of harvests products from the earth. Includes the production of
raw materials and basic foods.
Activities associated with the primary sector :

• Agriculture
• Mining
• Forestry
• Farming
• Fishing and hunting

The packaging on processing of the raw material associated with the sector is although considered
to be part of the sector. In developed and developing countries a decreasing proportion of workers
are involved in the primary sector. About 3% of the US labour force is engaged in primary sector
activity today, while more than 2/3 of labour force were primary sector workers in the middle of the
20th century.

b) The Secondary Sector / Manufacturing

Composed by manufactures and finished goods.

All of manufacturing processing on construction lies within the secondary sector included metal
working and smelting, car production, textile production, chemical and engineering industries,
aerospace manufacturing, energy utilities breweries, construction and ship building.

c) The tertiary sector / The service industry

It provides services to the general population and businesses. It's particularly important in modern
Britain.
Services give value to people but are not physical goods : banks, public transport.
They are sometimes classified as direct services to people (police, hair dressing) and commercial
services (business insurance, business post).

This is not ever the very good classification since most business services like banks and the post are
as much used by individuals as by businesses. Some businesses will concentrate on just one time
activity and the others will focus on range activities : a farmer is mainly concern with the primary
sector, he/she may although do some manufacturing. He/She produces fresh ice cream, butter or
yoghourt. In the us, more than 8% of the labour force are workers.
Before analyzing the firm's reason, it's necessary to know what type of business structure it is.
Here are some of the most common types of business structures in Britain and in the USA ...

2. TYPES OF BUSINESS

British businesses organizations are divide up into two : public sector and private sector.

→ Public sector is owned by the state or government for the people. People pays
taxes to the government to finance most of the pubic sectors. (taxpayer's money = argent du
contribuable)
→ Private sector organizations are owned by individual or group of individual. This
firms can be large or small. The can produce and sell goods and services, they attempt to
make profits for their owners because private sector businesses are set up to make a profit.

a) Sole Traders

→ A sole traders is limited to one only person. This person controls the owner's saving, the
bank loans, the overdrafts (découverts) and the profits.

As the name suggests it, a sole trader is wear and individual and he is the only owner of the
business. The business is often quite small in terms of size (as measured by sales generated or
number of staff employed).

The number of these businesses is very large and deep, the sole trader is the most common form of
the business ownership in the UK : window cleaning, plumbing, electrical work.
In the UK, about 20% in retailing and about 10% in finance, 10% in catering.

The sole traders business is easy to set up, no complicated people work is required. There is no
particular requirement except that sole traders register for the VAT and that the premises (logos) are
fit for business purposes.
Although, the sole traders must produce accounting information to satisfy taxation authorities, there
is no legal requirement relating to the business for other user groups. The sole traders must produce
accounting information too.

All profits go to the sole trader, who also has the satisfaction of building up his or her own
business, but there are disadvantages : as sole trader you have to take all the decisions yourself and
you may have to work long hour, you don't have limited liability (responsabilités) and you have to
provide (?) all the finance yourself. A sole trader needs to be “jack-of-all-trades” (def: a person that is
competent with many skills but is not outstanding in any particular one).

The sole trader can trade in his own name in which case no regulation applies. The name chosen
must not mislead or deceive (tromper) customers.
The sole trader must not run his business under the name of an existing concern so that the public
might confuse the 2 businesses. But the same name can be chosen for 2 concerns that do not carry
the same or similar business.

• The dissolution of the sole trader business can occur in two ways :

→ Retiring and selling.

→ Bankruptcy procedure.
The sole trader may decide to retire from the business and dissolving by selling off the assets (actifs
d'une entreprise) to other trades people, or by selling it as a growing concern (affaire en activité) to
another trader.
There are some legal formalities such as the conveyance (cession) of premises but no special
difficulties as long as the debt are paid in full. But when the sole trader can not pay his debts, he
may be forced to dissolve his business by his creditors under a process called “bankruptcy”.
Creditors ask the court for the bankruptcy order. The trustee (administrateur) will then deal with the
assets and generally sell them to pay the creditors.

Trading as a sole trader has many advantages :

Not least that you are able to give the more personal service to the customers and you are able to
make changing within your business very quickly. Due to the fact that there is no or little
bureaucracy, as the is only person who makes the final decision.
Other advantages include having complete control over the business and its profits. You are able to
use any money the business brings as you deem fit without having to justify your spendings.
These advantages also operating as the sole trader provides greater freedom and autonomy. But this
business structure can also present risk to you personal finance.

The more important disadvantage as operating as a sole trader is that the operator's liability is
unlimited. If a problem arises, creditors of the business are able to make totally responsible for all
the debts. This affects your personal assets and in a worst scenario, will send your bankrupt. Other
disadvantages include :

• The sole trader capital will be limited by his personal assets.

• The sole trader expertise may be limited and there is no one else to share the workload or
work loan (?).
• The sole trader is personally responsible for all the debts and liability.
• It may be difficult to pass on ownership making the business hand to sell if the owner dies or
experiences a change of circumstances.
• Taxation disadvantages exists when profits are high.

The key to success is to exploit the advantages of being a sole trader and take seriously the
disadvantages : for instance multinationals would be able to cope with demand and supply more
easily and far more quickly than the small sole traders.
A greater investment would allow them to buy equipment, increase production, adopt new
technology and develop new ideas.
The pressure put upon the sole trader must not be ignored and if you are thinking of becoming self-
employed as a sole trader you must address the issue as it could ultimately threaten the survivor of
you business.
A part from the pressure placed on the sole trader you have also fully liable financially. Finally, you
need to plan well for the future and deciding how your business might develop.

b) Partnerships

Partnerships are businesses owned by two or more people. A contract called “deed” or
“partnership”, is normally drawn up. It stats the type of partnership, how much capital has each
partner contributed and how profits and losses will be shared.

The partnership structure is typical of audit and accounting firms (entreprises de comptabilité) .
Accounting firms are never called companies. Their names which are generally those of the most
important founders are never followed by the abbreviation typical of public or private limited
companies such as PLC, LTD or CORP.
The first difference with the companies is that most partners play an active part of the
management of their firms whereas companies shareholders are not involved in management. An
other difference lies in the responsibility of partners : their responsibility is unlimited. Whereas that
shareholders is limited to the capital they have invested in the company. As a result, unlike in EU,
US and British partnerships have not legal entities.

Which mean they can not be taken to court as such. Only the real partners can be sued. In the US,
there is no limited number of partner but in Britain the limit is twenty. However there are some
exceptions, certain professional partnership such as solicitors (notaire / conseiller juridique ), accouters
and a surveyor are exempt from this maximum limit.

A partnership is generally run under the name of the partners but partners can trade in any name
as long as it doesn't suggest that their business is not the same as that of the competitors. As long as
it doesn't deceive or confuse customer or clients.
Each partner is the agent of his co-partners and enters into transaction on behalf of the firm (au nom
de … ). Partner are personally liable to pay the firm's debt from their own assets.

5 elements must be underlined when dealing with a partnership :

• The relationship between the partners is based on a contract.

• The distinctive features of a partnership are that partners must carry on a business. The mere
fact that individuals jointly own property doesn't necessarily mean they are partners. If the
property isn't being used by them to pursue some collective business activity.

• The business must be carried on with a view to profit.

• The partners must act in common and share the returns.

• Partners generally signed a return agreement. Though, this is not compulsory an agreement
to enter a partnership may be made by deed (acte) or in writing or by word of mouth.

➔ Types of partners : 3 types .

→ The general partner is the usual type. He puts capital into the firms and takes
part of the management of the business

→ The dormant or sleeping partner puts capital into the firm but takes no active
part in the management of the business. He nearly invests money in a partnership
enterprise but a part from receiving a return on capital invested, he takes no active
part in the day-to-day running of the business.

→ The salaried partner doesn't put any capital into the firm but works in it and he
is paid as a salary.

➔ The rights of Partners

→ To share equally in the capital and profits of the business.

→ To be indemnified by the firm for any liabilities incurred or payments made in the
course of the firm activities.
 → To take part in the management of the business.

→ To have access to the firm's book.

→ To prevent the admission of a new partner or prevent any change in the nature of
the partnership business.

➔ Dissolution of a partnership

There are two possibilities :

→ The dissolution can be non judicial :

In a number of cases. A partnership for a fixed terms is dissolved when the terms expires. A
partnership can be dissolve by novice (préavis) given by one of the partners or by the death or
bankruptcy of any partners, unless the agreements provide otherwise which it usually does.

→ The dissolution can be judicial when a partner petitions the Court to order the
dissolution. Several grounds are admissible such as mental incapability, conduct prejudicial to the
business, willful breach of the agreement or when the business can only continue to run at loss.

➔ Advantages of a partnership

→ The main advantages of a partnership over the sole trader for example the
responsibility can be shared. This allows for specialization where the strength of one partner can
compensate for the weaknesses of another partner. The expansion is easier compared to a sole trader
business as there is more capital to invest.

→ More people also contributing capital which allows more flexibility in the run for
the business.

→ There is less pressure of time on individual partner as there is someone consult

over business decision.

➔ Disadvantages of partnership

→ The main disadvantage comes from shared responsibility

c) Limited Company

This is a business owned by a group of people who do not want to have unlimited personal
liability for the business. This is because the company has is own legal identity separated and
distinct from the others. Liability is defined has limited because the maximum that the owners can
lose is the money that they have invested in the business.
In order to create a limited company, legal formalities have to be completed (effectuées) as stated in
the relevant companies act .
Companies are managed by director and owned by shareholders. Limited companies are the must
popular vehicles for businesses to carry out their operation. This is because of the obvious
advantage of limited liability, so that the assets of the owners can be shielded (= protected) from the
risks of business activities.
Statistics from the Companies House show that there are more than 2 million companies in its
register.
There are two types of limited companies : Private limited companies and Public Limited
Companies.

• Private Limited Companies

Although Britain has an active stock market, many large UK companies have remained in private
hands which means that their shares are not able for trading on Public equity market (marché des
actions).
They remained private because they can't afford to pay for a full listing on the stock exchange or
because they don't want shareholders to influence their long term business strategies.
The main characteristics of a PLC is that its shares are not available for the public market. Capital
is raised by the sale of shares although not to the general public. Dividends are payed to the
shareholders.
Besides the liability of the company is limited to the capital invested : the shareholders personal
assets are protected in the event a bankruptcy, they will only lose the capital invested in their shares.

• Public Limited Companies (PLCs)

Among the thousands of limited liability companies in the UK, only 5000, the cream of British
business, are PLCs.

“Public”, here, doesn't mean public sector or nationalized. It means that shareholders are members
of the general public and it is therefor a synonym for private enterprise.
The shares of most PLCs are quoted on the London Stock exchange or on the smaller Alternative
Investment Market (AIM). Before it can start the business or borrow money a public company must
satisfy Companies House that at least 50.000 £ worth of shares have been issued and that each share
has been paid up to at least quarter of its nominal face value.
It will then receive an authorization to start business and borrow money. Smaller PLCs's securities
may be traded on the developing over the counter market (OTC).

“Limited” means that the financial responsibility or liability of the shareholders is limited to their
shareholding. In other words they can't loose what they have invested in a business. PLCs must
have their account audited once a year and must comply with complex listing requirements (formalité
requise pour être coté en bourse) when they join the stock market.
They pay dividends once or twice a year and may be subject to shareholder influence, especially
when institutional investors such as banks or insurance companies are major shareholders and press
for short term performance and ever higher profits.

➔ Advantages of a PLC

• Liability is in the past majorities of cases strictly limited to the investments made by the
shareholders.
• Company officers are not personally liable for their actions unless there is a clear breach of
the financial duties.
• Limited companies often benefit from grater prestige than their sole proprietorship or
partnership counterparts.
• Limited companies often benefit from significant tax advantages. In fact many countries
around the world give exclusive tax incentive to this type of entity.
• The right of shareholders are normally clearly defined and protected.
• Corporate taxes are only payable after the end of the financial year (= année fiscale).
 • It is easier for PLCs to make acquisitions.
• Shares can be advertised.
• Shares can be soled trough the Stock Exchange (=bourse).
• Larger PLCs may find it easier to borrow from banks.

➔ Disadvantages

• Some PLCs can grow so large that they may be can difficult to managed effectively.
• There is a risk of takeover (=Offre Publique d'Achat OPA) by rival companies that have bought
shares in the firms.
• Decisions take longer and they may be disagreements.
• Growing Public can be expensive.

d) Franchising

Franchising is not a business in himself but a way of doing business. It is essentially a marketing
concept, an innovative method on distributing goods and services.
The franchising is a business relationship in which the franchisor are the owner of the business,
providing the product of the services, assigns to independent people the right to market and
distribute the franchisors goods.

Franchising's date back to the 1850's with Isaac Singer who made improvements to existing models
on a sewing machine (=machine à coudre) whose distribution he wanted to increased. A few years
later, a more successful example of franchising was John Pemberton franchising of Coca Cola.
The 1950's saw a boom of franchise chains in conjunction with the development of America's
Interstate Highway System. Fast food restaurants like Mc Donald's exploded and soon, it spread all
over the world.

In the US, almost half of retails sales are made trough firms operating under the franchise system
like Mc Donald's which has a brand franchise. A franchise mission is to sale products on trade under
a certain name in a particular area. The firm who sold the franchise is called the franchisor and a
person payed by the franchise is called a franchisee. A franchisor take a percentage of the profits of
the business without having to risk capital or become involved in the day-to-day management. The
franchisee benefits from trading under a well-known name and enjoys a local monopoly. The
franchisee is his own boss and takes most of the profits.

➔ Advantages of the Franchising system

• There are countless benefits to becoming a franchisee. That's why franchising is one of the
fastest growing sectors of the economy. Here is a short list of the advantages of the
franchising system.

→ The franchiser provides detailed training.

→ The franchisee benefits from operating under-the-name on reputation or brand image of
the franchisor. Which is already established in the mind and eyes of the public.
→ The franchisee will usually need less capital than he would if he was setting up a
business independently.
→ The support and benefits provided by a franchise system largely reduce the franchisee's
business risks.
→ The franchisee has the benefit of the franchisor's continuous research and development
program which are design to improved the business and keep it up to date on competitive.
 → The franchisee can use the franchisor's patents, trademarks and copyrights.

➔ Disadvantages

→ The relationship between the franchisor and the franchisee involves the imposition of
controls.
→ The franchisee will have to pay the franchisor for the services provided and for the use of
the system. Ex : The initial franchise tee and continuous franchise fees.
→ The prospective franchisee may find it difficult to assess (évaluer) the quality of the
franchisor.
→ The franchisor contract will contain some restriction against the sale or transfer of the
franchise business.
→ Franchises may find themselves becoming too dependent upon the franchisor.
→ The franchisor's policies may affect the franchisee's profitability.

e) Types of businesses organization in America

There are no separate legal forms for Public or Private companies in America. And there is no
national or federal business status for company. Corporations ( corp/incorp ) are not registered in
the US. They must be incorporated in one particular state on respecting this state's laws and
business regulations. Corporations account for approximately 86% of all business sales, despite
representing 20% of all companies in the USA.

There are two different type of Corporation : the private corporation and the publicly traded
corporation.

A private corporation refers to a company which is own by just a few individuals, sometimes
family members. This types of corporation rarely sell their shares.
The publicly traded corporation has generally many shareholders who buy and sell their shares in
the stock market.

➔ Advantages

→ It's much easier to raise financial capital because of his flexibility in receiving new investors
with new capital.
→ In a corporation the liability of shareholders is limited to their shareholding.
→ A corporation has unlimited life since the corporation can continue working even if one of the
shareholders dies or decides to quit.
→ A corporation also encourages specialization since each shareholder can do for the business what
he does best.

➔ Disadvantages

→ It's difficult and costly to start a corporation.

→ Corporations are constantly regulated.
→ Owners have less control over the decisions related to the performance of the corporation.
→ Taxation is higher since shareholders must pay double taxes. One in the profit earn and an other
one for the corporation companies.

In the US, the companies that want to go public, those which plan to sell securities to the public,
must registered with the Securities Exchange Commissions ( SEC ) for clearance. The SEC's job is
to ensure investors against losses.
Decides it can't prevent the sale of shares by risky powerly managed or unprofitable companies. Its
role is to make sure that the markets are transparent and that all investors are fully and equally
informed.
The SEC also acts as the Stock Market Watchdog (gendarme de la bourse) and investigates against
fraud and insider trading.
The French equivalent “Autorité des Marchés Financiers” (AMF) was largely modeled on the
American SEC and the British Financial Services Authority which owes much to its Washington
based system.

f) Mergers and acquisitions

They are not types of business organization but a way of business's to expand or organize their
activities. Mergers and acquisitions have been very popular lately and many companies have set up
mergers and acquisitions departments to merge with of the companies to buy them.
A mergers is when two or more separate companies join to form a new one thanks to a pooling of
their interests.
They made either use cash to buy each others shares or more commonly exchange their own shares
with no cash payment.

The companies that wish to join together do so on equal terms. In the other hand, acquisitions may
be unfriendly and take the form of takeovers (OPA). A takeover battle takes place when a company
forcibly tries to purchase the shares of a target company and the latter does its best to remain
independent.

In the Darwinian world of business, companies struggle to adapt and survive. The fittest often try to
absorb the lame duck.
A firm may agree to be acquired by another one if it is in its interest and if it makes good business
sends.
In that case a friendly takeover takes place.

Firms sometimes refuse to be absorbed and they are ready to fight in order to preserve their
independence.
If the acquiring company's manager has made up his mind, he will launch a hostile takeover and
takeover battle between the aggressor and its target will develop. Most takeover are launched for
individual reasons : car makers, banks, computer manufactures, for example, who join their
businesses so as to become market leaders or to achieve economies of scales or to find new
customers.

On the other hand, raids are hostile takeovers whose justification is purely financial. A raid is a
surprise attack on a company in order to control it. The raiders buy as many of their victim
shares as they can, in the shortest possible time. Once they have bought the company, they break it
in different units and sell them separately. Corporate leaders do not intend to keep the company they
acquired. They just hope to make a profit on the difference between the buying and the selling
prices.

g) Groups, parent companies and subsidiaries

Like mergers and acquisitions, these are tools used by companies to organize or reorganize their
activity. In a group of companies, the leading company is called the Parent Company. It owns more
than 50% of the shares in other companies which are called subsidiaries. The parent company's
accounts and those of its subsidiaries can be combined into consolidated accounts and treated as a
whole.

When a subsidiary is not fully owned, when less than 50% of its shares are in the hands of a
company, it's called an associated company and its result must be shown separately as a minority
interests.
Parent companies may adopt different strategies when dealing with their subsidiaries. Some
companies have a hands-on-policy and control their subsidiaries tightly. Others opt for a hands-of-
policy which means that they leave a large autonomy to their subsidiaries provided the latter make
enough money to justify their level.

h) Multinationals and Conglomerates

➔ Multinationals
Multinational corporations existed since the beginning of overseas trade. They have remained a part
of business scene throughout history. Entering their modern form in the 70’s and 80’s century with
the creation of large European-based monopolistic concerns such as the British east India company
during the age of colonization.
Multinational corporations were viewed at that time as agents of civilization and played pivotal/key
role in the commercial and industrial development of Asia, South America and Africa.
By the end of the 19th century, advances in communication had more closely links with market. And
multinational corporations retained their favorable image as instruments of improved global
relations through commercial ties/links.
The existence of close international trading relations did not prevent the outbreak of 2 World Wars
in the 20th century. But an even more closely bound-world economy emerged in the aftermath of the
period of conflict.
In more recent times, multinational corporations have grown in power and visibility but have come
to be viewed more ambivalently by both governments and consumers worldwide. Indeed,
multinationals today are viewed with increased suspicions given their perceived lack of concern for
the economy well-being of particular geography areas and the public impression that multinational
are gaining power in relation to national government agencies international trade federations and
organizations and the local national and international labor organization.
Despite searched concerns, multinational corporations are poised to expand (ready) their power and
influence as barriers to international trade continue to be removed.

What is a multinational?

 As the name implies, a multinational corporation is a business concern that operates

in several countries. A multinational is a business group which has subsidiaries and
operations in many different countries especially in different continents. An
important characteristic is that they have well-established corporate brands that are
widely recognized. Many multinationals produce global brands with similar
marketing mixes across the world.

Ex: With the same or similar advertising, distribution, retailing techniques and promotions.

There are over 40 000 multinational corporations currently operating in the global economy in
addition to approximately 250 000 affiliates running cross continental businesses.
In 1995, the top 200 multinational corporations had combined sales of 7 trillion dollars which is
equivalent of 28, 3% of the world’s cross domestic products. The top multinationals have
headquarters in the US, west of Europe and Japan. They have the capacity to shape global trade,
production and financial transactions.
The WTO (World Trade Organization), the IMF (International Monetary Fund) and the World
Bank are the 3 institutions that underwrite the basic rules of economic monetary and trade
relations.
In the 1990s, most of investments were in high icon countries and a few geographic locations in the
south like East Asia and Latino America.

According to the World Bank’s 2002 world development indicators, they 63 countries considered to
be low-income countries. The share of these low-income countries in which foreign countries are
making direct investments is very small. It lows from 0.5% in 1990 to 0.6% in 2000. Although,
Foreign Direct Investment in developing countries rose considerably in the 1990s. Not all
developing countries benefited from these investments. Most of these FDI went to a very small
number of lower and middle-income developing countries in east-Asia and Latino America. In these
countries, the rate of economic laws is increasing and the number of people living at the poverty
level is falling.
However, there are still nearly 140 developing countries that are showing very slow rose rates while
the 24 richest developed countries + another 10 to 12 newly industrialized countries are benefiting
from the economic growth and prosperity.

Multinational corporations are although seen as acquiring too much political and economic power
in the modern business environment. Indeed, corporations are able to influence public policies to
some degree by threatening to move jobs overseas. But companies are prevented from using this
tactic given the need for highly trade workers to produce many products.
Finally, the modern multinational corporation is not necessarily headquartered in a wealth policy.
Many countries that were recently classified as part of the developing world including Brazil,
Kuwait, Taiwan and Venezuela are now home to large multinational concern.
In short a multinational is a corporation that has its facilities on other assets in at least one country
other than its own country. Such companies have offices and/or factories in different countries
usually have a centralized head office where they coordinate global management. Very large
multinational have budgets that exceed those many small companies.
Nearly all major multinationals are American, Japanese, or western American such as Nike, Coca
Cola, Wal-Mart, AOL, Toshiba, Honda…

Advocates of multinationals say they create jobs and wealth in countries that are in need of such
development.
On the other hand, critics say they have undue political influence over government.
They can exploit developing nations and create a loss of jobs in their own home countries through
relocation.
Current trends in the international market place favor the continued development of multinational
corporations. Countries worldwide are privatizing government-run industries and the development
of regional trading partnerships such as the North American Free Trade Agreement (NAFTA)
between Canada, Mexico and the USA and the European Union have the overall effect of removing
barriers to international trade. The greatest potential threat posed by multinational corporations
would be their continuous success in a still under-developed market.
Indeed, as the produced capacity of multinational increases, the buying power of people in many
parts of the world remains unchanged.

➔ Conglomerates

A conglomerate is a group of companies which has diversified activities.

Ex: general electric’s, features 20 different activities and is “from a light bulb to jet engines
conglomerates.”

➔ Blue chips

The largest and best-known companies are frequently called Blue chips.
There is no technical definition of what a Blue chip is.

But there are some typical characteristics:

- A Blue chip depends on private capital state owned or nationalized whether fully
or partly aren’t called Blue chips.
So the SNCF or the BBC cannot be called Blue chips, even though they are major
business units.

- A blue chip is quoted on a major stock exchange like the New York stock exchange
in the US, the London stock exchange in England, or the Paris bourse in France.

- A blue chip is big enough to be listed in a measure stock market index. In others
words, its market capitalization (number of shares multiplied by share price) is one
of the largest in the country. For example 30 blue chips are listed in the Dow Jones
industrial average which is America’s oldest and best known index. Other famous
indices include the following:
1. Footsie 100 ; (1OO british blue chips)
2. Nikkei (Japan, 225 Japanese blue Chips)
3. Cac 40 (40 french blue chips)

- A blue chip is long established and profitable in the long term.

Famous US blue chips include IBM, Kodak, Mc Do, General Motors, Coca Cola, Boeing and
british blue chips include Rolls Royce, British Petroleum…

The term blue chips derives from poker when they do not play for money, card players use wood or
plastic chips with different shapes and colors indicating their value and the blue chip has the
highest value.

At the end of the 19th century, many stock market investors got used to calling the best stocks blue
chips to mean that they were safe investment. The term may apply both to the company and to its
shares.
 Conclusion

Businesses come in a variety of forms.For example, one important distinction is between private
and public sector businesses.Then, within each sector, there are a number of different types of
businesses.
- In the public sector, public corporations are government own businesses such as the
BBC which are managed independently of the government.
- In the private sector, there are sole traders, partnerships, private companies, public
companies and franchise organization.

3. COMPANY FORMATION

A company is an incorporated association formed to conduct business or any other activities in the
name of the association. Because it is incorporated, it has a legal personality distinct from that of its
members. Setting up a company brings many obligations. So, it may be necessary to take advice
from a solicitor or a content so has to know if a company is the best way to run a business.
There are 4 main types of companies :

1. Private company limited by shares

2. Private company limited by guaranty
3. Private unlimited company
4. Public limited companies.

Company legislation generally allows one or more person to form a company for any law-full
purpose by subscribing to its memorandum of association.

A. Formation

1. The memorandum of Association

- It mainly governs the companies’ external affairs.

- It represents the company to the outside world stating its capital structure, its power, and its
objects.
- Each subscriber must sign the company’s memorandum in front of a witness who must also
sign the document before it is sent to company’s house.
In the case of company limited by shares, each subscriber must take at least one share in the
company and the number of shares that each subscriber takes must be written against the
relevant subscriber’s name.
The memorandum of association must contain a number of clauses.

a. The name clause:

It must not be the same as that of a company already registered and must end with a
word “limited” for a private company and the words public limited company (PLC) for a
public company.
b. The registered head office clause
c. The objects clause

B. Financing the company

 1. Shares and shareholders:

A company may raise money in 2 ways:

- share capital
Share capital refers to funds raised by issuing shares for cash or other considerations.

- Loan capital.
Loan capital is part of a company’s capital raised by loans.

First of all, it is necessary to understand what shares are and why they are issued.
In simple words, a share or stock is a document issued by the company which entitles its holder to
be one of the owners of the company.

A share is issued by the company or can be purchased from the stock market.
By owning a share you can earn a portion and selling shares you get capital gain.
So your return is the dividend more the capital gain.

However, you also run the risk of making a capital loss if you have sold the share at a price below
your buying price.

A company’s stock price reflects what investors think about the stock not necessarly whet the
company is worth. For instance, companies that are growing quickly often trade at a higher price
than the company might currently be worth.

Stock prices are affected by all forms of company and market news.
Publicly traded companies are required to report quarterly on their financial status and earnings.
Market forces and general investor opinion can also affect share price.

Shares represent ownership of a company when someone buys share in a company, he becomes one
of the owners of the company.

Shareholders choose who runs a company and are involved in making key decisions such as
whether a business to be sold for example. While shares are most associated with a stock market,
the majority of small businesses can’t afford to be listed on the stock market. Most of the time, they
give out shares in their company in return for an investment. The money may come from friends
and family or from businesses that are looking for capital to finance high growths through formal
equity funding finance.

The ability to raise money or capital is essential. Not only for starting, but although for maintaining
and expanding a business.

The first thing the business has to do is to outline a strategy or business plan.
When prepared carefully and thoughtfully, the business plan is a road map that can pave the way for
the businesses growths and success.

In order to attract investors, the business plan should include:

- A persuading introduction and request for funds.
- A statement of the purpose of the business.
- A detailed description of how the business will work, including what the product service
will be whether it will have employees, who the suppliers of goods and services will be and
where the business will be located.
 - Who the customers will be.
- An evaluation of the main competitors .
- A description of the market strategy.

There are different models for financing a business :

- Own money
- Equity financing (investors give money in exchange for a share in the business and dept
financing, borrowing money that will be repaid with interests)

Formal equity finance is available through :

- Business angel investors

A business angel is a wealthy investor who provides capital for new ventures.
- Venture capital firms
Venture capital is often needed for the finance of high-tech and high-risk project.
- Stock markets : they can provide new finance, a mechanism for investors to trade shares, a
market valuation for the company, an incentive for staff using shares or stock options. It can
provide the business with acquisition currency in the forms of shares. It can provide a way
to raise the businesses provides. The capital of a company may be divided into 4 types of
shares : ordinary or equity shares, deferred shares, preference shares, redeemable shares.

C. Management of the company

In order to be efficient, the company needs to be organized. The organizational plan tries to
establish a platform within the company so that the latter may accomplish its mission, its strategy
and its objectives.
Furthermore, a company's mission, strategy and objectives will determine the type of structure to be
adopted as well as the process resources and competences required for its operation.

1. Organizational Structure

They are several types structures in business organization. But they all fit into four basic
categories :

a) Formal organizational structures

For the most part as long as they are at least to people running a business there is some sort
of hierarchy which determines who does want. When there are more than two people in a
business, this hierarchy often become a formal organizational structure which specifically
details and the responsibilities of all employees. Without some sort of organization a
business will be in total chaos because no one would know who is in charge of what. This
approach is although know as the functional organization structure and has been used
through out the centuries, since man established some sort of hierarchy dictating that the
man would hunt and the women would gather.
Today's organization and structure most commonly resembles ruling dynasties with usually
one person or maybe one group at the very top of the corporation and multiple layers or
supervisor department's head or managers between the top and the actual workers.

b) Flat organizational structures

The flat organizational structures means that they are very few and often no levels of
management between the staff and managers. Which means that the staff has some decisions
 making authority, this type of organizational structure works best for small organizations or
for smaller units of operation in larger companies. The flat organizational structure has three
basic benefits : communication, flexibility and degree of supervision.
Communication in thus type is generally faster, more reliable and is more effective. The
flexibility to make decisions means the company will be better able to serve its customers
and deal with their complains since the staff members will be able to take care of the
customers immediately. Finally, it is a bottom-up a broach and relies on highly competent
staff.

c) Functional organizational structures

The functional organizational structure is probably the most used and has probably been
around the longest since it is reported that the ancient egyptians helped to established this
form of organization for the building of the pyramids. It is simply one in which there is a
fairly strict hierarchy of responsibility. It is often depicted has a pyramid. In this type of
structure, people with similar jobs are usually grouped to form departments or functional
areas. They may be a production department, a marketing department, etc … depending on
how large the company actually is. Most of the departments will be overseen by department
head or director. Some of the benefits of the functional organizational structure include
having a chain of command which is fairly stable and clear. Depending on the actual size of
the business, there can be a few drawbacks to the functional organizational structure.
Communication among departments can be slow and cumbersome because they are so
many people to consult over decisions making.

d) Matrix organizational structures

Some organizations find that none of the three organizational structures previously
mentioned meet their needs. To overcome this inadequacy they use a matrix structure, which
is a combination of two or more different structures. The Matrix structure is based more on
teams than in individuals departments.

• The purpose of a company's organizational structure is

• To organized the different resources in a different way,
• To allow a real share of tasks and responsibilities between the various emplyees and groups
• To ensure this effective coordination of the companies activities and to clarify decision
making processes.
• To enhance on clarify the vertical and horizontal communication channels.
• To allow effective monitoring and analysis of the company activities.
• To make the resolution of crisis and problems easier.
• To keep the employees of the company motivated by providing them with professional
satisfaction.

In order to build a good organizational structure a certain number of principles must be taken into
an account :

• The structure must comply with the strategy. Objectives and strategies must be known and
supported by all employees.
• The whole structure must be divided into functionnal areas such as finance, production
marketing, etc …
• The number of structure should be as low as possible.
• The number of employees in each functional area should vary in accordance with the nature
 of the functions.
• Employees must know who they should report to and who has the authority to make
decisions.
• The structure should be designed so as to be able to cope with any change in the
environment: new legislation, technological development, etc … .

Conclusion
Most people understand and accept that in order for any business, to function with any degree of
success there must be some sort of structure in place. There are various business structures that are
typically followed on determined by the size and type of the company. However, what some people
overlook is how important the organization culture is for the survival of the business. The type of
organizational structure and culture associated with a business can have 4 reaching consequences on
how well the company performs.

Many small businesses operate with a flat organizational structure because there are very few
manager between the staff and the owner. Large corporations tend to use a more formal structure
such as the functional approach where everything is arranged in department and based on some sort
of hierarchy. The culture of the company is a different matter altogether.

4. The board of directors

It is the highest governing authority within the management structure of any publicly traded
business.
It’s the board job to evaluate and approve appropriate compensation for the company’s chief
executive officer (CEO), Evaluate the attractiveness of dividends and the way they will be
distributed to approve the company’s financial statements and recommend or strongly discourage
acquisitions and mergers.
The board is made up and individual men and women: the directors who are elected by the
shareholders for multiple year-terms. Shareholders own limited companies but they don’t run them.
That job is given to directors.
Every limited company must have at least one director. A public limited company (PLC) must have
at least 2 directors.
Directors have many business responsibilities for ensuring the success of their company in areas
such as health and safety employment law and tax.
In general, it’s up to shareholders to appoint who they want as director. But there are some
restrictions on candidates:
- The candidate must not have been disqualified by quote from being a director. In this case,
he needs the quotes permission.
- He must not have been on undischarged bankrupt. In this case, he needs the same
permission.
- For a public limited company if he is over 70, he’s appointment must be approved at a
general meeting of the company.

It must although complies with the company’s articles of association. They may include how many
directors there should be, how long they can serve and what happens at the end of their term.
The company’s memorandum and articles of association limit what directors can do. They must act
in good faith in the interest of the company as a home.
This includes treating all the shareholders equally, declaring any conflict or interest, not making
personal profits at the company’s expense.

Directors must obey the law. Company law requires them to produce proper accounts and send
various documents to Companies house.
Other laws include such areas as health and safety employment law and tax.
Finally, they may be responsible for the actions of company’s employees.

Disqualifications of directors:

Potential causes of disqualification include:

- Allowing the company to trade while insolvent.
- Failing to prepare and file accounts.
- Not sending returns to company’s house.
- Failing to send tax returns and pay tax.

In some cases directors could also face criminal charges. Fines or being made personally liable for
the company’s debts.
While disqualified, you must not be a director for any company, act like a director, influence the
running of a company through the directors and finally be involved in the formation of a new
company.

Ignoring a disqualification order is a criminal offence for which you could be find and send to
prison for up to 2 years.

There are a variety of views about the board of directors.

However, most of these views share common ideas about its duties and responsibilities.
Since managers are people who steer (diriger) an organization toward meeting its objectives,
management has been described as: “the process of planning, organizing, leading and controlling
the efforts of organization members and of all organizational resources to achieve stated
organizational goals.”

A manager’s job is to maintain control over the way an organization does thing and at the same time
to lead inspires and direct the people under them.
In a company, the shareholders will elect a board of directors to represent their interests. A
managing director will be appointed and will have overall responsibility for running the company.
The managing director with help from the directors will appoint senior directors to run the
company.

Possible structure will include:

- Regional managers when an organization operates on regional bases.
- Functional managers when an organization is split up into (divided) functional areas such as
human resources, finances, sales…
- Departmental managers when an organization is split up into departments: a school or a
retailing outlet.
- General Managers for example, an office or a factory may have a general manager whom
functional managers report to.

Each manager in an organization is given an area of responsibilities.

Typically, they will have targets and objectives to meet which fit into the organizations overall
targets and objectives.

Managers are typically responsible for:

- Establishing, Prioritizing, Making sure that objectives are met.
- Establishing a frame work for communications and patterns of work within their area of
responsibility.
 - Communicating targets, goals and results to people that work for them.
- Motivating employees.
- Setting out the administrative arrangements for their area of responsibility.
- Creating, monitoring and making sure that budgets are achieved.

The board of director’s responsibilities includes the establishment of the audit.

The audit committee is responsible for ensuring that the company’s financial statements and reports
are accurate and use fair and reasonable estimates.
The board members select higher and work with an outside auditing firm.
The compensation committee sets base compensations, stock option awards for the company’s
executives including the CEO.
In recent years, many boards of directors have come under fire for allowing executives salaries
reaching unjustifiably absurd levels.

To sum up, the major responsibilities of the board of directors are:

- To determine the organization and purpose.

- To select the executive.
- To support the executive and review their performance.
- To ensure effective organizational planning.
- To ensure adequate resources.
- To manage resources effectively.
- To determine and monitor the organization’s program and services.
- To enhance the organization’s public image.
- To serve as a court of appeal.
- To assess its own performance.

Conclusion

All businesses need a range of skills to survive and grow. Getting the right mix of people to
complement and reinforce a business is essential. A single director or managers rarely has the
combination of skills that a management team needs. Each member of a management team can
concentrate on their own area of expertise. In addition, a business benefits from having its overall
direction and goals viewed from different perspectives. A strong management team is particularly
significant of the business is to grow and develop as a whole. As a business grows, a management
team is although important in spreading leadership responsibility. It’s crucial if the business
operates in more than one location, if it operates in more than one industry, and if it has different
cultures (after a merger or an acquisition).
Besides, management teams can although operates at different levels. Teams can be set uo to help
run particular locations or divisions. These provide additional opportunities for staff development or
involvement and can be an asset for the business.

5) Various aspects of a business

1. Business activity

Business activities are those which are concerned to meet the need of customers by providing a
product a service that they require. (...) The term value added refers to the various ways in which
modern businesses make the goods and services their provides customers friendly. This organization
research customers requirement in oder to create the product and service benefits that the customers
are looking for. Business activity takes place at three stages of production :
 • Primary activity involves extracting the gift of nature, ex : drilling oil from the ground.
• Secondary activity involves manufacturing finished goods, ex : refining oil and gas.
• Tertiary activity involves providing services such as making finished goods and services
available to the end customer.

Business activity is focused on the achievement of appropriate goals. These can be categorize into
business aims or objectives : this is what a business wants to achieve.
A business may have several aims : in the private sector business aims to make profits. Others aims
to survive : being more competitive or being more environmental friendly.
Production aims for some companies will focused on quality and meeting particular targets and
standards. Marketting aims will focused on identifying and meeting the needs of customers.
Custormer service aims will focused on delighting customers. Business objectives and functional
objectives make it possible to set targets : this targets then create a direction for activities. The
overall aims of an organization can be translated into specific activity objectives. For example a
section head in a supermarket may have the objectives at the end of each working day to make sure
that there are enough employees schedule to carry out the require activities of the following day.
Employees have their own objectives and schedules. Objectives therefor provide a clear structure
for all the various activities that an organization caries out.

Peter Drucker, a well-known American business professor, suggests in his book “An Introductory
view in Management” that a work of a manager can be divided into planning, organizing,
integrating … . Secondly, the role of managers is to organize the overall businesses activities. They
analyze and classify the activities of the organization and the relation between them. They divided
work into manageable activities and then into individual jobs. They select people to manage these
units.
Thirdly, managers practice the social skills of motivation and communication. They have to
communicate objectives to the people who are responsible to attaining them. They have to make the
people who are responsible for performing individual jobs form teams. They make decisions about
pay and promotion. In addition to organizing and supervising the work of their subordinates, they
have to work with people in other functional areas.
Fourthly, managers have to measure the performance of their staff and to make sure that the
objective set to the organization as a whole and for each individual members are being achieved.
Lastly, managers develop people browse their subordinate and themselves. Top managers have
although to supervise a business's relation with customers, suppliers, distributers, bankers,
investors, public authorities and so on, as so as deal with measure crises which might rise.

2. Control of business activity and government influence on business

activity

Control activities are the policies procedures techniques and mechanisms that held ensure that
management response risks identified during the risks assessment process is carried out. In other
words, control activities are actions taken to minimize risks when the assessment identifies a
significant risk to the achievement of a company's objectives, a corresponding control activity is
determined and implemented. Control can be preventive or detective. Preventive activities are
designed to deter the occurrence of an undesirable event. The development of these controls
involves predicting potential problems before their occur and implementing procedures before to
avoid them. Detective activities are designed to identified undesirable events that to occur and alert
management about what has happened so that corrective action can be taken rapidly.
Control of business activity takes place at two levels : controls from within the organization and
external controls.
 • Internal control involves the creation of management system. For example there will be
control systems for managing the consistency and quality coming of a production line.
• External control : there are a number of external controls which limit organizations like the
Inland revenue which exerts control over business activity by making sure that companies
take appropriate levels of taxes on time.

Internal and external controls are designed to make sure that a business runs efficiently in working
towards his objectives while complying with the objectives and requirement's of the wider society
in which we live.

3. Reasons for regulating a business activity

Regulation means providing rules for businesses and other activities. Some aspects of business
activity are self-regulating. For example, the advertising standards authority provides a voluntary
code of practice for the regulation of advertising in Britain. However, in many areas, it’s necessary
to establish some form of compulsory regulations backed up by (soutenu par) legal functions such
as finds (amendes) and even prison sentences for employees and directors for malpractice. Today,
we are bound by UE regulations which are directly binding (contraignant) on all member state
without the need for national legislation to put them in place.
Regulations take place:

- To guarantee minimum standards (of consumer protection)

- To protect the weak against the strong (small companies against larger companies or group
of companies that work together to fix prices)
- To provide bench marks (norms) of good practice for businesses to set minimum standards
- To provide an appropriate frame work for ethical business behavior
- To create standards where there are none

In a number of industries that were formally (in the past) under government control regulators have
been appointed to make sure that prices are fair and that there are no restrictive practices carried out
by the newly privatize businesses that operate in these markets.

4. How business are affected by government policy: the example of

Britain

Governments create the rules and frame works in which businesses are able to compete against each
other.
From time to time, the government will change these rules and frame works forcing businesses to
change the way they operate. Business is thus deeply affected by government’s policy. Key areas of
government policy that affect business are economic policy and legal changes.
- Economic policy :
A key area of government policy is the role the government gives to the state in the economy.
Between 1945 and 1979, the British government increasingly interfered in the economy by creating
state-run industries which usually took the form of public corporations.

However, from 1979 onwards with Margaret Teacher we saw an era of privatization in which
industries were sold off to private shareholders to create a more competitive business environment.
Taxation policy although affects business costs. For example a rise in corporation tax as businesses
can pass some of this tax on to consumers into higher prices. Another area of economic policy
relates to interest rates. In Britain, the level of interest rates is determined by the government
appointed body the monetary policy committee. A rise in interest rates makes it more expensive for
businesses to borrow money and although causes consumers to reduce expenditures.
Examples of legal changes include:

- The creation of the national minimum wage for the under 18.
- The requirement for businesses to cater for disable people by buildings ramps into offices
shops
- Providing increasingly tighter protection for consumers against unscrupulous business
practice
- Creating tighter rules to ensure fair competition between businesses.

Today, British business is increasingly affected by EU regulations and directives as well as national
laws and requirements.

5. International issues and globalization

Globalization is a process of interaction and integration among the people companies government
of different nations. Human societies across the globe have progressively established closer contacts
over many centuries but recently the pace has dramatically increased. Computers, phones, huge
ocean-going vessels have may the world more interdependent than ever. Multinational corporations
manufacture products in many countries and sell to consumers around the world.

Money, technology and raw materials move evermore swiftly across national borders. Along with
products and finances, ideas and cultures circulate more freely. Many politicians, academics and
journalists consider these trends as both inevitable and welcome. This current wave of globalization
has been driven by policies that have opened economies domestically and internationally.

In the years since the WW2 and especially during the past 2 decades, many governments have
adopted free market economic systems vastly increasing their own productive potential and creating
milliard new opportunities for international trade and investment. Governments have although
negotiated dramatic deductions in barriers to commerce and have established international
agreements mainly through the world trade organization to promote trade in goods, services and
investment.

The WTO was born out of the general agreement on tariffs and trade (GATT) which was established
in 1947.
A series of negotiations called GATT rounds began at the end of WW2 and were aimed at reducing
tariffs for the facilitation of global trade and goods.
The WTO replaced GATT as the world trading body in 1995. The purpose of the WTO ensures that
global trade is carried out smoothly really unpredictably. The WTO embodies (incarne) the legal
ground rules for global trade among member nation and this offers a system for international
commerce. The WTO aims to create economic peace and stability in the world through a
multinational system based on connecting members that have ratified the rules of the WTO in there
individual countries have well. This means that WTO's rules become a part of country's domestic
legal system.

The rules therefor applies to legal companies in the conduct of business in the international area. If
a company decides to invest in a foreign country it will have to comply with the rules set by the
WTO. Theoretically, if a country is a member of the WTO, its local laws can't contradict WTO's
rules. Which currently govern 97% of all world trade.

If a trade disputes occurs the WTO tries to resolve it : if for example a country erects a trade barrier,
in the form of the custom duty, against a particular country or good, the WTO may issue sanctions
against the violating country . The WTO will although work to resolve the conflict through
negotiations. The anti-WTO protest will have seen around the world are response to the
consequences of establishing a multilateral trading system. Critics say that the after
effects of WTO's policy are undemocratic because of the lack of transparency during the
negociations. Opponents although argue that since the WTO functions as a global authority of trade
and reserves the right to review a country's domestic policies : national sovereignty is compromise.
Technology has been the other main driver of globalization, the advances have particularly
transform economic life. Information technology have given consumers investor in business
valuable new tools for identifying and pursuing economic opportunity. Proponents of globalization
claim that it allow poor countries and the citizens to develop economically and raise their standard
of living while opponent of globalization argue that the creation of an unfettered international free-
market has benefited multinational corporations in the western world at the expend of local
enterprises, local cultures and ordinary people.

No country today can provide the resources necessary to fully develop its economic potential and
satisfy the needs of the population. The main drivers of globalization are :

• Cost factors : companies are looking for cheaper level force and manufacturing costs to
enable them to stay competitive. So they outsource to other countries. The country receiving
the inward investment benefits from the creation of work, skills development of technology
transport.
Its low cost give it a major competitive advantage.
• Market factors : As domestic factors become saturated, emerging market offer new
opportunities. Countries like Brazil, India, Russia and China could dominated world trade in
the 21th as the US did in the 20th and the UK in the 19th . In any cases, companies need to
establish a global presence because customers are although global. It's dangerous to stay
aside as competitors marge inform alliances.
• Technology factors : The internet makes comparison of supply key costs and comparison of
final prices easy for the end user. Mobil communications allow employees to keep in touch
all over the world. Software tools in company intranets allow managers to access
informations anywhere, anytime.
• Global business cycle : The recurring elements of a business cycle are recovery, growth,
recession and depression. In every turn of the cycle the pace of globalization is likely to
increase particularly during the recovery and growths phases. In fact not all recessions lead
to a depression, they might be a mild slow down in the economy seen as a reduction in GDP.
By virtue of its location, Britain has historically been a major trading measure. International
trade has enable hit to gain from the advantages of specialization by exchanging its surplus
goods for surpluses produce by other countries. International trade involves making
payment oversees for goods and services received and the receiving of payments or goods
and services supplied. The balance of payment is a way of measuring a country's
international trading in a given period of time.
A country should sale a lot of exports to other countries because high levels of export raise
living standards or people. At the same time, it's good to import goods from oversees
because this enables British people more goods and services than they can produce. Britain
is a member of the EU which is one the largest three trading areas in the world. Within the
area, there is a freedom of movement of goods services and people. Most of the countries of
the EU have a common currency : the Euro. Britain loses out from not using the Euro as its
currency because every time a business imports or exports goods within the EU, they have
to exchange one form of currency to another. Often involving time.

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