Business English Ενότητα # 1: Economics and the Business

Environment

Ευαγγελία Κουτσογιάννη Τμήμα Διοίκησης Επιχειρήσεων

ΕΛΛΗΝΙΚΗ ΔΗΜΟΚΡΑΤΙΑ Ανώτατο Εκπαιδευτικό Ίδρυμα Πειραιά Τεχνολογικού Τομέα

Άδειες Χρήσης • Το παρόν εκπαιδευτικό υλικό υπόκειται σε

άδειες χρήσης Creative Commons. • Για εκπαιδευτικό υλικό, όπως εικόνες, που

υπόκειται σε άλλου τύπου άδειας χρήσης, η άδεια χρήσης αναφέρεται ρητώς.

2

Χρηματοδότηση • Το παρόν εκπαιδευτικό υλικό έχει αναπτυχθεί στα πλαίσια

του εκπαιδευτικού έργου του διδάσκοντα. • Το έργο «Ανοικτά Ακαδημαϊκά Μαθήματα στο

Ανώτατο Εκπαιδευτικό Ίδρυμα Πειραιά Τεχνολογικού Τομέα» έχει χρηματοδοτήσει μόνο την αναδιαμόρφωση του εκπαιδευτικού υλικού.

• Το έργο υλοποιείται στο πλαίσιο του Επιχειρησιακού Προγράμματος «Εκπαίδευση και Δια Βίου Μάθηση» και συγχρηματοδοτείται από την Ευρωπαϊκή Ένωση (Ευρωπαϊκό Κοινωνικό Ταμείο) και από εθνικούς πόρους.

3

Economics and the Business Environment

Learning Objectives

In this section you will • acquire specific vocabulary related to crucial economic issues • learn the terms associated with the basic types and legal forms of

business organizations in the American jurisdiction • practise sentence patterns • revise question words

Economics

Economics is the study of how wealth is created and distributed. By wealth we mean anything of value, including the products produced and sold by business. How wealth is distributed means “who gets what”.

The way in which a society answers the questions of what goods and services are to be produced, how and how much is to be produced and for whom to produce determines the economic system, or economy, that a society has:

• A planned economy, in which the answers to the basic economic questions are determined through centralized government planning.

• A free-market economy, which is characterized by the private ownership of resources, and the use of a system of markets and prices to coordinate and direct economic activity.

Resources Economics is concerned with the efficient use of resources in the

production of goods and services to satisfy human material wants. Economic resources refers to all natural and human resources that

go into the production of goods and services. They are classified as land, capital and labour.

• Land refers to the land and the raw materials on and in the land which are usable in the productive process.

• Capital refers to all manufactured aids to production, that is, machinery, equipment, buildings, and distribution facilities that are used in an organization’s operations.

• Labour refers to physical and mental talents of people which are usable in the productive process.

Economics Glossary • wealth: abundance of valuable material possessions or resources/ πλούτος • distribute: to give or deliver (something) to people or business/διανέμω • determine: to cause, affect, or control; fix or decide causally/ καθορίζω • ownership: legal right of possession; proprietorship/ιδιοκτησία • resources:the collective wealth of a country or its means of producing wealth(also

factors of production/ πόροι • material wants: physical needs/ υλικές ανάγκες • raw material: material before being processed or manufactured into a final form /

πρώτες ύλες • capital: the wealth, whether in money or property, owned or employed in business

by an individual, firm, corporation, etc. / κεφάλαιο • labour: the body of persons engaged in the productive activity/εργασία;εργατικό

δυναμικό

The characteristics of a market economy • In a free market economy the factors of production are owned by private

individuals who have the freedom to engage in the economic activities of their choice. Self-interest is the driving force of such an economy, and competition functions as a regulatory and control mechanism.

• The basic coordinating mechanism is the price system. Through this system individual decisions determine what is produced, the methods of production and the distribution of production. Not only does the market system decide on resource allocation and distribution of production, but it is the mechanism that carries out these decisions by an elaborate network of trade among individuals and countries.

• Money plays an important role since it facilitates these trading activities. • Specialization and an advanced technology are employed because they boost

productivity at low cost.

The characteristics of a market economy Glossary

• self-interest: personal interest or advantage/ προσωπικό συμφέρον

• competition: a rivalry among businesses for sales to potential customers/ ανταγωνισμός

• allocation: the act of distributing or assigning sth to sb for a purpose / επιμερίσμός, κατανομή (ενος ποσού), ανάθεση (καθηκόντων)

• trade:the act or process of buying, selling, or exchanging commodities, at either wholesale or retail, within a country or between countries/ εμπόριο

• specialization: division of labour/ εξειδίκευση • productivity: the rate at which goods and services having exchange

value are produced/ παραγωγικότητα

Demand, supply and price Prices are determined by the workings of supply and demand in

competitive markets. The supply of a particular product is the quantity of the product that producers are willing to sell at each of various prices. Producers are expected to offer more of a product for sale at higher prices and to offer less of the product at lower prices.

The demand for a particular product is the quantity that buyers are willing to purchase at each of the various prices. Buyers are expected to buy more of a product when its price is low and to buy less of the product when its price is high.

Under pure competition, the market price of any product is the price at which the quantity demanded is equal to the quantity supplied. Economists call this price the equilibrium price.

In real world, however, groups of sellers act in alliance with each other; as a result they have considerable control over prices. Other factors that affect prices are the development of new products, and fluctuations in income due to inflation or recession.

Demand, supply and price Glossary • supply: offering goods and services for sale/ προσφορά • demand: the ability and desire to purchase goods and services/

ζήτηση • quantity: magnitude, size; amount of anything/ ποσότητα • equilibrium price: the price at which the quantity of a product offered

is equal to the quantity of the product in demand/ τιμή ισορροπίας • alliance: a merging of efforts or interests by persons or organizations/

συμμαχία • income: the monetary payment received for goods or services, or from

other sources, as investments/ εισόδημα • fluctuation: continual change from one point or condition to another /

διακύμανση • inflation: a rise in the general (average) level of prices/ πληθωρισμός • recession: a general business slump, less severe than a depression/

ύφεση

Business • Business is the organized effort of individuals to produce and sell, for a profit, the goods

and services that satisfy a society’s needs. • The purpose of any business, as Drucker put it in “The Practice of Management”, is to

create a customer. • A person who risks his or her time, effort, and money to start and operate a business is

called an entrepreneur.

Types of business organizations Businesses are classified as one of three types:

• Manufacturing businesses are organized to process various

materials into tangible goods, such as cars or televisions. • Service businesses provide intangible services, such as legal

advice or haircuts. • Merchandising businesses which include wholesalers and

retailers. They purchase goods produced by manufacturers and then resell them to customers.

Types of business Glossary

• satisfy: to fulfill the desires, expectations, needs, or demands of (a person)/ ικανοποιώ

• customer: a person who purchases goods or services from another; buyer/ πελάτης

• entrepreneur: a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk/ επιχειρηματίας

• manufacturing business: they process or make products from raw materials, esp as a large-scale operation using machinery/ κατασκευαστικές εταιρίες

• service business: they supply services or utilities/εταιρίες παροχής υπηρεσιών

• merchandising business: they engage in the commercial purchase and sale of goods or services; trade / εμπορικές εταιρίες

• wholesaling: the business of selling goods to retailers in large quantities/ χονδρική πώληση

• retailing: the sale of goods individually or in small quantities to consumers/λιανική πώληση

Types of business Glossary

Legal forms of business organizations Sole proprietorship

• A sole proprietorship is a business owned by an individual and often managed by the same person.

• It is the simplest form of business to enter, control, and leave.

• The main disadvantage is unlimited liability, that holds a sole proprietor personally responsible for all the debts of his or her business.

Legal forms of business organizations Partnership

• A partnership is an association of two or more persons who

act as co-owners of a business for profit. • Partners sign an agreement which indicates how profits and

losses are shared. All partners need not be equal. • General partners are responsible for running the business

and for all business debts. • Limited partners receive a share of the profits in return for

investing in the business. However, they are not responsible for business debts beyond the amount they have invested.

Legal forms of business organizations Corporation

• A corporation is a limited liability business that has a legal personality separate from its owners.

• A corporation lists its shares on the Stock Exchange, where they are bought and sold by the general public.

• A privately-owned for-profit corporation is owned by shareholders, who elect a board of directors and appoint its management staff.

Legal forms of business organizations Glossary

• sole proprietorship: also known as the sole trader or simply a

proprietorship; a type of business entity that is owned and run by one individual/ ατομική επιχείρηση

• debt: a liability or obligation; something that is owed/ χρέος • unlimited liability: legal obligations of general partners and sole

proprietors who are responsible for paying off all of the company debts personally if the company can't make its payments/ απεριόριστη ευθύνη

• agreement: an arrangement that is accepted by all parties to a transaction/ συμφωνία

• run a business: manage a business/ διευθύνω μία επιχείρηση • general partners: a partner with unlimited liability for the debts of the

partnership/ ~ ομόρρυθμη εταιρία • limited partners: a business partner who has no management authority

and no personal liability/~ ετερόρρυθμη εταιρία • invest (in): to lay out (money or capital in an enterprise, esp. by

purchasing shares) with the expectation of profit / επενδύω

• corporation: an association of individuals having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members/ εισηγμένη εταιρεία στο χρηματιστήριο

• limited liability: a liability restricted by law or contract, as the liability of owners of shares in a corporation or limited company /περιορισμένη ευθύνη

• share: one of the equal fractional parts into which the capital stock of a corporation is divided/ μετοχή

• stock exchange: a building or place where stocks and other securities are bought and sold/ χρηματιστηριο αξιών

• shareholder: a holder or owner of shares/ μέτοχος • board of directors: a body of elected or appointed members who

jointly oversee the activities of a company or organization/ διοικητικό συμβούλιο

Legal forms of business organizations Glossary

Τέλος Ενότητας