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these leaders overthrow was likely to create a power vacuum resulting in deep civil strife. However, because they had lasted for so long, it was impossible to tell when, or how, they would fall. Ian Bremmer and Preston Keat argue in The Fat Tail that pure bolts from the blue hardly ever occur. For example, they disagree that the 1917 Russian Revolution and subsequent debt default was a random and unexpected event. The British knew the Germans were funding the Bolsheviks and the Russians knew Lenin would prove a threat. But it seems that the complacency of the European elite, who thought the First World War would never happen, also extended to the possibility of a Bolshevik revolution.

Almost a century later the Russian default of August 1998 took place, with creditors lending right up into that summer underestimating the fragility of Russias institutions, on the grounds that superpowers don’t default. Because geopolitical and strategic risks build up gradually over a long period, they tend to be underpriced by financial markets. And they have increased in the current international environment: older powers are preoccupied with recovery from the economic crisis, while emerging powers are testing their strength. As a result, potential geopolitical risks could pan out as worst case scenarios, as seen in Ukraine and Syria. Also, the complex, interrelated global and regional threats seem to require a new range of policy instruments.

The increasing use of economic sanctions, as against Russia over Ukraine, creates its own risks, as evident in the smuggling and corruption that they spawn, and the potential for fragmenting the global economy. Political risk is usually not high on the list of threats in advanced economies with mature political institutions and the flexibility to respond to domestic and global pressures. But in recent years, such countries have witnessed an increase in political risk not seen since the 1970s.

The US has to contend with Congressional political gridlock, gerrymandering of electoral constituency boundaries, the power of lobbyists, and the deterioration in income distribution. The EUs institutions face high youth unemployment and the rise of xenophobic and protectionist political currents. Separatism first in Scotland, then Catalonia is another element. Given the maturity of political institutions these conflicts are mostly though not always mediated peacefully. But, as seen with the decline of sterling in the lead-up to the Scottish referendum, they increase uncertainty.

In rapidly growing emerging markets, political risk is a large element of cross-border risks that investors must manage. Institutional development inevitably lags behind rapid social and economic change, increasing political tensions. Institutional weaknesses persist because of political ruptures, such as military coups,

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social revolutions, or civil wars. Thus institutions are often grafted top-down, which interrupts the gradual evolution and maturing of institutions reflecting local conditions. Examples include Argentina and Thailand, or southern European countries such as Portugal, Spain Greece and Turkey with their periods of military rule.

Resource-rich developing countries often have oligarchic and authoritarian political structures. State authority is based on the control of vital resources, as with the royal families of the Gulf, or a narrow elite, as seen in central Asia. This fosters corruption and lack of transparency, and the risks associated with leader succession are high.

Political unrest tends to be met with a combination of repression and state handouts. Budget reliance on tax revenues tends to be minimal. Hence such governments are under little public pressure for more transparent or representative forms of rule. Thus, international investors today face a broader range of political risks than in the 1960s and 1970s, when classic political risks of CEND confiscation, expropriation, nationalisation and deprivation were predominant (though they have not gone away, as seen with the renationalisation of YPF in Argentina).

Risks such as breach of contract require a broader analysis of the political and institutional trends. In addition, given the shifts in the contours of the global economy, geopolitical risks have a tendency to play out as worst case scenarios. Expert analysis can help identify the political and geopolitical pressures building up to a sharp political break, and their associated risks. And by at least eliminating incorrect scenarios, it can help manage the risks.

Read the text and answer the following questions:

1.What recent examples of unexpected rise in political risk for investment does the author of the article mention?

2.Is the political risk phenomenon more common in developing countries? What reasons for that does the author mention?

3.Since the 1970s developed countries with strong economies such as the US, UK and some continental European countries have seen a rise in political risk. Does increasing immigration have anything to do with it? Prove your point of view with examples from the text.

4.Why did the referendum in Scotland contribute to the decline of sterling (UK pound)?

5.What kind of political and social structure, according to the author, is typical for countries with emerging export-based economies? Name at least four ways in which these structures manifest themselves. Can you give any examples of such countries, apart from those mentioned in the text?

6.What is the key to avoiding substantial financial losses for global investors?

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Vocabulary and Language Practice

1.Look up the meaning of the words given in the text in bold in a British English dictionary and use them in sentences of your own.

2.Find English equivalents of the following words and expressions in the text; give the context: вкладчик; предполагаемое развитие; переворот, свержение; просроченная неуплата долга; случайный, произвольный; финансирование, выделение денежных средств; постепенно, поэтапно; возможный, предполагаемый; быть озабоченным, занятым чем-либо; взяточничество, казнокрадство; завсегдатай кулуаров, оказывающий давление на членов конгресса; распределение доходов; ненавидящий иностранцев; покровительственный; течение, направление; новые, формирующиеся, развивающиеся рынки; постепенное развитие; местные условия; важные, жизненно необходимые ресурсы; отсутствие открытости; нестабильность, беспорядок; доверие, надежность, уверенность; принудительное изъятие; отчуждение, лишение прав собственности; лишение, ухудшение экономического положения социальной группы или индивидуума; преобладающий, господствующий; разворачиваться, оборачиваться (о событиях).

3.Translate the following word combinations and sentences.

А. To identify a critical juncture; result in; a bolt from the blue; debt default; to prove a threat; on the grounds that; to pan out; to be preoccupied with; to be high in the list of something; to contend with; to respond to; to face something; to associate with; political tension; to be based on; to be under pressure.

B. 1. The present level of spending on pensions is unsustainable. 2. We asked a random sample/selection of people what they thought about a new long-term economic plan. 3. 20 years of civil strife have left the country's economy in ruins. 4. His attempt to start a new business didn't pan out. 5. They received state funding for the project. 6. The economic situation in the region has deteriorated rapidly. 7. People are not interested in government handouts – all they want is a job.

8. Western governments should be giving more aid to the emerging democracies of the Third World. 9. What annoys me about this sales representative trainee is his complacency – he seems to have no desire to expand his horizons. 10. Petroleum revenue tax has risen by over 60 %. 11. A gridlock economy is one that is so choked by private property and private property rights that it ceases to utilize the resources available to it in an efficient manner for the greater good of the population. 12. The boundary changes were denounced as blatant gerrymandering. 13. Sales are lagging at the moment. 14. Suppose a soft drink organisation’s goal is to increase sales of its soft drink by 10 % during the summer season, this requires

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the coordination of a set of interrelated tasks, such as developing an effective advertising campaign, motivation of sales force, developing pricing strategies and offering incentives to distributors. 15. The book provides a comparative analysis of the law relating to remedies for breach of contract. 16. To support the development of West African agriculture and to identify areas of comparative advantage in the highly competitive international market is necessary given that the international economy is not a level playing field. 17. In Finland, as elsewhere, there has been a recent surge of interest in the promotion of labour flexibility within industrial enterprises. 18. Debt crises and defaults by sovereigns – city-states, kingdoms, and empires – are as old as sovereign borrowing itself. The first recorded default goes back at least to the fourth century B.C., when ten out of thirteen Greek municipalities in the Attic Maritime Association defaulted on loans from the Delos Temple.

4. Complete the sentences with a suitable preposition.

All organisations face a wide range 1. ____ risks. Risk and reward are intrinsically linked and because 2. ____ that the company or individual that risks nothing achieves nothing. Understanding risk is therefore fundamental 3. ____ effective business success. Good risk management maximizes the probability 4. ____

business success and the likelihood 5. ____ failure.

Risk can be categorised 6. ____ four types. Firstly, operational risks, 7) ____

example, regulatory non-compliance, suuply chain failure, or failure 8. ____ governance 9. ____ an organization. Secondly, financial risks. 10. ____ example, cash flow, credit or exchange risks. Thirdly, hazards. 11. ____ instance, safeguarding the health and safety 12. ____ employees and the public, natural events and consequent business interruption impact or environmental impact. And finally, strategic risks, 13. ____ instance, market changes, increased competition, or failure to adapt or change 14. ____ an organization. Risk can be internally driven i.e. 15. ____ a firm, or externally driven i.e. 16. ____ the market or the environment 17. ____ which the company operates. Companies should think laterally when considering risk. They should consider not only obvious risks but think 18. ____ ‘what if ?’ Having good risk radar is therefore vital 19. ____ the successful enterprise. 20. ____ considering emerging trends, organisations not only can prepare better 21. ____ potential future adverse events but also capitalise 22. ____ opportunities 23. ____ their competitors.

Vocabulary: Phrasal verbs

1. Complete the second sentence in each pair with phrasal verb from the box so that it has the same meaning as the first sentence. You will need to change the verb form in most of the sentence.

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1.The negotiations between two companies collapsed when neither side reached an agreement.

The negotiations between two companies ____ when neither side reached an agreement.

2.The accountant was trying to calculate if the sales department has sold more this year than last year.

The accountant was trying ____ if the sales department has sold more this year than last year.

3.A lot of people exhaust themselves through overwork.

A lot of people ____ themselves ____ through overwork.

4.Through careful negotiations, they were able to resolve the problem. Through careful negotiations, they were able ____ the problem.

5.The Australian partners stopped being part of the deal at the last moment. The Australian partners ____ the deal at the last moment.

6.It is pointless relying on colleagues to help you if they don’t do as they promised.

It is pointless relying on colleagues to help you if they ____ you ____.

7.New government pension plans mean that many people will continue working well into their seventies.

New government pension plans mean that many people will ____ working well into their seventies.

8.The planned changes in the PR department were delayed because members of the Board argued among themselves.

The planned changes in the PR department were ____ because members of the Board argued among themselves.

9.At the last minute, the plans for the proposed didn’t take place.

At the last minute, the plans for the proposed ____.

10.During the recession, many workers in the primary sector became jobless. During the recession, many workers in the primary sector ____ jobless.

11.Minor economies, such as spending less on staff costs, can often prevent a company sliding into bankruptcy.

Minor economies, such as ____ staff costs, can often prevent a company sliding into bankruptcy.

12.We were accidentally disconnected in the middle of our phone call.

We were accidentally ____ in the middle of our phone call.

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13.Once the government removed quotas, the market was flooded with cheap foreign imports.

Once the government ____ quotas, the market was flooded with cheap foreign imports.

14.It cost almost 8 million pounds to renovate the old warehouses, by which time the company was in serious financial difficulties.

It cost almost 8 million pounds to ____ the old warehouses, by which time the company was in serious financial difficulties.

2. The verbs and the particles in the two boxes can be combined to make phrasal verbs, which then be used to complete the sentence below. Decide which phrasal verbs go into each sentence. In many cases, you will need to change the form of the verb (eg. past participle, infinitive, third person ‘s’, etc.). The meaning of each phrasal verb is in italics at the end of each sentence.

1.The executive director was reluctant to make changes, but representatives of the supply department managed to ____ him ____ (to persuade somebody).

2.After ____ a few unexpected difficulties, they decided to scrap the project. (to stop because something is in the way).

3.Although many companies offer their employees a pension programme, many decide to ____ of the programme and make their own arrangements. (to decide not to take part in something).

4.A lot of applicants expressed an interest in the job, but only a handful ____

for the interview. (to arrive for a meeting, appointment, etc.).

5.People who use credit cards unwisely can easily ____ debts of thousands of pounds every momth. (to make debts go up quickly).

6.By the time he was 18, he had ____ his mind that he wanted to become a top manager of some international company. (to decide on something).

7.It’s often a good idea to ____ some money for ‘a rainy day’. (to save money).

8.Technology is moving at such a fast pace it is no longer possible to ____ all the latest developments. (to understand or assimilate information).

9.Nobody was ____ by the director’s statement about false figures on recent.

10.He ____ the job that was offered to him, even though he was desperate for the money. (to refuse something which was offered).

11.Most people will ____ a stressful job if the money is good enough. (to tolerate something which is not pleasant).

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12.He was unable to make a report at the meeting, so I was asked to ____ and make it on his behalf. ( to take the place of someone – often also used with ‘for’ ).

13.A lot of people are ____ the idea of working for themselves because of the lack of regular salary. (to be discouraged from doing something, usually because of a potentially negative outcome).

14.Despite massive promotion, it took a long time for the company to ____

again after the crisis situation with one of its products. (to improve, to get better).

7. QUALITY MANAGEMENT

Lead-in:

1.Why is quality important?

2.What is quality management?

3.What purpose does a quality management system serve?

4.What are the four main components of quality management?

5.What are management principles that can be used by top management to guide their organizations towards improved performance?

6.What do you know about quality standards?

EVOLUTION OF QUALITY

From www.dti.gov.uk

Before the concepts and ideas of TQM were formalised, much work had taken place over the centuries to reach this stage.

During the early days of manufacturing, an operative’s work was inspected and a decision made whether to accept or reject it. As businesses became larger, so too did this role, and over the centuries jobs were created.

Accompanying the creation of inspection functions, other problems arose:

•More technical problems occurred, requiring speci alised skills, often not possessed by production workers.

•The inspectors lacked training.

•Inspectors were ordered to accept defective goods , to increase output.

•Skilled workers were promoted into other roles, l eaving less skilled workers to perform the operational jobs, such as manufacturing.

These changes led to the birth of the separate inspection department with a “chief inspector”, reporting to either the person i n charge of manufacturing or the works manager. With the creation of this new department, there came new services and issues, e.g, standards, training, recording of data and the accuracy of measuring

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equipment. It became clear that the responsibilities of the “chief inspector” were more than just product acceptance, and a need to address defect prevention emerged.

Hence the quality control department evolved, in charge of which was a “quality control manager”, with responsibility for the inspection services and quality control engineering.

In the 1920’s statistical theory began to be applied effectively to quality control, and in 1924 Shewhart made the first sketch of a modern control chart. His work was later developed by Deming and the early work of Shewhart, Deming, Dodge and Romig constitutes much of what today comprises the theory of statistical process control. However, there was little use of these techniques in manufacturing companies until the late 1940’s.

At that time, Japan’s industrial system was virtually destroyed, and it had a reputation for cheap imitation products and an illiterate workforce. The Japanese recognised these problems and set about solving them with the help of some notable quality gurus – Juran, Deming and Feigenbaum.

In the early 1950’s, quality management practices developed rapidly in Japanese plants, and become a major theme in Japanese management philosophy, such that, by 1960, quality control and management had become a national preoccupation.

By the late 1960’s/early 1970’s Japan’s imports int o the USA and Europe increased significantly, due to its cheaper, higher quality products, compared to the Western counterparts.

In 1969 the first international conference on quality control, sponsored by Japan, America and Europe, was held in Tokyo. In a paper given by Feigenbaum, the term “total quality” was used for the first time, a nd referred to wider issues such as planning, organisation and management responsibility. Ishikawa gave a paper explaining how “total quality control” in Japan was d ifferent, it meaning “company wide quality control”, and describing how all emplo yees, from top management to the workers, must study and participate in quality control. Company wide quality management was common in Japanese companies by the late 1970’s.

The quality revolution in the West was slow to follow, and did not begin until the early 1980’s, when companies introduced their own quality programmes and initiatives to counter the Japanese success. Total quality management (TQM) became the center of these drives in most cases.

In a Department of Trade & Industry publication in 1982 it was stated that Britain’s world trade share was declining and this was having a dramatic effect on the standard of living in the country. There was intense global competition and any

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country’s economic performance and reputation for quality was made up of the reputations and performances of its individual companies and products/services.

The British Standard 5750 for quality systems had been published in 1979, and in 1983 the National Quality Campaign was launched, using BS5750 as its main theme. The aim was to bring to the attention of industry the importance of quality for competitiveness and survival in the world market place.

Since then the International Standardisation Organisation 9000 has become the internationally recognised standard for quality management systems. It comprises a number of standards that specify the requirements for the documentation, implementation and maintenance of a quality system.

TQM is now part of a much wider concept that addresses overall organisational performance and recognises the importance of processes. There is also extensive research evidence that demonstrates the benefits from the approach.

As we move into the 21st century, TQM has developed in many countries into holistic frameworks, aimed at helping organisations achieve excellent performance, particularly in customer and business results. In Europe, a widely adopted framework is the so-called “Business Excellence” or “Excellence” Model, promoted by the European Foundation for Quality Management, and in the UK by the British Quality Foundation.”

Read the text and answer the following questions:

1.Has the importance of quality control become greater with the growth of productions over the years?

2.Why do you think buisnesses began to address the problem of prevention?

3.When was the basis of today's quality management developed?

4.Does the situation in which Japan found itself in the 1940s sound familiar to you? Can you name any countries with the same reputation in modern world trade?

5.How does the example of Britain's campaign in the 1980s underline the importance of quality management in the text?

6.What do you know about quality standards in the modern world? And in Russia? Can you give any examples?

Vocabulary and Language Practice

1.Look up the meaning of the words given in the text in bold in a British English dictionary and use them in sentences of your own.

2.Find English equivalents of the following words and expressions in the text; give the context: понятие, идея; оформлять, придавать официальный ста-

тус; проверять, осматривать, изучать; имеющий недостатки, неисправный;

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сообщать, докладывать, подчиняться; защита от дефектов; развиваться, видоизменяться; применять; метод, прием, процедура; неграмотный, необразованный; осознавать, признавать; выдающийся, знаменитый; организовывать, оказывать финансовую поддержку; вопрос, проблема; впечатляющий, разительный; большой, широкомасштабный; продвигать, повышать в чине или звании; способствовать; содействовать; поощрять.

3. Translate the following word combinations and sentences.

A.Over the centuries; full time jobs; to create jobs; to increase output; to reach (a stage); lead to something.

B.1. A quality management system is a management technique used to communicate to employees what is required to produce the desired quality of products and services and to influence employee actions to complete tasks according to the quality specifications. 2. When quality is the key to a company’s success, quality management systems allow organizations to keep up with and meet current quality levels, meet the consumer’s requirements. 3. It is believed that 85 percent of all quality problems were the fault of management and in order to improve, management had to take the lead and put in place the necessary resources and systems.

4.As early as the 1950s, Japanese companies began to see the benefits of emphasizing quality throughout their organizations and enlisted the help of an American, W. Edwards Deming, who is credited with giving Japanese companies a massive head start in the quality movement. 5. Juran defined quality as “fitness for use,” meaning that the users of products or services should be able to rely on that product or service 100 percent of the time without any worry of defects. 6. The Ford Motor Company was the first to invite Deming to help the company transform itself into a quality-oriented organization and as a result, Ford was able to achieve higher quality standards than any other American automotive manufacturer and substantial sales growth in the late 1980s even when the rest of the U.S. automotive market was declining. 7. Though the quality movement started in manufacturing it soon moved to service industries. Initially service organizations did not feel quality systems would transfer very easily from manufacturing, but today service companies are reaping substantial rewards from implementing quality programs.

8.TQM is a management approach in which quality is emphasized in every aspect of the business and organization, its goals being aimed at long-term development of quality products and services. 9. The implementation and management of a successful quality system involves many different aspects that must be addressed on a continuous basis. 10. Management’s role in TQM is to develop a quality strategy

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