The Banana War

Nowadays we take bananas for granted, but a hundred years ago few Europeans had seen a banana, let alone tasted one. They are a favourite in packed lunches and a healthy snack, which contains just 90 calories. Yet how many of us are aware of what’s involved in producing and transporting this delicate fruit? Interestingly, bananas can only grow in tropical climates fifteen degrees north and south of the Equator, giving countries in this belt an ideal competitive advantage. It took big companies, like Chiquita, to bring bananas to wider public.

Banana business is highly labour-intensive; besides, it involves a lot of travel for the fruit. A plant weighing 45 kilograms produces around 120 pieces of fruit. Freshly cut bunches of green bananas travel to the packing station by overhead cable, where they are washed in cold water and packed in cartons. They are loaded on pallets and the cargo is placed in the holds of refrigerated ships at 13.6⁰C which ‘puts them to sleep.’ It can take several days to reach this ideal temperature.

At their destination they are transported to ripening rooms where a little ethylene gas brings them to market condition: customers prefer bananas with green tips and necks. Container trucks take them to retail outlets.

It is perhaps strange that a fruit should be at the centre of what was almost a trade war between the USA and the European Union. France and Britain wanted to protect the interests of banana producers in their ex-colonies, especially in the West Indies, against US companies operating out of Central America. The USA claimed that this was against the rules of international competition and free trade.

The WTO decided in favour of the USA but the Europeans refused to recognize the ruling. It was only following a second WTO judgment against the EU, and the USA’s imposition of huge tariffs on unrelated goods, that they finally agreed to obey the decision. It remains to be seen how well banana growers in the West Indies can survive as Central American countries have a comparative advantage in climate, land, and even labour cots.

Useful terms and expressions

0. pallet – поддон, паллета

1. holds – трюмы

2. unrelated goods – совершенно иные, не связанные [с предметом спора] товары

3. ruling – постановление (суда, ВТО)

4. to obey the decision – подчиниться решению

Questions for discussion:

1. What was the cause of disagreement between the USA and the EU?

2. How did the USA punish the EU for refusing to accept the decision of the WTO?

3. What is the future likely to be for the West Indian producers? Why?

4. Why did the WTO support the US in the banana dispute?

5. Is this case a manifestation of fair competition well regulated by the international regulator?

6. In the long run, who is likely to win?

7. Please browse the Internet for more information on the current situation in the highly competitive banana market.

Give the Russian for the following:

banana business; banana producers; banana growers; retail outlets; ex-colonies; banana belt countries; to bring bananas to wider public; to involve a lot of travel for sb; a packing station; cargo is placed in the holds; companies operating out of Central America; to claim smth; to decide in favour of sb; to refuse to recognize the ruling; imposition of huge tariffs on unrelated goods

READING AND SPEAKING 5

Read the text and answer the questions that follow.

RadioShack's woes: Dead brand walking

At the start of RadioShack’s advertisement in this year’s Super Bowl, a worried-looking sales assistant takes a call, puts down the phone, then announces to his fellow salesman: “The 1980s called. They want their store back.” A host of 80s icons from Hulk Hogan to Chucky then rip apart the typically tired RadioShack store, and make off in the time-travelling DeLorean from “Back to the Future”. The voiceover: “It’s time for a new RadioShack.”

Unfortunately for the storied consumer-electronics retailer, it is way past time. A dreadful 2013 holiday sales season left RadioShack’s fourth-quarter sales down 20% on the same period of 2012, at $935 million. Discounts also bit deeply into the firm’s gross profit margin for the quarter, which fell by six percentage points to 29.8%. On March 4th Joseph Magnacca, RadioShack’s chief executive, announced that the company will close “up to 1,100 underperforming stores”—one-fifth of its total. That will leave it with a still-unwieldy network of more than 4,000 stores in America, 900 of which are franchised, plus 1,200 or so outlets abroad. The company’s shares were down 18% at the time of writing.

The dismal end to 2013 also left RadioShack with only about $180 million of cash on hand (down by two-thirds from the previous year-end) and total debt of $614 million. In December the company secured $835 million to refinance its existing debt (among other things). That financing round included a $585 million asset-based credit agreement, and a $250 million secured loan. In other words, RadioShack has bought itself a little time, but not much for a company with such a large store footprint and so many challenges.

RadioShack has been part of America’s retail landscape for more than 90 years: it was established in Boston in 1921 to serve the needs of radio officers aboard ships. But as its self-deprecating Super Bowl ad made painfully clear, many of its stores look like they were last revamped in the 1980s. And the company’s customers—which traditionally visited the store to buy bits and pieces for their electronic hobby projects—have aged with it.

Ask Americans under the age of 30 what they buy at “The Shack”, and you will be greeted with a blank look. For today’s younger consumers the brand isn’t associated with anything they need. The firm may have been one of the first retailers to sell mobile phones (back in the 1980s, naturally) and it may have sold 73m since then. But today’s consumers mostly buy their phones directly from the wireless carriers—or head for the Apple Store. On a recent evening in one of the Washington, DC, metro area’s biggest malls, the Apple Store was packed; RadioShack was deserted. This is bad news for a company that relies on mobile phones, computing tablets and related gadgets for around half its dwindling sales.

RadioShack isn’t alone in its woes, although it was by far the hardest hit this holiday season. Rivals such as Best Buy and Gregg Appliances (which does business as h.h. gregg) also saw declines in sales thanks to Scrooge-like consumer spending, severe weather, weak mobile phone sales and price-cutting. It is hard to imagine that smaller privately owned competitors such as Micro Center weren’t hit too. Even Amazon missed Wall Street’s expectations for the holiday quarter, and warned of a potential operating loss in the subsequent one.

The difference is that despite disappointing financial analysts, Amazon still saw its North American sales soar by 26% in the holiday quarter, to $15.3 billion. And in the consumer-electronics sector, Amazon’s gains are losses for primarily bricks-and-mortar retailers such as Radio Shack. They are struggling to gain a credible online foothold (a 26% year-on-year increase in Internet sales was a modest bright spot for Best Buy last quarter), but none can match Amazon’s breadth, economies of scale and logistics. RadioShack keeps quiet about its own online sales.

Mr Magnacca, a marketing executive who joined RadioShack just over a year ago from Walgreen, a pharmacy chain, has been struggling to turn around his new charge. Its stores are gradually being modernised, the number of products it carries has been cut, and the firm is trying to woo a younger audience by teaming up with companies such as Beats Electronics, a maker of trendy headphones.

But for RadioShack this may all be too little, too late. Its market share continues to fall - by 20% since 2010 according to Euromonitor International - and its brand is tired and increasingly irrelevant. For some, all this brings back memories of Circuit City, the giant American electronics retailer that suffered from many of the same woes before going bust in 2008. RadioShack’s Super Bowl ad may have been tongue-in-cheek, but in many ways it probably does wish it could take that DeLorean back to the 80s - and start building a new RadioShack back then.

The Economist

Answer the questions:

1. Which products does RadioShack specialize in?

1. What are the reasons for the storied retailer’s weak performance?

2. Do you think the new marketing executive from a pharmacy chain will improve the situation?

3. Who are the rivals and how are they doing? What steps do they take to keep or increase their market share?

4. At this stage of the market, when there are cheaper, deeper and even more convenient alternatives for just about everything it sells, what should RadioShack do to win its customers back? Does the author of the article suggest a viable survival strategy for RS?

5. RS started the careers of countless engineers and tinkerers. Now it is just another phone shop. The niche they built their brand on is now filled by the likes of Sparkfun. What could be your possible solution for RS now, when hardly anyone needs to go to a bricks-and-mortar store?

6. Suggest your interpretation of the headline. What particular culture-oriented associations does it evoke? How does it help reveal the implied meaning of the article?

7. What other culture-related references or realia can be found in the text? How do they convey the challenges faced by RadioShack? (to find out more about specific names and referenced things, search the web)

8. Why does the author of the article call the RadioShack’s advertisement self-deprecating? What can be its effects? Could RadioShack benefit from a rebrand instead?

Give the Russian for the following:

to revamp a company; underperforming stores; a still-unwieldy network of stores; franchised outlets; secured loan; chief executive (CEO); to be greeted with a blank look; the company also saw declines in sales; to warn of a potential operating loss; in the subsequent quarter; online sales; to be struggling to turn around one’s new charge; to team up with another company; a tired and increasingly irrelevant brand; electronics retailer; seasonal discounts

Suggest the English for the following:

закадровый комментарий (голос за кадром); чрезвычайно неудачный сезон предпраздничных распродаж; на момент написания статьи; приобретать устройства напрямую от операторов мобильной связи; переполненные торговые центры; пустующие магазины; вызывающие разочарование оценки финансовых аналитиков; не сообщать данных об объеме продаж через Интернет; аптечная сеть; пытаться наладить дела в компании; сокращать количество наименований товара (товарных позиций); привлекать более молодую аудиторию; остро модные товары; воскрешать в памяти; обанкротиться

Translate the following sentences:

1. A dreadful 2013 holiday sales season left RadioShack’s fourth-quarter sales down 20% on the same period of 2012, at $935 million.

2. Discounts also bit deeply into the firm’s gross profit margin for the quarter, which fell by six percentage points to 29.8%.

3. The dismal end to 2013 also left RadioShack with only about $180 million of cash on hand (down by two-thirds from the previous year-end) and total debt of $614 million.

4. In other words, RadioShack has bought itself a little time, but not much for a company with such a large store footprint and so many challenges.

5. This is bad news for a company that relies on mobile phones, computing tablets and related gadgets for around half its dwindling sales.

6. Rivals saw declines in sales thanks to Scrooge-like consumer spending, severe weather, weak mobile phone sales and price-cutting.

7. And in the consumer-electronics sector, Amazon’s gains are losses for primarily bricks-and-mortar retailers such as Radio Shack.

8. They are struggling to gain a credible online foothold (a 26% year-on-year increase in Internet sales was a modest bright spot for Best Buy last quarter), but none can match Amazon’s breadth, economies of scale and logistics.

9. For some, all this brings back memories of Circuit City, the giant American electronics retailer that suffered from many of the same woes before going bust in 2008.

10. RadioShack’s Super Bowl ad may have been tongue-in-cheek, but in many ways it probably does wish it could take that DeLorean back to the 80s - and start building a new RadioShack back then.

READING AND SPEAKING 6

Read the text and be ready for oral interpretation of the article orally.

Based on the provided information, give your account of America’s competitiveness. Which factors have prompted this trend? Is there any real reason for cheer? Give reasons and evidence to support your point of view.

America's competitiveness

Cheer Up

Political gridlock may be bad for America’s economy but the underlying growth prospects are much brighter than they seem It is 2030, and a Chinese university lecturer is explaining how a decadent America went the way of the British and Roman empires. Ruinous economic policies led to crippling debt, much of it owned by China. “Now they work for us,” he says with a smirk, to prolonged sniggers from his students. This depiction of the future comes from a television advertisement attacking Barack Obama’s policies during America’s election campaign last year. Obama himself seems haunted by similar fears. that China and other developing countries are beating America in the race for “the jobs of the future”. Running for president, he once said, to stop America “becoming less competitive internationally”.

The belief that America is losing its economic edge is pervasive. Americans are more pessimistic about their country’s prospects than at any point since Gallup, a polling firm, first started asking them in 1959. The grandees of Washington, DC, share their concern: the city’s many think-tanks are agonizing over the country’s waning competitiveness. The recession may gradually be receding, the worry goes, but long-ignored impediments to growth will hamper the recovery and prevent future generations from achieving the American dream.

Outsiders are anxious too. The World Economic Forum, which draws up international rankings on competitiveness, considers the US only the world’s seventh-fittest economy, a big slide from first place just four years ago. It faults America’s infrastructure (14th out of the 144 countries it assesses), its primary education and health care (34th), its institutions (41st) and above all its macroeconomic environment (111th, mainly because of the ballooning public debt). The only category in which the country still ranks first is market size, a slot it is destined to lose to China sooner or later.

The misgivings are easy to understand. Growth is sluggish, unemployment is high and investors are wary. America’s public debt is approaching $17 trillion, more than 100% of GDP, and it has been growing fast. Much of this stems from the transitory effects of the recession, but it will get worse rather than better. On the current trajectory, the soaring costs of Medicare and Medicaid, the government’s health-care schemes for the old and the poor respectively, along with Social Security, the state pension scheme, will consume all federal revenues within a generation, leaving nothing for anything else.

America’s politicians have been feckless in the face of this impending disaster. Republicans and Democrats are so much at odds that decisions are only ever made at the 11th hour, or the 13th, and in an ill-considered fashion. Words like “shutdown” and “default” have become part of Washington’s everyday language.

The combination of dysfunctional politics and empty coffers, in turn, is preventing Congress from dealing with the economy’s other obvious shortcomings. Besides, poor schooling feeds into concerns about America’s capacity to innovate. American firms’ R&D budgets have grown much faster abroad than at home. A misconceived immigration system is turning away the very people who could help remedy that, by denying visas to talented foreigners

“Is this a country that can still get big things done?” asked the head of the US Chamber of Commerce, a business lobby, in January. The answer is yes—but only if you look beyond the paralysis in Washington. And if the following factors get fixed - the factors which are the source of the most hand-wringing: innovation, energy, education, immigration, infrastructure and regulation. These help determine the number and productivity of America’s workers, and thus how quickly the economy will grow in the long run—the most basic measure of competitiveness. On every count, despite glaring problems, the outlook is less bleak than the pessimists maintain.

Moreover, all efforts to boost America’s competitiveness are for naught if the galloping costs of Medicare and Medicaid are not reined in—something only the federal government can do. So America’s competitive recovery is not as strong as it should be, and it will remain overshadowed by its shaky public finances. But it is real. And for all the histrionic talk of brinks of collapse and shutdowns, the politicians in Washington have not inflicted any crippling damage yet. Those who like to lecture smugly about America’s impending decline should take a closer look.

The Economist