Exam 1: The Nature and Environment of Companies

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The modern form of company emerged in Britain in the middle of the 19th century.It is no coincidence that it grew with the increasing industrialisation of the period,as the company was seen as a convenient form of organisation for the accumulation of capital.Thus,in the 17th century,when European traders were making ventures to newly "discovered" parts of the world,the need for capital exceeded the amounts that could be raised by one or two partners.There was also a considerable risk in investing in these ventures.They involved small ships travelling vast distances over uncharted (or scantily charted)oceans--and often the ships never returned! Many companies were formed to gather different levels (amounts)of funds from several investors.The venture was funded with the prospect of large rewards for contributors when the ships returned with their precious and exotic cargoes.In the 19th century,business activity in the industrial revolution and the expansion of railway networks usually required very large amounts of capital,amounts beyond the means of a few investors.It is generally believed that this provided the impetus for the growth in the company form of organisation,which was accompanied by growth in company legislation to protect the investors.