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.
|
