Unit 7 Profit

Pre-reading tasks

Practice the reading of the following words.

Monetary [ˈmʌnɪtərɪ]

component [kəmˈpəʊnənt]

merchandise [ˈmɜːtʃənˌdaɪz]

employee [ɛmˈplɔɪiː]

equipment [ɪˈkwɪpmənt]

eventually [ɪˈvɛntʃʊəlɪ]

society [səˈsaɪətɪ]

idea [aɪˈdɪə]

utilities [juːˈtɪlɪtɪ]

thereby [ˈðɛəˌbaɪ]

since [sɪns].

Learn to recognize the following international words.

Chance, indicate, locate, formula, component, material, motivation, talented, rent, element, product, conserve, resource, individual, creditor, expand.

Give the initial form of the following words.

Really, possibility, successful, satisfaction, talented, accomplishment, certainly, equipment, difference, reinvest, consumer, employee, strengthen, healthier.

Read and translate the following words paying attention to the stress displacement.

ˈReal – reˈality; ˈ

possible – possiˈbility;

ˈindicate – indiˈcation;

loˈcate – ˈlocative – loˈcation;

conˈtinue – continuˈation;

ˈbenefit – beneˈficial;

ˈproduct – proˈduction;

comˈpete – compeˈtition;

conˈtribute – contriˈbution.

Read the text and be ready to do the tasks.

Text a determining profit and importance of profit

Many times, we say that the profit is too high, or that the business is making too much profit without really understanding profit. Profit is the monetary return, or the reward, a business’s owner or owners receive for taking the risk of investing in the business.

But, what is risk? It is simply uncertainty – not knowing what the outcomes will be. With risk come the chance of loss – in this case, the chance of losing the money, time, and effort invested in a business, but the chance of profit is possible too. There are three main reasons that people are willing to take the risk:

Satisfaction from owning one’s own business. A lot of people owning a business indicate that a person is responsible, successful, and talented. Therefore, many people gain a sense of pride and accomplishment from owning a business.

Satisfaction from serving the community in which the business is located. Many people live in the same community in which their businesses are located. They receive satisfaction from operating a business that serves their community’s needs.

Possibility of making a profit. This reason is the main motivation for a person to take the risks involved in becoming a business owner. The desire to make a profit is known as the profit motive. Certainly, the satisfaction from owning a business or from serving one’s community can motivate people to take the risk of investing in a business. However, the main motivation, the one that really encourages people to take the risk, is the chance of making a profit.

Profit is the amount of money that is left after expenses are subtracted from income. Income is money that comes into a business. This income is from the sale of goods or services and called income from sales. Expenses are money that must be paid out in order to continue in business. There two main types of expenses: cost of merchandise and operating expenses. Cost of merchandise is the money that business must pay for the goods that they sell or for the raw materials from which they make goods to sell. Operating expenses are those expenses necessary to keep the business operating on a daily basis. Payroll, utilities, rent, insurance, supplies, equipment, taxes, bad debts, and donations are all examples of operating expenses.

Income and expenses are two elements that what, if any, a business will make. However, there are two types of profit, and it is very important to understand the difference. One of them is gross profit. It is the amount of money that is left after the cost of merchandise is subtracted from the income from sales. Another type of profit is net profit. It is the amount of money that is left after operating expenses are subtracted from the gross profit. This is the money that is actually left for the business owner to keep or to reinvest in the business.

Profits are important and beneficial to society, as well as to businesses. Some of the benefits of profit to our society include the following items:

Consumer needs and wants are met. This idea probably sounds pretty strange – consumers benefit when businesses make profits. How is this possible? Profits enable businesses to expand. In this way, they are able to offer consumers more and different kinds of products and services. New products can be discovered, developed, or offered to satisfy consumer needs and wants. In addition, the profit motive encourages businesses to change the kinds of goods or services they provide, so that changing consumer needs and wants can be met. Profits encourage business owners to make their businesses more efficient, thereby conserving resources that may be needed by the consumers of tomorrow. The added benefit is that fewer resources will be used today, leaving more resources available for future consumers. Businesses compete for profits. Because of the competition, improved products and services, higher quality products and services, lower prices, and more services are offered to consumers.

Wages and employment opportunities are better. Businesses that are profitable can afford to pay better wages and provide more benefits to their employees. Also, profitable businesses usually hire more employees, thereby increasing employment opportunities for more workers. As businesses expand, they provide more opportunities for workers to advance.

Our economy is strengthened. Profitable businesses can expand, hire more workers, and invest in new businesses. All of these help to make our economy stronger and healthier because they result in more tax rubles paid to the government. The government will use the tax rubles to pay for services and programs such as education and defense, which benefit all citizens. When businesses make profits, they are more likely to contribute to charitable causes. These contributions can help to fight against the poverty and diseases, which exist in our society. Other contributions can be used to improve the community.

Of course, profits are very important for businesses. They make it possible for businesses to grow, expand, and hire more employees. Because of profits, businesses are able to develop new and improved products for their customers and to compete with other businesses. Most of all, profits provide the incentive necessary for the individual to risk the time, money, and effort invested in a business. Although businesses may be able to survive without making profit in the short run, it is absolutely necessary for businesses to make profit in the long run. Otherwise, their employees, suppliers, owners, and creditors cannot be paid. Profits, therefore, are the lifeblood of businesses, since without profits businesses would eventually cease operating.

Match a line in A with a line in B (as in the text).

A	B
1. make 2. invest 3. operate 4. encourage 5. meet 6. pay 7. hire 8. cease	a) a business b) operating c) the risk d) needs and wants e) better wages f) in the business g) employees h) people

Try to remember the following word combinations:

travelling	expense(s)	путевые издержки
working		издержки производства
business		торговые расходы
excess	profit	сверхприбыль
missed		упущенная выгода
monopoly		доход от монополий
(of) low		малорентабельный
to employ	skill	нанять специалистов
qualification		производственная квалификация
work		трудовые навыки
business	tax	налог на предпринимателя
court		судебные издержки
excise		акцизные сборы
export		экспортная пошлина
income		подоходный налог

Suggest word combinations with each of the following terms using the dictionary: income, resource(s), wage(s), competition, product.

Match the definitions.

1. Loss	is (are )	a) things that can be owned, sold or bought.
2. Community		b) a person who buys and uses goods and services.
3. Expenses		c) a failure to make a profit.
4. Income		d) necessary materials for daily life.
5. Goods		e) a group of people living together.
6. Supplies		f) money received regularly from work.
7. Consumers		g) money used or wanted for a purpose.

Find the Russian equivalents to the following English ones in A and B.

A: operating expenses, payroll, gross profit, net profit, bad debt, donation, in the long run.

B: чистая прибыль, денежное пожертвование, текущие расходы, расчетная ведомость, валовая прибыль, в конце концов, со временем, безнадежный (сомнительный) долг.

Match up the words which have an opposite meaning from A and B.

A: lose, same , encourage, difference, strengthen, increase, cease, exclude, poverty.

B: discourage, similarity, decrease, wealth, include, weaken, gain, different, continue.

Match up the words which have a similar meaning from A and B.

A: reward, receive, outcome, chance, main, indicate, amount, cost, necessary, provide

B: possibility, show, price, result, needed, supply, return, chief, quantity, get.

Give the Russian equivalents to the following word combinations.

In the short run, lifeblood, charitable causes, to result in, to hire employees, employment opportunities, improved products, in this way, pretty strange, raw materials, profit motive, in this case, higher quality, lower prices, to make profit, to lose money.

Match the linking words with their Russian equivalents from A and B.

A: without, therefore, certainly, in order to, as well as, so that, thereby, since, rather than, the more….the lower, eventually, on occasion. .

B: с тем, чтобы; так как; поэтому/следовательно; посредством этого; в конце концов; а также и; без; чтобы/ для того, чтобы; конечно/непременно; чем больше…..тем ниже; иногда/ по случаю; а не.

Translate the sentences paying attention to the italicized words:

I cannot do it without your help. 2. Since you are ill, I’ll do the work for you. 3. I don’t know much about China, therefore I can’t advise you about it. 4. We used the computer in order to save time. 5. I’m learning French as well as English. 6. He became a citizen, thereby gaining the right to vote. 7. After failing four times, I eventually p assed my driving test on the fifth attempt. 8. I gave him the book so that he might study the subject at home.

Form the necessary parts of speech.

verb noun receive invest satisfy location mean difference accomplishment discover development compete noun	adjective
profit
	high
skill
	possible
	successful
	necessary
importance
benefit
	healthy
	improved

Answer the following questions.

1. What is profit?

2. What are the reasons for taking the risk of investing in the business?

3. What is the main profit motivation?

4. What expenses are involved in running a business?

5. How many types of profit are there?

6. How do consumers benefit from profit?

7. What can profitable businesses afford to do?

8. Why can we call profits “ lifeblood of businesses” ?

Summarize the information of the text and render its essentials.

Render the text into English.

Максимизация прибыли

Предпринимательская деятельность как особая форма экономической активности всегда связывалась с получением прибыли. Традиционный микроэкономический анализ обычно исходит из того, что фундаментальная задача фирмы заключается в максимизации прибыли в долговременном периоде.

В небольших фирмах, где функции руководства исполняет, как правило, сам владелец, прибыль действительно является доминирующей целью. Однако в крупных фирмах, где функции собственности отделены от функций контроля, расстановка приоритетов может быть иной. У менеджеров появляется возможность подмены целей корпорации иными целями. Критика теории ориентации фирмы на максимизацию прибыли осуществляется по двум направлениям.

Во-первых, в современных корпорациях реальные хозяйственные решения сложны и противоречивы, а потому не могут укладываться в прямое следование цели максимизации прибыли. Более предпочтительными для менеджеров могут быть, например, цели развития и роста фирмы, а не собственно максимизация доходов как таковых. Доминирующей целью может быть максимизация дивидендов акционеров, для которой вовсе не обязательно максимизировать прибыль.

Во-вторых, управляющие могут прямо следовать своим интересам в принятии решений, противоречащих интересам акционеров. Так, вполне типична ситуация, когда управляющие заинтересованы в краткосрочной прибыли за счет ее уменьшения в перспективе. При этом управляющие практически всегда больше заинтересованы в разрастании фирмы, чем в максимизации имущества акционеров, так как работа в боле крупной фирме престижнее и лучше оплачивается. Крупные фирмы вынуждены уделять специальное внимание проблемам повышения заинтересованности менеджеров в долгосрочной максимизации прибыли. Для гармонизации интересов акционеров и управляющих оплата труда менеджеров среднего уровня частично производится акциями, что должно заинтересовать их в повышении курсовой стоимости акций, а значит, и стратегической максимизации

Read the text, try to catch its essentials and be ready to do the tasks.