Реферат: Business English
Министерствообразования Российской Федерации
Тихоокеанскийгосударственный экономический университет
Учебноепособие для обучения с применением дистанционной технологии
Б 72 Бовина И.Е. Деловой английский язык. Учебное пособие для студентов,обучающихся с применением дистанционной технологии.- Владивосток, Изд-во ТГЭУ,2008.- 46 с.
Печатается по решению Учебно-методического совета гуманитарных дисциплин.
доц. ДВГУ, кандидат филологических наук Хабибулин В.А.
эксперт I категории ГУ ЦБ по Прим. краю ЯкименкоД.А.
ISBN 5-93362-112-9 Ó Бовина И.Е., 2001 г.
Ó Изд-во ДВГАЭУ, 2001 г.
Chapter 1. Business Basics
Part 1. Forms of BusinessOrganization
Part 2. Fundamentals of Marketing
Part 3. Management
Part 4. Accounting and Finance
Part 5. International Trade
marketing business trade accounting
Что такое деловой английский язык? Это английский, применяемый вситуациях делового общения.
Чтобы успешно общаться на английском языке в подобных ситуациях,необходимо, во-первых, знать лексику, употребляемую в той или иной сфеределовой жизни, например, в области маркетинга или финансов; и, во-вторых, иметьнавыки делового общения, – такие, как навык написания деловых писем или веденияразговоров по телефону.
Исходя из вышеописанного, данное пособие состоит из двух глав – «Business Basics»,которая знакомит читателя с базовым вокабуляром, применяемым в деловойпрактике; и «Business Skills», которая позволяет выработать два основныхделовых навыка.
Каждая глава делится на разделы, сопровождающиеся системой упражнений;поскольку пособие предназначено, прежде всего, для самостоятельной работыстудентов, обучающихся с применением дистанционных технологий, ключи купражнениям приведены в конце пособия. Пособие включает задания для проверкирезультативности самостоятельной работы (tasks),которые следует выполнить и направить в академию.
Chapter1. Business Basics Part 1. Forms of Business Organization
What is Business?
Before reading the text try to match the words on theleft with their definitions on the right.
1. Sole proprietorship a. A legal entity that exists separately from the people who own it.
2. Partnership b. An organization formed by two or more people becoming co-owners of a business.
3. Corporation c. An organization that is owned and managed by one person.
Now read the text and do the true-false exercises aftereach part of it.
A business is any organization that seeks profit byproviding goods and services to the economic system. A nonprofit organizationalso provides goods and services to the economic system, but does not haveprofit as an objective.
Forms of Business Ownership.
An organization that is owned, and usually managed, byone person is called a sole proprietorship. That is the most common form ofbusiness ownership.
When two or more people become co-owners of a business,the organization is called a partnership.
A legal entity that has an existence separate from thepeople who own it is called a corporation.
A Sole proprietorship has lots of advantages:
1. Ease of starting and ending the business. Allyou have to do to start a sole proprietorship is buy the needed equipment (forexample, a saw, a word processor, a tractor, a lawn mower, or a welder) and putup some announcements saying you are in business. It is just as easy to get outof business; you simply stop. There is no one to consult or to disagree withabout such decisions. You may have to get a permit or license from thegovernment, but that is usually no problem.
2.Being your own boss. «Working for otherssimply doesn’t have the same excitement as working for yourself,» – that’sthe way sole proprietors feel. You may make mistakes, but they are your mistakes– and so are the many small victories each day.
3.Pride of ownership. People who own and managetheir own businesses are rightfully proud of their work. They deserve all thecredit for talking the risks and providing needed goods and services.
4.Retention of profit. Other than the joy ofbeing your own boss, there is nothing like the pleasure of knowing that you canmake as mush as you can and do not have to share that money with anyone else(except the government, in taxes). Store owners and service people are oftenwilling to start working early in the day and stay late because the money theyearn is theirs to keep.
5.No special taxes. All the profits of a soleproprietorship are taxed as the personal income of the owner, and he or shepays the normal income tax on that money. Owners do have to file an estimatedtax return and make quarterly payments. It is wise for small business owners topick up a packet of information for small business owners from the localInternal Revenue Service office.
There are also a number of disadvantages:
1.The risk of losses. When you work for others,it is their problem if the business is not profitable. When you own you ownbusiness, you have the risk of losing almost everything – your time, yourmoney, and your business. What you keek, if you fail, is the pride of havingtried, and the experience.
2.Unlimited liability. When you own your ownbusiness, you and the business are considered one. That is, any debts anddamages incurred by the business are your debts and you must pay them, even ifit means selling your home, your car, and so forth. This is a serious risk andone that requires careful thought and discussion with a lawyer, insuranceagent, and others. As the owner, you are liable for everything.
3.Difficulty in management. Most business needsome management; that is, someone must keep inventory records, accountingrecords, tax records, and so on. Many people who are skilled at selling thingsor providing a service are not so skilled in keeping records. Sole proprietorsmay have no one to help them. It is often difficult to find good, qualifiedpeople to help run the business. Some employees can be careless, tardy,dishonest, unreliable, and incompetent. It is hard to own a business, manageit, train people, and have time for anything else in life.
4.Overwhelming time commitment. Perhaps the mostcommon complaint among sole proprietors is the fact that good employees arehard to find. Therefore, the owner must spend long hours working. The owner ofa store, for example, may put in 12 hours a day, at least 6 days a week. Thisis almost twice the hours worked by a salaried laborer, who may make moremoney.
5.Few fringe benefits. If you are your own boss,you lose many of the fringe benefits that come from working for others. Forexample, you have no health insurance, no disability insurance, no sick leave,no vacation pay, and so on. These benefits may add up to 30% or more of aworker’s income.
6. Limited growth. If the owner becomesincapacitated, the business often comes to a standstill. Furthermore, a soleproprietorship relies on its owner for most of its funding. Therefore expansionoften is slow and there are serious limits to how much one person can do. Thatis one reason why many individuals seek partners to assist in business.
7. You are on your own. The greatest advantage ofa sole proprietorship can also be a major disadvantage. You have nobody to helpor to blame if something goes wrong.
8. Limited life span. If the sole proprietordies, the business no longer exists.
Exercise 2. True orfalse?
1. It is difficult to start a sole proprietorship.
2. A sole proprietor doesn't have to share his profit withanybody except the government, in from of taxes.
3. A sole proprietor has limited liability.
4. Fringe benefits are few.
It is ot difficult to form a partnership, but it is wiseto get a counsel of a lawyer experienced with such agreements. Lawyers’services are expensive, so would-be partners should read all about partnershipsand reach some basic agreements before calling in a lawyer. It is often easierto form a partnership agreement than to operate one or end one, and manyfriendships have ended after friends became partners. With some care, however,partnerships have these advantages.
1. More financial resources. Naturally, when two or more people pool their money and credit, itis easier to pay the rent, utilities, and other bills incurred by a business. There is a concept called limitedpartnership that is specially designed to help raise capital (money). A limitedpartner invests money in the business, but doesn’t have any managementresponsibility or any liability for business losses. The agreement formnecessary for a limited partnership is more complex than that needed for asimple partnership (called a general partnership). For example, the agreementmust mention the amount of money involved, the share of profits each person receives,and so on. You will need a lawyer’s help with such agreements. The point hereis that partnerships feed more money into the business for growth.
2. Ease of management. Itis simply much easier to manage the day-to-day activities of a business withcarefully chosen partners. Partners give each other free time from thebusiness, and provide different skills and perspectives. Many people find thatthe best partner is a spouse. That is why you see so many husband/wife teamsmanaging restaurants, service shops, and other businesses.
There are also some disadvantages:
1. Unlimited liability. Each general partner isliable for the debts of the firm, no matter who was responsible for causingthose debts. Like a sole proprietor, partners can lose their homes, cars, andeverything else they own if the business fails or is sued by someone. Such arisk is very serious and should be discussed with a lawyer and an insuranceexpert. A general partner, then, is an owner (partner) who has unlimitedliability and is active in managing the firm. (As mentioned earlier, a limitedpartner risks an investment in the firm, but is not liable for the business’slosses).
2.Devision of profits. Let’s say two people forma partnership. One puts in more money and the other puts in more hours. Eachmay feel justified in asking for a bigger share of the profits. Sharing therisk means sharing the profit, and that can cause conflicts.
3. Disagreements among partners. Disagreementsover money are just one example of potential conflict in a partnership. Who hasfinal authority over employees? Who hires and fires employees? Who works whathours? What if one partner wants to buy expensive equipment for the firm andthe other partner disagrees? Potential conflicts are many. Because of such problems,all terms of partnership should be spelled out in writing to protect allparties and to minimize misunderstanding in the future.
4.Difficult to terminate. Once you havecommitted yourself to a partnership, it is not easy to get out of it. Questionsabout who gets what and what happens next are often very difficult to solvewhen the business is closed.
Exercise 3. True orfalse?
1. It is easier to start a partnership than to stop it.
2. A limited partner has no management responsibility.
3. General partners have equal responsibilities for afirm's debts.
4. Partnership is more difficult to manage than a soleproprietorship.
Although the word corporation makes people think of bigbusiness like General Motors, IBM, Ford and so on, it is not necessary to bebig in order to incorporate (start a corporation). Incorporating may bebeneficial for small businesses also.
The purpose of forming a corporation is to get away fromthe disadvantages of sole proprietorships and partnerships. One of the moreworrisome aspects of owing your own business or having a partner is the fear oflosing everything you own if someone sues the business or the business loses alot of money. A corporation isa state-chartered legal entity with authority to act and have liabilityseparate from its owners. What this means for the corporation's owners(stockholders) is that they are not liable for the debts or any other problemsof the corporation beyond the money they invest. Owners no longer must worryabout losing their house, car, and other property because of some businessproblem – a very significant benefit. A corporation not only limits theliability of owners, it enables many people to share in the ownership (andprofits) of a business without working there or having other commitments to it. The concept of incorporation is not toodifficult, even though the procedures for incorporating are often rathercomplex. Most people are not willing everything to go into business. Yet, forbusiness to grow and prosper and create abundance, many people would have to bewilling to invest their money in business. The way to solve this problem was tocreate an artificial being, an entity that existed only in the eyes of the law.That artificial being is called a corporation. It is nothing more than atechnique for involving people in business at a minimal risk. The advantages ofsuch an entity are:
1.More money for investment. To raise money, acorporation sells ownership (stock) to anyone who is interested. This meansthat millions of people can own part of major companies like IBM, Xerox, andGeneral Motors. If a company sold 10,000,000 shares for $50 each, it would have$500 million available to build plants, buy materials, hire people, buildproducts, and so on. Such a large amount of money would be difficult to raiseany other way. So a major advantage of corporations is their ability to raiselarge amounts of money.
2. Limited liability. It bears repeating that amajor advantage of corporations is the limited liability of owners.Corporations in England and Canada have the letters «Ltd.» aftertheir name, as in British Motors, Ltd. The Ltd. stands for limited liabilityand is probably the most significant advantage of corporations. Limited liabilitymeans that the owners of a business are responsible for losses only up to theamount they invest.
3. Size. That one word summarizes many of theadvantages of corporations. Because they have large amounts of money to workwith, corporations can build large, modern factories with the latest equipment.They can also hire experts or specialists in all areas of operation.Furthermore, they can buy other corporations in other fields to diversify theirrisk. (What this means is that a corporation can be involved in many businessesat once so that if one fails the effect on the total corporation is lessened.)In short, a major advantage of corporations is that they have the size andresources to take advantage of opportunities anywhere in the world. Corporationsdo not have to be large to enjoy the benefits of limited liability and moremoney for investment. Many doctors, lawyers, and individuals and partners in avariety of businesses have incorporated.
4. Tax advantages. Once a person, partnership, orgroup of individuals have incorporated, they often receive significant taxadvantages. They can deduct expenses for automobiles, meals, trips, and muchmore from their taxes. They can reinvest profits into the corporation topostpone paying taxes, and more. One of the most important tax advantages istax-free fringe benefits, such as retirement funds.
5. Perpetual life. Because corporations areseparate from those who own them, the death of one or more owners does notterminate the corporation.
6. Ease of ownership change. It is easy to changethe owners of a corporation. All that is necessary is to sell stock to someoneelse. This means that new owners can be brought in easily as well.
7. Separation of the ownership from management. Corporationsare able to raise money from many different investors without getting theminvolved in management, so the owners/shareholders are separate from themanagers and employers. The owners elect a board of directors. The directorsselect the officers. They, in turn, hire managers and employees. The ownersthus have some say in who runs the corporation, but no control.
There are also a few disadvantages:
1. Initial cost. Incorporation may cost thousandsof dollars and involve expensive lawyers and accountants.
2. Paperwork. The papers to be filed to start acorporation are just the beginning. Tax laws demand that a corporation proveall its expenses and deductions are legitimate. A corporation, therefore, mustprocess many forms. A sole proprietor or partnership may keep rather casualaccounting records; a corporation, on the other hand, must keep detailedrecords, the minutes of meetings, and more.
3. Two tax returns. If an individualincorporates, he or she must file both a corporate tax return and an individualtax return. The corporate return can be quite complex.
4. Size. Large corporations sometimes become tooinflexible and too tired down in red tape to respond quickly to market changes.
5. Social security. A corporation has a highsocial security and unemployment compensation burden; that is, it mustcontribute to these funds.
6. Termination difficult. Once a corporation isstarted, it is relatively hard to end.
7. Double taxation. Corporate income is taxedtwice. First the corporation pays tax on income before it can distribute any tostockholders. Then the stockholders pay tax on the income (dividents) theyreceive from the corporation.
Exercise 4. True orfalse?
Small businesses cannot be corporations.
Corporate owners are responsible for business' debts.
Shareholders are separated from company management.
Corporations are taxed only once.Part 2. Fundamentals ofMarketing
Exercise 5. Match thewords and their definitions:
1. Marketing a. Getting goods to the right placeat the right time in the right quantity.
2. Product b. A process of studying people's wants and needs and satisfyingthem by exchanging goods and services, resulting in profits for sellers.
3. Place c. Money paid by customers and received by sellers.
4. Promotion d. A good or a service andeverything connected with them– package, guarantee, brand name, etc.
5. Price e. Combination of different tools such as advertising, publicity,personal selling etc in order to sell goods or services.
A popular slogan that describes modern-day marketing is,«Find a need and fill it». What does it mean? It means that businessmust do some market research to find out what goods and services people andorganizations want and need. Listening should come first. Then marketers mustdo whatever it takes to satisfy those wants and needs. The ultimate goal is tomake money (profit) by producing and selling goods and services. Marketing,then, can be defined as follows:
Marketing is the processof studying wants and needs and satisfying those wants and needs by exchanginggoods and services; this results in satisfied buyers and creates profits forsellers.
When developing programs to satisfy market wants andneeds, marketing managers work with several variables known as the marketingmix. A marketing mix is the strategic combination of product decisionswith decisions on packaging, pricing, distribution, credit, branding, service,complaint handling and other marketing activities. All these activities areoften combined under four easily remembered categories called the four P’s:product, place, promotion, and price.
From a marketing viewpoint a product is not just thephysical good or service. A product consists of all the tangibles andintangibles that consumers evaluate when deciding whether or not to buysomething. When people buy a product, they evaluate its price, package,guarantee, image created by advertising, reputation of the producer, brandname, service, buyers’ past experience, store surroundings etc. Therefore asuccessful marketer must begin to think like a consumer and evaluate theproduct as a total collection of impressions created by all the factors listed.
The major function of packaging, for example, isto attract the attention of the buyer. To do this a package needs visibility.Visibility is achieved through the creative use of colour, shape, texture,design and size. Using these cues, one can easily identify most of the popularconsumer products. For example, most people can easily recognize a Coke bottle,a box of Tide, a pack of Marlboro cigarettes from several meters away.
Another function of packaging is to give consumers addedconvenience for their money through the use of easy-open cans, clear plasticwraps, squeezable ketchup bottles and so on. In the future we may expect to seemore packing innovations that will enable us to keep meat and milk withoutrefrigeration, keep fresh vegetables for months etc.
One more function of packaging is to protect the goodsfrom environmental factors such as rain and sun; against breakage and harm fromanimals.
Packaging also helps the middleman by grouping goodsinto easily managed sizes; retailers to price items, store them on theirshelves, reduce errors etc.
Branding, like packaging,changes the product by changing consumer perceptions.
A brand is a name, symbol or design (or a combination ofthem) that identifies the goods or services of one seller or group of sellersand distinguishes them from those of competitors. A brand name is that part ofthe brand consisting of a word, letter, or group of words or letters comprisinga name that differentiates the goods or services of a seller from those ofcompetitors. Brand names such as Colgate, Sony, Del Monte, Campbell etc. giveproducts a distinction that tends to make them attractive to customers.
A trademark is a brand that has been given legalprotection. It includes the brand name and the pictorial design.
People are often impressed by certain brand names, eventhough they say they know there is no difference between brands in a givenproduct category.
Exercise 6. True orfalse?
1. Product is just a physical good.
2. A good marketer must think like a consumer.
3. We can identify many consumer products looking attheir packaging.
4. People often buy certain products just because oftheir brand names.
Place, or distribution, means getting goods to the rightplace at the right time in the right quantity. The distribution mix includeseight main functions– research, risk bearing, storage, selling, buying, credit,transportation and grading.
Two institutions have emerged to perform thedistribution function: wholesalers and retailers. They are knownas marketing middlemen because they are in the middle of distributionnetwork that connects producers with consumers.
Marketing middlemen have always been viewed by thepublic with some suspicion. Surveys have shown that about half the cost of thething we buy are marketing costs that are largely to pay for the work ofmiddlemen! But if there are no middlemen, then consumers or someone else willhave to perform their tasks, including transportation, storage, findingsuppliers etc. Yes, middlemen add costs to products, but these costs areusually more than offset by the values they create. Middlemen, such asretailers, add time utility to products (utility is value added to rawmaterials) by making them available when they are needed; add placeutility by having them where people want them; add possession utility bydoing whatever is necessary to transfer ownership from one party to another,including providing credit; add information utility by opening two-wayflows of information between marketing participants.
A retailer is a marketing middleman who sells toconsumers. The success of any retail establishment depends largely on its salesworkers. Courteous and efficient service from behind the counter or on thesales floor does much to satisfy customers and build a store’s reputation.Whether selling furniture, electrical appliances or clothing, a sales worker’sprimary job is to interest customers in the merchandise. This is done bydescribing the product’s construction, demonstrating its use, and showingvarious models and colours.
Different products call for different retaildistribution strategies. There are three categories of retail distribution:intensive distribution, selective distribution, and exclusive distribution.
Intensive distribution puts products to as many retailoutlets as possible. Products that need such distribution include candy,cigarettes, gum etc.
Selective distribution is the use of only preferredgroup of the available retailers in an area. Such selection helps assure theproducers of quality sales and service. Manufacturers of TV sets, furniture andclothing usually use selective distribution.
Exclusive distribution is the use of only one retailoutlet in a given geographical area. Because the retailer has exclusive rightsto sell the product, he or she is more likely to carry more inventory, givebetter service and pay more attention to this brand than others. Automobilemanufacturers usually use exclusive distribution.
Regardless of the strategy used, manufacturers oftenship their goods through wholesalers, because they are more efficient atperforming the distribution functions.
A wholesaler is a marketing middleman who sellsto organizations and individuals, but not final consumers. He purchases, forresale, the best available merchandise at the lowest possible prices andexpedite the delivery of goods from the producer to the customer.
There are basically 2 types of wholesalers:full-function wholesalers that do all eight functions and limited-functionwholesalers that do only a few.
So, the reason for middlemen is to help perform thephysical distribution function, that is movement of goods from producer tocustomer. Physical distribution begins with raw materials that have to beshipped to manufacturers who change them into useful products; it also includesthose functions involved in purchasing goods, receiving them, moving themthrough the plant, inventorying them, storing them, and shipping finished goodsall the way to final users.
Exercise 7. True orfalse?
1. Middlemen only add cost to products and do no good.
2. A wholesaler is a marketing middleman who sells tofinal consumers.
3. The success of any retail outlet depends largely onits sales workers.
4. A good distribution strategy for selling expensivecars is intensive distribution.
A promotion mix is somecombination of promotional tools (advertising, personal selling, publicrelations, publicity, sales promotion, a good product or service, and word-of-mouth)that can be used to communicate to various publics.
Advertising is limited topaid, nonpersonal communication through various media by organizations andindividuals who are in some way identified in the advertising message. Whenpeople refer to advertising, they are usually talking about TV advertising; butonly about 22% of advertising is on TV. The other media used for advertisingare: newspapers, radio, magazines and direct mail.
The public benefits greatly from advertising. First, welearn about new products, new features, sales items, and more. But we alsobenefit from free radio and TV and subsidized newspapers and magazines. Inshort, advertising not only informs us about products but pays for us to watchTV and get the news from magazines and newspapers.
Sales promotion consistsof those marketing activities that stimulate consumer purchasing and dealerinterest by means of such things as displays, shows and exhibitions, andcontests. Sales promotion programs supplement personal selling, advertising,and public relations efforts by creating enthusiasm for the overall promotionalprogram.
There are two ways to promote the movement of productsfrom producers to customers. The first is called a push strategy. Inpush strategy, the producer uses promotional tools to convince wholesalers andretailers to stock and sell merchandise. If it works, consumers will then walkinto the store, see the product, and buy it. The idea is to push the productdown the distribution system to the stores. One example of a push strategy isto offer dealers one free case of beer or soda for every dozen cases theypurchase. A second strategy is called a pull strategy. In this caseheavy promotion is directed toward consumers. If it works, consumers will go tothe store and order the products. The storeowner will then order them from theproducer. Products are thus pulled down through the distribution system. Dr.Pepper has used television advertising in a pull strategy to increasedistribution. Of course, a company could use both a push and pull strategy atthe same time in a major promotional effect.
Word-of-mouth promotionencourages people to tell other people about products they have enjoyed. Wordof mouth is one of the most effective promotional tools, but one most marketersdo not use to full effectiveness.
Anything that encourages people to talk favourably aboutan organization is effective word of mouth – music, fairs, clowns and otherattention-getting devices. Samples are another way to generate word of mouth.But the best way is to have a good product, provide good services, and keepcustomers happy. We consumers are happy to tell others where to get goodservices and reliable products. However, we are also quick to tell others whenwe are unhappy with products and services. Negative word of mouth hurts a firmbadly. Taking care of consumer complaints quickly and effectively is the bestway to lessen negative word of mouth.
Public relations isdefined as the management function that evaluates public attitudes, identifiesthe policies and procedures of an individual or an organization with the publicinterest, and executes a program of action to earn public understanding andacceptance. Public relations start with good marketing research. The secondstep, after listening to the public, is the development of policies andprocedures that are in the public interest. The final step is to take action toearn public understanding and acceptance.
Personal selling is theface presentation and promotion of products and services plus the searching outof prospects and follow-up service. Effective selling is not simply a matter ofpersuading others to buy. In fact, it is more accurately described as helpingothers to satisfy their wants and needs.
Exercise 8. True orfalse?
1. Advertising is paid, personal communication throughdifferent media.
2. Only companies benefit from advertising.
3. Displays, shows and exhibitions are all means ofsales promotion.
4. Offering a dealer a free box of goods for every dozenbought is an example of a push sales strategy.
Firms must establish realistic and measurable pricinggoals if marketing strategy is to be effective. Some firms aim for a targetreturn on investment which enables them to determine a required level ofprofit. This, in turn, helps in the setting of prices and other marketing mixvariables.
Some firms use market share as a pricing goal. Inthe search for increased share of the market, firms might cut prices and hurttheir profit margins.
Another pricing objective is to meet competition. Manyfirms are suffering greatly from such practices or even go bankrupt.
Some firms set a profit-maximization objective,where the goal is to earn as mush as possible. Such policy cannotusually be implemented over a long run because of competitive and governmentforces, but in the short run it can be quite effective.
Pricing objectives are based on a firm’s overallobjectives, the market segments being served, competition, market conditions,and many other variables. The basic overall objective is to establish mutuallybeneficial exchange relationships with selected target markets.
There are different pricing strategies. A skimmingprice strategy is one in which the product is priced high to make optimumprofit while there is little competition. Of course, those large profits willattract others to produce similar goods so they can’t last long.
A penetration strategy isone in which a product is priced low to attract more customers and discouragecompetitors. This strategy enables the firm to penetrate or capture a largeshare of the market quickly. Another pricing strategy is called psychologicalor odd pricing when retailers price good at $9.99 instead of $10.00believing that such odd prices are psychologically more attractive than evenprices.
Exercise 9. True orfalse?
1. To increase market share it is sometimes necessary todecrease the price.
2. A profit-maximization objective can't be used duringa long period of time.
3. A penetration strategy is one when a product ispriced very high.
4. Odd pricing is based on studying people's psychology.Part 3. Management
Exercise 10. Match the wordsand their definitions:
1. Management a. The art of getting things donethrough people and other resources.
2. Planning b. Allocating resources, assigning tasksand establishing the organization objectives.
3. Organization c. Anticipating future trends anddetermining the best strategies and tactics to achieve organizationalobjectives.
4. Leadership d. Measuring performance relativeto objectives and standards and taking corrective actions where necessary.
5. Controle e. Establishing values, sharing visions,creating enthusiasm an maintaining focus on a few, clear objectives.
Management is the art of getting things done throughpeople and other resources.
The four primary managerial functions are planning,organization, leadership, and control. Other functions include stuffing(personnel), directing, reporting, and budgeting.
But management is much more complex than doing a fewtasks. A good manager must know about the industry the firm is in and all thetechnological, political, competitive, and social factors affecting thatindustry. He or she must also understand the kind of people who work in theindustry and what motivates them. Finally, a manager must be skilled inperforming various managerial tasks, especially technical tasks, humanrelations tasks, and communications tasks.
Planning includes anticipationg future trends anddetermining the best strategies and tactics to achieve organizationalobjectives. Most planning follow similar patterns. Planning answers threefundamental questions for business:
1. What is the situation now? What is the state of theeconomy? What opportunities exist for meeting people’s needs? How muchcompetition is there?
2. Where do we want to go? What objectives do we want toaccomplish?
3. How can we get there from here? This is the mostimportant part of planning which takes three forms:
1. Strategic (long-range) planning determines themajor objectives of the organization and the policies and strategies forobtaining and using resources to achieve those objectives. At this stage thecompany decides which customers to serve, what products or services to sell,and the geographic areas in which the firm will compete.
2. Tactical planning is the process of developingdetailed, short-term decisions about what is to be done, who is to do it, andhow it is to be done.
Whereas strategic planning is done by the top managersof the firm, tactical planning is more often done by managers at lower levelsof the organization. Tactical planning may involve setting annual budgets anddeciding on the details of how to meet the strategic objectives.
3. Contingency planning is the preparation ofalternative courses of action that may be used if the primary plans do notachieve the objectives of the organization. The economic and competitiveenvironments change so rapidly that it is wise to have alternative plans ofaction ready in anticipation of such changes.
Exercise 11. True orfalse?
1. Strategic planning is the process of makingshort-term decisions.
2. Strategic planning is mainly done by top managers.
3. Contingency planning is the same as tacticalplanning.
4. It's necessary to have alternative plans in case ofchanges in economic environment.
Organization means allocating resources, assigningtasks, and establishing procedures for accomplishing the organizationobjectives. When organizing, a manager develops a structure or framework thatrelates all workers, tasks, and resources to each other. That framework iscalled the organization structure and pictures who reports to whom andwho is responsible for each task.
An important part of organizing is staffing, getting theright people on the business team. Today it is called human resourcesmanagement because it is as important to develop the potential ofemployees, as it is to recruit good people in the first place.
Exercise 12. True orfalse?
1. Organizational structure is a picture showing whoreports to whom in the company.
2. Stuffing is a part of an organization structure.
Leadership today is not just good management. It is alsoa matter of establishing values, sharing visions, creating enthusiasm, andmaintaining focus on a few, clear objectives.
There are different leadership styles.
Autocratic leadership meansmaking managerial decisions without consulting others, and implies power overothers.
Bureaucratic leadershipis based on inflexible routine supported by rules, regulations, and policies.
Diplomatic leadership isbased on skill and tact in convincing employees to follow the leader'sdecisions.
Democratic leadership meansthat managers set work together to make decisions.
Laissez-faire leadership meansthat managers set objectives and employees are relatively free to do whateverit takes to accomplish those objectives. Many scientists and doctors work bestunder laissez-faire leadership.
Employee-controlled leadership consists of having employees set objectives, and management handleadministrative matters. Many universities are run this way.
Participative management involvesemployees in setting objectives and making decisions; consultive, democraticand laissez-faire leadership are all forms of participative management.
One manager may use a variety of leadership stylesdepending on whom he is dealing with and the situation.
Exercise 13. True orfalse?
1. Autocratic leadership is based on tact in convincingpeople to follow the leader's decisions.
2. Every manager uses only one leadership style.
3. Democratic management is an example of participativemanagement.
4. Doctors and scientists usually better work underbureaucratic leadership.
The control function involves measuring performancerelative to objectives and standards and taking corrective action whennecessary. The control function, therefore, is the heart of the managementsystem because it provides the feedback that enables managers to adjust to anydeviations from plans and to changes that have occurred in the environment thathave affected performance.
Controlling consists of the following steps:
1. Setting clear standards;
2. Monitoring and recording performance (results);
3. Comparing results against plans and standards;
4. Communicating results and deviations to the employeesinvolved;
5. Taking corrective action when needed.
Tasks and skills at different levels
A manager must have three categories of skills.
Technical skills involvethe ability to perform tasks of a specific department such as selling oraccounting.
Conceptual skills referto a manager’s ability to picture the organization as a whole and therelationship of various parts to perform tasks such as planning and controlling.
Human relations skills includeleadership, communication, motivation, coaching, and training.
The higher up one goes in management, the more time isspent on conceptual and human relations functions and less on technicalfunctions.
Exercise 14. True orfalse?
1. Top managers spend more time on technical functionthan on the others.
2. Conceptual skills refer to ability to performspecific tasks.Part 4. Accounting and Finance
Exercise 15. Match thewords and the definitions:
1. Accounting A document reporting the results ofcompany operations over a particular period of time.
2. Income statement A financial statement that reports the financial position of a firmat a specific time.
3. Balance sheet Acquiring funds for the firm and managing funds within a firm.
4. Financing Recording data from transactions and preparing financial statements.
Accounting process consists of two major functions:
1. Recording data from transactions;
2. Preparing financial statements.
Transactions includebuying and selling goods and services, acquiring insurance, using supplies, andpaying taxes. After the transactions have been recorded, they are usuallyclassified into groups that have common characteristics. For example, allpurchases are grouped together, as are all sales transactions. Other kinds ofaccounting documents are: purchasing documents, payroll records, bankdocuments, travel and entertainment records. The business is thus able toobtain needed information about purchases, sales and other transactions thatoccur over a given period of time. The methods used to record and summarizeaccounting data into reports is called an accounting system. One purposeof accounting is to help managers evaluate the financial condition and theoperating performance of the firm so that they may take better decisions.Another is to report financial information to people outside the firm such asowners, creditors, suppliers, and the government (for tax purposes).
When recording the original transaction documents in ajournal the accountant places them in certain accounts.
Accountants use five major accounts to preparefinancial statements:
1. Assets. Assets arewhat a business owns, property that have money value. Assets include thefollowing:
· Cash (cash on hand and deposits in banks)
· Accounts receivable (money owed to a business from customers whobought goods on credit)
· Motor vehicles
Assets are divided into three categories:
1) Current assets (items that can be converted to cashwithin one year),
2) Fixed assets (items such as land, buildings andfixtures that are relatively permanent),
3) Other (intangible) assets (patents and copyright).
2. Liabilities.Liabilities are what the business owes to others. They include:
· Accounts payable (money owed to others for merchandise and servicespurchased on credit, but not paid for yet),
· Accrued expenses payable (expenses the firm owes that haven’t beenpaid),
· Bonds payable (these represent money loaned to the firm that itmust pay back).
Liabilities are divided into two categories:
Current liabilities or obligations that must be paidwithin one year, such as accounts payable.
Long term liabilities or obligations that will not bepaid within one year, such as bonds.
3. Owners’ equity. It isassets minus liabilities. For sole proprietors, owners’ equity means the valueof everything owned by the business minus any liabilities of the owners (forexample, outstanding loans). For corporation, the owners’ equity accountrecords the owners’ claims to funds they have invested in the firm (capitalstock) plus earnings kept in the business and not paid out in dividends(retained earnings).
4. Revenues. Revenues isthe value of what is received for goods sold, services rendered, and from othersources. That includes sales revenues, rental revenues, commissions, royalties.
5. Expenses. They arecosts incurred in operating the business, such as rent, utilities, salaries andwages, insurance, advertising etc.
The two most important financial statements are: theincome statement and the balance sheet.
1. The income statement isalso called profit and loss statement. It summarizes all the resources thatcame into the firm from operating activities (called revenue), money resourcesthat were used up (called cost of goods sold and expenses), and what resourceswere left after all costs and expenses were incurred (net income or net loss).It reports the results of operating over a particular period of time.
2. The balance sheet isthe financial statement that reports the financial position of a firm at aspecific time. The words «balance sheet» imply, that the report showsa balance, an equality between two figures. That is the balance sheet shows abalance between assets and liabilities plus owner’s equity.
The formula Assets = Liabilities + Owners’ equity is thebasis for the balance sheet.
On the balance sheet, you list assets in a separatecolumn from liabilities and owner’s equity. The assets are equal to or arebalanced with the liabilities and owners’ equity.
Exercise 16. True orfalse?
1. Accountants use two major accounts to preparefinancial statements.
2. The main financial statements are purchasingdocuments and payroll records.
3. Liabilities are what a business owns.
4. Long term liabilities must be paid within a year.
5. The basis of a balance sheet is a formula Assets =Liabilities + Owners’ Equity.
Finance is the function in a business that isresponsible for acquiring funds for the firm and managing funds within the firm(planning, using and controlling money effectively).
A financial plan for a business specifies the amount ofmoney needed for various time periods and the most appropriate sources and usesof funds.
Long-term financing ismoney, obtained from the owners of the firm and lenders who do not expectrepayment within 2 or more years. Long-term capital is used to buy long-termassets such as a plant and equipment and to finance any expansions of theorganization. Initial long-term financing comes from three sources:
1.Equity capital comes from the owners of thefirm in a form of personal savings, friends’ loans, and mainly sale of stock.
Advantages of selling stock are:
· Because stockholders are owners of the business, their investmentnever has to be repaid.
· There is no legal obligation to pay dividends (a share of theprofits) to stockholders; therefore, income can be used for additional growth.
· Selling stock improves the condition of the balance sheet. Becauseno debt is incurred, the corporation is stronger financially and able to borrowfunds more easily.
However, there are some disadvantages:
· Because stockholders are owners of the firm, they can vote throughthe board of directors, on who will manage the firm and what the policies willbe. Having other owners takes away some freedom and control from those whostarted the firm and invested much time and effort in getting it started.
· Equity financing is relatively expensive form of fund rising. It ismore costly to pay dividends than interest because dividend income is taxedtwice – it is taxed at the corporate level and taxed again as income to thestockholders.
2. Retained earnings is income that the firmearns from its operating. As dividends a taxed twice, both the corporation andthe stockholders may prefer that the company keep (retain) those profits andreinvest them. This benefits stockholders because the company can prosper andgrow using those profits. It also benefits the firm in that it has more moneyto use. The profits that the company keeps are called retained earnings,therefore, because they are retained rather than paid out in dividends.
3. Debt financing. A financial alternative toselling stock is to sell bonds. A bond is the certificate that shows that aperson has loaned money to a firm. With debt financing the company has a legalobligation to pay interest payment to bond holders. The amount of interest acompany is willing to pay to borrow funds is written on the bond. How high thatinterest rate must be depends on how risky the company is and what theprevailing interest rate is.
The advantages of selling bonds are the following:
· Unlike stockholders, bondholders have no vote on corporate affairs,thus management retains control over the firm. Bondholders are creditors, notowners.
· Bonds are more flexible than stock. Whereas stockholders haveownership forever, bondholders represent more temporary sources of funds thatcan be tapped when needed.
Bonds also have their drawbacks:
· Bonds are an increase in debt (liabilities) and may make it moredifficult to obtain other financing.
· Interest on bonds is a legal obligation. A corporation cannot delayor halt such payment as they may do with dividends.
· Interest payments on bonds affect the firm’s cash flow negativelyin that they come out of the cash account.
Short-term financing.Small business rarely use stocks and bonds as sources of capital. Day-to-dayoperations of the firm call for careful management of short-term financialneeds. Cash may be needed for additional inventory or bills may come dueunexpectedly, so a business sometimes needs to obtain short-term funds whenother funds run out. Short term funds are those that are scheduled forrepayment in less than a year. Short-term financing includes trade credit,family and friends, commercial banks, factoring, commercial paper, and internalsources.
Trade credit. Is the mostwidely used source of short-term funding. This means that a business is able tobuy goods today and pay for them sometimes in the future. When a firm buysmerchandise it receive an invoice (bill) much like the one you receive when youbuy sometimes on credit. A business invoice often contains terms such as «2/10,net 30». This means that the buyer can take a 2% discount for payingwithin 10 days. The total bill is due in 30 days if the discount is not taken.
A second source of short-term funds for most smallerfirms is money lent to them by family and friends. Such loans can be dangerousif the firm does not understand cash flow. Several bills can come due at thesame time when there are no other sources of funds. It is better, therefore, ifyou do borrow from family or friends, to be very professional about the dealand
1) agree on terms at the beginning,
2) write an agreement,
3) pay them back the same way you would a bank loan.
Commercial banks usuallyoffer quite low rates in comparison with finance companies, so a small tomedium-sized business should have the person in charge of keeping in very closetouch with a local bank in case a business suddenly finds itself in a positionwhere many bills come due at once: utilities, insurance, payroll, new equipmentand more. Most times commercial banks can help. The most difficult kind of loanto get from a bank or other financial institution is an unsecured loan. This isa loan that is not backed by any collateral.
A secured loan is one backed by something valuable, suchas property. If the borrower fails to pay the loan the lender may takepossession of the collateral. That takes some of the risk out of lending money.Different property can be used as collateral, including buildings, machinery,stocks or bonds etc.
Factoring is a relativelyexpensive source of funds for a firm. The way it works is this: a firm sellsmany of its products on credit to consumers and other business. Some of thesebuyers are slow in paying their bills. The company may thus have a large amountof money due in accounts receivable. A factor buys the accounts receivable fromthe firm for cash (paying 50% to 70% of the value of the accounts receivable)and then collects the money due the firm. Factoring, then, is the process ofselling accounts receivable for cash. How much this costs the firm depends onthe rate the factor charges for this service. The discount rate for factoringdepends on the age of the accounts receivable, the nature of the business, andthe conditions of the economy.
Commercial paper is a wayto get short-term funds for less than bank rates. It consists of promissorynotes, in amount ranging from 25,000 up, that mature in 270 day or less.Commercial paper is insecured, so only the more financially stable firms cansell it.
Internal sources of fundsis a wise way to generate more cash. For example, inventory and costs may bereduced, expenses can be cut, accounts receivable can be collected morequickly. A good finance team is able to save a business much money by findingsuch internal sources of funds and freeing them.
Exercise 17. True orfalse?
1. Friends’ loans is an example of debt financing.
2. Bondholders are only creditors, they don't own thecompany.
3. Interest on bonds is an obligation for a company.
4. Factoring is cheaper for a company then usingcommercial banks' services.
5. Reducing inventory and cutting expenses are examplesof internal sources of funds.Part 5. International Trade
Exercise 18. Match thewords and the definitions:
1. International trade a. Exchange of goods andservices across national borders.
2. Exporting b. Buying products from another country.
3. Importing c. Relationship of exports to imports.
4. Balance of trade d. Value of one currencyrelative to the currencies of other countries.
5. Balance of payment e. Difference between money coming into a country and money leavingthe country.
6. Exchange rate f. Selling products to another country.
7. Import quota g. Limiting a number of products thatcan be imported.
8. Embargo h. Complete ban on import or export ofcertain products.
International trade is the exchange of goods andservices across national borders.
There are several reasons why one country would tradewith other countries. First, no country, even a technologically advanced one,can produce all the products that its people want and need. Second, even if acountry became self-sufficient, other countries would demand trade with thatcountry to meet the needs of their people. Third, some countries have anabundance of natural resources and a lack of technological know-how. Othercountries (for example, Japan) have vast technological skills, but few naturalresources. Trade relations enable each country to produce what it is mostcapable of producing and to buy what it needs in a mutually beneficial exchangerelationship.
Exchanges between and among countries, however, involvemore than goods and services. Countries also exchange art, athletes (forinternational competition and friendly relations), cultural events (plays,dance performances, and so forth), medical advances, space exploration andlabour.
The guiding principle behind international economicexchanges is the economic comparative advantage theory. This theorystates that a country should produce and sell to other countries those productsthat it produces most effectively and efficiently and should buy from other countriesthose products it cannot produce as effectively or efficiently.
A country has an absolute advantage if it has amonopoly on the production of a specific product or is able to produce it morecheaply than all other countries.
The following terms refer to international trade:
Exporting is sellingproducts to another country.
Importing is buyingproducts from another country.
Balance of trade is therelationship of exports to imports. A favourable balance of trade occurs whenexports exceed imports, an unfavourable balance of trade occurs when importsexceed exports.
Balance of payments isthe difference between money coming into a country (from exports) and moneyleaving the country (for imports) plus money flows from other factors such astourism, foreign aid, and military expenditures.
Exchange rate is thevalue of one currency relative to the currencies of other countries.
An organization may participate in international tradein many ways, including exporting and importing, joint venturing, licensing,creating subsidiaries, franchising, and forming a multinational organization.Firms just beginning to reach the international market are likely to use anindependent export house (trading company) to handle all such sales.Eventually the function may be absorbed internally in the form of an exportdepartment or an export section in marketing.
A firm may decide to service a growing overseas marketby licensing the manufacture of its product by a foreign producer on aroyalty basis. The company sends representatives to the foreign producer tohelp set up the production process and may provide a variety of services suchas marketing advice. Coke and Pepsi often enter foreign markets in this way.
As the size of a foreign market expands, a firm may wantto establish a wholly owned foreign subsidiary. Such a subsidiary wouldoperate much like a domestic branch.
Franchising is popularboth domestically and in international markets. Firms such as McDonald’s andHertz have many overseas units operated by franchisers.
One of the necessary ingredients for successfulexchanges in many countries is knowing how to deal with foreign governmentbureaucracy. It is usually not enough to have a good product or ready markets.Government administrators overseas will often insist on some under-the-tablepayment to get the necessary permits and the permission to begin trade. Usuallyonly natives to that country are suitably skilled to conduct such matters. Theyare used to the procedures, know who to see and what to say, and can minimizethe necessary fees. To be successful trader in foreign countries, therefore,one might have to begin by contacting local businesspeople and gaining theircooperation and sponsorship.
What is often a much greater barrier to internationaltrade is trade protectionism in a form of tariffs on imports, making them moreexpensive.
There are two different kinds of tariffs: revenue andprotective. Revenue tariffs are designed to raise money for thegovernment. Protective tariffs are designed to raise the retail price ofimported products so that domestic products will be more competitive. Thesetariffs are meant to save jobs for domestic workers and to keep industries fromclosing down entirely because of foreign competition.
The term that describes limiting the number of productsin certain categories that can be imported is import quota.
An embargo is a complete ban on the import orexport of certain products.
There are two sides of the tariff issue.
Some people feel that tariffs are necessary to protectnational markets from foreign competition.
Their arguments include the following:
· Tariffs save jobs.
· They protect industries vital to the country’s security such asaerospace, shipbuilding and automobile industries.
· They are needed to protect new domestic industries from establishedforeign competitors.
The opponents of tariffs counter argue by presenting thefollowing negative effects tariffs can have:
· Tariffs reduce competition.
· They tend to increase inflationary pressure because they raiseconsumer prices.
· Tariffs tend to support special interest groups such as localmanufacturers, but overall hurt the public who are forced to pay higher pricesfor imported products.
· Tariffs can lead to foreign retaliation and subsequently to tradewars.
Debates over trade restrictions will evidently stay amajor part of international politics for the next decade.
Exercise 19. True orfalse?
1. Countries only trade when they have a lack of goods.
2. Except goods, countries also exchange art, medicaladvances, cultural events, etc.
3. Using an independent export house is usually thefirst step in reaching the international market.
4. Franchising is only used on domestic markets.
5. Trade protectionism only makes goods more expensive.
Task 1. Answer thequestions:
1. What are three forms of business ownership?
2. What does «unlimited liability» mean?
3. What are «fringe benefits»?
4. Why is it easier to manage a partnership than a soleproprietorship?
5. What is the difference between a limited and generalpartnership?
6. What points should an agreement between partnersinclude?
7. What is the purpose of forming a corporation?
8. What is the most difficulty in forming a corporation?
9. How can a corporation save money on taxes?
10. What does double taxation of corporations mean?
Task 2. Answer thequestions:
1. What are functions of packaging?
2. What is brand?
3. What is the difference between a brandname and atrademark?
4. What are two types of middlemen? What is thedifference between them?
5. How do they help customers?
6. Can you give any other examples of differentdistribution strategies than those given in the text?
7. How does the public benefit from advertising?
8. What is the best way to create a favourableword-of-mouth?
9. What are the steps of public relations function?
10. What pricing aims can there be?
Task 3. Answer thequestions:
1. What knowledge and skills should a good manager have?
2. What questions should be answered in the process ofplanning?
3. What are three forms of planning and who are theyfulfilled by?
4. Why is stuffing now called human resourcesmanagement?
5. What leadership style do you personally prefer atyour workplace and why?
6. Why can the control function be called a heart of themanagement system?
Task 4. Answer thequestions:
1. What are the purposes of accounting?
2. What is the difference between assets andliabilities?
3. What does «Owner's equity» mean?
4. What is the difference between the income statementand the balance sheet?
5. What is long-term financing usually used for?
6. What are the differences between stockholders andbondholders?
7. What is short-term financing used for?
8. What are the sources for short-term financing?
Task 5. Answer thequestions:
1. Can you give examples of countries with lack ofnatural resources (except Japan)? abundance of human resources?
2. What does «The economic comparative advantagetheory» mean?
3. What does «absolute advantage» mean?
4. What are the ways a company can use to participate ininternational trade?
5. What is usually the first step of a successful traderin a foreign country?
6. What is the difference between two kinds of tariffs?
7. What are your views on tariffs issue?
Ирина Евгеньевна Бовина
Деловой английский язык
Редактор И.Е. Бовина
Редактор компьютерной верстки Л.С. Виляева
Лицензия ЛР № 020754 от 10.03.98 г.
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экономики и управления
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