Appunti Inglese

Retail trade overview

Retail trade involves the sale of goods in small quantities directly to consumers, not for resale. A retailer buys goods in small quantities from wholesalers and sells them to consumers. The main forms of retailers include:

• Shops: Where customers receive personal assistance from shop assistants.
• Supermarkets, department stores, and discount stores: Where customers serve themselves and find a wide variety of products.

Nowadays, the internet and e-commerce technologies provide new distribution channels. Through the internet, suppliers can advertise products, provide transaction details (prices, payment methods, delivery), and enable customers to order from computers or smartphones. Additionally, various retail chains are possible:

• Producer to consumer
• Manufacturer to consumer
• Producer to manufacturer to retailer to consumer
• Producer to manufacturer to wholesaler to consumer

Consumption & terminology

• Goods (always plural noun) and merchandise (always singular noun) mean goods of all kinds intended for sale.
• Commodity is specially used for useful and necessary articles, like food and drink.
• Wares is used for manufactured goods.

Product identification and protection

In primitive economies, land and farm products were bartered without specific names. Eventually, they were traded for money and later identified by their geographic origin, such as silk from China. Starting in the 18th century, with numerous inventions, three legal protections became essential: patents, trademarks, and copyrights.

• Patent: Provides legal protection for inventions, preventing others from creating similar products.
• Trademark: Protects brand names and logos, registered with a government office to prevent misuse by competitors. Famous examples include Apple's trademarks.
• Copyright: Protects the intellectual property of authors, including writers, photographers, and composers, from being copied.

Some trademarked names have become synonymous with the product type itself, like the biro, Walkman, and Scotch tape. Modern products, resulting from extensive research, development, and investment, require these legal protections to safeguard company investments.

Demand and supply summary

Products are made to be sold and consumed. Demand reflects how much consumers want to buy. Individual actions make little difference, but collective actions can change the market. Market demand is the sum of all individual buyers' demands.

Supply represents the amount of a product offered for sale at a certain time. Producers can usually increase supply when demand rises, but some products, like diamonds, have production limits. Market supply is the sum of all individual sellers' supplies.

Factors affecting demand and supply: Key factors include price, income availability, fashion, tastes, and promotion. Since supply often responds to demand, factors influencing demand typically impact supply as well.

Types of economy summary

There are three essential types of economic systems operating globally, differentiated by the extent of government intervention: centrally planned economy, free market economy, and mixed economy.

Centrally planned economy

• Description: The government determines what and how many goods and services are needed and arranges their production and distribution.
• Example: North Korea.
• Drawbacks: Lack of competition can lead to poor management, inferior products, supply problems, and shortages of essentials like food and clothing.

Free market economy

• Description: Prices and availability of goods and services are determined by supply and demand with minimal state interference. Private companies compete freely, and the market decides purchases.
• Example: Countries in Southeast Asia, such as Singapore.
• Note: Governments may still intervene to control business activities with significant national economic implications.

Mixed economy

• Description: Combines elements of both free market and centrally planned economies. Private companies compete for most goods and services, but the government typically provides public transport, education, healthcare, and utilities.
• Examples: Italy and the UK.

Publicly-owned businesses summary

Governments are major employers and provide various services, primarily funded through taxation. They may also run enterprises that offer services or sell products, the extent of which varies by the country's economic system.

Centrally planned economies

• All means of production are government-owned.
• The government decides on production and distribution, with prices set by the government rather than supply and demand.
• Consumers have no influence on prices.

Free market economies

• Market forces determine the needed goods and services.
• The state runs only essential enterprises, such as social or national security services.

Mixed economies

• Governments provide public interest services and run enterprises.
• Public enterprises are typically not profit-driven, with the state covering losses.
• Managers are government-appointed and subject to political changes or pressures.

Historically, many European governments owned numerous companies, but the trend over the past two decades has been towards privatization. These companies are often converted into Public Limited Companies (PLCs) with shares traded on the Stock Exchange.

Types of business ownership summary

This chapter discusses setting up a business and company structure.

Definition of a company

• A company is a management unit that trades under a specific name and manages the use of land, labor, and capital.
• It makes decisions on production methods and product marketing.
• A company is distinct from production units like factories, farms, or mines but may control multiple production units.
• Companies engage in activities across various areas such as research and development, marketing, production, sales, and customer service.
• They vary in size from individual entrepreneurs to large firms employing thousands.

Types of traders

• Sole Traders: Individual merchants or shopkeepers operating under their own name.
• Trading Firms: Associations of people doing business together.

Both types aim to meet demand by buying and selling goods, often with the help of employees or intermediaries.

Intermediaries

Direct trade between firms is rare; intermediaries often facilitate business transactions.

• Agents: Manage business affairs for others and include:
• General Agents: Handle general affairs.
• Special Agents: Employed for specific transactions.
• Sole Agents: Exclusively represent a firm in a region.
• Shipping and Forwarding Agents: Send goods to other places.
• Agents earn a commission for their services.
• Commercial Travellers: Obtain orders or sell goods while traveling. They earn a fixed salary plus potential commissions.
• Brokers: Act as intermediaries between buyers and sellers, earning a percentage called brokerage. Types include stockbrokers and ship brokers.
• Proxy: Authorized to act and sign on behalf of another person.

Retail employees

Shopkeepers employ assistants and, in larger shops, shop walkers to guide customers.

Merchant houses summary

To aid in the distribution of their products, manufacturers often sell through merchant houses or export agents.

Functions of merchant houses

• Buying for sale abroad: Purchasing goods on their own account to sell internationally.
• Buying on behalf of businesses: Purchasing goods abroad for domestic business houses.

They typically handle general merchandise and can act as both buyers and sellers. Staffed by trading experts with overseas connections, merchant houses charge a small commission for their services. This method spares manufacturers the complexities of distribution, insurance, and shipping.

Direct method

Large industrial companies often establish their own export departments, managing packing, insurance, shipping, and appointing their own agents overseas.

Types of business ownership: summary

This chapter discusses the various forms of business ownership, focusing on sole traders, partnerships, and companies/corporations.

Sole trader

• Definition: A business owned and operated by one person with unlimited liability.
• Characteristics:
• Simple to set up with full control and decision-making power.
• Common among small-scale businesses like market stall owners, shopkeepers, window cleaners, carpenters, and car mechanics.
• Advantages:
• Direct oversight of all operations.
• All profits go to the owner.
• Quick decision-making.
• Disadvantages:
• Unlimited liability risks personal assets if the business fails.
• Limited financial resources and capital.
• No one to share workload or ideas with.

Partnerships

• Definition: An association of two or more people or businesses sharing responsibilities and profits.
• Characteristics:
• Common in small retail and service businesses like restaurants or courier firms.
• Partners contribute capital and share profits and losses.
• Types:
• Unlimited Partnership: All partners have unlimited liability for the business debts.
• Limited Partnership: Some partners only contribute capital and have limited liability, while at least one partner must have unlimited liability.
• Advantages:
• Shared responsibilities and workload.
• Combined capital and expertise.
• Disadvantages:
• Unlimited partners risk personal assets.
• Potential for disputes among partners.

Companies/Corporations

• Definition: An association of investors (shareholders) with limited liability.
• Characteristics:
• Formed by at least two shareholders.
• Shares represent capital investment, and profits are distributed as dividends.
• Shareholders' liability is limited to their investment.
• Types in the UK:
• Private Limited Company (Ltd):
• Shares not quoted on the Stock Exchange.
• Shares can only be sold with all shareholders' agreement.
• Limited liability for shareholders.
• Public Limited Company (Plc):
• Shares can be freely bought and sold on the Stock Exchange.
• Requires Plc designation.
• Limited liability for shareholders.
• US Equivalent: Incorporated companies (Inc), registered with state authorities and regulated by the SEC for share sales.

These business structures offer various advantages and disadvantages, depending on the needs for control, liability, and capital. Companies can expand through:

• Franchising or licensing
• Setting up a joint venture
• Becoming a holding company
• Becoming a multinational
• Becoming a cooperative

Corporate structure changes when companies form an alliance

Many companies form alliances to expand operations and increase market influence. These alliances allow sharing of resources, expertise, and risks, which can lead to increased efficiency and competitive advantages.