Text 2. The business population

Businesses constitute the second major part of the private sector. To avoid confusion, we must start by distinguishing among a plant, a firm, and an industry.

A plant is a physical establishment – a factory, farm, mine, store, or warehouse – which performs one or more functions in fabricating and distributing goods and services. A business firm is a business organization which owns and operates plants. Most firms operate only one plant, but many own and operate several. Multi-plant firms may own horizontal, vertical, or conglomerate combinations of plants. A vertical combination of plants is a group of plants, with each performing a different function in the various stages of the production process. As an example, every large steel firm in the United States – Bethlehem Steel, Republic Steel, and others – owns iron ore and coal mines, limestone quarries, metal refineries, rolling mills, foundries and, in some cases, fabricating shops.

A horizontal combination of plants is one in which all plants perform the same function. The large chain stores in the retail field – JC Penney, Foot Locker, Wal-Mart in the US); Marks & Spencer, BHS, Boots, Little Woods (in Great Britain); Toys Us (Great Britain, the US) – are examples.

A conglomerate combination is made up of plants which operate across several different markets and industries. In the United States, for example, Warner-Lambert Company owns plants involved in such diverse fields as chewing gum (Trident), razors (Shick), cough drops (Halls), breath mints (Certs), and antacids (Rolaids). Firms such as these are called conglomerates.

An industry is a group of firms producing the same, or similar, products. This seems to be a simple concept, but industries are usually difficult to identify in practice. For example, how do we identify the automobile industry? The simplest answer is «all firms producing automobiles». But how should we account for small trucks? Certainly, small pickup trucks are similar in many respects to vans and station wagons. And what about firms which make parts for cars, say, airbags? What industry are they in? Is it better to speak of the «motor vehicle industry rather than the automobile industry? If so, where should we then place motorcycles?

Delineating an industry becomes even more complex because most businesses are multi-product firms. Automobile manufacturers in the United States also make such diverse products as diesel locomotives, buses, refrigerators, guided missiles, and air conditioners.

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Text 3. MONEY ECONOMY

Buying, Selling and Paying. Almost every society now has a money economy based on coins and paper notes of one kind or another. Money is used for buying or selling goods, for measuring value and for storing wealth. However, this has not always been true. In primitive societies, a system of barter direct exchange of goods was used. Somebody could exchange a sheep, for example, for anything in the marketplace that they considered to be of equal value. Most governments now issue paper money in the form of notes. Paper money is easier to handle and much more convenient in the modern world. Cheques, bankers' cards, and credit cards are being used increasingly, too.

Sometimes in a shop they ask you: "How do you want to pay?" You can answer: "Cash/ By cheque/ By credit card." In a bank you usually have a current account, which is one where you are paid your salary and then withdraw money to pay your everyday bills. The bank sends you a regular bank statement telling you how much money is in your account. You may also have a savings account where you deposit any extra money that you have and only take money out when you want to spend it on something special. Sometimes, the bank may lend you money — this is called a bank loan. If the bank lends you money to buy a house, that money is called a mortgage. When you buy (or, more formally, purchase) something in a shop, you usually pay for it outright but sometimes you buy on credit. Sometimes, you may be offered a discount or a reduction on something you buy at a shop. It is not usual to haggle about prices in a British shop, as it is in a Turkish market. If you want to return something which you have bought to a shop, you may be given a refund, i.e. your money will be returned, provided you have a receipt. The money that you pay for services, e.g. to a school or a lawyer, is usually called a fee or fees; the money paid for a journey is a fare. If you buy something that you feel was very good value, it's a bargain. Public Finance. The government collects money from citizens through taxes. Income tax is the tax collected on wages and salaries. Inheritance tax is collected on what people inherit from others. Customs duties have to be paid on goods imported from other countries. VAT, or value-added tax, is a tax paid on most foods and services when they are bought or purchased. Companies pay corporation tax on their profits. The government also sometimes pays out money to people in need. Recipients draw a pension/unemployment benefit or are on the dole or on social security.

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