CHAPTER 1.

MANAGEMENT
Motto: Management an activity or art where those who have not yet succeeded and those who have proved unsuccessful are led by those who have not yet failed. PAULSSON FRENCKNER

You want me to explain what management is? Well, I guess I can manage that! Actually, management as we understand it today is a fairly recent idea. Most economists in the eighteenth and nineteenth centuries, for example, wrote about factors of production such as land, labour, and capital, and about supply and demand, as if there were impersonal and objective economic forces which left no room for human action. An exception was Jean-Baptiste Say, who invented the term entrepreneur, the person who sees opportunities to use resources in more productive ways. Entrepreneurs are people who are alert to so-far undiscovered profit opportunities. opportunities technologies currently to and They products served perceive new will their that by commercialise

So, whats management? Well, its essentially a matter of organizing people. Managers, especially senior managers, have to set objectives for their organisation, and then work out how to achieve them. This is true of the managers of business enterprises, government departments, educational institutions, and sports teams, although for government services, universities and than so on we usually and talk about administrators and administration rather managers management. Managers analyse the activities of the organisation and the relations among them. They divide the work into distinct activities and then into individual jobs. They select people to manage these activities and perform the job. And they often need to make the people responsible for performing individual jobs form effective teams. Managers have to be good at communication and motivation. They need to communicate the organisations objectives to the people responsible for attaining them. They have to motivate their staff to work well, to be productive, and to contribute something to the

serve the market better than it is being competitors. They are happy to risk their own or other peoples capital. They are frequently same as unconventional, management, innovative and most people. But entrepreneurship isnt the managers arent entrepreneurs.

organisation. They make decisions about pay and promotion. Managers also have to measure the performance of their staff, and to ensure that the and objectives for and performance targets set for the whole organisation individual employees are reached. Furthermore,

they have to train and develop their staff, so Some Most that their performance obviously failures in or continues to improve. managers and perform these tasks better than others. achievements are the business achievements

failures of individual managers.

Translate the expressions in italics into your own language.

1.1. Management Styles

Do men and women bring different qualities to business or is it nonsense to talk about male and female management styles? Mark the following management qualities: M, W or M/ W according to whether you think are more typical of men, more typical of women or shared by both. 1. Being able to take the initiative. 2. Being a good listener. 3. Staying calm under pressure. 4. Being prepared to take risks. 5. Being conscientious and thorough. 6. Having good communication skills. 7. Being energetic and assertive. 8. Getting the best out of people. 9. Being independent and authoritative. 10. Being supportive towards colleagues. 11. Being able to delegate. 12. Motivating by example. 13. Having a co-operative approach. 14. Being single-minded and determined. 15. Being a good time-manager. Then select what you consider to be the five most important qualities in any manager and put them in order of importance. 1. 2. 3. 4. 5.
Read the article below:

Business was invented by men and to a certain extent it is still a boys game. Less than 20% of the managers in most European companies are women, with fewer still in senior positions.

In Britain one in three new businesses are started up by women and according to John Naisbitt and Patricia Auberdene, authors of Megatrends 2000, since 1980 the number of self-employed women has increased twice as fast as the number of self-employed men. Is it a case of women whose career progress has been blocked by their male colleagues the so-called glass ceiling syndrome - -being forced to set up their own businesses? Or do women share specific management qualities, which somehow serve them better in selfemployment? Anita Roddick, founder of the Body Shop empire, is the perfect example of the female entrepreneur with her company growing from zero to 470 million in its first fifteen years. Perhaps her success was caution. Rather than push ahead with the purchasing of new shops, Roddick got herself into franchising the cheapest way to expand a business while keeping overheads down. Caution, forward planning and tight budgeting seem to be more female characteristics than male. When women join an existing company, its a different story. Less ruthlessly individualistic in their approach to business, women are more sensitive to the feelings of the group or team in which they work. They are generally more cooperative than competitive, less assertive, less prepared to lead from the front. Though they usually manage their time better than men and may even work harder, they are much less likely than their male counterparts to take risks. And, above all, it is risk-taking that makes corporate high fliers. As one male director put it: Im not paid to make the right decisions. Im just paid to make decisions. It is generally true that men will more readily take the initiative than women. The female style of management leans towards consensus and conciliation. Women seem to be better communicators than men both more articulate and better listeners. And perhaps it is womens capacity to listen which makes them particularly effective in people-oriented areas of business. In any mixed group of business people the ones doing most of the talking will almost certainly be the men. But perhaps only the women will really be listening. As companies change from large hierarchical structures to smaller more flexible organisations, the communication skills and supportive approach of women are likely to become more valued.
Which of the following points are true or false?

1. 2. 3. 4.

Women are least as entrepreneurial as men. Most female managers prefer task-based jobs to people-centred ones? Women tend to be more conscientious than men. Women who do succeed in business have to become even more ruthless than men. 5. Men arent as financially aware as women. 6. Women are more likely to be the managers of the future than men are.
Look back at the article and find the expressions meaning:

1. Its to be expected. 2. Its not the same thing at all. 3. Its not always the case.

Response

Do you find yourself mostly agreeing or disagreeing with the article? Which is your score on this scale? I totally agree! 10 Theres some truth in it. 5 Its rubbish! 0 Compare your views with those of your colleagues.
Discrimination

In each of the following situations decide if you would give the applicant the job or not. Tick the appropriate boxes. Be prepared to justify your decision in each case. 1. SYSTEMS ANALYST The applicant is a 36 year old woman returning to work after giving up her previous job to start a family three years ago. She is well qualified for the post and much more experienced than any of the other applicants. She is, however, a little out of touch with the latest developments in the industry you work in and would require some retraining. Most of the other applicants are younger women. 2. MARKETING DIRECTOR The applicant is a 29 year old woman. On paper she looks impressive and at interview she came across very well indeed. In terms of experience and expertise, she is clearly the best person for the post. Theres only one problem: the job is in a country where women do not have equal status with men and where very few women hold management positions at all, let alone senior ones such as this. 3. PRODUCTION MANAGER The applicant is a 44 year old woman. You have recently interviewed 20 people for a very responsible post within your company and she is one of the two on your final shortlist. The other most promising candidate is a 29 year old man. On balance, you think the man would probably be the better choice but, at present, your company has only appointed three female managers out of a total of 32 and you are under a lot of pressure from the personnel dept. to exercise positive discrimination in favour of women. 4. MANAGEMENT TRAINER The applicant is a 31 year old man. The company you represent runs assertiveness training courses for women in management and at the moment you have an all-female staff. While the applicant has an excellent track record in management training with mixed group, you have some doubts about his credibility running seminars exclusively for women, some of whom tend to see male managers more as an obstacle than as aid to their progress. Youre also concerned about how the rest of the staff will react to him. ACCEPT REJECT CALL FOR SECOND INTER-VIEW REASONS REASONS REASONS REASONS
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 Look at the following list of qualities and say which are the most important for a manager.

1. being competent and efficient in ones job 2. being friendly and sociable 3. being a hard worker 4. being persuasive 5. having good ideas 6. being good at communicating 7. being good at motivating people 8. being good at taking the initiative and leading other people 9. being group oriented 10. being individualistic 11. being intuitive 12. being good at listening and sensitive to other peoples feelings 13. being cautious and careful
Use the following words to complete the sentences below.

a. b. c. d. e. f. g. h.

thoroughly be prevented proven track record in-house incentives sick leave procedure human resource management

1. He must.from leaving the company. 2. What..can we use to make them work harder? 3. When there are redundancies to be made, there is a correct to follow. 4. We rarely send employees for training outside because we have an excellent .program. 5. Before candidates are employed, their references are .checked. 6. She was given the Sales Managers job because of her ..in selling. 7. Our company realizes the importance of people to a firms success and has therefore invested a lot in 8. Im afraid MS Duvalier is on at the moment. Can I take a message?
Choose the appropriate word or expression to complete each sentence.

1. A person who does something in someone elses name, does it ..that person. a. to acknowledge b. on behalf of c. to be entitled to
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2. A graduate is someone who a. has won a prize b. has applied for a job c. has a degree 3. If you go to another place for your job, you go on a business a. travel b. voyage c. trip 4. Income is a synonym for.. a. earnings b. expenditure c. pension fund 5. The Chief Executive Officer is . for his decisions. a. apologise b. out-of-date c. accountable 6. Her.is in human resource management. a. background b. wage claim c. red tape
Match the definitions with the correct words:

a . b

the process of developing a set of goals and end-states that the organisation is expected to achieve; the process of influencing people to work

leading

goal setting controlling decision making motivating

. towards a common goal; c. providing reasons for people to work in the best d . e . interest of the organisation; evaluating and regulating ongoing activities; identifying the discrepancy between the actual condition and an ideal one, choosing and implementing solutions.

1.2. How to make a million?

Statistically, your chances of making a fortune will largely depend on how fortunate you are in the first place. Forget about drive, initiative and ingenuity. According to all the surveys, here are four sure-fire ways of getting rich: Start off rich. Its depressing but true that half of Britains 95,000 millionaires were born into wealthy families, and so were a quarter of those who head the countrys largest corporations. When you are rich already it takes a special kind of person not to get richer. Do badly at school. Richard Branson, the founder of Virgin, is the classic case, leaving school at 16 to start a mail-order record company and ending up running his own airline, publishing, broadcasting, construction and holiday empire. Almost two thirds of the UKs top earners finished their education early. And the studious graduate is less likely to be found staying at the Hilton Hotel than applying for a job in its kitchens. Lose a parent. Amazingly, only 5% of successful entrepreneurs had both parents throughout their childhood. Perhaps a lack of parental control gives you the toughness, resilience and independence you need to make it on your own. Be beautiful. Silly as it may seem, good looks really do get you places, both in terms of career and marital prospects. If you are too pretty, people may tend to assume that you are nice but stupid and pass you over for promotion.
Discussion

So, what can you do if you are born poor, ugly, pass all your exams and have parents who look as if theyll make 90? What do you think is the secret of success? List your ideas.
Quotes

1. Complete the following quotations on success: 2. Success is one inspiration and ninety-nine perspiration. 3. Many a man owes his success to his wife, and his second to his success. 4. There are no rules to success that will work you do.
Words to remember

apply - to make an application or request; to make use of something appoint - to give someone a job or position or responsibility appraise - to judge, assess, or evaluate a persons job performance assets - to estimate or evaluate, to make an assessment Board of Directors - a group of people elected by a companys shareholders to determine the overall policy of a company bonus - something extra, usually a payment, often given as a reward for good work or high productivity

business - an organisation that makes or buys and sells goods or provides a service; or trade and commerce in general business plan - a written report stating a companys plans regarding sales, product development, financing, etc. buyer or purchaser - either a customer who buys goods or a service, or a person who purchases goods for a company or a shop or store capital - the money requires to buy the assets of a business chairman - the person inn charge of the board of directors of a company (in Britain) Chief Executive Officer (CEO) - the person responsible for the running of a company (in the USA) client - a person or organisation that hires professional services (of a lawyer, auditing firm, advertising agency, etc.) commerce - trade: the buying and selling of goods, and all related activities company - an association of people formally registered as a business (partnership, limited company, etc.) corporation - American term for what the British call a company; in Britain, a public sector organisation (e.g. local government, the British Broadcasting Corporation) debt - money owed to other people demand - the willingness and ability of customers to purchase goods and services; to ask for something forcefully director - a person elected by shareholders to control the management and overall policy of a company earn - to receive money for work done earnings - income employ - to use somebodys labour or services in exchange for money enterprise - an informal term for a business organisation; the act of taking risks and setting up businesses entrepreneur - a person who sets up and manages a business executive - a manager with the responsibility to make important decisions executive director - a full-time manager in a company (often in charge of a department or division) franchise - a licence giving an exclusive right to manufacture or sell certain products in a certain area goods - items for sale (merchandise), or a persons movable possessions human resources - another name for people, and their skills and abilities income or earnings or revenue - all the money received by a person or a company during a given period (wages, salaries, rent, business profits, dividends, etc.) job - a piece of work; a position of regular paid employment joint venture - a particular enterprise undertaken together by two individual companies labour - work that provides goods and services performed in return for money manage - to be in charge of, to administer, to succeed in doing something management - the technique or practice of managing or controlling an organisation or business Managing Director (MD) - the person responsible for the day-to-day running of a company (in Britain) manager - a person who organises and controls a business or the work of other employees middle management - a group of managers below the top management, to whom day-today responsibilities are delegated personnel - an organisations staff or workforce; the people it employs

public relations (PR) - the creation, promotion and maintenance of a favourable image among the public towards an organisation purchase - to buy something research and development (R&D) the department of a company that is responsible for developing new products retailer - a merchant such as a shopkeeper who sells to the final customer shareholder or stockholder - the owner of a companys equity capital (stocks and shares) staff - the people who work for an organisation (often used only for white-collar workers); to provide an organisation with the employees it needs supply - the willingness and ability to offer goods or services for sale takeover - the process of gaining control of a company by offering to buy its shares at a particular price during a limited period task - a specific piece of work that has to be done wages - money paid (per hour or day or week) to manual workers wholesaler - an intermediary between producers and retailers, who stocks goods, and delivers them when ordered

CHAPTER 2. ORGANISATION OF BUSINESS

2.1. Introduction to Organisations

2.1.1. What is an organisation?

What do we mean by organisation? Here are some examples. Which do you think are organisations? a. A multinational company making and selling cars b. An accountancy firm c. A charity d. A local authority e. A trade union f. An army g. A political party These organisations seem, on the surface, to be very different. They do different things and draw their resources from different places, however, all of them could be described using the following definition: an organisation is a social arrangement for the controlled performance of collective goals. A social arrangement is a collection of people, whose interrelationships are ordered in some way. A business might be split into departments. A goal is some desired end result of an activity. People work together to achieve the goal. In business, an important goal is to make a profit. Controlled performance implies that the organisations activities are monitored and that corrective action is taken where necessary. In other words, the business monitors what it does, and changes its behaviour if things are not going according to plan. Generally, organisations exist because they achieve results which individuals cannot achieve alone. By grouping together, individuals overcome limitations imposed by both the physical environment and also their own biological limitations. Organisations meet an individuals need for companionship. Organisations increase productive ability for the following reasons: specialisation (division of labour) and synergy concept that implies that the whole is greater than the sum of the parts. They accumulate knowledge. They save time.
Types of organisation

There are many ways of classifying organisations. a. Ownership (private sector as opposed to public sector) b. Control (e.g. shareholders, managers) c. What they do (e.g. manufacturing, construction) d. Legal structure (e.g. partnership or limited company) e. Objectives (e.g. profit making or non profit making) f. Accountability
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g. Sources of finance (e.g. borrowing, the state, investments)

Define the term manager without using the word

management in your definition.

You are the owner and only employee of a firm that you started this morning. Your firm is to produce and sell hand-sewn pants to clothing stores. (You, of course, are an expert tailor). a. Write out your firms purpose, its mission and at least two of its objectives. b. Write out your firms sales strategy. Make sure the strategy is in keeping with your goals.
Types of business organisations

There are three basic forms of organisational structure: bureaucratic organic matrix 1. The term bureaucracy is often used in an unfavourable context and it tends to suggest rigidity. A bureaucratic structure is a management system based on a formal framework of authority that is carefully outlined and precisely followed. Characteristics: - a high level of job specialisation - departmentalisation by function - a high degree of centralisation - narrow spans of management e.g. government agencies, colleges, universities 2. The Organic structure is a management system founded on cooperation and knowledge-based authority. Characteristics: - a low level of job specialisation - departmentalisation by product, location, or customer - a high degree of decentralisation - wide spans of management 3. The Matrix structure is an organisational structure that combines vertical and horizontal lines of authority by superimposing product departmentalisation on a functionally departmentalised organisation. It is the newest and most complex organisational structure.
2.1.2. What is a company?

The word company is generally used to describe a company formed by registration under the Companies Act 1985.

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Formation of a Company

A company is formed by the issue of a certificate of registration by the registrar. The certificate identifies the company by its name and serial number at the registry and states that it is limited and that is a public company. To obtain the certificate of incorporation it is necessary to deliver to the registrar prescribed documents bearing the name of the proposed company. The documents to be delivered to the registrar are the following: A memorandum of association - This is normally signed by at least two subscribers. The signature(s) must be dated and witnessed. Each subscriber agrees to subscribe for at least one share. The Memorandum generally contains the following clauses stating: the name of the company, ending with the word Limited (LTD), its logo; the country in which the registered office is situated; the objects for which the company was constituted; the fact that the shareholders liabilities are limited; the amount of the authorised capital and its division into shares. Articles of association - Lodged together with the Memorandum, the Articles of Association are a contract between the company and its members comprising rules and regulations for the internal activity of the company and specifying such things as the voting power of its members, the appointment of directors, the distribution of the profits etc. A registration fee is payable. A private company may do business and exercise its powers from the date of its incorporation. It is normal practice to hold a first meeting of the directors at which the chairman, secretary, and sometimes the auditors are appointed, shares are allotted to raise capital, authority is given to open a bank account. A new public company may not do business or exercise any powers unless it has obtained a trading certificate from the registrar. If it fails to do so the company is liable to a fine. If it fails to do so within one year the company may be wound up. To obtain a trading certificate a public company makes application signed by the director or by the secretary with a statutory declaration.
Discussion

Give a short talk on one of the following topics: Acts required for the constitution of a firm The contents of the Memorandum
What additional procedures must be followed before a public company can commerce business?

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2.2. How to set up a business?

How would you like to launch your own business? You have to come up with a good idea for a small business enterprise and to convince your financial backers that your venture is the most likely to succeed. Step 1 Working in small groups, draw up a provisional business plan to present to the rest of the class. Try to anticipate any question about your business venture. The checklist may be helpful when organising the relevant information. Step 2 When the other groups present their business plans you should use your list of anticipated questions to ask them to give further details, back up their proposals or explain anything which is not clear. Step 3 Hold a short meeting with the rest of the class to decide which business venture will get the financial backing. Put this to vote. What is a business plan? It is a carefully constructed guide for the person starting a business.
BUSINESS PLAN CHECKLIST

The Nature & Objectives of the Business What will be your main business activity? What is your own professional background? Roughly how will the business be structured? Do you have an overall vision for the company?
Personnel

Approximately how many people will the company employ and in what capacity?

The Product/Service in Relation to the Market

What is the state of the market? Growing, static, seasonal? How will your products/services be positioned? Up- or down-market? Who will be your target customers? Who will be your major competitors? How will you market your products or services? Trade press? Mass media? Word of mouth?

Premises

Where will the company be located? Why? What kind of property will you require? Offices, factories? Leased or purchased?

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Equipment Required

What general trading equipment, if any, will you require? Vehicles, computer hardware? What manufacturing equipment, if any, will you require? Machinery, tools?

Sales Forecasts

What are your sales targets for year one? What kind of distribution network, if any, will you require?

Financial Profile

Roughly how much in the way of funds will you need?

2.3. Forms of Business Organisation

In business there are many forms of organisation. The form of organisation means the type of ownership. The main differences between the types of ownership are in the ability to raise capital, the size and continuity of the enterprise, the disposition of profits, and the legal obligations in the event of bankruptcy. 1. Sole Trader The simplest form of business organisation is the one-man business or sole trader/ proprietor who has control of his capital with almost complete freedom from external interference. The sole proprietor owns all the business assets, makes all the decisions, takes all the risks, and keeps all the profits of the business. He enjoys his freedom but if he suffers a loss, he owes all the debts, and his legal liability to pay them may be more than his investment in the business. Another disadvantage is that the expansion of such a business is limited to the financial resources of the owner. This business can succeed particularly where commodities such as foodstuffs, tobacco, sweets, newspapers are in regular demand and where the market is local. 2. Partnership A partnership may consist of a small number of persons called partners who contribute the capital for the business. They not only take active part in the management of the business but they share the resulting profit or loss as well. The relations between the partners are regulated by Articles of Partnership specifying the number of partners, the amount the number of partners, the amount of capital to be contributed by each as well as the amount that each partner may take weekly or monthly from the firm, the interest to be paid on capital, the general policy of the firm etc. The partners who play an active part in the management of the business are known as active partners as distinct from the sleeping partners. A partnership usually has more capital than a sole proprietorship. In partnership the personal wealth of all the partners can be used to secure loans and credit. Like the sole proprietorship, the partnership has unlimited financial liability in the event of bankruptcy. Accountants, solicitors, doctors, brokers usually work in partnership.

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3. Joint Stock Companies A company is a more complex business organisation consisting of an association of people who both contribute capital and agree to share the resulting profit or loss. In the UK, joint stock companies can be set up by Royal Charter (The Bank of England), by a special Act of Parliament (companies which are usually given the monopoly of public utility services such as railways, canal, gas, water and electricity) and by registration. Registration is the most usual way and the companies in which the liability of their members is limited to the value of their shares are of two types: private limited companies and public limited companies. 3.1. Private Limited Companies have the letters LTD after their name and consist of a number of shareholders. The shares are held among their members and these companies are not allowed to invite public to subscribe shares or debentures. The right to transfer shares is only with the consent of the directors and this restriction implies a high degree of risk. 3.2. Public Limited Companies have the letters PLC added to their name and consist of a very small number of members and they can offer their shares for sale. Like the private limited companies, the PLCs have limited liability but, unlike the former, the shareholders can sell their shares to people who wish to buy on the Stock Exchange 3.3. Joint Ventures are another form of business, i.e. companies usually constituted with both foreign and domestic capital contribution. The ventures as partners may be either legal or natural persons.
Translate the underlined words in your own language. Multiple choice - select the word which mostly means the same as the underlined word:

1. The sole proprietor is liable for all the debts of his enterprise. He owns all the assets, but he owes all the liabilities. a. inventory b. proprietorship c. capital d. debts 2. The different forms of organisation are taxed differently on their profits. They also have different legal obligations with regard to their debts in the event of bankruptcy. a. case b. aspect c. cost d. failure 3. His personal assets can be used to settle the debts. a. wealth b. capital c. freedom d d. inventory

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4. The articles of co-partnership explain how the partnership is started and how it should be dissolved. a. initiated b. sold c. ended d. regulated 5. When the sole proprietor stops doing business, he simply sells his inventory and equipment. a. labour b. machines for making goods c. debts d. profit 6. In addition to the benefits of running a sole proprietorship, there are also some unfavourable aspects. a. profits b. disadvantages c. assets d. satisfaction 7. He has the freedom to make his own decisions, but he bears sole responsibility for errors when he makes a wrong choice. a. profits b. loses c. takes all the blame d. does not have freedom 8. His responsibility for debt can be greater than his investment in the business. a. partnership b. assets c. profits d. capital 9. A partnership does not have some of the disadvantages of a sole proprietorship, but it shares some similarities. a. benefits b. problems c. agreement d. association 10. The owners of a partnership wished to stop doing business, both managers would have to agree on how to dissolve the partnership. a. partners b. corporations c. shops d. profits
Match the terms on the left with their definitions on the right.

1. 2.

private company public company

a. a company owned by another b. a company which produces and/or sells water, electricity, gas, etc. to the general public
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3. 4. 5.

nationalised company public utility partnership

c.

a group of up to 20 people with

unlimited liability for a firms debts d. a company which owns and runs e. other companies a limited company with up to 50 shareholders, which is not quoted on the stock exchange a small or medium-sized enterprise

6. 7. 8.

holding/parent company subsidiary SME

f.

g. a limited company quoted on the stock exchange h. a company owned by the state

Crossword Puzzle

Down: 1. A company consisting of two or more owners who manage it together and have unlimited liability. Across: 1. You make them when the company does well. 2. Checked by specialist accountants. 3. A company is highly - when it has a good deal of bank loans. 4. A business where decisions are taken at headquarters rather than at branch level. 5. Losses or expenses are by someone who has to pay. 6. Another name for the capital of share-holders. 7. The management committee of the limited liability company is the of Directors. 8. You make it when the company is not profitable. 9. Shares are traded on the stock 10. The highest position on the Board of Directors. 11. A limited liability company where anyone has the possibility to buy shares.

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A 1 2 3 4 5 6 7 8 9 1 0 1 1 B

2.4. An Organisation Chart

Organisation charts, departmentalisation

The organisation chart is a way of setting out in graphical form the various relationships between individuals and groups in an organisation in terms of their functions, responsibilities and the bounds of their authority. It acts as an aid to designing, expressing and understanding the shape and structure of an organisation. I think we have a typical organisation for a manufacturing firm. It is divided into Finance, Production, Marketing and Human Resources departments. The Human resources department is the simplest. It consists of two sections. One is responsible for recruitment and personnel matters, the other is in charge of training. The Marketing department is made up of three sections: Sales, Sales Promotion, and Advertising whose heads are all accountable to the marketing manager. The Production department consists of five sections. The first of these is Production Control, which is in charge of both Scheduling and Materials Control. Then there is Purchasing, Manufacturing, Quality Control, and Engineering Support. Manufacturing contains three sections: Tooling, Assembly, and Fabrication. Finance is composed of two sections: Financial Management, which is responsible for capital requirements, fund control, and credit, and Accounting.

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Which are the four synonyms of to consist of in the text above?

1 2 3. 4
The Shareholders

The shareholders, or more precisely those who hold ordinary shares, elect the Board of Directors at the Annual General Meeting. Every year, at the AGM, they are apprised of the dividend that they will get, of the companys performance over the previous fiscal year, and are given the balance sheet.
The Directors

The Directors elect one of their number as Chairman (US: President), and another as Managing Director (US: CEO). Sometimes one and the same person acts simultaneously as Chairman and Managing Director. The Directors lay down the policy of the company. Executive Directors work full-time in the company, and are responsible for carrying out that policy: they are the Managers (the Heads) of the main departments. Non-executive Directors simply attend Board meetings; they are Advisors who give legal, financial or technical advice, but take no active part in the management. Directors also elect the other officers of the company.
The Managing Director

The Managing Director runs the firm: s/he sees to it that all the decisions taken at Board meetings are implemented.
The Company Secretary

he makes sure that all the operations of the company are conducted in accordance with the law. he is responsible for recording the proceedings (the minutes) of all Board meetings, which are kept in the Minute Book. he is the link between the company and the shareholders. he also keeps a record of all the companys financial transactions. he may be in charge of insurance and security matters

The Chief Accountant (US: The Comptroller or Controller)

He is by definition in charge of the Companys accounts. Every year, the shareholders appoint an Auditor who audits the accounts; the balance sheet can then be drawn up and sent to the Shareholders together with the Auditors report on the companys financial position.
The Chief Buyer

He buys all that the company needs to operate efficiently 1. Raw materials and component parts for the production department.

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2. Machinery 3. Office furniture and equipment 4. Stationery 5. Food for the staff canteen, etc. He is in charge of stock control (US: inventory management): if the firm runs short of supplies, its output is bound to plunge; on the other hand, idle stock proves expensive.

The Production Manager

He is by definition in charge of the Production department, or in other words, of the factory which manufactures goods.
The Sales Director (Manager)

He heads up the Export, the Home Sales, the Marketing, and the After-Sales Departments, and is a key officer in the firm since the latters life hinges upon the volume of goods that he and his collaborators manage to sell, at home and/or abroad: they combine their efforts so that the firm may always have full order book, and work consequently at full capacity.
The Personnel Director (US: The Human Resources Manager)

He is entrusted with tasks of great importance: He takes on (hires, recruits) the workers that the firm needs, after advertising vacancies for jobs, screening the applicants, and shortlisting those with suitable qualifications. He ensures the promotion of employees through training and further education, or makes it easier for those who have been laid off or transferred to adapt themselves to another job thanks to retraining courses. He is entrusted: 1. With the unpleasant task of dismissing incompetent employees 2. With the no less unpleasant task of laying off such employees as have been made redundant in the wake of technological or economic upheavals (mergers, takeovers, etc.)

2.5. The Board of Directors

Complete the text using these verbs:

appointed constitute d

attacked reviewed

combined supervised

defined supported

Large British companies generally have a chairman of the board of directors who oversees operations, and a managing director (MD) who is responsible for the day-to-day running of the company. In smaller companies, the roles of chairman and managing
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director are usually (1). Americans tend to use the term president rather than chairman, and chief executive officer (CEO) instead of managing director. The CEO or MD is (2) by various executive officers or vice-presidents, each with clearly (3) authority and responsibility (production, marketing, finance, personnel, and so on). Top managers are (4) (and sometimes dismissed) by a companys board of directors. They are (5) and advised and have their decisions and performance (6) by the board. The directors of private companies were traditionally major shareholders, but this does not apply to large public companies with wide share ownership. Such companies should have boards (7) of experienced people of integrity and with a record of performance in a related business and a willingness to work to make the company successful. In reality, however, companies often appoint people with connections that will impress the financial and political milieu. Yet a board that does not demand high performance and remove inadequate executives will probably eventually find itself (8) and displaced by raiders.
Shareholders

Board of Directors

Chairman or President

Managing Director or Chief Executive Officer

(Executive Directors) VicePresident for Production Production Department VicePresident for Finance Finance Department Vice-President for Human Resources Human Resources Department Vice-President for Marketing

Marketing Department

Kinds of Managers

Managers can be classified according to: 1. the level within the organisation; 2. the area of management.

21

Level of management

TOP MANAGERS an upper level executive who guides and controls the overall fortunes of the organisation (a small group); MIDDLE MANAGERS a manager who implements the strategy and policies developed by the top management; LOW-LEVEL MANAGERS s/he coordinates and supervises the activities of operating employees.
Areas of Management

FINANCIAL MANAGER s/he is responsible for the organisations financial resources; OPERATION MANAGER s/he creates and manages the systems that convert resources unto goods and services; MARKETING MANAGER s/he is responsible for facilitating the exchange of products between the organisation and its customers or clients; HUMAN RESOURCES MANAGER - a person in charge with managing the organisations formal human resources programs; ADMINISTRATIVE MANAGER a manager who is not associated with any specific functional area but who provides overall administrative guidance and leadership.

22

CHAPTER 3. MARKETING
Motto: Exports are becoming obsolete, because they are too slow. Marketers today must sell the latest product everywhere at once And that means producing locally. CARLO DE BENEDETTI

Read the following article.

Marketing is a technique that aims to identify, anticipate and satisfy consumer demand. It covers quite a vast field that includes such different disciplines as R & D, product planning, marketing research, as well as the more obvious sales promotion and advertising. Market research is just one branch of marketing and must not be confused with marketing research. The latter is a term applied to general research concerning the type of media used to promote a product, the economic climate in general, and the techniques of persuading consumer to buy a product, just to name a few aspects. Market research, however, refers to the study of how a product will sell before it is launched, as well as its performance on the market once it has been launched. A market survey helps a manufacturer to find out if a product sells or not. It usually consists of a questionnaire that is tried out on a representative sample of the target population chosen. company has This may sound decided its quite straightforward, but even when a clearly objectives, experts are needed to draw up questions that do not influence or confuse the person answering them. The notion of target population is Also, sometimes difficult to define. Who should your product be aimed and why? Theres no much point in asking an 85year-old man what he thinks of the design of a trendy sweatshirt, just as it would be foolish to ask a teenage girl what sort of disposable nappy she preferred. For the purposes of research, the population is divided up into six categories: A, B, C1, C2, D and E. At the top of the pile you have the upper classes, people such as doctors and lawyers, and those positions. in B senior covers management

administrative and professional people. Coming down a little, C1 refers to junior executives and the lower middle class in general, and C2 to the skilled working class. Into category D come unskilled workers and finally, in category E, casual workers and, what may surprise some of you, state pensioners (because of their low income level). ! Important ideas Marketing involves making a good, cheap product and convincing customers to buy it by way of a good communications mix. Marketing involves four basic elements: advertising, sales promotion, public relations, and personal selling.

23

Then first three of these are used for consumer goods, the last for industrial goods.

Marketing involves producing the right product, pricing it attractively, making it available to potential customers, and promoting it.

Answer the following questions:

1. 2. 3. 4. 5. 6.

What is the purpose of marketing? What are three disciplines that are included in the concept of marketing? What is marketing research? How is this different from market research? What does a market survey consist of? What two basic problems are there in making up questions to the survey?

Crossword puzzle:

All the words below form strong partnership with the word product. 1 M 2 3 4 5 6 7 8 9
Across:

A R K E T I N G

1. A campaign organised by a company that can influence consumers buying of its products 2. To buy 3. An intermediary between producer and consumer specialised in transferring goods from manufacturer to consumer 4. A method of gambling where participants pay small amounts and name a horse taking part in a race. The one who names the horse winning the race takes all the money 5. One of the Marketing departments 6. The allocation of goods to consumers by means of wholesalers and retailers 7. A marketing activity designed to boost the sales of a product or service 8. A piece of printed paper that gives you the right to pay less than usual or not to pay at all for a product 9. Design and manufacture of materials for packing goods

24

 Read the following text, paying attention to particular market expressions:

The US market was fairly buoyant when we finally managed to break into it three years ago, even though it was largely dominated by two or three big American players. And over the next two years both the market itself and our market share grew significantly. Since then, as you know, much cheaper products from East Asia of almost equal quality to our own have flooded the market. At first the main threat came from Korea, but now it looks as though Taiwan is set to enter the market too. Im sure I do not need to tell you that if this trend continues the US market will become completely saturated and may even collapse altogether. Im afraid the picture in Western Europe is not much better. European trade disputes have further depressed a market which was already suffering from the effects of the recession. The one piece of good news is that going into Central Europe turned out to be the best move we have made for some time. We entered that market in October. At first, it looked as if the competition in Poland and the Czech Republic would squeeze us out of the market before we could establish ourselves, but fortunately that did not happen. And, in spite of currency difficulties, I can assure you that that market at least remains buoyant.

has collapsed

has grown

break into

depressed

Can you match the following words?

collapse skim

prune dry up

target penetrate

launch blitz

saturat e shrink

flood push

1. . Send a rocket into space or a new ship into water for the first time 2. . Aim at something when shooting at something 3. . Remove something from the surface of something cream from milk 4. . Go into something a bullet into a body 5. . Cover with water when a river bursts into banks 6. . Move something away from you 7. . Drop a lot of bombs on one area 8. . When some soft substance is full of water so that it cannot absorb any more 9. . Fall down suddenly - a building during an earthquake 10. . When something gets smaller clothes when they are washed 11. . When all the liquid in something disappears perhaps because of too much heat
25

12. . When you cut branches off a tree so that it will grow better in the future
Work with a partner. Fill in the following chart:

MY COMPANY Name of company Product/Service Main customers Main competitors General market trend Reasons for trend

MY PARTNERS CO

Match the first parts of the words or expressions on the left with the other parts on the right:

1. 2. 3. 4. 5. 6. 7. 8. 9. 10 .

advertising brand market retail break into public press prospective market commission

a. release b. a market c. d. e. f. g. h. i. j. survey image share campaign customer outlet research relations a market

Complete the text below with the following words:

1. trade fairs 2. range 3. stands 4. field work 5. desk work 6. samples 7. designed 8. break into 9. showrooms 10. market share 11. promote Before seeking to .. a new .of products, especially if the firm is trying to a new market or increase its .., an advertising campaign must be carefully.., based on the results of the and. out in the streets during the initial market survey. The campaign may include pictures on. and demonstrations at international or in the companys existing , or the distribution of free to potential customers.
26

3.1. Global Marketing

Logo Image

A logo is the symbol by which we know a company, but what makes a successful logo one which will be instantly recognized all over the world? Look at the logos on this page. To what do you think they owe their special appeal and memorability? simplicity symbolic design geometric shape style of lettering non-verbal impact

Discussion

How visually memorable are logos? Have you thought of your companys logo? How does a powerful logo help to build up the image of a product or service in the mind of the customer? What is global image? What do you understand by the term the globalization of markets?
Compare your ideas with those expressed in the following article:
27

GOING GLOBAL
According to experts, the biggest challenge now facing the international advertising industry is that of establishing world brands by appealing to the global consumer in all of us. Professor Theodore Levitt of Harvard Business School first put forward the theory of the globalization of markets. But the idea that there are more similarities between cultures than differences goes back to the popular image of the global village. It was Coca-Cola who told people in the 70s that theyd like to buy the world a Coke and British Airways who announced in the 80s that they were the worlds favourite airline. the Their global universally recognized TV and cinema advertisements invented advertising genre and the agencies that created their commercials are today widely regarded as the best in the business. The secret, according to British Airways, is that the message should be straightforward, easily understood and vividly expressed. And they succeeded in doing that in their first global commercial run by Saatchi Saatchi featuring Manhattan Island being flown across the Atlantic. The commercial was screened in 29 countries and caused a sensation in the industry. The effect was breathtaking; So words it were makes hardly global needed; the picture said it all. what advertising so memorable? The answer to that consists in reducing the message to an absolute minimum. A lot of

advertisements pack too much and end up obscuring their message. The global commercial gets its message across succinctly, with great impact and an emotional intensity which belongs to the universal languages of pictures and music. The commercials reinforce the brand-image independently of any real consideration of the product and image outsells product every time. The beauty of a good global ad is that it can be used to great effect over a period of many years and still seem fresh. However, global image-making is a costly business. Though the world is getting smaller by the day, few companies have true global status and since most mass-marketed products actually sell to fewer than five per cent of the masses, it doesnt always pay to think big.

Which of the following ideas support the opinions expressed in the article?
1. Global advertising is just a current trend. 2. Global ads are generally believed to be superior to other commercials. 3. A global advertising policy usually leads to extremely bland commercials. 4. Good global ads often rely on their non-verbal impact. Mass marketing is actually a contradiction in terms.

28

 Discussion
Is there a TV commercial at the moment that you particularly like or dislike? Is there really any evidence that adverts have the slightest effect on consumer buying behaviour? Has an advertiser ever persuaded you to buy or put you off buying a particular product?

Think of a well-known market leader. To what do you attribute its market leadership? a better brand-image superior marketing superior production methods technological superiority innovative research something else?

Read the following lines paying attention to the words written in italics:

The total marketing mix includes service or product range, pricing policy, promotional methods and distribution channels, but for world brands who aim to be market leaders, a large part of marketing expenditure goes on television advertising. When global companies organize a marketing drive, a concerted effort is made to promote and sell more of their products and this will often involve an expensive advertising campaign. Marketers generally tend to divide markets up into separate groups according to geographical area, income bracket and so on. This is known as market segmentation. But a global marketing policy will obviously take much less account of local market trends and concentrate instead on what different markets have in common. As global commercials are shown on TV in many different countries, the advertising costs tend to be high and obviously only the biggest advertising agencies can produce commercials on such a global scale. Fortunately, global commercials like those for Marlboro cigarettes and British Airways can be run for many years without looking out of date, and advertising slogans. Such as the worlds favourite airline and Coke is it, will always be universally recognized.
Try to arrange the words mentioned with the following areas, so that they form strong word partnership:

Marketi ng

- plan - strategy -

Advertisi ng

- budget -

Mark et

- forces - share -

One of the quickest ways of destroying your global image is to give your product an unattractive name. And when it comes to brand names that

sound embarrassing in translation, no one has made as many spectacular mistakes as the car industry. General Motors Nova (No va means It doesnt go

29

in Spanish) has, of course, become a classic. And the Ford Pinto in Portuguese pinto is slang for a small male organ. Understandably, Brazilians werent queuing up to become the proud owners of a Pinto.

However, Rolls Royce was always above such kind of embarrassments. They chose elegant names for their cars Silver Cloud, Silver Shadow, Silver Spirit and Silver Ghost.

Here are some well-known brand names you could find in any large British supermarket. What do you think the products are? 1. Old Spice 2. Pampers 3. Kleenex 4. Eternity 5. Frish 6. Uncle Bens 7. Timotei 8. Blue Dragon 9. Babycham 10. Special Brew 11. Black Magic 12. Imperial Leather 13. Taboo 14. Bold 15. Lynx

3.2. Advertising
Read the following article paying attention to the words related to advertising:

Advertising informs consumers about the existence and benefits of products and services, and attempts to persuade them to buy them. The best form of advertising is free word-ofmouth advertising, which occurs when satisfied customers recommend products or services to their friends, but very few companies rely on this alone. Large companies could easily set up their own advertising departments, but they tend to hire the services of an advertising agency. A contract to produce the advertisements for a specific company, product, or service is known as an account. The client company generally decides on its advertising budget, the amount of money it plans to spend in developing its advertising and buying media time or space. It also provides a brief, or a statement of the objectives of the advertising, as well as an overall advertising strategy concerning what message is to be communicated. Media for advertising include the following: i. National newspapers newspapers have a short life (one day) but a high attraction and value. ii. Local and regional newspapers local newspapers reach a concentrated geographical area, and are suitable for advertising to a geographical market segment. iii. Magazines and trades the advertiser can select a magazine for advertising according to the content of the magazine which identifies the interests of the audience. iv. Television television is a mass medium which can be received by almost everybody and thus reaching every socio-economic group. v. Direct mail direct mail is the sending of sales literature direct to the customers. Too often, this is junk mail. vi. Commercial radio vii. Posters (billboards in US) and transport advertising. viii. Cinema

30

The set of customers whose needs a company plans to satisfy, and therefore to expose to an advertisement are known as the target market. The advertising of a particular product or service during a particular period of time is called an advertising campaign. Favourable mentions of a companys products or services, in any medium read, viewed or heard by a companys customers or potential customers, that are not paid for, are called publicity. ! Remember a. Advertising is non-personal communication the seller does not come face to face with potential customers. b. It is paid for. c. There is a clear, identifiable sponsor of the advertisements. In brief, all advertising seeks to generate Awareness of the product, promote Interest, generate Desire to purchase and stimulate Action to purchase (AIDA)
Translate the following sentences into English. You will find the following vocabulary useful:

hoarding poll to aim at point-of-sale TV commercial break-even point glossy magazine insert peak viewing time 1. Pagina de reclame n culori se adreseaz unui public tnr i dinamic crui i place s se amuze. 2. Un ambalaj bine gndit contribuie enorm la succesul unui produs recent lansat. 3. Panouri publicitare hidoase desfigureaz aspectul societii secolului al XXlea. 4. Publicitatea la locul vnzrii este o strategie veche i modern n acelai timp. 5. Studiul de pia trebuie s-l informeze pe productor asupra clientelei susceptibile de a-i cumpra produsul. 6. Pragul de rentabilitate nu trebuie confundat cu rata rentabilitii. 7. Ct de rentabil ar fi pentru dumneavoastr dac vi s-ar deschide piaa spaniol i reeaua de distribuie a acesteia ? 8. Rezultatele sondajului sunt surprinztoare : se credea c marca e mult mai cunoscut. 9. politic de distribuie selectiv, axat numai pe supermagazine, va sta la baza succesului su. 10. Vom contracta spaiu publicitar n mai multe reviste i poate chiar o reclam TV difuzat la ore de maxim audien.
Read the following arguments pro and against advertising. What is your opinion?

Arguments for advertising

1.

Arguments against advertising

1.

Advertisements tell that are

Advertising

is

consumers about the products available, allowing

expensive and may lead to prices being higher than

31

them to make a wider and

2.

necessary. advertising new market firms

High costs from the because

more

informed encourages between have to

choice. It competition firms, who

may also prevent entering

produce cheaper and better products.

3.

they cannot afford the expense.

2.

By creating a wider for products, makes possible. and for

Advertising can misleading.

market

be

advertising and makes services

4.

However, there are substantial controls upon the industry.

3.

large-scale production sales Mass production also goods cheaper

Advertising can to buy

put pressure upon people products that they dont really need or cant afford.
4.

consumers. Without advertising, such would clubs as and be and form media television sporting other also

newspapers

Advertising

is

often

wasteful,

more expensive. Many organisations benefit

sometimes involving the same firm virtually products each advertising identical against other

advertising revenue.

(washing powder is a good example).

32

Table 1.1. The Twenty Leading American Advertisers

Ran k

Advertiser

Ad Spending ($ millions) $2,058.2 1,506.9 1,294.0 1,045.2 814.5 773.9 735.9 728.3 712.3 683.1 634.5 632.0 609.2 607.5 573.8 569.8 547.5 474.0 470.1 468.8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Philip Morris Cos. Procter & Gamble Co. General Motors Corp. Sears, Roebuck & Co. RJR Nabisco Grand Metropolitan PLC Eastman Kodak Co. McDonalds Corp PepsiCo Inc. Kellogg Co. Anheuser-Busch Cos. Kmart Corp. Warner Lambert Co. Unilever NV Nestle SA Ford Motor Co. American Telephone & Telegraph Chrysler Corp. General Mills Johnson & Johnson

Source: Reprinted with permission from AD AGE, 9/27/89. Copyright Crain Communications, Inc. All rights reserved.

33

 Crossword puzzle:

All the words below form strong partnership with the word product. 1 A 2 3 4 5 6 7 8 9 1 0 1 1 D V E R T I S I N G

Across:

1. A phrase that is used by advertisers and which sticks in the minds of the prospective buyers 2. A publicity material which is usually folded 3. A stimulus 4. An advertising method where a well-known public figure advertises a certain brand 5. To allocate the goods to consumers by means of wholesalers and retailers 6. An ad included in newspaper, magazine etc. 7. Vehicles for carrying the advertising message to the buyer (pl.) 8. A large notice that you stick on a wall or notice board 9. A list of companies grouped alphabetically or by their line of business 10. The number of times the same people in a target group are exposed 11. A short phrase meant to attract the consumers attention
Choose the most appropriate word or expression to complete each sentence:

1. Advertising tries to turn customers into real customers. a. foreign b. prospective c. domestic d. overseas

34

2. Posters are displayed on .. a. television b. computer screens c. hoardings d. radio 3. Direct advertising in shops is called advertising. a. point-of-sale b. retail c. wholesale d. display 4. Market research takes place before a new product is .. a. phased out b. packaged c. launched d. commissioned 5. A is the general name for different kinds of shops. a. department store b. wholesaler c. showroom d. retail outlet 6. They work for an advertising .. a. agency b. campaign c. company d. society 7. Advertisements on television are called a. spots b. classified ads c. commercials d. small ads 8. Rolls Royce is the brand.. in car industry. a. image b. identification c. leader d. name
Choose the correct alternative to complete each sentence:

1. In many markets there is a firm with a much larger market share than its competitors, called a .. a. market leader b. monopolist c. multinational 2. A company that is number two in an industry, but which would like to become number one think of Pepsi vs. Coca Cola is known as a a. market challenger b. market competitor c. market follower

35

3. A smaller company in an industry, more or less content with its existing market share, is called a a. market challenger b. market follower c. market sharer 4. Small, specialised companies, which target segments within segments, are called . a. market failures b. market followers c. market nichers 5. A market in which one single producer can fix an artificially high price is called a/an . a. homogeneous market b. monopoly c. undifferentiated market 6. A market dominated by a few large suppliers, and which it is hard for new companies to break into, is called a/an a. conglomerate b. market concentration c. oligopoly

3.3. Brand, Packing & Labelling

Read the following text paying attention to notions like brand, packing or labelling:

Consumers do not buy a product for its own sake, only for the benefits that the product offers them. The consumer who buys a drill does not generally do so for the pleasures of owning a drill but in order to have a facility to make holes in things. Therefore, in thinking about products it is necessary to think in terms of the needs that the product fulfils, and not the products features.
A checklist for analysing products is offered below:

a. b. c. d. e. f. g. h. i. j. k.

Quality: materials, workmanship, design, method of manufacture Technical characteristics, attributes that may be considered as selling points. Models, sizes, styles, ranges, colours etc. Essential or non-essential, convenience or speciality Similarities with other products supplied by the firm Relation of product features to users needs, wants, desires Development of branding and brand image Degree of product differentiation, actual and possible Packaging used, functional, promotional Materials, sizes, shapes, construction, closure Future trends in technology

36

Three important features of a product are its brand, package and label. They may be used to associate a product with a successful product line or to distinguish it from existing products. A brand is name, symbol, design or any combination of these that identifies a sellers products and distinguishes them from the competitors products. Branding removes anonymity and gives identification to a company and its goods and services. Branding is actually a very general term covering brand names, designs, trademarks, symbols, a distinctive letterhead, an identifiable shop front or van etc. A brand name is the part of a brand that can be spoken. It may include letters, words, numbers, symbols (that can be pronounced) Procter& Gamble A trade mark is a brand that is registered and whose shape is protected by law the CocaCola bottle A generic product is a product with no brand at all; its plain package carries only the name of the product (peanut butter, potato chips), and they appeal mainly to consumers who are willing to sacrifice quality for a lower price (however, they are not necessarily lower in quality). Branding strategies: 1. individual branding the strategy in which a firm uses a different brand for each of its products e.g. Procter & Gamble uses individual brands for its line of soaps: Ivory, Camay, Safeguard 2. family branding the strategy in which a firm uses the same brand for all or most of its products e.g. IBM Packaging consists of all those activities involved in developing and providing a container for a product. It has both functional and a marketing value (plastic packaging allows the customer to see the product before it is purchased). The package can also be used to inform customers about the products contents, uses, advantages, features etc. a. Packaging has five functions as follows: b. Protection of the contents of the package c. Distribution. Packaging helps to transfer products from the manufacturer to the consumer d. Promotion. The design of the package and the words printed on it should attract buyers to the product e. User convenience, as an aid to selling f. To conform to general government regulations Labelling is the presentation of the information on a product or its package. The label is the part that contains the information. This information may include the brand name and mark, the registered trademark symbol (), directions for use, safety precautions, a list of ingredients, the name and address of the manufacturer etc.
Discussion

Think of a product which has been on the market since you were a child. How has it changed? Do you want it to change? For someone growing up in Britain, here are six products which have been on the market for over 30 years:
Mars bars (a kind of sweet with toffee inside and chocolate outside) Heinz Beans (tins of beans in a tomato sauce)

37

Y-fronts (mens underwear) Barbie Doll (an American toy) Monopoly (a game) Channel No. 5 (a perfume)

Do you have those in your country? If not, can you name six similar products which have been around for 20 years or more? Why have they lasted for such a long time? The following are all brand names of products available in Britain. Which of them are available in your country? Can you think of one or two products from your country which are available all over the world?
Schweppes Tonic Water Campbells Scott Persil Soap Powder Uncle Bens Rice Polo Mints Kodachrome Harris Tweed Liquorice Allsorts Fairy Liquid Wet Ones Snickers Typhoo Tea Baxters Jam Headn Shoulders Signal Toothpaste Loo-blue Black Magic Sellotape Cadburys Milk Tray Pears Toilet Soap Rolo Kleenex Tissues Andrex Wilkinson Sword Slumberdown Macleans Toothpaste Elastoplast

Work in pairs or small groups to develop a competitive new product to challenge an established brand name:

1. Identify a household name. You should choose a product either in one of the fast-moving consumer goods markets such as food, soft drinks, alcoholic drinks, cigarettes, or cosmetics. Alternatively, choose a product from the luxury branded goods market such as perfume, watches, or fashion. TARGET BRAND: 2. Investigate the popularity of the brand name. Identify three factors which contribute to the universal appeal of the product. Is it a unique product? If so, what are its special characteristics? If not, to what does it owe its popularity? Is it quality, image, availability, or price? MAIN SELLING POINTS 1. . 2. 3. 3. Come up with an idea for a new product to compete with the brand name. Consider the following: market positioning (upmarket or downmarket?), pricing strategy, main selling points in comparison with the brand name, packaging, advertising. DETAILS & FEATURES: NAME OF NEW PRODUCT: 4. Produce a consumer profile of the customer you are trying to attract. You need to take account of age, sex, socio-economic group, and lifestyle. CONSUMER PROFILE:
38

 5. Devise a simple slogan to promote the product. SLOGAN:

3.4. Marketing and sales

Most contemporary marketing theorists distinguish between the now out-of-date selling concept and the modern marketing concept. The former the selling concept assumes that resisting consumers have to be persuaded by vigorous hard-selling techniques to buy non-essential goods or services. In other words, products are sold rather than bought. The marketing concept, on the contrary, assumes that the producers task is to find wants and fill them. In other words, you dont sell what you make; you make what will be bought, so that selling becomes almost superfluous. Of course, this is a little utopian: the existence of competitors offering comparable products will always make some selling necessary. Furthermore, sales departments generally resist the dominance of marketing, as they have different objectives. They are generally interested in the short-term and on achieving current sales targets rather than planning the right products and marketing strategy to meet consumers long-term needs. Yet, although marketing tends to dominate in consumer goods companies, there are still industries in which the production and sales departments tend to be as important. In capital intensive industries such as steel or chemicals, for example, it is desirable to keep equipment operating as much as possible. Consequently, senior management tends to set sales goals on the basis of the economic and competitive situation, as well as the need to keep plants running on near capacity, and then tries to find ways to sell the output in the short term.
3.4.1. Planning the Marketing Campaign

The marketer will combine all elements of the mix to attract customers. Any marketing plan will address the following issues. a. Identify who you are marketing to. You may be trying to win over a hostile pressure group. b. What are the competitors doing? c. How do marketing objectives translate into a strategy for each element of the mix? For example, a firm selling a new product will want to ensure the following. - Enough products have been made. - Distributors are stocking the product and are ready for the demand. - Advertisements have been booked to generate demand when distributors are ready to supply it. - The price is such as to make profit or win market share.

39

d. The firm might want to deter competitors, so it might try and flood the market. - The tactics for each element the mix need to be planned and co-ordinated. For example, the advertising element of the mix will involve the following decisions. - Newspaper and/or TV advertising - The frequency of the message - The content of the message - The style (eg. Humorous) e. How much money is available to be spent? f. Evaluation of the campaign. Did the firm achieve its objectives?
3.4.2. Soft Sell Vs. Hard Sell Read the following article and notice the differences between the soft sell and the hard sell.

The Soft Sell

Are you the kind of person who wont take no for an answer? So how come you keep getting no for an answer? Has it ever struck you that you could be doing something wrong? What if you really cant persuade people to do things they dont want to? And did it ever cross your mind that the customer may not actually need your product? Hard to accept, I know, but its a possibility. Forget conventional wisdom. Its not your job to get people to buy but to find out if theres basis for doing business. Manage the demand thats there. Thats all you have to do. Once a man of wisdom said: Everyone in the world just wants to be listened to, but they seldom get what they want because so does everyone else. I can see some of you know what Im talking about. Well, so you should, because some of the worst listeners I know work in sales. Try shutting up for a change. Listen to everything the customer says. Give them every opportunity to disqualify themselves as a serious prospect.

And

since

thats

all

youre

trying

to

establish. It neednt be a blow to your ego to be told no. If they say no, dont argue with them. Nobody ever won an argument with a customer. Dont make extravagant claims for your product. And listen when the customer asks questions even silly questions. People ask silly questions for a reason. Remember, the decision to buy is the buyers responsibility, not yours. What it comes down in the end is trust. Lets face it, its natural for the customer to be sceptical. Selling always causes customer resistance. Its a fact of life. But if selling causes customer resistance, no selling equals no resistance. And you make more sales when you stop trying to sell.

The Hard Sell

Contrary to popular opinion, selling is not a dirty word. Selling is what business is really about creating and stimulating demand. Nobody and I mean nobody would ever buy anything if somebody else

40

didnt go out and sell it to them. And thats as true as now as its ever been. People cannot make buying decisions. Not by themselves, they cant. The minute they have to say yes, they panic. Its the parachute principle. Theyre up there looking out of the aeroplane and they cant jump. They panic. Now, theres only one thing you can do if they wont jump push them. Get on the phone and sell. The telephone is an instrument of power if you know how to use it. Lesson one: you cant sell sitting down. No-one can. Selling is dynamic. Get up. Get a phone that lets you move around. Being mobile helps you to be alert, sound confident and project energy. It improves your performance. You sell more on the move.

Lesson two: dont be afraid of rejection. If one call in ten gets a yes, then a negative response is just one more no out of the way. Nine nos equal yes. So nos are OK. Nos are wonderful. Lesson three: are you sure the customer means No? As any good sales person will tell you, No is really just an invitation to keep talking. No hardly ever means No. No can mean No quite. No can mean Not yet. No can even mean Not if I can help it. Thats fine. What would it take to get you to say Yes? Lesson four: never invite your buyer to think the matter over. Its been statistically proven that if you have to make a second appointment, you have actually halved your chance of making the sale.

Discussion

OUR POLICY Rule 1 The Customer is Always Right!

The sign on the left is displayed outside the Connecticut store of American supermarket king and retail sales genius, Stew Leonard. How far do you go along with the idea

Rule 2 If the Customer is Ever Wrong, Re-read Rule 1.

that the customer is always right? And what are the implications for market research, customer service and quality management?

Cultural Awareness

Most Americans will insist on the hard sell. Its not enough that you want to buy their products, you must let them sell them to you. They have to report back to superiors who will be as interested in how the deal was struck as the result. Systems and procedures matter to Americans.

41

The Spanish, on the other hand, are unimpressed by the most meticulously prepared meeting and pay much more attention to people. In this they are more like the Arabs or the Japanese. In the Middle and Far East business is built on trust over a long period of time. Spaniards may come to a decision about whether they trust you a little sooner.
Match a word from each column:

1. 2. 3. 4. 5. 6. 7. 8. 9. 10

product sales percentage launch stock maintenance retail hidden dissatisfied after-sales

a. b. c. d. e. f. g. h. i. j. k. l. m . n. o.

increase check products range figures up customer service agreement Period agent with outlet defect Clause

. 11 comply . 12 guarantee . 13 penalty . 14 sole . 15 follow .

Choose the correct word or expression to complete each sentence:

1. Orders are written down on an a. authorised dealer b. order form c. assessment 2. An . price includes VAT. a. inclusive b. exclusive c. expiry 3. A ................................... is a period when prices cannot be increased. a. price freeze b. hold-up c. price-fixing

42

4. A .. is a reduction in price. a. mark up b. profit margin c. mark down 5. We have just received a for a quotation. a. requirement b. demand c. request 6. After an initial deposit, you pay a. remittances b. instalments c. shipments 7. A payment which is overdue is one which is .. a. early b. on time c. late 8. A .. is one that is controlled by Customs. a. warehouse b. trade fair c. bonded warehouse 9. If you have . goods, you dont have any left. a. out of stock b. overcharged c. run out of 10. A is where a company displays its products. a. retail outlet b. showroom c. warehouse
Discussion

Do you have any experience of selling goods to other countries? If you have, what problems have you come across? The export of animals is a very difficult problem in some countries. For example, when British farmers export sheep to Europe, sometimes the animals can be in the lorries for over 24 hours. What do you think of this? Is it cruel? Which of the following two opinions do you agree with? Animals should be treated with respect. It is cruel to transport live sheep without stopping every 6 hours to let them eat, drink, and run around. Any society which is cruel to animals is not a civilised place to live in. People should stop worrying about animals and start worrying more about other people. Think of all the children and old people who dont have enough to live on. We kill animals to eat them. So why worry!

43

 Test your knowledge.

1. 2. 3. 4.

Define marketing. What is the real purpose of a product? List the elements of the marketing mix. Why are people included in the Why do firms brand their What are the objectives of advertising? By what criteria would you choose an What issues would be addressed in a

marketing mix for services?

5.

product/services?
6. 7.

advertising medium?
8.

marketing plan?
WORDS TO REMEMBER

advertise to make something known to the public, by placing notices or messages in various media (newspapers, television etc.) advertisement (often abbreviated to ad or advert) a paid communication in the media designed to inform and persuade people about products or services advertiser a person or organisation that advertises advertising the business of creating and placing advertisements advertising agency a company that handles advertising and sales promotion for clients advertising brief a statement of the objectives of an advertising campaign that a client works out with an advertising agency advertising budget the amount of money a company plans to spend in developing its advertising and buying media time and space advertising campaign the advertising of a particular product during a particular period of time advertising copy the words or text of an advertisement after-sales service - the maintenance of a product after it has been bought AIDA a word made up of the first letters of the steps to successful communication in marketing: get Attention, hold Interest, arouse Desire, and obtain Action allocate to assign fixed resources for a particular purpose billboard (US) or hoarding (GB) a large board or other surface on which advertising posters are displayed brand a product that is distinguished from those of competitors by a name, symbol, sign, design etc. brand image the publics beliefs and perceptions about a particular product brand loyalty consumers commitment to a particular brand, which they regularly buy brand management responsibility for a particular brand in a multi-brand company brand mark a symbol or design or particular form of lettering, that is used to identify a brand

44

branding the process of establishing in customers minds a knowledge of and a loyalty to a product, focusing on the brand name brochure a small booklet or magazine containing pictures and information about a product or company consumer a person who buys and uses goods or services; a person whose needs are satisfied by producers consumer market the individuals and households that buy products for their own personal consumption conversional marketing converting peoples attitudes so that they buy something they previously disliked corporate image the face that a company wishes to present to the public, by way of advertising, public relations etc. counter-cyclical advertising advertising during periods or seasons when sales are normally relatively poor counter marketing or unselling the attempt to destroy demand for something considered to be harmful coupon a certificate giving consumers a price reduction on a particular product customer a person (organisation) that buys a product or service from a shop or a producer demarketing reducing excess demand by temporarily or permanently discouraging certain customers department store a large shop or store selling a wide range of products, e.g. clothing, household goods, food etc. developmental marketing the transformation of latent demand into actual demand, when a product or service first appears differentiated marketing providing products to meet the needs of different consumer groups in different market segments direct mail advertising and promotional material sent directly to consumers direct marketing reaching consumers without any intermediaries by sending them catalogues, telephoning them direct selling when manufacturers sell directly to retailers, without using wholesalers, or when wholesalers sell directly to the public without using retailers distribution the process of getting products to consumers, usually by way of middlemen such as wholesalers distribution channel all the companies or individuals involved in moving particular goods or services form the producer to consumer distributor someone (generally a wholesaler) who stocks and resells components or goods to manufacturers or retailers free gift a present given to consumers, usually when they purchase another product, as a sales promotion (also called a freebie) free sample a form of sales promotion in which a product is given to consumers (usually in a small size) to encourage them to try it. industrial market or producer market or business market all the people or organisations that buy goods and services used in the production or supply of other goods or services institutional advertising or prestige advertising advertising designed to build up a companys name or image rather than sell specific products junk mail advertising an promotional material that is delivered to people who didnt ask for it

45

knocking copy or comparative advertising advertising that criticises rival products by name leaflet a printed piece of paper giving information or advertising something mail order purchasing goods by post, from a catalogue maintenance marketing the attempt to keep up full demand market the set of all actual and potential buyers of a good or service; the place where people buy and sell; the people who trade in a particular good; to make goods available to buyers and to encourage them to buy them market demand the total volume that will be bought in a particular area, period of time, and marketing environment, with a given marketing programme market forces supply and demand market leader the company with the largest market share market penetration the attempt to increase or maximise sales, rather than current profits, by selling at a low price market potential the limit approached by demand in a given market and marketing environment as marketing expenditure increases market research the collection, analysis and reporting of data relevant to a specific marketing situation (e.g. a proposed new product) market segment part of a market; a group of customers with specific needs, defined in terms of geography, age, sex, income, occupation, life-style market segmentation the act of dividing a market into distinct groups of buyers who have different requirements or buying habits market share the sales of a company (or brand or product) expressed as a percentage of total sales in a given market marketer someone who works in marketing marketing the process of identifying and satisfying consumers needs and desires marketing mix the set of all the various elements in a marketing programme, and the way a company integrates them marketing programme a companys plans regarding the marketing mix, including product features, price, promotion expenses, resource allocation marketing strategy a plan or principle designed to achieve marketing objectives mid-market medium priced products (and their buyers) multi-brand-strategy producing several brands of the same product category, each positioned differently in consumers minds non-business marketing marketing by non-commercial organisations such as colleges, churches, clubs, political parties outlet a place where goods are sold to the public: shops, stores, kiosks, market stalls packaging wrappers (pieces of paper or plastic) and containers (boxes) in which products are sold point-of-purchase (or point-of-dale) display a sign, poster, stand advertising and showing a product, supplied by a manufacturer to retailers posters large door advertisements on hoardings pre-testing a way of predicting or measuring the effectiveness of an advertisement before it is generally released, by interviewing selected viewers product something made, manufactured by a mechanical or industrial process; anything capable of satisfying a want or a need promotion raising someone to a higher grade job; informing customers about products and services and trying to persuade them to buy them (to promote someone or something) promotional tools different ways of informing potential customers about products

46

publicity mention of a company or its products in the media, which is not paid for by the company questionnaire a list of questions sent to target customers in market research recall tests a way of measuring how much consumers remember about advertisements retailer a merchant such as shopkeeper who sells to the final customer rolling launch introducing a new product in one region at a time sales promotion the use of temporary incentives to make customers buy immediately sales representative or sales rep or salesman or salesperson someone who contacts existing and potential customers, and tries to persuade them to buy goods or services sales revenue the amount of money a company receives from its sales sample a group chosen out of a large number for a survey sampling taking a limited number from a large group for statistical inquiry, the results of which are then applied to the whole group showroom a large shop in which goods are displayed for customers sponsorship the subsidising of a sporting or artistic event by a company for advertising purposes stimulational marketing creating demand for products or services about which consumers are uninterested or indifferent survey the collection of information about peoples tastes and opinions, from a sample of the population target marketing selecting particular market segment and developing and positioning products for them trade mark a brand name that is legally protected and cannot be used by other producers trade marketing concentrating marketing effort on distributors and retailers rather than customers

47

CHAPTER 4. BANKING
Son "What is a debtor, Pa?" Papa " A man who owes money " Son "And what is a creditor?" Papa "A man who thinks he is going to get it back"

4.1. Money
4.1.1. What is money?

Money is anything used by a society to purchase goods and services or resources. The members of the society receive money for their products or resources. They can either hold that money or use it to purchase other products or resources. The members of primitive societies used to exchange goods and services through barter without using money. A barter system is a system of exchange in which goods or services are traded directly for other goods or services, e g a family may raise vegetables and herbs and another may wave cloth. To obtain food, the family of weavers trades cloth for vegetables if the farming family needs cloth. The only trouble is that they had to need each other's product at the same time. This kind of exchange went especially with products considered to be the necessities of life. Different groups of people have used all kind of objects as money whale's teeth, stones, gold, and silver. Today the most commonly used objects are metal coins and paper bills which together are called currency.
4.1.2. Functions of money

Besides being an aid in the exchange of goods and services for resources, there are three specific functions of money in any society. Serves as a Medium of Exchange It is the primary function of money. A medium of exchange is anything that is accepted for products and resources. As long as the owners of products and resources accept money in an exchange, it is performing this function. This eliminates the problems associated with the barter system. Serves as a Measure of Value Money serves as a measure of value because the prices of all products and resources are stated in terms of money. A measure of value is a single standard or yardstick that is used to assign values to, and compare the values of products and resources. Imagine the difficulty you would have in deciding whether you could afford a pair of shoes if it were priced in terms of yards of cloths or pounds of vegetables if your employer happened to pay you in toothbrushes. Represents a Store of Value Money received by an individual or firm need not be used immediately. It may be held and spent later. Thus money serves as a store of value, a means for retaining and accumulating wealth.

48

4.1.3. Characteristics of Money

To be acceptable as a medium of exchange, money must be easy to use, it must be trusted, and it must be capable of performing its functions. There are, thus, five essential characteristics of money. Divisibility The standard unit of money must be divisible into smaller units to accommodate small purchases as well as large ones. Portability Money must be small enough and light enough to be carried easily. That is why paper currency is issued in larger denominations. Stability Money should retain its value over time. When it does not (during periods of inflation), people tend to lose faith in their money. They may then return to other means of storing value (such as gold and jewels, works of art, and real estate). Durability The objects that serve as money should be strong enough to last through reasonable usage. No one would appreciate or use paper bills that disintegrated as they were handled or coins that melted in the sun. Difficulty of Counterfeiting If a nations currency were easy to counterfeit, its citizens would be uneasy about accepting it as payment.
Choose the right answer.

1. When you retire at the age of 65, you receive a(n) from the government. a. allowance b. alimony c. grant d. pension 2. If production in a factory exceeds the target, the workers get a a. bonus b. donation c. gratuity d. premium 3. The of living has risen by 25% in the last six months. a. cost b. expenditure c. expense d. price 4. The kidnappers demanded a of $ 1,000,000. a. fine b. penalty c. ransom d. reward 5. The World Bank has criticised the US for not giving enough financial to the East European countries. a. aid b. allowance c. loan d. premium 6. The President admitted taking and had to resign. a. bribes b. fees
49

c. fines d. premiums 7. In our country of $ 250 is paid weekly to a family with more than three children. a. an allowance b. a fee c. an income d. a wage 8. Mr. Rich earns $ 8,000 a month and $ 5,000 a month net. a. bulk b. gross c. mass d. wholesale 9. If they are not more careful with their accounts, they will go a. bankrupt b. broken c. penniless d. poor 10. While you are away from the office on business trips, you will be given a daily of $50 towards meals and accommodation. a. allowance b. fine c. permit d. reward
Give the names for the defined money expressions.

1. an amount of money you receive, usually weekly, in return for labour or service w___ 2. tax on imported articles paid to the customs d___ 3. a fixed amount which is paid, usually monthly, to workers of higher rank s_____ 4. money which is in the form of coins and notes, not cheques c___ 5. an amount of money which you lend to someone l___ 6. money paid by divorced father to his former wife to upkeep his children a_____y 7. money paid for professional services, e.g. to a doctor, a lawyer f__ 8. paid as a punishment for breaking the law f___

50

 Put each of the following words or phrases into its correct place in the text below.

banks currency goods

beads exchange rate sell

earn money shells

paper bills coins change

Money is what people use to purchase things. People spend money on and services. Many people save part of their money by depositing it in a bank. People money by performing services. can be anything that people agree to accept in exchange for the things they or the work they do. Ancient peoples used such varied things as , , and cattle as money. Today, most nations use metal coins and . Different countries and bills look different and have different names. A person can his money for the money of any country according to the . Usually, such rates are set by the central of a country. The value of a countrys may change, depending on the economic and political conditions in that country.

4.2. Banks
Read the following text:

Historically speaking, banks can be traced back to the days when religious people lent their assets (often in the shape of perishable goods) to the people who needed them in return for a promise to be paid back the goods along with a slight increase in the amount lent; also, religious people used to collect deposits from the public who thought that their belongings would be safest in temples or shrines. Today, the banking sector still performs such tasks but no longer does it in the name of a god or divinity. Still, in the same way that the exchange of goods was central in religion, bankers have now become key participants in the economic activity. Banks are financial organisations acting as intermediaries between borrowers and lenders. Banks essentially deal with collecting funds, making credit judgements and assuming credit risks. Nowadays banking is more and more referred to as a service industry. A bank looks like a financial services conglomerate able to carry out basic services such as: acceptance of deposits lendings foreign exchange transactions and bill finance investment management As a bank is not an isolated organisation, it is expected to do business within an environment determining its operation, interest rates, exchange rates, profit and expansion opportunities as well as the resources it needs to properly function (e.g. staff, customers

51

or clients, buildings etc.). This environment is made up from political, economic, social, technological, legal and international factors.
State which of the following are true or false:

1. Banks deal with collecting data and information about governments. 2. Banks are financial organisations acting as intermediaries between borrowers and lenders. 3. The main goal of a bank is to operate within insurance and pension funds areas. 4. Banks are not vulnerable to any changes in international politics as they have branches and subsidiaries abroad. 5. The basic services which banks offer relate to lendings, deposit-taking, foreign exchange transactions, investments. 6. The services of banks should meet the customers demands. 7. Changes in national governments affect the activities of banks.
Discussion

The bank is expected to do business within an environment. Any social changes may affect both the attitude of customers and quality of staff. Why do most people want to work in the banking business?
Translate into English:

Mediul n care bncile i realizeaz funciile determin modul de lucru, ratele dobnzii, ratele de schimb, oportunitile de dezvoltare i resursele necesare desfurrii unei activiti corespunztoare. Deoarece clienii doresc servicii la standarde tot mai nalte, este de ateptat ca bncile s studieze piaa n mod continuu. Aproape fiecare ar din lume i are propria moned. Cele mai obinuite categorii de bnci sunt cele de accept i de investiii, de compensare etc. Principalele segmente de pia pentru activitatea bancar sunt cele referitoare la sectorul agricol, zootehnic i de pescuit, industrii i servicii tradiionale, construcii i sector imobiliar, spitale, coli, industria modern, hoteluri i aprovizionare cu alimente i buturi, magazine, turism etc.
Choose the correct answer:

1. Every Friday Fred . money out of the bank. a. cashed b. drew c. robbed d. stole 2. The .of the pound has fallen recently. a. expense b. price c. value

52

d. worth 3. In order to buy his house Mr. White had to obtain a large ..from his bank. a. capital b. debt c. finance d. loan 4. The accounts show a .of $ 500 this month. a. decrease b. deficit c. deterioration d. devaluation 5. The bank will require three signatures when you open an account. a. natural b. sample c. specimen d. trial 6. Mr. Roger had to .all his savings from the bank to pay for a new car. a. exchange b. retire c. substract d. withdraw 7. The ...of the bank where I work is in the suburbs. a. branch b. house c. quarter d. seat 8. At this bank you can get 14% .on your savings. a. interest b. rate c. rent d. salary
4.4.1. Types of Banks

The way in which a bank is organised and operates is determined by its objectives and by the type of economy in which it conducts its business. According to the type of business performed, the following categories of banks are the most common: central banks investment or merchant banks commercial banks clearing banks saving banks national and state banks industrial banks A bank may or may not necessarily be in business to make a profit. Central banks, for example, provide a country with a number of services, while development banks exist to increase the economic growth of a country and raise the living standard of its population.
53

On the other hand, the aim of commercial banks is to earn profits. Therefore they provide and develop services that can be sold at a price that will yield a profit. A commercial bank, which provides the same range of services year after year, is less likely to be successful than one which assesses changes in the demand for its products and which tries to match products to its customers needs. New services are constantly being introduced and developed by commercial banks, and the full-service philosophy of many banks means that they are like financial supermarkets, offering a wide variety of services. However, not every bank may want to offer every kind of financial service. Many banks offer a combination of wholesale and retail banking. The former provides large-scale services to companies, government agencies and other banks. The latter mainly provides smaller-scale services to the general public. Both types of banking, however, have three essential functions, which are: deposits payments credits These three functions are the basis of the services offered by banks. They make it possible for banks to generate profits and to achieve their operating aims.
Which of the following banking services does the customer normally have to pay for?

a cheque book an overdraft home banking clearing a cheque a loan a fund transfer
Match the words on the left with the appropriate ones on the

right:

1. 2. 3. 4. 5. 6. 7. 8. 9. 10 .

withdraw have be in carry forward earn open endorse repay transfer sign

a. b. c. d. e. f. g. h. i. j.

interest a loan a balance funds cash debt an overdraft an account an agreement a bill of exchange

54

 Translate the following Romanian words so as to fill in the crossword and find the vertical word.

1 2 3 . 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1. venit 2. cost 3. dezvoltare 4. bani 5. a ctiga 6. transfer 7. comer 8. filial 9. cont 10. mprumut 11. a lua cu mprumut 12. bancomat 13. a da cu mprumut 14. banc

55

 Translate into English:

Exist dou categorii importante de bnci: bnci care ofer servicii persoanelor fizice i bnci care ofer servicii exclusiv marilor firme. Termenii cu ridicata i cu amnuntul au fost iniial folosii n legtur cu comerul, unde primul se refer la vnzarea detailitilor, iar cel de-al doilea la vnzarea n cantiti mici cumprtorilor individuali. Cel mai clar exemplu de banc care ofer servicii persoanelor fizice este banca comercial. Bncile comerciale accept deposite, pltesc bani conform instruciunilor clienilor, negociaz mprumuturi, cumpr i vnd valut. Bncile comerciale obin profit din ecart, adic diferena dintre rata dobnzii pltit deintorilor de aconturi i rata dobnzii pltit celor care mprumut. Exist mai multe feluri de conturi deschise la bncile comerciale: conturi curente, conturi de depozit la termen etc.

Central Banks The Bank of England

It occupies a central position in the UK financial system in terms of its main activities and areas of activity. The Bank of England is the central bank of the United Kingdom, and carries out a variety of traditional central bank functions. The Bank is a nationalised corporation. The Banks balance sheet has traditionally separate department been sections and divided the into two issue banking the

a. Banking Role The Bank of England acts as banker to a variety of customers: banker to banks and other financial institutions, banker to the Government, banker for a small number of private customers, as well as holding accounts for a variety of international organisations, including the World Bank, The Bank for International Settlements (BIS) and the International Monetary Fund (IMF). b. Lender Resort The Bank of England acts as lender of the last resort to the domestic banking system, in that it will provide funds to the banking sector when it is short in cash. Lender of last resort facilities are provided through direct loans to the banking sector, or by purchasing Treasury bills or commercial bills from the banking system. c. National Management Complementary to its role as banker public to the for Government debt. This is the the responsibility sector administrating Debt of Last

department. The former is concerned with the issue of notes by the Bank, and is classified as part of the public sector in the national account. The latter deals with all the other banking business, is classified as part of the banking sector, and falls within the UK monetary sector. The main areas of activity of the Bank of England can be grouped under the following categories:

includes

56

financing any public sector borrowing requirements, or at times managing the public sector debt repayment. d. Monetary Role The most crucial function of the Bank of England is the responsibility of carrying out monetary policy operations. Specific policy objectives are set by the government and put into action by the bank, though the Bank has an important role as adviser to the government on monetary policy matters. e. Note Issue The Bank is responsible for printing and issuing bank notes and coins in the UK. Banks withdraw new notes and coins from their accounts held in the Banking Department of the Bank of England. f. Foreign Currency Exchange Market Intervention the management of the Treasurys Exchange Equalisation Account (EEA) is carried out by the Bank of England. of The the EEA UKs contains gold the and deposits Policy

institutions preferred to be regulated by one of their own.

The Bank of Romania

It is the central bank of Romania, and carries out a variety of traditional central bank functions. The National Bank of Romania (BNR) is the only authorised institution to issue money as legal means of payment in Romania. The national currency is leul, its subdivision was banul. The BNR was founded in 1880 and it assumed and carried out its role and attributions successfully, proving to be one of the most important pillars of the Romanian modern society. Nowadays the BNR is a modern, independent central bank just like the other central banks in the states with advanced market economies. The main objective of the BNR is to take care of the stability of the national currency so as to keep prices in balance. In order to accomplish that, the BNR creates, applies, and is responsible for the monetary and foreign currency policy as well as the credit and payment one. As monetary authority of the country, the Bank of Romania has a set of distinctive functions: Bank of banks. The Bank of

convertible foreign currency reserves that are used to intervene in the exchange markets to stabilise the exchange rate of sterling or to raise it or lower it relative to other currencies. g. Supervision The Bank of England is responsible for the supervision of all banks under the Banking Act 1987. The Bank evolved as the regulator of banks largely through its operations in the financial markets. The

Romania acts as banker to a variety of customers: banker to banks and other financial institutions, banker to the Government. Lender of Last Resort. The Bank of Romania acts as lender of the

57

last resort to the domestic banking system, in that it will provide funds to the banking sector when it is short in cash it is a kind of cashier and banker of the state. The Board of Directors of the BNR is appointed by the Parliament for a 6 year period of time. Its main functions are: the design of the national and foreign currency policy, credit and payment policy and it also takes care of the necessary measures to authorise and supervise the whole banking system. The BNR network is made up of 22 branches and subsidiaries beside the headquarters.

58

 State which of the following sentences are true and which of them are false:

1. One of the functions of central banks is the implementation of monetary policy. 2. It is not only the Bank of England that issues notes in the UK. 3. The Bank of England controls the credit system and money supply. 4. The Bank is responsible for the supervision of all banks. 5. The Bank of England as lender of last resort cannot provide facilities by means of direct loans, only by purchasing Treasury bills or commercial bills.
Match the following expressions with the suitable definitions on the right:

a. legal tender

1. operations by a central bank performed in the open market such as buying securities on a large scale; 2. the speed at which a bank can raise cash from its assets; 3. money that must be accepted in discharge of a debt (in the UK Bank of England notes); 4. a function of a national bank which consists in making money available to commercial banks in case of emergency.

b. lender of last resort c. open market operations d. liquidity

4.4.2. Bank Organisation

Several factors have combined to make banking an international business. These include the growth of multinational companies and of international capital markets, the increased competition between the banks themselves, and important improvements in communications

and transportation. The major banks of the world have established extensive international operations by acquiring banks in other countries, by extending their own branch network abroad and by establishing correspondent relationships with foreign banks. 1 B 2 3 4 5 6 7
ACROSS:

A N K I N G

1. It deals with money. 2. They provide a country with a number of services. (2 words) 3. They exist to increase the economic growth of a country and raise the living standard of its population. (2 words) 4. A person working in a bank. 5. The aim of these banks is to earn profits. (2 words) 6. Documents promising to pay sums of money at specified times. 7. The bank offers a wide variety of services. (3 words)
Match the words to others with similar meaning:

1.

to assess

a.

it provides large-scale services, companies, government agencies and other banks money overdrawn on bank accounts to agreed limits

2.

deposits, payments, credits savings banks mortgage retail bank

b.

3. 4. 5.

c. d. e.

guarantee for a loan a bank mainly concerned with the financing of international trade the beneficiary of a draft

6. 7. 8.

wholesale bank overdraft clearing bank

f. g. h.

the maker of a draft deposit accounts an arrangement with a bank which pays the customers regular bills charging them to his account they have no restrictions as concerns the withdrawal of funds banks set up to accept deposits from members of the public set of shares and bonds and other securities owned by a banks customer the three essential functions of a bank a bank which is a member of a central organisation through which checks are presented for payment it provides smaller-scale services to the general public to evaluate

9.

merchant bank

i. j. k.

10 current accounts . 11 time or notice . accounts

12 drawer . 13 standing order . 14 portfolio . 15 payee .

l. m . n. o.

THE STRUCTURE OF AN AMERICAN BANK

Headquarters

Bankin g Divisio n

Private Bankin g Divisio n

Treasurers Division

Administration Division

Financial and Informational Systems Division

Corporat e Planning Division

Banking Division - Group 1 The Americas - Group 2 Europe - Group 3 Africa - Asia - Middle East

Private Banking Division - domestic and international markets Treasurers Division - investment portfolio management - commercial paper - foreign exchange - bullion - public finance Administration Division - personnel - premises - economic analysis Financial and Informational Systems Division - Comptrollers Department - Corporate Tax Department - Systems and Data - Processing Department Corporate Planning Division strategic planning - credit policy and administration Comptroller (US) = Controller (B)
THE STRUCTURE OF A BRITISH BANK
Headquarters

Administrati on Division

Banking Division

Dealing Division
- foreign exchange - currency options - money market transaction s - bonds - floating rate notes - CDs (Certificate s of Deposit)

Corpora te Finance Division

- mergers - takeovers acquisitions divestment s - stock market - capital raising

Investment Manageme nt Division

Leasin Divisio

- planning - group financial control - accounting and audit - computer services - personnel - premises

- loans -syndicated loans - project finance -overdrafts -documentary credits corresponden t banking

- pension funds - investment trust - offshore funds - unit-trusts

- leasing packages for lesser and lesse

 Crossword puzzle

A 1 2 3 4 5 6 7 8 B DOWN: A bank mainly concerned with the financing of international trade

ACROSS:

1. This division looks after all administrative matters 2. This division covers foreign exchange, currency options, money market transactions, bonds, floating rate notes etc. 3. It deals with mergers, takeovers, acquisitions and divestments, stock market and USM flotations in London 4. A(n) .. is 5. Subsidiary 6. It organises leasing packages for lessors and lessees 7. It deals with loans, syndicated loans, project finance, overdrafts, correspondent banking 8. Investment.. Division provides services to companies: pension funds, investment trusts, unit trusts and offshore funds.

 Match the words in column A with the words/definitions in column B; 1. 2. 3. 4. A syndicated loans merger divestment currency option a. b. c. d. B the selling-off of interests money placed in countries with very low taxes an organisation where one bank acts as an agent for another bank note on which interest rates are fixed periodically, and which can be traded on 5. takeover e. the market the starting of a new limited company, where the shares are not included in the 6. 7. 8. 9. USM flotation offshore funds correspondent banking investment trusts f. g. h. i. official list on the Stock Exchange activities where one bank acts as an agent for another bank a very large loan for one borrower, arranged by several banks the joining of two or more companies into one a contract where the buyer has the right to demand purchase or sale of a specified currency, but no obligation to 10 floating rate note . j. do so an organisation collecting and pooling money and invests it in securities.

THE STRUCTURE OF A SCANDINAVIAN BANK

Board of Trustees

Board of Directors

Managing Director

Deputy Managing Manager

Deputy Managing Director

Corporate Business Division - pool resources - gain access to the lucrative markets dominated by the commercial banks

Northern Regional Manager

Central Regional Manager

Southern Regional Manager

Crossword puzzle A 1 2 3 4 5 6 7 B

DOWN: Bank set up top accept deposits from members of the public ACROSS: 1. Board of people responsible for administering money or property for the benefit of others (3 words) 2. This board is elected by the .. (see 1; 3 words) 3. The bank is organized in.. (singular) 4. President (2 words) 5. Person responsible for the branch network of offices (3 words) 6. Person responsible for different regions (2 words) 7. This divisions role is to pool resources and gain access to the lucrative markets dominated by the commercial banks Match the words to others with similar meaning: 1. 2. 3. lucrative markets personnel debenture loan a. b. c. loan of money at a fixed rate of interest, involving a certificate of the debt system of local offices over the whole country banks which offer a wide range of services to the public, to companies and 4. 5. commercial banks network of branches d. e. to other organisations markets in which there are good profits people who work here

4.5. The Stock Exchange

New York Stock Exchange Read the text paying attention to the words written in italics: The transactions and trading concerning shares and other securities take place in the Stock Exchange and are governed by strict rules. The administration of the Stock Exchange is vested in a Board of Governors. Stockbrokers are individuals who buy and sell securities for clients. Most also provide securities information and advise their clients regarding investments. Once an investor has decided on a particular transaction, the investor gives the stockbroker an order for that transaction. The stockbroker will try to get the best possible price and the trade will be completed as soon as possible. Each stock is traded at only one post. Members interested in this stock congregate around post. Some bid for the stock, others offer it for sale. Transactions are carried out in this manner. When some particular stock is in great demand, its price rises. On the contrary, when the offers for sale are very numerous, the price for the stock falls. Since stock varies in price from one minute to the next, the Stock Exchange offers opportunities for speculation. A bull is a man who acts in expectation of a rise in the price of some stock. On the contrary, the dealings of a bear are based upon the expectation of a drop in the price of shares.

 Choose the right word or expression to fill in the empty spaces: 1. are paid to shareholders. a. profits b. interest c. dividends 2. A is when one company offers to buy another. a. merger b. takeover c. bid d. share 3. A ..is when two companies join together to create a third, separate company. a. merger b. takeover c. joint venture 4. .capital is risk capital. a. equity b. venture c. authorized 5. The management of stocks and shares is called . a. share b. debenture c. portfolio Translate into English: Multe firme au fost nevoite s fuzioneze pentru a deveni mai competitive, n timp ce altele au fost adesea preluate mpotriva voinei lor. Nici o companie nu este suficient de mare pentru a nu se simi ameninat de tentative de preluare. Preurile relativ sczute ale aciunilor precum i ratele sczute ale dobnzilor fac ca tentativele de preluare s fie mai uoare. Choose the appropriate words from the box so as to complete the sentences: Stock Exchange Nikkei Dow shares bull FT bear Dow Jones VAT

1. The units of ownership of a company, allowing the holder to receive a proportion of the companys profits are the. 2. If a company is publicly quoted, its shares are sold on the 3. The rate of the tax added to the price of an article, paid by the buyer to the seller, and by the seller to the government is the ..rate. 4. If the market is thought to be good and prices on the Stock Exchange are likely to rise, the market is called a market. 5. The index of share prices in America is the .index. 6. The index of share prices in Britain is the index. 7. The index of share prices in Japan is the ..index. 8. If the market is thought to be poor and the prices on the Stock Exchange are likely to fall, the market is called a market. All of the following expressions mean go bankrupt, except for one. Which one? 1. go bust 2. go like a bomb 3. go to the wall 4. go down the tubes Complete the following dialogues using the words below. What do the money expressions mean? tight tied waste throw channellin 5. go under 6. go broke 7. go down the pan

g liquid bad made 1. What do you think of the plan to install an executive gym? To be honest, I think its a complete of money. 2. Why dont we just inject some more cash into the project if its still underfunded? Because theres no point throwing good money after .

3. Cant we pay off the loan with the money thats coming in from our subsidiaries in the Gulf? Well, most of that money is .up, Im afraid. 4. So why arent we investing in new plant? Because Im afraid moneys a bit at the moment. 5. How much of that moneys ? Very little. In fact, hardly any of it can be turned into cash for over a year. 6. Look, we cant just ..money at the problem. No, but it wouldnt hurt to spend a bit more on advertising, would it? 7. Weve made a pretty good profit for the last three years running. In that case, shouldnt we be .some of the money into R&D? 8. I dont suppose you could lend me a couple of hundred pounds, could you? What do you think I am: of money? Words to remember bid - an offer to buy something at a particular price; to make an offer bribery - giving people in official positions money or other presents to try to get them to do something for you broker - an agent in a particular market, such as securities, commodities, insurance, etc. bureaucracy - a disapproving term for an organisational system employing a lot of people following a lot of rules capital - the money in the form of coins and bank-notes cash - money in the form of coins and bank-notes cash flow - a companys ability to earn cash; the amount of cash made during a specified period that can be used for investment commodity - any goods that can be bought; a raw material or primary product traded on special markets costs - the expenses involved in doing or making something currency - money in use fee - sum payable for professional services, or for a privilege fine - a sum of money to be paid as a penalty income - money received as wages, interest, etc interest - money paid for use of money borrowed money - current coins; coins and banknotes; wealth, any kind of currency pension - a regular sum of money paid to a retired worker in return for past services or contributions

policy - a plan of action or a statement of ideals, determined by the top management, that guides the activities of a company ransom - a price demanded or paid for the release of a captive salary - a fixed regular payment made by employers, usually monthly, for professional or office work security - a certificate showing ownership of financial stocks, etc. stock exchange - the stock market: an institution for buying and selling stocks and shares; the transactions of this wages - money paid (per hour, or day or week) to manual workers