The Rapid Adoption of Marketing

Most people think that only large companies operating in capitalistic countries use marketing, but marketing actually occurs both inside and outside the business sector and in all kinds of countries.

In the business sector, different companies become interested in marketing at different times. Marketing spread most rapidly in consumer packaged-goods companies, consumer durables companies, and industrial equipment companies – roughly in that order. Producers of such commodities as steel, chemicals, and paper adopted marketing later, and many still have a long way to go. Within the past few decades, consumer service firms, especially airlines and banks, have adopted modern marketing practices. Marketing has also attracted the interest of insurance and financial services companies. The latest business groups to take an interest in marketing are professionals such as lawyers, accountants, physicians, and architects. Until recently, professional associations have not allowed their members to engage in price competition, client solicitation, and advertising. But the U.S. antitrust division has ruled that such restrains are illegal. Accountants, lawyers, and other professional people quickly moved and to price aggressively.

In the nonprofit sector. Marketing is also attracting the interest of nonprofit organizations such as colleges, hospitals, museums, symphonies, and even police departments. These organizations have marketing problems. Their administrators are struggling to keep them alive in the face of changing consumer attitudes and smaller financial resources. Many such institutions have turned to marketing as a possible answer to their problems.

In the international sector. Marketing is practiced not only in the USA, but also in the rest of the world. In fact, several European countries and Japanese multinationals – companies such as Nestle, Toyota, and Sony – often outperform their US competitors. Multinationals have spread modern marketing practices throughout the world. As a result, management in smaller countries is beginning to ask: “Just what is marketing? How does it differ from plain selling? How can we introduce marketing into our firm? How will it make a difference and how much?”

 

MARKETING KEY TERMS

Demands. Human wants that are backed by buying power. Exchange.The act of obtaining a desired object from someone by offering something in return. Human need.A state of felt deprivation.   Human want.The form that a human need takes as shaped by culture and individual personality. Market. The set of actual and potential buyers of a product. Marketing. A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others. Marketing concept. The marketing management philosophy which holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than competitors. Marketing management.The analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives. Product.Anything that can be offered to a market for attention, acquisition, use, or consumption and that may satisfy a need or want. Product concept. The idea that consumers favor products that offer the most quality, performance, and features and that the organization should therefore devote its energy to making continuous product improvement.     Production concept. The philosophy that consumers favor products that are available and highly affordable and that management should therefore focus on improving production and distribution efficiency.     Selling concept. The idea that consumers will not buy enough of the organization’s products unless the organization undertakes a large-scale selling and promotional efforts.   Societal-marketing concept. The idea that the organization should determine the needs, wants, and interests of target markets and deliver the desired satisfaction more effectively and efficiently than competitors in a way that maintains or improves the consumer’s and society’s well-being. Transaction.A trade between two parties that involves at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement.

Запрос– потребность, подкрепленная покупательной способностью. Обмен –акт получения от кого-либо желаемого объекта с предложением чего-либо взамен.   Нужда –чувство ощущаемой человеком нехватки чего-либо. Потребность –нужда, принявшая специфическую форму в соответствии с культурным уровнем и личностью индивида. Рынок –совокупность существующих и потенциальных покупателей. Маркетинг –вид человеческой деятельности, направленной на удовлетворение нужд и потребностей посредством обмена.     Концепция маркетинга –утверждение, что залогом достижения целей организации является определение нужд и потребностей целевых рынков и обеспечение желаемой удовлетворенности более эффективными и более продуктивными, чем у конкурентов, способами.   Управление маркетингом –анализ, планирование, претворение в жизньи контроль за проведением мероприятий, рассчитанных на установление, укрепление и поддержание выгодных обменов с целевыми покупателями ради достижения целей организации. Товар –все, что может удовлетворить потребность или нужду и предлагается рынку с целью привлечения внимания, приобретения, использования или потребления. Концепция совершенствования товара –утверждение, что потребители будут благосклонны к товарам, предлагающим наивысшее качество, лучшие эксплуатационные свойства и характеристики, а следовательно организация должна сосредоточить свою энергию на постоянном совершенствовании товара. Концепция совершенствования производства –утверждение, что потребители будут благожелательны к товарам, которые широко распространены и доступны по цене, а следовательно руководство должно сосредоточить свои усилия на совершенствовании производства и повышении эффективности системы распределения. Концепция интенсификации коммерческих усилий –утверждение, что потребители не будут покупать товары организации в достаточных количествах, если она не предпримет значительных усилий в сфере сбыта и стимулирования. Концепция социально-этического маркетинга –утверждение, что задачей организации является установление нужд, потребностей и интересов целевых рынков и обеспечение желаемой удовлетворенности более эффективными и более продуктивными, чем у конкурентов, способами с одновременным сохранением или укреплением благополучия потребителя и общества в целом. Сделка –коммерческий обмен между двумя сторонами, предполагающий как минимум двух объектов ценностной значимости и согласованных условий, времени и места его совершения.

(Based on: Kotler P., Armstrong G. Principles of Marketing)

 

APPENDIX X

FORMS OF PRIVATE OWNERSHIP

Here are some materials for your additional reading based on the Companies Law provisions subject to the maim types of ownership of private companies. Hope they will help you within your studies and future working process.

COMPANIES LAW

Companies law (or the law of business associations) is the field of law concerning companies and other business organizations. It is an establishment formed to carry on commercial enterprises. This includes corporations, partnerships and other associations which usually carry on some form of economic or charitable activity. The most prominent kind of company, usually referred to as a "corporation", is a "juristic person", i.e. it has separate legal personality, and those who invest money into the business have limited liability for any losses the company makes, governed by corporate law. The largest companies are usually publicly listed on stock exchanges around the world. Even single individuals, also known as sole traders may incorporate themselves and limit their liability in order to carry on a business. All different forms of companies depend on the particular law of the particular country in which they reside.

Business Entities

The law of business organizations originally derived from the common law of England, but has evolved significantly in the Twentieth century. In common law countries today, the most commonly addressed forms are:

· corporations (Inc.,Co.,Corp.);

· limited companies.

· limited liability partnerships;

· limited partnerships;

· not-for-profit corporations;

· partnerships, sometimes called "general partnerships";

· sole proprietorships;

The proprietary limited company is a statutory business form in several countries, including Australia. Many countries have forms of business entity unique to that country, although there are equivalents elsewhere. Examples are the Limited-liability company (LLC) and the limited liability limited partnership (LLLP) in the United States. Other types of business organizations, such as cooperatives, credit unions and publicly owned enterprises, can be established with purposes that parallel, supersede, or even replace the profit maximization mandate of business corporations. Other business forms are available in civil law countries, such as the German Gesellschaft mit beschränkter Haftung (GmbH) and Aktiengesellschaft (AG); and the S.A., a form used in a number of countries which translates from various languages into the equivalent of anonymous society or anonymous company. For a country-by-country listing of officially recognized forms of business organization, see Types of business entity. There are various types of company that can be formed in different jurisdictions, but the most common forms of company are:

· a company limited by guarantee. Commonly used where companies are formed for non-commercial purposes, such as clubs or charities. The members guarantee the payment of certain (usually nominal) amounts if the company goes into insolvent liquidation, but otherwise they have no economic rights in relation to the company.

· a company limited by guarantee with a share capital. A hybrid entity, usually used where the company is formed for non-commercial purposes, but the activities of the company are partly funded by investors who expect a return.

· a company limited by shares. The most common form of company used for business ventures.

· an unlimited liability company. A company where the liability of members for the debts of the company are unlimited. Today these are only seen in rare and unusual circumstances.

There are, however, many specific categories of corporations and other business organizations which may be formed in various countries and jurisdictions throughout the world.

US Companies Law

In the United States, corporations are generally incorporated, or organized, under the laws of a particular state. The corporate law of a corporation's state of incorporation generally governs that corporation's internal governance (even if the corporation's operations take place outside of that state). The corporate laws of the various states differ - in some cases significantly - from state to state, as a result of which corporate lawyers are often consulted in an effort to determine the most appropriate or advantageous state in which to incorporate, and a majority of public companies in the U.S. are Delaware corporations. The federal laws of the United States and local law may also be applicable sources of corporate law.

Companies Law Theory

“A corporation is described to be a person in a political capacity created by the law, to endure in perpetual succession.” Americans in the 1790s knew of a variety of corporations established for various purposes, including those of commerce, education, and religion. As the law of corporations was articulated by the Supreme Court under Chief Justice Marshall, over the first several decades of the new American state, emphasis fell, in a way which seems natural to us today, upon commercial corporations. Nonetheless, Wilson believed that, in all cases, corporations “should be erected with caution, and inspected with care.” The actions of corporations were clearly circumscribed: “To every corporation a name must be assigned; and by that name alone it can perform legal acts.” For non-binding external actions or transactions, corporations enjoyed the same latitude as private individuals; but it was with an eye to internal affairs that many saw principal advantage in incorporation. The power of making by-laws was “tacitly annexed to corporations by the very act of their establishment.” While they must not directly contradict the overarching laws of the land, the central or local government cannot be expected to regulate toward the peculiar circumstances of a given body, and so “they are invested with authority to make regulations for the management of their own interests and affairs.”

The question then arises: if corporations are to be inspected with care, what - if not the commercial or social conduct, or the by-laws - is to be inspected – and by whom? Do corporations have duties? Yes: “The general duties of every corporation may be collected from the nature and design of its institution: it should act agreeably to its nature, and fulfill the purposes for which it was formed.” Who sees that corporations are living up to those duties? “The law has provided proper persons with proper powers to visit those institutions, and to correct every irregularity, which may arise within them.” The Common Law provided for inspection by the court of King ’s Bench. In 1790, at least, “the powers of the court of King’s Bench [were] vested in the supreme court of Pennsylvania.” As for the dissolution of corporations, there seems not to have been much question that a corporation might “surrender its legal existence into the hands of that power, from which it was received. From such a surrender, the dissolution of the body corporate ensues.” Nor does there seem to have been much question that by “a judgment of forfeiture against a corporation itself, it may be dissolved.” However, Supreme Court Justice Wilson, lecturing in his unofficial capacity, at least, suggests his displeasure with the doctrine that corporate dissolution cannot be predicated “by a judgment of ouster against individuals. God forbid ― such is the sentiment of Mr. Justice Wilmot ― that the rights of the body should be lost or destroyed by the offences of the members.”

As theorists such as Ronald Coase have pointed out, all business organizations represent an attempt to avoid certain costs associated with doing business. Each is meant to facilitate the contribution of specific resources - investment capital, knowledge, relationships, and so forth - towards a venture which will prove profitable to all contributors. Except for the partnership, all business forms are designed to provide limited liability to both members of the organization and external investors. Business organizations originated with agency law, which permits an agent to act on behalf of a principal, in exchange for the principal assuming equal liability for the wrongful acts committed by the agent. For this reason, all partners in a typical general partnership may be held liable for the wrongs committed by one partner. Those forms that provide limited liability are able to do so because the state provides a mechanism by which businesses that follow certain guidelines will be able to escape the full liability imposed under agency law. The state provides these forms because it has an interest in the strength of the companies that provide jobs and services therein, but also has an interest in monitoring and regulating their behavior. Here are some comments of the Companies Law provisions:

 

PRIVATE COMPANIES

1. Definition of a private company. The Companies Act 1985 defines a private company simply as a company which is not public company. Two restrictions on offers of shares were noted in Financial Service Act 1986 (now replaced by the Financial Services and Markets Act 2000). Apart from these two provisions, there are no longer further restrictions on a private company as such, and the differences between public companies and private companies arise from the privileges which the Acts have conferred on the latter. These privileges have been substantially increased by the Companies Act 1989, in particularby a group of provisions under the heading “De-regulation of private companies”. First, however, it is appropriate to deal with the statutory provisions governing the procedure by which a private company converts into a public company.

2. Capital requirements for conversion to public company. Section 45 imposes strict initials rules regarding the share capital of any private company seeking conversion. Before it can be re-registered as a public company, it must satisfy two of the same conditions required of a company registered as a public company on its original incorporation when such a company applies for a trading certificate, namely:

a) the nominal value of its allotted share capital must be not less than the authorized minimum; and

b) not less than one quarter of the nominal value of each allotted share, together with the whole of any premium on it, must have been paid up.

Thus safeguards are required when conversion is sought:

c) where any share in the company, or any premium on it, has been paid up by an undertaking to do work or perform services for the company, or the undertaking must have been performed; and

d) where shares have been allotted as paid up as to their nominal value or any premium on them otherwise than in cash, and be considered for the allotment includes and undertaking to the company which does not fall with (c) above, than either:

i) that undertaking must have been performed; or

ii) there must be a contract between the company and some person under which that undertaking is to be performed within five years.

Where (b) above has not been complied with as regards shares allotted under a share scheme for employees, those shares may be disregarded for the purpose of compliance with (b)-(d), but must then be treated for the purpose of (a) as though they were not part of the allotted share capital.

In addition to the four requirements of section 45, section 44 imposes two more conditions which apply where, between the date of their balance sheet and the passing of a special resolution for re-registration, shares are allotted as paid up as to their nominal value or any premium on them otherwise than in cash. In these circumstances the company may not apply for re-registration as a public company unless:

a) the consideration has been valued in accordance with section 108; and

b) a report has been made on its value during six months immediately preceding the allotment.

3. Procedure for re-registration of private company as public company. Section 43 governs the procedure to be followed for the re-registration of a private company with a share capital as a public company.

The first step is for the company to pass a special resolution for re-registration which:

a) alters its memorandum so that it states that the company is to be a public company; and

b) makes all other necessary alterations in both its memorandum and articles.

Next, an application for the re-registration, signed by a director or secretary, must be delivered to the registrar along with the following documents:

a) a printed copy of the altered memorandum and articles;

b) a copy of a written statement by the company’s auditors that in their opinion the relevant balance sheet shows that the amount of the company’s net assets at the date of the balance sheet was no less than the aggregate of its called-up capital and undistributable reserves;

c) a copy of the relevant balance sheet, i.e. one prepared as at a date not more than seven months before the company’s application, together with a copy of an unqualified report by the auditors;

d) a copy any report prepared under section 44; and

e) a statuary declaration by a director or secretary:

i) that the special resolution for re-registration has been passed and the conditions specified in sections 44 and 45 have been satisfied; and

ii) that between the date of the balance sheet and the application for re-registration there has been no change in the company’s financial position resulting in the amount of its net assets falling below the aggregate of its called-up capital and undistributable reserves.

Under section 47 the registrar may accept this declaration as sufficient evidence that the special resolution has been passed and the conditions satisfied. He then retains the application and other documents and issues the company with a certificate of incorporation stating that it is a public company. On the issue of the certificate the company becomes a public company and any alteration in its memorandum and articles takes effect. The certificate is conclusive evidence that all the requirements of the Act regarding re-registration have been complied with, and that the company is a public company.

It should be noted that under section 48 the same procedure, with slight and obvious modifications, is required for the re-registration of an unlimited (and therefore necessarily private) company as a public company.

Finally section 104, which brings into play the rules relating to the valuation of non-cash assets when acquired by the company from a subscriber to the memorandum, applies where a private company re-registers as a public company and non-cash assets equal to one-tenth or more of the nominal value of its issued share capital are acquired by the company from persons who were members at the date of re-registration within two years from that date.

4. Procedure for re-registration of public company as private company. Section 53 prescribes the procedure for the converse operation, namely the re-registration of a public company as a private company. Although this is a far less common to occurrence, it is sometimes seen where one company has taken over another and the holding company wishes to alter the status of its subsidiary.

The first step, once again, is the passing of a special resolution for re-registration by the company which:

a) alters its memorandum so that it no longer states that the company is a public company; and

b) makes all other necessary alterations in both its memorandum and articles.

Next, an application for re-registration, signed by a director or secretary, must be delivered to the registrar together with a printed copy of the altered memorandum and articles. Furthermore, either the period for making an application to the court under section 54 to cancel the resolution must have expired without such an application having been made or, if such as application has been made, it must have withdrawn or a court order made confirmation the resolution and a copy of that order delivered to the registrar.

Under section 55 the registrar then retains the applications and other documents and issues the company with an appropriate certificate of incorporation. On the issue of the certificate the company becomes a private company and the alterations in its memorandum and articles take effect. The certificate is conclusive evidence that all the requirements of section 53 regarding re-registration have been complied with, and that the company is a private company.

5. Provisions for dissentient members. It can be seen from 4 above that an application can be made to the court to cancel a resolution passed by a public company for re-registration as a private company. Section 54 governs such an application, dealing with the applicants, the period of time allowed and the powers of the court. Such an application may be made:

a) by the holders of not less that 5 percent in nominal value of the company’s issued share capital or any class thereof;

b)if the company is not limited by shares, by not less than 5 percent of its members; or

c) by not less than 50 percent of the company’s members.

No person who has voted in favour of the resolution can apply.

The application must be made within 28 days of the passing of the resolution. The court must then make an order either canceling or confirming the resolution on such terms as it thinks fit, and may adjourn the proceedings in order that an arrangement may be for the purchase of the interests of the dissentient members.

The court order may provide for the purchase by the company of the shares of any members and for the resulting reduction of capital. It can also make any alterations to the memorandum or articles which are thereby rendered necessary and prohibit the company from making subsequent alterations to these documents. The company may then make such alteration only with the leave of the court.

Finally, the registrar must be kept informed. As soon as an application to the court is mage, the company must deliver to him within 15 days an office copy.

6. Differences between public and private company. A private company differs from a public company in the following ways:

1. The statutory minimum of directors is one.

2. Two or more directors can be appointed by a single resolution of a general meeting.

3. A director holding office for life on 18 July 1945 (now almost extinct) cannot be removed by ordinary resolution under section 303 of the Companies Consolidation (consequential Provisions) Act 1985.

4. There is no statutory age-limit on the directors unless the company is a subsidiary of a public company.

5. There is no requirement that the secretary shall have qualifications.

6. A private company can convert from a limited company to an unlimited company.

7. A private company limited by guarantee is, on complying with certain conditions, exempt from the provisions of the Act regarding the use of the word “limited” as part of its name.

8. A proxy may speak at general meetings.

9. The directors are not required to convene an extraordinary general meeting where the company’s net assets fall to half or less of its called-up capital.

10. No minimum authorized capital is required on registration.

11. A private company can commence business immediately on registration and requires no trading certificates.

12. A private company must not apply its shares to be listed on the Stock Exchange in accordance with Financial Service Act 1986.

13. A private company must not offer its shares by advertisements unless by the Secretary of state for Trade and Industry in accordance with Financial Service Act 1986.

14. Shares issued by a private company to a subscriber to the memorandum are not required to be paid in cash.

15. Where a subscriber to the memorandum of a private company sells non-cash assets to the company, there is no requirements that those assets shall be valued by an expert.

16. It is necessary for 25 percent of the nominal value of the shares in a private company to be paid up on allotment.

17. A private company is not prohibited from accepting payment for its shares in a form of an undertaking to do work or perform services for the company.

18. Non-cash consideration to be furnished to a private company in respect of an allotment of shares need not to be so furnished within five years.

19. Non-cash consideration furnished to a private company in respect of all allotment of snares need not be valued by an expert.

20. The statutory pre-emption rights can be totally excluded by the memorandum or articles of a private company.

21. A private company may declare a dividend even though the amount of its net assets is less than the aggregate of its called-up share capital and its undistributabble reserves.

22. A private company is not required to file interim accounts to support a proposed interim dividend.

23. The strict rules applicable to shares in which the company has beneficial interests do not apply private companies.

24. A private company is not subject to the statutory restrictions on the talking of a lien or charge on its own shares.

25. A private company which is not in the same group as a public company is not prohibited from making quasi-loans to the directors or entering into credit transactions with them.

26. A private company which is not in the same group as a public company is not prohibited from making loans to persons connected with a director.

27. The rules relating to the giving of financial assistance by a company for the purpose of the acquisition of its own shares are less stringent for a private company.

28. Only a private company may be entitled to deliver modified accounts to the registrar.

29. A private company is subject to one less rule than a public company in the case off-market purchase by the company of its own shares.

30. A private company is subject to fewer rules regarding the disclosure of purchases of its own shares.

31. Only a private company is permitted to purchase its own shares out of capital.

32. A private company is not required to keep a register of interests in shares under.

The following further differences have been added by the Companies Act 1989, by provisions inserted in the 1985 Act by Companies Act 1989:

33. A private company may operate by written resolutions instead of by the resolutions (of any type) passed at meetings with the exceptions of a resolutions under section 303 for the removal of a director and resolution under section 391 for the removal of an auditor.

34. By an elective resolution under section 379A, a private company may extend the authority of the company required for allotment under section 80 to an unrestricted period or to a fixed period exceeding five years.

35. By an elective resolution under section 379A, a private company may dispense with the laying of accounts and reports before the company in general meeting.

36. By an elective resolution under section 379A, a private company may dispense with holding an annual general meeting.

37. By an elective resolution under section 379A, a private company may authorize shorter notice for a meeting where there is a 90 percent (instead of 95 percent) approval of persons entitled to amend and vote.

38. By an elective resolution under section 379A, a private company may dispense with annual appointment of auditors.

Finally it should be noted that, by section 117 Companies act 1989, the Secretary of State may by regulations extend the right of private companies to elect, by an elective resolution under section 379A, to dispense with any further statutory requirements which are specified in the regulations, provided the Secretary of State considers that the requirements relate primarily to the internal administration and procedure of the companies.

Progress test:

1. Define a private company.

2. With what conditions must a private company comply as regards share capital when it seeks conversion to a public company?

3. How does a private company convert into a public company?

4. By what procedure does a public company convert into a private company?

5. In what ways does a private company differ from a public company?

(Based on: M.C. Oliver and E.A. Marshall, Company Law)

 

 

APPENDIX XI

COMPANY FUNDS