ISTITUTO TECNICO COMMERCIALE

INGLESE

A.S. 2015/2016

Argomenti

1. Business organization 2. Marketing 3. The World of Sales 4. The most important sales documents 5. Banking 6. Insurance 7. Government and politics 8. Geography 9. The European Union

BUSINESS ORGANIZATION A mixed economy is a market economy primarily based on private enterprise where the government plays an important role in regulating the system by its choices of economic policy. SOLE PROPRIETORS AND PARTNERSHIPS A sole proprietor ( or sole trader ) is a person who owns and carries on a business for himself and on his own account. He bears all the risks and receives all the profits. A partnership is an association of individuals engaged in business. The minimum number is two, and the maximum number is generally limited to twenty. There are two types of partnership:

a. ordinary partnership; b. limited partnership( società in accomandita)

In an ordinary partnership all partners are considered as general partners and are jointly liable (responsabili in solido) for the debts of the partnership. In a limited partnership, along with one or more general partners (socio accomandatario), there are one or more limited partners (socio accomandante). Limited partners are only liable for the partnership’s debts up to the value of the money they have invested in the business. LIMITED COMPANIES (CORPORATIONS ) In this type of company partners no longer exist. They are replaced by investors, who take the name of shareholders. In fact a limited company (società per azioni) consists of a body of persons who have joined together in order to undertake some form of business activity, not as in the case of a partnership, but in the name of a company, which itself has a separate legal existence apart from its shareholders (azionisti). It is thus a legal entity. It can transact business in its own name, while its capital is divided into shares and finance is obtained by the sale of these shares. The most important features of a limited company are:

1. Shareholders control the business on a majority vote basis; 2. Profits are distributed as dividends on the basis of the shares held; 3. Shareholders have limited liability.

Shareholders have little to say in the day-to-day running of the company, which is normally managed by the Board of Directors. They receive dividends annually in proportion to the shares they possess and are entitled to attend the ANNUAL GENERAL MEETING (AGM) where directors report on the company’s performance for that year, and decide whether the Board of Directors can continue to run the company. TYPES OF LIMITED COMPANIES There are two types of limited companies:

• The private limited company, known as Ltd; • The public limited company, known as PLC.

Both types of companies can be formed by a minimum of two shareholders, while there is no maximum number.

Ltd Companies sell shares privately to people known to the shareholders: relatives, friends, employees. The sale must be approved to the majority of the shareholders. A public company ( PLC ) is not one controlled by the state. They sell shares to the general public on the stock market. To attract shareholders, they produce annual reports published in newspapers and business journals. CO-OPERATIVE SOCIETIES Co-operative societies are non-profit-making persons, who are at the same time both members and customers of the co-operative and whose aim is to economize by producing, buying or selling goods in common, returning the profits to the members, usually in the form of dividends in proportion to the amount of their purchases. PUBLIC UNDERTAKINGS Public undertakings include government departments, local authority enterprises and public corporations. Government departments regard the general interests of the nation. They can also provide national strategic planning and the supervision of services such as education and health. Local authority enterprises have some form of business undertaking. Bus services are among the most common form of local authority enterprise. A public corporation is an authority normally established by an Act of Parliament to carry out industrial, commercial or other activities of public interest. Control of a public corporation remains in the hands of a self-governing board, the members of which are appointed by the particular minister concerned. Since the 1970’s many public corporations and nationalized industries have been exposed to market forces through privatization and competition. Some remaining nationalized industries are the Post Office and London Transport. The BBC is also a public corporation. LARGE-SCALE BUSINESS ORGANIZATIONS MERGERS - A merger takes place when two or more business units merge into a permanent single undertaking. JOINT-VENTURES- A joint-venture is a very large business project in which two or more companies join together to complete that particular project. CARTELS- A cartel is a combination formed by companies in the same sector and at the same time of production. A Cartel fixes the maximum quantity of goods that any member can produce. HOLDING COMPANIES - A holding company is a financial organization. It uses the capital subscribed by its members to buy a high percentage of the shares in each of the companies it wants to control. In other words, it owns enough shares of other companies’ capital to control and influence their management and operations. The owned companies may be:

• Subsidiary companies- the holding company owns at least 51% and controls them. • Associated companies- the holding company owns 20-50% and has considerable influence

over the associated company

GLOSSARY

• DIVIDEND: annual payment made to shareholders in proportion to the money they have invested.

• SHARES: units calculated by dividing the capital invested in equal portions. • SHAREHOLDERS: investors who have shares in a company. • STOCKS: shares that somebody has bought in a company.* • STOCK MARKET: place where stocks and shares can be bought and sold.*

*La parola stock ha molti significati. Stock significa scorta, riserva di magazzino, giacenza, partita di merce giacente in magazzino, ecc. ALTRI SIGNIFICATI SONO:

• Supply from stock= rifornire direttamente dal magazzino; • In stock= in magazzino, disponibile; • Out of stock= esaurito; • Stock list/inventory= inventario; • Take stock= fare l’inventario; • Nel linguaggio finanziario stock significa anche capitale azionario, titoli. • Stock market = mercato azionario • Stocks and shares= titoli e azioni • Stock Exchange= Borsa Valori

MARKETING Marketing is a fundamental aspect of the trading world. It regards the decisions that affect the process of production, presentation and distribution of goods and services in a manner best designed to benefit the producer, the distributor and the consumer public. The basic elements of marketing are:

1. product – that is , product planning; 2. price- that is, an adequate price policy; 3. place – the search for the best markets for the distribution of certain goods; 4. promotion - related to advertising 5. services - a full exploitation of the services available in the business

environment. Before any important decision can be made, most producers undertake marketing and market research. However, a distinction between the two must be made. MARKETING RESEARCH is used by a manufacturer to discover the best way of selling his own goods. MARKET RESEARCH studies the general situation of the market and the state of consumers’ demands. TYPES OF ADVERTISING Advertising is a branch of commerce because of the important help it gives trade by spreading information about goods and services and by encouraging people to buy. There are two types of advertising:

1. Informative advertising 2. Persuasive advertising

Informative advertising is when companies give information about their goods or services and make customers familiar with the name of their products.

Persuasive advertising is when companies aim at persuading consumers to prefer their high quality products to those sold by their trade rivals. The principal methods of advertising are:

• Radio and television advertising • Online advertising • Advertising in newspapers and magazines • Posters • Advertising in cinemas, stadiums, etc. • Electric and neon signs, electronic boards • Counter and window displays • Trade fairs, exhibitions, direct demonstrations.

THE BRITISH BANKING SYSTEM In Britain there are four main types of banks:

• The Bank of England • Commercial or joint-stock banks • Savings banks • Merchant banks

*The Bank of England is the central bank of the country and the Government’s banker. It was founded by Royal Charter in 1694. It was nationalized in 1946. Its main function is to control monetary policy and help the financial system to operate efficiently. The Bank of England issues banknotes, holds the gold reserves and the reserves of foreign currency, advises the Government on financial affairs and controls credit. The Bank of England controls credit through the Bank Rate(tasso ufficiale di sconto) . It influences the country’s economic policy. The Bank of England has two important departments:

• The Issue department • The Banking department

*Commercial or joint-stock banks offer all kinds of banking and financial services to both individuals and business companies. HSBC-MIDLAND, Lloyds TSB Group, Barclays and National Westminster (NatWest) are the “big four” commercial banks in Great Britain. * Savings Banks - Even though they provide a wide range of services, their main function is to accept money on savings account and pay interest on it. The National Savings Bank ( La Cassa di Risparmio Nazionale) is the largest savings bank in Great Britain. *Merchant Banks mainly deal in international finance and lend money to companies. They finance industry and have an important role in foreign trade. Financial institutions, known as BUILDING COMPANIES, are also very common in Britain. They accept and pay interest on deposits and lend money to people who are buying property. In fact, they are the largest source of mortgage loans.

SERVICES OF BANKS Banks provide a wide range of services for their private clients, for businessmen and firms. The most important banking services include borrowing money, lending money, assisting trade overseas and miscellaneous service. Accepting or borrowing money is one of the oldest functions of banks. They accept money from their clients on current account or on deposit account. If a person has a current account, he can withdraw money from his account, generally by drawing cheques, at any time without giving notice to his bank. In the case of deposit accounts the bank reserves the right to be given notice of any withdrawal, although this right is not exercised in practice. The bank pays an interest on balances in deposit accounts. The lending of money to customers is one of the main functions of a commercial bank and the most profitable of its activities. Banks lend money to both private and business customers

• by overdraft- The client is allowed to draw cheques up to a fixed limit beyond the amount of his account;

• by loan account o ( con apertura di credito in conto corrente)- The bank can make loans for a short period and charge interest on them;

• by discounting bills of exchange – a bill of exchange can be taken to a bank before maturity and the holder will receive payment less discounting charges ( spese di sconto di cambiali) made by the bank.

Banks play an important part in financing and providing methods of payment for overseas trade. They accept and pay bills of exchange (cambiali) in respect of imported goods or by backing documentary credits. Miscellaneous services are also provided by banks.

• Banks advise customers on investments and other financial matters. • They act as custodians of customers’ valuables and securities. • Banks collect interest and dividends • They issue self-service banking cards and credit cards. • They deal in Stock Exchange securities (titoli, titoli di borsa, valori immobiliari) • Banks also assist travellers abroad. In fact they obtain foreign currencies for their customers

and provide travellers’ cheques, letters of credit *, etc. . * A letter of credit is an arrangement between a bank and its agency abroad, or between a bank in one country and a correspondent bank in another, authorizing payment to the person named in it (the beneficiary) of sums of money up to a certain amount.

INSURANCE The aim of insurance is to provide compensation for those ( an individual or a company ) who have suffered a loss or damage. In an insurance contract there are two parties:

• The insurer • The insured

The insurer agrees to indemnify against lost or damage another party , the insured , in return for payment of a premium. The premium is the amount to be paid to get some insurance cover. The terms of a contract are set out in a document called an insurance policy. Today insurance is very important to both business firms and private individuals. There are four main branches of insurance:

• Marine insurance • Fire insurance • Accident insurance • Life insurance

Marine insurance is the oldest form of insurance. It covers risks to ship, people or cargo which may occur during sea transport . Marine insurance is thus an agreement by which one party agrees to compensate the owner of a ship or cargo for marine losses. The underwriter (assicuratore o “sottoscrittore”) guarantees to pay a certain sum in the event of loss or damage. The insurable risks are:

• Hull risks- covering loss of, or damage to, the vessel itself; • Cargo risks- covering the risks of loss incurred by the owner of the cargo; • Freight risks- covering loss of the charges for carrying goods by sea, due to the owner of

the ship, • Ship owner’s liability- his liability for damage or loss as a result of his own negligence; • All risks- a general policy that covers all risks specified in the policy.

FIRE INSURANCE The insurer undertakes to indemnify any loss or damage caused by fire during a specified period of time. Most fire insurance policies cover loss or damage to both buildings and contents. Special policies at a higher premium can also cover loss or damage caused by explosions, floods, earthquakes, etc. . ACCIDENT INSURANCE This type of insurance covers many risks, both at home and abroad, in business and in private life. The main risks that are covered are:

� Personal accidents; � Motor and aviation accidents; � Industrial accidents; � Burglary and theft and others.

LIFE INSURANCE ( OR LIFE ASSURANCE)

This form of insurance is concerned not with compensation for loss, that may or may not occur, but with providing security for events- when a person reaches a given age or at death if that occurs first- that are certain to occur. There are two basic types of life insurance:

a) Whole life insurance ( assicurazione per il caso di morte ) -In this case the amount is payable only when the person whose life is insured dies.

b) Endowment assurance - In this case the amount can be paid either at a fixed number of years or when a person dies. It is a form of both investment and life insurance.

LLOYD’S OF LONDON Lloyd’s is an international market for insurance. It started in a small coffee-house kept by Edward Lloyd about three hundred years ago. There were no insurance companies at that time, and the merchants used to insure their goods and ships with private insurance men. These men made a list of the risks that they were willing to cover, and then simply wrote their names under the list to make the agreement binding (vincolante). They became underwriters and Lloyd’s coffee-house became the meeting place of both merchant’s and underwriters. Today, Lloyd’s is the largest and the most famous insurance centre of the world and leads the market of marine insurance. However, it is not a company. It is a marketplace and its members undertake insurance for their own account and risk, in competition with each other and with the insurance companies. Lloyd’s now offers all kinds of insurance except life insurance. UNDERWRITERS AND BROKERS The members of Lloyd’s are divided into two groups:

� The UNDERWRITERS, who actually undertake and accept all risks;

� The BROKERS, who are intermediaries between the underwriters and the general public . The underwriters accept risks from countries all over the world. Brokers act on behalf of their clients and co-operate with the underwriters. The brokers and the underwriters work together in an immense hall , that is, “the underwriting hall”.

THE UNITED KINGDOM

The United Kingdom of Great Britain and Northern Ireland is a constitutional monarchy, a member nation of the European Union and one of the independent members of the Commonwealth. It is made up of four countries, England, Wales, Scotland and Northern Ireland. The U.K. is one of the oldest democracies in the western world. However, its Constitution is not contained in one single document. It is, in fact, formed partly by statute law(1)*, partly by common law (2)*and convention( 3)*.

(1) *Corpo delle leggi scritte approvate dal Parlamento (2) *Diritto consuetudinario (3) *consuetudine

THE SEPARATION OF POWERS AND THE BRANCHES OF GOVERNMENT The Sovereign is the Head of State and the organs of government are separate and distinct from one another. The legislature is the supreme legislative authority and consists of the Queen in Parliament, although the sovereign today has a merely formal role. The executive is responsible for the administration of public affairs at both national and local level. The judiciary is concerned with the administration of justice and is fully independent of both the legislative and executive branches. THE CROWN Today the Sovereign is an impartial Head of State. In fact, the “Queen reigns but does not rule”. Laws are made by Parliament, the centre of the executive power is the government and the judicial power is exercised by the Law Courts. Although the Queen’s powers are largely nominal, there are, however, important acts of government which require her participation. She summons and dissolves Parliament, appoints the Prime Minister, gives her approval before a Government is formed and signs all laws before they can take effect. The Queen also appoints judges, is the temporal head of the established Church of England, the commander in-Chief of all armed forces of the Crown. She also has the function of head of State in international affairs and is the head of the Commonwealth. PARLIAMENT Parliament is the supreme legislative authority in the country. Its main functions are:

• To pass laws • Vote taxation • Control the Government

The British Parliament consists of two houses:

• The House of Lords • The House of Commons

The real political power, however, lies in the House of Commons, which is an elected body that represents the people directly. Both Houses are situated in the Palace of Westminster ( the Houses of Parliament ) in London. The House of Lords consists of nearly 1,200 peers who are not elected. They are hereditary or life peers appointed by the Sovereign. They are divided into Lords Temporal and Lords Spiritual. The House of Lords is presided over by the Lord Chancellor. Its main function is to act as a Chamber of revision. The Lords only have the power to delay a bill if no agreement is reached between the two Houses.

The House of Commons is a representative assembly of 659 members ( MPs), one for each constituency, elected by universal adult suffrage. MPs receive a salary for their office. The President of the House of Commons is the Speaker. THE GOVERNMENT The Head of government is the Prime Minister, or Premier. He is the leader of the party that has the majority in the House of Commons. The Cabinet ( the committee of leading ministers) meets in a large room at 10 Downing Street. The main government departments are:

• The Treasury • The Foreign Office • The Home Office

The main opposition party in Parliament forms the Shadow Cabinet. POLITICAL PARTIES There are three main political parties in Great Britain:

• The Conservative Party • The Labour Party • The Liberal Democrat Party

The Conservative Party represents private enterprise free from State control. The Labour Party has socialist ideas and aims at a wider State control of the major economic activities. The Liberal Democrats are the centre party in British politics. THE WELFARE STATE A welfare state is a state that accepts responsibility for providing basic assistance for its citizens, that is, social security, health, social services and housing. Today this responsibility in the U.K is divided between the State and private sectors. State provisions include services and benefits for sick, old, unemployed and poor people and are provided by the Department of Health and Social Security. These services are financed by public taxation and by a national insurance plan to which employers and employees contribute.

THE EUROPEAN UNION

INTRODUCTION

The process of European integration has been one of the elements of innovation in recent history and has opened up new perspectives for international trade and cooperation on a joint and cultural project. In recent times new central and eastern European countries have become members and many people hope that the stage of economic integration may quicken the pace of stronger political integration and help find the way towards a more effective world policy of peace and development.

The political and economic situation in Europe changed after the fall of the Wall of Berlin in autumn 1989. Eastern Europe no 10nger existed. As E. Mortimer wrote "There is only Europe". This gave new vigour to the idea of a United Europe. In December 1991 the Heads of State and Government of the EEC countries met at the Maastricht Summit in Holland and started a new process of political and economic integration aiming at the establishment of the European Union. During the Summit the Heads of State and Government reached agreement on a range of issues which formed the basis of the Treaty on the European Union. lt was signed, in the same town of Maastricht, on February 7th 1992. In November 1993 the European Economic Union formally became the European Union.

THE EUROPEAN PARLIAMENT

A European Parliament has existed since the early days of cooperation between the EEC countries but originally its members were nominated only indirectly by the national parliaments and formed what was officially called, in the Treaty of Rome, the Assembly of the European Economic Community. An assembly nominated in this way, however, remained too remote from the people of Europe and did not help them to feel European citizens. The problem soon arose as to how people could participate more actively in the life of the Community and proposals were advanced that the people themselves choose their representatives in the European Parliament through direct general elections. It took several years, however, before the idea was put into effect. The first direct elections by universal suffrage of the European Parliament were held in June 1979 and were a very important step on the way to European integration. Elections are now held every five years. Today the European Parliament has over 600 seats and its members form political rather than national groups. It normally meets in plenary session in Strasbourg. Brussels is the usual place for meetings of its 20 committees.

The European Parliament remains primarily a consultative rather than legislative body, although its political importance is considerably on the rise. It advises the Commission (the executive body) and is consulted on a wide range of issues before the Council of Ministers (the legislative body of the Union) takes final decisions. It also adopts or rejects the budget and in theory can dismiss the Commission by vote of censure though this has never actually occurred.

WHEN DID EVERYTHING BEGIN?

All began in 1948 when sixteen Western European countries set up the Organization for European Economic Cooperation (OEEC) with the purpose of fostering economic development and safeguarding peace in Europe. The following year (1949) the Council of Europe was established, with the function of serving as a forum for discussion and proposal mainly concerning subjects of social, cultural and environmental importance. Today the Council of Europe, which is a different organization from the European Union, includes most Western and Eastern European countries and is the largest European body. In 1951 the proposal of the French Foreign Minister, Robert Schumann, to pass from mere cooperation to some form of economic union is taken up by six countries France, Italy, West Germany, Belgium, the Netherlands and Luxembourg- which create the European Coal and Steel Community, which was to become the nuc1eus of the EEC. In 1957 the same six countries signed the Treaty of Rome setting up the European Economic Community, also referred to as the Common Market. Among its main objectives, the Treaty includes" the foundation of an increasingly c1oser union among the peoples of Europe, the improvement of their working and living conditions, the economic and social progress of their countries and the progressive abolition of all barriers and restrictions on trade." A year after, on January 1st 1958, the EEC formally comes into being. After years of negotiations, Great Britain, Denmark and the Irish Republic joined the European community in 1973. The first election by universal suffrage of the European Parliament was held in June 1979. Before this date, the members of the Assembly were nominated only indirectly by the various national parliaments. By 1986 Greece, Spain and Portugal were also members. A big step was taken in 1985 when a White Paper was issued. It was an agreement to abolish all existing trade barriers by 1992. The Single European Act, passed in 1987, endowed the Community with the means necessary to fulfil the programme. A big step ahead was taken in December 1991 when the Heads of State and Government of the EC met at the Maastricht Summit in Holland and reached an agreement on a Treaty on European Union. The famous Treaty was signed in February 1992. It partly revised the Treaty of Rome, marked a new stage in the process of creating a closer political union among the peoples of Europe. It contained a commitment to reinforce EMU, create a Central Bank and adopt a single European currency (the Euro) by 1999.

The following year (1993) Europeans witness the birth of the Single European Market. Furthermore, as a result of the decisions taken at Maastricht, the EEC formally becomes the European Union. In 1995 Austria, Finland and Sweden joined the EU and made it a fifteen-state union. At the Brussels Summit on May 2nd 1998, the Euro was finally adopted by eleven EU countries. Other countries will follow later. Up to this date, however, Great Britain is one of the countries that still has not adopted the Euro. Today the EU has 27 members. In Rome on October 29th 2004 the Heads of State and Government signed the European Constitution. Unfortunately, certain countries have not ratified it yet.