Interest rents leased depreciation

1. Commercial... have decreased significantly since their peak in 1997.

2. The East Moline foundry has been operating at less than 50 % capa­city and has ... significant operating losses.

3. The ... is the added output resulting from employing one more worker.

4. Their retail branches are a ..., so the more business they put through them the better.

5. Delay in construction could increase ... significantly.

6. Chrysler might run out of money to pay ... on its bonds.

7. The proposed site of the factory may lead to... of property value in the immediate vicinity.

8. The local authority ... him the property.

E. Make a summary of the text

Use the active vocabulary.

R Grammar notes

'One' and 'It'

§ 1. 'It' as an 'empty subject'. We often use 'it' in sentences referring to time, the weather, temperature or distance. When used in this way, it is sometimes called an empty subject because it carries no real information. It is present because every English sentence has to contain a subject and a verb. It is used in sentences with:

• time: It's 8 o'clock. It's Tuesday. It's May 25th;

• weather: It's hot. It's raining. It rains a lot here;

• temperature: It's37° centigrade/Celsius;

• distance: It's 20 miles to/from London;

• the tides: It's high tide at 11.44;

• environment: It's noisy/smoky in here;

• present situation: Isn't it awful! Isn't it a shame;

• it's time ... It's time (for us) to leave;

• with since: It's three years since we last met;

• with says: It says here there was a big fire in Hove;

• with take: It takes (us) half an hour to get to work.

And note many expressions with it, e. g., it doesn't matter; it's no use, ('it' as a subject); I've had it; That does it! ('it' as an object).

§ 2. 'It' as a 'preparatory subject'. Sometimes sentences beginning with 'it' continue with an infinitive, a gerund or a noun clause. It is possible to begin such sentences with an infinitive or gerund, but we generally pre­fer 'it'.

• E. g.: It's pleasant to lie in the sun (To lie in the sun is pleasant).

• It's pleasant lying in the sun (Lying in the sun is pleasant).

• It's a shame that he isn't here (That he isn't here is a shame).

• It doesn't matter when we arrive (When we anive doesn't matte?').

§ 3. General statements with 'one' and 'you'. 'One' used as an indefi­nite pronoun meaning 'everyone/anyone' is sometimes applied (formally) in general statements: World trade is improving, but one cannot expect mi­racles.

In everyday speech, the informal 'you' is preferred: Can you buy refri­gerators in Lapland? (= Can anyone ...?).

'One' may be used to replace T, but this tends to sound pompous: One likes to have one's breakfast in bed now and again.

'One' can be linked with 'one's', just as you can be linked with your. However, constructions with 'one', 'one V and 'oneself are often awkward because of the repetition of 'one'.

E. g.: One should do one's best at all times. (Better: You should do your best at all times).

One shouldn't be too hard on oneself. (Better: You shouldn't be too hard on yourself).

In AmE 'one's/oneself can be replaced by 'his/her', 'himself/herself: One should give himself/herself a holiday from time to time. (For the use of the passive in place of one).

F.l. Identify all dumpy 'it' or 'one' in the text "Cost and Production" and translate the sentences into Russian.

F.2. Rewrite these sentences beginning 'It ...' if it is appropriate in written English. The first has been done for you.

1. To drive a car without a licence is illegal. E. g.: It is illegal to drive a car without a licence.

2. That she wasn't hurt in the fall was a miracle.

3. Their decision was a serious setback.

4. The announcement is to be made this evening.

5. Where the light was coming from was far from clear.

6. That you already know my secret is obvious.

7. If the two countries don't reach an agreement soon will be surprising.

8. The parcel I was expecting has arrived.

F.3. Match up the sentences and write ones beginning with 'It ...', 'that ...', as in the example: It appears likely that the President will be re­elected. A number of alternative answers are possible:

1. the President will be re-elected;

2. Beckman had a wrist injury for most of the match;

3. this was to be the band's last world tour;

1. Jacobs possessed three handguns;

4. people are happy with the quality of supermarket food.

1. this transpired during the trial;

2. this follows the results of the survey;

3. this appears likely;

4. this seemed to be the case;

5. this emerged after the concert.

G. Speak up

G.l. Answer the following questions.

1. How can overhead costs change the way people do business?

2. How does costs affect total revenue? G.2. Discussion topics.

1. Comment on the statement: Profit is maximized when the marginal costs of production equal the marginal revenue from sales.

2. Explain the use of marginal analysis for break-even and profit-maxi­mizing decisions.

3. Many oil-processing plants shift workers to maintain operations. How do you think a plant's fixed and variable costs affect its decision to operate around the clock?

H. Reading the English newspaper

H.l. Read the article and do the exercises.

The Benefits of Being Small: Balancing Economies of Scale Against the Advantages of Intimacy Is a Delicate Task

John W. Hunt, "Financial Times"

In the 1970s the British economist E. F. Schumacher coined the phrase "small is beautiful." The expression focused on a design question. As com­panies become larger and more complex, can they restructure to retain the human benefits of smaller companies?

Schumacher believed that they could not. They would have to reduce in size and change their command structure. His argument was simple. As a company adds more people in more locations the sheer task of holding this lot together becomes an end in itself. The economic advantages of scale will be eroded by the disadvantages of a loss of intimacy.

Schumacher was largely ignored outside Europe. At the time a preva­iling view was that large companies could be very profitable if structures were crystal clear and rational. Through these means human error or devi­ance could be minimized.

One company was always quoted as the supreme example of the triumph of structure over deviance: International Business Machines, arguably the greatest exponent of machine-like precision through command and control structures.

However, in 1993 IBM lost $5bn (£ 5.6 bn). For those on the inside, the collapse of the world's most successful computing company was stunning. At the time I taught on IBM's senior management programme at La Hulpe in Belgium and I could track the growing unease. Yet the IBM staff still believed that creative, structural solutions would save the day. Managers largely ignored the evidence of paralysis at the top. They were part of the paralysis.

The rest is history. Lou Gerstner, with no background in computing, was brought in to rebuild IBM. Seemingly, overnight half of the far-flung 450,000 devoted, loyal, programmed IBM-ers were banished. The rational model had been shown to be flawed.

Since the 1990s various studies have reinforced the idea that 1,000 emplo­yees in one location is about the maximum size for any company if it is to retain the advantages of the economies of scale and minimize the human diseconomies arising from adding more people.

IBM did clean out 50 per cent of its workforce — but controlling size was not the main way the company reinvented itself. Its most important decision was to offload its entire hardware and components manufactu­ring. Outsourcing was its most spectacular strategy.

In the latest McKinsey Quarterly, the logic and effect of outsourcing as a strategy and how it affected IBM are examined. The research question posed by the authors is: has outsourcing gone too far?

The logic of outsourcing is that by shedding assets companies can con­centrate on the interesting work. Employees are remotivated to develop pro­duct or services, discover solutions and be innovators or supply chain integ­rators. Liberation leads to an increased rate of return on invested capital.

The Journal provides sensible, practical insights into the sort of questi­ons companies should ask before embarking on outsourcing. If internal suppliers can meet industry standards within a set time and present a com­petitive advantage, an internal solution may be preferable. If, as well, the internals are not readily substituted outside and are vital to the corporate culture and reputation, the company should resist outsourcing.

Conversely, if there are dramatic cost savings available from cheaper labour sources or the skills are hard to acquire or suppliers have greater productive capacity and higher levels of expertise and knowledge, the case for outsourcing is strong.

Rarely is outsourcing an either/or decision. So the authors discuss a mixture of tactics in which the company gets the best from both sources, internal and external. They rightly question the general assumption that outsourcing is always best.

One issue that the authors do not discuss is dependence. This is often critical. How dependent does a company become once it has transferred all its information technology processing to a supplier? Transferring staff is fine if the explicit and tacit knowledge is readily available elsewhere. It may be dangerous if it is not.

By the mid-1990s IBM had redefined its core business as e-business ser­vices and solutions, research and design and semiconductor architecture and manufacturing and spun off its hardware and components manufactu­ring business. By 2000 it reported revenues of $ 8.09 bn.

What does all this tell us? First, by outsourcing manufacturing IBM made possible a massive strategic shift. Lesson: outsourcing is not just a tactic for transferring costs, or people problems.

Second, IBM's leaders could not have known in 1994 how the company's future would evolve. This was not change based on a clear vision and a rational plan. Lesson: To outperform the competitors, companies must take risks, follow a shared hunch and tolerate ambiguity about the out­comes.

Third, this transformation was achieved by relentless segmentation into smaller units. Lesson: Schumacher's argument on the human diseconomies of size was valid. For innovation and creativity, free forming self-gover­ning teams are essential. Small in this sense is beautiful.

H.2. Answer the following questions.

1. What human benefits did Schumacher have in view when he coined the phrase "small is beautiful"?

2. Did other economists and industrialists share his opinion?

3. How did industrialists intend to minimize possible human error or deviance in a large company?

4. What other strategy besides controlling size did IBM use to reinvest itself in 1990s?

5. Was outsourcing strategy an efficient measure? What is the logic of this strategy?

H.3. Match up the words and definitions:

1) economies of scale; a) something that is different from what is socially

acceptable;

2) to erode; b) a person who expresses support, performs, or is an

example of a stated thing;

3) deviance; c) the advantages that a big factory, shop, etc. has over

a smaller one because it can spread its fixed costs over a larger number of units and therefore produce or sell things more cheaply;

4. exponent; d) to perform better than anyone else;

4. outsourcing; e) to wear or to be worn away gradually, esp. by slow

action of water, wind, etc.;

6) to outperform; f) \fa company, organization, etc. employs another

company to do a part of its contract;

7) far-flung; g) a situation, when there is more than one possible

meaning or interpretation; unclear;

8) ambiguity. h) spread over a great distance.

H.4. Read the article once more, find the sentences containing it/one and translate them into Russian.

H.5. Make up the outline of the article and then render it.

L Reading the Russian newspaper