universitatea « spiru haret - Universitatea Crestina Dimitrie Cantemir

Transcription

UNIVERSITATEA CREŞTINĂ „DIMITRIE CANTEMIR”
FACULTATEA DE FINANŢE, BĂNCI ŞI CONTABILITATE BRAŞOV
Cristina PIPOȘ
BUSINESS ENGLISH
COMMUNICATION
- Manual de studiu individual -
UNIVERSITATEA CREŞTINĂ
„DIMITRIE CANTEMIR”
FACULTATEA DE FINANŢE, BĂNCI ŞI
CONTABILITATE - BRAŞOV
Cristina PIPOȘ
BUSINESS ENGLISH
COMMUNICATION
MANUAL DE STUDIU INDIVIDUAL
BRAȘOV
2011
CUPRINS
INTRODUCTION
V
MEETINGS
1
1.1. INTRODUCTION
1.2. THE OBJECTIVES OF THE UNIT
1.3. THE CONTENT OF THE UNIT
1.4. SELF-ASSESSMENT GUIDE
1
1
2
3
PASSIVE VOICE
7
2.1. INTRODUCTION
7
7
8
9
TELEPHONING
12
3.1. INTRODUCTION
12
12
13
15
MODAL VERBS
19
4.1. INTRODUCTION
19
19
20
22
ADVERTISING
25
5.1. INTRODUCTION
25
25
26
27
THE CONDITIONAL SENTENCE
30
6.1. INTRODUCTION
30
30
31
33
i
BUSINESS ENGLISH COMMUNICATION
MARKETING
36
7.1. INTRODUCTION
36
36
37
38
PREPOSITIONS
41
8.1. INTRODUCTION
41
41
42
43
NEGOTIATIONS
46
9.1. INTRODUCTION
46
46
47
48
FINANCE
52
10.1. INTRODUCTION
52
52
53
57
FINANCIAL PLANNING
59
11.1. INTRODUCTION
59
59
60
61
FINANCE
66
12.1. INTRODUCTION
66
66
67
67
THE SEQUENCE OF TENSES
LXX
13.1. INTRODUCTION
LXX
LXX
LXXI
LXXII
ii
CUPRINS
REVIEW
75
14.1. INTRODUCTION
75
75
76
77
ACCOUNTANCY
80
15.1. INTRODUCTION
15. THE OBJECTIVES OF THE UNIT
80
80
81
84
FINANCIAL STATEMENTS
87
16.1. INTRODUCTION
87
87
88
92
PRICING
95
17.1. INTRODUCTION
95
95
96
97
INVESTMENTS
99
18.1. INTRODUCTION
99
99
100
102
BUDGETING
105
19.1. INTRODUCTION
105
105
106
107
REPORTED SPEECH
109
20.1. INTRODUCTION
109
109
110
111
iii
STOCK MARKET
114
21.1. INTRODUCTION
114
114
115
118
BUSINESS RISKS
120
22.1. INTRODUCTION
120
120
121
122
COMPUTERS AND COMMERCE
126
23.1. INTRODUCTION
126
126
127
128
COMPANIES AND THEIR BANKS
130
24.1. INTRODUCTION
130
130
131
132
GLOBAL INFORMATION
134
25.1. INTRODUCTION
134
134
135
137
iv
INTRODUCTION
INTRODUCTION
Disciplina Comunicare de afaceri în limba engleză este necesară studenților aflați în
anul al II-lea de studiu deoarece aduce infirmații deosebit de utile pentru realizarea în cadrul
firmei și între firme a unei relații profesioniste de afaceri.
Obiectivele cursului
Cursul își propune prezentarea unor elemente teroetice dar si a elemntelor practice,
aplicative necesare comunicării cât mai clare și mai simple la nivelul dezovoltării și întrețineri
comunicării de afaceri.
Competenţe conferite
După parcurgerea acestui curs, studentul va dobândi următoarele competențe generale și
specifice:
1. Cunoaştere şi înţelegere (cunoaşterea şi utilizarea adecvată a noţiunilor specifice
disciplinei)
 identificarea de termeni, relaţii, procese, perceperea unor relaţii şi conexiuni în
cadrul disciplinelor economice;
 utilizarea corectă a termenilor de specialitate din domeniul economic;
 definirea / nominalizarea de concepte ce apar în activitatea de corespondență de
afaceri;
 capacitatea de adaptare la noi situaţii apărute pe parcursul activităţii de comunicare
de afaceri internaţional relațiilor între firme
2. Explicare şi interpretare (explicarea şi interpretarea unor idei, proiecte, procese,
precum şi a conţinuturilor teoretice şi practice ale disciplinei)
 generalizarea, particularizarea, integrarea elementelor teroetice în comunicarea de
afaceri
 realizarea de conexiuni între elementele funcţiilor comunicării de afaceri;
 argumentarea unor enunţuri în faţa partenerilor de afaceri, anagajaţilor;
 capacitatea de organizare şi planificare a activitaților specific comunicării de
afaceri;
 capactitatea de analiză şi sinteză în procesul de comunicare.
3. Instrumental-aplicative (proiectarea, conducerea şi evaluarea activităţilor practice
specifice; utilizarea unor metode, tehnici şi instrumente de investigare şi de aplicare)
 relaţionări între elementele ce caracterizează activităţile de cmunicarea de afaceri;
 descrierea unor stări, sisteme, procese, fenomene ce apar pe parcursul activităţii de
comunicare de afaceri;
 capacitatea de a transpune în practică cunoştiinţele dobândite în cadrul cursului;
 abilităţi de cercetare, creativitate în domeniul comunicării de afaceri;
 capacitatea de a concepe proiecte şi de a le derula activităţi de comunicare de
afaceri;
 capacitatea de a soluţiona probleme apărute pe parcusul comunicării de afaceri
v
4. Atitudinale (manifestarea unei atitudini pozitive şi responsabile faţă de domeniul
ştiinţific / cultivarea unui mediu ştiinţific centrat pe valori şi relaţii democratice /
promovarea unui sistem de valori culturale, morale şi civice / valorificarea optimă şi creativă
a propriului potenţial în activităţile ştiinţifice / implicarea în dezvoltarea instituţională şi în
promovarea inovaţiilor ştiinţifice / angajarea în relaţii de parteneriat cu alte persoane /
instituţii cu responsabilităţi similare / participarea la propria dezvoltare profesională )
 reacţia pozitivă la sugestii, cerinţe, sarcini didactice, satisfacţia de a răspunde la
întrebările clienţilor;
 implicarea în activităţi ştiinţifice în legătură cu disciplina comunicare de afaceri;
 acceptarea unei valori atribuite unui obiect, fenomen, comportament, etc. conform
legislaţiei în vigoare;
 capacitatea de a avea un comportament etic în faţa partenerilor de afaceri,
angajaţilor;
 capacitatea de a aprecia diversitatea şi multiculturalitatea analizei probelor;
 abilitatea de a colabora cu specialiştii din alte domenii.
Resurse şi mijloace de lucru
Cursul dispune de manual scris, supus studiului individual al studenţilor, precum şi de
material publicat pe Internet sub formă de sinteze, teste de autoevaluare, studii de caz,
aplicaţii, necesare întregirii cunoştinţelor practice şi teoretice în domeniul studiat. În timpul
convocărilor, în prezentarea cursului sunt folosite echipamente audio-vizuale, metode
interactive şi participative de antrenare a studenţilor pentru conceptualizarea şi vizualizarea
practică a noţiunilor predate. Activităţi tutoriale se pot desfăşura după următorul plan tematic,
conform programului fiecărei grupe:
Structura cursului
Cursul este compus din 25 unităţi de învăţare:
Unitatea de
învăţare 1.
Unitatea de
învăţare 2.
Unitatea de
învăţare 3.
Unitatea de
învăţare 4.
Unitatea de
învăţare 5.
Unitatea de
învăţare 6.
Unitatea de
învăţare 7.
Unitatea de
învăţare 8.
Unitatea de
învăţare 9.
Unitatea de
MEETINGS
PASSIVE VOICE
TELEPHONING
MODAL VERBS
ADVERTISING
MARKETING
PREPOSITIONS
NEGOTIATIONS
FINANCE
vi
INTRODUCTION
învăţare 10.
Unitatea de
învăţare 11.
Unitatea de
învăţare 12.
Unitatea de
învăţare 13.
FINANCIAL PLANNING
FINANCE
Unitatea de
învăţare 14.
Unitatea de
învăţare 15.
Unitatea de
învăţare 16.
Unitatea de
învăţare 17.
Unitatea de
învăţare 18.
Unitatea de
învăţare 19.
Unitatea de
învăţare 20.
Unitatea de
învăţare 21.
Unitatea de
învăţare 22.
REVIEW
Unitatea de
învăţare 23.
Unitatea de
învăţare 24.
Unitatea de
învăţare 25.
ACCOUNTANCY
PRICING
INVESTMENTS
BUDGETING
REPORTED SPEECH
STOCK MARKET
BUSINESS RISKS
GLOBAL INFORMATION
Teme de control (TC)
Desfăşurarea temelor de control se va derula conform calendarului disciplinei şi acestea vor
avea următoarele subiecte:
1. Elaborarea unei scurte prezentări pe baza temelor dicutate
2. Traducerea unui text relevant studierii limbii engleze
Bibliografie obligatorie:
Mascul Bill, Business Vocabulary in Use, Cambridge University Press, 2002
Trappe Tonya, Tullis Graham, Intelligent Business, coursebook, Intermediate Business,
Pearson Education, 2005
Cotton Davis, Falvey David, Kent Simon, Market Leader, Business English coursebook,
vii
Metoda de evaluare:
Examenul final se susţine sub formă scrisă, la el adăgându-se activitatea studentului la
seminar
Simbolurile utilizate:
Introducere
Obiectivele unităţii de învăţare
Timpul alocat unităţii de învățare:
Conţinutul unităţii de învăţare
Exemple
Îndrumar pentru autoverificare
Teste de evaluare/autoevaluare
viii
UNIT 1
MEETINGS
1.1. INTRODUCTION
1.2. THE OBJECTIVES OF THE UNIT – TIME ALLOCATED
1.3. MEETINGS
1.1. INTRODUCTION
In business communication meetings are really
important in establishing correct business relationships
Meetings vocabulary
Types of meetings
Pointing a chairperson
Points of view
Make meetings work for you
The time allocated for the unit:
hours
1
2
UNIT 1 – MEETINGS
How to Make a Good Impression at a First Business
Meeting
Any small business entrepreneur knows that growing the
business relies on much more than just a good idea. No matter
how good the product is, if you don't make a good impression
at the first business meeting, you could lose a potential new
backer or crucial business partnership. Employees new to the
business face similar issues when attending a company
business meeting for the first time. Managing your image and
keeping abreast of common business etiquette is a skill that
all employees should master, regardless of where each
individual is in his career.
Step 1
Be punctual. Always arrive on time to a business meeting
so that you don't waste other people's time while they sit and
wait for you to arrive. Don't arrive too early -- a few minutes
is ideal, but much more than that cuts into other people's
ability to prepare for the meeting and makes everyone
uncomfortable. If you are early, find something else to do
such as getting a drink of water, fixing your hair or washing
your hands in cold water so they won't be sweaty when
shaking hands.
Step 2
Dress appropriately -- a notch above the average
workplace attire. If you are meeting with representatives from
other organizations, a formal business suit in dark colors is
appropriate unless it is significantly outside the industry
norms. Select a plain or pin-striped shirt; men should wear a
coordinating tie. Present a neat, clean appearance with freshly
shined shoes, pressed clothing and clean, trimmed nails.
Step 3
Make small talk and put others at ease before the meeting
starts. Introduce yourself to the other participants. Listen
attentively to the conversation -- don't check your emails or
chew gum -- and pay attention to personal details that, over
time, can help you build a long-term relationship with the
other attendees.
Step 4
Conduct research in advance. Review business materials
and internet information to discover the company's recent
2
accomplishments, new initiatives and key projects. Prepare
one or two key questions and objectives in advance that you
hope to cover during the meeting.
Step 5
Strike the right balance -- make relevant contributions but
avoid talking too much. Don't interrupt other people when
they are talking. Avoid conflict -- a business meeting with
others is not the appropriate place to resolve personal
disagreements. Keep your interactions professional, on target
and to the point. Don't engage in meandering discussion or
get side-tracked on a tangent. If you called the meeting, create
an agenda and stick to it, politely redirecting other
participants if they get too far off topic.
(http://smallbusiness.chron.com)
Types of meetings





Chat
Brainstorming
Meeting with suppliers
Board meeting
Project meeting
 Departmental meeting
 AGM (annual general meeting)
 EGM (extraordinary general meeting)
Set up
A meeting
Arrange
A meeting
Fix
A meeting
Bring forward
A meeting
Put back
A meeting
Postpone
A meeting
3
UNIT 1 – MEETINGS
Cancel
A meeting
Run
A meeting
Chair
A meeting
Attend
A meeting
Miss
A meeting
Opening a meeting
•
•
•
•
•
•
Ok lets’ get started.
It’s about time we got started.
Let’s begin, shall we?
Shall we make a start?
Let’s make a start?
Let’s get down to business.
INVITING PEOPLE TO SPEAK
•
•
•
•
•
Would you like to open the discussion?
Perhaps you’d like to get the ball rolling…
Would you like to kick off?
What are your views on this?
What’s the general feeling of this?
4
MAKING YOUR POINT
•
•
•
•
•
•
•
I believe…
As I see it…
In my opinion…
Of course…
The way I see it…
I think…
Personally I believe…
Make meetings work for you
 Only call a meeting when is needed
 Don’t forget to circulate memos before the meeting
 Ask for only six people to attend the meeting, too many people won’t make your
meeting more successful
 Take decisions
 Ask the quiet people to speak
 Don’t talk more than necessary
 When participating in a meeting, don’t memorize what you have to say. It will be very
boring for the others
 Use your body language and make eye contact
 Arrive early and if you’re late don’t sneak in
 Do not come unprepared to the meeting
ASSESSMENT/ SELF-ASSESSMENT
TESTS
 Organize a short meeting. Say how you prepare for the meeting, the people you invite,
how you start the meeting, what you do during the meeting, how do you finish the
meeting?
 What is in your opinion the importance of a chairperson in a meeting. Have you ever
been a chairperson, would you consider being one? What skills should a chairperson
have?
 How important is it to express your views?
 In your opinion, is essential to make your point in a meeting? Why?
 Are there any rules about taking turns to speak in a meeting? Do you know any?
5
UNIT 1 – MEETINGS
BIBLIOGRAPHY:
6
UNIT 2
PASSIVE VOICE
2.1. INTRODUCTION
2.3. PASSIVE VOICE
2.1. INTRODUCTION
The Passive Voice is very useful in describing actions
and events of people reflected on objects and other people’s
actions
The study of the Passive Voice
The use of the Passive Voice
Rules of Formation
hours
7
2
UNIT 2 – PASSIVE VOICE
•
•
THE SUBJECT BECOMES THE OBJECT AND
THE OBJECT BECOMES THE SUBJECT
I bought a plant
The plant was bought by me
•
•
•
•
To be + past participle
The shares were bought by the new investors
Passive +Modal
The products can be shipped to your office.
THE PASSIVE VOICE SHOWS THAT THE SUBJECT
OF THE SENTENCE DOES NOT PERFORM THE
ACTION, THIS BEING PERFORMED BY AN AGENT
(THE LOGICAL SUBJECT OF THE SENTENCE)
Diateza pasivă arată că subiectul propoziţiei nu realizează
acţiunea, aceasta fiind realizată de complementul de agent
(subiectul logic al propoziţiei).
To emphasize the action and not the person who performs
the action
The clock was moved.
To focus on the information that is offered to the listener
The issue was solved.
To focus on the procedure and not the person who is
caring it out
The house is made of steel.
To write in formal / official style
The sale was confirmed.
It + verb
It was agreed to increase the capital.
To report unconfirmed information
He is believed to try and buy our company.
8
Present simple
They see it
It is seen.
Present continuous
They are seeing it
It is being seen
Future
They will see it
It will be seen
Past simple
They saw it
It was seen
Past continuous
They were seeing it
It was being seen
Present perfect
They have seen it
It has been seen
Past perfect
They had seen it
It had been seen
Infinitive
To eat
To be eaten
9
UNIT 2 – PASSIVE VOICE
TESTS
Complete the following sentences using one word in the box:
spend








solve
repair
fix
wake up
carry
teach
The door can be locked now. It might …………….… while we were on holiday.
The wedding is already over budget. Less money should ……………..… on flowers.
The baby had only two moths and couldn’t walk. He had to …………..… all the way.
We still don’t know who solved the mystery. It might …………… by Tina.
This house is in a very bad condition. It should ………….……… a long time ago.
He was still sleeping when we arrived. He had to …………….. by us.
He did not know anything before that day. He ………… what he needed to know.
We don’t know who sent us the present. It might …………………..by George.
Rewrite the sentences using the passive form of the verbs in italics:
 They had to put off all that work until later.
………………………………………………………………………………………
 We all heard about those who broke into your house.
…………………………………………………………………………………………
 They gave the freedom to their slaves.
…………………………………………………………………………………………
 They denied him the access to those files.
…………………………………………………………………………………………
 His aunt left him an estate worth ₤10.000.
…………………………………………………………………………………………
 Someone should teach that boy a lesson.
…………………………………………………………………………………………
 They offered me a raise of my salary.
………………………………………………………………………………………
 They told me how badly you behaved while I was gone.
…………………………………………………………………………
Answer the following questions using the passive voice:
 Do you know when and who built this house?
…………………………………………………………………………………………
 What should someone be given when he’s got flu?
…………………………………………………………………………………………
 What causes many accidents nowadays?
…………………………………………………………………………………………
 Who cleaned this room yesterday?
…………………………………………………………………………………………
 What foreign languages did you learn at school?
…………………………………………………………………………………………
10
 What opportunity would you like to have when you graduate?
…………………………………………………………………………………………
 Did the police see the damage after the big fire?
…………………………………………………………………………………………
 Who paid you to come and talk to me?
……………………………………………………………………….
Rewrite the following sentences using Passive Voice:
 This autumn The Hippodrome brings a glittering collection of hit shows.
 The theatre plans many other events.
 The Hippodrome theatre will present on the Christmas Eve the revival of the Beauty
and the Beast.
 The art studio theatre supports the development of new works.
 “Lewis Davies painted on our safety curtain.”
 In the ‘70s music inspired fashion.
 David Bowie’s image inspired many people in that time.
 Bay City Rollers dominated the pop scene in Europe.
 The Jacksons, Diana Ross and Stevie Wonder were selling millions of records for the
Motown Label.
 Abba won in 1974 the Eurovision Song Contest.
BIBLIOGRAPHY:
11
UNIT 3 – TELEPHONING
UNIT 3
TELEPHONING
3.1. INTRODUCTION
3.3. TELEPHONING
3.1. INTRODUCTION
In business English understanding phone messages is
crucial for the development of the business
Phone numbers
Types of phones
Connections
Voicemail
Messages
Telephone information
hours
12
2
Telephone Etiquette
Although several different means of communication like
the email and instant chatting or messaging are used on a
wide scale today, the telephone is still a part of a person's
personal as well as business life. A telephone conversation is
as important as the actual face-to-face conversation and
hence, one needs to be very careful while making as well as
answering calls on a telephone. There are some basic rules or
simply dos and don'ts, known as telephone etiquette; that one
needs to remember during a telephone conversation.
Telephone
Etiquette
Tips
The following are some general tips that one should
remember as they are a part of business as well as personal
telephone etiquette.
It is considered good manners to greet the person while
making or receiving call; the simplest form of greeting is
'hello'. It is not advisable to answer calls with 'yes' as it seems
rude.
According to personal telephone etiquette, it is mandatory
to identify yourself while making a call. Do not ever play
games of 'guess who' on a telephone with a busy friend.
Before handing the call to someone, ask the listener's
permission before putting him on hold and thank him for it.
(Do not keep a person 'on hold' for more than 1 minute).
If you are the caller, have some patience when someone
puts you 'on hold' as it is not always possible to find the
required person on the spot.
It is necessary to talk clearly and precisely with proper
pauses.
Also, make timely responses as 'yes' and 'okay'.
It is mandatory to call someone back if you have
promised.
It is not advisable to call a person before 8.00 am and
after 9.00 pm.
If you are at the receiving end of the calls, do not hang-up
until the caller does so.
It is advisable to thank a person while ending the call.
You can even say that you appreciated talking to him.
13
Lastly, it is considered good manners to return telephone
calls and voice messages within 24 hours.
Business
Telephone
Etiquette
In the business world, telephone conversations take place
before the actual meeting and also form an important part of
many business transactions and hence, it is essential to keep
in mind certain things while making and receiving calls.
Making a Call
It is wise to make a written note of things that you need to
convey to the person before making a call, lest you forget.
It is essential to identify yourself and your company first
when starting the conversation.
If your call was expected or planned prior, it is essential to
make the listener realize that, in brief, in case he/she has
forgotten.
Tell the person the intention of your call in brief. If it is a
receptionist, it is still advised to explain the intention of your
call.
When talking to the required person, talk clearly, slowly
and precisely. It is embarrassing to be asked to repeat what
you just said.
Also, make proper and timely responses in the formal 'yes'
and 'no' manner. Never use the informal way of 'yeah' and
'nope'.
While ending the call, thank the person politely for his
time.
Examples:
Good morning, this is (name) from (name of company).
Please may I speak with (name).
Hello, this is (name) from (name of company). I am
returning call from (name), is he available?
Receiving a Call
As 'hello' is the proper way of starting a conversation, it is
also an appropriate form of greeting the caller while receiving
calls.
You can even receive calls by identifying yourself and
your company.
It is advisable to try to answer business calls as pleasingly
as possible as the tone of the voice can be easily recognizable
and can make a great impression.
While receiving business calls, it is advisable to pay
attention and stop other activities like reading, talking to
others, chewing gum, attending other calls.
If inquired whether certain Mr. ABC is available or not,
do not reply with a curt 'no'. The perfect answer should be 'I
am sorry, Mr. ABC is not available at this time, may I take a
message?'.
If a person is not available, it is better to convey the
14
reason to the caller briefly.
You should never hang up before the caller does so. Also,
be gracious in your goodbyes as that can help in future
communications.
Examples:
Thank you for calling (name of the company). This is
(name), how may I help you?
Hello, (name) speaking.
(The caller's name), will you hold while I look for
information/person?
Thank you for calling.
Phones and numbers
•
•
•
•
•
•
•
Public telephone
Mobile phone
Extension
Webcam
Pager
WAP
Videophone
•
•
•
•
•
•
To call someone
To phone someone
To telephone someone
To ring someone
To give someone a bell
To give someone a ring
Access code
Country code
Area code
Number
00
44
1746
875345
15
Double oh
Double four
One seven four
six
•
•
•
•
Helpline
Hotline
Information line
Reservation line
GETTING THROUGH
•
•
•
•
•
Dialing tone / Busy tone/ Engaged tone
Direct line
Switchboard / Operator/ Transfer / Cut off
Hang up/ Answer
Call back/ Return call
•
•
•
•
•
•
Voice mail
I’m not here. Leave a message please
I’ll get back to you
To listen to your message press 1
To listen to your message again press 2
To delete your message press 3
MESSAGES
Asking to speak to someone
 It’s John here
 This is John
 Can I speak to James?
 Could I speak to James?
 Is this a good time to call?
 This is James speaking
 I’m busy at the moment. Could you call back later?
 I’m sorry but he’s not here.
 Your name on the phone:
Capital letter / small letter
Dash or hyphen (-)
Slash (/)
One word
Dot
New word
16
Eight seven
five three four five
At (@)
MAKING ARRANGEMENTS
Can we fix a meeting?
Shall we make an appointment?
Is Tuesday good for you?
How about Monday?
Yes, I agree.
No, I’m sorry I won’t be able to make it on Saturday.
Closing Conversations
See you on Tuesday.
Speak to you soon.
Keep in touch.
Look forward to hearing from you.
Nice talking to you.
Thank you for your call.
Changing arrangements
I can’t make it on Monday. Can we reschedule for Tuesday?
How about Wednesday?
Can we put it off?
I’m afraid I won’t be able to come on the 1st of May but how about 1st of June?
Can we leave it open?
TESTS
 Do you like phone calls? Imagine you have to talk to a person about a bank account.
You call at the bank and ask to talk to that person. What do you do when you
understand that he/she is not in the office?
 Write a phone conversation to show that you book a ticket using a reservation line.
Ask and answer questions about your name, address, information related to your trip.
 Is it difficult to speak to someone on the phone in English rather than face to face?
Why?
 Can you spell your name and address?
 What do you do when the other person doesn’t understand what you are trying to say?
17
BIBLIOGRAPHY:
18
UNIT 4
MODAL VERBS
4.1. INTRODUCTION
4.3. MODAL VERBS
4.1. INTRODUCTION
Modals are helping in expressing ourselves in a formal
way when in a business meeting
Study of form, use and practice of Modals
hours
19
2
UNIT 4 – MODAL VERBS
Characteristics of Modal Verbs
 they have the same form for all the persons:
I can, he can
 negatives are made by the modal verb followed by
not:
He can not do that.
 the interrogative is made by simple inversion:
Can you do that?
 they are followed by infinitives:
You should talk to me.
Can, Could
1.capacitate fizică sau intelectuală (physical or
intellectual ability)
I can swim.
I could swim when I was young.
He can read this book.
2. posibilitate (possibility)
You can go home, the danger passed.
We could go to Greece last year, there was no war.
3. permisiune (permission)
- ca o alternativă a lui May, Can este folosit în
exprimarea familară, mai puţin politicos decât May (as an
alternative to May, Can is used in familiar speech, less polite
than May)
Can I borrow your CD?
Could I come with you to Disneyland?
! Be able to este un înlocuitor pentru can atunci când
acesta nu are forme pentru anumite timpuri (viitor, perfecte)
I’ll be able to help you.
May, Might
1. posibilitate (possibility)
He may be at home.
He might be on his way home.
2. permisiune (permission)
20
mai formal, politicos decât Can (more formal than Can)
May I leave the room?
May I borrow your pen?
Might I borrow your glasses?
3. rugăminte politicoasă (polite request)
May I use your phone?
Might I use your phone?
4. Comandă (command)
You may do this for me.
5. Reproş (reproach)
You might have told me.
6. Sugestie (suggestion)
You might send me an e-mail to tell me how everything
is going.
Must
1.obligaţie a vorbitorului (expresses an obligation of the
speaker)
I must be at home soon, I’m tired.
2. invitaţie (invitation)
You must come and visit the exhibition.
3. deducţie logică (logical deduction)
He must be in Washington, he is not at home.
Have to
1. obligaţie impusă din afară, obişnuită, externă (an
obligation imposed from outside, habitual, external
obligation)
I have to be at work at five every day, that is the time
my programme starts.
2. la trecut, înlocuitor al lui Must, pentru timpurile care
îi lipsesc acestuia (in the past, replacement for Must, for the
tenses Must lacks):
I had to be there.
Need
lipsa obligaţiei (lack of obligation)
You needn’t come, I’m better.
You needn’t have taken so much troble cooking, we
21
have already had lunch at home
Will, Would
1. insistenţă (insistence):
I will do whatever I want, do not try to stop me.
He would go instead all our pleads.
2. comandă (command):
You will stay here until future orders.
You would better stop crying.
Shall, Should
Shall
1. cererea unei păreri (asking for an opinion):
Where shall I put the vase?
2. ofertă (offer):
Shall I help with these bags?
Should (ca alternativă pentru Should îl folosim pe Ought
to/ as an alternative for should we use Ought to):
sfat sau recomandare (advice or recommendation):
You should / ought to read that book.
Ability
can, could, be able to
He can speak English fluently.
Possibility
can, could, may, might
An agreement may be reached
tomorrow.
I might be wrong.
They might have arrived by now.
They could not find a job.
You can find the answer on the
bottom of this page.
Permission
can, could, may might
You may stay for a few more
Probability
should, ought to
The introduction of the new national
22
minutes.
You can speak to him for one more
minute.
He said I could speak to him for one
more minute.
He said we might stay for a few
more minutes.
phone numbers should help us to have better
phone conversations.
Obligation and necessity
Absence of obligation or necessity
needn’t, not need to, not have to
needn’t autoritatea vorbitorului (the
authority of the speaker)
not need to, not have to - autoritate
exterioară sau circumstanţe îndepărtează
obligaţia sau necesitatea de acţiune (external
authority or circumstances remove the
obligation or necessity for action)
You needn’t come.
You don’t need to come to work today.
You don’t have to work on this project.
must, must not, have to
Candidates must fill in all the forms.
We must watch that movie.
You have to come with us.
 Observaţie (Observation): Verbele modale au mai mult decât un singur sens sau o
unică folosinţă, şi în unele cazuri verbe modale diferite au înţelesuri sau utilizări
similare dar nu pot fi interşanjabile. (Modal verbs have more than one meaning or use,
and in some cases two different modal verbs have some meanings or uses in common,
but are not fully interchangeable.)
TESTS
Circle a, b or c to show which modal verb best completes the sentence:
1. You do not ……… to be my neighbour to visit us whenever you want
a.have to, b. ought to, c. can
2.If you are a good person and love children, you ……. to come and be a volunteer.
a.ought to, b. should, c. may
3. You ….… vote if you are 13.
a. must not, b. can not c. should not
4. You …..… be 18 to drive a car.
a.need, b. have to, c. must
5. You …..… get married without your parent’s agreement if you are only 14.
23
a. must not, b. should not, c. can not
6. You …….. go to the police if somebody breaks into your house.
a.will, b. should, c. must
7. …………… I borrow your CD?
a.may, b. will, c. must
8. ……….. I use your phone, please?
a. could, b. can, c. must
Rewrite the sentences using the words suggested so that they represent the equivalent
situation in the past time. Use could or (be) able to:
He can drive a car. (when he was eighteen)
………………………………………………………………………………………….
She can speak five languages. (when she was sixteen)
…………………………………………………………………………………..
I am able to stand on my head for more than a half an hour. (when I was 12)
…………………………………………………………………………………….
Tom is able to persuade anyone. (when Tom was 20)
……………………………………………………………………………………
Gina can hear very well. (when Gina was younger)
…………………………………………………………………………………….
I can remember many things from the past. (when I was 30)
……………………………………………………………………………………..
I can understand how you feel about the situation. (when the accident happened)
………………………………………………………………………………………….
8. I am able to predict the future. (when I was five).
…………………………………………………………………………
BIBLIOGRAPHY:
24
UNIT 5
ADVERTISING
5.1. INTRODUCTION
5.3. ADVERTISING
5.1. INTRODUCTION
In business advertising your product or your services is
very important
5.1 Favorite advertisements
5.2 What makes a good advertisement
5.3 Advertising vocabulary
5.4 The future of advertising
5.5 Successful advertising campaigns
5.6 Create your own advertisement
5.7 Expressions and key concepts
hours
25
2
UNIT 5 – ADVERTISING
Corporate and political advertising
.
DAVID BERNSTEIN has an interesting take on the Mitt
Romney ad controversy that I think is wrong in one important
way. The ad, as we all know by now, shows Barack Obama
saying "If we keep talking about the economy, we're going to
lose", without noting that the clip dates from the 2008
campaign rather than the present, and that Mr Obama's line
was in fact "Sen. McCain's campaign actually said, and I
quote, ‘If we keep talking about the economy, we're going to
lose.’" This is a ridiculous distortion. But Mr Bernstein thinks
that the swirly-dark montage the ad employs and its low
levels of truthfulness are normal for corporate advertising,
and that we're basically seeing a culture clash as the
extremely corporate Mr Romney mixes it up with exclusively
political competitors.
This technique is pretty standard practice in corporate
advertising, which long ago convinced us that the term "false
advertising" means something other than the plain meaning of
those words. Nobody questions the TV ad with the doctored
image of a 747 landing on a Nissan pickup truck. Nobody
points out that the guy in another commercial doesn't really
have heartburn; that the guy next to him on the airplane isn't
really a doctor; and that he doesn't really feel better later—a
play-acting vignette indistinguishable from the classic
travelling-huckster miracle-cure snake-oil routine of old.
Nobody thinks twice about lines like "best rest you've ever
gotten...," or phony scenes of families enjoying the hell out of
their cereal and models throwing themselves on the guy
doused in Axe cologne, that clearly have no basis in fact.
Why? Why, in fact, do we not consider all use of fictional
devices in advertising to be, by definition, "false"? Because,
um, well, 'cuz, uh... well, because those are fictions, we say,
that nobody actually believes, so they're OK. But of course
this is the fig leaf that allows Axe and Nissan and the rest to
get the benefit they know perfectly well they get out of it.
I don't know that I buy Mr Bernstein's contention that
political advertising is in any meaningful sense more truthvalue-oriented than corporate advertising. But more
importantly, I'm pretty sure that if Mr Romney had tried to
run an ad like this for a commercial product, he'd be facing a
26
lawsuit. A Nissan ad may show a 747 landing on the roof of
the truck, but it doesn't contrast that with a shot of a 747
attempting to land on the roof of a Ford and crushing it due to
the Ford's inferior quality. In commercial advertising, making
a demonstrably false or misleading negative statement about a
competitor's product would be legally actionable.
The courts would probably be very reluctant to take up a
lawsuit against a political candidate for pulling this sort of
dirty advertising trick, because letting candidates sue each
other over their campaign claims would create far more
problems than it might solve. But precisely because we don't
have much legal constraint on the truth of political
advertising, we need to ensure that we have some social
opprobrium attached to cutting and pasting video clips of
politicians to blatantly distort what they've said.
Meanwhile, I think this week's "false equivalency award"
should go to Ken Rudin on NPR's "It's All Politics", who in
response to co-host Ron Elving came up with this gem:
Ken Rudin: I still think the DNC hysterics over the
Romney ad are way over the top.
Ron Elving: Well maybe the DNC hysterics are over the
top, but an awful lot of journalists also pounced on this and
said, this is the very first ad Mitt Romney has put out as a
presidential candidate in 2012, and this is the way he chooses
to represent his opponent. What kind of signal does that send
about the kind of campaign that Mitt Romney's planning to
run?
Ken Rudin: Look at the campaign President Obama is
running, running around the country saying how deceitful the
Republicans are! So it's going to be a dirty campaign, we
know that.
So Mr Romney lied about Mr Obama, but Mr Obama
called Mr Romney deceitful! Really, both sides share the
blame for the dirty campaigning here.
(the economist)
Do you think that the advertising practices described below are
acceptable? Are there any types of advertisements that you find
offensive?
 Using children in advertisements
 Promoting alcohol on TV
 Comparing your products with your competitor’s products
27
UNIT 5 – ADVERTISING
 An image flashed onto a screen very quickly so that people are affected without
noticing it (subliminal advertising)
Advertising vocabulary
•
•
•
•
•
•
•
•
•
•
Directories
Run
Commercial
Exhibition
Point of sale
Target
Press
Persuade
Mailshots
Public transport
•
•
•
•
•
•
•
•
•
Billboards / hoardings
Posters
Endorsement
Jingles
Promote
Place
Launch
Word of mouth
Research
•
•
•
•
•
•
•
•
•
SLOGANS
SPONSORSHIP
CINEMA
FREE SAMPLES
LEAFLETS
RADIO
SPONSOR
TELEVISION
PUBLICISE
Outdoor advertising’s appeal is growing as TV and print are loosing theirs. The soaring
costs of TV are promoting clients to consider alternatives. Dennis Sullivan, boss of Portland
Group, a media buyer, calls outdoor advertising the last true media market medium. It is also
cheap. In Britain, a 30 – second prime time TV slot costs over ₤60.000 placing an ad on a bus
shelter for two weeks works out at about ₤ 90.
TESTS
•
•
•
How can you say that an ad is good or bad?
What is important for us when we watch an advertisement?
What is your favorite advertisement? Why do you like it?
28
•
What kind of advertisements do you like?
 Use the words in the box and think what makes a good advertisement:
Clever
Interesting
Powerful
Funny
Humorous
Shocking
Inspiring
Eye-catching
Informative
Sexy
BIBLIOGRAPHY:
29
UNIT 6 –THE CONDITIONAL SENTENCE
UNIT 6
6.1. INTRODUCTION
6.3. THE CONDITIONAL SENTENCE
6.1. INTRODUCTION
The conditional sentence is very useful in negotiating in
business
Studying the use, role and practice of the conditional
sentences
hours
30
2
What is a conditional sentence?
If I eat too much, I get sick.
A conditional sentence is a sentence structure commonly
used in English when we want to talk about something (a
result) that may happen ONLY IF something else happens
first (a condition). The condition may be something real or
unreal / hypothetical, and the result could a definite result, or
just a possible / likely result.
The most common type of conditional sentence uses if.
These are the easiest conditional sentences to form and
understand. You could also use unless, when, after, before or
as soon as. Here, we will focus on using conditional sentences
with if.
~
There are 2 parts to a conditional sentence. These two
parts are also called clauses. [A clause is any part of a
sentence with a subject and a verb.]
Part 1 – the if or condition clause: the event that needs to
occur; also called the dependent clause because it is not a
complete sentence and is dependent on the 2nd part of the
sentence.
Part 2 – the result or main clause, or what happens when
the event in the if/condition clause occurs; also called the
independent clause.
Either part can come first:
[When the 'if' part comes first, the two parts are separated
with a comma ( , ) ]
I get sick if I eat too much.
Changing the order of the clauses does not change the
meaning; the two sentences above mean exactly the same
thing.
~
There are 4 types of conditional sentences in English:
31
0 (zero) conditional – real / factual conditional
1st (first) conditional – future possible/real conditional
If I eat too much, I will get fat.
2nd (second) conditional – present unreal/hypothetical
conditional
If I were fat, I wouldn’t be able to dance very well.
3rd (third) conditional – past unreal conditional
If I hadn’t eaten so much, I wouldn’t be so fat.
If, provided (that), so long as, on condition that, in case,
suppose, supposing (that), unless
Main clause
1. FUTURE /
PRESENT / IMPERATIVE
I’ll go swimming
I am happy
Go and buy tickets
If clause
PRESENT
If the water is warm
If you are happy
If you want to see the
film
PAST TENSE
He went for a walk
PAST TENSE
If he felt tired
FUTURE / PRESENT /
IMPERATIVE
(past condition with a
PRESENT PERFECT /
present result)
PAST
Read
again
the
instruction
If
you
haven’t
He’ll come today
understood them
If he wasn’t here
yesterday
2.
PRESENT
PAST TENSE
CONDITIONAL
present action
(imaginary
situation
If the weather were
opposed to a
better
We could go
(lack of probability in a
If I had the day off
future moment)
32
I would go to the beach
3.
PAST
PAST PERFECT
CONDITIONAL
If the weather had been
I would have left last better
Monday
I. Puneţi verbele din paranteze la timpul corect. (Put the verbs in brackets into the correct
tense):
A.
1. If we do not take that bus, we (not/ find) another.
………………………………………………………………………………………………
2. If the government (not/ do) anything about this, we’ll have to ask them to resign.
………………………………………………………………………………………………
3. If I (not/ go) to bed now, I (fall asleep) on the sofa.
………………………………………………………………………………………………
4. If you (not/ want), (not/ go) there.
………………………………………………………………………………………………
5. If it (snow), they (go) skating.
B.
1. We would go for a walk if it (not / be) raining.
………………………………………………………………………………………………
2. We (ask) him a question if he stopped shouting.
………………………………………………………………………………………………
3. If you weren’t so dirty I (take) you with me.
………………………………………………………………………………………………
4. If I (have) a place to park, I (stop).
………………………………………………………………………………………………
5. If you (stop) smoking, I (buy) you a present.
C.
1. I would have visited him if he (not /been) so grumpy.
………………………………………………………………………………………………
2. They (listen) to your songs, if you had been more polite.
………………………………………………………………………………………………
33
3. If I (know) your number, I would have called you.
………………………………………………………………………………………………
4. I (play) the guitar for you if the strings hadn’t been missing.
………………………………………………………………………………………………
5. If my computer hadn’t been broken, I (write) your paper.
II. Încheiaţi fiecare propoziţie folosind condiţia potrivită. (Finish the sentences with
suitable conditions):
1. I’d be in New York if …………………...
2. I would go shopping if ………………………………….
3. Tomorrow I’ll be in Birmingham if ……………………………...
4. You hadn’t been in this situation if …………………....
5. The kitchen wouldn’t be a mess, if ................................................
6. There would have been less chance of panic if ………………………..
7. There would have been less people injured if ……………………....
8. I come with you if ……………………………….
III. Puneţi verbele din paranteză la forma corectă (Put the verbs in brackets into the
correct form):
1. If I were you, I ………………..… there. (go)
2. If it were not so cold, I………………………. (pay a visit)
3. If I knew you were there, I ……………………..…. (not/come)
4. If I did not want to be there, I…………………….… (e-mail)
5. If I knew his number, I…………………….…. (would call)
6. I wish you ………………….. so annoying. (be)
7. If I were you, I …………………….. such a thing. (do)
8. What would you do if they ………………you that job? (give)
IV. Completaţi propoziţiile folosind modelul trei de condiţional (Complete the sentences
following the pattern for the third type of conditional):
1. I would have liked the dress much more if …………….….
2. You would have come to the party if ……………………………….
3. He would not have won the elections, if …………………………..
4. If the had arrived earlier the accident ……………………….
5. I am sure she would not have married him if ……………………..….
6. If I had realised that you wanted to help me, I …………………..….
7. If you had drunk water before we left home, you …………………………...
8. I would have driven faster if …………………………………..
TESTS
Write what you will or may do in the following situations:
34
1.
2.
3.
4.
5.
6.
If your car is stolen…
If a close colleague gets married
If you are offered a better paid job abroad
If your firm is taken over by a competitor
If you have to give a presentation in English
If your computer is infected with a virus
Imagine what would happen in the following (unlikely)situations:
1. If the world was governed by a Communist superpower…
2. If your husband or wife was offered a good position in Iceland…
3. If you stood for the presidential elections…
4. If the sale of alcohol was banned in Europe…
5. If you were accused of selling your country’s military secrets…
Read the text and say if you had been director
general of Soda – Soda Enterprises what would you
have done to restore consumer confidence:
In June 199 more than 100 people in Spain and two
in Italy complained of headaches, dizziness and
stomach upsets after drinking canned soft drinks
manufactured by Soda – Soda. Subsequently, the
authorities in Spain and Italy ordered Soda – Soda
products to be withdrawn as a precaution.
BIBLIOGRAPHY:
35
UNIT 7 –MARKETING
UNIT 7
MARKETING
7.1. INTRODUCTION
7.3. MARKETING
7.1. INTRODUCTION
The study of marketing terms in business English
Buyers, sellers and the market
Markets and competitors
Marketing and market orientation
hours
36
2
I
Marketing is the social process by which individuals and
organizations obtain what they need and want through
creating and exchanging value with others.
Kotler and Armstrong (2010).
The process by which companies create value for
customers and build strong customer relationships in order to
capture value from customers in return.
Kotler and Armstrong (2010).
Defining Consumer Behavior
What is Consumer Behavior?
How many times throughout the day do people make
product decisions? If you stop to think about it, many product
decisions are made every day, some without much thought.
What should I wear? What should I eat? What am I going to
do today? Many product decisions are answered routinely
every day and they help move the economy of cities,
countries and ultimately the world.
Product decisions also shape life for the consumer. How
can simple decisions be so important? Why do marketers
spend millions of dollars to uncover the reasons behind these
decisions?
To define consumer behavior: it is the study of consumers
and the processes they use to choose, use (consume), and
dispose of products and services. A more in depth definition
will also include how that process impacts the world.
Consumer behavior incorporates ideas from several sciences
including psychology, biology, chemistry and economics.
"All marketing decisions are based on assumptions and
knowledge of consumer behavior," (Hawkins and
Mothersbaugh, 2007). Researching consumer behavior is a
complex process, but understanding consumer behavior is
critical to marketers-they can use it to:
Provide value and customer satisfaction.
Effectively target customers.
Enhance the value of the company.
Improve products and services.
Create a competitive advantage
Understand how customers view their products versus
their competitors' products.
37
UNIT 7 –MARKETING
Expand the knowledge base in the field of marketing,
Apply marketing strategies toward a positive affect on
society (encourage people to support charities, promote
healthy habits, reduce drug use etc.)
Consumer Behaviour
External Influences - Consumer Culture
a. Culture includes knowledge, belief, art, law, morals,
customs, and any other capabilities and habits acquired by
humans as members of society.
b. How does culture affect consumer behavior? Whatever
a person consumes will determine their level of acceptance in
their society. If someone does not act consistently with
cultural expectations, they risk not being accepted in society.
c. What happens when a company ignores culture?
McDonald’s is one of the most popular restaurants in the
world. At their American based restaurants they serve beef
hamburgers, but when they decided to open restaurants in
India, they used lamb meat for their hamburgers, because the
Indian people do not eat cow meat; if McDonald’s had
ignored this cultural difference they would not have been
successful in India! That was the problem when The Walt
Disney Company opened EuroDisney outside Paris; it was
almost a failure because Disney ignored the culture. The
French people drink wine at very young ages and prefer sugar
on their popcorn, not salt, like Americans. Disney did not
accommodate their theme park until they realized that the
French people were indeed their target market, so they
changed the name of the park to Disneyland Paris and made
modifications to their menus and also to the wait lines in the
park.
(marketingteacher.com)
THE NINE FUNCTIONS OF MARKETING
In order for the marketing bridge to work correctly -- providing consumers with opportunities
to purchase the products and services they need -- the marketing process must accomplish
nine important functions.
The functions are:
Buying - people have the opportunity to buy products that they want.
Selling - producers function within a free market to sell products to consumers.
Financing - banks and other financial institutions provide money for the production and
marketing of products.
Storage - products must be stored and protected until they are needed. This function
38
I
is especially important for perishable products such as fruits and vegetables.
Transportation -products must be physically relocated to the locations where consumers can
buy them. This is a very important function. Transportation includes
rail road, ship, airplane, truck, and telecommunications for non-tangible products such as
market information.
Pr ocessing - processing involves turning a raw product, like wheat, into something
theconsumer can use -- for example, bread.
Risk-Taking - insurance companies provide coverage to protect producers and
marketers from loss due to fire, theft, or natural disasters.
Market Information - information from around the world about market conditions,
weather, price movements, and political changes, can affect the marketing process.
Market information is provided by all forms of telecommunication, such as television,
the internet, and phone.
Grading and Standardizing - Many products are graded in order to conform to
previously determined standards of quality. For example, when you purchase US No. 1
Potatoes, you know you are buying the best potatoes on the market.
THE FOUR UTILITIES OF MARKETING
The marketing process must also add "utility" to the products consumers want. Utility is the
use or satisfaction a person gets from a product. If you purchase a chain saw you anticipate
that you will receive a certain amount of utility from it. You will be able to use the saw to cut
fire wood, prune trees, and take care of a variety of jobs around your home. There are four
types of utility.
Form Utility - a product must be processed into a form that the customer wants or
needs. For example, wheat is processed into bread, trees are processed into lumber, and
potatoes are processed into french fries. If you ordered french fries with your lunch and the
waiter brought you a raw potato, you probably wouldn't be too happy.
Place Utility - place utility involves transporting products to the location where
consumers can buy them. If you live in Alaska, you certainly wouldn't want to have to
drive to California to buy oranges. Thanks to our modern transportation systems you
don't have to; you simply drive to the local grocery store and oranges are there ready to add to
your shopping cart -- place utility.
Possession Utility - possession utility establishes legal ownership of a product. When you
purchase something you normally receive a receipt; this provides legal ownership and the
right to use the product. Some products, computer software, for example,
also provide a user license. A license of this kind gives you the right to use the product within
certain guidelines.
Time Utility - this could be described as being in the right place at the right time when a
customer is ready to purchase a product. Creating and keeping customers means
having products available for when they want them, and often this requires some type of
storage facility. Wheat is one example of a commodity that must be stored after it is
harvested. It is stored in silos until processors are ready to convert it into food products such
as bread or cereals.
(asbcentral.com)
39
UNIT 7 –MARKETING
TESTS
WHAT IS MARKETING?
Think of a product with which you are familiar and answer the following questions.
1. Product Name:
2. Product Use:
3. Describe the typical consumers of the product:
4. What raw materials are used to make this product?
5. How is the product processed?
6. How is the product transported?
7. Where is it sold?
8. How is the product promoted and advertised?
9. How much does the product cost?
10. Each item above is part of the marketing process. Many other activities
are considered to be part of marketing.
How many you can list?
BIBLIOGRAPHY:
40
UNIT 8
PREPOSITIONS
8.1. INTRODUCTION
8.3. PREPOSITIONS
8.1. INTRODUCTION
Knowing how to use prepositions in English is of high
importance
Types of prepositions
Use of prepositions
Practice
hours
41
2
UNIT 8 –PREPOSITIONS
At,in and on:prepositions of place
We use at to talk about a place we think of as a point rather
than an area, and about an event
where there is a group of people:
• I arrived at New Street Station at 7.30. • We were waiting at
the far end of the room.
• We last met at the conference in Italy. • There were very
few people at Joan's party.
We use on to talk about a position touching a flat surface, or
on something we think of as a line
such as a road or river:
• Is that a spider on the ceiling} (Notice we also say 'on the
wall/floor')
• She owns a house on the Swan River.
We use in to talk about a position within a larger area, or
something within a larger space: )
• There's been another big forest fire in California.
* • She looked again in her bag and, to her relief, there
were her keys.
Also study how at, in, and on are used in these sentences:
• My dream is to play at
- seen as a point
Wembley Stadium.
- either seen as within the
pool itself, or as a
• Didn't I see you in/at the
building which is a point in
pool yesterday?
town
• He lives in Perth.
- within the city
• We stopped in/at Milan,
- we use at when we see the
Florence and
cities as points
on a journey, and in when
Pisa on our way to Rome.
we see them as
enclosed areas where we
stayed for some time
• They were a great success - we can use at when we use
in/at
a place name
instead of an institution or
Edinburgh.
event - here, the
Edinburgh Festival; in
suggests the city
• He's in Los Angeles on
- staying or living there
business.
- a student at Manchester
42
• He's at Manchester
studying Linguistics.
• She works at Marks and
Spencer.
• She works in a shoe shop.
• I stopped at the shop on
the way home.
• I was in the bank when in
came Sue.
(Notice we say: T work on a
farm', but T
work in a factory.')
• I read the paper in the taxi
on the way.
• I'll probably go on the bus.
University
- the name of a particular
organisation
- the kind of place
- we use at to talk about
buildings such as the
dentist's, the supermarket,
the bank, school,
etc.; we use in to emphasise
that we mean
inside the building
- for travel using taxis and
cars
- for travel using bus, coach,
plane, or train;
but we use in if we want to
emphasise inside
the bus, etc.
We usually use at before an address and in or on before the name of a road:
• They've opened an office at 28 Lees Road.
• The church is in/on Park Road.
However, we sometimes use on instead of in when we talk about long streets or roads:
• The town is on the Pacific Highway.
We can use at instead of in when we use a street name to refer to an institution in that street:
• There was an important meeting of ministers at Downing Street today.
But notice that we say 'on Wall Street' to mean the financial institution.
Compare:
• I'll meet you on the corner of the street, and
• The lamp was in the corner of the room.
Complete these sentences with at, on, or in and the most likely word or phrase.
THE PITCH /PARTIES /THIS BOOKLET /THE TABLE /THE MAIN ROAD /A
DINNER
/THIS COUNTRY /HIS POCKET /THE TOP END /YOUR LAWN /THE OPERA
HOUSE /TUNISIA
1 I bumped into Tim ……………….I went to the other evening.
2 The film was shot mainly……………………. in North Africa.
3 He was undoubtedly the best player ………………………..in the first half.
4 Although he has been singing for ages, it will be the first time he has
appeared…………………….
5 They live ………………….., so there's a lot of traffic going past.
43
UNIT 8 –PREPOSITIONS
6 It will be the biggest event of its kind ever held……………………………….
7 I know that people like to dress up …………………………….., but that is ridiculous.
8 Bill lived …………………………………………..of my street.
9 The information …………………………………..is out of date.
10 Do you know that there's a rabbit …………………………, and it's eating your flowers?
11 He put his hand …………………….and took out some coins.
12 Who's moved my briefcase? I left it……………………
Complete these sentences with at, in or on. If two answers are possible, write them both.
1 a He played………….. Wimbledon for the first time this year.
b Quite by chance, we met …………….the tennis stadium last week.
2 a He turned up early to make sure he had a seat ……………the plane.
b I saw Judith this morning, but she was………………………. her car so I couldn't say hello.
3 a We just got ………………..the train and headed for Florence.
b We were stuck………………………… the plane for hours in Jakarta.
4 a We went to wave him off ………………….the station.
b It was raining, so he decided to shelter ……………………..the station before he walked
home.
5 a She worked ……………………………..a restaurant during the evenings to earn some
extra money.
b When she was a student she worked ………………………..a pizza restaurant at weekends.
6 a She won a gold medal ……………..Barcelona in 1992.
b I lived ……………………..Stockholm for three years during the 1970s.
7 a Peter's doing a Master's degree……………. Birmingham.
b They're ……………Brighton to do an English language course.
TESTS
Complete the sentences with at, in or on.
1 There has been a serious accident ………………..the motorway near Swindon.
2 She's just moved from her flat ………………….38 Azalea Drive.
3 We broke down ………………….the Princes Highway between Melbourne and Adelaide.
4 The overnight rise ……………………Wall Street was not maintained.
5 Talks are to be held ………………..Downing Street, chaired by the Prime Minister.
6 My uncle owns a hardware shop……………….. the corner of High Street and Redland
Road.
7 I first saw the ring in an antique shop …………………………Kensington Road.
44
BIBLIOGRAPHY:
45
UNIT 9 – NEGOTIATIONS
UNIT 9
NEGOTIATIONS
9.1. INTRODUCTION
9.3. NEGOTIATIONS
9.1. INTRODUCTION
In business knowing how to negotiate is of high
importance
Rules of negotiation
How to negotiate
Negotiation Vocabulary
Practice
hours
46
2
Dealing with the Other Side’s Constituents
During a meeting with a potential customer, a new
salesperson leaves the room several times to make phone
calls. Each time when she returns, she tells the customer she
can’t accept the terms they just negotiated. Exasperate by her
apparent lack of authority, the customer ends the meeting
abruptly.
As this scenario shows, your counterpart’s constituents
are bound to play a role in negotiations, whether you realize it
or not. When the other side negotiates on behalf of an
organization, his superiors and coworkers have a stake in the
outcome. In more personal negotiations, his friends or family
members may attempt to sway his choices.
The same is true of your constituents. Yet negotiators
often are surprised to discover the strength of the opinions,
advice, and directives their counterparts face from others. By
anticipating the role of these shadowy outsiders in
negotiation, you can plan to manage their influence.
As part of your preparation for a particular negotiation,
think about how much authority our counterpart might have
to make decisions. Whom does she report to? With whom
might she consult before making a decision? When
negotiating on the job, you can assume the other party’s boss
will need to sign off on your agreement. Will she also have to
check in with her boss periodically on key issues? Is she part
of a team that must sign off on a deal, whether formally or
informally? In some cases, such as an unemployment
negotiation, the person’s spouse, children, or parents may
play a strong backstage role.
If you think a third party could slow down your
negotiation or scuttle a deal at the last minute, what should
you do? In his chapter “Bargaining in the Shadow of the
Tribe” in The Negotiator’s Fieldbook (American Bar
Association, 2006), negotiation and mediation expert John H.
Wade outlines a number of possibilities. First, if an outsider’s
influence seems likely to be destructive, you might decide to
pass on the negotiation altogether and find a partner who has
more autonomy, especially if you are on a deadline.
Second, you might ask you counterpart if he’d like to
include any of these interested parties in negotiation. This
option is often impractical or undesirable; you counterpart
probably doesn’t want his boss at the table, for instance. Yet
because interested parties often have legitimate concerns,
47
bringing them to the table may actually enhance your
negotiation. If you would each be representing a team, for
example, it might make sense to switch from one-on-one to
team negotiations. Or if a prospective employee would be
moving her family across the country, her husband might
appreciate being included in discussions about company
benefits and the job market in the new community.
(harvard.edu)
What Are The Four Types Of Negotiating Outcomes?
Negotiating outcomes are the types of results that can happen at the end of a negotiation.
All negotiations end up with one out of four possible outcomes: one party wins and the other
loses, both parties lose, they get stuck in a stalemate, or both end up winning. Obviously, the
goal in a cooperative negotiation is for both parties to walk away with their needs being
satisfied. Familiarize yourself with the four different negotiating outcomes and make it your
goal to aim for a mutually-beneficial outcome.
Lose-Lose
In this type of outcome, ego's come into play which thwart the negotiating process. Both
sides dig into their positions and are unwilling to compromise with each other. In the end,
both parties end up losing in the deal. Resentment exists between both parties as a result of
the outcome and it is unlikely that they will ever negotiate with each other again.
Example
A labor union refuses a contract offer and goes on strike until demands are met. The
company refuses to give into to this bullying-type technique and digs into their position of not
budging. In the end, the strikers go back to work without a raise and with lost income and the
company loses a large amount of sales revenue, and the consumer loses because the company
must raise prices to pay for its losses.
Win-Lose
In this type of outcome, one side wins and the other side loses. There is no compromise
with a win-lose outcome. It's a one-side takes all battle with one side getting all their needs
satisfied and the other side getting nothing. While the side that wins may be very happy about
the outcome; the losing side has a high level of resentment over the deal because they did not
have any of their needs met. This usually results in a end to any future negotiations and a
termination of the relationship.
Examples
A street brawl is the ultimate in win-lose negotiations. One side wins by use of physical
violence and the losing side has no choice but to submit to defeat.
A civil court battle is win-lose. A judge or jury decides winner and loser based on
available evidence. One side wins punitive or compensatory damages and the other side loses
that money.
Stalemate
In this type of outcome, neither side wins or loses and after a long negotiating session,
both sides are at the exact same place that they started off at. This is a result of not being able
48
to deal with interests and only positions. Stalemates happen when both sides aggressively
defend their positions and neither side is able to make the other side budge.
Example
You go to buy a car and the salesman quotes you a price that is too high. You are
unwilling to budge on your price and the salesman is unwilling to budge on his quote. You
then walk out of the dealership and go find another one to deal with and the salesman moves
on to the next customer.
Win-Win
This is the type outcome that you strive to achieve when you Street Negotiate. In this type
of outcome, both sides walk away with their interests and needs being met. Both sides leave
the negotiating table satisfied because they came out of the negotiation with more than they
had started with. Relationships are preserved because both parties cooperated with each other
in determining a fair solution to the problem. This outcome also bolsters trust for future
negotiations between the two parties because they have established a positive relationship.
Example
A hostage taker agrees with the police negotiator to surrender and release his hostages. In
return, the negotiator agrees that the SWAT team won't bust through the doors and kill the
hostage taker. In this example, the hostage taker gets his needs of survival taken care of and
the negotiator gets his needs of ending a potentially deadly confrontation without any
bloodshed satisfied.
Key Points
The four possible outcomes to a negotiation are: lose-lose, win-lose, stalemate, and winwin.
Set your goals on having a win-win outcome in all of your negotiations. A win-win
outcome is where both negotiating parties walk away with having both of their needs met.
(ezinearticles.com)
TESTS
15 Rules of Negotiation
Negotiation is a process that can be learned.
By following the 15 rules outlined here--and practicing, practicing, practicing--you can
perfect your skills at negotiating deals in which everyone wins.
1. Remember, everything is negotiable. Don’t narrow a negotiation down to just one issue.
Develop as many issues or negotiable deal points as you can and then juggle in additional deal
points if you and the other party lock onto one issue.
2. Crystallize your vision of the outcome. The counterpart who can visualize the end result
will most likely be the one who guides the negotiation.
3. Prepare in advance. Information is power. Obtain as much information as possible
beforehand to make sure you understand the value of what you are negotiating. Remember,
very few negotiations begin when the counterparts arrive at the table.
49
4. Ask questions. Clarify information you do not understand. Determine both the implicit and
explicit needs of your counterpart.
5. Listen. When you do a good job listening, you not only gain new ideas for creating win/win
outcomes but also make your counterpart feel cared for and valued. This also allows you to
find out what the other party wants. If you assume that his or her wants and needs are the
same as yours, you will have the attitude that only one of you can “win” the negotiation.
6. Set a goal for each deal point. Define your minimum level of acceptance for each goal. If
you aren’t clear on your goals, you will end up reacting to the propositions of your
counterpart.
7. Aim your aspirations high. Your aspirations will likely be the single most important factor
in determining the outcome of the negotiation. You can aim high just as easily as you can aim
low.
8. Develop options and strategies. Successful people are those who have the greatest number
of viable alternatives. Similarly, successful negotiators are those who have the most strategies
they can use to turn their options into reality.
9. Think like a dolphin. The dolphin is the only mammal who can swim in a sea of sharks or
in a sea of carp. Dolphins are able to adapt their strategies and behaviors to their counterparts.
Remember, even when negotiating with a shark, you have an option--you can walk away!
10. Be honest and fair. In life, what goes around comes around. The goal in creating win/win
outcomes is to have both counterparts feel that their needs and goals have been met, so that
they will be willing to come back to the table and negotiate again. An atmosphere of trust
reduces the time required to create win/win outcomes.
11. Never accept the first offer. Often, the other party will make an offer that he or she thinks
you will refuse just to see how firm you are on key issues. Chances are, if you don’t have to
fight a little for what you want, you won’t get the best deal.
12. Deal from strength if you can. If that’s not possible, at least create the appearance of
strength. If the other party thinks you have no reason to compromise in your demands, he or
she is less likely to ask you to.
13. Find out what the other party wants. Concede slowly, and call a concession a concession.
Giving in too easily tells the other party that you will probably be open to accepting even
more concessions.
14. Be cooperative and friendly. Avoid being abrasive or combative, which often breaks down
negotiations.
15. Use the power of competition. Someone who thinks it’s necessary to compete for your
business may be willing to give away more than he or she originally intended. Sometimes just
the threat of competition is enough to encourage concessions.
50
BIBLIOGRAPHY:
51
UNIT 10 – FINANCE
UNIT 10
FINANCE
10.1. INTRODUCTION
10.3. FINANCE
10.1. INTRODUCTION
Knowing as much we can about finance is very
important for the development of he business
Finance vocabulary
Use of vocabulary
Practice
hours
52
2
FINDING
GROWTH
THROUGH
MERGERS & ACQUISITIONS
STRATEGIC
Not long ago, owners of middle market companies could
expect to sell their business at a reasonable value when they
were ready for a transition. Their business didn't have to be
the best performer, but rather operate comparably to the
performance of their peers meeting decent middle-of-the-road
metrics. Not so today! Many are experiencing what the
market is calling the "Value Gap."
This gap manifests itself in a number of ways in terms of
buyer interest, in terms of access to growth capital and in
terms of valuation. In many instances it's not a matter of the
value of the company being low or the cost of capital being
high -- it is the absolute lack of any interest in financing or in
acquiring the company at all.
For example, lower middle market businesses that haven't
hit their stride or met their potential -- evidenced by slow
growth rates, low gross margins or low EBITDA margins -but are strategically positioned and attract buyer interest;
these companies have seen a continued declined in EBITDA
multiples paid by both strategics and financial buyers. On the
other hand, the higher performing middle market companies
with EBITDA greater than $8 million to $10 million are
experiencing record high multiples, even higher than those in
late 2007 and early 2008. To the point, the size of EBITDA
does matter!
The value gap can be illustrated by the wide difference
between what is referred to as "Owner Value" and "Market
Value." Owner value is the required value in the M&A
transaction by the shareholders of the selling company,
whereas market value is the range of amounts that the market
players place on a company based on their perspective and the
market dynamics. In many cases, owner values have been
driven higher by the lack of alternate investment opportunities
post-closing that will yield returns with adequate cash flow to
mirror those that the owners currently experience by holding
their interest in their business. In many situations, market
values for all but the high performers have been driven down
….thus the gap has widened.
Recent research and empirical evidence shows that the
root problems causing this value gap for middle market
companies are that:
Companies don't generate returns adequate to cover their
53
UNIT 10 – FINANCE
cost of capital, and
Management isn't re-investing at an adequate rate to
sustain growth and remain competitive and relevant in the
market place long-term.
The Opportunities
M&A and the private capital markets currently present an
interesting set of alternatives. As shareholders contemplate
the effect of the market dynamics, their companies' growth
strategies and eventual transition plans, some are seeking
deals that allow them to:
Diversify away the risk of having too much personal net
worth in a single asset.
Minimize the risk of growth by obtaining a financial or
strategic partner.
Buy-out passive partners and make room in the capital
structure for management and employees without dilution to
exiting active shareholders.
So, depending upon the strength of the middle market
business, its strategic position, and its financial performance
relative to peers, the spectrum of options can include:
Selling to a strategic or financial buyer. The stronger or
"A" players in the market will likely have the opportunity to
sell their business in whole or part through a traditional
buyout transaction that can provide a change of control
selling the majority of the business to a private equity fund
while keeping a minority portion. The advantage of this
approach allows the current owners a "second bite at the
apple" using the fund's capital to further grow their business
and the opportunity to sell a second time when their investors
sells (some three to five years later). Strategics provide the
opportunity for a complete exit at a price that the financial
buyer may find difficult to match because of the inability to
obtain a return outside of the pure financial metrics.
Recapitalize the existing business. Generally a
recapitalization will involve a lower cash-out (as a partial or
staged exit) for the active owners than a buyout (which
involves a change of control). A recapitalization will most
likely be focused on changing the relative mix of debt and
equity with an eye toward the growth objectives of the
company and the required go-forward capital. For example, a
leveraged recapitalization will most likely increase the debt of
the company in exchange for distributions, dividends, or
purchase of equity.
Acquire or merge with a complementary or competitive
player. There are various forms of acquisition financing
available depending upon the relative strengths of the parties.
Because of some of the structural barriers in the private
capital markets, a lower middle market company may not
have access to growth equity or mezzanine financing alone.
However, through an acquisition or merger two businesses
54
with the right synergies and combined cash flow may very
well cross into the credit box or investment criteria that
allows the newly formed business access to capital to
accelerate growth, fund strategic initiatives and possibly
buyout some partners or shareholders.
Acquisitions
Acquisitions can meet a number of goals if approached
and executed as part of a long-term strategy. In addition to
solving the "access to capital" problem discussed above, some
of the typical reasons executives pursue acquisitions include:
To accelerate revenue growth.
To enter an adjacent market space.
To expand into a new geography or obtain a physical
footprint in a new location.
To access new customers.
To access technology.
To strengthen the pool of talent and capabilities.
To complete or augment a product or service line.
To reduce costs.
To capture market share.
To prevent a competitor from gaining these advantages.
The first phase of a typical acquisition process addresses
finding a target company to buy; this begins with the strategic
plan that should lay the foundation to determine many of the
parameters and the focus of the process. The second phase of
the process is to structure the deal, close the transaction, and
integrate the business.
The financing strategy to support the acquisition should
initially be thought of in the context of the overall acquisition
process and be defined as part of the acquisition strategy
(phase one), understanding that the process will evolve and is
somewhat iterative as knowledge is gained from the
marketplace. If your company is cash flush or the acquisition
target is immaterial in value, the financing strategy may be as
simple as funding the transaction from operational cash flow
or cash reserves. However, if the deal requires external
funding, management must consider a financing strategy,
which typically begins with understanding the acquiring or
buying company. This involves:
Determining its valuation and financial strength.
Establishing financial objectives and benchmarks for
vetting possible acquisitions.
Determining parameters around how much the buyer can
afford.
Conducting internal discussions around an ideal or
preferred deal structure.
Establishing relationships with financing sources and
obtaining buy-in regarding the acquirer's plans.
Obtaining evidence for potential sellers of the buyer's
ability to finance and close a deal.
55
UNIT 10 – FINANCE
From these parameters, management can then think about
financing a specific target company, which is a function of
the value of the target, likely cash flow of the target, the deal
structure and the integration strategy.
Start by assessing the value of the target acquisition as a
stand-alone business using traditional valuation approaches;
then value the acquisition in the context of your business
giving consideration to cost savings and lift that may be
obtained on a combined basis. Another metric that may be
useful in the process is to determine the financeable value.
This is the amount that can be paid using external financing
based on the assets and cash flow of the target.
The deal structure and financing strategy are developed by
weighing a number of factors to find the optimum solution to
meet the objectives of the parties involved. Among other
things, these factors include the integration strategy and the
deal valuation gap -- in this case, that is the value that your
company is willing to pay and what is required to get the deal
done.
Management should keep in mind some core concepts as
it takes an objective view and embarks on the acquisition
process:
Begin with the end in mind; set clear objectives and
benchmarks to gauge attractiveness of potential target
companies and particular deals.
Develop the financing strategy up-front and establish
relationships with likely sources of financing.
Terms are likely more important than absolute valuation.
Align the financing strategy with the operating/integration
plan and deal structure.
Focus on Value Creation
Regardless of the eventual solution or desired outcome,
start with the same process. The essence of the front-end steps
in the M&A and financing process is an analysis and
understanding of the shareholders' and company's objectives,
financial and competitive position, growth strategy and
initiatives, and valuation.
Keep in mind that whether financing an acquisition,
selling the entire company, raising a tranche of growth capital
(in the form of debt or equity), or pursuing a recapitalization,
what you are really selling is the future cash flow of the
business. While past performance provides credibility to
management's claims, future cash flow is the foundation for
valuation and usually the primary reason for buying or
investing in a company.
(http://businessfinancemag.com)
56
Money
1 A.T.M.
2 banknote
3 billUS
abbr. Automated Teller Machine; cash dispenserUK
n: a piece of paper money; billUS
n. a banknote; a piece of paper money
n. illegal traffic in officially controlled commodities such as foreign
4 black market
currency
bureau
de
n. establishment where currencies of different countries may be
5
change
exchanged
n. 1 coins or bank notes (not cheques); 2 actual money paid (not
6 cash
credit)
cash
n: automatic machine from which clients of a bank may withdraw
7
UK
dispenser
money; ATM
8 cashier
n. person dealing with cash transactions in a bank, store etc
9 coin
n: a piece of metal money
1 currency
n. the money in general use or circulation in any country
1 debt
n. money etc owed by one person to another
Exchange
1
n. the rate at which one currency can be exchanged for another
rate
foreign
1
n: the currency of other countries
exchange
hard
1
n. currency that will probably not fall in value and is readily accepted
currency
1 invest
v. to put money for profit into business, land etc - investment n.
1 legal tender
n: currency that cannot legally be refused in payment of a debt
UK
1 petty cash
n. a cash fund for small, everyday expenses
1 soft currency
n. currency that will probably fall in value and is not readily accepted
v. (risky) buying of foreign currency, land etc for rapid gain 1 speculate
speculation n.
2 transaction
n. a (usually commercial) exchange; a deal - to transact v.
TESTS
Business Finance Terms
1. NET PROFIT The difference between total sales and total costs of the business
57
UNIT 10 – FINANCE
2. PROFIT The amount by which the total revenue of a business exceed its total costs and
expenses
3. INTEREST The cost of borrowing money, or the return from saving
4. RETAINED Profits earned by a business that are reinvested in the business rather than
paid out as dividends
5. PROFIT AND LOSS account. Describes the results of the trading (revenues and costs)
of a business in a period
6. FINANCE The money required to set up, run and expand a business
7. LIQUIDITY Measures of a business' ability to pay its debts
8. LOSS Where total costs of a business exceed its total revenues in a period
9. STOCKS Raw materials, work-in-progress and finished goods held for resale
10. LEASEBACK Where a business sells fixed assets and then leases them back
11. FLOTATION Where the shares of a company are offered for sale on a stock market
for the first time
12. CREDITORS People, businesses or other organisations to which a business owes
money
13. NET ASSETS The difference between the total value of assets owned by a business
and the total of its liabilities
14. OVERHEADS Costs incurred by a business that are not directly related to production
activities
15. LOAN Where money is borrowed and repaid under agreed terms and conditions
16. FIXED ASSETS Resources owned and used by a business over the long-term such as
buildings and machinery
17. OVERDRAFT A loan facility from the bank that may have to be repaid at any time
18. LIABILITIES Debts owed by a business
19. BALANCE SHEET Shows the financial position (assets and liabilities) of a business
at a specific moment in time
20. COSTS Amounts incurred by a business in producing and selling products
21. COST OF SALES The cost to the business of the goods sold
22. REVENUE Another term for the value of sales made by a business
23. ASSETS Everything that the business owns that has a monetary value, including cash,
stocks, debtors
24. GROSS PROFIT A measure of profit calculated as: revenue less cost of sales
25. TURNOVER An alternative word for revenue or sales
BIBLIOGRAPHY:
58
UNIT 11
FINANCIAL PLANNING
11.1. INTRODUCTION
11.3. FINANCIAL PLANNING
11.1. INTRODUCTION
Writing a financial plan in English is important for
starting or developing a business
Information on correct writing of a business plan
Writing a business plan
Practice
hours
59
2
UNIT 11 – FINANCIAL PLANNING
How To Write A Financial Plan?
Now that you know the importance of a financial plan,
figuring out exactly when you’ll do what you want to do is
the next step and that is: make a financial plan. The actual
financial plan will help you in knowing how you’ll achieve
your goals.
Writing a financial plan does not make it compulsory for
you to be a mathematician, but you need to know how the
numbers affect a business. Anyone can put together a great
financial plan. A financial plan is simply a budget put
together to reflect your goals, new income and time.
How to write a financial plan?
You can be as creative and innovative as you want as long
as you are succeeding in accomplishing the following goals.
Be as creative as you want, as no two plans look alike. Go
through he following points on making a financial plan:
a) Set a time frame
State clearly where you want to be after five, ten or thirty
years? Establish how you want how your financial life will
look like at these points.
b) Plot your income:
Your job may not be your only means of income. A side
business or making money online are options for extra
income. An income statement is one of the three parts that
make a financial plan. The income statement expresses your
revenue and expenses, providing you a clear financial picture.
c) Monitoring cash flow
Preparing a cash-flow estimation allows you to monitor
the flowing in and out of cash, thus allowing you to prepare
for a surplus or a loss. The best way is to include two columns
for each month of operation. Research into necessary costs
and don’t forget your life insurance, health insurance, car
insurance, etc.
c) A balance sheet.
The balance sheet in a financial plan is very important as
it balances the assets and fixed assets against all the liabilities.
The balance sheet helps to measure the financial health of a
business, as it projects its net worth.
d) Luxury costs
Think about on what kind of money you’ll need to live the
lifestyle you want. Expensive cars, nice house, education can
be considered a luxury cost.
e) Investments
Investments are a great way to counteract against
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inflation. Invest in stocks, mutual funds, bonds, real estate,
gold, collections, what ever suits you. But make sure you
know what you’re doing. It’s wise to not to put all of your
eggs in one basket. Your financial security should become
more and more important as you age.
It’s always better to go with the conservative approach
when writing a financial plan. People get tempted to paint too
much of a rosy picture. Don’t get too fancy when you are
preparing your financial plan. One can always use
Standardized Financial Sheets. Decide upon an appropriate
Accounting Method. Remember to follow one method for all
of your accounts, to make things easier later on.
How to Write the Financial Section of a Business Plan
An outline of your company's growth strategy is essential to a business plan, but it just
isn't complete without the numbers to back it up. Here's some advice on how to include things
like a sales forecast, expenses budget, and cash flow statement.
A business plan is all conceptual until you start filling in the numbers and terms. The
sections about your marketing plan and strategy are interesting to read, but they don't mean a
thing if you can't justify your business with good figures on the bottom line. You do this in a
distinct section of your business plan for financial forecasts and statements. The financial
section of a business plan is one of the most essential components of the plan, as you will
need it if you have any hope of winning over investors or obtaining a bank loan. Even if you
don't need financing, you should compile a financial forecast in order to simply be successful
in steering your business.
"This is what will tell you whether the business will be viable or whether you are wasting
your time and/or money," says Linda Pinson, author of Automate Your Business Plan for
Windows® (Out of Your Mind 2008) and Anatomy of a Business Plan (Out of Your Mind
2008), who runs a publishing and software business Out of Your Mind and Into the
Marketplace. "In many instances, it will tell you that you should not be going into this
business."
The following pages will cover what the financial section of a business plan is, what it should
include, and how you should use it to not only win financing but to better manage your
business.
Dig Deeper: Generating an Accurate Sales Forecast
How to Write the Financial Section of a Business Plan: The Purpose of the Financial
Section
Let's start by explaining what the financial section of a business plan is not. Realize that the
financial section is not the same as accounting. Many people get confused about this because
61
the financial projections that you include -- profit and loss, balance sheet, and cash flow -look similar to accounting statements your business generates. But accounting looks back in
time, starting today and taking an historical view. Business planning or forecasting is a
forward-looking view, starting today and going forward into the future.
"You don't do financials in a business plan the same way you calculate the details in your
accounting reports," says Tim Berry, president and founder of Palo Alto Software, who blogs
at bplans.com and is writing a book, The Plan-As-You-Go Business Plan. "It's not tax
reporting, it's an elaborate educated guess."
What this means, says Berry, is that you summarize and aggregate more than you might with
accounting, which deals more in detail. "You don't have to imagine all future asset purchases
with hypothetical dates and hypothetical depreciation schedules to estimate future
depreciation," he says. "You can just guess based on past results. And you don't spend a lot of
time on minute details in a financial forecast that depends on an educated guess for sales."
The purpose of the financial section of a business plan is two-fold. You're going to need it if
you are seeking investment from venture capitalists, angel investors, or even smart family
members. They are going to want to see numbers that say your business will grow -- and
quickly -- and that there is an exit strategy for them on the horizon, during which they can
make a profit. Any bank or lender will also ask to see these numbers as well to make sure you
can repay your loan.
But the most important reason to compile this financial forecast is for your own benefit, so
that you understand how you project that your business will do. "This is an ongoing, living
document. It should be a guide to running your business," Pinson says. "And at any particular
time you feel you need funding or financing then you are prepared to go with your
documents."
If there is a rule of thumb when filling in the numbers in the financial section of your business
plan, it's this: be realistic. "There is a tremendous problem with the hockey-stick forecast" that
projects growth as steady until it shoots up like the end of a hockey stick, Berry says. "They
really aren't credible." Berry, who acts as an angel investor with the Willamette Angel
Conference, says that while a startling growth trajectory is something that would-be investors
would love to see, it's most often not a believable growth forecast. "Everyone wants to get
involved in the next Google or Twitter, but every plan seems to have this hockey stick
forecast. Sales are going along flat but six months from now there is a huge turn and
everything gets amazing, assuming they get the investors' money," Berry says.
The way you come up a credible financial section for your business plan is to demonstrate
that it's realistic. One way, Berry says, is to break the figures into components, by sales
channel or target market segment, and provide realistic estimates for sales and revenues. "It's
not exactly data because you're still guessing the future. But if you break the guess into
component guesses and look at each one individuals, it somehow feels better," Berry says.
"Nobody wins by overly optimistic or overly pessimistic forecasts."
Dig Deeper: What Angel Investors Look For
How to Write the Financial Section of a Business Plan: The Components of a Financial
Section
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A financial forecast isn't necessarily compiled in sequence. And you most likely won't present
it in the final document in the same sequence you compile the figures and documents. Berry
says that it's typical to start in one place and jump back and forth. For example, what you see
in the cash-flow plan might mean going back to change estimates for sales and expenses.
Still, he says that it's easier to explain in sequence, as long as you understand that you don't
start at step one and go to step six without looking back -- a lot -- in between.
Start with a sales forecast. Set up a spreadsheet projecting your sales over the course of
three years. Set up different sections for different lines of sales and columns for every month
for the first year and either on a monthly or quarterly basis for the second and third years.
"Ideally you want to project in spreadsheet blocks that include one block for unit sales, one
block for pricing, a third block that multiplies units times price to calculate sales, a fourth
block that has unit costs, and a fifth multiplies units times unit cost to calculate cost of sales
(also called COGS or direct costs)," Berry says. "Why do you want cost of sales in a sales
forecast? Because you want to calculate gross margin. Gross margin is sales less cost of sales,
and it's a useful number for comparing with different standard industry ratios." If it's a new
product or a new line of business, you have to make an educated guess. The best way to do
that, Berry says, is to look at past results.
Create an expenses budget. You're going to need to understand how much it's going to
cost you to actually make the sales you have forecast. Berry likes to differentiate between
fixed costs (i.e., rent and payroll) and variable costs (i.e., most advertising and promotional
expenses), because it's a good thing for a business to know. "Lower fixed costs mean less risk,
which might be theoretical in business schools but are very concrete when you have rent and
payroll checks to sign," Berry says. "Most of your variable costs are in those direct costs that
belong in your sales forecast, but there are also some variable expenses, like ads and rebates
and such." Once again, this is a forecast, not accounting and you're going to have to estimate
things like interest and taxes. Berry recommends you go with simple math. He says multiply
estimated profits times your best guess tax percentage rate to estimate taxes. And then
multiply your estimated debts balance times an estimated interest rate to estimate interest.
Develop a cash flow statement. This is the statement that shows physical dollars moving
in and out of the business. "Cash flow is king," Pinson says. You base this partly on your sales
forecasts, balance sheet items, and other assumptions. If you are operating an existing
business, you should have historical documents, such as profit and loss statements and
balance sheets from years past to base these forecasts on. If you are starting a new business
and do not have these historical financial statements, you start by projecting a cash flow
statement broken down into 12 months. Pinson says that it's important to understand when
compiling this cash flow projection that you need to choose a realistic ratio for how many of
your invoices will be paid in cash, 30 days, 60 days, 90 days and so on. You don't want to be
surprised that you only collect 80 percent of your invoices in the first 30 days when you are
counting on 100 percent to pay your expenses, she says. Some business planning software
programs will have these formulas built in to help you make these projections.
Income projections. This is your pro forma profit and loss statement, detailing forecasts
for your business for the coming three years. Use the numbers that you put you're your sales
forecast, expense projections, and cash flow statement. "Sales, lest cost of sales, if gross
margin," Berry says. "Gross margin, less expenses, interest and taxes, is net profit."
Deal with assets and liabilities. You also need a projected balance sheet. You have to deal
with assets and liabilities that aren't in the profits and loss and project the net worth of your
business at the end of the fiscal year. Some of those are obvious and affect you at only the
beginning, like start-up assets. A lot are not obvious. "Interest is in the profit and loss, but
repayment of principle isn't," Berry says. "Taking out a loan, giving out a loan, and inventory
show up only in assets -- until you pay for them." So the way to compile this is to start with
63
assets, and estimate what you'll have on hand, month by month for cash, accounts receivable
(money owed to you), inventory if you have it, and substantial assets like land, buildings, and
equipment. Then figure what you have as liabilities -- meaning debts. That's money you owe
because you haven't paid bills (which is called accounts payable) and the debts you have
because of outstanding loans.
Break-even analysis. The break-even point, Pinson says, is when your business' expenses
match your sales or service volume. The three-year income projection will enable you to
undertake this analysis. "If your business is viable, at a certain period of time your overall
revenues will exceed your overall expenses, including interest." This is an important analysis
for potential investors, who want to know that they are investing in a fast-growing business
with an exit strategy.
Dig Deeper: How to Price Business Services
How to Write the Financial Section of a Business Plan: How to Use the Financial Section
One of the biggest mistakes business people make is to look at their business plan, and
particularly the financial section, only once a year. "I like to quote former President Dwight
D. Eisenhower," says Berry. "'The plan is useless but planning is essential.' What people do
wrong is focus on the plan and figure once the plan is done it's forgotten. It's really a shame
because they could have used it as a tool for managing the company." In fact, Berry
recommends that business executives sit down with the business plan once a month and fill in
the actual numbers in the profit and loss statement and compare those numbers with
projections. And then use those comparisons to revise projections in the future.
Pinson also recommends that you undertake a financial statement analysis to develop a study
of relationships and comparisons of items in your financial statements, comparative financial
statements over time, and even comparing your statements to those of other businesses. Part
of this is a ratio analysis. She recommends that you do some homework and find out some of
the prevailing ratios used in your industry for liquidity analysis, profitability analysis, and
debt and compare those standard ratios with your own.
"This is all for your own benefit. That's what financial statements are for. You should be
utilizing your financial statements to measure your business against what you did in prior
years or to measure your business against another business like yours," she says.
If you are using your business plan to attract investment or get a loan, you may also include a
business financial history as part of the financial section. This is a summary of your business
from start to the present. Sometimes a bank might have a section like this on a loan
application. If you are seeking a loan, you may need to add supplementary documents to the
financial section, such as the owner's financial statements, listing assets and liabilities.
All of the various calculations you need to assemble the financial section of a business plan
are a good reason to look for business planning software, so you can have this on your
computer and make sure you get this right. Software programs also let you use some of your
projections in the financial section to create pie charts or bar graphs that you can use
elsewhere in your business plan to highlight your financials, your sales history, or your
projected income over three years.
64
"It's a pretty well-known fact that if you are going to seek equity investment from venture
capitalists or angel investors," Pinson says, "they do like visuals."
Dig Deeper: How to Protect Your Margins in a Downturn
Related Links:
Making It All Add Up: The Financial Section of a Business Plan
One of the major benefits of creating a business plan is that it forces entrepreneurs to
confront their company's finances squarely.
Persuasive Projections
You can avoid some of the most common mistakes by following this list of dos and don'ts.
Making Your Financials Add Up
No business plan is complete until it contains a set of financial projections that are not
only inspiring but also logical and defensible.
How many years should my financial projections cover for a new business?
Some guidelines on what to include for a new business.
(inc.com)
TESTS
Write your own financial plan
BIBLIOGRAPHY:
65
UNIT 12 - FINANCE
UNIT 12
FINANCE
12.1. INTRODUCTION
12.3. FINANCE
12.1. INTRODUCTION
Forecasting your financial gains is of huge importance
for the business
Forecasting financial gains
Firm financial vocabulary
Practice
hours
66
2
Financial Forecasting
Financial Forecasting describes the process by which
firms think about and prepare for the future. The forecasting
process provides the means for a firm to express its goals and
priorities and to ensure that they are internally consistent. It
also assists the firm in identifying the asset requirements and
needs for external financing.
For example, the principal driver of the forecasting
process is generally the sales forecast. Since most Balance
Sheet and Income Statement accounts are related to sales, the
forecasting process can help the firm assess the increase in
Current and Fixed Assets which will be needed to support the
forecasted sales level. Similarly, the external financing which
will be needed to pay for the forecasted increase in assets can
be determined.
Firms also have goals related to Capital Structure (the mix
of debt and equity used to finance the firms assets), Dividend
Policy, and Working Capital Management. Therefore, the
forecasting process allows the firm to determine if its
forecasted sales growth rate is consistent with its desired
Capital Structure and Dividend Policy.
The forecasting approach presented in this section is the
Percentage of Sales method. It forecasts the Balance Sheet
and Income Statement by assuming that most accounts
maintain a fixed proportion of Sales. This approach, although
fairly simple, illustrates many of the issues related to
forecasting and can readily be extended to allow for a more
flexible technique, such as forecasting items on an individual
basis.
Financial Forecasting
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UNIT 12 - FINANCE
1
Although some managers use the terms forecasting, planning and modelling
indiscriminately, they are not the same things. A forecast is a prediction about a future
condition or situation. In terms of a business, financial forecasting means looking ahead to a
point in the future and trying to estimate the financial situation that the company will be in at
that time. Decisions about whether to spend more or less money on a project today will be
determined by financial forecasting. A company needs to feel secure that their future
finances will be able to recuperate the money they have spent and keep their bank balances
healthy.
2
Most organisations with strong financial departments spend a lot of time and effort on
financial forecasting. The nature of the business world means that managers need to look
ahead and plan for a future that is in no way certain. Financial forecasting helps a company
to make important decisions today that will affect the company in the future. These decisions
affect things like whether to spend or borrow money, where to invest or when to start a new
project.
3
The difficulty with financial forecasting is that it involves uncertainty. The future is uncertain
and a single financial policy can have numerous repercussions. However, when businesses
draw up strategies to deal with risk management they build in forecasting procedures which
strengthen the company’s position. Risk cannot be eliminated by financial forecasting but it
is beneficial for a company to have a better understanding of what the future could hold.
Companies accept that uncertainty is an integral part of any financial forecast.
4
This is a difficult question to answer. What is clear however is that managers should always
establish how much accuracy they can expect from a financial forecast. Managers have to
decide how much money is worth investing in a forecasting project which is only going to
have a certain amount of accuracy. Sometimes it is the case that the benefits of a financial
forecast are not worth its cost.
5
Another important thing to consider is the timing of a financial forecast. Forecasts
necessarily need to be updated because new information comes to light and things are
constantly changing. So managers need to think about a series of financial forecasts, not just
one. The question then becomes “how often do forecasts need to be made?” Each time there
is an updated forecast there will be an additional cost. Linked to this is the need to establish
how far into the future a forecast needs to reach. A ten year forecast will be more
complicated – and expensive – than a two year forecast.
(britishcouncil.org)
TESTS
What is financial forecasting?
What do you have to consider when you do financial forecast?
What is the importance of financial forecasting?
68
BIBLIOGRAPHY:
69
UNIT 12 - FINANCE
UNIT 13
13.1. INTRODUCTION
13.3. THE SEQUENCE OF TENSES
13.1. INTRODUCTION
Knowing how to organize your speech is very important
in the study of business English
Rules of sequence of tenses
Use of sequence of tenses
Practice
hours
lxx
2
Sequence of Tenses
The tense of a verb in the subordinate clause changes in
accordance with the tense of the verb in the main clause.
The basic rules are as follows:
Rule 1
If the verb in the principal clause is in the present or the
future tense, the verb in the subordinate clause may be in any
tense, depending upon the sense to be expressed.
He says that he is fine
He says that he was fine.
He says that he will be fine.
He will say that he is fine.
He will say that he was fine.
He will say that he will be fine.
Rule 2
If the tense in the principal clause is in the past tense, the
tense in the subordinate clause will be in the corresponding
past tense.
He said that he would come.
He told me that he had been ill.
I knew that he would not pass.
We noticed that the fan had stopped.
There are, nevertheless, a few exceptions to this rule.
A past tense in the main clause may be followed by a
present tense in the subordinate clause when the subordinate
clause expresses some universal truth.
Copernicus proved that the earth moves round the sun.
The teacher told us that honesty is the best policy.
He told me that the Hindus burn their dead.
A subordinate clause expressing place, reason or
comparison may be in any tense, according to the sense to be
expressed.
He didn’t get the job because his English isn’t good.
A fishing village once existed where now lies the city of
Mumbai.
If the subordinate clause is an adjective clause, it may be
in any tense as is required by the sense.
Yesterday I met a man who sells balloons.
Yesterday I met a man who sold me a balloon.
Rule 3
Note that when the subordinate clause is introduced by the
conjunction of purpose that, the following rules are observed.
We use may in the subordinate clause when the main
clause is in the present tense. We use might in the subordinate
clause when the main clause is in the past tense.
lxxi
UNIT 12 - FINANCE
I study that I may pass.
I will study that I may pass.
I studied that I might pass.
We eat that we may live.
He ate that he might not die.
Rule 4
If the principal clause is in the future tense, we do not use
future tense in subordinating clauses beginning with when,
until, before, after etc.
I will call you when dinner is ready. (NOT I will call you
when dinner will be ready.)
I shall wait until you return. (NOT I shall wait until you
will return.)
Rule 5
Expressions such as as if, if only, it is time and wish that
are usually followed by past tenses.
I wish I was a bit taller.
It is time we started working.
He talks as if he knew everything.
Sequence of tenses quiz
July 3, 2011
Complete the following sentences using appropriate verb forms.
1. You will find Coca-Cola wherever you …………………………….
a) Go
b) Will go
c) Would go
2. He would never do anything that ……………………….. against his conscience.
a) Goes
b) Will go
c) Went
3. I will lend it to you on condition that you ………………………… it back tomorrow.
a) Bring
b) Will bring
c) Would bring
4. I ……………………….. a good time whether I win or lose.
a) Will have
b) Had
c) Have
5. One day the government will ask people what they …………………………..
a) Want
b) Will want
c) Wanted
6. I don’t know where she ……………………………. tomorrow.
lxxii
a) Will be
b) Is
c) Was
7. If I had lots of money, I would give some to anybody who ……………………….. for
it.
a) Ask
b) Asked
c) Had asked
8. I have brought my tennis things, just in case we …………………………… time for a
game tomorrow.
a) Have
b) Will have
c) Had
9. I will go where you ……………………………
a) Go
b) Will go
c) Would go
10. I will tell you when I ……………………………
a) Finished
b) Have finished
c) Will finish
TESTS
Fill in the blanks using appropriate verb forms. Observe the rule of the sequence of tenses.
1. I found that my son …………………… awake.
2. The pickpocket confessed that he …………………………. (pick) my pocket.
3. He was so tired that he ……………………….. scarcely stand.
4. He said that I …………………………… a lazy good-for-nothing boy.
5. No one could explain how the prisoner ………………………….. (escape) from the prison.
6. Euclid proved that the three angles of a triangle ………………………… equal to two right
angles.
7. Italy went to war that she ……………………….. (extend) her empire.
8. The passage is so difficult that I ……………………… not comprehend it.
9. The boy was so indolent that he ……………………….. not pass.
10. In my perplexity I requested my guide to tell me what I ……………………….. to do.
lxxiii
UNIT 12 - FINANCE
BIBLIOGRAPHY:
lxxiv
UNIT 14
REVIEW
14.1. INTRODUCTION
14.3. REVIEW
14.1. INTRODUCTION
This unit reviews the vocabulary studies so far.
Review of vocabulary
hours
75
2
UNIT 14 – REVIEW
Choose the best word to fit the gap.
1 Most of our ………………………………have been
working with us for a number of years.
A supplies B suppliers C supporters D supplements
2 Unfortunately the recent takeover will result in a number
of………….. at the plant.
A rationalisations B dealings C redundancies D exchanges
3 You will see from the catalogue that our prices are
very……………….. .
A competitive B competent C completed D compatible
4 The price of the catalogue is…………………… against
your first order.
A removable B replaceable C rechargeable D refundable
5 All items in this range will be from 27 April.
A suitable B portable C available D accessible
6 The assignment arrives at the warehouse on Monday and
will be………………………. immediately.
A unloaded B emptied C undone D unsent
7 Unfortunately it is ……………………………….to keep
the complete range in stock.
A insufficient B uneconomic C uncertain D invalid
8
After
rationalisation
the
company
was…………………………….. and its order book was full.
A in good time B in good shape C in good spirits D in good
health
9 Artemis gives us a good price on this because they are our
……………………………...
A single B one C individual D sole
10 I would be grateful if you could let me have a
detailed………………….., including prices and delivery
terms.
A quotation B term C offer D order
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1 The company saw net profits fall as a result of the……………………. in the industry
world-wide.
A downfall B downgrade C downturn D downward
2 It is important for many small businesses to improve their credit…………………….. and
ensure customers
pay on time.
A limit B control C risk D term
3 All letters of credit should include an expiry date when payment is………………………. .
A called B complete C ready D due
4 We apologise for the difficulty we are experiencing in paying your
…………………..account.
A delayed B waiting C outstanding D owing
5 Thank you for your ………………………….of $500 which we received today.
A remittance B remission C remains D remuneration
6 The credit terms…………………….. that payment should be on presentation of the goods.
A remind B stipulate C agree D settle
7 It’s important to……………………………………… customer references when offering
credit.
A take on B take down C take up D take in
8 If you do not pay your bill within the next few days we will have to consider taking
legal……………………. .
A prosecution B action C instruction D presentation
9 He was offered a bank…………………….. when the company experienced financial
problems.
A payment B credit C overdraft D debt
10 If customers fail to…………………………. their bills you can be left with a serious cashflow problem.
A meet B charge C invoice D state
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UNIT 14 – REVIEW
TESTS
1 The company will be………………… a new range of health foods over the next few
months.
A promoting B encouraging C competing D supporting
2 Although prices have remained…………………. for the past two years we are expecting a
sharp rise in the near future.
A still B immobile C same D static
3 This particular………………………… of ice cream is supposed to contain very little fat.
A name B brand C label D product
4 Their products are only available through selected……………………….. .
A outlooks B outlets C outlines D outfits
5 The sales………………………………………. for the next few months is not particularly
optimistic.
A figures B drive C forecast D trend
6 The advertising company have come up with a catchy new ……………………………..for
the car.
A slogan B saying C image D feature
7 It’s going to be difficult to break …………………………the Far East market but I believe
it will become a key market for us.
A through B up C into D down
8 We’re hoping that the new software package is going to make a big…………………………
.
A effect B impact C influence D mark
9 Supermarkets often find point of sale……………………… very useful when introducing
new products to their customers.
A displays B exhibits C presentations D exhibitions
10 When deciding what kind of advertising to use it’s important to find out as much as
possible about your………………………. .
A companions B competitions C competitors D components
78
BIBLIOGRAPHY:
79
UNIT 15 – ACCOUNTANCY
UNIT 15
ACCOUNTANCY
15.1. INTRODUCTION
15.3. ACCOUNTANCY
15.1. INTRODUCTION
This unit presents some of the most important
vocabulary terms in accountancy
15. THE OBJECTIVES OF THE UNIT
Vocabulary introduction
Review of vocabulary
Practice
hours
80
2
Accounting and accountancy
Accounting
 Accounting involves recording and summarizing an
organization’s transactions or business deals, such as
purchases and sales, and reporting them in the form of
financial statements. In many countries, the accounting or
accountancy profession has professional organizations
which operate their own training and examination system,
and make technical and ethical rules: these relate to
accepted ways of doing things.
 Bookkeeping is the day-to-day recording of transactions.
 Financial accounting includes bookkeeping, and preparing
financial statements for shareholders and creditors (people
or organizations who have lent money to a company)
 Management accounting involves the use of accounting
data by managers, for making plans and decisions.
Auditing
Auditing means examining a company’s system of control
and the accuracy or exactness of its records, looking for errors
or possible fraud: where the company may have deliberately
given false information.
 An internal audit is carried out by a company’s own
accountants or internal auditors.
 An external audit is done by independent auditors:
auditors who are not employees of the company.
The external audit examines the truth and fairness of financial
statements. It tries to prevent what is called “creative
accounting” which means recording transactions and values
in a way that produces a false result –usually an artificially
high profit.
There is always more than one way of presenting accounts.
The accounts of British companies have to give a true and fair
view of their financial situation. This means that the financial
statements must give a correct and reasonable picture of the
company’s current condition.
Law, rules and standards
 In most continental European countries, and in Japan,
there are laws relating to accounting, established by the
government. In the US, companies whose stocks are
traded on public stock exchanges have to follow the rules
set by the Securities and Exchange Commission (SEC), a
government agency. In Britain, the rules, which are called
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standards, have been established by independent
organizations such as the Accounting Standards Board
(ASB), and by the accountancy profession itself.
Companies are expected to apply or use these standards in
their annual accounts in order to give a true and fair view.
 Companies in most English-speaking countries are largely
founded by shareholders, both individuals and financial
institutions. In these countries, the financial statements are
prepared for shareholders. However, in many continental
European countries businesses are largely founded by
banks, so accounting and financial statements are
prepared for creditors and the tax authorities.
Bookkeeping
Double-entry bookkeeping
Zaheer Younis works in the accounting department of a
trading company:
“I began my career as a bookkeeper. Bookkeepers record the
company’s daily transactions: sales, debts, expenses and so
on. Each type of transaction is recorded in a separate account
– the cash account, the liabilities account, and so on. Doubleentry bookkeeping is a system that records two aspects of
every transaction. Every transaction is both a debit – a
deduction – in one account and a corresponding credit – an
addition – in another. For example, if a company buys some
raw materials – the substances and components used to make
products – that it will pay for a month later, it debits its
purchase account and credits the supplier account. If the
company sells an item on credit, it credits the sales account,
and debits the customer’s account. As this means the level of
the company’s stock – goods ready for sale – is reduced, it
debits the stock account. There is a corresponding increase in
its debtors – customers who owe money for goods or services
purchased – and the debtors or accounts payable account is
credited. Each account records debits on the left and credits
on the right. If the bookkeepers do their work correctly, the
total debits always equal the total credits.”
BrE: debtors; AmE: accounts receivable
BrE: creditors; AmE: accounts payable
BrE: stock; AmE: inventory
Day books and ledgers
“For accounts with a large number of transactions, like
purchase and sales, companies often record the transactions in
day books or journals, and then put a daily or weekly
summary in the main double-entry records.
In Britain, they call the main books of accounts nominal
ledgers. Creditors – suppliers to whom the company owes
money for purchases made on credit – are recorded in a
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bought ledger. They still use these names, even though these
days all the information is on a computer.”
Note: In Britain the terms debtors and creditors can refer to
people or companies that owe or are owed money, or to the
sums of money in an account or balance sheet.
Balancing the books
“At the end of an accounting period, for example a year,
bookkeepers prepare a trial balance which transfers the debit
and credit balances of different accounts onto one page. As
always, the total debit should equal the total credit. The
accountants can then use these balances to prepare the
organization’s financial statements.”
Depreciation and amortization
Fixed assets
A company’s assets are usually divided into current assets
like cash and stock inventory, which will be used or
converted into cash in less than a year, and fixed assets such
as buildings and equipment, which will continue to be used
by the business for many years. But fixed assets wear out –
become unusable, or become obsolete – out of date, and
eventually have little or no value. Consequently fixed assets
are depreciated: their value on a balance sheet is reduced each
year by a charge against profits on the profit and loss account.
In other words, part of the cost of the asset is deducted from
the profits each year.
The accounting technique of depreciation makes in
unnecessary to charge the whole cost of a fixed asset against
profits in the year it is purchased. Instead it can be charged
during all the years it is used. This is an example of the
matching principle.
BrE: fixed assets; AmE: property, plant and equipment
Valuation
Assets such as buildings, machinery and vehicles are grouped
together under fixed assets. Land is usually not depreciated
because it tends to appreciate, or gain in value. British
companies occasionally revalue – calculate a new value for –
appreciating fixed assets like land and buildings in their
balance sheets. The revaluation is at either current
replacement cost – how much it would cost to buy new ones,
or at net realizable value (NVR) – how much they could be
sold for. This is not allowed in the USA. Apart from this
exception, appreciation is only recorded in countries that use
inflation accounting system.
Companies in countries which use historical cost accounting –
recording only the original purchase price of assets – do not
usually record an estimated market value – the price at which
something could be sold today. The conservatism and
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objectivity principles support this; and where the company is
a going concern, the market value of fixed assets is not
important.
Depreciation systems
The most common system of depreciation for fixed assets is
the straight-line method which means charging equal annual
amounts against profit during the lifetime of the asset (e.g.
deducting 10% of the cost of an asset’s value from profits
every year for 10 years).
Many continental European countries allow accelerated
depreciation: business can deduct the whole cost of an asset in
a short time. Accelerated depreciation allowances are an
incentive to investment: a way to encourage it. For example,
if a company deducts the entire cost of an asset in a single
year, it reduces its profits, and therefore the amount of tax it
has to pay consequently new assets, including the buildings,
can be valued at zero on balance sheets. In Britain, this would
not be considered a true and fair view of the company’s
assets.
Accounting and accountancy
What type of work does each person do, what is the name of each job? Look at A and B
to help you.
1. I record all the purchases and sales made by this department.
2. This month, I’m examining the accounts of a large manufacturing company.
3. I analyze the sales figures from the different departments and make decisions about
our future activities.
4. I am responsible for preparing our annual balance sheet.
5. When the accounts are complete. I check them before they are presented to the
external auditors.
Match the two parts of the sentence. Look at C to help you.
1. In Britain
2. In most of continental Europe and Japan
3. In the USA
4. In Britain and the USA
5. In much of continental Europe
a. Accounting rules are established by a government agency
b. Companies are mainly funded by shareholders and stockholders
c. Accounting rules are set by an independent organization
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d. The major source of corporate finance is banks
e. Accounting rules are set by the government
Bookkeeping
Match the words in the box with the definitions below. Look at A and B to help you.
credit creditors ledger stock debit debtors
1. An amount entered on the left-hand side of an account, recording money paid out
2. A book of accounts
3. Customers who owe money for goods or services not yet paid for
4. An amount entered on the right-hand side of an account, recording a payment received
5. Goods stored ready for sale
6. Suppliers who are owed money for purchases not yet paid for
Complete the sentences. Look at A, B and C opposite to help you.
1. ………………………………shows where money comes from and where it goes: it is
always transferred from one ………………………to another one. Every event is
entered twice – once as a credit and once a ………………… .
2. Most businesses record very frequent or numerous transactions in ………………..or
………… .
3. The main account books are called …………………., and the book relating to
creditors is called the………………………….. .
4. In order to prepare financial statements, companies do a
…………………………..which copies all the debit and credit balances of different
accounts onto a single page.
Complete the sentences using “debit” or “credit”. Look at A to help you.
1. If you buy new assets, you ………………the cash or capital account.
2. If you pay some bills, you …………………the liabilities account.
3. If you buy materials from a supplier on 60 day’s credit, you ………………the
purchases account and ……………….the supplier’s account.
4. If you sell something to a customer who will pay 3o days later, you ……………… the
sales account and …………………… the customer’s account.
Depreciation and amortization
Match the words in the box with the definitions below. Look at the A and B to help you.
appreciate obsolete current assets revalue fixed assets wear out
1.
2.
3.
4.
5.
6.
To record something at a different price
Assets that will no longer be in the company in 12 month’s time
To increase rather than decrease in value
Out of date, needing to be replaced by something newer
Assets that will remain in the company for several years
To become used and damaged
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Match the nouns in the box with the verbs below to make word combinations. Then use
some of the word combinations to complete the sentences below. Look at A, B, and C
opposite to help you.
cost
profits
fixed assets
value
market value
purchase price
Deduct (1)
Depreciate (1)
Record (2)
Reduce(2)
1. Because we ………………..the…………………., we don’t have to worry about the
market value of fixed assets.
2. To depreciate ……………………….., we ………………….part of
their……………………from profits each year.
3. Because land usually appreciates, companies do not generally………………….its
………………on the balance sheet.
Match the two parts of the sentences. Look at B and C opposite to
help you.
1. All fixed assets can appreciate if there is high inflation
2. Accelerated depreciation allows companies to
3. Fixed assets generally lose value, except for land,
4. The straight-line method of depreciation
5. Accelerated depreciation reduces companies’ tax bills,
a) which usually appreciates.
b) charges equal amounts against profits every year.
c) remove some extremely valuable assets from their balance sheets.
d) which encourages them to invest in new factories etc.
e) but historical cost accounting ignores this.
TESTS
Is accounting in your country based on standards, rules, laws or a mixture of these?
BIBLIOGRAPHY:
86
UNIT 16
16.1. INTRODUCTION
16.3. FINANCIAL STATEMENTS
16.1. INTRODUCTION
The importance of correct fill in of a financial statement
is of high importance for businesses
Types of financial statements
Fill in of financial statements
Practice
hours
87
2
UNIT 16 – FINANCIAL STATEMENTS
Balance sheet 1
Assets, liabilities and capital
Balance sheet, 31 December 20.. ($’000)
Current assets
3,500
Liabilities….. …………………………..…6,000
Fixed assets
6,500
Shareholders’ equity ………………….…...4,000
Total assets
10,000 Total liabilities and shareholders’ equity…10,000
! Equity=a stock or any other security representing an
ownership interest
Company law in Britain, and Securities and Exchange
Commission in the US, require companies to publish annual
balance sheets: statements for shareholders and creditors. The
balance sheet is a document which has two halves. The totals
of both halves are always the same, so they balance. One half
shows a business’ assets, which are things owned by the
company such as factories and machines, that will bring
future economic benefits. The other half shows the
company’s liabilities, and its capital or shareholder’s equity.
Liabilities are obligations to pay other organizations or
people: money that a company owes, or will owe at a future
date. These often include loans, taxes that will soon have to
be paid, future pension payments to employees and bills from
suppliers: companies which provide raw materials or parts. If
the suppliers have given the buyer a period of time before
they have to pay for the goods, this is known as granting
credit. Since assets are shown as debits (as the cash or capital
account was debited to purchase them), and the total must
correspond with the total sum of the credits – that is the
liabilities and capital – assets equal liabilities plus capital or
A=L+C
American and continental European companies usually
put assets on the left and capital and liabilities on the right. In
Britain, this was traditionally the other way round, but now,
most British companies use a vertical format, with assets on
the top and liabilities and the capital below.
BrE: balance sheet: AmE: balance sheet or statement of
financial position
BrE: shareholders’ equity: AmE: stockholders’ equity
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Shareholders’ equity
Shareholders' equity consists of all the money belonging
to shareholders. Part of this is share capital – the money the
company raised by selling its shares. But shareholders’ equity
also includes retained earnings: profits from previous years
that have not been distributed – paid out to shareholders – as
dividends. Shareholders’ equity is the same as the company’s
net assets, or assets minus liabilities.
A balance sheet does not show how much money a
company has spent or received during a year. This
information is given in other financial statements: the profit
and loss account and the cash flow statement.
The balance sheet 2. Assets
In accounting, assets are generally divided into fixed and
current assets. Fixed assets (or non-current assets) and
investments, such as buildings and equipment, will continue
to be used by the business for a long time. Current assets are
things that will probably be used by the business in the near
future. They include cash – money available to spend
immediately, debtors – companies or people who owe money
they will have to pay in the near future, and stock.
If a company thinks a debt will not be paid, it has to
anticipate the loss – take action in preparation for the loss
happening, according to the conservatism principle. It will
write off, or abandon, the sum as a bad debt, and make
provisions by charging a corresponding amount against
profits: that is, deducting the amount of debt from the year’s
profits.
In accounting, assets are generally divided into fixed and
current assets. Fixed assets (or non-current assets) and
investments, such as buildings and equipment, will continue
to be used by the business for a long time. Current assets are
things that will probably be used by the business in the near
future. They include cash – money available to spend
immediately, debtors – companies or people who owe money
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they will have to pay in the near future, and stock.
If a company thinks a debt will not be paid, it has to
anticipate the loss – take action in preparation for the loss
happening, according to the conservatism principle. It will
write off, or abandon, the sum as a bad debt, and make
provisions by charging a corresponding amount against
profits: that is, deducting the amount of debt from the year’s
profits.
Valuation
Manufacturing companies generally have a stock of raw
material, work-in-progress – partially manufactured
products – and products ready for sale. There are
various ways of valuing stock or inventory, but generally
they are valued at the lower cost or market, which
means whichever figure is lower: their cost – the
purchase price plus the value of any work done on their
items – or the current market price. This is another
example of conservatism: even if the stock is expected
to be sold at a profit, you should not anticipate profits.
Tangible and intangible assets
Assets can also be classified as tangible and intangible.
Tangible assets are assets with a physical existence – things
you can touch – such as property, plant and equipment.
Tangible assets are generally recorded at their historical cost
less accumulated depreciation charges – the amount of their
cost that has already been deducted from profits. This gives
their net book value.
Intangible assets include brand names – legally protected
names for a company’s products, patents – exclusive rights to
produce a particular new product for a fixed period, and trade
marks – names or symbols that are put on products and
cannot be used by other companies. Networks of contacts,
loyal customers, reputation, trained staff or “human capital”,
and skilled management can also be considered as intangible
as assets. Because it is difficult to give an accurate value for
any of these things, companies normally only record tangible
assets. For this reason, a going concern should be worth more
on the stock exchange than simply its net worth or net assets:
assets minus liabilities. If a company buys another one at
above its net worth – because of its intangible assets – the
difference in price is recorded under assets in the balance
sheet as goodwill.
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The balance sheet 3. Liabilities
Liabilities
Liabilities are amounts of money that a company owes, are
generally divided into two types – long term and current.
Long term liabilities or non-current liabilities include bonds.
Current liabilities are expected to be paid within a year of the
date of the balance sheet
They include:
- Creditors – largely suppliers of goods or services to
the business who are not paid at the time of purchase
- Planned dividends
- Deferred taxes – money that will have to be paid as
tax in the future, although the payment does not have
to be made now.
Accrued expenses
Because of the matching principle, under which transactions
and other events are reported in the periods to which they
relate and not when cash is received or paid, balance sheets
usually include accrued expenses. These are expenses that
have accumulated or built up during the accounting year but
will not be paid until the following year, after the date of the
balance sheet. So accrued expenses are charged against
income – that is, deducted from profits – even though the bills
have not yet been received or the cash paid. Accrued
expenses could include taxes and utility bills, for example
electricity and water.
Shareholders’ equity on the balance sheet
Shareholders’ equity is recorded on the same part of the
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balance sheet as liabilities, because it is money belonging to
the shareholders or not the company.
Shareholders’ equity includes:
- The original share capital (money from stock or shares
by the company
- Share premium: money made if the company sells
shares at above their face value written on them
- Retained earnings: profits from previous years that
have not been distributed to shareholders
- Reserves: funds set aside from share capital and
earnings, retained for emergencies or other needs
BrE: share premium
AmE: paid-in surplus
Are the following statements true or false? Find reasons for your answers in A and B
opposite.
1. British and American balance sheets shows the same information, but arranged
differently.
2. The revenue of the company in the past year is shown on the balance sheet.
3. The two sides or halves of a balance sheet always have the same total.
4. The balance sheet gives information on how much money the company has received
from sales of shares.
5. The assets total is always the same as the liabilities total.
6. The balance sheet tells you how much money the company owes
Complete the sentences.
•
•
•
•
•
……………………..are companies that provide other companies with materials,
components, etc.
…………………….are profits that the company has not distributed to shareholders.
…………………..are things a company owns and uses in its business.
…………………..consist of everything a company owes.
…………………..consists of money belonging to a company’s owners.
Make word combinations using a word from each box.
Then use the word to complete the sentences below.
DISTRIBUTE GRANT OWE PAY RETAIN
LIABILITIES MONEY PROFITS EARNINGS CREDIT
1. We ……………a lot of our …………because we don’t …………any of our
……………….to the shareholders.
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2. Most businesses have customers who …………………, because they ………….them
30 to 60 days’………….
3. We have a lot of ……………..that we’ll have to …………..later this year.
Find words and expressions in A, B and C with the following meanings:
1. An amount of money that is owed but probably won’t be paid
2. The accounting value of a company (assets minus liabilities)
3. A legal right to produce and sell a newly invented product for a certain period of time
4. The historical cost of an asset minus depreciation charges
5. The amount a company pays for another one, in excess of the net value of assets
6. A legally protected word, phrase, symbol or design use to identify a product
7. To accept that a debt will not be paid
8. To deduct money from profits because of debts that will not be paid
9. Products that are not complete or ready for sale
10. The amount of money owed by customers who have bought goods but not yet paid for
them
Match the two parts of the sentences. Look at A, B and C to help you.
1. A company’s value on the stock exchange is neatly always
2. Brand names, trade marks, patents, customers, and qualified staff
3. Cash, money owed by customers, and inventory
4. Companies record inventory at the cost of buying or making the items
5. Companies write off bad debts, and make provisions
6. Land, buildings, factories and equipment
a. Are current assets.
b. Are examples if intangible assets.
c. Are examples of tangible, fixed assets.
d. by deducting the amount of profits.
e. higher than the value of its net assets.
f. not the current market price, whichever is lower.
Sort the following into current, fixed and intangible assets. Look at A and C to help you.
buildings goodwill stock cash in the bank
human capital land debtors investments reputation
Current assets Fixed assets Intangible assets
………………. ……………..
……………….
………………. ……………… ………………
………………. ……………… ……………..
Are the following statements true or false? Find reasons for your answers in A, B and
C opposite.
1. A current liability will be paid before the date balance sheet.
2. A liability that must be paid in 13 months time is classified as long-term.
3. A company’s accrued expenses are like money an individual saves to pay bills in the
future
4. Shareholders' equity consists of the money paid for shares, and retained earning
5. If companies retain part of their profits, this money no longer belongs to the owners.
6. Companies can sell shares at a higher value than the one stated on them
93
Find words in A, B and C opposite with the following meanings.
1. Money that will be paid in less than 12 months from the balance sheet date
2. The money that investors have paid to buy newly issues shares, minus the shares’ face
value
3. Delayed, put off or postponed until a latter time
4. Build up or increased over a period of time
TESTS
Think of a company you know well. Which are its most valuable assts?
BIBLIOGRAPHY:
94
UNIT 17
PRICING
17.1. INTRODUCTION
17.3. PRICING
17.1. INTRODUCTION
Knowing the importance of prices on the market is
crucial in developing a good business
Pricing – vocabulary
Pricing – understanding vocabulary
Practice
hours
95
2
UNIT 17 – PRICING
 Companies’ prices are influenced by production and
distribution costs, both direct and indirect.
 Mark-up or cost – plus pricing: some firms just
calculate the unit cost and add a percentage.
 Most companies consider other factors, like demand
competitor’s prices, sales targets and profit targets.
 Market penetration pricing: some companies launch
products at a price that only gives them a very small
profit, they want market share. This allows them to
make profits later because of economies of scale, e.g.
Bic pens, lighters and razors, Dell PCs.
 Market skimming: some customers will pay almost
any price, e.g. for a new high-tech product, so the
company can charge a really high price, then lower it
to reach other market segments, e.g. Intel with new
microchips.
 If a company has a higher demand for its products
than it’s able to supply, it can raise its prices. This is
other done by monopolists.
 Prestige pricing or image pricing: products positioned
at the luxury end of the market need to have a high
price: the target customer probably won’t buy if they
think the price is too low. e.g. BMW Rolex
 Going – rate pricing: if a product is almost identical to
competitor’s products, companies may charge the
same price
 Prestige pricing or image pricing: products positioned
at the luxury end of the market need to have a high
price: the target customer probably won’t buy if they
think the price is too low. e.g. BMW Rolex
 Going – rate pricing: if a product is almost identical to
competitor’s products, companies may charge the
same price
 Unit cost: the expenses involved in producing each
individual product
 Sales target / profit target: the quantity of saves /
profit a business wants to achieve
 Launch: to introduce a product into the market
 Market share: the proportion of total sales in the
market
 Economies of scale: the cost of producing each unit
96
decreases as the volume of production increases
 Market segment: groups of consumers with similar
needs and wants
 Monopolists: companies that are the only supplier of a
product or service
 Target customers: the customers whose needs the
company wants to satisfy
Retail pricing strategies
- loss-leader pricing: retailers (e.g. supermarkets) often
offer some items at a very low price that isn’t
profitable, to attract customers who then buy more
products which are profitable.
- Odd pricing or odd-even pricing: many producers and
retailers believe a customer sees a price of € 29.95 as
in the €20 price range rather than the €30 one.
- Elasticity: demand is elastic if sales respond directly
to price variations – e.g. if the price is cut, sales
increase. If sales remain the same after a change in
price, demand is inelastic.
Match the pricing strategies in the box with the statements below.
going-rate pricing
mark-up pricing
loss-leader pricing
odd pricing
market penetration
prestige pricing
market skimming
1. Because of our famous brand name and our reputation for quality, we can charge a
very high price.
2. We never use whole numbers like $10 or $20. our prices always end in 95 or 99 cents.
3. We launch our products at high prices, and then reduce them a few months later to get
more customers.
4. We just get the cost accountants to work out how much it costs to make the product,
and add our profit.
5. Demand isn’t very elastic, so we charge the same price as our main competitors.
We actually sell a few products at breakeven price, but this brings in customers who
always buy a lot of other things.
We charge a really low price at first, because we want to sell many units of the product
as possible.
97
UNIT 17 – PRICING
TESTS
Can you think of at least one producer or retailer that uses each of the pricing strategies
mentioned here?
BIBLIOGRAPHY:
98
UNIT 18
INVESTMENTS
18.1. INTRODUCTION
18.3. INVESTMENTS
18.1. INTRODUCTION
Making good investments can bring high profits to the
company. This is the reason why understanding and using the
specific English vocabulary is very important. The present
unit deals with investment vocabulary.
What should companies invest in?
Investment vocabulary
Practice
hours
99
2
UNIT 18 – INVESTMENTS
Japanese companies invest in Vietnam
Japanese companies are flocking to Vietnam in record
numbers seeking cheap labour and growth markets and
business is booming for the Hanoi branch of Izakaya Yancha,
a Japanese restaurant chain.
“Many Japanese men in their 40s like to hang out here
with their Vietnamese girlfriends after going to karaoke,”
says Shinya Nakao, the restaurant’s manager. “We expect
more Japanese companies to move to Vietnam, so we’re
planning to open a second branch this year and maybe some
more after that.”
It may be bad news for these executives’ wives and
children, who are increasingly being left at home as
companies cut back once-generous expatriate packages. But
the rising tide of Japanese investment is welcome in Vietnam,
where several years of macroeconomic instability have dented
confidence among investors.
A record 208 Japanese companies set up in Vietnam last
year, pledging to invest just over $1.8bn, according to Jetro,
the Japanese trade promotion body. In 2010, 114 Japanese
companies came to Vietnam, vowing to invest $2bn.
While Japan still ranks behind Taiwan, South Korea and
Singapore in terms of registered foreign investment capital in
Vietnam, Japan is leading the way in terms of implemented
investments, says Hirokazu Yamaoka, Jetro’s chief
representative in Vietnam.
The latest wave of investment, which has been propelled
by the strong yen, is part of a broad push into emerging
markets backed by the Japanese government, which is
concerned about low growth and an ageing population at
home.
Tony Foster, managing partner of the Vietnam office of
Freshfields Bruckhaus Deringer, the law firm, says Japanese
companies have been “jolted into action” since the earthquake
that struck the east of the country in March.
“Japanese companies are realising that they’re not going
to survive just in Japan,” says Mr Foster, who advised
Mizuho, the banking group, last year on its $567m acquisition
of a 15 per cent stake in Vietcombank, one of Vietnam’s
biggest state-controlled institutions. “The Japanese
government is also supporting diversification into Vietnam
for geopolitical reasons.”
Export-focused manufacturers such Bridgestone, the
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world’s biggest tyre maker, and Panasonic, the electronics
group, are setting up factories in Vietnam to take advantage
of cheap wages. Unskilled workers in Vietnam are typically
paid a half to a third of the $300 a month their counterparts
might receive in the manufacturing clusters of southern
China.
Companies such as Sapporo, the brewer, Mizuho, and
Unicharm, which makes female hygiene products, are
attracted by rapid domestic growth in Vietnam, which has one
of the fastest-expanding middle classes in Asia, according to
the Asian Development Bank.
“Until recently, many Japanese manufacturers were
looking to China, but it is more and more difficult because the
currency is strong and wage costs are rising rapidly,” says Mr
Yamaoka. “There are also political issues between Japan and
China.”
A senior executive from a Japanese trading house with a
presence in Vietnam says Japanese companies like the
political stability of one-party, Communist-ruled Vietnam,
which comes free of the historical animosity and present-day
rivalry that looms over China-Japan relations.
However, wages and social tensions are also rising in
Vietnam, which suffered a record number of labour strikes
last year, as average annual inflation exceeded 18 per cent,
the highest rate in Asia.
But companies such as Tamron, which makes lenses for
the world’s leading camera brands, are not deterred by this
economic instability.
“Vietnam is very friendly for Japanese investors and the
wage levels are acceptable,” says Shoji Kono, a corporate
vice-president at Tamron, which plans to build a Y1bn
($13m) factory near Hanoi that will eventually employ 2,000
people.
Tamron set up its first overseas factory in Foshan, in the
industrial heartland of China’s Pearl River Delta. It is one of
many global manufacturers, not just Japanese, that want to
diversify their production away from China to cut costs and
reduce their dependence on one manufacturing base – a risk
exposed last year by the floods in central Thailand and the
earthquake and tsunami in Japan.
Western diplomats say Japanese companies investing in
Vietnam benefit from high-level political backing. Japan is
one of Vietnam’s largest aid donors and political and security
ties between the two countries are growing as both look
anxiously over their shoulder at an ever more assertive China.
Japan provided Vietnam with Y100bn of official
development assistance in 2010, about a third of the total it
provided to the whole of south-east Asia. Much of Japan’s aid
is focused on infrastructure and Tokyo is not shy about
directing its cash toward projects that directly benefit
101
Japanese companies, such as the large, new Lach Huyen port
in Haiphong, northern Vietnam.
While there are many opportunities, conditions in
Vietnam are far from ideal for foreign investors. In addition
to widespread corruption, red tape and high inflation, the
country’s infrastructure is still underdeveloped.
Tamron, along with many manufacturers, will be
installing generators to protect against possible power cuts.
But, says the executive from the Japanese trading house,
Japanese companies – and their shareholders and boards – are
more willing than their western counterparts to adapt to tough
conditions in developing countries and play the long game.
“Japanese companies have a more long-term view,” he
says. “We accept the situation, consider the best way forward,
and situation, consider the best way forward, and don’t
complain to anybody.”
(ft.com)
Bid
The price a buyer is willing to offer for shares
in a company.
Stocks of leading companies with a
reputation for stable growth and earnings.
Certificate issued by companies and
governments to its lenders
Money and other property of companies used
in transacting the business
Blue Chip Stocks
Bond
Capital
Capital stock
All shares representing ownership of a
company
Products such as agricultural products and
natural resources (wood, oil and metals)
that are traded on a separate, authorized
commodities exchange
A portion of a company's earnings which is
paid to the shareholders/stockholders
on a quarterly or annual basis.
The value of stocks and shares; the net value
of mortgaged property
Stocks and shares which represent a portion
of the capital of a company.
Contracts to buy or sell securities at a future
Commodities
Dividend
Equity .
Equities
Futures
102
date.
All those who have access to inside
information concerning the company.
Buying or selling with the help of
information know only to those connected
with the
business.
Initial Public Offering - selling part of a
company on the stock market.
Put into circulation a number of a company's
shares for sale.
The debts and obligations of a company or an
individual.
Agreement by which a bank or building
society lends money for the purchase of
property,
such as a house or apartment. The property
is the security for the loan.
Savings fund that uses cash from a pool of
savers to buy securities such as stock,
bonds and real estate.
The right to buy and sell certain securities at
a specified price and period of time.
Transferable certificates showing ownership
of stock, bonds, shares, options, etc.
Owner of shares
A licensed professional who buys and sells
stocks and shares for clients
in exchange for a fee, called a 'commission'.
Money raised by companies to finance new
ventures in exchange for percentage
ownership.
Return on investment shown as a percentage.
Insider
Insider dealing/trading
IPO
Issue
Liabilities
Mortgage
Mutual fund
Option
Securities
Shareholder.
Stockbroker
Venture capital
Yield
TESTS
In your opinion what type of investment would you do and why?
BIBLIOGRAPHY:
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104
UNIT 19
BUDGETING
19.1. INTRODUCTION
19.3. BUDGETING
19.1. INTRODUCTION
Budgeting is of great importance in business practice
and the awareness of the knowledge of vocabulary related to
it offers the necessary information
Budgeting vocabulary
Budgeting understanding
Practice
hours
105
2
UNIT 19 – BUDGETING
Bullet v budget
Can low-cost airlines beat bullet trains?
THE world’s busiest train route, and one of the busiest air
routes, is between Tokyo and Osaka, Japan’s two biggest
metropolitan areas. On that corridor, the shinkansen, as
Japan’s bullet trains are known, were born in 1964. They
whizz 120,000 passengers a day smoothly from one place to
another, on trains that leave every ten minutes. Although
humans, not robots, are at the controls, the average delay is a
miraculous 36 seconds. To take all those passengers by air
would require 667 aircraft, each with 180 seats, or five times
Japan’s fleet of Boeing 737s, estimates Macquarie, an
investment bank.
Undeterred, between March and August three low-cost
airlines will have started operations in Japan. It would be a
miracle if they could help hammer down train and plane fares
in Japan, which are excruciating. For example, a one-way
shinkansen ticket from Tokyo to Osaka costs ¥14,000 ($170),
and there are no discounts for return fares or for booking
early. But compared with Europe and other parts of Asia,
where budget airlines have quickly gained market share, in
Japan the low-cost model is expected to take time to take off.
There are three main reasons for that, analysts say. First,
all three newcomers have established parents. Peach, which
started flying in March, and Air Asia Japan, which starts in
August, are part-owned by ANA, one of Japan’s two main
carriers. Jetstar Japan, which launches operations in July, is
one-third owned by Japan Airlines (JAL). Such ties have
usually hobbled low-cost airlines elsewhere: incumbents hate
to cannibalise their own business. (Australia, where Qantas
owns Jetstar, is an exception.) Analysts say the upstarts will
thrive only if ANA and JAL step out of their way, letting
them shake up the domestic tourist market. The big boys
could then concentrate on long-haul and business travel.
Second, the budget airlines may struggle to make similar
profits to their lucrative low-cost counterparts in other
countries because, despite deregulation, airport costs and fuel
taxes in Japan remain among the highest in the world. That
could limit expansion, though Jetstar Japan is boldly aiming
for 100 aircraft by the end of the decade, up from three at its
launch.
Third, it will be hard to convince finicky Japanese
passengers that low fares make up for the lack of comfort and
convenience they are used to. Jetstar and Air Asia are using
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Narita airport as their hub, which is expensive and timeconsuming to get to from Tokyo. The main carriers use
Haneda, which is closer to the capital and cheaper. The
shinkansen zoom out of the city centre, with no reservations
needed.
Miyuki Suzuki, the boss of Jetstar Japan, says her
company’s strategy is to use low fares to persuade people to
make trips they would otherwise not have made at all. More
tourists, she hopes, will start visiting Japan’s most far-flung
islands. She says she will not go head-to-head with the
shinkansen (though her airline will fly between Tokyo and
Osaka). Peach and Air Asia Japan have their sights not only
on domestic flights but also on the route between Tokyo and
Seoul, the nearest foreign capital. They may be eyeing the
East Asian market, where low-cost penetration lags behind
the rest of Asia.
Alas, none of Japan’s new budget carriers is expected to
be as cut-throat as low-cost carriers elsewhere. Ms Suzuki
says Jetstar Japan will allow its passengers to book through
travel agents, which are still ubiquitous, as well as online.
“This is Japan,” she says, with a sympathetic air unusual for a
budget-airline boss. “It’s not all going to be self-service.”
(economist.com)
Read all the answers first. Choose the best one to complete the sentences:
1. ___ Which of these is not a source of income?
a. Allowance
b. Salary
c. Interest
d. Savings *
2. ___ Which of these are not expenses?
a.Wages *
b. Gifts
c. Things we need
d. Things we want
3. ___ What can help you buy your future wants and needs?
a. Impulse buying
b. Expenses
c.Overspending
d. Savings *
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UNIT 19 – BUDGETING
4. ___ A budget helps you to
a. buy everything you want.
b. balance your income with your expenses.*
c. overspend.
d. earn more money.
5. ___ Which of these is not a reason to budget?
a. To put you in control of your money.
b. To determine how much money you have to spend.
c. To increase your income. *
d. To decrease your impulse spending
TESTS
What make a good budget strategy?
BIBLIOGRAPHY:
108
UNIT 20
REPORTED SPEECH
20.1. INTRODUCTION
20.3. REPORTED SPEECH
20.1. INTRODUCTION
The correct use of the Reported Speech is very
important in Business English
Understanding the rules of formation for the Reported
Speech
Understanding the use of the Reported Speech
Practice
hours
109
2
UNIT 20 – REPORTED SPEECH
Vorbirea indirectă reprezintă modalitatea prin care
vorbitorul reproduce cuvintele altei persoane (The indirect
speech represents the means of the speaker to express the
words uttered by another person)
În acest proces timpurile sunt modificate (In this process
the tenses are changed):
Direct
Speech
Indirect
Speech
(vorbirea directă)
(vorbirea indirectă)
Present Simple
Past Simple
Present Continuous
Past Continuous
Present
Perfect
Past Perfect Simple
Simpl
Past Simp e
ast
Perfect
Sim le
Past C ntinuous
Past
Perfect
Continuous
Future
Future in the Past
Present Simple →Past Simple
I feel happy. → He said he felt happy.
Present Continuous→ Past Continuous
I’m sleeping now. → He said he was sleeping then.
Present Perfect Simple→ Past Perfect Simple
I have just had a coffee→ He told me he had just had a
coffee.
Past Simple → Past Perfect Simple
I talked to him yesterday. →He confessed to me he had
talked to him Yesterday.
Past Continuous → Past Perfect Continuous
What were you doing yesterday? → He asked me what I
had been doing the day before.
Future→ Future in the Past
I’ll be washing the dishes. → He said he would be
washing the dishes.
Observaţie (Observation):
Future in the Past se formează:
Forma afirmativă (affirmative form)
Subiect + should /would + be+ verb ing
I’ll be writing to you soon → She said she would be
writing to me soon.
110
Adverbele sau structurile adverbiale de timp şi loc
necesită a fi schimbate (Adverbs or adverbial phrases of time
and place need to be changed).
Direct
Speech
Indirect
Speech
(vorbirea directă)
(vorbirea indirectă)
here
the e
in this place
in that place
now
then
today
(on) that day
yesterday
(on) the previous
day
(on)
the
day
before
la t
(on) the prev ous
night/evening/week
night/evening/ eek
to orrow
next
day/the
following day
next
day/next
the
fol owing
week
day/week
the
day after
two days later
tomorrow
after two days
ago
before
this week/month
that week/month
I. Puneţi următoarele propoziţii la vorbirea indirectă (Put the following sentences into
indirect speech):
1. I live in London.
………………………………………………………………………………………………
2. I have talked to Jim this morning.
………………………………………………………………………………………………
3. Jim and Monique have been quarrelling for ages.
………………………………………………………………………………………………
4. I had had this information.
………………………………………………………………………………………………
5. Last night I arrived late at home.
………………………………………………………………………………………………
6. I will ask him to give me the phone number.
………………………………………………………………………………………………
7. That tea was expensive.
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UNIT 20 – REPORTED SPEECH
……………………………………………………………………………………………..
8. Whenever I go to America I bring presents for my children.
…………………………………………………………………………………………….
II. Aici este scenariul unor secvenţe din filmul lui Stan şi Bran “Going Bye-Bye”.
Relatează povestea folosind vorbirea indirectă (Here is a script of some scenes in the Laurel
and Hardy’s film “Going Bye-Bye”. Tell the story using indirect speech):
Judge: Ladies and gentlemen of the jury have reached a verdict?
Head of jury: Yes your honour. We the jury find the defendant, guilty as charged.
Judge: Before I pass sentence I want to thank you gentlemen, on behalf of the state, for the
valuable evidence you have furnished this court in bringing this criminal to justice. Its men
like you this country should be proud of.
Judge: The defendant will now stand up.
Judge: Has the defendant anything to say on his behalf?
Defendant (Butch): No
Judge: I hereby sentence you to prison for the rest of your natural life.
Stan Laurel: Aren’t you going to hang him?
Defendant: You rats. I’ll get even with you even if it’s the last thing I ever do.
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
TESTS
1. Direct speech :
David : "There is an excellent band playing later on."
Reported Speech : David said ...
2. Direct speech :
Christine : "I saw Amy at the bank on Monday."
Reported Speech : Christine said ...
3. Direct speech :
The driver : "I'm going to turn right at the traffic lights."
Reported Speech : The driver said ...
4. Direct speech :
Jonathan: "I've returned the dictionary to the library".
Reported Speech : Jonathan said ..
5. Direct speech :
The doctor : "I'll send you the results as soon as they arrive."
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Reported Speech : The doctor said ...
6. Direct speech :
Reported Speech :
Caroline : "Will you come to my party on Saturday?"
Caroline ...
7. Direct speech :
Reported Speech :
Shop assistant: "Are you looking for something special?"
The shop assistant ...
8. Direct speech :
Reported Speech :
Jack : "I'll lend you my grammar book if you think it will help.
Jack said ...
BIBLIOGRAPHY:
113
UNIT 21 – STOCK MARKET
UNIT 21
STOCK MARKET
21.1. INTRODUCTION
21.3. STOCK MARKET
21.1. INTRODUCTION
Learning about stock market is helping in developing
the business
Defining stock market
Stock market vocabulary
Practice
hours
114
2
An Initial Public Offering (IPO) takes place when a
private company raises capital by introducing its shares on the
stock market and becomes a public limited company (plc).
Before a private company can go public, it must comply with
the requirements of regulators of the stock exchange
(Securities and Exchange Commission in the US) and file an
application giving full details of its accounts. Most companies
prefer to use the services of an investment bank to manage or
underwrite the offering.
Read the following statements. Which show the
advantages of going public and which show the
disadvantages?
1. Management will face pressure to produce positive
quarterly results.
2. Outsiders may impose their views on management.
3. The value of the business may suddenly fluctuate.
4. More people will be aware of the company’s
existence.
5. The company will be obliged to disclose financial
information.
6. The company can obtain finance without having to
repay a debt.
7. Employees can exercise stock options.
8. Capital will be available for expansion.
Work in pairs. Discuss the following statement made by
Richard Branson before he decided to take Virgin Blue public
and answer the questions below.
The delightful thing about not being a public company is
that we don’t have to worry about foolish analysts who say
stupid things.
1. Why do you think Richard Branson changed his
mind?
2. When is better for a company to go public rather than
stay private?
3. How would you decide whether or not to buy the
shares of a company that was going public?
4. Can you think of an example of a company that has
gone public? How successful has it been?
Read the extract from a letter written by Larry Page and
Sergey Brin, the founders of Google, the internet search
115
company.
Google is not a conventional company. We don’t intend to
become one. Throughout Google’s evolution as a privatelyheld company, we have managed Google differently. We
have also emphasized an atmosphere of creativity and
challenge, which has helped us provide unbiased, accurate
and free access to information for those who rely on us
around the world.
What do you know about the company?
Read the text and answer the questions.
1. What is unusual about the way Google organised its
IPO?
2. What are the two principles on which Google is
founded?
Glossary
Drop dead – mind its own business
Racket (US shakedown) - a way of obtaining money by
fraud or deception
Kickbacks (Br backhanders) – sums of money paid to
someone in exchange for a favour
Hype – promote something with exaggerated claims
Gun – attempt to defeat
Brains will trump brawn – intelligence will win against
power
Status quo – the situation as it is
Larry Page and Sergey Brin, the founders of Google, are
doing something that has never been risked before. Not by
Microsoft’s Bill Gates. Not even by Apple’s Steve Jobs. The
Google guys are telling Wall Street to drop dead.
Those entrepreneurs from an earlier era played the game of
going public the way it had always been played. Before
Google came along, when a company was ready to sell
shares, it hired big Wall Street investment firms such as
Goldman Sachs and Morgan Stanley. The firms offered the
stock to their favourite customers at a big discount.
The privileged few were guaranteed quick profits, but the
company received less money for its IPO. And the newly
public company paid a high price for the little honour. The
investment firms’ commission was typically as high as 7 per
cent of the money raised. That fee could run into the hundreds
of millions of dollars.
Page and Brin aren’t putting up with this racket. Their
plan is to offer Google’s shares to anyone willing to pay the
market price. Google will receive an estimated $100 million
more by handling the sales this way. And while major firms
116
like Morgan Stanley will be managing the auction, their role –
and their fees – will be much diminished.
Why did such famous risk-taker as Gates and Jobs put up
with the Wall Street shakedown? They didn’t have much
choice. The brokerages were able to act like a cartel because
they held a near monopoly of information. CEOs had no idea
what was happening to their stock price unless they called
their brokers. And the buyers of equities were mostly big
financial institutions – pension funds, insurance companies –
that paid commissions to the big brokerage firms to research
and advice. The investment houses essentially gave kickbacks
by cutting them in on IPOs.
Cracks began to appear in that cartel in the late 1990s,
when WR Hambrecht & Co. and Wit Capital pioneered the
auction approach. But few entrepreneurs chose these Wall
Street reformers for their IPOs. Why? For one thing, many
founders and CEOs picked traditional investment banks to
take them public because they wanted the services of the
firms “analysts” – who notoriously hyped clients’ stocks
under the guise of proving objective stock research. Page and
Brin built Google by applying their hyper-mathematical logic
to the internet; now they have focused the same rationality on
the IPO industry. In so doing, they might revolutionize Wall
Street just as they revolutionized the Internet.
Of course, the huge popularity of Google’s brand makes it
possible for the company to bypass Wall Street. The Google
guys are relying on the fact that by the time the public come
to decide whether to buy, they will have seen that the old way
was collusive and corrupt while their way is rational and fair.
That’s a great leap of faith. Alienating the powers in
investment banking has risks too. The first time the newly
public company reports disappointing results. Wall Street will
be a very lonely and dangerous place, where everyone is
gunning for Google and few allies are to be found.
Page and Brin are going to take chance.
Google is based on the twin principles that will trump
brawn and that a democracy will always supplant a hierarchy.
This democratic impulse forms the very core of Google’s
technology; so it goes with the IPO: Google has put its future
in the hands of the people, not Wall Street. Larry and Sergey
are not your typical courageous leaders. But they are at the
forefront of a new breed of technocrat kings who are
gambling that they can outthink – and – the status quo.
117
Read the text again and study the following statements. Which refer to the way that
companies traditionally issued shares, which refer to the public auction approach adopted by
companies like Google and which apply to both?
Traditional Auction
Both
1. Stocks are sold directly to the public.
2. The company pays fees to a brokerage firm.
3. Stocks are sold mainly to financial institutions.
4. Shares are sold at reduced price to favour customers.
5. The company receives more money from the sale.
TESTS
How to Get Some of the Highest Yields in the World for as Little Risk as Possible
Here's an old Wall Street saying that investors should "Sell in May and go away." While
there's no identifiable rationale to explain why that should be good advice, there is an element
of empirical truth. A study by PlexusAsset management shows that since 1950 the returns for
the S&P 500 in the months of November through May were 8.1%, compared with just 2.4%
for the period from May through October. [James Brumley, one of our talented analysts,
recently warned investors about putting too much stock in this, though. Go here to read his
take
.]
The MSCI WorldIndex , a popular index of global stock market performance, shows a similar
seasonal pattern. In fact, returns for the MSCI World Index in the months of May through
October over the same post-1950 era are negative. The old adage to sell in May has gained
even more prominence over the past two years, as stocks have endured gut-wrenching
corrections in the summers of 2010 and 2011, only to enjoy powerful year-end and New Year
rallies.
I'd never recommend managing your portfolio using simplistic seasonal rules, but it's only
prudent for investors to contemplate the potential for at least a short-term correction in global
equity markets.
118
BIBLIOGRAPHY:
119
UNIT 22 – BUSINESS RISKS
UNIT 22
BUSINESS RISKS
22.1. INTRODUCTION
22.3. BUSINESS RISKS
22.1. INTRODUCTION
Taking a risk in business is common and knowing the
correct vocabulary helps.
Business Risks vocabulary
Understanding the vocabulary
Practice
hours
120
2
Reduce Supply Chain Interruption Risks – Automate
Year-end business reviews for 2011 point to a weak link
in corporate practices that can bring even the mightiest of
organizations to its knees in a time of crisis. That weak link is
the lack of multiple suppliers that are dependable and readily
available.
In his excellent Wall Street Journal story, "Reinforcing
the Supply Chain," on January 11, 2012, Maxwell Murphy
highlighted the vulnerabilities of companies that depend upon
a single supplier only to have that supplier rendered
powerless to deliver due to a disaster, such as the earthquake
and tsunami in Japan, or the Arab Spring uprisings that closed
businesses in the Middle East.
Closer to home, we don't have to look any farther than the
tornadoes that struck Joplin, Missouri, and Tuscaloosa,
Alabama, and Hurricane Irene flooding that swallowed many
parts of the Northeast. All told, the United States had a record
10 weather catastrophes in 2011 costing more than a billion
dollars -- five separate tornado outbreaks, Hurricane Irene,
two different major river floods in the Upper Midwest and the
Mississippi River, drought in the Southwest and a blizzard
that crippled the Midwest and Northeast.
With many disasters, natural and otherwise during 2011,
organizations are realizing the frailties of small inventories,
just in time deliveries and single vendor partnerships. These
procurement strategies may have looked good on paper at one
time, but are now proving to have the potential for grave
negative consequences, especially when the supply chain is
cut by severe weather, strikes or other conditions.
Organizations most vulnerable during disasters are those
that insist on having just a few suppliers and resist automating
their procurement process. You may have the best supplier in
the world, but if it is underwater you are stuck without a
supplier. You are left scrambling to find a supplier
somewhere to deliver what you need, even if the quality
doesn't measure up to what you really expect.
That is where automated procurement technology fits in.
With automated vendor selection technology, for instance,
buyers are not limited to reliance on single sources of supply
even while gaining the efficiencies and cost savings
associated with single source partnerships. Buyers using
automated vendor selection procurement obtain the best price
121
from the best qualified supplier for the specified product or
service needed at the exact time required (with zero cost for
inventory).
As a single-source ordering platform that manages a
multitude of buyer qualified suppliers, automated vendor
selection technology requires that the buyer develop a
database of at least two dozen trusted suppliers. Each time the
buyer submits job specifications, the computer matches the
specs with the supplier pool and only those that are best
qualified to do the work are invited to bid. Not only does this
give the buyer a diverse field of pre-qualified suppliers from
many geographic areas, it creates a competitive bidding
environment that results in the buyer paying 25% to 50% less
for the procured good or service. The web-based
communications and workflow system used for maximum
automated vendor selection benefit delivers total
transparency, strong risk management and quality controls,
full accountability and complete documentation and
archiving.
Automation is changing the efficiency and cost
effectiveness with which organizations procure what they
need to sustain their businesses. Common sense would tell
you that this is the course to take. But if that is not enough,
the Aberdeen Group reported that the majority of the 130
organizations that participated in its 2011 procurement survey
agreed companies should adopt more technology to automate
procurement. A.T. Kearney's 2011 Assessment of Excellence
in Procurement study of more than 185 leading companies
across 32 different industries found that procurement leaders
excel at managing risk. By contrast, just one in five
procurement followers use risk management activities in
procuring goods and services-which means about 80% of
companies are a natural disaster away from a major
disruption.
(businessweek.com)
PROFITS
COME FROM TAKING BUSINESS RISKS
You face risks every day.
You cannot cross the street without some danger that you will be hit by a car. Getting out
of bed, driving a car, and opening a business all involve SOME risk. Risk is simply the
possibility of damage, injury, or loss.
122
Like individuals, business owners need to protect themselves against the risks they face. It
is important for entrepreneurs to recognize potential risks they face and prepare effective
strategies to deal with them. It is also useful for entrepreneurs to design "contingency plans",
or alternative courses of action. Contingency plans show that the entrepreneur is sensitive to
important risks and is prepared to handle risks as they occur.
MARKETS:
Some of the risks that almost all businesses face involve competition, price changes, style
changes, competition from new products, and changes from fluctuating economic conditions.
ACCIDENTS:
Businesses also face risks beyond these market and economic shifts. For example, a
merchandise shipment of tennis shoes may be destroyed in transit. A warehouse may burn
down and large amounts of expensive inventory may be lost. Events like these threaten the
security of a business. They cost money, and they may cause a business to fail. First,
entrepreneurs must be able to identify all the possible risks they face, then decide upon
preventive measures to eliminate or reduce the impact of the risks.
As an entrepreneur, there are two primary types of risk that you will face: speculative risk
and pure risk.
SPECULATIVE RISK
is uncertainty as to whether an activity will result in a gain or a loss. Risks, such as
building a plant that turns out to have the wrong capacity or keeping an inventory level that
turns out to be too high or too low, are speculative risks. Speculative risk is unavoidable and
is inherent in the nature of the private enterprise system
PURE RISK
is uncertainty as to whether some unpredictable event that can result in loss will occur.
Pure risk can result only in loss, never in gain. This kind of risk consists of hazards such as a
fire or a hurricane, death of key employees, or customer injuries on the premises of the
business. Pure risk exists when the possibility of loss is present, but the extent of the possible
loss is unknown. Pure risk is different from speculative risk because speculative risk carries
the possibility of gain as well as loss.
When you start a business, you automatically assume risk; you intend to make money, but
you also know that you can lose money. Not starting a business at all is the only sure way to
avoid the risk. Successful entrepreneurs, however, take control over how much risk they are
willing to accept and then develop plans to control the remaining risks.
Businesses face many kinds of risks, and you should realize that there is no way to avoid
all of them. Sound business management procedures can minimize the losses your business
may suffer from some risks, but no amount of caution and planning can eliminate risk
entirely.
As an entrepreneur, you must be able to identify the risks that your business faces and take
appropriate preventive measures to minimize losses. In addition, you should be aware of
which losses you can protect yourself from by purchasing the appropriate business insurance.
Otherwise, a lifetime of work and dreams can be lost in a few minutes.
Risk should not paralyze the zeal and enthusiasm of new entrepreneurs. They must be
willing to take moderate risks when they believe there is a strong likelihood that they will
succeed. For the entrepreneur, the brighter side of risk-taking is the possibility of success and
increasing their wealth. Most dreams cannot come true unless some risks are taken.
HOW DO ENTREPRENEURS MAKE PLANS TO REDUCE RISK????
Effective management is clearly the best way to reduce the impact of many risks,
particularly speculative risks. Careful control of financing, product development activities,
production, marketing, distribution, and other management concerns help ensure that the
results of most speculative risks will be profits rather than result in loss or failure of the
123
business. Many entrepreneurs control risk by keeping fixed assets to a minimum or by renting
facilities rather than using personal funds to purchase land and buildings.
Entrepreneurs do not necessarily seek out risks; they ASSUME risks. You can reduce risk
through careful planning and decision-making with activities such as the following:
1. Analyzing current and future economic and market conditions.
2. Considering the consequences of alternative actions
3. Making reasonable decisions in response to conditions as they develop and change.
WHAT METHODS DO ENTREPRENEURS USE TO CONTROL RISK?
Once entrepreneurs have identified the risks they face, they must decide what to do about
them. Some risks are easier to control than others and the actions of the owner will vary with
the circumstances faced by individual firms. Most owners control risk by—
RISK AVOIDANCE (eliminating the risk) is abandoning or refusing to undertake an
activity in which the risk seems too costly.
RISK REDUCTION (minimizing the risk) consists of using various methods to reduce the
probability that a given event will occur. Although some risks cannot be avoided, most can be
appreciably reduced. The primary control technique is prevention, including the use of safety
and protective techniques.
RISK TRANSFER means shifting the consequences of a risk to persons or organizations
outside your business. The best known form of risk transfer is insurance, which is the process
by which an insurance company agrees to pay an individual or organization an agreed upon
sum of money for a prospective future loss.
RISK ASSUMPTION, also known as risk absorption or risk retention, involves the
planned acceptance of the risk of loss. In some instances, reducing certain risks may be too
expensive. Generally, the small business owner will assume risks in which losses that occur
will not produce significant financial consequences to the business. Determining the amount
of loss that is significant is not a precise science.
TESTS
How would you apply this information on risk management to the following CASE
STUDY?
Jill Kearns was in her first year of college, and was running low on money. She
needed to make at least $500 to cover her expenses. She considered getting a full-time
job, but realized that she did not have enough time to do her studies and keep the job.
Her solution was to start a small business venture with the members of a jazz band to
which she belonged. They would hold jazz concerts and sell tickets to Jill's
performances.
Jill's idea for this venture came from her own and a friend's interest in jazz. As the
popularity of jazz has grown, she would have seen the potential for a business venture
expanding. The idea of using her interest in music to earn the money was very appealing.
Currently, the group members have $500 in the bank. In order to give a concert, Jill
anticipated that they would have the following start-up expenses: an advertising cost of
124
printing posters, rent on a concert hall, cost of printing tickets, and incidental expenses
for transportation, telephone calls, etc.
By deferring as many payments as possible and obtaining credit, she found that they
needed $465 to hold their first concert. Jill figured their total expenses would be about
$2000. By giving two shows and multiplying the ticket price by the legal capacity of the
hall, she calculated that the maximum gross receipts would be $2900. The business
venture would earn a profit of $900!
What risks are involved in this business venture?
How could these risks be reduced or eliminated?
(entre-ed.org)
BIBLIOGRAPHY:
125
UNIT 23 –COMPUTERS AND COMMERCE
UNIT 23
23.1. INTRODUCTION
23.3. COMPUTERS AND COMMERCE
23.1. INTRODUCTION
Doing online business is very common nowadays and
knowing vocabulary is very important
Online vocabulary understanding
Online vocabulary activities
Online vocabulary practice
hours
126
2
Online support for busy travellers
THE last year has seen the launch of some interesting
web-based subscription services aimed at making life easier
for people with little time for errands or planning—business
travellers, for example. Inspired by the business models of the
likes of Amazon and Netflix, these services allow users to
make regular orders of cosmetics, dog food and underwear,
while also offering discounts and access to better service.
The travelling man, for example, might be taken with the
idea of Manpacks, which consist of quarterly shipments of
underwear, socks, razors, condoms, soap and even vitamins.
The founders say they built Manpacks to “give you more time
to build the next Facebook, land planes on the Hudson, to slay
dragons, and achieve the goals you aspire to”. (And no I don’t
quite get the relevance of the Hudson landing either.) With its
simple returns policy and a no-obligation subscription system,
Manpacks seems like a no-frills way to restock your basics.
That being said, these are not fancy goods, so men who prefer
higher-quality underwear might still have to run their
“disruptive errands”.
Travelling women, on the other hand, could consider
Birchbox. In the cosmetics world you need a beady eye to
ignore the advertising and a thorough reading of beauty
editorials to find the best products. For $10 a month Birchbox
does this laborious work for you and sends four or five
carefully selected samples of make-up, skincare or tools to
your doorstep. This might be useful for the busy
businesswoman intimidated/bored by the Sephoras,
SpaceNKs and department-store beauty departments of this
world. You’ll also receive pamphlets and access to a digital
magazine. If you enjoy the monthly shipments, you can of
course buy full-sized products from the website.
And if all this travelling means you are neglecting your
dog, BarkBox might be the salve for a guilty conscience.
Each month, for a starting price of $17, this service will send
a box with at least four products for your pooch, including
bones, treats, shampoos and leashes. In addition, BarkBox
will donate 10% of the value of your order to a local shelter
or rescue, meaning you’re doing good not just by your dog,
but also by the homeless ones out there.
127
UNIT 23 –COMPUTERS AND COMMERCE
Pets.com; Boo.com. The road to the online retailing future is littered with the wrecks of
Internet start-ups once seen as the pioneers of retailing revolution.
The shape of e-tail, however, is very different from what was predicted a few years ago.
Apart from Amazon and e-Bay – the web’s biggest forum for buying and selling, though it is
an auction house not a retailer – most of the biggest online retailers are not Internet start-ups
but traditional shop or mail-order groups. Retailers have brought their investment capacity
and trusted brand names to bear on Internet shopping boosting public confidence. Many have
integrated online sales into a “multichannel” strategy that may link a website, shops and mailorder catalogue.
“There was a time when everybody said the Internet was going to steal purchases from
shops. But the opposite is happening: multichannel retailing is the reality today”, says Darrel
Rigby, head of the global retail practice at Bain &Co, the management consultants. “Many
classic bricks-and-mortar retailers actually on their online started making money on their
online operations long before Amazon did.”
A prime example of the fusion of the online and so-called “offline” retail worlds is
Amazon itself. The company has expanded well beyond its roots as a seller of books and CDs,
acting as an online mall selling everything from gourmet foods to clothing. Evolving from
pure retailer to “retail platform”. It now conducts its online commerce in partnership with
bricks-and-mortar reatialers such as Target, Nordstrom, Borders and Circuit City.
That blending of online and offline is offering consumers new ways to shop. They may
research and order their purchase online, but have it delivered to a nearby shop – a service
offered by retailers such as Sears Roebuck and Circuit City – so as to avoid delivery charges
and allow them to see or try it on first.
Some of the biggest US retailers are developing integrated operations. JC Penney, the
century-old It offers 200,000 items that can be delivered to customers’ homes or any of its
1,020 shops.
Steve Riordan, a consultant at AT Kearney, says traditional retailers that have not yet
embraced the online world face heavy investment and some tough choices. Are they going to
run online operations themselves or outsource them? Do they use the same sourcing model
from the same factories? Do they have different distribution centres?
While the US still leads the way, it does not have a monopoly on successful Internet
retailers. Tesco, the British supermarket chain, has the world’s biggest online grocery
business. It has helped Safeway, the third-largest US supermarket chain, set up its Internet
operations.
The biggest e-commerce site in Japan is Rakuten, a home-grown online shopping mall
that began life in 1997 with just 13 shops. Today, it has more than 10,000 and a share of the
e-commerce market three times bigger than the second ranking Yahoo Japan, according to a
report by JP Morgan.
Some pure Internet retailers are also continuing to grow. Yoox.com – which sells endof-season and exclusive goods from designers such as Armani, Prada and Dolce & Gabbana –
has proved that designer labels will sell online and that European e-tailers can succeed
internationally.
It chose to launch in Europe first, close to the designers whose goods it sells. Yoox now
sells in seven languages to 25 countries in Europe, North America and Japan. Its stylish site –
which it calls an “e-concept store” – enables shoppers to “zoom” in on clothes and see them
from different angles, and include video and music.
128
Federico Marchetti, the Italian former investment banker who is Yoox’s founder and
chief executive, says that anyone selling online does not just have to get the technology and
orders right, they also have to provide fun and entertainment. “What we have been trying to
do with Yoox is build a very nice customer experience,” he says. “The online retailer always
has to be doing something interesting and different.”
FINANCIAL TIMES
TESTS
What is your opinion on online business?
BIBLIOGRAPHY:
129
UNIT 24 –COMPANIES AND THEIR BANKS
UNIT 24
24.1. INTRODUCTION
24.3. COMPANIES AND THEIR BANKS
24.1. INTRODUCTION
Knowing banking language is of great importance for
your company
Banking vocabulary
Banks and companies
Practice
hours
130
2
Does it pay to hire top banks?
MOST research in academia is critical of the league tables
that rank investment banks by the value of deals on which
they advise. The conflicts of interest in investment banking
were highlighted by last week’s publication of an anguished
resignation letter by a Goldman Sachs executive; finance is
traditionally based on client service but much of its fantastic
profitability in recent decades has come from trading profits.
Banks that profit on their own account often face conflicts of
interest (as their clients are usually on the other side of the
trades). Studies have shown that if anything banks with a
smaller market share win better deals for clients. Ranking by
volume also gives banks an incentive to advocate deals with
no business rationale, which may contribute to the small (or
negative) returns for bidders in most mergers. Despite all this,
companies still select their most trusted advisers from the
league tables. Surely only a muppet would make such a
choice?
However, a new paper with a twist on the latest data
suggests that the “top-tier” banks may be worthwhile for
some clients. Andrey Golubov, Dimitris Petmezas and
Nickolaos Travlos of the Cass Business School, the
University of Surrey and the ALBA Graduate Business
School examined almost 5,000 deals conducted between 1996
and 2009, separating deals involving publicly-listed and
private companies for the first time. Private deals had no link
between adviser reputation and quality, but bidders shelling
out for a top-tier adviser in a public deal enjoy returns just
over 1% higher than if they had used an adviser outside the
top tier. This amounts to $65.83m of shareholder value—even
after accounting for the fees paid, which are $5.41m—for the
average bidder.
Large deals may give banks a motive to perform well and
protect their reputation, or may simply be beyond the abilities
of smaller boutiques. Follow-up work from Mr Golubov on
the behaviour of independent directors, and a 2003 paper by
Jayant Kale and Omesh Kini of Georgia State University and
Harley Ryan of Louisiana State University, support the first
explanation. Kale et al show large banks are more likely to
withdraw clients from contested public deals when the price
rises too high; Alex Edmans of the Wharton Business School
and Jack Bao of Ohio State University suggest this may be
due to the “honest” scrutiny provided by impartial
131
UNIT 24 –COMPANIES AND THEIR BANKS
commentators in high-profile deals. Mr Golubov and his
colleagues find that bulge-bracket banks achieve better
outcomes for bidders by both finding deals with greater
synergies and negotiating harder over the price. The good
news for target firms is that they can nullify the second of
these by hiring a top-tier adviser of their own.
It is hard to avoid concluding that tables based on the
market performance of past clients would still make more
sense. This is the basis for rankings amongst banks in equity
issuance (although ironically, share price rises here indicate
that an issuance may have been underpriced by the bank).
Nevertheless, it is an encouraging sign that sometimes the
term “bulge bracket” signifies more than just the shape of the
bankers’ money clips. For companies determined to pay top
rates for a prestigious adviser, the clear lesson is to at least
make sure that their bank’s gold-plated reputation is firmly on
the line if they want their money’s worth.
(economist.com)
1 balance n. the difference between credits and debits in an account
2 bank charges n. money paid to a bank for the bank's services etc
3 branch n. local office or bureau of a bank
4 checkbookUS n. book containing detachable checks; chequebookUK
5 checkUS n. written order to a bank to pay the stated sum from one's account; chequeUK
6 credit n. money in a bank a/c; sum added to a bank a/c; money lent by a bank - also v.
7 credit card n. (plastic) card from a bank authorising the purchasing of goods on credit
8 current account n. bank a/c from which money may be drawn at any time; checking
accountUS
9 debit n. a sum deducted from a bank account, as for a cheque - also v.
10 deposit account n. bank a/c on which interest is paid; savings accountUS
11 fill inUK v. to add written information to a document to make it complete; to fill outUS
12 interest n. money paid for the use of money lent - interest rate n.
13 loan n. money lent by a bank etc and that must be repaid with interest - also v.
14 overdraft n. deficit in a bank account caused by withdrawing more money than is paid
in
15 pay in v. [paid, paid] to deposit or put money in to a bank account
16 payee n. person to whom money is paid
17 paying-in slip n. small document recording money that you pay in to a bank account
18 standing order n. an instruction to a bank to make regular payments
19 statement n. a record of transactions in a bank account
20 withdraw v. [-drew, -drawn] to take money out of a bank account - withdrawal n.
132
TESTS
Here is a conversation between Mrs. Smith (Joan) and the cashier at her new bank.
It's Saturday morning and Joan's gone to the bank.
Joan
Cashier
Joan
Cashier
Joan
Cashie
Joan
Cashie
Joan
Cashie
Joan
Cashie
I'd like to open a bank account, please.
Certainly. Do you have some form of identification?
Yes, I bought my passport. Is that OK?
Yes. We also need proof of your current address. Do you have a utility
bill or your driver's licence with you?
I've got my driver's licence.
That's fine. What kind of account did you want?
Well I want two, a deposit account and a savings account.
That's fine, we do both. Do you have any proof of income?
Yes, I bought my pay slips for the last three months.
Good. You could also apply for a credit card at the same time, if you
like.
Yes, that would be great.
OK. If you would just like to fill out these forms...
BIBLIOGRAPHY:
133
UNIT 25 –GLOBAL INFORMATION
UNIT 25
GLOBAL INFORMATION
25.1. INTRODUCTION
25.3. GLOBAL INFORMATION
25.1. INTRODUCTION
Getting information online is very useful for businesses
Information about newspapers
hours
134
2
The Wall Street Journal
The Wall Street Journal is an English-language
international daily newspaper published by Dow Jones &
Company, a division of News Corporation, in New York City,
with Asian and European editions.
The Journal has the largest circulation of any newspaper
in the United States. According to the Audit Bureau of
Circulations, it has a circulation of 2.1 million copies
(including 400,000 online paid subscriptions) as of March
2010[2] compared to USA Today's 1.8 million. Its main rival
in the business newspaper sector is the London-based
Financial Times, which also publishes several international
edition
The Journal primarily covers U.S. and international
business, and financial news and issues. Its name derives
from Wall Street in New York City, the heart of the financial
district, and has been printed continuously since its inception
on July 8, 1889, by Charles Dow, Edward Jones, and Charles
Bergstresser. The newspaper version has won the Pulitzer
Prize thirty-three times,[3] including 2007 prizes for its
reporting on backdated stock options and the adverse effects
of China's booming economy.
The Financial Times
The Financial Times (FT) is a British international
business newspaper. It is a morning daily newspaper
published in the Borough of Southwark, London and printed
at 22 sites. Its primary rival is New York City-based The Wall
Street Journal.
Founded in 1888 by James Sheridan and his brother, the
Financial Times competed with four other finance-oriented
newspapers, in 1945 absorbing the last, the Financial News
(founded in 1884). The FT specialises in business and
financial news. Printed as a broadsheet on light salmon paper,
the FT is the only paper in the UK providing full daily reports
on the London Stock Exchange and world markets.
The Financial Times reports business and features share
and financial product listings. About 110 of its 475 journalists
are outside the UK. The FT is usually in two sections, the first
135
UNIT 25 –GLOBAL INFORMATION
section covers national and international news, the second
company and markets news.
FT Magazine is a weekly magazine published with the
Financial Times Weekend Edition. Elements are incorporated
in the main newspaper for the USA weekend edition.
The Economist
The Economist is an English-language weekly news and
international affairs publication owned by The Economist
Newspaper Ltd. and edited in offices in the City of
Westminster, London.[1][2] Continuous publication began
under founder James Wilson in September 1843. While The
Economist calls itself a "newspaper", each issue appears on
glossy paper, like a newsmagazine. In 2009, it reported an
average circulation of just over 1.6 million copies per
issue[3], about half of which are sold in North America.[4]
The Economist claims it "is not a chronicle of
economics."[5] Rather, it aims "to take part in a severe
contest between intelligence, which presses forward, and an
unworthy, timid ignorance obstructing our progress."[6] It
takes an editorial stance based on free trade and globalisation,
but also the expansion of government health and education
spending, as well as government support of banks and other
financial enterprises in danger of bankruptcy. It targets highly
educated readers and claims an audience containing many
influential executives and policy-makers.
The publication belongs to The Economist Group, half of
which is owned by the Financial Times, a subsidiary of
Pearson PLC. A group of independent shareholders, including
many members of the staff and the Rothschild banking family
of England,[8] owns the rest. A board of trustees formally
appoints the editor, who cannot be removed without its
permission. In addition, about two-thirds of the seventy-five
staff journalists are based in London, despite the global
emphasis.
136
Forbes
Forbes, Inc. is a privately held publishing and new media company. Its flagship
publication is Forbes, a bi-weekly magazine, with a circulation over 900,000. In August 2006,
the private equity firm, Elevation Partners, became a minority shareholder in a newly formed
company, Forbes Media, which encompasses Forbes magazine and Forbes.com, one of the
leading business sites on the Web. Forbes.com reaches 18 million people monthly. Other
Forbes
Media
websites
are:
Investopedia.com;
RealClearPolitics.com;
RealClearMarkets.com; and RealClearSports.com. Together with the Forbes.com Business
and Finance Blog Network, these properties reach nearly 40 million business decision makers
each month.
The company also publishes Forbes Asia, ForbesLife, and Forbes Woman magazines. In
addition, Forbes has 10 local-language licensee editions in China, Croatia, India, Indonesia,
Israel, Korea, Poland, Romania, Russia and Turkery. Forbes, Forbes Asia and the company's
ten international licensee editions together reach a worldwide audience of more than 6 million
readers.
TESTS
Do you think business magazines are useful?
BIBLIOGRAPHY:
137

universitatea « spiru haret - Universitatea Crestina Dimitrie Cantemir

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