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UNIT 1: COMPANY STRUCTURE

I. READING COMPREHENSION TASKS 1. The only adequate summary is the second. The first stress the disadvantages of hierarchies much more strongly than the text, and disregards the criticisms of matrix management and decentralization. The third is simply misleading: matrix management and teams are designed to facilitate communication among functional departments rather than autonomous divisions. 2. Discussion 1, 4 and 11 would logically satisfy production managers, although 11 should also satisfy other departments. 1, 3, 6, 7, and 9 would logically be the demands of marketing managers. 5, 8, 10, and 12 would logically keep finance managers happy II. EXERCISES Exercise 1 1. f 2. e 3. h 4. d 5. a 6. g 7. b 8. c 9. i 10. j

Exercise 2 1. human resources 4. research and development 7. administration 10. legal 13. marketing 16. procurement Exercise 3 2. customer service 5. public relations 8. billing 11. shipping 14. accounts 3. quality control 6. project management 9. production 12. finance 15. purchasing

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Market research/ cost centre/ earnings growth/ management hierarchy/ customer needs/ product portfolio/ core business/ distribution channel/ mission statement/ market share/ shareholder value/ brand loyalty Exercise 4 1. market research 2. core business 3. shareholder value 4. product portfolio 5. brand loyalty Exercise 5 1. check 6. ensure Exercise 6 The second statement is true III.ESSAY What are the advantages and disadvantages of the matrix company structure? The matrix organizational structure is atypical because it brings together employees and managers from different departments to work toward accomplishing a goal. The matrix structure is a combination of the functional and divisional structures. The former divides departments within a company by the functions performed, while the latter divides them by products, customers or geographical location. Small business owners should understand the benefits and limitations of the matrix structure before implementing it in their businesses. One of the advantages of implementing the matrix organizational structure in a business is that it can lead to an efficient exchange of information. Departments work closely together and communicate with each other frequently to solve issues. Efficient lines of communication enhance productivity and allow for quick decision-making. For example, in a matrix structure, 2. coordinate 7. adapt 3. assign 8. monitor 4. implement 9. evaluate 5. control 10. determine 6. cost centre 7. earnings growth 8. management hierarchy 9. mission statement 10. distribution channel

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individuals from the marketing, finance and product departments may confer with one another to formulate strategies. The specialized information exchange allows managers to respond quickly to the needs of customers and the organization. Furthermore, the matrix structure encourages a democratic leadership style. This style incorporates the input of team members before managers make decisions. The ability to contribute valuable information before decisions are made leads to employee satisfaction and increased motivation. In a matrix structure, each employee brings his expertise to the table. Managers are involved in the day-to-day operations, which allow them to make decisions through the viewpoint of employees. On the other hand, a disadvantage of the matrix structure is that it can result in internal complexity. Some employees may become confused as to who their direct supervisor is. For example, an employee may receive different directions concerning the same thing from supervisors in different departments. The dual authority and communication problems may cause division among employees and managers. Miscommunication and ineffective managing can result in employee dissatisfaction and low morale. Prolonged issues may cause an organization to experience high employee turnover. Another disadvantage of the matrix organizational structure is that it is expensive to maintain. A company's overhead cost typically increases because of the need for double management. The extra salaries an organization must pay can put a strain on its resources. The sharing of employees may cause unhealthy competition between managers within a company. The expertise that employees bring to the table makes them valuable, which causes managers to seek their assistance. The competition for scare resources may cause hostility within the workplace and hinder production. To sum up, each company structure reveals its own pros and cons and the matrix ones makes no exception. The important thing is that businessmen should thoroughly understand these advantages and also disadvantages for efficient utilization in reality.

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UNIT 2: MANAGEMENT AND CULTURAL DIVERSITY

1. READING COMPREHENSION TASKS 1. Answer the questions 1. Glocalization means operating all over the world while taking account of local cultural habits, beliefs and principles in each country or market. 2. Japanese companies have a policy of promotion by seniority, so a 50-year-old manager should automatically be granted much more status and respect than a 30-year-old one. 3. The Italian salesman did not want to earn more (i.e. show himself to be a better salesman) than his colleagues, or earn as much as his boss. The Singaporean and Indonesian managers did not approve of a system that might cause salesmen to encourage customers to buy products they didnt need. 4. Universalists believe that rules are extremely important, and distrust particularlists because they break rules to help their friends, while particularlists believe that personal relationships should take precedence, and distrust universalists because they wont even help a friend.
2. Vocabulary

1. the use of reason rather than emotions or beliefs : rationality 2. understanding or knowing without consciously using reason: intuition 3. respect, prestige or important given to someone: status 4. having a higher rank because he is older: policy of promotion by seniority 5. to have hurt feelings because someone is derespectful : offended 6. money or something else given in recognition of good work : pay for performance 7. additional money given for better work or increased productivity: bonus 8. feeling of shame and loss of dignity or self- esteem : humiliation

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9. to give up a job or a position: resign 10. according to acceptance moral standards: ethic

II. EXERCISES

Exercise 1
1. Since we have just bought the Parkland guide, we can now find out what Europeans think of each other. 2. Furious with his employees for turning up late each morning, he decided to have a serious talk with them. 3. I have two Swiss people staying at my house, neither of whom I consider to be moneyminded, or excessively serious. 4. Although some Europeans consider the Italians to be dishonest, I found them completely trustworthy when I recently visited Italy. 5. Besides having faults, the British have qualities, such as an excellent sense of humor, for which they are famous throughout the world. 6. While working for a multinational company in Holland, I learned to admire the Dutch for their good nature and tolerance. 7. In generalizing about nationalities we often show prejudices, the origins of which are obscure. 8. In trying to pick nationalities for each post, we were obviously unfair to those we omitted while we were probably generous to some we selected.

Exercise 2
1. for ; for 6. of 2. in; in 7. at 3. for; to 8. of; about 4. of; to 9. for 5. against/ towards 10. to 11. of 12. with/about/by

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III. ESSAY What are disadvantages of working in a culturally diverse environment? As you all know, cultural diversities seem to reveal certain advantages. However, it is also considered to bring about no fewer challenges for multinational company management. In this essay, I would like to emphasize three disadvantages that attract great concern from people working in a culturally diverse environment. The first one I would mention here is individual decision-making and problem solving. People from different countries tend to work in various different ways. This is regarded partly due to their different educational backgrounds, work experiences and culture-based value systems. In fact, the diverse ways people in a company approach decisional problems could result in severe troubles threatening the function of an organization. Some of the members may like to take decisions on their own, while the others may prefer participative approach to solve a decisional problem. Some may believe in rational decision-making, collecting all possible information and resource inputs, while others feel like taking a decision with a quick-fix approach, only based on their own experience and feeling. Such great differences could be a strength for a multinational company because of a variety of valuable resource inputs to quality decision-making. However, they are subject to a lot of unpredictable misunderstandings within a workplace when everybody shows great resistance to change and only want to work in their own way. Hence, a good manager is supposed to know how to create the integration among his or her staff by respecting their value systems and their approaches as well as consider all the ways of thinking provided for an appropriate final decision. The second problem easily noticed in a culture diversity workplace is communication, both the language and nonverbal behaviors as well. Everybody can see that when you are working with people from different countries, it is necessary to pick up a common language for mutual understanding. However, even when all the staff are speaking a one certain language, troubles are still arising. It is because of the difference in vocabulary, pronunciation, language style or the use of slang, idioms Nonverbal behaviors also form an important part of communication. For some cultures, the sense of personal space is very different and standing close or touching when speaking is the norm. Eye contact can also convey a great deal, and for some cultures, too much eye contact is considered rude or aggressive. Facial expressions such as smiling or furrowing the eyebrows may be used differently depending on the culture. When communicating in a culturally diverse environment, be aware of these differences and do not jump to conclusions if someone reacts in an unexpected way.

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In a nutshell, working in a culturally diverse environment presents lots of challenges that deserve your consideration. However, with certain understanding on these difficulties, you can easily overcome and gain the best efficiency in your job.

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UNIT 3: MARKETING
I. READING COMPREHENSION TASKS 1. The 3rd summary is the most accurate and complete The 2nd summary fails to mention market research and both 1st and 2nd contain errors. They both neglect the continued importance of selling, and the existence of competitors. The 1st summary wrongly states that marketers have to change a product, its distribution, the way it is promoted and its price. In fact they may change one or more of these elements as neccesary. 2.C II. EXERCISES Exercise 1 1. distribution: a 2. to launch a product: i 3. market opportunities: g 4. market research: h 5. market segmentation: d Exercise 2 Products Optional features After-sale service Packaging Sizes Brand name Price Credit terms Going-rate List price Prestige pricing Cash discount Place Inventory Point of sale Transportation Vending machine Warehousing Promotion Advertising Poster Publicity Public relations Mailings 6. packaging: j 7. points of sale: e 8. product concept: b 9. product feature: c 10. sale representative: g

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Characteristics Quality Guarantee Style Line-filling

Production costs Quantity discounts Market skimming Market penetration

Distribution channel Retailing Wholesaling Franchising

Sponsorship Personal selling Media plan Commercials

Exercise 3 1. conversional marketing: eg for dental work , or hiring disable people 2. stimulational marketing: which often happens with new products and services 3. developmental marketing: eg, a non-polluting anf fuel- efficient car 4. remarketing: eg, for churches, inner city areas, or aging film stars. 5. synchromarketing: eg, for public transport between rush hours, or for skill resorts in the summer 6. maintenance arketing: eg in the face of competition or changing tastes 7. demarketing: eg, for some roads and bridges during rush hours 8. counter marketing: eg: cigarettes, drugs, handguns, or extremist political parties Exercise 4 Synchromarketing: i Stimulational marketing: j Remarketing: k Conversional marketing: l Exercise 5 1. making a loss 2. early adopters 3. similar offerings 4. advertising budgets 5. differentiate products 6. reaches saturation Counter marketing: m Maintenace marketing: n Developmental marketing: o Demarketing: p

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7. consumer tastes 8. withdrawn from the market III.ESSAY The importance of marketing The heart of your business success lies in its marketing. Most aspects of your business depend on successful marketing. Without marketing, your business may offer the best products or services in your industry, but none of your potential customers would know about it. Without marketing, sales may crash and companies may have to close. My writing will figure out the question: Why is marketing so important? For a business to succeed, the product or service it provides must be known to potential buyers. Unless your business is known in the community and have communication with your customers readily available, you have to use marketing strategies to create product or service awareness. Without marketing, your potential customers may never be aware of your business offerings and your business may not be given the opportunity to progress and succeed. Using marketing to promote your product, service and company provides your business with a chance of being discovered by prospective customers. The success of a company often rests on a solid reputation. Marketing builds brand name recognition or product recall with a company. When a company reaches the high expectations of the public, its reputation stands on firmer ground. As your reputation grows, the business expands and sales increase. The reputation of your company is built through active participation in community programs, effective communication--externally and externally--and quality products or services, which are created or supported by marketing efforts. Marketing also fosters an environment in the marketplace for healthy completion. Marketing efforts get the word out on pricing of products and services, which not only reaches the intended consumers, but also reaches other companies competing for the consumers business. As opposed to companies that have a monopoly on products and services that can charge almost any price, marketing helps keep pricing competitive for a business to try to win over consumers before its competition does. Without competition, well known companies would continue to sell while lesser known companies or new companies would stand little chance of

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ever becoming successful. Marketing facilitates the healthy competition that allows small businesses and new businesses to be successful enter and grow in the marketplace. Marketing plays a very essential role in the success of a company. It educates people on the latest market trends, helps boost a companys sales and profit, and develops company reputation. But marketers must be creative and wise enough to promote their products with the proper marketing tactics. Although marketing is important, if it is not conducted and researched well, the company might just be wasting on expenses and time on a failed marketing approach.

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UNIT 4: PRICING
I. READING COMPREHENSION TASKS 1. Understanding main points Second summary: most accurate and complete. The 1st is incomplete, and the 2nd and 3rd sentences are misleading. The 3rd sentence of the third para is totally false. 2. Understanding details Statements 1. There are three basic factors potentially involved in all pricing decisions True V False

2. When pricing a product, companies have to think of potential as well as V existing competitors. 3. You are unlikely to sell high quality products at a low price. V

4. When demand exceeds supply, a company nearly always increases its V price. 5. A company faced with rising costs has to increase its prices. 6. A company can only change a price if it is inelastic. 7. Pricing is often strongly influenced by psychological factors. V V V

8. A company can respond to competitors price cuts by changing different V elements of the marketing mix. 9. Prices generally take into account both direct and indirect costs. V

10. In theory, a products price should equal its marginal cost and the V companys breakeven point.

3. Complete the following word partnerships from the text:

1. Breakeven Point 2. Production capacity 3. Distribution costs.

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4. Profit/ Sales targets 5. Market positioning

6. Market share
7. Odd Pricing 8. Prime Cost 9. Cost Accountant 10. Variable Costs.

II. EXERCISES Exercise 1 1. 2. 3. 4. 5. 6. 7. 8. 9. 10 . 11 . 12 . 13 . Exercise 2 price control . 14. cost price . 15. Price cut/ Cut-price 16. Price discrimination .. 17. Price elasticity ... 18. exercise price . Price fixing Price freeze going price .. historical price ... price index 24. 25. 26. 19. 20. 21. 22. 23. ... market price

price mechanism

minimum price

price range recommended price . price reduction . retail price price rise selling price ... . .......... price sensitivity price war price

strike price wholesale

price list/ list price price maintenance

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1. market penetration pricing = G 2. market skimming = H 3. current revenue pricing = A 4. loss-leader pricing = B 5. mark-up or cost-plus pricing = D 6. going-rate pricing = C 7. demand- deferential pricing ( or price discrimination) = F 8. perceived-value pricing = E Exercise 3
1. A basic price before discounts and special offers are made? List price 2. Aggressive competition between rival? Price war 3. A price at which retailers buy goods? Wholesale price 4. A price recorded in a companys accounts? Historical price 5. The governments measure of inflation? Price index 6. The price at which a producer makes no profit? Cost price 7. The relationship between a products price and the quantity bought?

Price elasticity
8. A price-limit imposed by government? Price control + Price freeze 9. Arrangements between competitors not to lower prices? Price fixing/

maintenance
10. The price of options? Exercise/ Strike price

Exercise 4 1.overheads 2. substitute 3. components 4. target 5. sensitivity 6.market 7. segment

III. ESSAY

8. market 9. shares 10. plant 11. monopolist 12.competitive 13. market leaders 14. volume

What are the disadvantages of an everyday low pricing strategy?

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Product pricing is an important element of a marketing strategy. The concept of everyday low pricing means that your company consistently tries to be the provider with the lowest price in the marketplace for a good or service, based on surveys of competitors pricing. Having the lowest price can be advantageous to your marketing effort, but the strategy also has several disadvantages. Firstly, in the years prior to the prevalent use of the Internet in e-commerce, being the everyday low-price leader meant being the price leader in your geographic region. The Internet now offers consumers the ability to check your pricing against hundreds or thousands of online retailers. Your company stands to lose credibility among consumers if your everyday low prices are not comparable to pricing found on the Internet Secondly, the promise of everyday low pricing can work against you when it comes to discounts and pricing specials. Because your company strives to provide the lowest prices at all times, you may not have sufficient profit margin to offer occasional promotional discounts. Pricing discounts are marketing vehicles that can be used to improve sales, according to website NetMBA. When you have conditioned customers to expect everyday low prices from your company, offering price discounts can seem contradictory; it may cause customers to question whether or not you actually have the lowest price. Finally, competition-based pricing is a model that relies on the pricing habits of your competition. It does not take into account product cost, your profit margin or product demand. In some cases, you may be forced to sell product at a loss to remain competitive. Always being the lowest-priced supplier sometimes creates the perception that your product quality is lower than that of the competition, according to Karl Heil, writing on the Reference for Business website. Some consumers might assume that counterfeit or reconditioned products are the means by which you maintain your low prices. To sum up, the strategy of everyday low pricing sometimes seems to be counterproductive. Consequently, it is noted that businessmen should clearly understand the pros and cons of this pricing method in order to gain more and more success.

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UNIT5: ARBITRATION
I. READING COMPREHENSION TASKS 1. Understanding main points 1. There may be bias or unfair advantages in home country of business partner. 2. Shipping, commodities and construction. 3. Arbitrators, one chosen by each each party and the third, the chairman, selected by both parties 4. Arbitration takes place in private, litigation takes place in court. 5. Paris, london, Geneva, Stockholm, New York, Hong Kong and Singapore. 6. Stockholm 7. Activities and rules 8. Speed, cost effectiveness, confidentialityand reliability of the arbitrators and their decisions. 9. Accoutants and engineers 10. No 2. Understanding details 1.F 2.T 3.T 4.T 5.T 6.T 7.T 8.F

II. EXERCISES Exercise 1 1. dispute resolution: settling disagreement 2. a money- spinner: something that makes profit for everyone 3. have recourse to the courts: make use of legal system 4. home-team advantage: benifit from being local or on home ground 5. local bias: unfair treatment 6. financial crisis: serious money problems 7. delaying tactics: ways of making things take a long time 8. speed things up: accerlerate 9. interfere: meddle or get involved with 10. overturn decisions: reverse something already decided 11. take steps: institute action

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12. come into force: become oerational Exercise 2 1. he was a distinguished lawyer who was an expert arbitratorB 2. the process took far longer than the parties had expected arbitration 3. this was due to the delaying tactics employed by one of the companies involved. 4. the question is how are we going to settle this dilemma? 5. when the goods arrived in poor condition, a dispute arose over whose fault this was, and who should bear the cost 6. the best way is not to go to court, which is public and costly, but to arbitrate and agreement 7. I believe you are wrong on that point- we disagee on the interpretation 8. there is always an answer if you try hard to find it : every difficulty has a resolution 9. you cannot assume he will agree to those terms : you must check with him first.

Exercise 3 1. everyone promises to obey the treaty- all major countries are signatories to it. 2. in the civil case, the plaintiff brought an action against the defendent 3. the price was negotiated between the buyer and the seller of the house, in a private sale. 4. the bank agree that the borrower should pay 12% on the loan, so the lender made a fair profit! 5. manufacturers sell their goods to wholesalers and in turn, retailers buy from them. 6. the ralationship between a lawyer and client is bound by confidentiality. 7. the beer can be produced under license but the licensee must fufill all the requirements imposed by the licensor. 8. some clothes comanies sell their products on a franchise basis: each country has a main frienchiser, with numerous people working as franchisees. 9. a letter was sent to the manager complaining about working condditions. All the member wrote their names. The letter read: we, undersigned, strongly protest about condition at work.

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10. many projects require the cooperation of various partners. If they all agree to work together, they become parties to the agreement. Exercise 4 1. ajudication 2. arbitrator 3. arbitration 4. dispute 5. hearing II. ESSAY As a businessman what would you choose: arbitration or litigation for dispute resolution? Why? Arbitration is a procedure for the resolution of disputes on a private basis through the appointment of an arbitrator, an independent, neutral third person who hears and considers the merits of the dispute and then renders the final decision. Recently, arbitration seems to be proving their popularity all over the world. Therefore, as a businessman, I would like to choose arbitration due to its numerous advantages. First, the parties to the dispute usually agree on the arbitrator, so the arbitrator will be someone that both sides have confidence will be impartial and fair. Second, the dispute will normally be resolved much sooner, as a date for the arbitration can usually be obtained a lot faster than a court date. In Virginia, a trial date is normally about twelve months from the date the lawsuit is filed. Third, arbitration is usually a lot less expensive. Partly that is because the fee paid the arbitrator is a lot less than the expense of paying expert witnesses to come and testify at trial. There are also lower costs in preparing for the arbitration than there are in for preparing for a trial. Partly this is due to the fact that the rules of evidence are often more relaxed than in a trial, so that documents can be submitted in lieu of having a witness come to trial and testify. For instance, if a claimant has several doctors who are out-of-state, the cost of bringing them to trial or going out-of-state to take their depositions may be prohibitive for trial, but in arbitration you can usually use just their records and reports. Fourth, unlike a trial, arbitration is essentially a private procedure, so that if the parties desire privacy then the dispute and the resolution can be kept confidential. Fifth, if arbitration is binding, there are very limited opportunities for either side to appeal, so the arbitration will be 6.decision- maker/ expert 7. expensive 8. duration

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the end of the dispute. That gives finality to the arbitration award that is not often present with a trial decision. In a nutshell, arbitration has proved to be the wise choice for businessmen for the resolution of economic disputes.

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UNIT 6: INTERNATIONAL TRADE

I. VOCABULARY 1. 2. 3. 4. 5. 6. Exercise 1 1. countries- nations 2. raw meterials and goods- commodities 3. difference between total earings from visible exports and total expenditure on visible imports: balance of trade 4. difference between total earings from all exports and total expenditure on all imports- balance of payments. 5. direct exchange of goods without the use of money: barter or counter-trade 6. the fovouring of domestic industries- protectionism 7. inputs- factor of production 8. weather condition- climate 9. specialization of work into different jobs- division of labour 10. savings in unit costs arising from large- scale production- economies of scale 11. taxes charged on imports- tariffs 12. restrictions on the quantity of import- quotas Exercise 2 1. barrier 2. autarky 3. dumping 4. merchadise 6. taxes 7.debt 8.liberalize visible trade (GB) or 7. 8. 9. 10. 11. 12. surplus deficit dumping protectionism tariffs quotas merchandise trade (US) invisible imports and exports barter or counter-trade balance of trade balance of payment autarky

II. EXERCISES

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5. comparative advantage Exercise 3 1. trade 2. software 3. container ships 4. fares Exercise 4 1. a suggestion for improving trade in the future: G 2. the effects of the introduction electronic delivery: F 3. the similar cost involved in transporting a product from abroad or from a local suppliers: H 4. the weakening relationship between the value goods and the cost of their delivery: D Decide if these statements are true (T) of false (F) or not given (NG) 1. T 2. NG 3. NG III.ESSAY How does international trade benefit an economy If you walk into a supermarket and are able to buy South American bananas, Brazilian coffee and a bottle of South African wine, you are experiencing the effects of international trade. International trade among different countries is not a new a concept and its rise is essential for the growth of globalization. Apparently, international trade has brought great benefits to an economy involved. First, international trade enables countries to specialize in the production of those commodities in which they have a comparative advantage. With specialization countries are able to take advantage of efficiencies generated from economies of scale and increased output. International trade increases the size of a firms market, resulting in lower average costs and increased productivity, ultimately leading to increased production. 4.T 5.F

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Second, international trade helps in the optimum use of natural resources and avoid wastages of resources.If a country does not takes up imports and exports then its resources remain unexplorted. Thus it helps to eliminate the wastage of resources. Efficient allocation and better utilization of resources since countries tend to produce goods in which they have a comparative advantage. When countries produce through comparative advantage, wasteful duplication of resources is prevented. It helps save the environment from harmful gases being leaked into the atmosphere and also provides countries with a better marketing power. And third, it ensures more production to meet the demand of the people of different countries. By increased production, it becomes possible to increase income and the standard of living of its people. It also increase the standard of living by increasing more employment opportunities. More employment could be generated as the market for the countries goods widens through trade. International trade helps generate more employment through the establishment of newer industries to cater to the demands of various countries. This will help countries bring down their unemployment rates. To sum up, international trading has become very important for every country of the world - be it big or small, developing nation or developed nation. Each country should take advantage of it to become more wealthy and developed.

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UNIT7: BANKING
I. READING COMPREHENSION TASKS
1. Find the words or expressions in the text

a. deposit b. foreign exchange c. interest d. liquidity e. maturity f. underwrite 2. Matching a. charge b. do business c. exchange currencies
d. make profits

g. takeover h.merger i.stock broking j. portfolio management k. deregulation l. conglomerates e. pay interest f. offer advice g. raise fund

m.blue chip n. solvency o. collateral

II. EXERCISES Exercise 1 1. central bank 2. commercial bank 3. universial banks 4. merchant banks 5. investment banks 6. building society 7. supranational banks Exercise 2 1. deposit 2. customers 3. lend 4. accounts 5. wages 6. salary 7. transfer 8. current account 9. withdraw 10. cheque 11. standing order 12. loan 13. overdraft 14. debt 15. spread 16. depositors 17. optimize 18. liquidity 19. liabilities 20. return

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Exercise 3 1. J 2.I 3.K 4.H 5.A 6.D 7.E 8.B 9.G 10.F 11.C

1.A 2.G

3.B 4.A

5.F 6.C

7.D 8.E

Exercise 4 1. from/ to 2. by/for 3. within 4. to/to III. ESSAY How banks facilitate the work of modern society Banks have these days functioned as an internal part of our modern life. Over a long period of developing, our human society has witnessed a number of striking innovations and the banking system has proved to be one of mans great achievements. In the essay, I would like to focus on some typical advantages that banks have specially facilitated our business life. Firstly, what draws most of my attention about banks role is a place for money storage. Thanks to various inventions, human nowadays are capable of making more and more money. In fact, many people seem to earn more than they need for normal spending. Consequently, there has emerged a demand for saving and also for investing. In the advent of the banking system, people no longer have to look for a specially secret and safe for storing their unused money, sometimes known as gold treasures as in some legendary stories. Numerous banks functioning in the country are ideal solutions for people who are wondering how to store and invest their savings. 5.in 6.among/ of 7. against

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Being thoroughly organized and tightly secured, commercial banks not only can be a storage but also help people make more profit on their unused money through many banking activities. Secondly, banks can be considered to be a beneficial tool of payment. There is no doubt that the advent of the international banking system has helped a lot in the over- the- border business. In a world of globalization as ours, international trade seems to be a definition of great popularity over every corner of the society. So imagine without the modern and well-operating banking system you have to go for thousands of miles in order to pay the money for any goods you want. In some cases, the cost of transportation may even outweigh the actual price of the products. Clearly, the existence of banks can save a lot of unnecessary costs for international business. For a product of thousands miles away, all you have to do is making a call for ordering and then paying through your account in the commercial bank. In a nutshell, it is undeniable about a variety of benefits that banks have brought to our modern society. Undoubtedly, even serving as a money storage or a tool of payment, our banks are presently making our life much more comfortable and easier. Consequently, government should take more consideration into the improvement of our national banking system for the purpose of long run developing.

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UNIT 8: FINANCING FOREIGN TRADE

I. READING 1 1. Understand main points: Payment menthod: 1. open account 2. bills for collection 3. documentary credit 4. advance payment 2. Understand details Mark these statements T or F according to the information in the text. Find the part of the text that gives the correct information. Open account: 1. T 2. F 5.T 7.T 8.T 9.F 3. T

Documentary credit: 4. F Bills for collection: Advance payment: 6.F 10. T

3. Information search

1. open account: f,d,c 2. documentary credit: a,j 3. bills for collection: b,c, d, f 4. advance payment: f 4. Key terms 1. invoice: b 2. clean collection:f 3. documentary cllection:j 4. bill of exchange:g 5. bill of lading: a 6. document of title: e 7. issuing bank: c

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8. collecting bank: h 9. comfirming bank: d 5. Word search 1. undertaking 2. consignment 3. intermediary 4. maturity 6.Complete the sentence 1. forward 2. dispatch 3. forward 4. accept/ release 5. dishonour 6. remit II. READING 2 1. 4 1 3 2 2. 7 10 9 8 6 - 5 III. ESSAY

10. letter of credit: i

The risks of trading internationally Any business transaction involves a degree of risk. The risks in international trade differ from those in domestic trade, and it is important to treat international trade with an extra measure of care and proper risk management. My writing will point out some major types of risks faced when trading internationally. The first one I want to mention here is poor quality risk. Exported goods can be rejected by an importer on the basis of poor quality. It is always recommended to properly check the

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goods prior to export. Be aware that buyers and importers sometimes raise quality issues to pressure exporters into negotiating lower prices. It is suggested that an independent party inspect your shipment prior to its delivery if you are working on a first-time import transaction. Such an inspection protects both the importer and the exporter. An inspection is normally done at the request of the importer, and the costs for the inspection are borne by the importer or may be negotiated to be included in the contract price. Another risk is transportation risk. With the movement of goods from one continent to another, or even within the same continent, goods can face many hazards. There is the risk of theft, damage, and possibly of the goods not arriving at all. It is common for many importers to conduct a test order; this has advantages for both parties. The documentation, shipping, and quality inspection can all be conducted simultaneously. Subsequent orders shipped with the same standards are difficult to reduce, and all parties involved experience greater comfort as the larger orders proceed. And the last one is credit risk. Credit risk is associated with the customers' solvency but also the firm's business cycle. To assess this type of risk, the firm needs to take into consideration the amount of credit outstanding - both overseas and domestic - in the trading accounts, the impact of a customer's financial pitfall of the firm, the maximum amount of credit which should not be exceeded, and most importantly how to finance the offered credit period. Having sufficient cash to allow offering credit terms in export sales is a substantial part of the firm's business circle. Beyond doubt, doing business in a foreign country entails major business risks. The key is to assess these risks properly in order to eliminate the failure factor in the firm's global operations, but also to be prepared to anticipate the cost of such a failure.

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UNIT 9: ACCOUNTING AND FINANCIAL STATEMENT

I. EXERCISE Exercise 1: 1. 2. 3. 4. 5. 6. Own/owe Depreciation/written off/amortization Receivable/payable Inventory Accrued Leverage

Exercise 2: variable costs direct costs fixed costs indirect costs operating costs capital expenditure marginal costs

Exercise 3:
Preparation of Accounts: ledger, trial balance, invoices Profit and Loss Account: cost of goods sold, EBITDA, operating expenses Balance Sheet: accounts payable, shareholders equity, current assets

Exercise 4:

1. T

2. F

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3. T 4. T 5. F 6. F II. ESSAY

7. T 8. F 9. T 10. F

What is the balance sheet statement and how important is it? The balance sheet statement is one of the most important of all financial documents, and it is important for every business owner or would be business owner to understand just what goes into this important document. A good balance sheet statement will help potential lenders to determine the creditworthiness of a new client, and help potential partners to make the decision on whether or not to invest. Firstly, the Balance Sheet Statement Is the Face Of Your Business To The World.Having a solid business plan and a good balance sheet statement to work from is even more important with a brand new startup business.While the established business will most likely already have a credit rating of its own, it is often much more difficult to determine just how successful, or how credit worthy, the brand new startup business will be.That is why the balance sheet statement is such an important document, and it is the face of the new business to the world. Secondly, balance sheet statement would be the one that potential lenders and investors want to view so as to have a general perspective about how the company is operating. As the business moves forward later on, the importance of the balance sheet statement will become even greater. The balance sheet statement will help potential lenders and potential investors to look at the business as it goes forward.The statement will help to detail the history of the business, including the profit and loss, the seasonality of earnings, and other factors that are unique to the business. However, creating a balance sheet statement is not always as easy as it sounds of course. While those who already have business experience may have little trouble coming up with such a statement, those without a business background may need some help to get started.After you know just what such a statement consists of, it will be much easier to create your own going forward.Those who have never created a business plan, an income statement or a balance sheet statement before may need to seek the help of a business mentor or other experienced business person

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UNIT 10: MERGERS AND ACQUISITIONS

I. READING COMPREHENSION TASKS 1. Understanding main points 1. D 2. E 3. B 4. A 5. C 2. Understanding details 1. Diversify 2. Market share 3. Economies of scale 4. Advising fees 5. Customers 6. Optimum 7. Synergy 8. Corporate raiders and private equity companies 9. Conglomerate 10. Asset- stripping II. EXERCISES Exercise 1 The first two paragraphs of the article. According to the Consultancy KPMGs research about mergers: a. It found that 83% of mergers failed means that only 17% of mergers are successful. b. More than half of mergers actually destroyed value of company. c. The two key reasons for their failure are management too optimistic about prospects for the enlarged group and too confident they can overcome cultural barriers.

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In the rest of the article. d. Mergers fail because of

Who believes?

The way the two companies are John Kelly UK head of KPMGs Merger and combined? Acquisition Integration John Thorp head of finance and accounting at European Business School in London

Differences in culture?

Unrealistic expectation about the Jame Montier Investment Strategist future success of the new company?

e. Companies merger essentially: Who believes?

From fear of competition?

John Kelly UK head of KPMGs Merger and Acquisition Integration

To ensure their survival in a global John Thorp head of finance and accounting at market place? European Business School in London

Answer the questions: f. The writer is so surprised at the money spent on merger because of evidence so strongly against mergers succeeding.

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g. The belief that Daimler Benz would sell more Mercedes in the UK motivated it to merge with Chrysler. h. The direct consequences of the culture clash were many of the US executives quit their jobs, overconfident financial target were not met job cutting, numerous of a takeover bid. i. The individual personalities are less justifiable than other reasons in mergers. j. Because the BP Amoco merger is between companies with similar businesses that can produce ongoing cost efficiencies rather than one-off saving. a steady decline in the share price,

Exercise 2 1. Find examples of words and expressions which are related to marriage. Tie-up/ Nuptials/ Mutual protection/ altar/ Breathing space Why do you think the writer uses this metaphor? Because he wants to emphasize the close relationship between two company which are merged. 2. Take a word from box A and combine it with a word from box B to form collocations. + Cost efficiency + share price + job cuts + stock market + investment strategy + financial target + share options + takeover bid

Exercise 3 1. Reasons for merger: + Business need to survive, develop the scale and get access to an increased number of markets these days.

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+ Companies are worried that if they do not get together for mutual protection, they would either be taken over or lose customers to powerful rivals. + A less justifiable reason is management egos and the endless desire of advisers to earn fees. 2. Problems with mergers: + The cultural barriers makes the communication becomes less effective. The clash led to many of the executives quitting after cashing in millions of share options, a steady decline in the share price, job cutting and numerous of a takeover bid. + Over-optimism by management was a major reason why merged companies failed to perform well. 3. Type of mergers: _ Horizontal: Two companies making the same product combined. _ Vertical: A company either acquires or merges with another company in an immediatelyrelated stage of production and distribution. _ Diversification: A company acquires another company in an entirely different sphere. Exercise 4 What problems can occur with mergers: + Damage of companys image, goodwill and share value + Unmanageable and inefficient structures (such as large conglomerates): The merged company may too large to manage + Drainage of Human Capital + Differences in opinion or management style may cause partners to fail to see eye-to-eye + Culture: Differences in corporate culture from one organization to the next also can pose problems for businesses looking to combine efforts and resources. If the risks are so great, why do companies merge: Firstly, the key principle behind merger is to create a shareholder value over and above that of the sum of the two individual companys shareholder value. Two companies together are more valuable than two separate companies. In detail, each type of merger can bring different advantages for companies:

Horizontal Mergers:

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+ Reduce competition: By merging, one natural competitor was eliminated in the process + Increase market share + Acquire additional plant and equipment + Achieve synergy and economies of scale: Merger are able to reduces total costs for the newly formed corporation by implementing a combined effort such as using one set of marketing efforts to the same target market

Vertical Mergers:

+ Guarantee the supply and cost of raw material and components + To be closer to the customers, by cutting out the wholesaler for example, and dealing directly with the retail trade.

Diversification Mergers:

+ Move into a sector which promises greater growth or profits. Secondly, in some cases, firms may derive tax advantages from a merger. Merger and acquisitions can either be tax free or taxable event depending on the situation of the merger. Moreover, besides some failed merged companies, there are a lot of cases for successful merger companies. For example: in 1999, when Exxon and Mobil signed a $81 billion agreement to merge and form Exxon Mobil. Not only did Exxon Mobil become the largest company in the world, it reunited its 19th century former selves. Exxon Mobil remains the strongest leader in the oil market, with a huge hold on the international market and dramatic earnings. In 2008, Exxon Mobil occupied all ten spots in the Top Ten Corporate Quarterly Earnings (earning more than $11 billion in one quarter) and it remains one of the worlds largest publicly held companies. Exercise 5 Here are some linking words and expressions that can be used to describe cause and effect: So to bring about to lead to to result in to cause to mean CAUSE EFFECT

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as a result of because to result from to arise from to be due to to be caused by EFFECT CAUSE Answer:

On 28 January 2005, Procter and Gamble announced that it was going to buy Gillette for $57 billion that led to a nearly 13% rise for Gillette on Wall Street, while there was a 2.1% drop for P&G. P&G predicted cost savings of between $14 billion and $16 billion from economies of scale and restructuring of the two companies so the combined companies sales would be over $60 billion a year. The US Federal Trade Commission (FTC) approved the acquisition on 10 April 2005, as long as the companies divest some overlapping product lines to result in restoring competition in the market. In July 2005, shareholders of both companies and the European Union approved the proposed merger; as a result of P&Gs agreement to sell its line of battery-operated toothbrushes. P&G exchanged its common stock for Gillette stock on 1 October 2005, that cause Gillette shareholders got an 18% premium on the closing share prices of 27 January 2005. The Gillette Company ceased to exist and its stocks were no longer traded, meaning that the purchase was finalized. P&G became the worlds biggest household goods maker, which caused 6,000 people, 4% of the combined workforce of 140,000, to lose their jobs because of overlaps in management and business support functions. However, it also resulted in a 27% increase in sales and a 29% in net earnings for P&G.

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II. ESSAY Why most M&A deals end up badly Todays business environment is extremely competitive. Business organizations have to deal with its competitors. At the same time, it has to deal with external factors that affect how it conducts business. In the light of these conditions, business organizations have to strategize not only to survive but to thrive in the competitive business environment. One of these strategies is mergers and acquisitions. However, not many merger and acquisition deals prove to be successful. My writing will point out three major reasons for this issue. It all comes from the ignorance. While the parties to a merger or acquisition cannot exchange commercially sensitive information prior to being under common ownership, there is enough crucially important and legally permissible preparation work to keep an integration team busy for several months before day one. Most chief executives dont know this and they waste the time that could be put to good use while they await clearance from the regulatory authorities. Good preparation means the integration can kick off on day one. Speed matters. Besides, failures also result from no common vision. In the absence of a clear statement of what the merged company will stand for, how the organization will operate, what it will feel like, and what will be different compared to how things are today, there is no point of the convergence on the horizon and the organizations will never blend. Weak leadership is also a reason. Integrating two organisations is like sailing through a storm: you need a strong captain, someone whom everyone can trust to bring the ship to its destination, someone who projects energy, enthusiasm, clarity, and who communicates that energy to everyone. If senior managers do not walk the talk, if their behaviours and ways of working do not match the vision and values the company aspires to, all credibility is lost and the mergers mission is reduced to meaningless In short, perhaps the measure of why shareholders and directors of companies are still pursuing mergers and acquisitions despite a global trend of a significant failure rate, can be attributed to the motivation for businesses to combine forces and resources so as to ensure sustainability. Notwithstanding the many failures, the economic downturn has perhaps

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highlighted the need to diversify resources into foreign and emerging markets; thereby potentially enabling higher levels of growth.