Практический курс английского языка = Practical Course of English for Students of Economics. Учебное пособие для студентов экономических специальносте

material of economics. Economists use data to test their ideas about how the world works and to monitor the performance of the economy. This is a vital role if we are to trust our economic reasoning. We could never develop confidence in a theory if its predictions were always out of line with what actually happens. But economists cannot use laboratory experiments to provide evidence in support of their theories. Instead, they must rely on observations of how people and economic institutions behave in the real world. Graphs represent an economic model or theory which focus on hypothetical relationships or real-world data visually.

Business people use information to get a clear view of many factors affecting the efficiency, productivity, and profits of their businesses. Production managers use statistics data in quality control. Marketing managers do a lot of research, measuring the size of markets, the effectiveness of various marketing techniques, and the needs and desires of prospective customers. Financial managers analyze the performance of their investment portfolios. And risk managers use statistics data to determine risk.

The results of most research efforts can only be made useful by submitting the findings to statistical analysis. Statistics makes any kind of numerical data useful and meaningful. Several types of diagrams are used to display relationships among data (see Fig. 1). A line graph is a line connecting points. Single line graphs are used to show trends, to give information about one item. Amounts are given on the vertical axis and time on the horizontal axis. A bar chart uses either vertical or horizontal bars to compare information. Because of its simplicity, the bar chart is frequently used in business reports. A pie chart is a circle divided into slices. The slices are labeled as percentages of the whole circle, or 100 percent. A pie chart provides a vivid picture of relationships, but it is not good for showing precise data. A table is grid of words and numbers commonly used to present data when there is a large amount of precise numerical information to convey.

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Fig.1.

Unit 2

G O O D S & S E R V I C E S

Text 1

Organizational Products

There are two basic types of industrial products. – expense items and capital items. Expense items are relatively inexpensive goods and services that are generally used within a year of purchase. Those that are more expensive and have a longer useful life are considered capital items. Another classification of organizational or industrial products is the most commonly used classification system which outlines the basic characteristics of each class of organizational product:

•Raw materials: basic ingredients that undergo processing in the factory;

•Component parts: items used in the assembly of the finished product;

•Installations: major capital purchases, such as a new factory building or an airport’s computerized baggage system;

•Accessory equipment: equipment that aids in the operation of the business, such as cash registers, photocopiers, forklift trucks;

•Operating supplies: paper, pencils, brooms, and other short-lived items that are routinely purchased and used up in the organization’s operations;

•Services: work provided by others, such as janitorial services, repair and maintenance services, and the services of lawyers and accountants.

All organizational products have one thing in common: derived demand. Derived demand means the demand for every organizational

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product depends on the demand for some other product. The demand for tempera paints, water colors, and chalk sold to the art departments of public schools is derived from the demand of students or their parents for a basic, well-rounded education. Ultimately the demand for all organizational products depends on consumer demand for finished goods and services.

Text 2

Services

Services are especially important because the service industry now accounts for more than half of personal consumption expenditures. Services have the following characteristics: intangibility, perishability, inseparability, variability.

Goods are tangible, whereas services are intangible. Intangibility means buyers normally cannot see, feel, smell, hear, or taste a service before making a purchase decision. Services, then, cannot be handled, examined, or tried out before they are purchased. This increases buyer uncertainty and necessitates marketing strategies and tactics to “make the intangible tangible.” Although services are intangible, the production of a service may be linked to a tangible product. (The transportation service an airline provides is tied to its fleet of airplanes. Renting a videotaped movie is tied to the temporary use of the videocassette).

Services “disappear” quickly. They are perishable and cannot be stored. If a computer salesperson loses a customer, the computer—a tangible good—remains to be sold to another. If a dentist’s patient fails to keep an appointment, that half-hour of the dentist’s time—the service to be sold—is gone forever.

A manufactured good may be produced by one firm and marketed by another; thus, the good can be separated from its producer. In contrast, the service is inseparable from its supplier. Inseparability means producer and consumer may have to be present in the same place at the same time for the service transaction to occur.

Most services are delivered by people. Because the quality of service provided is closely tied to the supplier’s personal performance, there can be great variability among services provided. Most services are delivered by people. Because not all the same, variability among services can be great. Dealing with a friendly workers are clerk or having other positive experiences with the people who provide the service may be a major reason why people keep using the service. Think about your regular hairstylist. Why do you go there rather than to another hairstylist? If you

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think about hairstyling, dental care, insurance, subway and bus transportation, and all the other services you buy, you will appreciate the importance of services in our economy. We can subdivide the service sector of the economy into many different service businesses: business services (accounting, advertising, consulting), repair services, personal services (hairstyling, maid services), travel and lodging services, entertainment and recreation services.

In other words, service quality is characterized by variability. Services are often heterogeneous because the quality of the service depends on who provides it and how quickly it is provided.

Marketers of services strive to control service quality. One goal is to standardize services to reduce variability, but this is difficult. It is not possible to prescribe and deliver equal amounts of “smiling” by all employees at a bank. Nevertheless, companies that market services often use employee training and incentives, such as employee-of-the-month awards, as steps to control service quality.

If you think about a pasta dinner at a restaurant, you will realize that it is difficult to separate goods from services entirely. This reality has led some marketing experts to array products along a continuum from “mostly good” to “mostly service.” A tune-up for your car provides both a good—spark plugs and other parts—and a service—measurement, tuning, and installation of the parts, as well as convenience of the location and other aspects of the total product offering.

Text 3

Modern Production Processes

The intended result of all production management activities is a high level of productivity. Productivity means that the outputs (goods and services) are more valuable than the total of inputs consumed in producing them. Productivity is increased by producing more goods and services while using the same number of or fewer inputs. Increases in productivity typically depend on three factors: standardization of parts and processes, specialization of labor, and mechanization of work.

Standardization involves adopting uniform, consistent parts and processes in producing a good or service. If an employee always uses the same type of screw or rivet, time will be saved and skills increased. If, however, the employee uses a different type of screw or rivet for each separate operation, time will be wasted looking for the right tools and parts. Thus, standardization saves both time and costs in the manufacture of many goods today.

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The advantages of standardization are highlighted by problems faced by Electrolux, a Swedish appliance maker. Although there are 325 million European consumers, local and regional customs prevent standardization. Northern Europeans want large refrigerators because they shop once a week. But southern Europeans want small ones because they shop for fresh produce each day. Northerners want freezers on the bottom, southerners on the top. Britons insist 60 percent of the refrigerator be devoted to freezer space. In Europe Electrolux is only one of over 100 appliance makers, yet it must produce over 120 basic refrigerator designs with 1,500 variants. Manufacturing expenses necessitated by the great variety of designs have depressed Electrolux’s profits for years.

Specialization is an element of job design. It can enhance productivity. As employees become increasingly skilled at the limited variety of activities they perform, they can reach high levels of productivity. In addition to having employees simply repeat a few rather than many activities, managers of production processes can take other steps. For example, they can conduct time-and-motion studies, in which they carefully observe workers on the job to see exactly what movements they use while performing a task, such as bending over or “grasping” a tool. By doing this, they discover any repetitive movements or unnecessary “small” movements. Then they can work to minimize these movements and thus help employees speed up the performance of their tasks. Another form of specialization is collaboration with another organization to perform the work.

All processes may be continuous or intermittent. Continuous processes run for long periods of time with few pauses or changes. Chemical plant, steel mills usually operate around the clock for months with no essential changes in their production activities. Intermittent processes operate for shorter period, in batches and are easier to change.

Text 4

Consumer Products

Consumer goods fall into three general categories: convenience, shopping, and specialty products. This classification describes the products involved and it is actually based on the consumer’s reasons for buying, the consumer’s need for information, and the consumer’s shopping and purchase behaviors.

Convenience products are relatively inexpensive, are purchased on a regular basis, and are bought without a great deal of thought. Convenience products reflect the consumer behaviour of buying goods or ser-

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vices with a minimum of shopping effort. People buy these products at the most convenient locations (hence the term). Milk, shoe shines, soft drinks, and bread, are convenience products. How far out of your way would you go to buy a quart of a particular brand of milk? The answer to this question helps determine whether a given product is a convenience product.

Shopping products are goods and services that generate a great deal of consumer effort Consumers feel the need to make product comparisons, seek out additional information, examine merchandise, or otherwise reassure themselves about quality, style, or value before purchasing a shopping product. In other words, prospective buyers of products such as clothing, shoes, furniture, and tableware want to shop around.

Decisions about shopping products are not made on the spur of the moment. Buyers want to mull things over before committing themselves. This is partly because shopping products are generally priced higher than convenience products. There is also greater consumer involvement with the purchase. Thus, the risks associated with shopping products, both monetary and social, are fairly high. The distribution strategy for shopping products differs from that for convenience products. Since people are willing to shop around, the product should not be available everywhere rather, it should be placed in selected spots.

Consumers believe they know exactly what they want. They have selected the brand in advance and will not accept substitutes. At the moment of purchase, they no longer need to make shopping comparisons among alternatives. They have thought about their purchase. They regard the brand as having a particular attraction other than price. Products that are the object of this type of consumer concern are called specialty products. Many of these products are seldom-purchased items such as stereo equipment, pianos, wedding receptions, or expensive cars. Potential buyers may have gathered a great amount of information prior to making the purchase decision. At the time of purchase, they may spend considerable time and effort to get to the appropriate store that carries the item, but they no longer need to make shopping comparisons. Their minds are made up.

Some products do not fit neatly into this product classification scheme. However, classifying products into convenience, shopping, and specialty products does help in planning marketing strategy for most consumer products.

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Unit 3

B U S I N E S S O R G A N I Z A T I O N

Text 1

Entrepreneur

Entrepreneur is a loan word from French that refers to a person who undertakes and operates a new venture, and assumes some accountability for the inherent risks. Most commonly, the term entrepreneur applies to someone who establishes a new entity to offer a new or existing product or service into a new or existing market, whether for a profit or not for-profit venture, a business entrepreneur. Business entrepreneurs often have a strong beliefs about a market opportunity and are willing to accept a high level of personal, professional or financial risk to pursue that opportunity.

Research has demonstrated that there is such thing as an “entrepreneurial type”, with certain characteristics linked to the probability of someone being an entrepreneur themselves. There is little good evidence, however, that entrepreneurial type is linked to ultimate success of an entrepreneurial venture. Business entrepreneurs are often highly regarded in US culture as being a critical component of its capitalistic society. Famous entrepreneurs include: Henry Ford (automobiles), J. Pierpont Morgan (banking), Thomas Edison (electricity/ light bulbs), Bill Gates (computer operating systems and applications), Steve Jobs (computer hardware, software), Richard Branson (travel and media) and others.

There is a question: “Are entrepreneurs born or made?” The answer lies in what one author writing in Business Horizons calls “the galaxy of personality traits which characterize individuals who have a propensity to behave entrepreneurially”. He lists nine as being more salient: a desire to achieve: the push to conquer problems, and give birth to a successful venture; hard work: are mostly workaholics; nurturing quality: willing to take charge of, and watch over a venture until it can stand alone; acceptance of responsibility: are morally, legally, and mentally accountable for their ventures; reward orientation: desire to achieve, work hard and take responsibility, but also want to be rewarded handsomely for their efforts, rewards can be in the forms others than money, such as recognition and respect; optimism: live by philosophy that is the best of times, and that anything is possible; orientation to excellence: often desire to achieve something outstanding that they can be proud of; organization: are good at bringing together the components (including people) of a venture; profit orientation: want to make a profit, but the profit serves primarily as a meter to gauge their success and achievement.

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The concept of the entrepreneur is intimately associated with three elements: risk bearing, organizing and innovation. Thus, an entrepreneur can be defined as a person who tries to create something new, organizes production and undertakes risks and handles economic uncertainty involved in enterprise.

Entrepreneur as a risk bearer. Richard Cantillon, an Irish man living in France was the first who introduced the term entrepreneur and his unique risk bearing function in the early 18th century. He defined an entrepreneur as an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future. Uncertainty is defined as a risk, which cannot be insured against and is incalculable.

Entrepreneur as an organizer. Jean-Baptiste Say, an aristocratic journalist, developed the concept of an entrepreneur a little further. His definition associates an entrepreneur with the functions of co-ordination, organization and supervision. According to him, an entrepreneur is one who combines the land of one, labor of another and the capital of yet another, and, thus, produces a product.

Entrepreneur as an innovator. Joseph A. Schumpeter, for the first time in 1934, assigned a crucial role of innovation to the entrepreneur. Schumpeter considered economic development as a discrete dynamic change brought by an entrepreneur by instituting new combinations of production, i.e. innovation. He also made a distinction between an inventor and an innovator. An inventor is one who discovers new methods and new materials, and an innovator utilizes inventions and discoveries in order to make new combinations.

Text 2

Governing Bodies of the Corporation

Shareholders. Theoretically, the shareholders, as the owners, are the ultimate governing body of the corporation, but in practice most individual shareholders in large corporations accept the recommendations of management. Indeed, the more shareholders there are, the less real influence each one has on the corporation. However, some shareholders have more influence than others. For one thing, some people own stock that carries no voting rights, while others own shares that are worth one vote each. Furthermore, some people (or organization) own more shares with voting rights than others do.

In the last 20 years institutional investors such as pension funds, insurance companies, and college endowment funds have accumulated an increasing share of the stock in the nations corporations. These large institutional investors want the value of their stock to increase, and they

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are beginning to play a more powerful role in governing the corporation in which they own shares. At least once a year, all the owners of voting shares are invited to a meeting to choose directors, select an independent accountant to audit the company’s financial statements, and attend other businesses. Shareholders who can’t attend the annual meeting in person vote by proxy, signing and returning a slip of paper that authorizes management to vote on their behalf.

Board of directors. As a practical matter, the board of directors, which represents the shareholders, is responsible for guiding the corporate affairs and selecting officers. Depending on the size of the company, the board might have anywhere from 3 to 35 directors, although 15 to 25 is the typical range. The board has the power to vote on major management decisions. The board’s actual involvement in running a corporation varies from one company to another. Often, the board of directors acts as a “rubber stamp”, simply approving management’s recommendations. This role is common where a majority of the board members are also managers and where management ensures that only people who support management’s interests are elected to the board.

Officers. The real power in a corporation often lies with the chief executive officer (CEO), who is responsible for establishing the policies of the company at the direction of the board. He may also be the chairman of the board, the president of the corporation, or both. Officers just below top rank, including most vice presidents, are generally appointed by the chief executive officer and approved by the board. A top officer who fails to carry out the board’s wishes may be removed, although this happens relatively rarely.

Employees. To an increasing degree, employees are also becoming more involved in governing the corporation. They are doing this through a variety of vehicles, one of which is the employee stock ownership plan (ESOP), a program that encourages employees to buy shares of stock in the company for which they work.

Text 3

New Businesses

In the past few years news media have been filled with reports of businesses combining and splitting to form new businesses. These deals vary dramatically in magnitude, form, and effect.

The terms most often used to describe all of this activity are mergers, acquisitions and leveraged buyouts. The difference between a merger and an acquisition is fairly technical, having to do with how the financial transaction is structured. Basically in a merger, two companies combine

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to create a new company by pooling their interests. In an acquisition, one company buys another company and emerges as the controlling corporation. The slip side of an acquisition is a divestiture. One company sells a portion of its business to another company. In recent years, many acquisitions have taken the form of a leveraged buyout, when one or individuals purchase the company (or a division of the company) with borrowed funds, using the assets of the company they’re buying to secure (or guarantee repayment of) the loan. Mergers and acquisitions represent relatively radical ways in which companies are combined.

There is nothing new about the deals of this sort. Companies have been combining in various configurations since the early days. In fact, one of the biggest waves of merger activity occurred between 1881 and 1911, when ”robber barons” created giant monopolistic trusts to control the market. These trusts were horizontal mergers, or combinations of competing companies performing the same functions. The purpose of a horizontal merger is to achieve the benefits of economies of scale and to prevent cutthroat competition.

A second great wave occurred in the boom decade of the 1920s. This era was marked by the emergence of vertical mergers, in which a company involved in one phase of a business absorbs or joins a company involved in another phase of that business. The aim of a vertical merger is often to guarantee access to supplies or markets.

A third wave of mergers occurred in the late 1960s and early 1970s, when corporations acquired strings of unrelated businesses. These conglomerate mergers were designed to augment a company’s growth and diversify its risks.

A new round of business combinations is currently underway. A number of factors have combined to bring about the recent wave of “merger mania”. Here are three of the most significant:

Operational improvements. Perhaps the most fundamental reason is a desire to improve operations. Mergers, acquisitions, and divestitures often perk up a company’s performance. In some industries, like the airlines, for example, consolidation lowers costs. In others, splitting a company into pieces gives performance a boost. In still other cases, mergers represent the cheapest, fastest way to achieve growth or to expand into new product and market areas.

Profit potential. The opportunity to make money is also a factor. When a recent wave of merger mania began, many companies were actually worth more than the combined value of all their stock. As the stock market rose in the late 1980s, fewer companies were undervalued, but enough bargains remained to stimulate activity, particularly deals financed largely with debt. The “leverage” in leveraged buyout enables the investors to achieve a big return on their investment.

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