Unit 17 the new board of directors
The death of the Chairman, Ambrose Harper, upset the balance of power on the Board of Directors of Harper & Grant Ltd. The next Chairman is Hector Grant, who, in Unit 13, postponed the possibility of a takeover by buying two hundred and fifty more shares in the company. The remaining two hundred and fifty were bought, as Hector feared they would be, by Alfred Wentworth, the rather dynamic owner of a neighbouring mattress factory, and a friend of the late Ambrose Harper. He now owns such a large proportion of the shares that he will have to be asked to join the Board. The present members of the Board are: Hector Grant (Chairman and Managing Director), his nephew Peter Wiles (who was invited by the Board to become a director on the death of Ambrose Harper), Peter Wiles's mother, Mrs. Margaret Wiles (who rarely attends Board meetings as she leaves Peter to act for her) and the Company Secretary, William Buckhurst (F.C.A.).
Peter thinks it is high time John Martin was made a director. He has had a very successful year and has increased sales by almost forty per cent in the two years since he joined the firm. Peter wants him on the Board as an added support for himself. He feels the Board is already rather overweighted with members like Hector Grant and William Buckhurst, whose outlook on business is not always up-to-date. He also suspects that an ambitious young man like John Martin could easily be tempted away by another firm if Harper & Grant do not make it worth his while to stay.
At the Board Meeting the directors also discuss budgetary control, and William Buckhurst, who has just attended a course on the subject, wants to introduce monthly accounting by cost centres. He wants the Board to have information about the company's trading position more accurately and more often than at present.
A company's budget is the forward plan of what they expect to spend, to make and to sell during a specific period. Quarterly accounts, that is, a record of what has actually been bought, sold and spent, are drawn up every three months in a financial year, but as Buckhurst explains, modern management needs to discover the profits and losses more often to keep a firmer control.
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(Peter talks about the Board to John while they are lunching together.)
PETER WILES: I'm glad you could manage lunch today, John. I really wanted to sound you out about the future. Harper's death has caused a big change in the control of this company.
JOHN MARTIN: Yes, I realise that. He was a strong personality, wasn't he?
PETER: Yes, he was. H.G. couldn't have everything his own way while Harper was Chairman. Mind you, I'm not criticising my dear uncle. He's a clever man, but I think we need to balance his power a bit, and that's why I want you on the Board.
JOHN: You know, I've been hoping H.G. would put my name forward. But hasn't Alfred Wentworth been asked to join the Board now that he owns more shares?
PETER: Yes, his name will be put forward at tomorrow's meeting. That's why I believe I've a chance to get you elected, because, H.G. will want to strengthen his position in case old Wentworth tries to make things go his way.
JOHN: Wouldn't I have to own shares to become a director?
PETER: Yes, you would. But the Rules of Association drawn up by Harper and H.G.'s father state that the qualification holding is only two shares. So that's easily arranged. I hold two and my mother nine hundred and ninety-eight. Anyway, I wanted to put you in the picture. The next move is to get you made a director. I'll see what I can do.
(Next day, at the Board Meeting.)
HECTOR GRANT: What's the next item on the agenda, William?
WILLIAM BUCKHURST: We've got this problem of Alfred Wentworth, of Wentworth & Company. He ought to be invited to join the Board.
GRANT: It's unfortunate, but I'm afraid he now owns so many shares that his election is inevitable... Don't put that in the minutes, William!
PETER: I would like to propose that our Sales Manager, John Martin, should also be asked to join the Board. In the time he has been here he has greatly increased sales and done much to improve profits. I think if he was made a director his advice at Board Meetings would be invaluable.
GRANT: Well, perhaps next year I...
PETER: Be careful, H.G. You don't want to lose him. There must be lot of companies who'd be prepared to offer him a directorship. We can't afford to lose him.
GRANT: What do you think, William?
BUCKHURST: If might be a good idea to strengthen the support for yourself, H.G.
GRANT: Very well. As the character of the Board is changing so completely, this is probably the right moment... yes... I agree. John would be a useful counter to Wentworth. If everyone agrees...
PETER: Yes
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BUCKHURST: Agreed.
GRANT: William, will you draft suitable minutes about these two proposals then?
BUCKHURST: Yes, I will.
GRANT: Now the next item on the agenda is to consider a report with
recommendations tabled by you, William, on budgetary control. Perhaps you'd like to give us an outline of your proposals.
BUCKHURST: As everyone here knows, I have just attended a course on financial control, and as a result I really do consider we should do the accounts more often than we do at present.
GRANT: At present the accounts are done every quarter.
BUCKHURST: Yes, but quarterly accounts don't allow us to keep a close enough control. If the company should suddenly make a heavy loss we ought to be able to act quickly. If we don't, it may be too late to prevent the loss getting larger still.
GRANT: Well, if sales go down, we reduce stocks, which means cutting down purchases and, if necessary, we reduce personnel.
BUCKHURST: Yes, but we need the information faster than we're getting it at the moment. If profitability goes down — that is, profits in relation to sales turnover or in relation to capital employed — it may be necessary to increase prices, cut costs and so on. But the right information must be readily available.
GRANT: What do you propose?
BUCKHURST: What I would like to do is to break down the activities of the company into cost centres.
GRANT: What does all this mean?
BUCKHURST: Each manager would be responsible for at least one cost centre. He would be required to forecast, well in advance, the income and expenditure of his centre. Then we put the budgets from all the centres together. When they've been approved they become the annual budget, or plan, of the company. If the actual income or expenditure varies a lot from any budgeted figure, then that manager would be responsible and would have to" explain why his actual figures differed from his forecast, and take appropriate action.
GRANT: Will you let us have more details about this budgetary control, exactly how it would operate and so on?
BUCKHURST: Certainly.
GRANT: Now let's get on. The next item on the agenda is a recommendation that we buy two lorries for the Transport Department...
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TERMS IN THE INTRODUCTION
1. company every company has to appoint a secretary. He is
secretary legally responsible for giving information to the
Registrar (the Registrar of Companies, a department of the Board of Trade), for seeing that the company's accounts are correctly kept and for keeping the minute book, which is a record of all the company's meetings. A company secretary is often an accountant. Mr. Buckhurst is a Fellow of the Institute of Chartered Accountants, F.C.A.
2. budgetary a close watch over a company's performance, com-
control paring it with budgeted performance and taking
corrective action where necessary. (See also Unit 1.)
3. cost centre a business can be divided into cost centres for the
purpose of collecting information on income and expenditure. These are the basis for budgeting (forward planning). Each department or cost centre is thus made responsible for its own financial planning and accountable for its actual performance.
4. budget (See Unit 15.)
TERMS IN THE EPISODE
1. to sound to find out someone's opinion about a particular
someone out matter
2. to put a name to propose that a person should be invited to join a
forward board of directors, be elected to a society, etc.
3. Rules of see Articles of Association (Unit 13).
Association
4. qualification in certain Articles of Association it is made a
bolding regulation of the company that to qualify as a
director a certain number of shares must be held,
owned.
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5. to put to explain to someone exactly what is happening. someone in the
picture
6. draft write a report, letter, minutes of a meeting, in rough
form for final approval.
7. tabled to table (a report, a motion): to put on record that a
certain subject should be discussed at a future
meeting.
8. stocks supplies. Often broken down into raw stocks (raw
materials), intermediate stocks, work-in-progress and finished stocks.
9. to break down to divide into groups. For example, a company's
proposed expenditure for the coming year can be broken down into the amounts spent on materials, overheads, salaries, advertising, etc. (See Unit 15 breakdown.)
VOCABULARY EXERCISES.
I. Give English equivalents to the following words and expressions:
откладывать; взятие под контроль (захват); калькуляционный отдел;
поквартальная отчетность; составлять (документ); выставлять кандидатуру; нарушать баланс; действовать за кого-л.; перспективный план;
квалификационный пакет акций; бесценный; противовес; вводить в курс дела; повестка дня; протокол; поставить вопрос на обсуждение; отличаться от (разниться с); разбивать (разделять); составить черновик, набросать; неизбежный; выяснить чье-л. мнение по какому-л вопросу;
изложить суть чего-л.; учет финансовой деятельности фирмы
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II. Match the words with definitions:
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1. to sound someone out 2. budgetary control 3.cost centre 4. to table 5. to draft 6.to put one's name forward 7. Rules of Association 8. Company Secretary 9. to break down 10. minutes
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a) to say that a certain subject should be discussed at a meeting b) a person responsible for giving information to the Registrar of Companies, for seeing that the company's accounts are correctly kept, and for keeping the minutes book c) written records of what is said or decided the meeting d) department responsible for its own financial planning and actual performance e) to find out one's opinion about a particular matter f) to write a report, letter, minutes of a meeting in a rough form for final approval g) to suggest that a person should be considered for a particular job or position h) a close watch over a company performance, comparing it with budgeted performance and taking corrective action where necessary i) regulations which govern the running of a company divided into paragraphs or articles j) to separate something into smaller parts in order to understand it or deal with it more easily
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III. What do these definitions stand for?
1. A forward plan which a company has and which shows in detail how much money is available and how it is to be spent.
2. The act of getting control of a company by buying a controlling interest.
3. A list of items to be discussed at a meeting.
4. Regulation according to which a person should own a certain number of shares to qualify as a director and join the Board of Directors.
5. Detailed record of all the money that a person or business receives and spends every quarter.
IV. Fill in the gaps with the words from the box:
quarterly accounts; actual income; item; to draw up; to break down; to postpone; to approve; board of directors; to tempt away; a takeover; to vary from; budget; qualification holding; to own; the rules of association; agenda; cost centre; to table
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1. Will you please ………………… suitable minutes about these proposals?
2. Now he …………… enough shares to join …………………… .
3. The ………………………….... stated in ……………………………….... is one hundred shares.
4. The next ………… on the ………… is assessing the profitability of a new project.
5. At the next board meeting we should consider a report with recommendations ……………… by the company secretary.
6. After all forecast figures ………………… they become the …………………… of a company.
7. If the …………………… or expenditure ………………… any budgeted figure a lot, then the manager would be responsible for it.
8. The Managing Director ………………… the possibility of a ……………….. by buying an additional amount of shares.
9. ………………………………….. is a record of what has actually been bought, sold or spent.
10. Such an ambitious young man as John can easily ……………………… by a rival company.
11. Company secretary's idea was to introduce monthly accounting done by.............................................. .
12. William said he would like to …………………………….. the activities of the company into cost centres.
V. Paraphrase the underlined parts of the following sentences:
1. Peter fixed an appointment with John in order to find out his views about the company's future.
2. The committee drafted a plan to revive the economy.
3. Peter made John aware of a big change in the control of the company.
4. Could you give us an idea of what your proposals are.
5. Decrease in profits in relation to the capital used shows the rundown of profitability.
6. Actual income or expenditure shouldn't differ from the budgeted figures.
7. Expert's advice in a crisis situation is priceless.
8. HG's actions put off the possibility of a takeover.
9. The Articles of Association were drawn up by people who started this business up.
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VI. Complete the following sentences:
1. Peter invited John to lunch because…………………………………………….
2. The Chairman's death caused …………………………………………………….
3. Now that Mr. Wentworth owns more shares, he……………………………...
4. The Rules of Association drawn up years ago state that ………………….
5. If John were made a director………………………………………………………
6. Mr. Buckhurst's idea was …………………………………………………………….
7. Quarterly accounts don't allow …………………………………………………..
8. In case we fail to keep a close financial control over the business ……
9. The decrease in profitability means that …………………………………….
10. In accordance with Mr. Buckhurst's proposal each manager will be responsible for …………………………………………….
11. In case actual income or expenditure varies from any budgeted figure a lot ………………………………………………………….. .
VII. Translate the following sentences into English:
1. Президент отвел угрозу поглощения фирмы другой более крупной компанией, купив 250 акций.
2. Наш менеджер по продажам очень успешно работал весь прошлый год, за два года со времени его прихода на фирму продажа товаров увеличилась на 40%.
3. В нашем совете директоров слишком много членов, чьи взгляды на бизнес не очень современны.
4. Этого честолюбивого молодого человека легко переманить в конкурирующую фирму.
5. Секретарь компании хочет, чтобы у совета была более точная и регулярная информация о торговой деятельности фирмы.
6. Бюджет компании это перспективный план расходов и доходов от производства товаров и их продажи на определенный промежуток времени.
7. Поквартальные отчеты о том, что было куплено, продано и сколько было истрачено, составляется на каждые три месяца в течение всего финансового года.
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COMPREHENSION QUESTIONS
1. Describe the situation on the Board of Directors after the death of Ambrose Harper.
2. Why does Peter think that John Martin should be made a director?
3. What doubts does John have concerning his directorship?
4. Why is Mr. Buckhurst not satisfied with the present budgetary control?
What does he suggest to improve the system?
5. What is a company's budget?
ADDITIONAL VOCABULARY.
Types of business people. Find combinations in the box that refer to business people who...
1) are well known (2 expressions)
2) have great ability to change things.
3) have been good at their jobs and made money.
4) are important in the place where their business is, but not nationally.
5) are from abroad.
6) own businesses' that are-not large.
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Now use the words in the box to complete the extracts, choosing among the suggestions in brackets. Each word is used once.
a) Many ………………………….... business people consider it a compliment for an expatriate to be able to converse in their language. (prominent / foreign /small)
b) Alison Knight, a ceramic artist, found herself becoming a ………………
businesswoman when she needed factory floor space to lay out the tiles she had agreed to make for an architect working on a pop star's swimming pool. (small / foreign / powerful)
c) All the management techniques we use in business, they knew already. They would be very ……………………… business people in their own right. (successful / local / leading)
d) Other help to business comes from our Training and Enterprise Councils, run by local business people who understand ……………………… needs. (foreign / local / successful)
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e)… Mr. de Benedetti, one of Italy's most …………………….. businessmen. (foreign/ prominent / leading)
f) The Duke should start an appeal to save Rolls-Royce for Britain and encourage …………………… businessmen to drive the cars. (leading / local / powerful)
g) Only the most …………………… businessmen, like Mr. Ambani, can cut through the red tape by going straight to the top. (powerful / small / leading)
A manager is someone in a position of responsibility in an organisation. An executive is usually a manager at a quite high level. Executives are also execs, an informal expression.
People at the head of an organisation arc senior executives or senior managers, top executives or top managers.
The people legally responsible for a company are its board or board of directors.
Translate the following sentences into Russian:
● There is no one answer for all companies at all times. It's up to the board of that company to decide how to run the company and for the shareholders to shout if they don't like it. It's important to have a good strong board of directors so they can stand up and say, "Hang on, you can't do that".
● Among other topics included in the conference will be how to handle journalists who discover a top executive has been involved in a scandal.
Executive combinations
Which of the words in the box is missing from all the extracts?
(The word is plural in two of the extracts.)
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pay duties assistant jet executive stress toy search |
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Many looked on the idea of a computerized wallet more as an executive ……………… than a serious business aid. |
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Where portable computers may previously have been regarded as a status symbol or even as an executive ………………. they are now viewed more objectively and critically by the companies that buy them in quantity. |
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The group has produced not a breakthrough for medical science and technology, but a $300 executive ……………… and a place in the Guinness Book of Records. |
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Taking the pocket machine back to the office and plugging it into the desktop PC is such a chore that most owners of these executive ……………. hardly ever do it. |
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Image, a chain of shops specializing in pricey executive …………… , lost money for the first time in 15 years. |
Read the extracts below and complete the commentary.
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1. chairman 2. chairwoman 3. managing director 4. chief operating officer 5. chief executive 6. chief executive officer 7. CEO |
The person who chairs board meetings is the……… or …… . The position is often combined with that of … … , who may be responsible for the day-to-day running of the company. This responsibility is made specific in the titles … … , … … … , or CEO Some companies also have a … … … in addition to or instead of a CEO. |
Translate into Russian:
● Louis Gerstner yesterday took up the most daunting challenge in corporate America when IBM named him as its new chairman and chief executive officer. The 51-year-old chairman of RJR Nabisco will become only IBM's sixth CEO and the first outsider to lead the company in its 79-year history.
● ...Mr. Sugar, the founder, chairman and managing director of the troubled electronics group Amstrad.
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● Mr. Garuzzo was given responsibility for car production in 1990 and last year became chief operating officer, co-ordinating all of Fiat's industrial sectors.
What makes a good manager? Study the following word-list. What qualities would you characterize as strengths and what qualities — as weaknesses for a manager?
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ambitious |
enterprising |
interfering |
supportive |
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arrogant |
focused |
irresponsible |
thorough |
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bullying |
forceful |
nosy |
tolerant |
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caring |
frivolous |
obsessive |
tunnel-visioned |
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combative |
generous |
open to change |
uncaring |
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competitive |
helpful |
opportunistic |
wishy-washy |
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confident |
humorous |
prudent |
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controlling |
indecisive |
ruthless |
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Answer the questions:
1) What personal qualities are essential in a good manager?
2) What professional skills / abilities are essential in a good manager?
3) What approach to people should a good manager have?
TEXT
Read the text and summarise the information.