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1. Socialising
1. The Impact of Culture on Business
2. Telephoning across cultures
3. Planning and preparation
4. Image, impact and making impression
5. The presentation
. The end of the presentation
2. Meetings
!. Preparation for meetings
". Participating in meetings
#. $nding the meeting
3. Negotiations
1%. &no' 'hat (ou 'ant
11. )etting 'hat (ou can
12. *ot getting 'hat (ou don+t 'ant
13. ,hat is management-
14. T(pes of managers
15. The management process
1. .anagement le/el and skills
4. Companies and organisations
1!. Compan( structure
1". The e0ternal en/ironment of organisations
Production and products
1#. 1ust2in2time production
2%. Products and 3rands
Marketing ad!ertising promotion
21. The centralit( of marketing
22. 4o' companies ad/ertise
23. The four ma5or promotional tool
". Market structure and competition
24. .arket leaders, challengers and follo'ers
25.Takeo/ers, mergers and 3u(outs
2. Profits and social responsi3ilit(
#. Mone$ and %inance
2!. 6 histor( of mone( 7 'hat makes the 'orld goes round
2". The profits of la3our
2#. 6ccounting and financial statements
3%. $0change 8ates
&. 'anking and ta(ation
31. T(pes of 3anks
32. 9pening an account and means of pa(ment
33. Banking 7 &e( 'ords and sentences
34. Ta0ation and ho' to a/oid it
). Stock market
35. :tocks and shares
3. Bonds
3!. ;utures, options and s'aps
Cheia e0erci<iilor
*(tra Readings + Industr( Profile and Career 9/er/ie' from
Cotton, =a/id 7 &e(s to management, >ongman, 1##
Cotton, =a/id? 8o33ins, :ue 7 Business Class, *elson $nglish
>anguage Teaching, >ondon, 1##3
.ac&en@ie, Ian 7 $nglish for Business :tudies, Cam3ridge
Ani/ersit( Press, 2%%1
:'eene(, :imon 7 $nglish for Business Communication,
Cam3ridge Ani/ersit( Press, 2%%%
Chiriacescu, 6driana? .ureBan, >aura? Barghiel, Cirginia?
4ollinger, 6le0ander 7 Coresponden<D de afaceri En lim3ile
romFnD Bi engle@D, $ditura Teora, BucureBti, 1##5
)eoghegan, C.).? )eoghegan, 1.G. 7 $ngle@a pentru negocieri,
$ditura Teora, BucureBti, 2%%%
8oland, .arie2Claude? .ast2)rand, .artha 7 CC En lim3a
engle@D, un pas spre anga5are, $ditura Teora, BucureBti, 2%%%
=a(an, 6.? >indsa(, ,.4.? 1anakie'ic@, 6.? .archeteau, .. 7
$ngle@a pentru marketing Bi pu3licitate, $ditura Teora, BucureBti,
BantaB, 6ndrei? Por<eanu, 8odica 7 >im3a engle@D pentru Btiin<D
Bi tehnicD, $ditura *iculescu, BucureBti, 1##5
>aun, ;la/ia $. 7 Birotics and Telecommunication $0planator(
=ictionar(, $ditura =acia, Clu52*apoca, 1##
.DnDilD, =.? Popa, C.? Popa, =.? Popescu, I...? Clad, C.I. 7 .ic
dic<ionar poliglot de fi@icD, tehnicD Bi matematicD, $ditura 6cora
Press, BucureBti, 1##5
>e =i/enach, Hloi 7 $ngle@a En presD, $ditura Teora, BucureBti,
.archeteau, .ichel 7 Berman, 1ean2Pierre 7 :a/io, .ichel,
$ngle@a comercialD En 4% de lec<ii, $ditura *iculescu, BucureBti,
-. Socialising
The following text is about cultural diversity. Read it through once
and decide which of the three statements (A, B or C) given below the
extract offers the most accurate summary.
1. The Impact of Culture on Business
Take a look at the ne' 3reed of international managers,
educated according to the most modern management philosophies.
The( all kno' that in the :BA, TI. should reign, 'ith products
deli/ered 1IT, 'here C;T+s distri3ute products 'hile su35ect to .B9.
J:BA K strategic 3usiness unit, TI. K total Lualit( management, 1IT
K 5ust2in2time, C;T K customer first team, .B9 K management 3(
But 5ust ho' uni/ersal are these management solutions- 6re
these Ntruths+ a3out 'hat effecti/e management reall( is, truths that
can 3e applied an('here, under an( circumstances-
$/en 'ith e0perienced international companies, man( 'ell2
intended Nuni/ersal+ applications of management theor( ha/e turned
out 3adl(. ;or e0ample, pa(2for2performance has in man( instances
3een a failure on the 6frican continent 3ecause there are particular,
though unspoken, rules a3out the seLuence and timing of re'ard and
promotions. :imilarl(, management 3( o35ecti/es schemes ha/e
generall( failed 'ithin su3sidiaries of multinationals in southern
$urope, 3ecause managers ha/e not 'anted to conform to the a3stract
nature of preconcei/ed polic( guidelines.
$/en the notion of human2resource management is difficult to
translate to other cultures, coming as it does from a t(picall( 6nglo2
:a0on doctrine. It 3orro's from economics the idea that human
3eings are Nresources+ like ph(sical and monetar( resources. It tends
to assume almost unlimited capacities for indi/idual de/elopment. In
countries 'ithout these 3eliefs, this concept is hard to grasp and
unpopular once it is understood. International managers ha/e it tough.
The( must operate on a num3er of different premises at an( one time.

These premises arise from their culture of origin, the culture in 'hich
the( are 'orking, and the culture of the organi@ation 'hich emplo(s
In e/er( culture in the 'orld such phenomena as authorit(,
3ureaucrac(, creati/it(, good fello'ship, /erification and
accounta3ilit( are e0perienced in different 'a(s. That 'e use the
same 'ords to descri3e them tends to make us una'are that our
cultural 3iases and our accustomed conduct ma( not 3e appropriate, or
:BA K strategic 3usiness unit K unitate comercialD, economicD
TI. K total Lualit( management K managementul total al calitD<ii
1IT K 5ust2in2time K li/rare e0act la momentul potri/it
C;T K customer first team K
.B9 K management 3( o35ecti/es K managementul pe o3iecti/e
pa(2for2performance K platD pentru munca depusD
human2resource management K managementul resurselor umane
at an( one time K En fiecare moment
premises K premise, loca<ii
grasp K a pricepe, a En<elege JEn te0tM
accounta3ilit( K rDspundere
3ias K tendin<D, orientare
A. There are certain popular uni/ersal truths a3out management
'hich can successfull( 3e applied in /arious cultural conte0ts.
'. Cultures are so /aried and so different throughout the 'orld that
management has to take account of differences rather than simpl(
assume similarities.
C. $ffecti/e management of human resources is the ke( to e/er(one
achie/ing their full potential.
.anguage Checklist
Cultural diversity and socializing
Welcoming visitors
,elcome to O
.( name+s O
4ello. .( name+s O from O
I+/e an appointment to see O
:orr( 7 I+m a little late P earl(.
.( plane 'as dela(edO
Introducing someone
This is O 4ePshe+s m( Personal 6ssistant.
Can I introduce (ou to O 4ePshe+s our JPro5ect .anagerM.
I+d like to introduce (ou to O
Meeting someone and small talk
Pleased to meet (ou.
It+s a pleasure.
4o' 'as (our trip- =id (ou ha/e a good flight P trip P 5ourne(-
4o' are things in J>ondonM-
4o' long are (ou sta(ing in J*e' GorkM-
I hope (ou like it.
Is (our hotel comforta3leP
Is this (our first /isit to Jthe Big 6ppleM-
ffering assistance
Can I get (ou an(thing-
=o (ou need an(thing-
,ould (ou like a drink-
If (ou need to use a phone or fa0, please sa(.
Can 'e do an(thing for (ou-
=o (ou need a hotel P a ta0i P an( tra/el information P etc.-
Asking for assistance
There is one thing I need O
Could (ou get me O
Could (ou 3ook me a car P ta0i P hotel P O-
Could (ou help me arrange a flight toO-
Can (ou recommend a good restaurant-
I+d like to 3ook a room for tomorro' night.
Can (ou recommend a hotel-
Skills Checklist
Cultural diversity and socializing
Before meeting 3usiness partners and fello' professionals from other
countries, (ou could find out a3out their countr(Q
The actual political situation
Cultural and regional differences
The role of 'omen in 3usiness and in societ( as a 'hole
Transport and telecommunications s(stems
The econom(
The main companies
The main e0ports and imports
The market for the industrial sector 'hich interests (ou
Gou might also 'ant to find outQ
,hich topics are safe for small talk
,hich topics are 3est a/oided
If (ou are going to /isit another countr(, find out a3outQ
The con/ersations regarding sociali@ing
6ttitudes to'ards foreigners
6ttitudes to'ards gifts
The e0tent to 'hich pu3lic, 3usiness and pri/ate li/es are mi0ed
or kept separate
Con/entions regarding food and drink.
Gou might also like to find out a3outQ
The 'eather at the rele/ant time of the (ear
Pu3lic holida(s
The con/entions regarding 'orking hours
>eisure interests
Bod( language
Practice -
Make a dialogue ,ased on the %ollo/ing %lo/ chart. 0% $ou need
help look at the .anguage Checklist
1isitor Receptionist
Introduce (ourself
:a( (ou ha/e an appointment
'ith :andra Bates. ,elcome /isitor.
$0plain that :B 'ill 3e
along shortl(.
9ffer a drink P refreshments.
=ecline 7 ask if (ou can
use a phone.
:a( (es P 9ffer fa0 as 'ell.
=ecline 7 (ou onl( need
the phone.
:ho' /isitor to the phone.
Thank himPher.
!a fe" minutes later#
Thank assistant.
8epl( 7 offer an( other help.
6sk ho' far it is to station.
T'o miles 7 ten minutes
3( ta0i.
9ffer to 3ook one.
6ccept offer 7 suggest a time.
Promise to do that 7 sa( that
:B is free no'.
9ffer to take himPher to :B+s
A,out small talk
If (ou ask a Luestion (ou should comment on the ans'er or ask a
supplementar( Luestion.
*(ercise - 2irst /ords
9ften the first 'ords are the most difficult. Belo' are some
suggestions for N3reaking the ice+. ,hich of the sentences could 3e
said 3( a /isitor, and 'hich 3( the person recei/ing the /isitor-
a. :orr(, I+m a little earl(. I hope it is not incon/enient.
3. Is the 'eather the same in (our countr(-
c. :orr( to keep (ou 'aiting. I 'as rather tied up 5ust no'.
d. I+m pleased to 3e here, after a trip like thatR
e. Is this (our first /isit- ,hat do (ou think of the cit(-
f. People are /er( helpful here. 9n m( 'a( to meet (ouO
g. Isn+t it cold toda(-
h. Gou found us 'ithout too much difficult(, then-
i. It+s good of (ou to spare the time.
5. It+s kind of (ou to come all this 'a(.
k. I like (our offices. 4a/e (ou 3een here long-
l. =id (ou ha/e a good trip-
m. ,ould (ou like a cup of coffee-
*(ercise 2 *nding the small talk
If the small talk continues too long, (ou ma( 'ant to change the
su35ect to 3usiness matters. 4ere are some 'a(s of doing it.
6. ,ith someone (ou kno' 'ellQ
.et3s get do/n to ,usiness. 9r let3s get started.
B. ,ith someone (ou don+t kno' 'ellQ
Perhaps /e could talk a,out the su,4ect o% our meeting.
Perhaps /e could talk a,out the reason 03m here.
,hich e0pressions 'ould (ou use in the follo'ing situations-
a. 9n a sales /isit to a potential customer.
3. 6t a 'eekl( planning meeting 'ith colleagues.
c. 6t (our first meeting 'ith the ne' group auditors.
d. 6t a meeting to o3tain finance from a 3ank.
e. Before making a speech at an office part(.
2. Telephoning
. Tele!honing across cultures
.an( people are not /er( confident a3out using the telephone
in $nglish. 4o'e/er, good preparation can make telephoning much
easier and more effecti/e. Then, once the call 3egins, speak slo'l(
and clearl( and use simple language.
Check that (ou understand 'hat has 3een said. 8epeat the
most important information, look for confirmation. 6sk for repetition
if (ou think it is necessar(.
8emem3er too that different cultures ha/e different 'a(s of
using language. :ome speak in a /er( literal 'a( so it is al'a(s Luite
clear 'hat the( mean. 9thers are more indirect, using hints,
suggestions and understatement Jfor e0ample Nnot /er( good results+ K
Na3solutel( disastrous+M to put o/er their message. *orth 6merica,
:candina/ia, )erman( and ;rance are Ne0plicit+ countries, 'hile the
British ha/e a reputation for not making clear e0actl( 'hat the( mean.
9ne reason for this seems to 3e that the British use language in a more
a3stract 'a( than most 6mericans and continental $uropeans. In
Britain there are also con/entions of politeness and a tendenc( to
a/oid sho'ing one+s true feelings. ;or e0ample if a =utchman sa(s an
idea is Ninteresting+ he means that it is interesting. If an $nglishman
sa(s that an idea is Ninteresting+ (ou ha/e to deduce from the 'a( he
sa(s it 'hether he means it is a good idea or a 3ad idea.
.ean'hile, for a similar reason 1apanese, 8ussian and 6ra3s
7 Nsu3tle+ countries 7 sometimes seem /ague and de/ious to the
British. If the( sa( an idea is interesting it ma( 3e out of politeness.
The opposite of this is that plain speakers can seem rude and
dominating to su3tle speakers, as 6mericans can sound to the British 7
or the British to the 1apanese.
The British ha/e the tendenc( to engage in small talk at the
3eginning and end of a telephone con/ersation. Iuestions a3out the
'eather, health, 3usiness in general and 'hat one has 3een doing
recentl( are all part of telephoning, la(ing a foundation for the true
purpose of the call. 6t the end of the call there ma( 'ell 3e /arious
pleasantries, $ice talking to you% &ay hello to the family Jif (ou ha/e
met themM and 'ooking for"ard to seeing you again soon. 6 sharp,
3rief st(le of talking on the phone ma( appear unfriendl( to a British
partner. *ot all nationalities are as keen on small talk as the BritishR
Being a'are of these differences can help in understanding
people 'ith different cultural traditions. The difficult( on the
telephone is that (ou cannot see the 3od( language to help (ou.
Choose the closest de%inition o% the %ollo/ing /ords %rom the te(t.
1. literal
a. direct and clear 3. full of literar( st(le c. a3stract and
2. understatement
a. kind 'ords 3. less strong 'a( of talking c. cle/er
3. deduce
a. reduce 3. 'ork out c. disagree
4. /ague
a. unclear 3. unfriendl( c. insincere
5. de/ious
a. rude 3. dishonest c. cle/er
. pleasantries
a. Luestion 3. reLuest c. polite remarks
.anguage Checklist
Telephoning J1M
Introducing yourself
)ood morning, 6risto.
4ello, this is O from O
4ello, m( name+s O calling from O
&aying "ho you "ant
I+d like to speak to O please.
Could I ha/e the O =epartment, please-
IsO there, please-
&aying someone is not availa(le
I+m sorr( hePshe+s not a/aila3le O
:orr(, hePshe+s a'a( P not in P in a meeting P in .ilan.
>ea/ing and taking messages
Could (ou gi/e himPher a message-
Can I lea/e himPher a message-
Please tell himPher O
Please ask himPher to ring me onO
Can I take a message-
If (ou gi/e me (our num3er I+ll ask himPher to call (ou later.
ffering to help in other "ays
Can an(one else help (ou-
Can I help (ou perhaps-
,ould (ou like to speak to his assistant-
:hall I ask him to call (ou 3ack-
6sking for repetition
:orr(, I didn+t catch J(our name P (our num3er P (our compan( name M
:orr(, could (ou repeat (our Jname, num3er, etc.M.
:orr(, I didn+t hear that.
:orr(, I didn+t understand that.
Could (ou spell Jthat P (our nameM, please.
Ackno"ledging repetition
9ka(, I+/e got that no'.
J.r. &(otoM I understand.
I see, thank (ou.
Skill Checklist
Telephoning) *reparation for a call
+eading , (ackground information
-esk preparation
4a/e the follo'ing a/aila3leQ
8ele/ant documentation P notes
Correspondence recei/ed
Computer files on screen
Pen and paper
Check time availa(le
4o' much time do (ou need-
4o' much time do (ou ha/e-
,ho do (ou 'ant to speak to-
In case of nonPa/aila3ilit(, ha/e an alternati/e strateg(Q
Call 3ack P 3e called 3ack 7 'hen-
>ea/e a message
:peak to someone else
,rite or fa0 information
-o you "ant to)
;ind out information-
)i/e information-
=o (ou need to refer toQ
6 pre/ious call-
6 letter, order, in/oice or fa0-
:omeone else J'ho-M
6n e/ent J'hat- ,hen-M
,hat do (ou e0pect the other person to sa( P ask (ou- ho' 'ill (ou
*(ercise - Making a call
A %e/ common e(pressions are enough %or most telephone
con!ersations. Practice these telephone e(pressions ,$ completing
the %ollo/ing dialogue using the /ords listed ,elo/.
S/itch,oard Conglomerate )roup? can I help (ou-
5ou Could I 222222 2222222 .r. Pardee, please-
S/itch,oard Putting (ou 222222 .
Secretar$ 4ello, .r. Pardee+s 222222 . 22222222 I help (ou-
5ou 222222, can (ou hear me- It+s a 222222 line. Could (ou 222 2222
up, please-
Secretar$ I: T46T B$TT$8- ,ho+s 22222222, please-
5ou J(our nameM from J(our compan(M.
Secretar$ 9h, hello. 4o' nice to hear from (ou again. ,e
ha/en+t seen (ou for ages. 4o' are (ou-
5ou ;ine thanks. Could (ou 2222222 me 22222222 to .r. Pardee,
Secretar$ 22222222 the line a moment. I+ll see if he+s in. I+m sorr(,
I+m afraid he+s not in the 2222222 at the 222222 . Could
(ou gi/e me (our 2222222222, and I+ll ask him to 2222222
(ou 2222222222 -
5ou I+m 22222 34! "21. That+s >ondon.
Secretar$ ,ould (ou like to lea/e an( 22222222 for him-
5ou *o thanks. 1ust tell him I 222222222 .
Secretar$ Certainl(. *ice to hear from (ou again.
5ou I+ll e0pect him to 2222222 me this afternoon, then. Thanks.
Secretar$ Gou+re 'elcome. )ood3(e.
n speak to (ack message (ad put
num(er call ring
&ecretary through office speak speaking
can hello
+ang hold moment through
Note6 If (ou do not hear or understand the other person, sa(Q 03m
sorr$7 or 03m sorr$ 0 don3t understand. It is not polite to
sa(Q Please repeat8
9ATA20.*6 The Telephone
This datafile gi/es (ou man( of the terms and phrases commonl( used
in making telephone calls.
The director$
>ook up their num3er in the director(. JA&M.
I+ll look up the num3er in the telephone 3ook. JA:M.
The num3er is e02director(. JA&M.
The num3er is unlisted. JA:M.
I+ll ring =irector( $nLuiries. JA&M.
I+ll ring information. JA:M.
The recei!er
Can I help (ou-
Putting (ou through.
I+m afraid he+s not a/aila3le at the moment. JA&M.
I+m afraid he+s tided up at the moment.
Gou+re 'elcome. )ood3(e.
The line
4e+s on the other line.
,ould (ou like to hold the line-
The line is engaged. JA&M.
The line is 3us(. JA:M.
The operator Jin the pu3lic telephone s(stemM
=ial 1%% for the operator. JA&M.
=ial % J@eroM for the operator. JA:M.
I+d like to make a re/erse charge call. JA&M.
I+d like to make a collect call. JA:M.
I+d like to make a transfer charge call. JA&M.
The dial
=ial 123 for the correct time. JA&M.
>isten for the dialling tone.
6ll lines to the countr( (ou ha/e dialled are engaged.
Please tr( later. JA&M.
The code,ook
I+m on a long distance Jor internationalM call.
The :T= code is O JA&M.
The area code is O JA:M.
A message pad
Can I tell him 'ho called-
Can I gi/e her a message-
>et me take do'n (our num3er.
If (ou do not understand, sa(O S:orr(, I didn+t Luite catch that.T
Practice -
Use the %ollo/ing %lo/ chart to make a complete telephone
con!ersation. 0% $ou need to re%er to the .anguage Checklist.
Caller Receptionist
N)ood morning, )orli@ and
Introduce (ourself.
6sk to speak to .r. Conrad Bird.
.r. Bird is not in.
6sk 'hen (ou can contact him.
$0plain that he is a'a( 7
offer to take a message.
Gou 'ant .r. Bird to call (ou.
8epeat (our name.
)i/e (our num3er.
Confirm the information.
$nd call.
$nd call.
Practice 2
0n the %ollo/ing con!ersation a Singaporean e(porter plans to
send goods %rom Singapore to :reece. ;e /ants to ha!e a meeting
/ith a :reek shipping compan$ 0ntership.
Suggest suita,le phrases %or each step in the con!ersation then
practice the dialogue /ith a colleague.
Caller <Computech= Called Person <0ntership=
NIntership, good morning.+
Introduce (ourself.
Check name.
Confirm P correct.
9ffer to help.
6sk for appointment
'ith .r. =ionis.
6sk 'hat it+s a3out.
$0plain that (ou 'ant
to discuss transport of goods
from :ingapore to 6thens.
6ckno'ledge 7 ask 'hen
'ould 3e a good time.
:uggest ne0t 'eek.
8e5ect 7 .r. =ionis is a'a(.
:uggest 3eginning of ne0t
:uggest .onda( 3
8e5ect 7 9n .onda( .r.
=ionis is 3us( all da(.
:uggest Tuesda(.
6gree. :uggest 1%.%% a.m.
6gree 7 ask for fa0 to
9ffer to 3ook hotel.
6gree to fa0 7 hotel 3ooking
is not necessar(.
:ignal end of call.
$nd call P thanks P refer to
fa0, etc.
$nd call.
.anguage Checklist
Telephoning J2M
&tating reason for a call
I+m ringing to O
I+d like to O
I need some information a3out O
Making arrangements
Could 'e meet some time ne0t month-
,hen 'ould 3e a good time-
,ould Thursda( at 5 o+clock suit (ou-
,hat a3out 1ul( 21
That 'ould 3e fine.
*o, sorr(, I can+t make it then.
:orr( I+m too 3us( ne0t 'eek.
Changing arrangements
,e+/e an appointment for ne0t month, 3ut O
I+m afraid I can+t come on that da(.
Could 'e fi0 an alternati/e-
Confirming information
Can I check that- Gou said O
To confirm that O
Can (ou P can I confirm that 3( fa0-
/nding a call
8ight. I think that+ all.
Thanks /er( much for (our help.
=o call if (ou need an(thing else.
I look for'ard to O seeing (ou P (our call P (our letter P (our fa0 P our
)ood3(e and thanks.
B(e for no'.
Skills Checklist
Telephoning !0#
Background information
&e( information
8epetition, emphasis and confirmation
Possi3le confirmation 3( fa0
;ormal P informal
Cold call P ne' contact P esta3lished contact
In2compan( /s. Customer P :upplier P 9utside agent
Colleague P friend P 3usiness associate P pu3lic
Compan( image
&tructure of a call
Introduce (ourself
)et 'ho (ou 'ant
:mall talk
:tate pro3lem P reason for call
6sk Luestions
)et P gi/e information
Confirm information
:ignal end
Thank other person
:mall talk
8efer to ne0t contact
Close call
Check that there+s nothing else to sa(
*(ercise 2 Changing arrangements
It is not al'a(s possi3le to follo' (our original plans. Gou, or (our
contact, ma( 'ant to change an appointment.
.anguage input To apologi@e, sa(Q 03m a%raid that >.
03m sorr$ ,ut >
To suggest another time, sa(Q Could 0 suggest >7
?hat a,out >7
Perhaps >7
Belo' is the schedule for (our 'eek in :(dne(, 6ustralia. 1ust 3efore
(ou lea/e for :(dne( (ou recei/e /arious telephone calls from the
people (ou are going to /isit. The( 'ant to change their appointments.
But (ou do not 'ant to change the order in 'hich (ou /isit them. ;irst
apologi@e for not managing the da( the( suggest, then suggest a
different time on the original da(. 4ere (ou ha/e their callsQ
2ello3 Mr. +ossi3 This is the Australian Chemical Bank. I4m Mr.
Whitle4s secretary. I understand you have an appointment for 15 a.m.
on Tuesday 16
. I4m afraid that Mr. Whitley is rather tied up them.
Could I suggest Monday instead3
7es% I4m sure that "ill (e 8.
2ello% Mr. +ossi3 Tim Bro"n% your agent. &mall pro(lem. ur
meeting for 9riday is all right% (ut Monday afternoon is likely to (e
difficult: someone is coming to see us "ho might (e a useful outlet for
some of your range. perhaps "e could change our meeting to Tuesday
7es% 8. +ight% that4s fine.
Mr. +ossi3 It4s ;enny 8insella here. 9rom B.I.<. I4m sorry (ut my
colleagues can4t all make it on Thursday afternoon. Could I suggest
"e meet on Tuesday instead3
/r= yes= "hy not3 8 = Well% thank you very much.
2ello again% Tim Bro"n here again. I forgot: I have some other
customers visiting on 9riday morning. 2o" a(out a meeting on
Thursday sometime% if that4s all right "ith you3
+ight. &orry to (e difficult. Thanks a lot% Mr. +ossi. Bye no".
Mr. +ossi3 <ood morning. I4m ringing for Mr. 'und of 'und and
'und Associates. 2e4s very sorry% (ut he "on4t (e a(le to manage
Wednesday afternoon. Could I suggest 9riday afternoon instead3
Well% I think that should (e all right. I4ll give you a cal this afternoon
to confirm. Thank you. <ood(ye.
.onda(, 12 *o/em3er
.orning 6rri/e :(dne( airport ".3% a.m.
6fternoon 3 p.m. Tim Bro'n JagentM at hotel
Tuesda(, 13 *o/em3er
.orning 1% a.m. .r. ,hitle(, 6ustralian Chemical Bank
,ednesda(, 14 *o/em3er
6fternoon 2 p.m. >und V >und 6ssociates J.r. ,illiam >undM
Thursda(, 15 *o/em3er
6fternoon 3 p.m. 1enn( &insella W colleagues JB.I.).
;rida(, 1 *o/em3er
.orning 11 a.m. Tim Bro'n
6fternoon flight 3#%, =epart :(dne( p.m.
Practice 3
Use the %lo/ chart ,elo/ as the ,asis %or a telephone con!ersation
in!ol!ing a complaint. Re%er to the .anguage Checklist i% $ou
need to.
'erraondo S.A. Tao .oon Compan$
<Sales @%%ice=
Introduce (ourself.
9ffer to help.
$0plain pro3lem.
9rder 4;51" for 2% printers.
9nl( 1! ha/e arri/ed.
$0press surprise.
This is second time (ou ha/e
recei/ed an incomplete deli/er(.
:uggest possi3le error in
order administration.
6gree 7 sa( (ou need the
other three printers urgentl(.
=ela(s are costing (ou good'ill 7
unhapp( customers.
$0plain stock pro3lems.
6sk for a promise of deli/er(
date 7 6:6P.
Promise ne0t .onda(.
Complain 7 (ou 'ant despatch no'.
$0press regret 7 not possi3le.
6sk for fa0 to confirm despatch.
6gree 7 apologi@e.
$nd call.
.anguage Checklist
Telephoning !6#
&tating reason for the call
I+m calling a3out O
Anfortunatel(, there+s a pro3lem 'ith O
I+m ringing to complain a3out O
/>plaining the pro(lem
There seems to 3e O
,e ha/en+t recei/edO
The O doesn+t 'ork.
The Lualit( of the 'ork is 3elo' standard.
The specifications are not in accordance 'ith our order.
+eferring to previous pro(lems
It+s not the first time 'e+/e had this pro3lem.
This is the JthirdM time this has happened.
Three months agoO
,e had a meeting a3out this and (ou assured us thatO
If the pro3lem is not resol/edO
,e+ll ha/e to reconsider our position.
,e+ll ha/e to renegotiate the contract.
,e+ll contact other suppliers.
The conseLuences could 3e /er( serious.
$andling com!laints and other !roblems
Asking for details
Could (ou tell me e0actl( 'hat O-
Can (ou tell me O-
,hat+s the O-
I+m sorr( to hear that.
I+m sorr( a3out the pro3lem P dela( P mistakeO
-enying an accusation
*o, I don+t think that can 3e right.
I+m sorr( 3ut I think (ou+re mistaken.
I+m afraid that+s not Luite right.
I+m afraid that can+t 3e true.
Skills Checklist
Telephoning !6#
If you receive a complaint)
Consider (our compan(+s reputation
$0press surprise
6sk for details
:uggest action
Promise to in/estigate
.ake reasona3le suggestions, offers to help.
Consider your customer and)
:ho' polite understanding
Ase acti/e listening
8eassure customer.
If you make a complaint)
Prepare for the call
Be sure of the facts
4a/e documentation a/aila3le
=ecide 'hat (ou reLuire to resol/e the pro3lem 7 at least partiall(
7 or completel(.
Who is to (lame3
,ho is responsi3le-
6re (ou talking to the right person-
,as (our order or (our specifications correct-
,ere (ou partl( responsi3le for arrangements 'hich 'ent 'rong, e.g.
=oes responsi3ilit( actuall( lie else'here, i.e. 'ith a third part(-
If you do not get "hat you "ant)
&eep control 7 state 'hat (ou need calml(
=o (ou need to continue to do 3usiness 'ith the other side-
If (ou do, keep a good relationship
$0press disappointment 7 not anger
=on+t use threats 7 unless (ou ha/e toR
Read the te(t then mark the sentences that %ollo/ as True <T=
or 2alse <2=.
In some countries, like Ital( and Britain, con/ersation is a
form of entertainment. There is an endless flo' and if (ou 3reak the
flo' for a second someone else 'ill pick it up. In other countries there
is a higher /alue placed on listening 7 it is not onl( impolite to 3reak
in 3ut listeners 'ill consider 'hat has 3een said in silence 3efore
responding. ;inland and 1apan are e0amples.
If (ou are talking to people 'ho are also speaking $nglish as a
foreign language, the( are likel( to lea/e gaps and silences 'hile the(
search for 'ords or tr( to make sense of 'hat (ou ha/e 5ust said. :o
3e patient and tr( not to interrupt, as (ou 'ould hope the( 'ould 3e
patient 'ith (ou.
$/er( countr( has its o'n codes of etiLuette. ;or e0ample it is
common for 6nglo2:a0ons to use first names /er( Luickl(, e/en in a
letter of fa0 or telephone call. :uch instant familiarit( is much less
accepta3le in the rest of $urope and 6sia 'here e/en 3usiness
partners and colleagues of man( (ears+ acLuaintance address each
other 3( the eLui/alent of .r. or .rs. 6nd the last name or 5o3 title.
:o stick to last names unless (ou specificall( agree to do
other'ise. =on+t interpret the other person+s formalit( as stiffness or
unfriendliness. 9n the other hand, if 3usiness partners 'ith an 6nglo2
:a0on 3ackground get on to first name terms straighta'a(, don+t 3e
63o/e all, one should remem3er that people do not usuall(
mind if their o'n codes are 3roken 3( foreigners as long as the( sense
consideration and good'ill. This is much more important than a set of
rules of etiLuette.
a. ;or the British and the Italians it is normal to interrupt the other
speaker during the con/ersation.
3. 6 special importance is attached to listening in 1apanese and
;innish cultures.
c. 9ne should interrupt and tr( to help speakers 'ho ma( ha/e
difficult( in sa(ing 'hat the( 'ant to sa(.
d. It is unusual for 6mericans and British to use first names earl( in a
3usiness relationship.
e. It doesn+t matter if (ou 3reak certain social rules if it is clear that
(ou are sensiti/e to other people.
f. $tiLuette is the critical point in telephoning 3et'een different
3. Presentations
%. &lanning and !re!aration
.anguage Checklist
&tructure !1# The introduction to a presentation
)ood morning P afternoon ladies and gentlemen.
J>adies andM )entlemen O
I plan to sa( a fe' 'ords a3out O
I+m going to talk a3out O
The su35ect of m( talk is O
The theme of m( presentation is O
I+d like to gi/e (ou an o/er/ie' of O
I+/e di/ided m( talk into JthreeM parts.
.( talk 'ill 3e in JthreeM part.
I+m going to di/ide O
;irst O
:econd O
Third O
In the first part O
Then in the second partO
.( talk 'ill take a3out ten minutes.
The presentation 'ill take a3out t'o hours O 3ut there+ll 3e a t'ent(2
minute 3reak in the middle. ,e+ll stop for lunch at 12 o+clock.
*olicy on ?uestions @ discussion
Please interrupt if (ou ha/e an( Luestion.
6fter m( talk there+ll 3e time for a discussion and an( Luestions.
Skills Checklist
$ffecti/e presentations 7 planning and preparation
Technical kno'ledge
Iuestions and P or discussion
'!ea(er)s com!etence
Presentation techniLue
,hat to include
>ength P depth Jtechnical detailsM
*um3er of ke( ideas
3eginning, middle, end
8epetition, summari@ing
;ormal P informal
$nthusiasm P confidence
Cariet( P speed
Bod( language
$(e contact
)esture P mo/ement
+isual aids
T(pe P design P clarit(
Tape recorder
:cript or notes
:i@e P seating
$Luipment Jdoes it 'ork-M
:ound Lualit(
:imple P clear
:entence length
:tructure signals
Practice -
.ook at the %ollo/ing situations.
A medical congress in Tokyo "ith papers
on ne" techni?ues in open heart surgery.
The *urchasing and *roduct Manager of
a Tai"anese company interested in (uying
some production e?uipment from your company.
An internal meeting of administrative
staff to discuss a ne" accounting procedure.
A staff meeting to discuss a charity event for
earth?uake victims.
0magine $ou ha!e to gi!e a ,rie% presentation in two o% the a,o!e
situations. Make ,rie% notes on the %ollo/ing6
a. ,ill (our talk 3e formal or informal-
3. ,hat are the audience+s e0pectations in terms of technical detail,
e0pertise, etc.-
c. ,hat is the audience+s pro3a3le le/el of specialist kno'ledge-
6re the( e0perts or non2e0perts-
d. 4o' long 'ill (our talk 3eQ fi/e minutes, t'ent( minutes, half an
hour, or longer-
e. ,hat is (our polic( on Luestions- ,ill the audience interrupt or
'ill the( ask Luestions after'ards- ,ill there 3e an( discussion-
f. 4o' 'ill (ou help the audience to remem3er 'hat (ou tell them-
Practice 2
0n an$ presentation the ,eginning is crucial. Certainl$ some things
are essential in an introduction and others are use%ul. ;ere is a list
o% /hat could ,e included in an introduction. Mark them
according to ho/ necessar$ the$ are using the %ollo/ing scale6
*ssential Use%ul Not necessar$
- 2 3 4 "
:u35ect P title of talk.
Introduction to oneself, 5o3 title, etc.
8eference to Luestions and P or discussion.
8eference to the programme for the da(.
8eference to ho' long (ou are going to speak for.
8eference to the /isual aids (ou plan to use.
The scope of (our talkQ 'hat is and is not included.
6n outline of the structure of (our talk.
6 summar( of the conclusions.
Read the te(t ,elo/ and %ind6
a. eight ad/antages of using /isual aids
3. three 'arnings a3out using /isual aids
-. .mage, im!act and ma(ing an im!ression
=inckel and Parnham J1#"5M sa( that NThe great danger Jin
using /isual aidsM is that presenters place the ma5or emphasis on /isual
aids and relegate themsel/es to the minor role of narrator or
technician. Gou are central to the presentation. The /isual aid needs
(ou, (our interpretation, (our e0planation, (our con/iction and (our
Cisual aids can make information more memora3le and the(
help the speaker. 4o'e/er, the( must literall( support 'hat the
speaker sa(s and not simpl( replace the spoken information. It is also
not enough to 5ust read the te0t from a /isual aid.
There are man( ad/antages to the correct use of /isual aids.
The( can sho' information 'hich is not easil( e0pressed in 'ords or
the( can highlight information. The( cause the audience to emplo(
another sense to recei/e information, the( 3ring /ariet( and therefore
increase the audience+s attention. The( sa/e time and the( clarif(
comple0 information.
8elegate K a retrograda, a degrada
.anguage Checklist
Asing visuals

Types of visual support
CisualQ film P /ideo P picture P diagram P chart P pie chart P plan P map
Ta3le graph
0 a0is P hori@ontal a0is
( a0is P /ertical a0is
left hand P right hand a0is
>ine graph
solid line
dotted line
3roken line
JslideM pro5ector
slides JB.$.M
diapositi/es J6m.$.M
o/erhead pro5ector J94PM
transparenc( JB.$.M
slide J6m.$.M
flip chart
metaplan 3oard
Introducing a visual
I+d like to sho' (ou O
4a/e a look at this O
This JgraphM sho's P represents O
4ere 'e can see O
>et+s look at this O
4ere (ou see the trend in O
This compares 0 'ith (
>et+s compare the O
4ere (ou see a comparison 3et'een O
Pie chart K diagramD circularD JrotundD, SplDcintDTM
;lo' chart K schema procesului tehnologic P organigramD
=iagram K diagramD
Bar graph K diagramD cu 3are
Ta3le graph K grafic stil ta3el
>ine graph K grafic cu linii
o/erhead pro5ector K proiector
transparenc( P slide K slide2uri
JslideM pro5ector K dia2proiector
slides P diapositi/es K diapo@iti/e
flip chart K panou cu foi de hFrtie detaBa3ile
'hite3oard K panou al3 din material sintetic
-escri(ing the speed of change
6 dramatic dramaticall(
6 marked markedl(
6 significant increase P fall To increase P fall significantl(
6 slight slightl(
-escri(ing trends
To go up
To increase an increase
To rise a rise
To go do'n
To decrease a decrease
To fall a fall
To clim3 a clim3
To impro/e an impro/ement
To decline a decline
To deteriorate a deterioration
To reco/er a reco/er(
To get 3etter an upturn
To get 'orse a do'nturn
To le/el out a le/eling out
To sta3ili@e
To sta( the same
To reach a peak a peak
To reach a ma0imum
To peak
To reach a lo' point
To hit 3ottom a trough
To undulate an undulation
To fluctuate a fluctuation
Skills Checklist
Asing visual supports
1isual must (e)
'ell prepared
'ell chosen
Availa(le media
Ase media 'hich suit the room and audience si@e.
9/erhead pro5ector J94PM
2 Transparencies P 94T+s P slides J6m.$.M
:lide pro5ector
2 :lides P diapositi/es J6m.$.M
Cideo P computer graphics P flip chart P 'hite3oard
Ase of visual aids
Com3ination of 94P and flip chart 'ith pens often good.
;irst /isual should gi/e the title of talk.
:econd sho' structure of talk 7 main headings.
&eep te0t to minimum 7 ne/er 5ust read te0t from /isuals.
=o not use too man( /isuals 7 guide is one per minute.
Ase pauses 7 gi/e audience time to comprehend picture.
*e/er sho' a /isual until (ou 'ant to talk a3out it.
8emo/e /isual once finished talking a3out it.
:'itch off eLuipment not in use.
Ase of colour
;or slides, 'hite 'riting on 3lue P green is good. Ase different colours
if colour impro/es clarit( of message Je.g. pie charts.M.
Ase appropriate colour com3inationQ (ello' and pink are 'eak
colours on 'hite 3ackgrounds.
Ase of room and machinery
Check eLuipment in ad/ance.
Check organi@ation of room, eLuipment, seating, microphones, etc.
Ase a pointer on the screen Jnot (our handM.
4a/e a good suppl( of pens.
Check order of (our slides P 94T+s, etc.
7ou in relation to your audience
=ecide appropriate le/el of formalit(, dress accordingl(.
&eep e(e contact at least "%X of the time.
Ase a/aila3le space.
.o/e around, unless restricted 3( a podium.
Ase gesture.
Practice 3
9ra/ a line graph %or use in a presentation. Choose an$ situation
or su,4ect real or imagined. 0% possi,le dra/ the picture on an
o!erhead transparenc$.
Then present the graph as $ou /ould in a presentation. 5our
description should last no more than one minute.
0% possi,le construct a graph that makes comparisons possi,le.
Use solid dotted or ,roken lines <or colours= to make the picture
/. The !resentation
Read the %ollo/ing passage and identi%$ at least six
recommendations a,out speaking techniAue /hich can help to
make the message in a presentation clear.
0ou)re lost if you lose your audience
Clear o,4ecti!es clear plan clear signals6 the secrets o%
presentation success.
6n( presentation reLuires a clear strateg( or plan to help (ou
reach (our o35ecti/es. The aim is not to pass a'a( t'ent( minutes
talking non2stop and sho'ing a lot of nice pictures. It is to con/e( a
message that is 'orth hearing to an audience 'ho 'ant to hear it.
4o'e/er, ho' man( speakers reall( hold an audience+s attention-
,hat is the secret for those 'ho do- ;irst, find out a3out the audience
and 'hat the( need to kno'. Plan 'hat (ou+re going to sa( and sa( it
clearl( and concisel(.
6 good speaker uses /arious signals to help hold the
audience+s attention and make the information clear. 9ne t(pe of
signal is to introduce a list "ith a phrase like There are three things
"e have to consider. The speaker then sa(s 'hat the three things are
and talks a3out each one at the reLuired le/el of detail. ;or e0ampleQ
There are three types of price that "e have to think a(out) economic
price% market price and psychological price. 'et4s look at each of
these in more detail. 9irst% economic price. This is (ased on
production costs and the need to make a profit O and the speaker
goes on to descri3e this t(pe of price. 6fter that, he goes on to talk
a3out the market price and so on.
6nother signaling techniLue is to give a link (et"een parts of
the presentation. :a( 'here one part of the talk finishes and another
starts. ;or e0ample, a 'ell organi@ed presentation usuall( contains
different parts and progression from one part to the ne0t must 3e clear,
'ith phrases like That4s all I "ant to say a(out the development of the
product. $o" let4s turn to the actual marketing plan. This techniLue is
/er( helpful to the audience, including those 'ho are mainl(
interested in one part onl(.
6nother t(pe of signaling is se?uencing of information. This
usuall( follo's a logical order, perhaps 3ased on time. :o a pro5ect
ma( 3e descri3ed in terms of the 3ackground, the present situation and
the future. &e( 'ords in seLuencing information are first, then, ne>t,
after that, later, at the end, finally, etc.
:till another techniLue 'hich helps to emphasi@e ke( points is
careful repetition. $0amples are As I4ve already said% there is no
alternative (ut to increase production (y 155 per cent or I4d like to
emphasize the main (enefit of the ne" design , it achieves t"ice as
much po"er "ith half as much fuel.
6 final point concerns timing and Luantit( of information.
Ps(chologists ha/e suggested that concentration is reduced after a3out
t'ent( minutes 'ithout a 3reak or a change in acti/it(. ;urthermore,
audiences should not 3e o/er3urdened 'ith technical details or gi/en
too man( facts to remem3er. It is claimed that to ask people to
remem3er more than three things in a fi/e2minute talk is too much.
:ome sa( that se/en is the ma0imum num3er of an( length of
presentation. 6n( such calculations are pro3a3l( not /er( relia3le, 3ut
e/er( speaker needs to think a3out e0actl( ho' much information of a
particular t(pe a specific audience is likel( to a3sor3 and to plan
Read the %ollo/ing te(t and identi%$ the %ollo/ing6
a. the relationship 3et'een the main 3od( of the presentation and the
3. a recommendation on one 'a( to di/ide the main 3od( of the talk.
The main 3od( of the presentation contains the details of the
su35ect or themes descri3ed in the introduction. 6ll the a3o/e
techniLues are especiall( useful in making the main 3od( easil(
understood. The( help the audience to follo' the information and to
remem3er it.
The( also help the speaker to keep to the planned structure
and to kno' e0actl( 'hat stage has 3een reached at all times during
the presentation. Clear structure doesn+t 5ust help the audienceR In
man( presentations the main 3od( can 3e usefull( di/ided into
different parts. The main parts, each 'ith a main heading, are referred
to in the Introduction. Clearl( there are man( 'a(s to di/ide the main
3od( of presentation and often different parts 'ill themsel/es 3e
di/ided into smaller sections of informationQ
Introduction .ain 3od( of information
;irst part :econd part Third part
Practice 4
The in%ormation ,elo/ is part o% a Product Manager3s notes %or a
presentation on an ad!ertising mi( %or a ne/ range o% ,eaut$
products /ith the ,rand name Cheri. ;e is talking to a marketing
team set up to promote the ne/ range. Use the notes to gi!e a
presentation o% a,out " minutes using listing linking and
seAuencing /here necessar$.
Ad!ertising mi( %or Cheri ,eaut$ products
Above1the1line advertising Below1the1line advertising
tele!ision commercials
ne/spaper ad!ertising
$outh magaBines in+store on+pack targeted
/omen3s magaBines e.g. e.g. mailing
displa$s coupons
merchandising competitions
%ree samples 4oint promotions
'egin as %ollo/6
N )ood morning, e/er(one. I+d like to talk a3out the ad/ertising mi0
for the ne' Cheri range of 3eaut( products. ,e are planning t'o
categories of ad/ertising, a3o/e2the2line and 3elo'2the2line. I+ll talk
first a3outO N
MerchandisingQ 6n( direct efforts to encourage sales of a product,
increase consumer a'areness, etc.
A(oveBtheBline advertisingQ .ass media ad/ertising, such as
tele/ision, radio and ne'spaper.
Belo"BtheBline advertisingQ ;orms of ad/ertising at the point of sale or
directl( on the product, such as packaging, shop displa(s, etc.
.anguage Checklist
&tructure !0# The main (ody
'ignaling different !arts in a !resentation2
/nding the introduction
:o that concludes the introduction.
That+s all for the introduction.
Beginning the main (ody
*o' let+s mo/e to the first part of m( talk, 'hich is a3out O
:o, first O To 3egin 'ith O
There are three things to consider. ;irst O :econd O Third O
There are t'o kinds of O The first is O The second is O
,e can see four ad/antages and t'o disad/antages. ;irst, ad/antages.
9ne is O 6nother is O 6 third ad/antage is O ;inall( O
9n the other hand, the t'o disad/antages.
;irst O :econd O
'inking) Beginning a ne" part
>et+s mo/e to Jthe ne0t part 'hich isM O
:o no' 'e come to O
*o' I 'ant to descri3e O
There are Jse/enM different stages to the process
;irst P then P ne0t P after that P then J0M P after 0 there+s (, last O
There are t'o steps in/ol/ed.
The first step is O The second step is O
There are four stages to pro5ect.
6t the 3eginning, later, then, finall( O
I+ll descri3e the de/elopment of the idea.
;irst the 3ackground, then the present situation, and then the prospects
for the future.
Skills Checklist
&tructure !0# The main (ody
rganization of presentation
>ogical progression of ideas andPor parts of presentation.
Clear de/elopment.
:eLuential description of processes.
Chronological order of e/ents, i.e. 3ackground 22 present 22 future
Main parts Sections Su,sections
6 i a.
B i. a.
iii. a.
C i. a.
Internal structure of the main (ody of a comple> presentation
&ignaling the structure
Ase listing techniLues.
>ink different parts.
Ase seLuencing language.
&ignaling the structure =
.akes the organi@ation of the talk clear
4elps the audience to follo'
4elps you to follo' the de/elopment of (our talk.
3.The end of the !resentation
Read the %ollo/ing te(t and identi%$6
a. a potential pro3lem at the end of a presentation.
3. three 'a(s to a/oid the pro3lem.
4!en for 5uestions2 The silent disaster
6 nightmare scenario is as follo'sQ the speaker finishes his
talk 'ith the 'ords N6n( Luestions-+ This is met 3( total silence. *ot
a 'ord. Then an em3arrassed shuffling, a cough O ho' can this 3e
a/oided- 6 possi3le ans'er is that if the presentation has 3een good
and the audience is clearl( interested, someone 'ill ha/e something to
6nother 'a( to a/oid the nightmare of utter silence is to end
'ith an instruction to the audience. This should ensure immediate
audience response. )i/ing an instruction is often useful in sales
presentations and 'here the audience has special reLuirements.
A sales !resentation
6fter talking a3out his or her products or ser/ices, the speaker
'ants the audience to e0plain their needs and sa(sQ
Ckay , I4ve told you a(out the "ays &nappo can help
companies like yours. $o" for us to do that% "e need to kno" more
a(out the "ay you "ork. 9or e>ample% tell me a(out your particular
situation% tell me "hat in particular may interest you = .4
This places a responsi3ilit( on the audience to respond 7
unless of course the( ha/e a completel( negati/e /ie' of 3oth the
presenter and the messageR 6ssuming the( are 'ell2disposed to'ards
the potential supplier, it is pro3a3l( in their interests to offer some
information and 3egin discussion.
A training manager
:peaking to an audience of =epartment .anagers, /ice2
presidents, or potential trainees, the Training .anager has outlined
recommendations and e0plained 'hat is a/aila3le. 4ePshe can end
C+ightD I4ve told you "hat "e can offer. $o" tell me "hat are
your impressions% "hat are your priorities and "hat else do you need
to kno" no"3E
6nother option is for the speaker to ha/e a Luestion prepared.
6sk something 'hich (ou kno' the audience 'ill ha/e to ans'er.
This often 3reaks the ice and starts discussion. It ma( 3e possi3le to
single out an indi/idual 'ho is most likel( to ha/e a Luestion to ask
(ou or a comment to make, or it ma( 3e apparent from earlier contact
perhaps during the reception or coffee 3reak, that a particular
indi/idual has something to sa( or to ask.
;andling Auestions is thought ,$ man$ speakers to ,e the
most di%%icult part o% a presentation. ?h$ do $ou think this is7
;ere $ou ha!e a list o% the pieces o% ad!ice $ou need in
handling Auestions6
Be polite.
Check understanding if necessar( 3( paraphrasing.
>isten /er( carefull(.
=on+t sa( an(thing (ou+ll regret later.
6sk for repetition or clarification.
6gree partiall( 3efore gi/ing o'n opinionsQ 7es% (ut=
&eep calm.
Tell the truth Jmost of the timeRM
Practice "
0magine that $ou ha!e gi!en a talk on "ar(eting in 6a!an at a
con%erence on ,usiness trends. ?hat /ould $ou sa$ in these
situations7 0% $ou need to re%er to the .anguage Checklist.
1. 6t the end of (our presentation, mo/e to comments P discussion P
2. 6 mem3er of the audience suggests that (ou said that many small
retail outlets% small shops% had actually closed do"n in recent
years. In fact, (ou said this process has 3een going on for a long
time. Politel( correct the other person.
3. 6sk the audience for comments on 'h( this has happened.
4. 6gree 'ith someone+s suggestions, 3ut suggest other factors. 9ne
is the increasing num3er of take2o/ers of smaller companies.
5. 6 mem3er of the audience sa(s the follo'ingQ CI = understand
that a report sho"ed that F55 ne" drinks came out in ;apan in
1GG5 and one year later G5 H had failed. That4s a pretty amazing
figure =4 Paraphrasing this, ask if in the A:6 or $urope that
could not happen.
. :omeone suggests that in 1apan there has al'a(s 3een an
emphasis on Lualit( and on products. In the ,est market research
has 3een more de/eloped. 6gree, 3ut sa( the situation is changing.
!. 6 speaker sa(s something (ou don+t understand. ,hat do (ou
.anguage Checklist
The end of presentation
/nding the main (ody of the presentation
8ight, that ends Jthe third part ofM m( talk.
That+s all I 'ant to sa( for no' on O
Beginning the summary and@or conclusion
I+d like to end 3( emphasi@ing the main pointJsM.
I+d like to finish 'ith O
6 summar( of the main points.
:ome o3ser/ations 3ased on 'hat I+/e said.
:ome conclusions P recommendations.
6 3rief conclusion.
There are t'o conclusions P recommendations.
,hat 'e need is O
I think 'e ha/e to O
I think 'e ha/e seen that 'e should O
Inviting ?uestions and@or introducing discussion
That concludes Jthe formal part ofM m( talk.
JThanks for listeningM O *o' I+d like to in/ite (our comments.
*o' 'e ha/e Jhalf an hourM for Luestions and discussion.
8ight. *o', an( Luestion or comments-
:o, no' I+d 3e /er( interested to hear (our comments.
;andling Cuestions
Anderstood (ut difficult or impossi(le to ans"er
That4s a difficult ?uestion to ans"er in a fe" "ords.
it could 3e O
in m( e0perience O
I 'ould sa( O
I don+t think I+m the right person to ans'er that. Perhaps J.r.
4olmesM can help O
I don+t ha/e much e0perience in that field O
Anderstood (ut irrelevant or impossi(le to ans"er in the time
I+m afraid that+s outside the scope of m( talk P this session. If I 'ere
(ou I+d discuss that 'ith O
I+ll ha/e to come to that later, perhaps during the 3reak as 'e+re short
of time.
$ot understood
:orr(, I+m not sure I+/e understood. Could (ou repeat-
6re (ou asking if O-
=o (ou mean O-
I didn+t catch Jthe last part ofM (our Luestion.
If I understood (ou correctl(, (ou mean O- Is that right-
Checking that your ans"er is sufficient
=oes that ans'er (our Luestion-
Is that oka(-
Skills Checklist
&tructure !6# /nding the presentation
A summary
8estates main pointJsM.
8estates 'hat the audience must understand and remem3er.
Contains no ne' information.
Is short.
A conclusion
:tates the logical conseLuences of 'hat has 3een said.
9ften contains recommendations.
.a( contain ne' and important information.
Is short.
In/iting Luestions implies that the audience is less e0pert than the
Be'are of the Nnightmare scenario+ 7 total silenceR 4a/e one or
t'o prepared Luestions to ask the audience.
&eep control of the meeting.
In/iting discussion gi/es the impression that the audience ha/e
useful e0perience, so is often more Ndiplomatic+.
Gou still need to control the discussion.
Inviting discussion and ?uestions
9ffer the 3est solution.
&eep control, limit long contri3utions, 'atch the time.
2andling ?uestions
>isten /er( carefull(.
6sk for repetition or clarification if necessar(.
Paraphrase the Luestion to check (ou understand it.
)i/e (ourself time to think 7 perhaps 3( paraphrasing the
Check that the Luestion is rele/ant. If not, don+t ans'er if (ou
don+t 'ant to.
8efer Luestioner to another person if (ou can+t ans'er.
:uggest (ou+ll ans'er a Luestion later if (ou prefer.
Check that the Luestioner is happ( 'ith (our ans'erQ e(e contact
and a pause is often sufficient.
&eep control.
=on+t allo' one or t'o people to dominate.
Be polite.
:ignal 'hen time is running out 7 NTime for one last Luestion+.
6t the end, thank the audience.
*(ercise - The ne/ product
8ead .r. >ope@+ presentation and tr( to match the titles Jused in his
rough planM of the different parts of his presentation to the right te0t
?inding+upD 0ntroducing $oursel%D 9eli!ering the messageD
Preparing the audience
<ood morning ladies and gentlemen: "e haven4t all met (efore so I4d
(etter introduce myself. I4m >uis >ope@ from the de/elopment
department of Citrus IncorporatedO I should sa( 3efore 'e start that I
hope you4ll e>cuse my /nglish. I4m a little out of practice=
6n('a(, I4m going to (e talking this morning a(out a ne' product
'hich 'e are planning to launch in t'o months+ time? it+s called
&99>29AT, that+s &29292> dash 92A2T, and it+s a lemon2fla/oured
,ell, I4ll start "ith the 3ackground to the product launch? and then
move on to a description of the product itself, I4m going to list some of
the main selling points that "e should emphasize in the ad/ertising
and sales campaign. I think if you don4t mind% "e4ll leave ?uestions to
the end=
*o' firstly, as (ou all kno', 'e had a gap in our soft2drink product
range for the last t'o (ears? 'e ha/e 3een manufacturing mi0ed2fruit
drinks and orange drinks for the last ten (ears, 3ut 'e stopped
producing lemonade t'o (ears ago? I think 'e all agreed that there
'as room on the market for a completel( ne' lemon2fla/oured drink
O &econdly, the market research indicated that more and more
consumers are using soft drinks as mi0ers 'ith alcohol, so in other
'ords, the market itself has e0panded.
This (rings me to my ne>t point 'hich is that 'e ha/e rather ne'
customer2profile in mind? I must emphasize that this product is aimed
at the (oung2professional, high2income, market and not the traditional
consumer of old2fashioned lemonade. At this point "e must consider
the importance of packaging and design, and if (ou look at the /ideo
in a moment, (ou+ll see that 'e ha/e completel( re2/amped the
container itself as 'ell as the la3el and sloganO
$o" to digress for .ust a moment, the more sophisticated packaging
means a high unit cost, and this ma( 3e a pro3lem in the selling area,
3ut 'e+ll ha/e a chance to discuss that aspect laterO so O to go (ack
to my earlier point, this is a totall( ne' concept as far as Citrus
Incorporated are concerned? as (ou see 'e are using 3oth the ne'2si@e
glass 3ottle and the miniature metal cans.
9inally, let+s look at the ma5or attractions of the product. In spite of
the higher price it 'ill compete 'ell 'ith e0isting 3rands? the design
is more modern than an( of the current ri/al products, and incidentall(
the fla/our is more realistic and naturalO it+s lo' calorie, too.
9.&., so .ust (efore closing% I4d like to summarize my main points
again= ,e ha/e &99>29AT, a ne' design concept, aimed at a
relati/el( ne' age and income group? it+s designed to 3e consumed on
its o'n, as a soft drink, or to 3e used as a mi0er in alcohol23ased
drinks and cocktails. It comes in 3oth 3ottle and can and this 'ill
mean a slightl( higher price than 'e are used to? 3ut the impro/ed
fla/our and the package design should gi/e us a real ad/antage in
toda(+s marketO 'ell, that4s all I have today for the moment, thank
you for listening, no" if there are any ?uestions% I4ll (e happy to
ans"er them=
*(ercise 2 The product presentation
Ase the phrases 'ritten 3elo' to construct a similar presentation to 3e
gi/en to a client.
a. *o', to change the su35ect for a momentO
3. Before I finish, I+d like to run through the main points againO
c. I+ll 3egin 3( descri3ing 222222222, and then go on to 222222222, and
I+ll end 'ith 22222222 .
d. In conclusionO
e. I 'ant to stressO
f. )ood afternoon.
g. That 3rings me to the end of m( presentation.
h. I+d like to talk a3outO
i. To return to the point I made earlierO
5. ;irst, let me introduce m(self? I+m 2222222 from 2222222222 .
k. ;eel free to interrupt if (ou ha/e an( Luestions.
l. Thank (ou for (our attention.
m. ;irst of all O *e0t O
n. Please e0cuse m( rather poor $nglishR
o. I+d like no' to turn toO
p. If (ou ha/e an( Luestions, I+ll 3e glad to ans'er them.
L. 6t this point 'e ha/e to 3ear in mindO
*(ercise 3 Can 0 interrupt here7
,hile (ou 'ere speaking (our colleague, or (our customer ma(
interrupt to make a point. Gou 'ill ha/e to deal 'ith itR >ook at the
interruptions listed 3elo' and some possi3le replies. .atch the repl(
to the interruption.
a. Gou ha/en+t mentioned the price (etR
3. Gour product is more e0pensi/e than (our competitor+sR
c. I+d like the e0act specifications, pleaseR
d. I still don+t understand the difference 3et'een the de2lu0e and
econom( modelsR
e. Gour ne' model seems much hea/ier than the old oneR
1. I take (our pointO 3ut ha/e (ou taken into account the impro/ed
2. I+ll 3e coming to that in a moment.
3. Gou+re right, 3ut on the other hand our product has a num3er of
uniLue design features.
4. 9ur technical department 'ill 3e a3le to gi/e (ou an ans'er on
5. >et me clarif( that for (ou.
*(ercise 4 Anticipating Auestions
It is a /er( good polic( to tr( to anticipate Luestions or pro3lems and
to deal 'ith them 3efore (our audience raises them. 4ere are some
e0amples of ho' (ou can anticipate.
I can hear (ou sa(Q 'h( is this so costl(-
I 'onder 'h( it+s so e0pensi/e-
*o', (ou ma( 'ell ask, 'hat does the mean 3( Nup2market+-
,hat+s Nup2market+-
Gou 'ill ha/e noticed that I ha/en+t gi/en an( figures.
,here+s the statistical data-
6n o3/ious pro3lem at this stage is the choice of colours.
=oes it onl( come in 3lack-
4o' 'ould (ou anticipate the follo'ing Luestions- $0ampleQ ,h( is
it so hea/(- 6n o3/ious pro3lem is the 'eight.
a. ,h( is the deli/er( period so long-
3. ,hat+s Ntop Lualit(+ specification-
c. =o the accessories ha/e to 3e so e0pensi/e-
d. ,h( doesn+t he mention the price-
e. Can he pro/e 'hat he sa(s 'ith figures-
4. Meetings
&re!aration for the meeting
.anguage Checklist
Chairing and leading discussion
pening the meeting
Thank (ou for coming O
JIt+s ten o+clockM. >et+s start O
,e+/e recei/ed apologies from O
6n( comments on our pre/ious meeting-
Introducing the agenda
Gou+/e all seen the agenda O
9n the agenda, (ou+ll see there are three items.
There is one main item to discuss O
&tating o(.ectives
,e+re here toda( to hear a3out plans for O
9ur o35ecti/e is to discuss different ideas O
,hat 'e 'ant to do toda( is to reach a decision O
Introducing discussion
The 3ackground to the pro3lem is O
This issue is a3out O
The point 'e ha/e to understand is O
Calling on a speaker
I+d like to ask .ar( to tell us a3out O
Can 'e hear from .r. Passas on this-
I kno' that (ou+/e prepared a statement on (our =epartment+s
Controlling the meeting
:orr( 4ans, can 'e let .agda finish-
$r, 4enr(, 'e can+t talk a3out that.
:o, 'hat (ou+re sa(ing is O
Can I summarise that- Gou mean O
:o, the main point is O
Moving the discussion on
Can 'e go to think a3out O
>et+s mo/e on to the ne0t point.
Closing the meeting
I think 'e+/e co/ered e/er(thing.
:o, 'e+/e decided O
I think 'e can close the meeting no'.
That+s it. The ne0t meeting 'ill 3e O
Skills Checklist
*reparation for meetings
=ecide o35ecti/es.
,hat t(pe of meeting Jformal or informal, short or long, regular
or a None off+, internal P e0ternal information gi/ing P discussion P
decision makingM-
Is a social element reLuired-
Prepare an agenda.
=ecide time P place P participants P 'ho must attend and 'ho can
3e notified of decisions.
:tud( su35ects for discussion.
6nticipate different opinions.
:peak to participants.
93tain agenda and list of participants.
Inform participants and checkQ
8oom, eLuipment, paper, materials.
8efreshments, meals, accommodation, tra/el.
:tud( su35ects on agenda, 'ork out preliminar( options.
If necessar(, find out team or department /ie's.
Prepare o'n contri3ution, ideas, /isual supports, etc.
The role of the Chair
:tart and end on time.
Introduce o35ecti/es, agenda.
Introduce speakers.
=efine time limits for contri3utions.
Control discussion, hear all /ie's.
:ummarise discussion at ke( points.
$nsure that ke( decisions are 'ritten do'n 3( the secretar(.
$nsure that conclusions and decisions are clear and understood.
=efine actions to 3e taken and indi/idual responsi3ilities.
Practice -
Suggest phrases /hich could ,e used ,$ a chairperson in the
%ollo/ing situations in a meeting.
a. To 'elcome the participants to a meeting.
3. To state the o35ecti/es of the meeting.
c. To introduce the agenda.
d. To introduce the first speaker.
e. To pre/ent an interruption.
f. To thank a speaker for hisPher contri3ution.
g. To introduce another speaker.
h. To keep discussion to the rele/ant issues.
i. To summarise discussion.
5. To ask if an(one has an(thing to add.
k. To suggest mo/ing to the ne0t topic on the agenda.
l. To summarise certain actions that must 3e done follo'ing the
meeting Jfor e0ample, do research, 'rite a report, meet again,
'rite a letter, etc.M.
m. To close the meeting.
Practice 2
-. 0n groups /ork out a ,rie% agenda /ith an appropriate order
%or a meeting o% the marketing department o% A(is 2inance .td. a
medium+siBe %inancial ser!ices compan$. 5our agenda should
include the points listed here6
6n( other 3usiness
*e' products
.inutes of pre/ious meeting
.arketing plans for ne0t (ear
=ate of ne0t meeting
8e/ie' of marketing performance in the current (ear
Personnel changes
Chair+s opening address
6pologies for a3sence.
2. 0n pairs prepare a ,rie% opening statement ,$ the chair to
introduce the meeting a,o!e6
Think a3out 'hat the opening statement from the chair needs to sa(
Ase (our agenda as a guide
8efer to the >anguage Checklist
Practise in pairs
7. &artici!ating in meetings
.anguage Checklist
-iscussion in meetings
&tating opinion
It seems to me O
I tend to think O
In m( /ie' O
,e think P feel P 3elie/e O
There+s no alternati/e to O
It+s o3/ious that O
Clearl( P o3/iousl( O
Asking for opinion
I+d like to hear from O
Could 'e hear from O -
,hat+s (our /ie'-
,hat do (ou think a3out O-
=o (ou ha/e an( strong /ie's on O -
6n( comments-
$0cuse me, ma( I ask for clarification on this-
If I ma( interrupt, could (ou sa( O -
:orr( to interrupt, 3ut O
=o (ou think so- .( impression is O
,hat- That+s impossi3le. ,e P I think O
2andling interruptions
Ges, go ahead.
:orr(, please let me finish O
If I ma( finish this point O
Can I come to that later-
That+s not reall( rele/ant at this stage O
Can 'e lea/e that to another discussion-
Skills Checklist
*articipating in meetings
Types of meeting
=ecision making meeting
Information gi/ing meeting
:pontaneous P emergenc( meeting
8outine meeting
Internal meeting
Customer P client P supplier 2 first meeting P esta3lished
&tructure of decision making meetings
:tud( P discuss P anal(se the situation
=efine the pro3lem
:et an o35ecti/e
:tate imperati/es and desira3les
)enerate alternati/es
$sta3lish e/aluation criteria
$/aluate alternati/es
Choose among alternati/es
The -/&C stage of meeting
= =escri3e situation
$ $0press feelings
: :uggest solutions
C Conclude 'ith decision
)oal of decision making meetings
935ecti/eQ to get a consensus in a time2efficient and cost effecti/e
Importance of communication
T'o2'a( process
Participants must 3e a'are of others+ needs
;ull communication and understanding is essential
;our elements in communicationQ a'areness 7 understanding 7
empath( 7 perception
+eaching a consensus
=iscussion leads to consensus
Consensus is recognised and /er3alised 3( leader
=ecisions checked and confirmed
Practice 3
Use the skeleton outline ,elo/ to recreate the entire dialogue /ith
a partner. Choose alternati!e interruptions and /a$s o% handling
NThe fall in sales is mainl( due to
the recession affecting 'orld markets.+
0nterruptQ ask for clarification.
Polite response.
Jgeneral fall of 5 X P most product areas
P especiall( oil processing sector
P also due to sale of 6nglo, A& su3sidiar(M
0nterruptQ ask 'h( 6nglo 'as sold.
8e5ect interruptionQ
*o time P discussed 3efore.
Tr( to mo/e on to future prospects.
Jthe outlook is 5ust good no'M
0nterruptQ disagree.
8espondQ (ou disagree.
;orecast are much 3etter.
0nterruptQ (ou 'ant to talk a3out
ne' markets.
Promise to discuss this later.
But first O
0nterruptQ suggest a 3reak.
8e5ect the idea.
-. Read the %ollo/ing e(tract and ans/er these Auestions.
a. ,hat kind of meeting is the te0t a3out-
3. ,hat structure does the te0t descri3e-
c. ,hat ke( points is made a3out communication-
2. Read the te(t again. 9o $ou agree /ith6
a. The first sentence- )i/e reasons for (our ans'er.
3. 4a(ne+s suggestions for the steps in/ol/ed in decision making-
c. The /ie' that communication must 3e a t'o2'a( process-
d. ,hat the 'riter sa(s a3out consensus in the final paragraph-
The reason for ha/ing a meeting is to make a decision.
Information ma( 3e gi/en in a presentation follo'ed 3( Luestions or
discussion, 3ut it is to get a consensus that the meeting has 3een
arranged in the first place. 6chie/ing this in the most time2 and cost2
effecti/e manner possi3le is a goal that e/er(one attending Jthe
meetingM must share.
.arion 4a(nes J1#""M maintains that decision2making meetings
need to follo' a specific structure. The rational decision process
includes the follo'ing stepsQ
:tud( P discuss P anal(se the situation
=efine the pro3lem
:et an o35ecti/e
:tate imperati/es and desira3les
)enerate alternati/es
$sta3lish e/aluation criteria
$/aluate alternati/es
Choose among alternati/es.
9ne other aspect of decision making is the necessit( for
participants in the meeting to 3e a'are of one another+s needs and
perceptions. If these are not effecti/el( communicated, if there is an
insufficient degree of understanding of one another+s reLuirements,
then an accepta3le conclusion is unlikel( to 3e reached. There are four
essential elements in decision2makingQ a'areness, understanding,
empath( and perception.
It is onl( 'hen 'e accept that communications are a t'o2'a(
process that an( form of communication, including decision making,
'ill 3ecome genuinel( successful and effecti/e.
=ecision2making is not al'a(s an identifia3le acti/it(. ;reLuentl( the
discussion can e/ol/e into a consensus 'hich can 3e recognised and
/er3alised 3( the leader 'ithout the need to Nput things to the /ote+.
3. 2ind /ords or phrases in the te(t /hich mean the same as the
a. common agreement
3. economical use of resources
c. aim
d. fi0 a goal
e. 'hat one must ha/e
f. 'hat one 'ould like to ha/e
g. consider other options
h. 'a( of seeing things
i. seeing things as others see them
5. de/elop
k. e0press through speaking.
0nterruptions can ha!e di%%erent intentions6
To ask for clarification
To add opinion
To ask for more details
To change direction of the discussion
To disagree.
;andling interruptions6
Promise to come 3ack to a point later
Politel( disagree 'ith an interruption
:a( the interruption is not rele/ant or that time is short
Politel( accept the interruption and respond to it 3efore continuing
8e5ect a suggestion
8. #nding the meeting
Read the %ollo/ing te(t and identi%$6
a. three recommendations on ho' a meeting should end
3. 'hat should happen after a meeting.
8egardless of the t(pe of meeting Jinformation or decision
makingM, it is important to close 'ith a restatement of o35ecti/e, a
summar( of 'hat 'as accomplished, and a list of agreed action that
needs to 3e taken.
6fter the meeting, it is essential to follo' up 'ith action. 6
3rief memorandum of conclusions should 3e 'ritten and distri3uted.
Inform appropriate people 'ho did not attend the meeting a3out
essential decisions made.
;inall(, each meeting should 3e /ie'ed as learning
e0perience. ;uture meetings should 3e impro/ed 3( soliciting
e/aluations and deciding 'hat action is reLuired to conduct 3etter
.anguage Checklist
/nding the meeting
Asking for clarification
Could (ou 3e more specific-
Can (ou e0plain that Jin more detailM-
,hat do (ou mean 3( O-
This means O
,hat I mean is O
,hat I 'ant to sa( is O
To e0plain this in more detail O
Checking that the clarification is sufficient
Is that oka(- P is that clearer no'-
+eferring to other speakers
6s Peter has alread( told us O
I+m sure .r. &o'ski kno's a3out this O
>ater 'e+ll hear a report from *eil on O
Professor )il3erto is certainl( a'are of O
-elaying decisions
I think 'e need more time to consider this.
I think 'e should postpone a decision O
Can 'e lea/e this until another date-
It 'ould 3e 'rong to make a final decision O
#nding the meeting
I think 'e should end there. 1ust to summarise O
,e+/e co/ered e/er(thing, so I+d like to go o/er the decisions 'e+/e
taken O
:o, to conclude O 'e+/e agreed O
Confirming action
,e+ll contact O
1ohn 'ill O
,e+/e got to O
,e need to look at O
+eferring to ne>t contact
,e+ll meet again ne0t month O
,e look for'ard to hearing from (ou O
It+s 3een a pleasure to see (ou toda( and I look for'ard to our ne0t
meeting O
Skills Checklist
/nding meetings
T"o general rules
.eeting should end on timeR
=ecision making meetings should end 'ith decisionsR
The Chair should close the meeting "ith)
6 restatement of the o35ecti/es
6 summar( of decisions taken
6 summar( of the action no' reLuired
8eference to an( indi/idual responsi3ilities.
After the meeting
6 memorandum should 3e sent to all participants summarising the
decisions taken and the action reLuired.
The memorandum should 3e sent to an( interested indi/iduals
'ho 'ere una3le to attend.
The Chair should seek feed3ack on the meetings to tr( to impro/e
future meetings.
Improving meetings
.oti/ation to change
)ather information on present situation
Identif( specific areas needing impro/ement
Identif( alternati/e courses of action
Practise ne' techniLues
Impro/ement model.
Practice 4
5ou are at an internal meeting to discuss increases in the price o%
$our products. ?ith a partner use these prompts to make a
dialogue. Tr$ to use ne/ language %rom this unit.
Participant A Participant '
6sk if the meeting can
reach a decision on this.
8espond that 'e need more
6sk for clarification.
:a( 'e need to kno' more
a3out the effects of a price
:uggest doing market research.
6gree. :uggest contacting a
friend 'ho kno's a3out
market consultanc( firms.
:uggest first looking at pre/ious
e0perience of price rises 7
then later going to a .arketing Consultanc(.
6sk for general agreement.
.o/e to ne0t item for discussion.
Practice "
0n pairs use the outline ,elo/ to create a chair3s closing remarks
%or a meeting. To make this more realistic add names and other
details as reAuired. Practice $our closing remarks together.
Indicate that the meeting is almost o/er.
Check that no one has an(thing else to sa(.
8estate the purpose of the meeting.
Introduce a summar( of the decisions taken.
6sk if e/er(one is happ( 'ith (our summar(.
Indicate that a colleague 'ill organise a presentation ne0t 'eek.
;i0 a date for a ne' meeting.
Thank people for coming.
". Negotiations
9:. ;now what you want
.anguage Checklist
$egotiations !1#
Making an opening statement
,elcome to O
I+m sure 'e 'ill ha/e a useful and producti/e meeting O
9irst meeting
,e see this as a preparator( meeting O
,e 'ould like to reach agreement on O
ne of a series of meetings
;ollo'ing pre/ious meetings 'e ha/e agreed on some important
issues. Toda( 'e ha/e to think a3out O
,e ha/e reached an important stage O
&tating your aims and o(.ectives
I+d like to 3egin 'ith a fe' 'ords a3out our general e0pectations O
.a( I outline our principle aims and o35ecti/es toda( O
,e 'ant to clarif( our positions O
,e ha/e a formal agenda O
,e don+t ha/e a formal agenda, 3ut 'e hope to reach agreement on O
There are three specific areas 'e 'ould like to discuss. These are O
,e ha/e to decide O
&tating shared aims and o(.ectives
Together 'e 'ant to de/elop a good relationship O
,e agree that O
It is important for 3oth of us that 'e agree on O
2anding over
I+d like to finish there and gi/e (ou the opportunit( to repl( to this.
I+d like to hand o/er to m( colleague O, 'ho has something to sa(
a3out O
Skills Checklist
$egotiations !1#
Planning and preparation
Type of negotiation
To'ards agreement
Both teams tr( to suit 5oint interests
Independent ad/antage
$ach team aims to get 3est deal
6 team aims to 'in and make the other team lose
*urpose of negotiation
$0plorator( Jpossi3le areas of interestM
Conciliator( Jresol/ing differencesM
:cale Je.g. 121%M
=ecide realistic ma0imum and minimum accepta3le scores
9acts and figures
Prepare statistical data
&no' facts
Prepare /isuals
&trengths and "eaknesses
>ist (our 3argaining strengths
&no' (our possi3le 'eaknesses
Calculate (our 3argaining position
*ossi(le concessions
Plan (our 3argaining strateg(
>ist essential conditions
Impossi3le to concede
>ist possi3le concessions
pening statements
:tate general o35ecti/es
:tate priorities
:tate independent Jnot 5ointM o35ecti/es
Be 3rief
Practice -
-. Suggest phrases %or each o% the %ollo/ing at the start o% a
,elcome the other side.
=e/elop small talk Jtrip, 'eatherM.
.ention plans for lunch 7 make (our /isitors feel 'elcome Jsee
cit( centre P local restaurantM.
:uggest (ou start talking a3out the main su35ect of (our meeting.
Introduce a colleague.
$0plain general aim or purpose of the meeting. Jpreliminar( P
:a( 'hat (our side 'ants from the meeting. J$sta3lish 3eginnings
of a partnership P learn a3out suppl( s(stems P price /ariations and
suppl( costs.M
2. Tr$ to ,ring all the phrases a,o!e together in a single opening
T$pes o% negotiation6
Agreement1based negotiation or win1win negotiation
Proposals and counter proposals Jpropuneri contrareM are
discussed until agreement is reached. Both sides hopes for repeat
3usiness. T'o parties ha/e a shared o35ecti/eQ to 'ork together in
a 'a( 'hich is mutuall( 3eneficial.
.nde!endent advantage negotiation
This t(pe of negotiation is less 3ased on mutual 3enefit, 3ut on
gaining the 3est deal possi3le for (our side. $ach team thinks onl(
a3out its o'n interests.
<in=lose negotiation
This t(pe is the negotiation to resol/e conflict, for e0ample in a
contractual dispute. 4ere, it is possi3le that each part( regards the
other as an opponent and seeks to 'in the argument.
A t$pical structure o% a negotiation6
Counter suggestion
Practice 2
-. Mark the se!en points ,elo/ <ho/ to prepare a negotiation= in
the right order. The %irst is alread$ marked as an e(ample.
Identif( (our minimum reLuirements.
Prepare (our opening statement.
=ecide 'hat concessions (ou could make.
&no' (our o'n strengths and 'eaknesses.
&no' (our role as part of a team.
Prepare (our negotiation position 7 kno' (our aims and o35ecti/es. -
Prepare an( figures, an( calculations and an( support materials (ou
ma( need.
2.Match each o% the %our aspects o% good preparation on the le%t
/ith why the$ are important on the right.
a. &no'ing (our aims i. means (ou can support (our
and o35ecti/es argument.
3. &no'ing (our o'n strengths and ii. helps clear thinking and
'eaknesses purpose.
c. Preparing an( figures, calculations iii. creates reasona3le
and other materials e0pectations.
d. Preparing an opening statement i/. helps (ou to kno' the
market, the conte0t in 'hich
(ou 'ant to 'ork.

99. >etting what you can

-. Read the %ollo/ing e(tract. According to the /riter are these
statements a,out negotiating true <T= or %alse <2=6
a. =ecide on the most important and less important issues.
3. Tr( to guess 'hat the other side thinks.
c. *ote ans'ers to the Luestions (ou ask.
d. =eal 'ith issues in isolation, one at a time.
e. .ake concessions and get a concession in return.
f. Tough 3argaining can com3ine 'ith a spirit of cooperation.
g. If there are pro3lems, (ou ha/e to accept or re5ect 'hat is on
#ffective negotiation re5uires clear thin(ing and a constructive
It is necessar( to ha/e a clear understanding of 'hat for (ou
are the most important issues and at the same time 'hat for (ou are
less important. Tr( to identif( aspects in the second categor( 'here
the other side 'ill 3e /er( happ( to gain concessions. )i/e 'hat is not
so important for (ou, 3ut is /alua3le for the other side.
To do this, (ou ha/e to do the follo'ingQ
Check e/er( item of 'hat the other side 'ants. 6sk ho'
important items are and look for fle0i3ilit(.
=o not guess their opinions or moti/es 7 (ou could 3e 'rong, or
the( 'on+t like (our speculation.
*ote the other side+s ans'ers, 3ut don+t immediatel( sa( 'hat (ou
6/oid 3eing forced into considering one issue alone, consider t'o
or three at once 7 aim for an agreement to a package.
If there are 3ig differences 3et'een the t'o parties, (ou ha/e a
choice of these optionsQ to accept, to re5ect, or to carr( on negotiating.
If (ou decide to carr( on, then the options in the ne0t round areQ
To make a ne' offer
To seek a ne' offer from the other part(
To change the shape of the deal J/ar( the Luantit( or the Lualit(,
or 3ring in third partiesM
Begin 3argaining.
Gour 3argaining should 3e go/erned 3( three principlesQ 3e
prepared, think a3out the 'hole package, and 3e constructi/e. In
preparing, (ou must identif( the issues, and prepare (our 3argaining
position. Gou needQ
6n essential conditions list 7 issues 'here (ou cannot concede
6 concessions list 7 issues 'here (ou can make concessions
To grade the concessions from the easiest to the most difficult,
'here (ou need most in return.
6s for the package, (ou must look for agreement in principle on a
3road front JzonJ cu elemente diferiteM. ,hen the time comes for
compromise, each part( 'ill concede on one issue if the( 'in a
concession on another.
The final principle is to 3e positi/e and constructi/e. Gou should
3e fair and cooperati/e, e/en during difficult 3argaining. This
approach is mot likel( to mo/e the negotiation to'ards a settlement
that 3oth sides feel is to their ad/antage.
2. Read the te(t again. 0denti%$ the %ollo/ing6
a. 4o' to respond to 'hat the other side 'ants.
3. Three 'a(s to change a deal.
c. Three actions to prepare for 3argaining
.anguage Checklist
$egotiations !0#
,e can agree to that if O
9n condition that O
:o long as O
That+s not accepta3le unless O
,ithout O
Making concessions
It (ou could O 'e could consider O
:o long as O 'e could agree to O
9n condition that 'e agree on O then 'e could O
>et+s think a3out the issue of O
,e could offer (ou O
,ould (ou 3e interested in O-
Could 'e tie this agreement to O-
,e agree.
That seems accepta3le.
That+s pro3a3l( all right.
Can 'e run through 'hat 'e+/e agreed-
I+d like to check 'hat 'e+/e said P confirm
I think this is a good moment to repeat 'hat 'e+/e agreed so far.
I+d like to run through the main points that 'e+/e talked a3out.
:o. I+ll summarise the important points of our offer.
Can 'e summarise the proposal in a fe' 'ords-
'ooking ahead
:o, the ne0t step is O
,e need to meet again soon.
In our ne0t meeting 'e need to O
:o, can 'e ask (ou to O-
Before the ne0t meeting 'e+ll O
,e need to dra' up a formal contract.
Skills Checklist
$egotiations !0# , Bargaining in negotiations
Concessions rules
N6 ke( principle in negotiation is to gi/e a little and get a little at the
same time.+
6sk for concessions
6ll concessions are conditional
Conditions first NIf O then O+
NIt+s a package+
)i/e 'hat+s cheap to (ou and /alua3le to them.
9uring the negotiation
Main speaker
Create a 5oint, pu3lic and fle0i3le agenda.
Iuestion needs and preferences.
=on+t talk too much.
=on+t fill silences.
Build on common ground.
$0plore alternati/es N,hat if O-+
Be clear, 3rief and firm.
;ollo' concession rules.
&upport speaker
,ait till the Chair or (our main speaker 3rings (ou in.
Be clear, 3rief and firm.
;ollo' the concession rules.
:upport (our main speaker
2 6gree Jnod, NThat+s right O+M
2 $mphasise JNThis point is /er( important+M
2 6dd forgotten points JN6nd 'e must remem3er O+M
2 But don+t make concessions for (our main speaker.
2 >isten.
2 =on+t fill silences.
Practice 3
Make sentences /hich include concessions ,ased on the prompts
,elo/. The %irst is done %or $ou as an e(ample.
a. a 3etter 'arrant( P Luicker pa(ment terms
We could offer a (etter "arranty if you "ould agree to ?uicker
payment terms.
3. free deli/er( P large order
c. free on2site training P small increase in price
d. 5 X discount P pa(ment on deli/er(
e. e0tra Y 5%, %%% compensation P agreement not to go to la'
f. promise to impro/e safet( for staff P agreement on ne' contracts
g. 3etter 'orking conditions P shorter 3reaks
Practice 4
0ou and a !artner are re!resentatives of Bec( .nstruments and
4?an!era .nc., a machine tool ma(er. 4?an!era is in discussion with
Bec( .nstruments to buy a machine, the B. /. @se the flow chart
below to negotiate some as!ects of an agreement for the sale of the
B. /.
@4anpera 'eck 0nstruments
9ffer to 3u( the machine if BI
can gi/e a good price.
:a( that (our prices are /er(
6sk for a discount.
:a( a discount could 3e
possi3le if 95anpera agrees to
pa( for shipping costs.
6gree, if the discount is attracti/e.
9ffer 4 X discount.
6sk for X discount.
Anfortunatel(, (ou can+t
agree, unless 95anpera pa(s
for the installation.
Confirm (our agreement.
Practice "
The %ollo/ing letter is %rom :i,son Trust .td. To the Ministr$ o%
Ur,an 9e!elopment summarising the points agreed in the
negotiation ,et/een them and outlining the ne(t steps. Complete
the spaces in the letter /ith appropriate /ords gi!en ,elo/.
/nclosed developed specified e>amined e>cluded signed
Agreed dra"n up confirm included
:0'S@N TRUST .0M0T*9
Anits #212 $ast :ide .onks Cross Industrial $state B8I:T9> B:I4
Telephone %12!2 54!!!! ;a0 %12!2 54!!%1
*eil ;inch
.inistr( of Ar3an =e/elopment
14%2 144 ,hitehall
>ondon ,CI 48;
.a( 2 2%%Z
=ear *eil,
Re6 Meeting in 'ristol April 3E +++ FRail/a$ .and Sale3
I am 'riting to JaM [[[[[[[ points J3M [[[[[[[ in the a3o/e meeting,
held to discuss the sale of go/ernment o'ned rail'a( land to )i3son
Trust >imited.
,e 'ould like to confirm through this letter and the JcM [[[[[[[[
dra'ings that the propert( JdM [[[[[[ in the a3o/e sale consists of the
land presentl( occupied 3( the station 3uildings and also the former
car parks to the east of the station, the offices to the 'est and the
'arehouse alongside the traks. The go/ernment2o'ned housing on the
north side of the rail'a( lines is JeM [[[[[[[ .
,e also agree that the station 'ill 3e reno/ated 3( the Transport
=epartment and that the go/ernment 'ill 3e responsi3le for running
an e/entual museum and pa(ing a rent of Y 1%%,%%% per (ear to
)i3son Trust. The remaining land 'ill 3e JfM [[[[[[[[[ 3( )i3son
Trust and later sold off separatel(. The de/elopment is intended to 3e
for commercial and residential use. The e/entual use of the land
should 3e JgM [[[[[[[ in the contract.
9ur ne0t meeting 'ill 3e on .a( 15 at 1% a.m., at 'hich de/elopment
plans 'ill 3e JhM [[[[[[. :oon after this, contracts 'ill 3e JIM [[[[[[ .
Then 'e 'ill need time to consider the contracts 3ut hopefull( the(
'ill 3e J5M [[[[[[ 3( the end of :eptem3er.
=o contact us if (ou ha/e an( comments or alterations (ou 'ould like
to make to this summar(. Thank (ou once again for a /er(
constructi/e meeting and 'e look for'ard to seeing (ou again on .a(
Gour sincerel(,
1ill &earne
Chief *egotiator
$ncs. JIM
9. Aot getting what you don)t want
?hat t$pe o% negotiator are $ou7
1. Gour aim in a negotiation is O
aM to find the greatest area of agreement in the 5oint interests of
3oth parties.
3M To 'in and to make the other side lose.
cM To find the 3est deal for (our side.
2. ,hen the other side is talking (ou O
aM use the information (ou are hearing to identif( 'eaknesses in
the other part(.
3M Plan 'hat (ou are going to sa( ne0t.
cM >isten 'ith ma0imum attention.
3. Gou think that O
aM part of the a/aila3le time must 3e spent socialising and getting
to kno' the other side.
3M )ood'ill is important 3ut the speed of the meeting should 3e
Luick and 3usinesslike.
cM The meeting should get do'n to 3usiness as soon as possi3le
and reach Luick decisions.
4. ,hen (ou speak in a negotiation (ou O
aM make 3old and forceful statements, possi3l( 3anging the ta3le.
3M .ake carefull( considered statements in a calm, controlled
cM 6re occasionall( forceful and infle0i3le.
5. If the other side disagree 'ith (ou, (ou O
aM tr( hard to find a creati/e position 3( modif(ing (our
3M 8epeat (our demands and 'ill not concede 7 (our o35ecti/e is
to make the other side gi/e in.
cM 8eshape (our offer 'ithout fundamental changes.
. If the other side state an opinion (ou disagree 'ith, (ou O
aM tentati/el( suggest an alternati/e.
3M 6sk for clarification and e0planation.
cM 8idicule it 'ith sarcasm.
- aM3 3M2 cM2 2 aM1 3M2 cM3 3 aM3 3M2 cM1
4 aM1 3M3 cM2 " aM3 3M1 cM2 # aM3 3M2 cM1
If (ou score 15 or more (ou are a creati!e negotiator. 11214 (ou
negotiate to independent ad!antage. !21% (ou are a %ighterR >ess
than ! (ou should get a gun licenceR
Match each o% the %ollo/ing to a phrase in the te(t /ith a similar
a. highlight the disad/antages of failing to reach a deal
3. think of ne' 3enefits for 3oth sides
c. alter parts of 'hat is on offer
d. take a 3reak to consider positions
e. ha/e the negotiation in a different place
f. change the indi/iduals in/ol/ed
g. ask an independent person to come and help (ou reach agreement
h. ha/e an informal meeting to talk things o/er.
*ealing with conflict
Conflict ma( sometimes 3e an una/oida3le step on the road
to'ards agreement. 4o'e/er, in some cases conflict leads to the 3reak
do'n of negotiations as one or 3oth sides realise that agreement is not
possi3le. In man( cases this is 3etter than agreeing to something
'hich 'ould 3e against the interests of the people concerned.
,hen conflict arises, there are se/eral possi3le actions 'hich
ma( help to resol/e conflict in a negotiationQ
>ea/e the pro3lem, go on to a different topic and return later to
the point at issue
:ummarise progress and areas of agreement
$mphasise the 3enefits a/aila3le to 3oth sides
$mphasise the loss to 3oth sides of not reaching agreement
8estate the issue and 'ait for a response
Change the package
In/ent ne' options for mutual gain
9ffer conditional concessions
6d5ourn Ja amKna% a suspendaM to think and reflect
;i0 an off2the2record meeting JLntKlnire neoficialJM
Change location
Change negotiator Jpersonal chemistr(-M
Bring in a third part( Jmediator-M
Consider 'alking a'a(.
Practice #
0n pairs use the gi!en prompts to suggest a response to the
&ituation 1
The pro3lem is that 'e ha/e ne/er offered the kind of 'arrant( (ou
are looking for.
&uggest leaving the point and returning to it later after discussing
other issues% i.e. training for technical staff.
&ituation 0
There+s a num3er of issues on the ta3le. ,e seem to 3e a long 'a(
from an agreement.
&uggest changing the package on offer !varia(les include price%
shipment costs% payment terms#.
&ituation 6
The price (ou are asking is rather high, Luite a lot higher than 'e 'ere
&end a signal that you could offer (etter payment terms.
&ituation M
There are se/eral pro3lems. ,e think there is Luite a lot of negotiation
ahead 3efore 'e can agree on a common strateg(.
&uggest advantages of reaching agreement) more glo(al influence%
(etter prospects for the future.
'elo/ are %i!e strategies in dealing /ith con%lict. Use them in
making statements.
a. 6d5ourn to think and reflect.
3. :ummarise progress and areas of agreement.
c. >ea/e the pro3lem, discuss something else, come 3ack later to the
d. $mphasise the loss to 3oth sides of not reaching agreement.
e. 9ffer a conditional concession.
Practice &
'elo/ are %our o%%ers or reAuest. Re4ect each one using the
in%ormation in the prompts.
&ituation 1
>et me make a suggestion. If (ou agree to 3u( 1%% units e/er( month
for the ne0t t'el/e months, 'e+ll agree a 1% X discount.
7ou don4t kno" ho" many units you "ill need in si> and t"elve
months. It might (e more or less.
&ituation 0
The price 'e are offering e0cludes installation costs 3ut does include
a t'el/e month+s guarantee.
ther suppliers offer free installation and a t"o year parts and la(our
&ituation 6
I think the a3solute minimum in/estment in ad/ertising must 3e
\4%,%%%, other'ise 'e cannot reach enough of our market. It+s not
much to ask for.
7ou cannot spend more than your (udget.
&ituation M
*o', some e0cellent ne'sQ 'e+d like to increase our order. 8ight no'
(ou are sending us 35% 3o0es a month. ,e need at least 5%%, demand
is /er( high O
7our order (ooks are full% the plant is "orking at capacity.
Practice )
Suggest /hat $ou could sa$ in the %ollo/ing situations.
&ituation 1
6fter a long negotiation, (ou ha/e reached agreement and no' plan a
meal in a local restaurant 'ith the other part( in the negotiation.
&ituation 0
Gour efforts to reach agreement ha/e 3een unsuccessful. It is late. $nd
the negotiation 3ut offer some hope that in the future (ou might
manage some cooperation 'ith the other side.
&ituation 6
6 colleague has asked (ou to cooperate on a pro5ect, 3ut after long
discussion (ou feel (ou cannot participate 3ecause of fundamental
disagreement. It is important that (ou continue to 'ork together in the
other areas.
&ituation M
Gou 'ant to repeat an order 'ith a supplier 3ut the( are tr(ing to
increase prices 3( 2% X. Gou cannot agree to this. $nd (our
&ituation N
6 customer is asking (ou to suppl( goods in a month. This is
ph(sicall( impossi3le. $nd the discussion.
.anguage Checklist
*egotiations J3M
-ealing "ith conflict
I think 'e should look at the points 'e agree on O
,e should focus on the positi/e aspects O
,e should look at the 3enefits for 3oth sides O
It is in (our interests to resol/e the issue O
,hat do (ou think is a fair 'a( to resol/e this pro3lem-
,e hope (ou can see our point of /ie' O
>et us e0plain our position O
Could (ou tell us 'h( (ou feel like that-
I think 'e should look at the 'hole package, not so much at indi/idual
areas of difficult(.
Perhaps 'e could ad5ourn for a little 'hile.
I think 'e need to consider some fresh ideas O
I+m afraid 'e can+t O
Before agreeing to that 'e 'ould need O
Anfortunatel( O
I don+t think it 'ould 3e sensi3le for us to O
I think if (ou consider our position, (ou+ll see that O
/nding negotiations
:o, can 'e summarise the progress 'e+/e made-
Can 'e go through the points 'e+/e agreed-
Perhaps if I can check the main points O
:o, the ne0t step is O
,hat 'e need to do no' is O
It+s 3een a /er( useful and producti/e meeting.
,e look for'ard to a successful partnership.
Breaking off negotiations
I think 'e+/e gone as far as 'e can.
I+m sorr(, 3ut I don+t think 'e+re going to agree a deal.
It+s a pit( 'e couldn+t reach agreement this time.
Anfortunatel( 'e appear una3le to settle our differences.
It 'ould 3e 3etter if 'e looked for some independent ar3itrator.
Skills Checklist
$egotiations !6#
-ealing "ith conflict
:ho' understanding of the other side+s position
4ighlight ad/antages of agreement
-on4t = -o =
Be sarcastic ask Luestions
6ttack listen
Criticise summarise
Threaten 3uild on common ground
Blame e0plain (our feelings
T$pes o% negotiators
*egotiates to 'in
.akes demands
>ooks for common 3enefits
.akes offers
>ooks for agreement
6ccepts 'hat+s on offer
9ighter Independent advantage Creative negotiator
,in2lose 'in2'in looks for agreement
6sk for an ad5ournment.
=iscuss options.
8emem3er (our limits.
=ecide if (our interests are 3eing metQ if not, re5ect the proposal
on offer, or suggest alternati/es.
After the negotiation
Compare the result 'ith (our o35ecti/es, targets and limits.
$0amine the process of the negotiationQ
The planning 7 the strateg( 7 team roles 7 the issues.
>earn from failureQ
,hat 'ent 'rong and 'h(-
Identif( 'eaknesses and errors
=iscuss and plan ahead.
Build on successQ
8ecognise success
Praise people
=e/elop team'ork and partnership.
Negotiating Conditions
Conditions *(amples
Anit price \".5% per unit
.inimum Luantit( at least 1%,%%% units
Credit period 3% da(s after in/oice
=eli/er( date 2% 1une 2%%3
Bulk discount 22 X if o/er 1%,%%% units
Penalt( clause 5 X for each month of dela(
Cancellation clause 5% X charge if cancelled less
than si0 'eeks 3eforehand
$0clusi/it( sole rights o/er all $ast Coast
8o(alt( on sales under licence 3 X of turno/er on licensed
Commission 5 X on sales in the territor(
$arl( settlement discount 22 X if paid 'ithin 2% da(s
9ption period first option for 12 months
after contract
.ethod of pa(ment irre/oca3le letter of credit
,arrant( period 1" months 'arrant( from
9ATA20.*6 Negotiation
Belo' are the stages of negotiation and some e0pressions 'hich (ou
ma( find useful at each stageQ
Con!ersation <-=
I+m surePconfident 'e can reach agreement. JoptimisticM
I+m sure there+s room for negotiation.
,e ha/e a lot to discuss.
>et+s see ho' 'e get on. JcautiousM
Presenting $our position <2=
This is our position.
This is ho' 'e see it.
,e think the follo'ing is reasona3lePappropriate.
9ur approach is this.
Cuestioning the other3s position <3=
4o' do (ouP e0plain (our attitude-
P 5ustif( O- 6ccount forO- 6rri/e atO-
,h( do (ou 'antO-
,h( such a P high charge-
P long deli/er( period-
P lo' discount-
Re%using to accept <4=
I+m sorr(, I can+t accept 2 X.
Gou+ll ha/e to do 3etter than that, I+m afraid.
I+m afraid it+s not enough.
9ther firms offer more than 2 X.
Re%using to mo!e <"=
I+m afraid I can+t agree to P that.
P increase the rate.
P lo'er the price.
P shorten deli/er(.
,e+/e done our 3est for (ou.
,e ha/e maintain a polic(.
I ha/e m( instructions.
Suggesting a compromise <#=
.a( I make a suggestion-
If (ou O then 'e ma( 3e a3le toO
,e ma( 3e a3le toO 3ut onl( if (ouO
Anless (ou O there is no Luestion of our 3eing a3le toO
Reaching agreement <&=
>et+s 5ust go through the terms.
>et+s summari@e the conditions.
*(ercise - 5our turn to negotiate8
*o' (ou ha/e the opportunit( to negotiate. To help (ou 'ith each
ans'er (ou are gi/en some information in the script 3elo' and a
num3er 'hich refers 3ack to the =atafile.
'u!!lier ,ell, let+s get started. Gou kno', 'ith this deli/er(
pro3lem I+m sure there+s room for negotiation.
0ou J1Q cautiousM
'u!!lier 8ight, 'ell this is ho' 'e see it. ,e can deli/er the first
machine in ten 'eeks, and install it four 'eeks after that.
0ou J3Q long deli/er( periodM
'u!!lier ,ell, these are in fact the usual periods. It+s prett( normal
in this kind of operation. =id (ou e0pect 'e could deli/er an(
0ou J2Q 'eeks ma0imum deli/er(? 4 'eeks installationM
'u!!lier I see 'hat (ou mean, 3ut that 'ould 3e /er( difficult. Gou
see 'e ha/e a lot of orders to handle at present, and mo/ing 5ust one
of these machines is a ma5or operation. >ook, if I can promise (ou
deli/er( in eight 'eeks, does that help-
0ou J4Q too lateM
'u!!lier 6h2haR ,ell, lookO erO Gou 'ant the machine in si0
'eeks. *o' that is reall( a /er( short deadline in this 3usiness. Gou
said that (ou couldn+t take it an( later, 3ut couldn+t (our engineers
find a 'a( to re2schedule 5ust a little, sa( another 'eek-
0ou J5Q refuseM
'u!!lier ,ell, (ou reall( are asking us for something that is /er(
difficult. I+/e alread( offered (ou se/en 'eeks. I+ll ha/e to consult
'ith m( colleagues and come 3ack to (ou, 3ut I can+t see 'hat 'e can
0ou JQ if deli/er in 'eeks perhaps talk a3out further orderM
'u!!lier ,ell, on that 3asis I suppose 'e might 3e a3le to look at
some kind of arrangement. In fact, if (ou can promise another order I
think 'e could accept (our terms.
0ou J!Q 'eeks deli/er(? 4 'eeks installation? decision on ne0t
order 3( 2
of this monthM
'u!!lier $0actl(. If (ou could confirm this in 'riting I O
*(ercise 2 Ten rules %or negotiating
=r $d Uap is holding a t'o2da( seminar on negotiating techniLues. 6t
the end of the first morning he gi/es the group his ten rules for
negotiating. 4ere the( are.
1. ;ind out ho' man( points are to 3e negotiated.
2. :tart from an e0treme position.
3. 6ssume the other person o'es (ou a concession.
4. *e/er concede 'ithout e0change.
5. *e/er gi/e 'hat (ou can sell.
. $0aggerate the /alue of (our concessions, minimi@e the /alue of
!. If he insists on Nprinciple+, e0pect a concession in return.
". 9nl( threaten 'hat (ou are prepared to carr( out.
#. =on+t sho' disrespect to (our opponent.
1%. If (ou+re happ( 'ith the result, don+t shout NI+/e 'onR+
8ead =r Uap+s rules and then look at the remarks in list 6. These
remarks are not good for negotiating. Instead, use phrases from list B.
'hich one 'ould (ou use in each case-
6. B.
a. Gou see- I kne' I+d 'inR
1. If (ou increase the order, then 'e ma( 3e a3le to reduce the price.
3. I kno' 'hat (ou 'ant to discuss, so let+s start.
2. Cer( 'ell, 3ut if (ou can+t gi/e discounts I+m sure (ou can
c. I can reduce the price. =oes that help-
3. If (ou can+t accept this, I ma( ha/e to reconsider m( position.
d. =eli/er(- That+s no pro3lem? no e0tra charge.
4. I think 'e can agree on these terms.
f. It+s against (our polic( to gi/e discounts- 9&.
5. I+m afraid that 'ill not 3e possi3le.
g. ,hat a ridiculous ideaR =on+t 3e stupidR
. .a( 'e go through the points to 3e discussed 3efore 'e 3egin-
h. 6nother half per cent- Ges, that+s /er( generous offer (ou+re
!. 4alf per cent is /er( small amount
i. This is m( final offer. If (ou refuse, I+ll cancel e/er(thing.
". =eli/er(- ,ell it ma( 3e possi3le 3ut onl( ifO
*(ercise 3 ?hen things get di%%icult
In their negotiation e0ercises the managers on =r Uap+s seminar
sometimes find themsel/es in difficult situations. 6s the( are all from
$nglish2speaking countries the( kno' 'hat to sa(.
Could you give me a moment to do some calculations3
CertainlyD Would you e>cuse me a minute3
Would you like me to go through that again3
I4m sorry% could you go through that again3
I don4t think "e4re talking a(out the same thing.
That4s rightD We4re talking at crossBpurposes.
Can "e say it4s agreed% here and no"3
I4ll have to come (ack to you on this.
Where does the ;anuary figure come from3
I4m .ust looking. Could you (ear "ith me a moment3
&o "hat is the (asis of calculation3
I4m sorry% I don4t have the figures to hand.
,hich e0pression 'ould (ou use in the follo'ing cases-
a. The other person does not seem to understand (our e0planation of
the pa(ment schedules.
3. 4e 'ants (ou to agree a definite price toda(, 3ut (ou need to
consult (our 3oss at the office 3efore committing (ourself.
c. 4e suddenl( asks (ou 'hat discount (ou 'ould make for a /er(
large order indeed. Gou need a minute to 'ork it out.
d. Gou are rather surprised at the high charge for transport.
e. 4e suddenl( asks the price of similar products in the range. Gou
ha/e the price list in (our 3riefcase 7 some'here.
f. Gou think he has 5ust made up the figure for installation costsR
g. 4e has alread( e0plained the commission s(stem t'ice 3ut (ou
are still not reall( clear a3out it.
Understanding contracts
*(ercise 4 1oca,ular$ %or contracts
The 'ords 3elo' are often used in connection 'ith contracts. Ase
some of them to complete the sentences 'hich follo'. Gou ma( need
to put certain 'ords in the plural.
Terminate clause dra" up agreement
condition (inding
&ection party provide for ar(itration
compromise comply "ith@a(ide (y
'itigation out of court (reach valid
court term void
a. 6 contract is an 2222222222 3et'een t'o 22222222222 . It is di/ided into
2222222222 , 222222222222 , and 222222222222 .
3. The contract 222222222 2222222222 an( pro3lems 3et'een the t'o
parties. The conditions of the contract are 222222222 on 3oth parties.
If one part( does not 22222222222 22222222222 the clauses, this is called
a 222222222 of contract.
c. In the case of a dispute, man( contracts pro/ide for 2222222222, 3ut
in some cases the dispute results in 2222222222 . .ost parties reach a
222222222 'ithout going to 222222222 , and the dispute is settled 22222222
222222 2222222222 .
d. :ome contracts are for a fi0ed period, or 222222222 ? also, there are
'a(s in 'hich the parties can end, or 222222222, the contract.
*(ercise " .icensing terms
Gou ha/e asked a A: firm if (ou could make one of its products under
licence, in (our o'n countr(. 4ere is part of their ans'er. But 'hat do
the legal terms reall( mean- 8eplace the underlined terms 'ith the
phrases listed 3elo'.
We4ve checked "ith our legal department. 7es% "e are the patent
holders for the OTF. We are prepared% in fact% to grant you a licence
to make it in your o"n territory on these conditions) there "ould (e a
fee on agreement and then a royalty of N H "ith a minimum annual
royalty of PN5%555. The term "ould (e four years% "ith the possi(ility
of rene"al on e>piry. And% of course% in the event of any infringement%
as our licensee you "ould have to apply for an in.unction on the
infringer4s production.
>et (ou ha/e (earl( 3ottom limit illegal cop(ing
9fficial manufacturer ha/e the legal rights o/er copier+s
;urther (ears period countr(
6sk for a 3an 'hen it ended permission
6n immediate pa(ment 5 X to pa(
#. Management
-3. ?hat is management7
,hat do (ou think makes a good manager- ,hich four of the
follo'ing Lualities do (ou think are the most important-
6 3eing decisi/eQ a3le to make Luick decisions
B 3eing efficientQ doing things Luickl(, not lea/ing tasks unfinished,
ha/ing a tid( desk, and so on
C 3eing friendl( and socia3le
= 3eing a3le to communicate 'ith people
$ 3eing logical, rational and anal(tical
; 3eing a3le to moti/ate and inspire and lead people
) 3eing authoritati/eQ a3le to gi/e orders
4 3eing competentQ kno'ing one+s 5o3 perfectl(, as 'ell as the 'ork
of one+s su3ordinates
I 3eing persuasi/eQ a3le to con/ince people to do things
1 ha/ing good ideas
This te(t summariBes some o% Peter 9rucker3s !ie/s on
management. As $ou read a,out his description o% the /ork o% a
manger decide /hether the %i!e di%%erent %unctions he mentions
reAuire the %our Aualities $ou selected in $our discussion or
others $ou did not choose.
Peter =rucker, the 'ell2kno'n 6merican 3usiness professor
and consultant, suggests that the 'ork of a manager can 3e di/ided
into planning Jsetting o35ecti/esM, organi@ing, integrating Jmoti/ating
and communicatingM, measuring, and de/eloping people.
;irst of all, managers Jespeciall( senior managers such as
compan( chairmen 7 and 'omen 7 and directorsM set ob?ectives, and
decide ho' their organi@ation can achie/e them. This in/ol/es
de/eloping strategies, plans and precise tactics, and allocating
resources of people and mone(.
:econdl(, managers organiBe. The( anal(se and classif( the
acti/ities of the organi@ation and the relations among them. The(
di/ide the 'ork into managea3le acti/ities and then into indi/idual
5o3s. The( select people to manage these units and perform the 5o3s.
Thirdl(, managers !ractice the social s(ills of motivation and
communication. The( also ha/e to communicate o35ecti/es to the
people responsi3le for attaining them. The( ha/e to make the people
'ho are responsi3le for performing indi/idual 5o3s form teams. The(
make decisions a3out pa( and promotion. 6s 'ell as organi@ing and
super/ising the 'ork of their su3ordinates, the( ha/e to 'ork 'ith
people in other areas and functions.
;ourthl(, managers ha/e to measure the !erformance of
their staff, to see 'hether the o35ecti/es set for the organi@ation as a
'hole and for each indi/idual mem3er of it are 3eing achie/ed.
>astl(, managers develo! !eo!le 7 3oth their su3ordinates and
93/iousl(, o35ecti/es occasionall( ha/e to 3e modified or
changed. It is generall( the 5o3 of a compan(+s top managers to
consider the needs of the future, and to take responsi3ilit( for
inno/ation, 'ithout 'hich an( organi@ation can onl( e0pect a limited
life. Top managers also ha/e to manage a 3usiness+s relations 'ith
customers, suppliers, distri3utors, 3ankers, in/estors, neigh3ouring
communities, pu3lic authorities, and so on, as 'ell as deal 'ith an(
ma5or crises 'hich arise. Top managers are appointed and super/ised
and ad/ised Jand dismissedM 3( a compan(+s 3oard of directors.
6lthough the tasks of a manager can 3e anal(@ed and
classified in this fashion, management is not entirel( scientific. It is
human skill. Business professors o3/iousl( 3elie/e that intuition and
Ninstinct+ are not enough? there are management skills that ha/e to 3e
learnt. =rucker, for e0ample, 'rote o/er 2% (ears ago that N 6ltogether
this entire 3ook is 3ased on the proposition that the da(s of the
Sintuiti/eT manager are num3ered+, meaning that the( 'ere coming to
an end. But some people are clearl( good at management, and others
are not. :ome people 'ill 3e una3le to put management techniLues
into practice. 9thers 'ill ha/e lots of techniLue, 3ut fe' good ideas.
9utstanding managers are rather rare.
a. Complete the %ollo/ing sentences /ith these /ords.
Achieved (oard of directors communicate innovations
managea(le performance
+esources setting supervise
1 .anagers ha/e to decide ho' 3est to allocate the human, ph(sical
and capital OO.. a/aila3le to them.
2 .anagers 7 logicall( 7 ha/e to make sure that the 5o3s and tasks
gi/en to their su3ordinates are OO.. .
3 There is no point in OO. o35ecti/es if (ou don+t OOO them to
(our staff.
4 .anagers ha/e to OO. their su3ordinates, and to measure, and tr(
to impro/e, their OOO .
5 .anagers ha/e to check 'hether o35ecti/es and targets are 3eing
OO. .
6 top manager 'hose performance is unsatisfactor( can 3e
dismissed 3( the compan(+s OOO. .
! Top managers are responsi3le for the OOO. that 'ill allo' a
compan( to adapt to a changing 'orld.
,. The te(t contains a num,er o% common !er,+noun partnerships
<e.g. achieve ob?ectives, deal with crises and so on=.
Match up these !er, and nouns to make common collocations.
6llocate decisions
Communicate information
=e/elop 5o3s
.ake o35ecti/es
.easure people
.oti/ate performance
Perform resources
:et strategies
:uper/ise su3ordinates
-4. T$pes o% Managers
,e ha/e 3een using the term manager to mean an(one 'ho is
responsi3le for su3ordinates and other organi@ational resources. There
are man( different t(pes of managers, 'ith di/erse tasks and
responsi3ilities. .anagers can 3e classified in t'o 'a(sQ 3( their level
in the organi@ation 7 so2called first2line, middle, and top managers 7
and 3( the range of organi@ational acti/ities for 'hich the( are
responsi3le 7 so2called functional and general managers.
Management .e!els
Cirst1,ine "anagers. The lo'est le/el in an organi@ation at 'hich
indi/iduals are responsi3le for the 'ork of others is called first2line or
first2le/el management. ;irst2line managers direct operating
emplo(ees onl(? the( do not super/ise other managers. $0amples of
first2line managers are the SforemanT JmaistruM or production
super/isor JQef de producRieM in a manufacturing plant, the technical
super/isor JQef de echipJM in a research department, and the clerical
super/isor JQef de (irouM in a large office. ;irst2le/el mangers are
often called Ssuper/isors.T
"iddle "anagers. The term middle management can include to more
than one le/el in an organi@ation. .iddle managers direct the
acti/ities of lo'er2le/el managers and sometimes also those of
operating emplo(ees. .iddle managers+ principal responsi3ilities are
to direct the acti/ities that implement their organi@ations+ policies and
to 3alance the demands of their superiors 'ith the capacities of their
To! "anagers. Composed of a comparati/el( small group of
e0ecuti/es, top management is responsi3le for the o/erall
management of the organi@ation. It esta3lishes operating policies and
guides the organi@ation+s interactions 'ith its en/ironment. T(pical
titles of top managers are Schief e0ecuti/e officerT, SpresidentT and
Ssenior /ice2presidentT. 6ctual titles /ar( from one organi@ation to
another and are not al'a(s a relia3le guide to mem3ership in the
highest management classification.
2unctional and :eneral Managers
The other ma5or classification of managers depends on the scope of
the acti/ities the( manage.
Cunctional "anagers. The %unctional manager is responsi3le for
onl( one organi@ational acti/it(, such as production, marketing, sales,
or finance. The people and acti/ities headed Ja conduceM 3( a
functional manager are engaged in a common set of acti/ities.
>eneral "anagers. The general manager, on the other hand,
o/ersees Ja supravegheaM a comple0 unit, such as a compan(, a
su3sidiar(, or an independent operating di/ision. 4e or she is
responsi3le for all the acti/ities of that unit, such as its production,
marketing, sales, and finance.
6 small compan( ma( ha/e onl( one general manager 7 its
president or e0ecuti/e /ice2president 7 3ut a large organi@ation ma(
ha/e se/eral, each at the head of a relati/el( independent di/ision. In a
large food compan(, for e0ample, there might 3e a grocer(2production
di/ision, a refrigerated2products di/ision, and a fro@en2food2products
di/ision, 'ith a different general manager responsi3le for each. >ike
the chief e0ecuti/e of a small compan(, each of these di/isional heads
'ould 3e responsi3le for all the acti/ities of the unit.
chief e0ecuti/e officer K director e0ecuti/
senior /ice2president K /ice2preBedinte senior Jmai important decFt cel
president K preBedinte
e0ecuti/e /ice2president 7 /ice2preBedinte e0ecuti/
chief e0ecuti/e K director sau administator al unei firme
-". The Management Process
Plans gi/e the organi@ation its o35ecti/es and set up the 3est
procedures for reaching them. In addition, plans 3ecome the guides 3(
'hich the organi@ation o3tains and commits Ja anga.aM the resources
reLuired to reach its o35ecti/es, mem3ers of the organi@ation carr( on
acti/ities consistent 'ith Jconcordant cuM the chosen o35ecti/es and
procedures, and progress to'ard the o35ecti/es is monitored and
measured, so that correcti/e action can 3e taken if progress is
The first step in planning is the selection of goals for the
organi@ation. Then o35ecti/es are esta3lished for the su(units of the
organi@ation 7 its di/isions, departments, and so on. 9nce the
o35ecti/es are determined, programs are esta3lished for achie/ing
them in a s(stematic manner. 9f course, in selecting o35ecti/es and
de/eloping programs, the manager considers their feasi3ilit( and
'hether 'ill 3e accepta3le to the organi@ation+s managers and
Plans made 3( top management for the organi@ation as a
'hole ma( co/er periods as long as fi/e or ten (ears. In a large
organi@ation, such as a multinational energ( corporation, those plans
ma( in/ol/e commitments Janga.amenteM of 3illions of dollars.
Planning at the lo'er le/els, 3( middle or first2line managers, co/ers
much shorter periods. :uch plans ma( 3e for the ne0t da(+s 'ork, for
e0ample, or for a t'o2hour meeting to take place in a 'eek.
9nce managers ha/e esta3lished o35ecti/es and de/eloped
plans or programs to reach them, the( must design and staff an
organi@ation a3le to carr( out those programs successfull(. =ifferent
o35ecti/es 'ill reLuire different kinds of organi@ations. ;or e0ample,
an organi@ation that aims to de/elop computer soft'are 'ill ha/e to
3e far different from one that 'ants to manufacture 3lue 5eans.
Producing a standardi@ed product like 3lue 5eans reLuires efficient
assem3l(2line techniLues, 'hereas 'riting computer programs
reLuires teams of professionals 7 s(stems anal(sts, soft'are engineers,
and operators.
6lthough the( must interact effecti/el(, such people cannot
3e organi@ed on an assem3l(2line 3asis. It is clear, then, that managers
must ha/e the a3ilit( to determine 'hat t(pe of organi@ation 'ill 3e
needed to accomplish a gi/en set of o35ecti/es. 6nd the( must ha/e
the a3ilit( to de/elop Jand later to leadM that t(pe of organi@ation.
6fter plans ha/e 3een made, the structure of the organi@ation
has 3een determined, and the staff has 3een recruited and trained, the
ne0t step is to arrange for mo/ement to'ard the organi@ation+s
defined o35ecti/es. This function can 3e called 3( /arious namesQ
leading, directing, moti/ating, actuating Jimpulsionare% stimulareM,
and others. But 'hate/er the name used to identif( it, this function
in/ol/es getting the mem3ers of the organi@ation to perform in 'a(s
that 'ill help it achie/e its esta3lished o35ecti/es.
,hereas planning and organi@ing deal 'ith the more a3stract
aspects of the management process, the acti/it( of leading is /er(
concrete? it in/ol/es 'orking directl( 'ith people.
;inall(, the manager must ensure that the actions of the
organi@ation+s mem3ers do in fact mo/e the organi@ation to'ard its
stated goals. This is the controlling function of management, and it
in/ol/es four main elementsQ
*sta,lishing standards o% per%ormance.
.easuring current performance and comparing it against the
esta3lished standards.
=etecting de/iations from standard goals in order to make
corrections 3efore a seLuence Jsuccesiune% QirM of acti/ities is
Taking action to correct performance that does not meet those
Through the controlling function, the manager can keep the
organi@ation on its chosen track, keeping it from stra(ing Ja se
depJrata% a se a(ateM from its specified goals.
-#. Management .e!el and Skills
.anagers at e/er( le/el plan, organi@e, lead, and control. But
the( differ in the amount of time de/oted to each of these acti/ities.
:ome of these differences depend on the kind of organi@ation in 'hich
the manager 'orks, some on the t(pe of 5o3 the manager holds.
.anagers of small pri/ate clinics, for e0ample, spend their
time Luite differentl( from the 'a( the heads of large research
hospitals spend theirsQ .anagers of clinics spend comparati/el( more
time practicing medicine, and less time actuall( managing, than do
directors of large hospitals. The technical super/isor of research
ph(sicists at 6TVT Bell >a3s 'ill ha/e a 5o3 that in some respects is
Luite different from that of a production super/isor on a )eneral
.otors assem3l( line. Get 3oth are first2line managers. 6nd (et there
'ill also 3e important similarities in the 5o3s of all these managers.
9ther differences in the 'a(s managers spend their time
depend upon their le/els in the organi@ational hierarch(. 8o3ert >.
&ats, a teacher and 3usiness e0ecuti/e, has identified three 3asic kinds
of skillsQ technical, human, and conceptual. $/er( manager needs all
three. Technical skill is the a3ilit( to use the procedures, techniLues,
and kno'ledge of a speciali@ed field. :urgeons, engineers, musicians,
and accountants all ha/e technical skills in their respecti/e fields.
2uman skill is the a3ilit( to 'ork 'ith, understand, and moti/ate other
people, as indi/iduals or in groups. Conceptual skill is the a3ilit( to
coordinate and integrate all of an organi@ation+s interests and
acti/ities. It in/ol/es the manager+s a3ilit( to see the organi@ation as a
'hole, to understand ho' its parts depend on one another, and to
anticipate ho' a change in an( of its parts 'ill affect the 'hole.
&ats suggests that although all three of these skills are
essential to a manager, their relati/e importance depends mainl( on
the manager+s rank in the organi@ation. Technical skill is most
important in the lo'er le/els. 4uman skill, 3( contrast, is important
for managers at e/er( le/elQ 3ecause the( must get their 'ork done
primaril( through others, their a3ilit( to tap Ja capta% a a(ordaM the
technical skills of their su3ordinates is more important than their o'n
technical skills. ;inall(, the importance of conceptual skill increases
as one rises through the ranks of a management s(stem 3ased on
hierarchical principles of authorit( and responsi3ilit(. It depends
mainl( on the manager+s rank in the organi@ation.
&. Companies and @rganiBations
-&. Compan$ structure
Match up the /ords on the le%t /ith the de%initions on the right
- autonomous 6 a s(stem of authorit( 'ith different le/els,
one a3o/e the other
2 decentrali@ation B a specific acti/it( in a compan(, e.g.
production, marketing, finance
3 function C independent, a3le to take decisions 'ithout
consulting a higher authorit(
4 hierarch( = people 'orking under someone else in a
" line authorit( $ di/iding an organi@ation into decision2
making units that are not centrall( controlled
# report to ; the po'er to gi/e instructions to people at
the le/el 3elo' in the chain of command
& su3ordinates ) to 3e responsi3le to someone and to take
instructions from him or her
Read the te(t ,elo/ a,out di%%erent /a$s o% organiBing
companies and then la,el the diagrams according to /hich o%
these the$ illustrate6
,ine structure D functional structure D matrix structure D staff
.ost organi@ations ha/e hierarchical or p(ramidal structure,
'ith one person or a group of people at the top, and an increasing
num3er of people 3elo' them at each successi/e le/el. This is a clear
line or chain of command running do'n the p(ramid. 6ll the people
in the organi@ation kno' 'hat decisions the( are a3le to make, 'ho
their superior Jor 3ossM is Jto 'hom the( reportM, and 'ho their
immediate su3ordinates are Jto 'hom the( can gi/e instructionsM.
:ome people in an organi@ation ha/e colleagues 'ho help
themQ for e0ample, there might 3e an 6ssistant to the .arketing
.anager. This is kno'n as a staff positionQ its holder has no line
authorit(, and is not integrated into the chain of command, unlike, for
e0ample, the 6ssistant .arketing .anager, 'ho is num3er t'o in the
marketing department.
Get, the acti/ities of most companies are too complicated to
3e organi@ed in a single hierarch(. :hortl( 3efore the ;irst ,orld
,ar, the ;rench industrialist 4enr( ;a(ol organi@ed his coal2mining
3usiness according to the functions that it had to carr( out. 4e is
generall( credited 'ith in/enting functional organi@ation. Toda(, most
large manufacturing organi@ations ha/e a functional structure,
including Jamong othersM production, finance, marketing, sales, and
personnel or staff departments. This means, for e0ample, that the
production and marketing departments cannot take financial decision
'ithout consulting the finance department.
;unctional organi@ation is efficient, 3ut there are t'o standard
criticisms. ;irstl(, people are usuall( more concerned 'ith the success
of their department than that of the compan(, so there are permanent
3attles 3et'een, for e0ample, finance and marketing, or marketing and
production, 'hich ha/e incompati3le goals. :econdl(, separating
functions is unlikel( to encourage inno/ation.
Get, for a large organi@ation manufacturing a range of
products, ha/ing a single production department is generall(
inefficient. ConseLuentl(, most large companies are decentrali@ed,
follo'ing the model of 6lfred :loan, 'ho di/ided )eneral .otors
into separate operating di/isions in 1#2%. $ach di/ision had its o'n
engineering, production and sales departments, made a different
categor( of car J3ut 'ith some o/erlap Jsuprapunere%
LntrepJtrundereM, to encourage internal competitionM, and 'as
e0pected to make a profit.
Business that cannot 3e di/ided into autonomous di/isions
'ith their o'n markets can simulate decentrali@ation, setting up
di/isions that deal 'ith each other using internall( determined transfer
prices. .an( 3anks, for e0ample, ha/e esta3lished commercial,
corporate, pri/ate 3anking, international and in/estment di/isions.
6n inherent pro3lem of hierarchies is that people at lo'er
le/els are una3le to make important decisions, 3ut ha/e to pass on
responsi3ilit( to their 3oss. 9ne solution to this is matri0 management,
in 'hich people report to more than one superior. ;or e0ample, a
product manager 'ith an idea might 3e a3le to deal directl( 'ith
managers responsi3le for a certain market segment and for a
geographical region, as 'ell as the managers responsi3le for the
traditional functions of finance, sales and productions. This is one 'a(
of keeping authorit( at lo'er le/els, 3ut it is not necessaril( a /er(
efficient one. Thomas Peters and 8o3ert ,aterman, in their 'ell2
kno'n 3ook In &earch of />cellence, insist on the necessit( of
pushing authorit( and autonom( do'n the line, 3ut the( argue that one
element 7 pro3a3l( the product 7 must ha/e priorit(? four2dimensional
matrices are far too comple0.
6 further possi3ilit( is to ha/e 'holl( autonomous, temporar(
groups or teams that are responsi3le for an entire pro5ect, and are split
up Ja se diviza% a se LmpJrRiM as soon as it is successfull( completed.
Teams are often not /er( good for decision2making, and the( run the
risk or relational pro3lems, unless the( are small and ha/e a lot of
self2discipline. In fact, the( still reLuire a definite leader, on 'hom
their success pro3a3l( depends.
9escri,ing compan$ structure
The most common !er,s %or descri,ing structure are6
Consists of contains includes
Is composed of is made up of is divided into
e.g. The compan( consists of fi/e main departments.
The marketing department is made up of three units.
@ther !er,s %reAuentl$ used to descri,e compan$ organiBation
To (e in charge of to (e responsi(le for
To support or to (e supported (y to assist or to (e assisted (y
To (e accounta(le to
e.g. The marketing department is in charge of the sales force.
The fi/e department heads are accounta3le to the .anaging =irector.
This is an e(ample o% part o% a compan$ organiBation chart6
Board of *irectors
with a Chairman (>B)
or &resident (@')
"anaging *irector (>B)
Chief #xecutive 4fficer (@')
Production .arketing ;inance 8esearch V Personnel
.arket :ales 6d/ertising
8esearch Promotions ;inancial 6ccounting
*orthern :outhern
8egion 8egion
*o' 'rite a description of either the organi@ation chart a3o/e, or a
compan( (ou kno', in a3out 1%%215% 'ords.
-). The *(ternal *n!ironment o% @rganiBations
The man( rapid changes taking place in the e0ternal en/ironment
of organi@ation reLuire increasing attention from managers. The
direct1action com!onent of the en/ironment consists of the
organi@ation+s stakeholders 7 that is, the groups 'ith direct impact on
the organi@ation+s acti/ities. #xternal sta(eholders include customers,
suppliers, go/ernments, consumer and en/ironmental ad/ocates,
special interest groups, la3or unions, financial institutions, the media,
and competitors. .nternal sta(eholders include emplo(ees,
shareholders, and the 3oard of directors.
.anagers must 3alance the interests of the /arious stakeholders
for the good of the organi@ation as a 'hole. The( ma( 3e a3le to use
the net'ork of relationships among the stakeholders and the
organi@ation to influence stakeholders indi/iduall(. ;or their part,
stakeholders ma( unite in coalitions to e0ert o/er Ja e>ercita% a face
uz de influenRJM the organi@ation. Indi/idual stakeholders ma( also
hold conflicting stakes Jinteres% participareM in an organi@ation.
The indirect1action com!onent of the en/ironment consists of
their factors that influence the organi@ation indirectl(. *ot onl( do
these factors create a climate to 'hich the organi@ation must ad5ust,
3ut the( ha/e the potential to mo/e into the direct2action en/ironment.
=emographic and lifest(le /aria3les mold Ja forma% a modelaMan
organi@ation+s la3or suppl( and customer 3ase, and changes in /alues
are at heart of e/er( other social, economic, political, and
technological change. .anagers must distinguish 3et'een and ad5ust
to structural and c(clical changes in the econom(. In addition, the(
must contend 'ith Ja lupta cuM the gro'ing influence of special
interest groups in politics, and technological de/elopments also fuel
the competition 3et'een organi@ations.
Technological ad/ances in communication and transportation
ha/e made the international en/ironment increasingl( important.
)reater international competition has made the A.:. lag Ja LntKrzia% a
rJmKne Ln urmJM in competiti/eness critical, and has also 3lurred Ja
Lntuneca% a pune Ln ceaRJM the distinction 3et'een the pri/ate and
pu3lic sectors.
The en/ironment determines the e0tent to 'hich Jgradul Ln careM
organi@ations face uncertaint( and to 'hich the( are dependent on
others for /ital resources. In tur3ulent en/ironments, organi@ations
must de/ote more of their resources to monitoring the en/ironment.
The natural2selection, resource2dependence, and industrial2
organi@ation models pro/ide alternati/e /ie's of the relationship
3et'een organi@ations and the en/ironment.
.anagers 7 especiall( at higher le/els 7 must monitor the e0ternal
en/ironment and tr( to forecast changes that 'ill affect the
organi@ation. The( ma( use strategic planning and organi@ational
design to ad5ust to the en/ironment.

). Production and products
a. Match up these /ords /ith the de%initions /hich %ollo/.
Capacity component inventory lead time plant
'ocation su(contractor outsourcing or contracting out
1. an( compan( that pro/ides goods or ser/ices for another one
2. an( of the pieces or parts that make up a product, machine, etc.
3. 3u(ing products or processed materials from other companies
rather than manufacturing them
4. the Jma0imumM rate of output that can 3e achie/ed from a
production process
5. the 3uildings, machines, eLuipment and other facilities used in the
production process
. the geographical situation of a factor( or other facilit(
!. the stock of an( item or resource used in an organi@ation
Jincluding ra' materials, parts, supplies, 'ork in process and
finished productsM
". the time needed to perform an acti/it( Ji.e. to manufacture or
deli/er somethingM
,. A%ter it has ,een decided /hat to manu%acture operations
managers ha!e to decide where to manu%acture the di%%erent
products how much !roductive ca!acity their %actories and plants
should ha!e and how much inventory to maintain. Read the -"
sentences ,elo/ and classi%$ them under the %ollo/ing si(
headings. Some sentences ma$ %all under t/o headings.
6 The conseLuences of insufficient capacit(
B The conseLuences of e0cess capacit(
C The ad/antages of large facilities
= The disad/antages of large facilities
$ The ad/antages of ha/ing a large in/entor(
; The disad/antages of ha/ing a large in/entor(
1. 6 long lead time ma( allo' competitors to enter the market.
2. 6/erage fi0ed cost per unit drops as /olume increases 3ecause
each succeeding unit a3sor3s part of the fi0ed costs, gi/ing
economies of scale.
3. ;inding staff and coordinating material flo' 3ecome e0pensi/e
and difficult.
4. If lead time increases, some customers ma( go to other suppliers.
5. >ost sales and market share are usuall( permanent.
. The 'orking en/ironment might 'orsen and industrial relations
!. There are costs of storage, handling, insurance, depreciation, the
opportunit( cost of capital, and so on.
". Gou can 3e more fle0i3le in product scheduling, and ha/e longer
lead times and lo'er cost operation through larger production runs
'ith fe'er set2ups.
#. There is al'a(s a risk of o3solescence, theft, 3reakage, and so on.
1%. Gou can meet /ariation in product demand.
11. Gou ma( 3e under2utili@ing (our 'ork force.
12. Gou ha/e protection against /ariation in ra' material deli/er(
time Jdue to shortages, strikes, lost orders, incorrect or defecti/e
shipments, etc.M
13. Gou ma( 3e forced to produce additional less profita3le products.
14. Gou can take ad/antage of Luantit( discounts in purchasing.
15. Gou ma( ha/e to reduce prices to stimulate demand.
-G. Hust+in+time production
Read the te(t ,elo/ and insert the eight /ords de%ined in
!oca,ular$ a= in the spaces.
Capacity component inventory lead time
'ocation outsourcing plants su(contractor
.anufacturing companies are faced 'ith a Nmake2or23u(
decision+ for e/er( item or J1M OOO. the( use Jas 'ell as for e/er(
process and ser/iceM. =o the( make it themsel/es or do the( outsource
Ja contracta lucrJri Ln afara companieiM, and 3u( from a J2M OOO-
If a compan( assem3les products supplied 3( a large num3er of
su3contractors Jfurnizor intermediarM, the( face the pro3lem of ho'
much J3M OO. the( reLuire.
In 1ust2In2Time J1ITM production 7 also called lean production,
stockless production, and continuous flo' manufacture 7 nothing is
3ought or produced until it is needed. $ach section of the production
process makes the necessar( Luantit( of the necessar( units at the
necessar( time 7 'hich is 'hen it is reLuired 3( the ne0t stage of the
manufacturing process, or 3( distri3utors or customers.
The 1IT s(stem is usuall( credited to Taiichi 9hno, 'ho 'as /ice2
president for manufacturing 'ith To(ota in 1apan in the earl( 1#5%s 7
although he stated that he got the idea from 6merican supermarketsR
1IT is 'holl( contrar( to the $uropean and 6merican logic of
encouraging greater producti/it(, and 'elcoming production that
e0ceeds the agreed schedule or Luota, and stocking e0tras in case of
the future pro3lems.
1IT minimi@es the cost of holding in/entories, 'hich are regarded
negati/el(, as a/oida3le costs, rather than as assets. The large
1apanese manufacturing companies ha/e long practised J4MOOOO,
and generall( use e0tensi/e net'orks of small su3contractors. 9f
course, if a single su3contractor fails to deli/er a component on time,
the 'hole production process is sa3otaged, 3ut the 1apanese industrial
s(stem relies on mutual trust and long2term relationships. :mall
suppliers often attempt to situate their facilities close to the J5M.OOO
of a larger compan( 'ith 'hich the( 'ork.
The 1apanese also prefer small, speciali@ed production JMO.OO
'ith a limited J!MOO.. , in 'hich, 'here/er possi3le, all the
machines reLuired for a certain 5o3 are grouped together. This a/oids
all the 'aiting and mo/ing time in/ol/ed in sending half2finished item
from one department to another, although it often reLuires fle0i3le,
multi2skilled emplo(ees.
1IT thus greatl( reduces transportation and in/entor( costs, and
should ensure that there is no 'aste from o/erproduction, or from idle
'orkers 'aiting for parts. It allo's increased producti/it( 3ecause of
shortened throughput time Jtimpul de prelucrare a materialelorM. If
factories are eLuipped so that set2up times are short, /er( small
production runs Jetape de producRieM are possi3le. 6n( Lualit(
pro3lems or product defects should 3e noticed more Luickl(,
production J"MOOO Jtimpul de conducere a producRieiM are reduced,
and the firm can react more rapidl( to demand changes.
2E. Products and ,rands
Read the %ollo/ing te(t and /rite a ,rie% heading %or each
- >>>>>>>>>>>>
.arketing theorists tend to gi/e the 'ord product a /er( 3road
meaning, using it to refer to an(thing capa3le of satisf(ing a need or
'ant. Thus ser/ices, acti/ities, people Jpoliticians, athletes, film starsM,
places Jholida( resortsM, organi@ations Jhospitals, colleges, political
partiesM, and ideas, as 'ell as ph(sical o35ects offered for sale 3(
retailers, can 3e considered as products. Ph(sical products can usuall(
3e augmented Ja spori% a creQteM 3( 3enefits such as customer ad/ice,
deli/er(, credit facilities, a 'arrant( or guarantee, maintenance, after2
sales ser/ice, and so on.
2 >>>>>>>>>>>>
:ome manufactures use their name Jthe Nfamil( name+M for all
their products, e.g. Philips, Colgate, Gamaha. 9thers, including
Anile/er and Procter V )am3le, market /arious products under
indi/idual 3rand names, 'ith the result that man( customers are
unfamiliar 'ith the name of the manufacturing compan(. The ma5or
producers of soap po'ders, for e0ample, are famous for their multi2
3rand strateg(, 'hich allo's them to compete in /arious market
segments, and to fill shelf space in shops, there3( lea/ing less room
for competitors. It also gi/es them a greater chance of getting some of
the custom of 3rand2s'itchers Jcei care schim(J mJrcile pe care le
3 >>>>>>>>>>>>
.ost manufactures produce a large num3er of products, often
di/ided into product lines. .ost product lines consist of se/eral
products, often distinguished 3( 3rand names, e.g. a range of soap
po'ders, or of tooth2pastes. :e/eral different items Jdifferent si@es or
modelsM ma( share the same 3rand name. Together, a compan(+s
items, 3rands and products constitute its product mi0. :ince different
products are al'a(s at different stages of their c(cles, 'ith gro'ing,
sta3le or declining sales and profita3ilit(, and 3ecause markets,
opportunities and resources are in constant e/olution, companies are
al'a(s looking to the future, and re2e/aluating their product mi0.
4 >>>>>>>>>>>>>
Companies 'hose o35ecti/es include market share and market
gro'th generall( ha/e long product lines, i.e. a large num3er of items.
Companies 'hose o35ecti/e is high profita3ilit( 'ill ha/e shorter
lines, including onl( profita3le items. Get, most product lines ha/e a
tendenc( to lengthen o/er time, as companies produce /ariations on
e0isting items, or add additional items to co/er further market
segments. 6dditions to product lines can 3e the result of either upB
market or do"nBmarket, i.e. making items of higher or lo'er Lualit(.
This can 3e carried out in order to reach ne' customers, to enter
gro'ing or more profita3le market segments, to react to competitors+
initiati/es, and so on. Get, such mo/es ma( cause image pro3lemsQ
mo/ing to the lo'er end of the market dilutes Ja slJ(i% a diluaM a
compan(+s image for Lualit(, 'hile a compan( at the 3ottom of a
range ma( not con/ince dealers and customers that it can produce
Lualit( products for the high end. 'ineBfilling 7 adding further items in
that part of a products range 'hich a line alread( co/ers 7 might 3e
done in order to compete in competitors+ niches JniQJM, or simpl( to
utili@e e0cess production capacit(.
2ind /ords or e(pressions in the te(t /hich mean the %ollo/ing.
1 the possi3ilit( of pa(ing for a product o/er an e0tended period
2 a promise 3( a manufacturer or seller to repair or replace defecti/e
goods during a certain period of time
3 a surface in a store on 'hich goods are displa(ed
4 consumers 'ho 3u( /arious competing products rather than 3eing
lo(al to a particular 3rand
5 the standard pattern of sales of a product o/er the period that is
the e0tend to 'hich an acti/it( pro/ides financial gain
! possi3ilities of filling unsatisfied needs in sectors in 'hich the
compan( can produce goods or ser/ices effecti/el(
" the sales of a compan( e0pressed as a percentage of total sales in a
gi/en market
# the set of 3eliefs that the pu3lic at large holds of an organi@ation
1% a small, speciali@ed, 3ut profita3le segment of a market
G. Marketing Ad!ertising Promotion
.atch up the 'ords or e0pressions on the left 'ith the definitions on
the right.
1 distri3ution channel 6 all the companies or indi/iduals
in/ol/ed in mo/ing a particular good
or ser/ice from the producer to the
2 to launch a product B an idea for a ne' product, 'hich is
tested 'ith target consumers 3efore
the actual product is de/eloped
3 market opportunities C attri3utes or characteristics of a
productQ Lualit(, price, relia3ilit(, etc.
4 market research = di/iding a market into distinct
groups of 3u(ers 'ho ha/e different
reLuirements or 3u(ing ha3its
5 market segmentation $ places 'here goods are sold to the
pu3lic 7 shops, stores, kiosks, market
stalls, etc.
packaging ; possi3ilities of filling unsatisfied
needs in sectors in 'hich a compan(
can profita3l( produce goods or
! points of sale ) someone 'ho contacts e0isting and
potential customers, and tries to
persuade them to 3u( goods or
" product concept 4 collecting, anal(sing and reporting
data rele/ant to a specific marketing
situation Jsuch as a proposed ne'
# product features I to introduce a ne' product onto the
1% sales representati/e 1 'rappers and containers in 'hich
products are sold
2-. The centralit$ o% marketing
.ook Auickl$ through the %ollo/ing te(t and decide /hich
paragraphs are a,out these su,4ects6
- compan(2to2compan( marketing
- identif(ing market opportunities
- the marketing mi0
- the selling and marketing concepts
- the importance of market research
.ost management and marketing 'riters no' distinguish 3et'een
selling and marketing. The Nselling concept+ assumes that resisting
consumers ha/e to 3e persuaded 3( /igorous hard2selling techniLues
to 3u( non2essential goods or ser/ices. Products are sold rather than
3ought. The Nmarketing concept+, on the contrar(, assumes that the
producer+s task is to find 'ants and fill them. In other 'ords, (ou
don+t sell 'hat (ou make, (ou make 'hat 'ill 3e 3ought. 6s 'ell as
satisf(ing e0isting needs, marketers can also anticipate and create ne'
ones. The markets for the ,alkman, /ideo games, personal
computers, and genetic engineering, to choose some recent e0amples,
'ere largel( created rather than identified.
.arketers are conseLuentl( al'a(s looking for market
opportunities 7 profita3le possi3ilities of filling unsatisfied needs or
creating ne' ones in areas in 'hich the compan( is likel( to en5o( a
differential ad/antage, due to its distincti/e competencies Jthe things it
does particularl( 'ellM. .arket opportunities are generall( isolated 3(
market segmentation. 9nce a target market has 3een identified, a
compan( has to decide 'hat goods or ser/ice to offer. This means that
much of the 'ork of marketing has 3een done 3efore the final product
or ser/ice comes into e0istence. It also means that the marketing
concept has to 3e understood throughout the compan(, e.g. in the
production department of a manufacturing compan( as much as in the
marketing department itself. The compan( must also take account of
the e0istence of competitors, 'ho al'a(s ha/e to 3e identified,
monitored and defeated in the search for lo(al customers.
8ather than risk launching a product or ser/ice solel( on the 3asis
of intuition or guess'ork, most companies undertake market research
J)BM or marketing research JA:M. The( collect and anal(@e
information a3out the si@e of a potential market, a3out consumers+
reactions to particular product or ser/ice features, and so on. :ales
representati/es, 'ho also talk to customers, are another important
source of information.
9nce the 3asic offer, e.g. a product concept, has 3een esta3lished,
the compan( has to think a3out the marketing mi0, i.e. all the /arious
elements of a marketing program, their integration, and the amount of
effort that a compan( can e0pend on them in order to influence the
target market. The 3est2kno'n classification of these elements is the
N4Ps+Q product, place, promotion and price. 6spects to 3e considered
in marketing products include Lualit(, features Jstandard and
optionalM, st(le, 3rand name, si@e, packaging, ser/ices and guarantee.
Place in a marketing mi0 includes such factors as distri3ution
channels, locations of points of sale, transport, in/entor( si@e, etc.
Promotion groups together ad/ertising, pu3licit(, sales promotion, and
personal selling, 'hile price includes the 3asic list price, discounts,
the length of the pa(ment period, possi3le credit terms, and so on. It is
the 5o3 of a product manager or a 3rand manager to look for 'a(s to
increase sales 3( changing the marketing mi0.
It must 3e remem3ered that Luite apart from consumer markets Jin
'hich people 3u( products for direct consumptionM there e0ists an
enormous producer or industrial or 3usiness market, consisting of all
the indi/iduals and organi@ations that acLuire goods and ser/ices that
are used in the production of other goods, or in the suppl( of ser/ices
to others. ;e' consumers reali@e that the producer market is actuall(
larger than the consumer market, since it contains all the ra'
materials, manufactured parts and components that go into consumer
goods, plus capital eLuipment such as 3uilding and machines, supplies
such as energ( and pens and paper, and ser/ices ranging from
cleaning to management consulting, all of 'hich ha/e to 3e marked.
There is conseLuentl( more industrial than consumer marketing, e/en
though ordinar( consumers are seldom e0posed to it.
.ook at the %ollo/ing diagrams %rom "ar(eting "anagement ,$
Philip Iotler.
1 The first diagram contrasts the selling and the marketing concepts.
;ill in the four spaces 'ith the follo'ing 'ords or e0pressionsQ
] Coordinated marketing ] .arket
] Customer needs ] Profits through customer satisfaction
'tarting Cocus "eans #nds
;actor( Products :elling V promoting Profits
through sales /olume
a. The selling concept
3. The marketing concept
5 ;o/ companies ad!ertise
6d/ertising informs consumers a3out the e0istence and
3enefits of products and ser/ices, and attempts to persuade them to
3u( them. The 3est form of ad/ertising is pro3a3l( 'ord2of2'ord
ad/ertising, 'hich occurs 'hen people tell their friends a3out the
3enefits of products or ser/ices that the( ha/e purchased. Get,
/irtuall( no pro/iders of goods or ser/ices rel( on this alone, 3ut use
paid ad/ertising instead. Indeed, man( organi@ations also use
institutional or prestige ad/ertising, 'hich is designed to 3uild up their
reputation rather than to sell particular products.
6lthough large companies could easil( set up their o'n
ad/ertising departments, 'rite their o'n ad/ertisements, and 3u(
media space themsel/es, the( tend to use the ser/ices of large
ad/ertising agencies. These are likel( to ha/e more resources, and
more kno'ledge a3out all aspects of ad/ertising and ad/ertising
media than a single compan(. The most talented ad/ertising people
generall( prefer to 'ork for agencies rather then indi/idual companies
as this gi/es them the chance to 'ork on a /ariet( of advertising
accounts Jcontracts to ad/ertise products or ser/icesM. It is also easier
for a dissatisfied compan( to gi/e its account to another agenc( than it
'ould 3e to fire its o'n ad/ertising staff.
The client compan( generall( gi/es the ad/ertising agenc( an
agreed 3udget? a statement of the o35ecti/es of the ad/ertising
campaign, kno'n as a 3rief? and an o/erall ad/ertising strateg(
concerning the message to 3e communicated to the target customers.
The agenc( creates ad/ertisements Jthe 'ord is often a33re/iated to
ad/erts or adsM, and de/elops a media plan specif(ing 'hich media 7
ne'spapers, maga@ines, radio, tele/ision, cinema, posters, mail, etc. 7
'ill 3e used and in 'hich proportions. J9n tele/ision and radio, ads
are often kno'n as commercials.M 6gencies often produce alternati/e
ads or commercials that are pre2tested in ne'spapers, tele/ision
stations, etc. in different parts of a countr( 3efore a final choice is
made prior to a national campaign.
The agenc(+s media planners ha/e to decide 'hat percentage
of the target market the( 'ant to reach Jho' man( people 'ill 3e
e0posed to the adsM and the num3er of times the( are likel( to see
them. 6d/ertising people talk a3out freLuenc( or N9T:+
Jopportunities to seeM and the threshold effect Jefectul de pronireM 7
the point at 'hich ad/ertising 3ecomes effecti/e. The choice of
ad/ertising media is generall( strongl( influenced 3( the comparati/e
cost of reaching 1,%%% mem3ers of the target audience, the cost per
thousand Joften a33re/iated to CP., using the 8oman numeral for
1,%%%M. The timing of ad/ertising campaigns depends on factors such
as purchasing freLuentl( and 3u(er turno/er Jne' 3u(ers entering the
4o' much to spend on ad/ertising is al'a(s pro3lematic.
:ome companies use the comparati/e2parit( method Jmetoda
comparativBanalogicJM 7 the( simpl( match their competitors+
spending, there3( a/oiding ad/ertising 'ars. 9thers set their ad
3udget at a certain percentage of current sales re/enue. But 3oth these
methods disregard Ja nu Rine seama% a negli.aM the fact that increased
ad spending or counter2c(clical ad/ertising JreclamJ anticiclicJM can
increase current sales. 9n the other hand, e0cessi/e ad/ertising is
counter2producti/e JantiproductivJM 3ecause after too man( e0posures
people tend to stop noticing ads, or 3egin to find them irritating. 6nd
once the most promising prospecti/e customers ha/e 3een reached,
there are diminishing returns, i.e. an e/er2smaller increase in sales in
relation to increased ad/ertising spending.
2ind the terms in the te(t /hich mean the %ollo/ing.
1 free ad/ertising, 'hen satisfied customers recommend products to
their friends.
2 ad/ertising that mentions a compan(+s name 3ut not specific
3 companies that handle ad/ertising for clients
4 a contract 'ith a compan( to produce its ad/ertising
5 the amount of mone( a compan( plans to spend in de/eloping its
ad/ertising and 3u(ing media time or space
the statement of o35ecti/es of an ad/ertising campaign that a client
'orks out 'ith an ad/ertising agenc(
! the ad/ertising of a particular product or ser/ice during a particular
period of time
" a defined set of customers 'hose needs a compan( plans to satisf(
# the people 'ho choose 'here to ad/ertise, in order to reach the right
1% the fact that a certain amount of ad/ertising is necessar( to attract a
prospecti/e customer+s attention
11 choosing to spend the same amount on ad/ertising as one+s
12 ad/ertising during periods or seasons 'hen sales are normall(
relati/el( poor
?hich o% the %ollo/ing claims do $ou agree /ith7
1. 6d/ertising is essential for 3usiness, especiall( for launching ne'
consumer products.
2. 6 large reduction of ad/ertising 'ould decrease sales.
3. 6d/ertising often persuades people to 3u( things the( don+t need.
4. 6d/ertising often persuades people to 3u( things the( don+t 'ant.
5. 6d/ertising lo'ers the pu3lic+s taste.
. 6d/ertising raises prices.
!. 6d/ertising does not present a true picture of products.
". 6d/ertising has a 3ad influence on children.
0n a /ell+kno/n sur!e$ the $arvard Business Review asked 2&EE
senior ,usiness managers /hether the$ agree /ith these
statements. The sur!e$ produced some une(pected results. ?hich
o% the %ollo/ing percentages do $ou think go /ith /hich o% the
statements a,o!e7
41X 4#X 51X 5!X %X !2X "5X #%X
5 The %our ma4or promotional tools
0nsert the %ollo/ing /ords in the te(t ,elo/.
Advertising aimed a"areness channel loyalty
Maturity medium tactics target trial
The 3asic idea 3ehind the Nmarketing concept+ 7 that (ou
make 'hat (ou can sell rather than sell 'hat (ou make 7 does not
mean that (our product 'ill sell all 3( itself. $/en a good, attracti/el(2
priced product that clearl( satisfies a need has to 3e made kno'n to its
J1MOOO. Customers. =uring the introduction and gro'th stages of
the standard product life c(cle, the producer Jor importer, and so onM
has to de/elop product or 3rand J2MOOO. , i.e. inform potential
customers Jand distri3utors, dealers and retailersM a3out the product+s
e0istence, its features, its ad/antages, and so on.
6ccording to the 'ell2kno'n N;our Ps+ formulation of the
marketing mi0 Jproduct, place, promotion and priceM, this is clearl( a
matter of promotion. :ince 3udgets are al'a(s limited, marketers
usuall( ha/e to decide 'hich tools 7 ad/ertising, pu3lic relations,
sales promotion, or personal selling 7 to use, and in 'hat proportion.
&ublic relations Joften a33re/iated to P8M is concerned 'ith
maintaining, impro/ing or protecting the image of a compan( or
product. The most important element of P8 is pu(licity 'hich Jas
opposed to ad/ertisingM is an( mention of compan(+s products that is
not paid for, in an( J3MOOO. Q read, /ie'ed or heard 3( a compan(+s
customers or potential customers, aimed at assisting sales. .an(
companies attempt to place stories or information in ne's media to
attract attention to a product or ser/ice. Pu3licit( can ha/e a huge
impact on pu3lic a'areness that could not 3e achie/ed 3( ad/ertising,
or at least, not 'ithout an enormous cost. 6 lot of research has sho'n
that people are more likel( to read and 3elie/e pu3licit( than
'ales !romotions such as free samples, coupons, price
reductions, competitions, and so on, are temporar( J4MOOO.
=esigned to stimulate either earlier or stronger sales of a product. ;ree
samples, for e0ample, Jcom3ined 'ith e0tensi/e ad/ertisingM, ma(
generate the initial J5MOOO. 9f a ne' product. But the ma5orit( of
products a/aila3le at an( gi/en time are of course in the JMOOOO..
stage of the life c(cle. This ma( last man( (ears, until the product
3egins to 3e replaced 3( ne' ones and enters the decline stage. =uring
this time, marketers can tr( out a num3er of promotional strategies
and tactics. 8educed2price packs in supermarkets, for e0ample, can 3e
used to attract price2conscious 3rand2s'itchers, and, also, to counter
Ja contracaraM a promotion 3( a competitor. :tores also often reduce
prices of specific item as loss leader, 'hich 3ring customers into the
shop 'here the( 'ill also 3u( other goods.
:ales promotions can also 3e J!MOOO.. at distri3utors,
dealer and retailers, to encourage them to stock ne' items or larger
Luantities, or to encourage off2season 3u(ing, or the stocking of items
related to an e0isting product. The( might eLuall( 3e designed to
strengthen 3rand J"MOOO. 6mong retailers, or to gain entr( to ne'
markets. :ales promotions can also 3e aimed at the sales force,
encouraging them to increase their acti/ities in selling a particular
Personal selling is the most e0pensi/e promotional tool, and is
generall( onl( used sparingl(, e.g. as a complement to J#MOOO.. .
6s 'ell as prospecting for customers, spreading information a3out a
compan(+s products and ser/ices, selling these products and ser/ices,
and assisting customers 'ith possi3le technical pro3lems, salespeople
ha/e another important function. :ince the( are often the onl( person
from a compan( that customers see, the( are an e0tremel( important
J1%MOOOO of information. It has 3een calculated that the ma5orit(
of ne' product ideas come from customers /ia sales representati/es.
Complete the %ollo/ing sentences to summariBe the te(t a,o!e.
1 ,hen a ne' product is launched, the producer has to O..
2 Promotion is one of the four O. ? sales promotions are one of the
four different OO.
3 The ad/antages of pu3licit( include O..
4 The four stages of the standard product life c(cle Je0cluding the pre2
launched de/elopment stageM are O.
5 8easons to offer temporar( price reductions include O.
:ales promotions need not onl( 3e aimed at customers? O.
! 6part from selling a compan(+s products, sales representati/es O.
?hat kind o% sales promotions are $ou recepti!e to7
J coupons gi/ing a price reduction-
J free samples-
J discounts for 3u(ing a large Luantit(-
J price reductions in shops-
J packets offering N2%X $0tra+-
J competitions-
There is a logical connection among three o% the %our /ords in
each o% the %ollo/ing groups. ?hich is the odd one out and /h$7
1 ad/ertising 7 competitors 7 pu3licit( 7 sales promotion
2 ad/ertising agenc( 7 ad/ertising campaign 7 media plan 7 'ord2of2
mouth ad/ertising
3 ad/ertising manager 7 3rand2s'itcher 7 marketing manager 7 sales
4 after2sales ser/ice 7 guarantee 7 optional features 7 points of sale
5 3rand a'areness 7 3rand lo(alt( 7 3rand name 7 3rand preference
competitions 7 coupons 7 free samples 7 line2stretching
! credit terms 7 discount 7 list price 7 packaging
" decline 7 gro'th 7 introduction 7 product impro/ement
# focus group inter/ie's 7 internal research 7 media plan 7
1% packaging 7 place 7 product 7 promotion
-E. Market structure and competition
24. Market leaders challengers and %ollo/ers
Read the %ollo/ing te(t and /rite short headings %or each
- >>>>>>>>>>>>>.
In most markets there is a definite market leaderQ the firm
'ith the largest market share. This is often the first compan( to ha/e
entered the field, or at least the first to ha/e succeeded in it. The
market leader is freLuentl( a3le to lead other firms in the introduction
of ne' products, in price changes, in the le/el or intensit( of
promotions, and so on.
2 >>>>>>>>>>>>
.arket leaders usuall( 'ant to increase their market share
e/en further, or at least to protect their current market share. 9ne 'a(
to do this is to tr( to find 'a(s to increase the si@e of the entire
market. Contrar( to a common 3elief, 'holl( dominating a market, or
ha/ing a monopol(, is seldom an ad/antageQ competitors e0pand
markets and find ne' uses and users for products, 'hich enriches
e/er(one in the field, 3ut the market leader more than its competitors.
6 market can also 3e e0panded 3( stimulating more usageQ for
e0ample, man( households no longer ha/e onl( one radio or cassette
pla(er, 3ut perhaps one in each room, one in the car, plus a ,alkman
or t'o.
3 >>>>>>>>>>..
In man( markets, there is often also a distinct market
challenger, 'ith the second2largest market share. In the car hire
3usiness, the challenger actuall( ad/ertises this factQ for man( (ears
6/is used the slogan N,e+re num3er t'o. ,e tr( harder.+ .arket
challengers can either attempt to attack the leader, or to increase their
market share 3( attacking /arious market follo'ers.
4 >>>>>>>>>>..
The ma5orit( of companies in an( industr( are merel( market
follo'ers, 'hich present no threat to the leader. .an( market
follo'ers concentrate on market segmentationQ finding a profita3le
niche in the market that is not satisfied 3( other goods or ser/ices, and
that offers gro'th potential or gi/es the compan( a differential
Jdistinctiv% deose(itM ad/antage 3ecause of its specific competencies.
" >>>>>>>>>>>
6 market follo'er, 'hich does not esta3lish its o'n niche is
in a /ulnera3le positionQ if its product does not ha/e a NuniLue selling
proposition+ there is no reason for an(one to 3u( it. In fact, in most
esta3lished industries, there is onl( room for t'o or three ma5or
companiesQ think of soft drinks, soap and 'ashing po'ders, 5eans,
sports shoes, and so on. 6lthough small companies are generall(
fle0i3le, and can Luickl( respond to market conditions, their narro'
range of customers causes pro3lematic fluctuations in turno/er and
profit. ;urthermore, the( are /ulnera3le in a recession 'hen, largel(
for ps(chological reasons, distri3utors, retailers and customers all
prefer to 3u( from 3ig, 'ell2kno'n suppliers.
2ind /ords in the te(t /hich mean the %ollo/ing.
1 a compan(+s sales e0pressed as a percentage of the total market
2 short2term tactics designed to stimulate stronger sales of a product
3 the situation in 'hich there is onl( one seller of a product
4 companies offering similar goods or ser/ices to the same set of
5 a short and easil( memori@ed phrase used in ad/ertising
the di/ision of a market into su3markets according to the needs or
3u(ing ha3its of different groups of potential customers
! a small and specific market segment
" a factor 'hich makes (ou superior to competitors in a certain respect
# a 3usiness+s total sales re/enue
1% a period during 'hich an econom( is 'orking 3elo' its potential
2". Takeo!ers mergers and ,u$outs
Match up these /ords /ith the de%initions ,elo/.
Back"ard integration to diversify !diversification# synergy
9or"ard integration horizontal integration to merge !a merger#
to innovate !innovation# a raid a takeover (id
vertical integration
1 designing ne' products and 3ringing them to the market
2 to e0pand into ne' fields
3 to unite, com3ine, amalgamate, integrate or 5oin together
4 3u(ing another compan(+s shares on the stock e0change, hoping to
persuade enough other shareholders to sell to take control of the
5 a pu3lic offer to a compan(+s shareholders to 3u( their shares, at a
particular price during a particular period, so as to acLuire a compan(
to merge 'ith or take o/er other firms producing the same t(pe of
goods or ser/ices
! 5oining 'ith other firms in other stages of the production or sale of a
" a merger 'ith or the acLuisition of one+s suppliers
# a merger 'ith or the acLuisition of one+s marketing outlets
1% com3ined production that is greater than the sum of the separate
.e!eraged ,u$outs
9ne indication that the people 'ho 'arn against takeo/ers
might 3e right is the e0istence of le/eraged 3u(outs.
In the 1#%s, a 3ig 'a/e of takeo/ers in the A: created
conglomerates 7 collections of unrelated 3usinesses com3ined into a
single corporate structure. It later 3ecame clear that man( of these
conglomerates consisted of too man( companies and not enough
s(nerg(. 6fter the recession of the earl( 1#"%s, there 'ere man( large
companies on the A: stock market 'ith good earnings 3ut lo' stock
prices. Their assets 'ere 'orth more than the companies+ market
:uch conglomerates 'ere clearl( not ma0imi@ing stockholder
/alue. The indi/idual companies might ha/e 3een more efficient if
li3erated from central management. ConseLuentl(, raiders JpersoanJ
agresivJ% acaparatoareM 'ere a3le to 3orro' mone(, 3u( 3adl(2
managed, inefficient and under2priced corporations, and then
restructure them, split them up, and resell them at a profit.
Con/entional financial theor( argues that stock markets are
efficient, meaning that all rele/ant information a3out companies is
3uilt into their share prices. 8aiders in the 1#"%s disco/ered that this
'as Luite simpl( untrue. 6lthough the market could understand data
concerning companies+ earnings, it 'as highl( inefficient in /aluing
assets, including land, 3uildings and pension funds. 6sset2stripping 7
selling off the assets of poorl( performing or under2/alued companies
7 pro/ed to 3e highl( lucrati/e Javanta.os% profita(ilM.
Theoreticall(, there 'as little risk of making a loss 'ith a
3u(out, as the de3ts incurred Jdatoriile fJcuteM 'ere guaranteed 3( the
companies+ assets. The ideal targets for such 3u(outs 'ere companies
'ith huge cash reser/es that ena3led the 3u(er to pa( the interest on
the de3t, or companies 'ith successful su3sidiaries that could 3e sold
to repa( the principal, or companies in fields that are not sensiti/e to a
recession, such as food and to3acco.
Takeo/ers using 3orro'ed mone( are called Nle/eraged
3u(outs+ or N>B9s+. >e/erage Jraportul dintre creanRe Qi capitalM
means ha/ing a large proportion of de3t compared to eLuit( capital.
J,here a compan( is 3ought 3( its e0isting managers, 'e talk of a
management buyout or .B9.M .uch of the mone( for >B9s 'as
pro/ided 3( the 6merican in/estment 3ank =re0el Burnham >am3ert,
'here .ichael .illken 'as a3le to con/ince in/estors that the high
returns on de3t issued 3( risk( enterprises more than compensated for
their riskiness, as the rate of default Jrata neonorJrii plJRiiM 'as lo'er
than might 3e e0pected. 4e created a huge and liLuid market of up to
3%% 3illion dollars for N5unk 3onds+ Jo(ligaRiuni cu riscM. J.illken 'as
later arrested and charged Ja fi acuzatM 'ith #" different felonies
Jcrime% acte penaleM, including a lot of insider dealing JoperaRiuni ale
unui iniRiat% a unei persoane anga.ate Ln respectiva firmJM, and =re0el
Burnham >am3ert 'ent 3ankrupt Ja da falimentM in 1##%.M
8aiders and their supporters argue that the permanent threat of
takeo/ers is a challenge to compan( managers and directors to do
their 5o3s 3etter, and that 'ell2run 3usinesses that are not under/alues
are at little risk. The threat of raids forces companies to put capital to
producti/e use. ;at or la@( companies that fail to do this 'ill 3e taken
o/er 3( raiders 'ho 'ill use assets more efficientl(, cut costs, and
increase shareholder /alue. 9n the other hand, the permanent threat of
a takeo/er or a 3u(out is clearl( a disincenti/e Jmi.loc de intimidareM
to long2term capital in/estment, as a compan( 'ill lose its in/estment
if a raider tries to 3reak it up as soon as its share price falls 3elo'
>B9s, ho'e/er, seem to 3e largel( an 6merican
phenomenon. )erman and 1apanese managers and financiers, for
e0ample, seem to consider companies as places 'here people 'ork,
rather than as assets to 3e 3ought and sold. 4ostile takeo/ers and
3u(outs are almost unkno'n in these t'o countries, 'here 3usiness
tends to concentrate on long2term goals rather than seek instant stock
market profits. ,orkers in these companies are considered to 3e at
least as important as shareholders. The idea of a 1apanese manager
restructuring a compan(, la(ing off Ja concedia temporarM a large
num3er of 'orkers, and getting a huge pa( rise Jas freLuentl( happens
in Britain and the A:M, is unthinka3le. >a(2offs in 1apan are instead a
cause for shame for 'hich managers are e0pected to apologi@e.
Complete the %ollo/ing sentences /hich summariBe the te(t
1 The fact that man( large conglomerates+ assets 'ere 'orth more
than their stock market /aluation demonstrated that O
2 8aiders 3ought conglomerates in order to O
3 8aiders sho'ed that the stock market did not O
4 8aiders 'ere particularl( interested in O
5 In/estors 'ere prepared to lend mone( to finance >B9s 3ecause O
8aiders argue that the possi3ilit( of a 3u(out O
2#. Pro%its and social responsi,ilit$
In the 1#2%s, man( large 6merican corporations 3egan, on a
'ide scale, to esta3lish pension funds, emplo(ee stock o'nership, life
insurance schemes, unemplo(ment compensation funds, limitations on
'orking hours, and high 'ages. The( 3uilt houses, churches, schools
and li3raries, pro/ided medical and legal ser/ices, and ga/e mone( to
charities Jacte filantropiceM. :ince this is fairl( surprising 3eha/ior for
3usiness corporations, there must 3e a good e0planation.
In the <enerous Corporations, *eil 1. .itchell argues that the
reason for man( of these actions, most of 'hich clearl( did not 3ring
immediate cash 3enefits, 'as that large corporations had a legitimac(
pro3lem. The e0istence of large corporations sho'ed the classical
economic theor( of perfect competition to 3e inadeLuate.
ConseLuentl( large corporations introduced N'elfare capitalism+
Jcapitalism socialM as a 'a( of creating fa/ora3le pu3lic opinion.
8ational capitalists starting 'ith 4enr( ;ord, also reali@ed that a 3etter
paid 'ork force 'ould 3e more lo(al, and 'ould 3e a3le to 3u( more
goods and ser/ices, and that a 3etter educated 'ork force 'ould 3e a
more efficient one.
9f course, pure free market theorists disappro/e of 'elfare
capitalism, and all actions inspired 3( Nsocial responsi3ilit(+ rather
than the attempt to ma0imi@e profits. :ince the 3enefits of such
initiati/es are not confined to Ja se limita laM those 'ho 3ear the costs,
.ilton ;riedman has critici@ed them for 3eing un3usinesslike, and for
threatening the sur/i/al not onl( of indi/idual corporations 3ut also
the general /italit( of capitalism. In a ne'spaper article titled NThe
social responsi3ilit( of 3usiness is to increase its profits+, he argued
In a free enterprise, pri/ate2propert( s(stem, a corporate
e0ecuti/e is an emplo(ee of the o'ners of the 3usiness. 4e has direct
responsi3ilit( to his emplo(ers. That responsi3ilit( is to conduct the
3usiness in accordance 'ith their desires, 'hich generall( 'ill 3e to
make as much mone( as possi3le, 'hile of course confirming to the
3asic rules of the societ(, 3oth those em3odied in la' and those
em3odied in ethical custom.
Thus e0ecuti/es should not make e0penditures on reducing
pollution 3e(ond the amount that is reLuired 3( la' or that is the 3est
interest of the firm. *or should the( deli3eratel( hire less2Lualified,
long2term unemplo(ed 'orkers, or 'orkers from ethnic minorities
suffering from discrimination. To do so is to 3e guilt( of spending the
stockholders+ Jor the customers+ or the emplo(ees+M mone(. ;riedman
does not consider the possi3ilit( that stockholders might prefer to
recei/e lo'er di/idends 3ut li/e in a societ( 'ith less pollution or less
unemplo(ment and fe'er social pro3lems.
6n alternati/e /ie' to the stockholder model e0emplified 3(
;riedman+s article is the stakeholder Jcei care deRin un interesM model,
outlined, for e0ample, in 1ohn &enneth )al3raith+s 3ook, The $e"
Industrial &tate. 6ccording to his approach, 3usiness managers ha/e
responsi3ilities to all the groups of people 'ith a stake in or an interest
in or a claim on the firm. These 'ill include suppliers, customers,
emplo(ees, and the local communit(, as 'ell as the stockholders. 6
firm 'hich is managed for the 3enefit of all its stakeholders, 'ill not,
for e0ample, pollute the area around its factories, or close do'n a
factor( emplo(ing se/eral hundred people in a small to'n 'ith no
other significant emplo(ers, and relocate production else'here in
order to make small financial sa/ings. Proponents of the stakeholder
approach suggest that suppliers, customers, emplo(ees, and mem3ers
of the local communit( should 3e strongl( represented on a
compan(+s 3oard of directors.
2ind /ords or e(pressions in the te(t /hich mean the %ollo/ing.
1 institutions or organi@ations that pro/ide help for people in need
2 accepta3ilit(, according to la' or pu3lic opinion
3 the situation 'hen there are a large num3er of sellers and 3u(ers,
freedom to enter and lea/e markets, a complete flo' of information,
and so on
4 a condition of general 'ell23eing Jand go/ernment spending
designed to achie/e thisM
5 menacing, endangering
li/eliness, health, energ(, strength
! an economic s(stem in 'hich an(one can attempt to raise capital,
form a 3usiness, and offer goods or ser/ices
" compl(ing 'ith or follo'ing Jrules, etc.M
# e0pressed, gi/en a material form
1% supporters, people 'ho argue in fa/our of something
--. Mone$ and 2inance
2&. A histor$ o% mone$ K /hat makes the /orld go round
.one( 7 it ?ingles in (our pocket, it rustles in (our 'allet and
it clin(s in (our !iggy1ban(. "oney ma(es the world go round, 3ut
'hat+s it- It+s a store of value or a measure of wealth. .one( is
an(thing that is generall( accepted as !ayment for goods and
services. This is a 'ide definition and, o/er the centuries, mone( has
appeared in all shapes and si@es? cowrie shells in ancient China, huge
stone discs on a :outh Pacific Island or beads J<am!umM for the
*orth 6merican Indians.
1ingle K a @ornDi
8ustle K a foBni
Clink K a @DngDni
Pigg(23ank K puBculi<D
Co'rie K scoicD, ghioc
Beads K mDrgele, mDtDnii
,ampum K colier de scoici
2rom Chickens to Plastic
6t the end of the da(, of course, it doesn+t reall( matter 'hat
shape or si@e the mone( takes, as long as e/er(one recognises it and
acce!ts it in !ayment. But, o/er the course of histor(, mone( has
predominantl( 3een associated 'ith metals, in particular gold, silver
and co!!er.
'artering JtrocM
Before metal mone( 3ecome the usual means of e0change,
people 'ould swa! Jschim(aM goods and ser/ices in a process kno'n
as 3artering 7 SI+ll s'ap (ou ten chickens for (our goatT. This kind of
e0change does not reall( encourage trade, as all sorts of pro3lems
arise? are all the chickens of the same si@e- If I+/e onl( got fi/e
chickens, can I 3u( half a co'- 93/iousl(, precious metals are a
!ractical alternative to !ayment in (ind JLn naturJM.
2our *ssential Cualities
;or mone( to 3e practical and efficient it should possess these
*urability 7 in prison, cigarettes ma( 3ecome a medium of e0change
7 3ut the(+re eas( to 3reak and Luickl( dr( up? in other 'ords, the(
don+t last.
&ortability 7 in some parts of 6frica (our 'ealth is measured in cattle.
This is fine if (ou+re trading locall(, 3ut if mone( isn+t eas( to carr(,
ho' can trade de/elop-
*ivisibility = small units make life much easier 7 imagine tr(ing to
3u( a hot dog in *e' Gork if the \1%% 3ill 'as the lo'est unit of
.ntrinsic value 7 mone( should ha/e some 'orth in itself, other'ise it
'on+t inspire confidence.
,e first read of coins in the &ingdom of >(dia in the !
centur( BC. Their coins 'ere of e5ual weight and therefore of e5ual
value, simplif(ing trade. 'tam!ing a design onto the coins is called
EmintingF? Alexander the >reat introduced the practice of stamping a
picture of the sovereign)s head on the coins, an idea that 'as soon
Coins ho'e/er, 'ere not al'a(s as /alua3le as the( seemed 7
the( 'ere often cli!!ed or shaved 3( unscrupulous indi/iduals or
debased 3( the state. The 8omans, 'ith the economic pressure of the
Punic 'ars, 3egan a long process of debasement, mi0ing more and
more copper in 'ith the sil/er, so that the intrinsic value of the coin
'as far lo'er than the mar(ed face value.
.int K a 3ate monedD
=e3ase K a de/alori@a
=e3asement K de/alori@are
Clipped K rete@at, scurtat
:ha/ed K redus
Paper Mone$
Bank notes 'ere first introduced 3( the Chinese in the 1%
centur(. The( 'ere later used 3( go/ernments in dire financial straits
JLn dificultJRi mari financiareM 7 caused 3( things like ha/ing to
finance a 'ar, for e0ample. The $nglish colonies in *orth 6merica
made important strides in the use of 3ank notes. ;or /arious political
and economic reasons, the Colonists often found themsel/es short of
coinage. To get round this pro3lem, the( used first wam!um, then
tobacco, rice and whis(y or brandy 7 not e0actl( the most practical
solution. The first !a!er money issue 'as 3( the .assachusetts Ba(
Colon( in 1#%. The practice 'as fro'ned upon and e/entuall(
3anned 3( the mother countr(, 3ut the in/enti/e money1ma(ing
instincts of the ne' Anited :tates of 6merica meant that, during the
centur(, most of the mone( used 'as in the form of !a!er dollars.
The first full( printed note in $ngland 'as issued in 1"55 7 until that
time the cashier had to 'rite the name of the pa(ee and sign each note
6t first, 3ank notes 'ere redeemable for gold 7 on Bank of
$ngland notes (ou 'ill see 'ritten S. !romise to !ay the bearer on
demand the sum ofGT If (ou took a ten2pound note to the Bank the(
used to ha/e to gi/e (ou ten pounds in gold coin. Britain left the gold
standard in 1#31 and thus the notes are no longer 3acked 3( gold.
:trides K progrese, paBi
:hort of coinage K lipsD de mone@i
Ban K a inter@ice, a scoate En afara legii
;ro'n upon K a nu fi de acord cu ce/a
8edeem K a compensa, rDscumpDra
Plastic mone$
*o'ada(s man( transactions are carried out 'ith S!lastic
moneyT such as credit cards. The ne'est are called Ssmart cardsT and
carr( small silicon chi!s that can record e/er( transaction on the card.
8esearch into the cards of the future continues, 3ut the latest
de/elopment is e1cash, cash to 3e used across the .nternet 7 (ou+ll 3e
a3le to spend mone( from the comfort of (our armchair. If onl(
earning the damn stuff 'as so eas(R
M@N*5 TA.I K the language o% cash
.one( is so central to our li/es that it has spa'ned Ja
proliferaM a 'ealth of specific terminolog(, idioms and sa(ings. )reat
thinkers in all ages ha/e had something to sa( a3out it? go/ernments
are elected on the strength of ho' the( plan to manage it, empires rise
and fall 3ecause of it.
The Root o% All *!il
.one( is so important to us 7 people e/en sa( it ma(es the
world go round 7 that it has acLuired man( nicknames, such as bread,
dough, dinero, maBuma, s!ondulic(s, rhino, gravy, dosh, lucre or
simpl( the necessary. :mall amounts of it are chic(enfeed or !eanuts.
JLn slang) lovele% (iQtari% parale% (ani% cKQtigM
:o 'hat are (ou thinking a3out no'H A !enny for your thoughtsI 9h,
I see, (ou like the look of that ne' 5acket 7 it)ll cost you an arm and
a leg. I+m afraid, or, to put it another 'a(, (ou+ll ha/e to !ay through
the nose for it.
Gou ma( like it so much (ou insist that money)s no ob?ect 7
3ut don+t forgetQ money doesn)t grow on trees, so don)t live beyond
your meansI If (ou do go ahead and 3u( that 5acket, (our friends 'ill
tell (ou that you might as well flush it Jthe mone(M down the toilet.
:o, if (ou can)t afford it, 3u( the chea!o /ersionQ you can bet your
bottom dollar that no3od( 'ill 3e a3le to tell the difference.
9f course (our attitude to mone( depends, to a certain e0tend,
on how well off you are. Gou ma( 3e e0periencing a li5uidity
!roblem or a cashflow !roblem at the moment? in other 'ords, (ou+re
stra!!ed for cash, bro(e, or e/en flat bro(e. Perhaps you don)t have
a dollar to your name, you don)t have a red cent and you haven)t got
a bean, in 'hich case you)re as !oor as a church mouseR
If, on the other hand, (ou+/e got plent( of mone( then (ou+re
filthy rich, or stin(ing rich or rolling in it 7 perhaps (ou had some
good 3usiness ideas and !ut your money where your mouth is or
cashed in on a golden business o!!ortunity and managed to get rich
5uic(, so no' (ou+re laughing all the way to the ban(.
Gou+/e got money to burn? (ou+re earning megabuc(s and,
no' that (ou kno' its po'er, (ou 3elie/e 'hat people sa( 7 money
tal(sR In spite of this, (ou might 3e so careful 'ith mone( that people
think (ou+re mean or stingy JzgKrcitM. Perhaps the(+ll call (ou a miser
3ehind (our 3ack? in the A: (ou+d 3e called a tightwad Jcalic% avarM.
Gou might repl( that mone( doesn+t gro' on trees 7 3ut then
others might sa( that you can)t ta(e it with you J'hen (ou dieM and so
the( s!end money as if it were going out of fashion. In this case,
money burns a hole in their !oc(et, and (ou 'ould 3e the first to
remind them that a fool and his money are soon !arted. If, on the
other hand, (ou loo( after the !ennies, then the !ounds will loo(
after themselves.
The pro%its o% la,or
Roman soldiers 'ere gi/en part of their !ay in salt, as it 'as
so /alua3le 7 at least that+s the e0cuse the :enate ga/eR
6t the time it 'as called their salario, and it is for this reason that 'e
still use the 'ord salary to descri3e the regular monthly !ayment
made to em!loyees 7 especiall( white1collars wor(ers. If (ou recei/e
(our pa( every wee(, then (ou recei/e wages on !ayday, in the form
of a !aychec( in the A:, or a !ay!ac(et in the A&.
Gou ma( find that some of (our mone( is taken from (ou
3efore (ou e/en see it, that is it is deducted at source? in the A: these
deductions are kno'n as deduc(s or duc(s. The( ma( 3e for tax and
also, in the A&, Aational .nsurance, 'hich means that (our ta(e1
home !ay ma( 3e a lot less than (ou e0pectedR
Those 'ho are unluck( enough not to ha/e a 5o3 'ill 3e on
the dole 7 recei/ing unem!loyment benefit in the A& or on welfare in
the A:. If (ou pa( mone( for (our retirement then (our compan(
runs a !ension scheme. If (ou 'ork more than (our normal hours,
then (ou+re paid overtime. If (our compan( has 3een doing 'ell, (ou
ma( get a bonus.
If (ou+re one of the 3osses of a ne'l(2pri/atised monopol(,
(our emplo(ees ma( call (ou a fat cat, and part of (our pa( ma( take
the form of share o!tions? 'hen (ou started to 'ork for the compan(
(ou 'ere gi/en a golden hello and, regardless of the compan(+s
performance, (ou 'ill 3e gi/en a golden handsha(e 'hen (ou lea/e.
Perhaps (ou+re the kind of 3oss that ne/er stops complaining a3out
(our emplo(ees? if so remem3erQ if you !ay !eanuts you get
Gou and (our fello' top2managers are likel( to en5o( a range
of fringe benefits or !er(s 7 like a free car, house and e/en pri/ate
education for (our children. This is in lieu of money, and means that
(ou ha/e a high standard of living 'ithout ha/ing to declare
hundreds of thousands of pounds at the end of the tax year. 6ll the
ex!enses the compan( incurs on (our 3ehalf are also tax deductible
for the compan(, so it doesn+t lose out either.
,hen the time comes to retire, sooner rather then later, for the
luck( fe' 'ho can choose early retirement, (ou ma( decide to take
(our compan( pension in a lum! sum 7 and finall( (ou can go on that
'orld cruiseR
,hite2collars 'orkers K func<ionari
9n the dole K a5utor de Boma5, su3/en<ie de la stat
9n 'elfare K a5utor social
:hare options K
;ringe 3enefit P perks K 3eneficiu suplimentar
In lieu of mone( K En loc de 3ani
Incur K a face, a crea
>ump sum K sumD glo3alD P unicD, platD unicD
.an( of us go to the 3ank at some point to ask for a loan 7 it
is often said that a ban( manager is someone 'ho lends (ou an
um3rella 'hen the sun is shining and 'ho asks for it 3ack 'hen it
starts to rain.
The simplest 'a( to 3orro' is 'ith an overdraft, or 3( using
the facilities offered 3( a credit card? 3ut to 3orro' large sums (ou+ll
pro3a3l( negotiate a loan 'ith (our 3ank? (ou can either 3orro' a
fixed amount or agree a credit limit.
If (ou+re 3u(ing a house, then (ou+ll 'ant a mortgage. If the
3ank refuses to lend (ou mone(, (ou might resort to 3orro'ing from a
finance com!any or e/en the local loan shar( to pa( off (our .4@s
J. 4we 0ouM. ;or an( loan, (ou should look at the Annual &ercentage
Rate 'hich takes into account the /arious charges 'hich 'ill 3e
included in (our re!ayments.
Borro'ing from a loan shar( can in/ol/e e0or3itant interest
rates. If (ou+re 3eing gouged in this 'a(, then (ou ma( end up 3eing
una3le to make the repa(ments. Gour debt ma( 3e sold to a debt
collector or (ou ma( recei/e a /isit from the bailiffs in the A&. If
(ou+/e 3een 3u(ing something in instalments or on a hire !urchase
J$&M scheme, defaulting on the re!ayments 'ill pro3a3l( lead to a
/isit from the dreaded re!o JrepossesssionM man.
)ouged K escrocat, tras pe sfoarD
Bailiff K inspector
=readed K de temut
,ith the in/ention of mone( came forgery. .odern
counterfeit notes can 3e e0tremel( difficult to s!ot and ne'
de/elopments in the production of notes are soon co!ied 3( the
forgers. 4ere+s a Luick guide to recogni@ing a counterfeit Ban( of
#ngland noteQ
The feel of the !a!erQ it should 3e cris! and slightl( rough in the
heavily !rinted areas.
The watermar(Q (ou shouldn+t 3e a3le to notice it until (ou hold the
note u! to the light? then (ou can see a picture of the Iueen.
The threadQ all genuine notes ha/e a thread embedded in the paper.
8ecent notes ha/e a EwindowedF thread 'hich does not appear as a
continuous line until the note is held up to the light.
Juality of !rintingQ !ure, clear colours and shar!, well1defined lines.
:pot K a identifica, a distinge
Counterfeit notes K 3ancnote contrafDcute
;orgers K falsificatori
Crisp K fragil
$m3edded K introdus
;ard Times
If (ou+/e fallen on hard times, (ou might tell people that (ou
need to watch your s!ending, (our money or (our !ennies. In the
:tates, (ou might sa( that you have to watch every dime. Perhaps
(our 3ank account is in the red, so (ou decide to control your
s!ending and (ee! trac( of your ex!enses more closely. This 'ill
certainl( in/ol/e cutting down on ex!enses in general, budgeting
your money, tightening your belt and saving your !ennies.
6lmost certainl( (ou 'ill ha/e to cut the frills Junneccessar(
ex!enditureM, trim JreduceM the budget and go bac( to basics. If an
unex!ected ex!ense comes up that (ou ha/e to meet, (ou might
decide to di! into your savings, or scrounge the mone( someho'.
If, on the other hand, (ou s!lash out on something
extravagant, (ou might ?ustify the ex!ense 3( telling people that
you)ve got enough saved u!, that (ou+/e been saving for a rainy day
or that (ou+re luck( enough to ha/e a nest egg that (ou+/e finall(
decided to use.
;rills K fasoane, lucruri care nu sunt necesare
:crounge K a Baprli, a Bterpeli
:plash out K a se arunca
2G. Accounting and %inancial statements
a. Match up the terms on the le%t /ith the de%initions on the
-. 'ookkeeping
6 calculating an indi/idual+s or a compan(+s lia3ilit( for ta0 7
2. Accounting
B 'riting do'n the details of transactions Jde3its and creditsM 2
3. Managerial accounting
C keeping financial records, recording income and e0penditure,
/aluing assets and lia3ilities, and so on
4. Cost accounting
= preparing 3udgets and other financial reports necessar( for
". Ta( accounting
$ inspection and e/aluation of accounts 3( a second set of accountants
7 audit
#. Auditing
; using all a/aila3le accounting procedures and tricks to disguise the
true financial position of a compan(
&. Fcreati!e accounting3
) 'orking out the unit cost of products, including materials, la3our
and all other e0penses
,. Match up these /ords /ith the de%initions ,elo/
1. Assets
6 a compan(+s o'ners
2. 9epreciation
B all the mone( recei/ed 3( a compan( during a gi/en period
3. .ia,ilities
C all the mone( that a compan( 'ill ha/e to pa( to someone else in
the future, including ta0es, de3t, and interest and mortgage pa(ments
4. Turno!er
= the amount of 3usiness done 3( a compan( o/er a (ear
5. Creditors <:'= accounts pa$a,le <US=
$ an(thing o'ned 3( a 3usiness Jcash in/estments, 3uildings,
machines, and so onM that can 3e used to produce goods or pa(
. 9e,tors <:'= accounts recei!a,le <US=
; the reduction in /alue of a fi0ed asset during the (ears it is in use
Jcharged against profitsM
!. @!erheads <:'= o!erhead <US=
) sums of mone( o'ed 3( customers for goods or ser/ices purchased
on credit
". Re!enue or earnings or income
4 sums of mone( o'ed to suppliers for purchases made on credit
#. Shareholders <:'= stockholders <US=
I Jthe /alue ofM ra' materials, 'ork in progress, and finished products
stored read( for sale
1%. Stock <:'= in!entor$ <US=
1 the /arious e0penses of operating a 3usiness that cannot 3e charged
to an( one product, process or department
0nsert the /ords in !oca,ular$ ,= in the gaps in the te(t ,elo/.
Accounting and %inancial statements
In accounting it is al'a(s assumed that a 3usiness is a Ngoing
concern+, i.e. that it 'ill continue indefinitel( into the future, 'hich
means that the current market /alue of its assets is irrele/ant, as the(
are not for sale. ConseLuentl(, the most common accounting s(stem is
historical cost accounting, 'hich records J1M OOOO at their
original purchase price, minus accumulated depreciation charges. In
times of inflation, this understates the /alue of appreciating assets
such as land, 3ut o/erstates profits as it does not record the
replacement cost of plant or J2M OOO . The /alue of a 3usiness+s
assets under historical cost accounting 7 purchase price minus J3M
OO.. 7 is kno'n as its net 3ook /alue. Countries 'ith persistentl(
high inflation often prefer to use current cost or replacement cost
accounting, 'hich /alues assets Jand related e0penses like
depreciationM at the price that 'ould ha/e to 3e paid to replace them
Jor to 3u( a more modern eLui/alentM toda(.
Compan( la' specifies that J4M OOO. .ust 3e gi/en certain
financial information. Companies generall( include three financial
statements in their annual reports.
The profit and loss account J)BM or income statement JA:M sho's
J5M OOO.. and e0penditure. It usuall( gi/es figures for total sales or
JM OOO. 6nd costs and J!M OOO . The first figure should
o3/iousl( 3e higher than the second, i.e. there should 3e a profit. Part
of the profit goes to the go/ernment in ta0ation, part is usuall(
distri3uted to shareholders JstockholdersM as di/idend, and part is
retained 3( the compan(.
The (alance sheet sho's a compan(+s financial situation on a
particular date, generall( the last da( of the financial (ear. It lists the
compan(+s assets, its J"M OOOO , and shareholders+ JstockholdersM
funds. 6 3usiness+s assets include J#M OOO as it is assumed that
these 'ill 3e paid. >ia3ilities include J1%M OOO , as these 'ill ha/e
to 3e paid. *egati/e items on financial statements, such as creditors,
ta0ation, and di/idends paid, are usuall( enclosed in 3rackets.
In accordance 'ith the principle of dou3le2entr( 3ookkeeping
Jthat all transactions are entered as credit in one account and as de3it
in anotherM, the 3asic accounting eLuation is 6ssets K >ia3ilities W
9'ner+s Jor :hares+M $Luit(. This can 3e re'ritten as 6ssets 7
>ia3ilities K 9'ners+ $Luit( or *et 6ssets. This includes share capital
Jmone( recei/ed from the issue of sharesM, share premium J)BM or
paid2in surplus JA:M Jan( mone( realised 3( selling shares at a3o/e
their nominal /alueM, and the compan(+s reser/es, including the (ear+s
retained profits. :hareholders+ eLuit( or net assets are generall( less
than a compan(+s market capitalisation Jthe total /alue of its shares at
an( gi/en moment, i.e. the num3er of shares times their market priceM,
3ecause net assets do not record items such as good'ill.
The third financial statement has /arious names including the
source and application of funds statement, and the statement of
changes in financial position. This sho's the flo' of cash in and out
of the 3usiness 3et'een 3alance sheet dates. :ources of funds include
trading profits, depreciation pro/isions, sales of assets, 3orro'ing, and
the issuing of shares.
6pplications of funds include purchases of fi0ed or financial
assets, pa(ment of di/idends, repa(ment of loans, and 7 in a 3ad (ear
7 trading losses.
The pro%it and loss account <:'= or income statement <US= 7
calculul re@ultatelor, al pierderilor Bi a profitului
The ,alance sheet 7 3ilan<ul conta3il
Net Assets 7 acti/ul net
Share capital 7 capitalul ac<inilor
Share premium <:'= or paid+in surplus <US= 7 primD suplimentarD
din ac<iuni
Compan$3s reser!es 7 re@er/ele firmei
The $ear3s retained pro%its 7 profitul pDstrat dintr2un an
:ood/ill 7 clientela? fondurile comerciale? /ad
Source and application o% %unds statement L the statement o%
changes in %inancial position 7 situa<ia surselor Bi a aplicDrii
fondurilor P situa<ia schim3Drilor din situa<ia financiarD
There are ten gaps in the t/o statements /hich %ollo/. According
to the in%ormation in the pre!ious te(t decide /here the %ollo/ing
headings should appear6
CalledBup share capital cash in hand and at (ank
Corporation ta> de(tors depreciation turnover
9reehold properties historical cost net assets overheads
The Arsenal 2oot,all Clu, P.C
Pro%it and .oss Account %or the 5ear *nded 3-
Ma$ -GG4
1##4 1##3
^ ^
M- >>>>>>>>.N 21,4!1,"% 15,341,"#
Jincome from foot3all and related
acti/itiesQ gate receipts, 3roadcasting,
ground ad/ertisements, pri@e mone(M
Costs and _2 OOOOOOOOO`, J14,#51,!3!M J12,"%4,53"M
less other income Jcosts include
salaries, _3 OOOOOOO`, auditors+
remuneration, and lease pa(ments? other
income includes Interest 8ecei/a3leM
Pro%it on @rdinar$ Acti!ities ,e%ore
Trans%er 2ees ,51#,#43 2,53!,151
Transfer fees pa(a3le J""#,5""M J54,25#M
Pro%it on @rdinar$ Acti!ities ,e%ore
Ta(ation 5,3%,355 2,4"2,"#2
Ta0ation J1,5#,22M J!5%,%%%M
Pro%it a%ter Ta(ation Retained %or
The 2inancial 5ear 4,%34,12# 1,!32,"#2
Arsenal 2oot,all Clu, P.C K 'alance Sheet 3-
Ma$ -GG4
1##4 1##3
^ ^
2i(ed Assets 2",4!",#22 1",#"2,#31
Jincluding _4 OOOOOO.`,
leasehold properties, plant and
eLuipment, and motor /ehicles?
all recorded at _5 OOOOO`
minus depreciationM
Current Assets #,%!,5#2 !,##1,%""
:tocks? Jincluding _ OOOO.`,
Instalments on e0ecuti/e 3o0esM?
and _! OOOOO.`
Creditors J#,"3,45!M J",!55,4#1M
6mounts falling due 'ithin one
(ear Jincluding _" OOOOO.`
and social securit(M
Total Assets less Current .ia,ilities 2",223,%5! 1",21",52"
.ong Term .ia,ilities
6mounts falling due after more than
9ne (ear Jincluding de3enture
:u3scriptionsM J1!,"#3,5%%M J11,#23,1%%M
MG >>>>>>>>>..N 1%,32#,55! ,2#5,42"
Capital and Reser!es
_1% OOOOOOOOO` 5,%%% 5,%%%
:hare premium account 23!,2%1 23!,2%1
Building reser/e "4,%%% "4,%%%
Profit and loss account #,1#%,35 5,15,22!
J(ear+s profit added to pre/ious 3alanceM
Shareholders3 2unds 1%,32#,55! ,2#5,42"
3E. *(change rates
?hile reading the te(t decide /hich paragraph could ,e gi!en the
%ollo/ing headings.
- ;loating e0change rates
- Inter/ention and managed floating e0change rates
- :upporters of fi0ed and floating rates
- The a3olition of e0change controls
- The period of gold con/erti3ilit(
- The po'er of speculators and the collapse of the $.:
- ,h( man( 3usiness people 'ould prefer a single currenc(
The Bretton ,oods agreement of 1#44 esta3lished fi0ed
e0change rates, defined in terms of gold and the A: dollar. Bet'een
1#44 and 1#!1, man( currencies 'ere pegged against Jfi>at% sta(ilizat
dupJM the A: dollar, i.e. their parties 'ith the A: dollar 'ere fi0ed. In
this period, a A: dollar 'as a promissor( note issued 3( the Anited
:tates Treasur(. If an(3od( reLuested it, the Treasur( had to e0change
the note for 1P35
of an ounce of gold. Ander this s(stem, o/er/alued
or under/alued currencies could onl( 3e ad5usted 'ith the agreement
of the International .onetar( ;und. :uch ad5ustments are called
de/aluations and re/aluations. The Bretton ,oods s(stem of gold
con/erti3ilit( and pegging against the dollar 'as a3andoned in 1#!1,
3ecause follo'ing inflation, the ;ederal 8eser/e did not ha/e enough
gold to guarantee the 6merican currenc(.
)old con/erti3ilit( 'as replaced 3( a s(stem of floating
e0change rates. JToda(, the A: dollar 7 the unofficial 'orld currenc(
7 is merel( a piece of paper on 'hich is 'ritten NIn )od ,e Trust.+
)od, not goldRM a freel( Jor cleanM floating e0change rate is
determined purel( 3( suppl( and demand. Theoreticall(, in the
a3sence of speculation, e0change rates should reflect purchasing
po'er parit( 7 the cost of a gi/en selection of goods and ser/ices in
different countries. Proponents of floating e0change rates, such as
.ilton ;riedman, argued that currencies 'ould automaticall( esta3lish
sta3le e0change rates, 'hich 'ould reflect economic realities more
precisel( than calculations 3( central 3ank officials. Get, the(
underestimated the impact of speculation, and the fact that companies
and in/estors freLuentl( follo' short2term mone( market trends e/en
if these are contrar( to their o'n long2term interests.
In the late 1#!%s and earl( 1#"%s, the 6merican, British and
other go/ernments deregulated their financial s(stems, and a3olished
all e0change controls. 8esidents in these countries are no' a3le to
e0change an( amount of their currenc( for an( other con/erti3le
currenc(. This has led to the current situation in 'hich #5X of the
'orld+s currenc( transactions are unrelated to transactions in goods
3ut are purel( speculati/e. $normous amounts of mone( mo/e round
the 'orld, chasing high interest rates or capital gains, as in/estors 7
including rich indi/iduals, companies and pension funds 7 seek to
ma0imi@e the /alue of their assets. In >ondon alone, o/er \3%% 3illion
'orth of currenc( is traded on an a/erage da( 7 the eLui/alent of
a3out 3%X of the /alue of the goods Britain procedures each year.
Banks make a profit from the spread Jmar.JM 3et'een a currenc(+s
3u(ing and selling prices.
;e' go/ernments, ho'e/er, lea/e e0change rates 'holl( at
the merc( of market forces. .ost of them attempt to influence the
le/el of their currenc( 'hen necessar(. .anaged Jor dirt(M floating
e0change rates are more common than freel( floating ones. In 1#!#,
most ,estern $uropean go/ernments 5oined the $.: J$uropean
.onetar( :(stemM, 'ith its $8. J$0change 8ate .echanismM. This
esta3lished parties 3et'een mem3er currencies, and a margin of plus
or minus 2 a X. If the rate di/erged 3( more than this amount from
the central parit(, go/ernments and central 3anks had to inter/ene in
e0change markets, 3u(ing or selling in order to increase or decrease
the /alue of their currenc(.
Get, go/ernment polic( can easil( 3e defeated 3( the
com3ined action of international speculators. ;or e0ample, on a single
da( in :eptem3er 1##2 the Bank of $ngland lost fi/e 3illion pounds in
a hopeless attempt to support the pound sterling. ;or 'eeks, all the
'orld+s financial institutions and rich indi/iduals had 3een selling
their pounds, as e/er(one e0cept the British )o/ernment 3elie/ed that
e/er since it 5oined the $8. in 1##%, the pound had 3een seriousl(
o/er/alued. ,hen the British central 3ank ran out of reser/es and
could no longer 3u( pounds, the currenc( 'as 'ithdra'n from the
$8. and allo'ed to float, instantl( losing a3out 15X of its /alue
against the =2mark. The ne0t (ear, speculators attacked the ;rench
franc, the Belgian franc, the =anish krone and the :panish peseta. In
6ugust 1##3, the $uropean .onetar( :(stem 'as more or less
.an( manufacturers are in fa/our of fi0ed e0change rates, or
a single currenc(. 6lthough it is possi3le to some e0tend to hedge
against Ja se asigura LmpotrivaM currenc( fluctuations 3( 'a( of
futures contracts, for'ard planning is difficult 'hen the price of ra'
materials 3ought from a3road, or the price of (our products in e0port
markets, can rise or fall 3( 5%X in onl( a fe' months. J:ince
e0change controls 'ere a3olished, currencies including the A:\ and
the pound sterling ha/e in turn appreciated 3( up to 1%%X and then
depreciated 3( more than 5%X against the currencies of ma5or trading
9ther supporters of fi0ed e0change rates or a single currenc(
include e0treme conser/ati/es 'ho 'ant to return to something like
the gold standard, as 'ell as people on the left 'ho 3elie/e that
speculators ha/e too much po'er. :upporters of fle0i3le rates include
monetarists 'ho 'ant countries to follo' strict monetar( rules, as
'ell as &e(nesians 'ho 'ant to 3e free to de/alue in the attempt to
reduce unemplo(ment. These are 3oth rather surprising alliances,
'hich put into dou3t the planned timeta3le for the introduction of a
:ingle $uropean Currenc(.
Are the %ollo/ing statements True or 2alse7
1 )old con/erti3ilit( 'as a3andoned 3ecause there 'as too much
2 It is no' impossi3le to e0change dollars for gold.
3 9nl( a pegged currenc( can 3e de/alued or re/alued.
4 6 floating currenc( can either appreciate or 3e de/alued.
5 Central 3anks sometimes attempt to decrease the /alue of their
The $.: 'as designed to sta3ili@e e0change rates.
! To speculate is to take risks? to hedge is to tr( to a/oid risks.
" Ander the s(stem of floating e0change rates, currencies can
depreciate 1%%X in a short time.
-. Match up the hal%+sentences ,elo/.
1. To Npeg+ a currenc( against something means to
6. the amount of a countr(+s mone( that residents 'ere a3le to
change into foreign currencies.
2. 6 clean floating e0change rate
B. fi0 its /alue in relation to it.
3. $0change controls used to limit
C. make a profit 3( making capital gains or 3( in/esting at higher
interest rates.
4. :peculators 3u( or sell currencies in order to
=. is determined 3( suppl( and demand.
5. N.arket forces+ means
$. tr(ing to insure against unfa/oura3le price mo/ements 3( 'a( of
futures contract.
. N4edging+ means
;. the determination of price 3( suppl( and demand Jthe Luantit(
a/aila3le and the Luantit( 3ought and soldM.
2. ?hich si( o% these !er,s are de%ined ,elo/7
A(olish ad.ust appreciate convert diverge
/sta(lish fluctuate peg suspend revalue
1 to make changes to something
2 to change something into something else
3 to end something permanentl(
4 to end something temporaril(
5 to go up or do'n Jin Luantit(, /alue, etc.M
to mo/e a'a( from 'hat is considered normal
-2. 'anking and ta(ation
Match up these terms /ith the de%initions ,elo/.
Cash card cash dispenser credit card home
'oan mortgage overdraft standing order
Current account !<B# or checking account !A&#
-eposit account !<B# or time or notice account !A&#
1 an arrangement 3( 'hich a customer can 'ithdra' more from a
3ank account than has 3een deposited in it, up to an agreed limit?
interest on the de3t is calculated dail(
2 a card 'hich guarantees pa(ment for goods and ser/ices purchased
3( the cardholder, 'ho pa(s 3ack the 3ank or finance compan( at a
later date
3 a computeri@ed machine that allo's 3ank customers to 'ithdra'
mone(, check their 3alance, and so on
4 a fi0ed sum of mone( on 'hich interest is paid, lent for a fi0ed
period, and usuall( for a specific purpose
5 an instruction to a 3ank to pa( fi0ed sums of mone( to certain
people or organi@ations at stated times
a loan, usuall( to 3u( propert(, 'hich ser/es as a securit( for the
! a plastic card issued to 3ank customers for use in cash dispensers
" doing 3anking transactions 3( telephone or from one+s o'n personal
computer, linked to the 3ank /ia a net'ork
# one that generall( pa(s little or no interest, 3ut allo's the holder to
'ithdra' his or her cash 'ithout an( restrictions
1% one that pa(s interest, 3ut usuall( cannot 3e used for pa(ing
cheLues J)BM or checks JA:M, and on 'hich notice is often reLuired to
'ithdra' mone(
3-. T$pes o% ,anks
Read the te(t ,elo/ and /rite short headings <one or t/o /ords=
%or each paragraph
5 >>>>>>>>>>>..
Commercial or retail 3anks are 3usinesses that trade in
mone(. The( recei/e and hold deposits, pa( mone( according to
customers+ instructions, lend mone(, offer in/estment ad/ice,
e0change foreign currencies, and so on. The( make a profit from the
difference Jkno'n as a spread or a marginM 3et'een the interest rates
the( pa( to lenders or depositors and those the( charge to 3orro'ers.
Banks also create credit, 3ecause the mone( the( lend, from their
deposits, is generall( spent Jeither on goods or ser/ices, or to settle
de3tsM, and in this 'a( transferred to another 3ank account 7 often 3(
'a( of a 3ank transfer or a cheLue JcheckM rather than the use of notes
or coins 7 from 'here it can 3e lent to another 3orro'er, and so on.
,hen lending mone(, 3ankers ha/e to find a 3alance 3et'een (ield
and risk, and 3et'een liLuidit( and different maturities.
5 >>>>>>>>>>>
.erchant 3ank in Britain raise funds for industr( on the
/arious financial markets, finance international trade, issue and
under'rite securities, deal 'ith takeo/ers and mergers, and issue
go/ernment 3onds. The( also generall( offer stock3roking and
portfolio management ser/ices to rich corporate and indi/idual clients.
In/estment 3anks in the A:6 are similar, 3ut the( can onl( act as
intermediaries offering ad/isor( ser/ices, and do not offer loans
themsel/es. In/estment 3anks make their profits from the fees and
commissions the( charge for their ser/ices.
5 >>>>>>>>>>>..
In the A:6, the )lass2:teagall 6ct of 1#34 enforced a strict
separation 3et'een commercial 3anks and in/estment 3anks or
stock3roking firms. Get, the distinction 3et'een commercial and
in/estment 3anking has 3ecome less clear in recent (ears.
=eregulation in the A:6 and Britain is leading to the creation of
Nfinancial supermarkets+Q conglomerates com3ining the ser/ices
pre/iousl( offered 3( 3anks, stock3rokers, insurance companies, and
so on. In some $uropean countries Jnota3l( )erman(, 6ustria and
:'it@erlandM there ha/e al'a(s 3een uni/ersal 3anks com3ining
deposit and loan 3anking 'ith share and 3ond dealing and in/estment
5 >>>>>>>>>>>>
6 countr(+s minimum interest rate is usuall( fi0ed 3( the
central 3ank. This is the discount rate, at 'hich the central 3ank makes
secured loans to commercial 3anks. Banks lend to 3lue chip 3orro'ers
J/er( safe large companiesM at the 3ase rate or the prime rate? all other
3orro'ers pa( more, depending on their credit standing Jor credit
rating, or credit'orthinessMQ the lender+s estimation of their present
and future sol/enc(. Borro'ers can usuall( get a lo'er interest rate if
the loan is secured or guaranteed 3( some kind of asset, kno'n as
5 >>>>>>>>>>>
In most financial centres, there are also 3ranches of lots of
foreign 3anks, largel( doing $urocurrenc( 3usiness. 6 $urocurrenc(
is an( currenc( held outside its countr( of origin. The first significant
$urocurrenc( market 'as for A: dollars in $urope, 3ut the name is
no' used for foreign currencies held an('here in the 'orld Je.g. (en
in the A:, =. in 1apanM. :ince the A:\ is the 'orld+s most important
trading currenc( 7 and 3ecause the A: has for man( (ears had a huge
trade deficit 7 there is a market of man( 3illions of $urodollars,
including the oil2e0porting countries+ Npetrodollars+. 6lthough a
central 3ank can determine the minimum lending rate for its national
currenc( it has no control o/er foreign currencies. ;urthermore, 3anks
are not o3liged to deposit an( of their $urocurrenc( assets at %X
interest 'ith the central 3ank, 'hich means that the( can usuall( offer
3etter rates to 3orro'ers and depositors than in the home countr(.
Commercial L retail ,ank 7 3ancD comerciale P 3ancD de depo@it
Merchant ,ank L 0n!estment ,ank 7 3ancD comercialD P de in/esti<ii
a. 2ind the /ords or e(pressions in the te(t /hich mean the
1 to place mone( in a 3ank? or mone( placed in a 3ank
2 the mone( used in countries other than one+s o'n
3 ho' much mone( a loan pa(s, e0pressed as percentage
4 a/aila3le cash, and ho' easil( other assets can 3e turned into cash
5 the date 'hen a loan 3ecomes repa(a3le
to guarantee to 3u( all the ne' shares that a compan( issues, if the(
cannot 3e sold to the pu3lic
! 'hen a compan( 3u(s or acLuires another one
" 'hen a compan( com3ines 'ith another one
# 3u(ing and selling stocks or shares for clients
1% taking care of all a client+s in/estments
11 the ending or rela0ing of legal restrictions
12 a group of companies, operating in different fields, that ha/e 5oined
13 a compan( considered to 3e 'ithout risk
14 a3ilit( to pa( lia3ilities 'hen the( 3ecome due
15 an(thing that acts as a securit( or a guarantee for a loan
,.The te(t contains a num,er o% common !er,+noun partnerships
<e.g. to lend mone$ to %inance international trade=. Match up the
!er,s and nouns ,elo/ to make common collocations.
Charge ad/ice
=o 3onds
$0change 3usiness
Issue currencies
.ake deposits
9ffer funds
Pa( interest
8aise loans
8ecei/e profits
Ander'rite securit( issues
32. @pening an account and means o% pa$ment
At the 'ank K @pening an account
Mr. O 7 I 'ould like to open an account 'ith (ou.
'ank Clerk 7 Cer( 'ell, sir. 4ere is a form (ou+ll ha/e to fill in.
Mr. O 7 There ma( 3e a pro3lem. Gou see, I+m a foreign resident.
'ank Clerk 7 This is Luite all right, sir. Iuite a large num3er of our
clients are foreigners. =o (ou 'ant to open a current account or a
deposit account-
Mr. O 7 ,ell, I+m going to sta( and 'ork here for a 'hile, and I+d
like m( salar( to 3e paid into m( account. But I don+t 'ant to ha/e to
gi/e notice 3efore I can 'ithdra' mone(.
'ank Clerk 7 It+s o3/iousl( a current account (ou need.
Mr. O 7 4o' long 'ill take to open an account-
'ank Clerk 7 =oesn+t take long, sir. >et me seeO Toda( is
Thursda(, if (ou can complete this form toda(, (our cheLue23ook 'ill
3e read( for (ou on Tuesda(.
Mr. O 7 ;ine. :o, m( salar( could 3e paid in at the end of the month.
'ank Clerk 7 *o dou3t, sir.
Mr. O 7 There are t'o Luestions I+d like to ask. ,ill this 3e the onl(
place 'here I can cash a cheLue-
'ank Clerk 7 9h, no, sir. Gou can ha/e them cashed at an( of our
Mr. O 7 )ood. 6nd 'hat a3out statements of account- 4o'
freLuentl( does one get them-
'ank Clerk 7 *ormall(, once a month. But 'e shall send one out
after each transaction if (ou 'ant us to.
:eneral 0n%ormation6
,hen doPare (ou open-
4o' late do (ou sta( open-
,hen do (ou close-
,hat are (our opening hours-
In the A:Q =oes this 3ank ha/e an 6T. J6utomatic Teller .achine 7
In the A&Q =o (ou ha/e a cash pointPdispenser-
The 6T. atePkept m( card.
The cash dispenser 'on+t gi/e me m( card 3ack.
If (ou 'ant to use 3ank ser/ices (ou ma( ha/e to Lueue JA&M or stand
in line JA:M and 'ait for the ne0t a/aila3le teller JA:M 7 or clerk JA&MQ
,hen their desk is free, a light 'ill come onQ
*e0t, please.
Please step do'n JA:M.
I+m open o/erPdo'n here.
Iueue @ stand in line S a sta la coadJ
Teller @ clerk S funcRionar la ghiQeu
5ou can then tell him or her /hat $ou /ant6
I 'antPneedP'ould like to cash a check.
I+d like to cash these tra/elers checks, please.
Can (ou change a ten2pound note, please-
I+d like ten dollars+ 'orth of Luarters, please.
I need a roll of Luarters.
If (ou ha/e an account thereQ
I+d like to make a deposit.
I+d like to 'ithdra' some mone( from m( account.
I+d like to make a 'ithdra'al.
If (ou 'ant to 'ithdra' some mone( from a3roadQ
I+d like to transfer some mone( from an o/erseas 3ank account.
Before the clerk gi/es (ou an( mone(, shePhe 'ill askQ
4o' 'ould (ou like that-
6n( preference-
>arge or small 3ills JA:M notes JA&M-
Gour repl(Q
It doesn+t matter J'hich denominationM
6ll t'enties, please.
1ust tens and t'enties, please.
;i/e, tens and three fi/es, please.
*o small 3illsPnotes, please.
0% $ou /ant to trans%er some mone$ the clerk /ill sa$6
6re (ou a customer here-
;irst of all, I need some I=, please.
.a( I see some identification-
=o (ou ha/e a 3ank card 'ith (ou-
I+d like the name and address of (our 3ank, (our account num3er and
(our sorting code, please.
Please fill in this form.
I+m afraid (ou+ll ha/e to go to the enLuiries desk J(iroul de
@r i% $ou3re cashing a check6
Could (ou endorse this Jsign it on the 3ackM, please.
Perhaps $ou3re /ithdra/ing mone$ /ith a credit card6
$nter (our PI* num3er, please JPI*Q Personal Identification *um3erM.
0% $ou ha!e %oreign currenc$6
=o (ou handle foreign e0change here-
Is there a foreign e0change desk-
I+d like to changeP3u( some foreign currenc(.
,hat+s the current e0change rate, please-
4o' man( marks to the dollar, please-
And the repl$6
The e0change rate is 1,5 marks to the dollar.
I+m afraid the rate has gone up toda(.
5ou might /ant to kno/6
=o I ha/e to pa( 3ank charges JcomisionM on top of that-
Is that inclusi/e of commission-
6re there an( additional e0penses-
,hat commission do (ou charge-
Ma$,e $ou3re sta$ing in an Anglophone countr$ %or more than a
$ear and $ou /ant to open a ,ank account there6
I+d like to open a depositPcheckingP sa/ings account, please.
I+d like to appl( for a loan.
I+d like to get a safet( deposit 3o0 Jsafe de depuneriM.
,hat+s the interest rate on this account-
Could (ou e0plain the ser/ice charges on this account-
Could I ha/e a ne' check3ook, please-
I+d like to appl( for a 3ankPcheLuePcreditPcash card, please.
Means o% pa$ment.
I+d 5ust had a phone call from the 3ank. The( couldn+t cash in =+s
cheLue. The( 'ere told there 'ere insufficient funds on his account.
I+m surprised. That 'ould 3e the first time. Can (ou remind me of the
It+s not a large sumQ onl( 135 pounds.
This is all the more surprising. 4e is not the kind of person to
o/erdra' his account. ,hat sort of a cheLue did he make out-
I+m looking into his fileO *o'O It 'as a giro cheLue. Asuall( he
pa(s us 3( 3ank cheLue for small amounts, and 3( draft for large
It makes more sense. 1ust gi/e him a ring, 'ill (ou- I+m sure he+ll
settle immediatel(.
I+ll do that. :omething else. I+/e had /er( 3ad information a3out B,
(ou kno', the reseller JvKnzJtorM 'ho 'anted immediate deli/er(.
I see 'ho (ou mean. It+s his first order 'ith us-
That+s it. 4e+s alread( had a current account cancelled and has a
reputation for 3eing a slo' pa(er.
If so, insist on pa(ment 'ith the order Jplata la comandJM. =eli/er( is
out of the Luestion until the sum has 3een paid into our account.
,ell, I think that+s all. 9h (esR 9ne more thing, the drafts to 3e
Means o% pa$ment. Ie$ sentences.
4is account is o/erdra'n Jin the redM.
Cecul sJu este descoperit.
The settlement is long o/erdue.
*lata ar fi tre(uit sJ fie fJcutJ demult.
,hat+s his current account num3er-
Care este numJrul contului sJu curent3
Charge it to m( account.
&coateRi suma din contul meu.
:ettle the amount 3( mone( order if (ou find it more con/enient.
*lJtiRi suma prin mandat poQtal dacJ consideraRi cJ este mai practic.
The cheLue 'as made out to his order.
Cecul era fJcut la ordinul sJu.
4e intends to open a deposit account at one of our 3ranches.
/l are intenRia sJ deschidJ un cont pentru depuneri la una din
sucursalele noastre.
I think I remem3er it 'as a 3earer cheLue.
Cred cJ Lmi amintesc% era un cec la purtJtor.
*ormall(, that pa(ment2in ought to ha/e 3een recorded on m( last
statement of account.
$ormal% acea platJ !vJrsJmKnt# ar tre(uie sJ figureze pe ultimul meu
e>tras de cont.
;or sight 'ithdra'als, (ou simpl( ha/e to go to counter no.3
*entru retragerile la vedere% a.unge sJ mergeRi la ghiQeul nr.6
:he 'ill pa( us 3( instalments o/er si0 months.
/a ne va plJti Ln rate eQalonate pe Qase luni.
I ha/e kept the stu3 JcounterfoilM of the cheLue 'hich I issued on
Am pJstrat talonul cecului pe care lBam emis pe T martie.
The holder of the credit card must inform our nearest office in case of
loss or theft.
Titularul cJrRii de credit tre(uie sJ informeze imediat (iroul nostru
cel mai apropiat Ln caz de pierdere sau de furt.
Thanks to (our credit card, (ou ma( rent a car 'ithout lea/ing a
-atoritJ cJrRii dumneavoastrJ de credit veRi putea Lnchiria o maQinJ
fJrJ sJ lJsaRi o garanRie.
4o' is it that this cheLue has not 3een endorsed-
Cum se face cJ acest cec nu a fost andosat3
I suppose (ou+d rather 3e paid in cash-
*resupun cJ preferaRi sJ fiRi plJtiRi cu (ani gheaRJ.
The draft 'ill fall due at the end of the month.
Trata a.unge la scadenRJ la sfKrQitul lunii.
,h( ha/en+t (ou presented this draft for acceptance (et-
-e ce nu aRi prezentat LncJ aceastJ tratJ la acceptare3
4o' long 'ill it take to ha/e the sum transferred to m( account-
CKt dureazJ sJ viraRi suma Ln contul meu3
It has 3een re5ected for non2conformit( of the signature J3ecause the
signature 'as not trueM.
/l a fost refuzat din cauza nepotrivirii semnJturii !din cauzJ cJ
semnJtura nu era cea adevJratJ#.
This is not the first time he has issued 3ad cheLues Jdud checks?
cheLues that 3ounceM.
$u este prima datJ cKnd el emite cecuri fJrJ acoperire.
33. 'anking K Ie$ /ords and sentences
The 3anks ha/e pla(ed a prominent role in the de/elopment of
modern econom( since the /er( 3eginning of commercial acti/ities.
Their 3ranches ha/e 3ecome a familiar sight on man( cit( streets, 3ut
also in /illages, as more and more people no' S3ankT 'ith an( one of
the national or local 3anks.
Banks offer their ser/ices 3oth to pri/ate indi/iduals and to
3usinesses. 9ne can open a current account or a deposit account 'ith
them. The former 'ill ena3le a person to use a cheLue for pa(ment
instead of hard cash, 'hereas the latter 'ill 3ring a small interest.
People can ask their 3ank to pa( recurring e0penses for them, such as
su3scription, rents, telephone, gas or electrical 3ills. Calua3les or
deeds can 3e left in custod( in a 3ank safe on pa(ment of certain
charge. The 3ank 'ill o3tain foreign currencies, issue tra/eller+s
cheLues and letter of credit pa(a3le at their 3ranches or at
correspondent 3anks.
Besides, 3anks 'ill operate transactions on the stock
e0change for (ou and gi/e ad/ice on in/estments. The( also lend
mone(, generall( on a short term 3asisQ thus the( can allo' o/erdraft
facilities or personal loans? if (our credit rating is good and if (ou can
offer some sort of securit(, the( ma( consider longer term credit.
.ost of this applies to 3usiness discounting of their 3ills 7 Bills of
$0change JdraftsM, or e/en Promissor( *otes. In the field of foreign
trade, the 3anks can help 3( financing or ad/ising their clients. The(
can 3e referred to 3( either part( for status enLuiries in 3usiness
8ecurring e0penses K cheltuieli recurente
Calua3les P deeds K acte, /alori
9/erdraft K cont de3itor, descoperire de cont
Be referred to K a fi Endrumat
A cheAue is signed 3( the pa(er and pa(a3le to the pa(ee or to his
order. A dra%t Jor ,ill o% e(changeM is dra'n 3( the creditor on the
de3tor and pa(a3le to the dra'er or to a third part( after acceptance
3( the dra'ee.
An cec este semnat de plJtitor Qi se plJteQte (eneficiarului sau la
ordinul sJu. tratJ este trasJ de creditor asupra de(itorului Qi se
plJteQte trJgJtorului sau unei terRe pJrRi dupJ acceptare de cJtre tras.
'ank. Ie$ sentences.
1. 6n interest is charged on all 3anks ser/ices.
&e percepe do(KndJ pentru toate serviciile (ancare.
2. Gou had 3etter ask for an o/erdraft 3efore (our account is
o/erdra'n Jin redM.
Ar fi (ine sJ cereRi un descoperit Lnainte de a vi se epuiza contul.
3. I al'a(s deposit m( /alua3les and m( 'ife+s 5e'els in a 3ank safe
3efore lea/ing for a long holida(.
-epun Lntotdeauna o(iectele mele de valoare Qi (i.uteriile soRiei
la o (ancJ Lnainte de a pleca LntrBo vacanRJ de lungJ duratJ.
4. ,here can I cash this cheLue Jcheck 7 A.:.M-
Ande pot Lncasa acest cec3
5. 8emem3er to record all 'ithdra'als on counterfoils JA.:. 7 stu3sM
in (our cheLue23ook.
$u uitaRi sJ LnregistraRi toate retragerile pe talonul carnetului
dumneavoastrJ de cecuri.
. The( offered me to refund a 2,%%% personal loan o/er a 3%2month
/i miBau propus sJ ram(ursez un Lmprumut personal de 0.555 de
lire Ln treizeci de rate lunare.
!. ,hen 'riting out or endorsing a cheLue, one must 3e careful to
a/oid an( erasure.
CKnd se redacteazJ sau se andoseazJ un cec% tre(uie sJ se evite
orice QtersJturJ.
". :he made out so man( dud J3adM cheLues that no 3ank 'ill trust
her 'ith a cheLue23ook.
/a a Lntocmit atKtea cecuri fJrJ acoperire% LncKt nici o (ancJ nuBI
va mai LncredinRa un carnet de cecuri.
#. =on+t forget to ha/e these 3ills discounted 3( the end of this
$u uitaRi sJ scontaRi aceste efecte la sfKrQitul lunii.
1%. 8ecentl( a trader sued his 3anker after he could no longer ha/e his
3ills discounted.
+ecent% un comerciant a intentat un proces (Jncii sale dupJ ce nB
a mai avut posi(ilitatea sJBQi sconteze efectele de comerR.
11. The clearing2house 'ill centrali@e all the operations dealing 'ith
the e0change of 3ills and cheLues 3et'een 3anks.
Camera de decontJri@oficiul de cliring va centraliza toate
operaRiunile care se referJ la schim(ul inter(ancar de efecte de
comerR Qi cecuri.
12. The A.:. in/estment 3anks ha/e 5ust raised their prime rate 3( a
point to ,!5X.
BJncile de investiRii americane tocmai au crescut rata de (azJ !a
do(Knzii# la T%FNH mJrindBo cu un sfert de punct.
13. The increase in the price of short2term mone( has 3een confirmed
'hereas longer term rates remain sta3le.
&Ba confirmat creQterea preRului pentru Lmprumuturile pe termen
scurt% Ln timp ce ratele !do(Knzii# pe termen lung rJmKn sta(ile.
14. The Prime 8ate Jfine rate, 3lue2chip rate, _B.$.` 3ase rateM is the
rate granted 3( A.:. 3anks to their clients 'ith the highest rating.
+ata de (azJ reprezintJ rata acordatJ de (Jncile americane
clienRilor care prezintJ cel mai mic risc.
15. The spell of monetar( sta3ilit( has lasted since the 3egining of the
AceastJ perioadJ de sta(ilitate monetarJ dureazJ de la Lnceputul
1. The polic( of e0pensi/e mone( is meant to fight inflation.
*olitica diri.atJ Lmpotriva creQterii preRurilor este destinatJ
com(aterii inflaRiei.
1!. O3ut it has immediate repercussions on corporate income
=dar acest lucru are repercursiuni imediate asupra conturilor de
venit Qi pierderi ale Lntreprinderilor.
1". The Central Bank acts as 3anker to the go/ernment and to other
3anks, and as the central note2issuing authorit(.
Banca centralJ funcRioneazJ Ln calitate de (ancher pentru guvern
Qi alte (Jnci Qi ca autoritate centralJ de emisiune monetarJ.
'anking. Ie$ sentences.
1. I+d like to change ;rench francs into pounds.
AQ vrea sJ schim( franci francezi Ln lire.
2. Gour account is in the red Jo/erdra'nM.
Contul -umneavoastrJ este epuizat.
3. :hould I Jmust IM endorse the cheLue-
Tre(uie sJ andosez cecul3
4. 4e has opened a giro account.
/l a deschis un contBcec poQtal.
5. .( salar( is paid into m( account e/er( month.
&alariul meu este vJrsat Ln contul meu Ln fiecare lunJ.
. The holders of such deposit accounts must gi/e se/en da(+s notice
3efore 'ithdra'al.
-eRinJtorii de astfel de conturi de depuneri tre(uie sJ LnQtiinReze
!(anca# cu Qapte zile Lnainte pentru aBQi retrage (anii.
!. :a/ings accounts earn an interest.
Conturile de economii aduc o do(KndJ.
". The last 'ithdra'al dates 3ack to the 2!
of last month.
Altima retragere este din 0F luna trecutJ.
#. 4e 'anted me to make out a 3lank cheLue.
/l voia sJ facJ un cec Ln al(.
1%. I+m not sure I kept the stu3.
$u sunt sigur cJ am pJstrat talonul.
11. ,h( not endorse the cheLue to his JherM name-
-e ce sJ nu andosez cecul pe numele lui !ei#3
12. .( 3ank 'ill lend me part of the sum.
Banca mea o sJBmi dea cu Lmprumut o parte din sumJ.
13. 4e 'ill find it hard to repa( his loan.
Ui va fi greu sJ ram(urseze Lmprumutul.
14. ,h( has his JherM o/erdraft 3een discontinued -
-e ce nu i sBa mai dat descoperitul3
15. 4e should not ha/e 3orro'ed so much.
$u ar fi tre(uit ca el sJ Lmprumute atKt.
1. This is the 5
3ad cheLue Jdud cheLueM 'e+/e had this month.
/ste al cincilea cec fJrJ acoperire care mi se dJ luna aceasta.
1!. Please go to counter .
1J rog sJ mergeRi la ghiQeul T.
1". Please gi/e me the rest in 52pounds notes.
-aRiBmi restul Ln hKrtii !(ancnote# de N lire.
1#. The statement has still not reached me.
/>trasul !de cont# nu a a.uns LncJ la mine. !nu miBa parvenit
2%. I ha/e to JI mustM replenish m( account.
Tre(uie sJBmi reaprovizionez contul.
21. :he hasn+t dra'n on her account for 3 'eeks.
/a nu a mai scos din contul sJu de trei sJptJmKni.
34. Ta(ation and ho/ to a!oid it
?hich terms do the %ollo/ing sentences de%ine7
1. The ta0 people pa( on their 'ages and salaries is called
Capital transfer ta0 income ta0 'ealth ta0
2. 6 ta0 on 'ages and salaries or on compan( profits is aPan
=irect ta0 indirect ta0 /alue2added ta0
3. 6 ta0 le/ied at a higher rate on higher incomes is called a
Progressi/e ta0 regressi/e ta0 'ealth ta0
4. 6 ta0 paid on propert(, sales transactions, imports, and so on is
=irect ta0 indirect ta0 /alue2added ta0
5. 6 ta0 collected at each stage of production, e0cluding the alread(2
ta0ed costs from pre/ious stages, is called aPan
6dded2/alue ta0 sales ta0 /alue2added ta0
. Profits made 3( selling assets are generall( lia3le to a
Capital gains ta0 capital transfer ta0 'ealth ta0
!. )ifts and inheritances o/er a certain /alue are often lia3le to a
Capital gains ta0 capital transfer ta0 'ealth ta0
". The annual ta0 imposed on people+s fortunes Jin some countriesM
is aPan
6dded2/alue ta0 capital gains ta0 'ealth ta0
#. .aking false declarations to the ta0 authorities is called
;iscal polic( ta0 a/oidance ta0 e/asion
1%. 8educing the amount of ta0 (ou pa( to a legal minimum is called
Creati/e accounting ta0 a/oidance ta0 e/asion
0ncome ta( 7 impo@it pe /enit
?ealth ta( 7 impo@it pe a/ere
9irect ta( 7 impo@it direct
0ndirect ta( 7 impo@it indirect
Progressi!e ta( 7 impo@it progresi/
Regressi!e ta( 7 impo@it regresi/
1alue+added ta( K TC6
Sales ta( 7 impo@it pe /Fn@Dri
Capital gains ta( 7 impo@it pe plusul de capital
Capital trans%er ta( 7 impo@it pe transferul de capital
2iscal polic$ 7 politicD fiscalD
Ta( a!oidance 7 e/itare fiscalD
Ta( e!asion 7 e/a@iune fiscalD
Ta( 7 ta0D, impo@it
Ta(ation 7 impo@it, impo@itare
Ta( shelter 7 protec<ie fiscalD
Ta( ha!en 7 paradis fiscal
Ta(+deducti,le 7 deducti3il fiscal
*(cise duties 7 acci@e, impo@it de fa3ricare
Read the %ollo/ing te(t and decide /hich paragraphs could ,e
gi!en the %ollo/ing headings.
- 6d/antages and disad/antages of different ta0 s(stems
- 6/oiding ta0 on profits
- 6/oiding ta0 on salaries
- Ta0 e/asion
- The functions of ta0ation
Ta(ation <and ho/ to a!oid it8=
The primar( function of ta0ation is, of course, to raise re/enue
to finance go/ernment e0penditure, 3ut ta0es can also ha/e other
purposes. Indirect e0cise duties, for e0ample, can 3e designed to
dissuade Ja preveni% a schim(a pJrereaM people from smoking,
drinking alcohol, and so on. )o/ernments can also encourage capital
in/estment 3( permitting /arious methods of accelerated depreciation
accounting that allo' companies to deduct more of the cost of
in/estments from their profits, and conseLuentl( reduce their ta0 3ills.
There is al'a(s a lot of de3ate as to the fairness of ta0
s(stems. Business profits for e0ample, are generall( ta0ed t'iceQ
companies pa( ta0 on their profits Jcorporation ta0 in Britain, income
ta0 in the A:6M, and shareholders pa( income ta0 on di/idends.
Income ta0es in most countries are progressi/e, and are one of the
'a(s in 'hich go/ernments can redistri3ute 'ealth. The pro3lem 'ith
progressi/e ta0es is that the marginal rate 7 the ta0 people pa( on an(
additional income 7 is al'a(s high, 'hich is generall( a disincenti/e
to 3oth 'orking and in/esting. 9n the other hand, most sales ta0es are
slightl( regressi/e, 3ecause poorer people need to spend a larger
proportion of their income on consumption than the rich.
The higher the ta0 rates, the more people are tempted to cheat,
3ut there is a su3stantial N3lack+ or Nunderground+ econom( nearl(
e/er('here. In Ital(, for e0ample, self2emplo(ed people 7 'hose
income is more difficult to control than that of compan( emplo(ees 7
account for more than half of national income. >ots of people also
ha/e undeclared, part2time e/ening 5o3s Jsome people call this
Nmoonlighting+M 'ith small and medium2si@ed famil( firms, on 'hich
no one pa(s an( ta0 or national insurance. 6t the end of the 1#", the
=irector of the Italian *ational Institute of :tatistics calculated the
si@e of the underground econom(, and added 1.!X to Ital(+s gross
national product J)*PM figure, and then claimed that Ital( had
o/ertaken Britain to 3ecome the 'orld+s fifth largest econom(.
To reduce income ta0 lia3ilit(, some emplo(ers gi/e highl(2
paid emplo(ees lots of Nperks+ Jshort for perLuisitesM instead of ta0a3le
mone(, such as compan( cars, free health insurance, and su3sidi@ed
lunches. >egal 'a(s of a/oiding ta0, such as these, are kno'n as
loopholes in ta0 lo's. >ife insurance policies, pension plans and other
in/estments 3( 'hich indi/iduals can postpone the pa(ment of ta0,
are kno'n as ta0 shelters. =onations to charities that can 3e su3tracted
from the income on 'hich ta0 is calculated are descri3ed as ta02
Companies ha/e a /ariet( of 'a(s of a/oiding ta0 on profits.
The( can 3ring for'ard capital e0penditure Jon ne' factories,
machines, and so onM so that at the end of the (ear all the profits ha/e
3een used up? this is kno'n as making a ta0 loss. .ultinational
companies often set up their head offices in countries such as
>iechtenstein, .onaco, the Ca(man Islands, and the Bahamas, 'here
ta0es are lo'? such countries are kno'n as ta0 ha/ens. Criminal
organi@ations, mean'hile, tend to pass mone( through a series of
companies in /er( complicated transactionsin order to disguise its
origin from ta0 inspectors 7 and the police? this is kno'n as
laundering mone(.
According to the te(t are the %ollo/ing statements True or 2alse7
1 Ta0es can 3e designed 3oth to discourage and to encourage
2 The same amount of mone( can 3e ta0ed more than once.
3 Progressi/e ta0es ma( discourage people from 'orking e0tra hours.
4 :ales ta0es are unfair 3ecause poor people spend more than the rich
5 The Italian go/ernment kno's that a3out one se/enth of national
income escapes ta0ation.
1. N>oopholes+ are a common form of ta0 e/asion.
2. If (ou pa( a lot of (our income into a pension fund or a life
insurance polic( (ou ne/er ha/e to pa( ta0 on it.
" 6 compan( that makes an unusuall( large profit during a ta0 (ear
might Luickl( decide to spend it, for e0ample, on a ne' factor( or
2ind /ords in the te(t that mean the %ollo/ing.
1 reducing the /alue of a fi0ed asset, 3( charging it against profits
2 something 'hich discourages an action
3 an ad5ecti/e descri3ing a ta0 that is proportionall( higher for people
'ith less mone(
4 spending mone( to 3u( things, rather than sa/ing it
5 'orking for (ourself, 3eing (our o'n 3oss
3. a ta0 on incomes that pa(s for sickness 3enefit, unemplo(ment
3enefit, and old2age pensions
4. non2financial 3enefits or ad/antages of a 5o3
" a 'a( to dela( the pa(ment of ta0 to a later time
# an ad5ecti/e descri3ing e0penditure that can 3e taken a'a( from
ta0a3le income or profits
1% a countr( offering /er( lo' ta0 rates to foreign 3usinesses
-3. Stock Market
3". Stocks and shares
Indi/iduals and groups of people doing 3usiness as a
partnership, ha/e unlimited lia3ilit( for de3t, unless the( form a
limited compan(. If the 3usiness does 3adl( and cannot pa( its de3ts,
an( creditor can ha/e it declared 3ankrupt. The unsuccessful 3usiness
people ma( ha/e to sell nearl( all their possessions in order to pa(
their de3ts. This is 'h( most people doing 3usiness form limited
companies. 6 limited compan( is a legal entit( separate from its
o'ners, and is onl( lia3le for the amount of capital that has 3een
in/ested in it. If a limited compan( goes 3ankrupt, it is 'ound up and
its assets are liLuidated Ji.e. soldM to pa( the de3ts. If the assets don+t
co/er the lia3ilities or the de3ts, the( remain unpaid. The creditors
simpl( do not get all their mone( 3ack.
.ost companies 3egin as private limited companies. Their
o'ners ha/e to put up the capital themsel/es, or 3orro' from friends
or a 3ank, perhaps a 3ank speciali@ing in /enture capital. The founders
ha/e to 'rite a .emorandum of 6ssociation J)BM or a Certificate of
Incorporation JA:M, 'hich states the compan(+s name, its purpose, its
registered office or premises, and the amount of authori@ed share
capital. The( also 'rite 6rticles of 6ssociation J)BM or B(la's JA:M,
'hich set out the duties of directors and the rights of shareholders
J)BM or stockholders JA:M. The( send these documents to the registrar
of companies.
6 successful, gro'ing compan( can appl( to a stock e0change
to 3ecome a pu(lic limited compan( J)BM or a listed compan( JA:M.
*e'er and smaller companies usuall( 5oin No/er2the2counter+ markets,
such as the Anlisted :ecurities .arket in >ondon or *asdaL in *e'
Gork. Cer( successful 3usinesses can appl( to 3e Luoted or listed Ji.e.
to ha/e their shares tradedM on ma5or stock e0changes. Pu3licl( Luoted
companies ha/e to fulfil a large num3er of reLuirements, including
sending their shareholders an independentl(2audited report e/er( (ear,
containing the (ear+s trading results and a statement of their financial
The act of issuing shares J)BM or stocks JA:M for the first time
is kno'n as floating a compan( Jmaking a flotationM. Companies
generall( use an in/estment 3ank to under'rite the issue i.e. to
guarantee to purchase all the securities at an agreed price on a certain
da(, if the( cannot 3e sold to the pu3lic.
Companies 'ishing to raise more mone( for e0pansion can
sometimes issue ne' shares, 'hich are normall( offered first to the
e0isting shareholders at less than their market price. This is kno'n as
a rights issue. Companies sometimes also choose to capitali@e part of
their profit, i.e. turn it into capital, 3( issuing ne' shares to
shareholders instead of pa(ing di/idends. This is kno'n as a 3onus
Bu(ing a share gi/es its holder part of the o'nership of a
compan(. :hares generall( entitle their o'ner to /ote at a compan(+s
6nnual )eneral .eeting J)BM or 6nnual .eeting of :tockholders
JA:M, and to recei/e a proportion of distri3uted profits in the form of a
di/idend 7 or to recei/e part of the compan(+s residual /alue if it goes
into liLuidation. :hareholders can sell their shares on the secondar(
market at an( time, 3ut the market price of a share 7 the price Luoted
at an( gi/en time on the stock e0change, 'hich reflects Jmore or lessM
ho' 'ell or 3adl( the compan( is doing 7 ma( differ radicall( from
its nominal /alue.
2ind /ords in the te(t /hich mean the %ollo/ing
1 ha/ing a responsi3ilit( or an o3ligation to do something, e.g. to pa(
a de3t
2 a person or organi@ation to 'hom mone( is o'ed Jfor goods or
ser/ices rendered, or as repa(ment of a loanM
3 to 3e insol/entQ una3le to pa( de3ts
4 e/er(thing of /alue o'ned 3( a 3usiness that can 3e used to produce
goods, pa( lia3ilities, and so on
5 to sell all the possessions of a 3ankrupt 3usiness
mone( that a compan( 'ill ha/e to pa( to someone else J3ills, ta0es,
de3ts, interest and mortgage pa(ments, etc.M
! to pro/ide mone( for a compan( or other pro5ect
" mone( in/ested in a possi3l( risk( ne' 3usiness
# the people 'ho 3egin a ne' compan(
1% the place in 'hich a compan( does 3usinessQ an office, shop,
'orkshop, factor(, 'arehouse, and so on
11 to guarantee to 3u( an entire ne' share issue, if no one else 'ants
12 a proportion of the annual profits of a limited compan(, paid to
Alternati!e terminolog$
6mericans often talk a3out corporations rather than companies and
a3out an initial pu(lic offering rather than a flotation.
6nother name for stocks and shares is e?uities, 3ecause all the stocks
or shares of a compan( 7 or at least all those of a particular categor( 7
ha/e eLual /alue.
T'o terms for nominal value are face value and par value.
9ther names for a (onus issue are a scrip issue Jshort for Nsu3scription
certificate+M and a capitalization issue, and in the A:, a stock dividend
or stock split.
Match up the %ollo/ing /ords and de%initions.
Blue chip -efensive stock <ro"th stock
Insider shareBdealing Institutional investors Mutual fund
MarketBmaker *ortfolio &tock(roker
1. a compan( that spreads in/estors+ capital o/er a /ariet( of
2. an in/estor+s selection of securities
3. a person 'ho can ad/ise in/estors and 3u( and sell shares for
4. a stock in a large compan( or corporation that is considered to 3e
a secure in/estment 7
5. a stock 7 in an industr( not much affected 3( c(clical trends 7 that
offers a good return 3ut onl( a limited chance of rise or decline in
a stock 7 'hich usuall( has a high purchasing price and a lo' current
rate of return 7 that is e0pected to appreciate in capital
. a 'holesaler in stocks and shares 'ho deals 'ith 3rokers
!. financial organi@ations such as pension funds and insurance
companies 'hich o'n most of the shares of all leading companies
Jo/er %X, and risingM
". the use of information not kno'n to the pu3lic to make a profit
out of 3u(ing or selling shares
3#. 'onds
Companies finance most of their acti/ities 3( 'a( of
internall( generated cash flo's. If the( need more mone( the( can
either sell shares or 3orro', usuall( 3( issuing 3onds. .ore and more
companies no' issue their o'n 3onds rather than 3orro' from 3anks,
3ecause this is often cheaperQ the market ma( 3e a 3etter 5udge of the
firm+s credit'orthiness than a 3ank, i.e. it ma( lend mone( at a lo'er
interest rate. This is e/identl( not a good thing for the 3anks, 'hich
no' ha/e to lend large amounts of mone( to 3orro'ers that are much
less secure than 3lue chip companies.
Bond2issuing companies are rated 3( pri/ate rating companies
such as .ood(+s and :tandard V Poors, and gi/en an Nin/estment
grade+ according to their financial situation and performance, 6aa
3eing the 3est, and C the 'orst, i.e. nearl( 3ankrupt. 93/iousl(, the
higher the rating, the lo'er the interest rate at 'hich a compan( can
.ost 3onds are 3earer certificates, so after 3eing issued Jon
the primar( marketM, the( can 3e traded on the secondar( 3ond market
until the( mature. Bonds are therefore liLuid, although of course their
price on the secondar( market fluctuates according to the changes in
interest rates. ConseLuentl(, the ma5orit( of 3onds on the secondar(
market are traded either a3o/e or 3elo' par. 6 3ond+s (ield at an(
particular time is thus its coupon Jthe amount of interest it pa(sM
e0pressed as a percentage of its price on the secondar( market.
;or companies, the ad/antage of de3t financing o/er eLuit(
financing is that 3ond interest is ta0 deducti3le. In other 'ords, a
compan( deducts its interest pa(ments from its profits 3efore pa(ing
ta0, 'hereas di/idends are paid out of alread(2ta0ed profits. 6part
from this Nta0 shield+, it is generall( considered to 3e a sign of good
health and anticipated higher future profits if a compan( 3orro's. 9n
the other hand, increasing de3t increases financial riskQ 3ond interest
has to 3e paid, e/en in a (ear 'ithout an( profits from 'hich to deduct
it, and the principal has to 3e repaid 'hen the de3t matures, 'hereas
companies are not o3liged to pa( di/idends or repa( share capital.
Thus companies ha/e a de3t2eLuit( ratio that is determined 3(
3alancing ta0 sa/ings against the risk of 3eing declared 3ankrupt 3(
)o/ernments, of course, unlike companies, do not ha/e the
option of issuing eLuities. ConseLuentl( the( issue 3onds 'hen pu3lic
spending e0ceeds receipts from income ta0, C6T, and so on. >ong2
term go/ernment 3onds are kno'n as gilt2edged securities, or simpl(
gilts, in Britain, and Treasur( Bonds in the A:. The British and
6merican central 3anks also sell and 3u( short2term Jthree monthsM
Treasur( Bills as a 'a( of regulating the mone( suppl(. To reduce the
mone( suppl(, the( sell these 3ills to commercial 3anks, and 'ithdra'
the cash recei/ed from circulation? to increase the mone( suppl( the(
3u( them 3ack, pa(ing 'ith ne'l( created mone( 'hich is put into
circulation in this 'a(.
Rating compan$ 7 firmD de rating
9e,t %inancing 7 finan<area de3itului
*Auit$ %inancing 7 finan<area ac<iunilor
0n!estment grade 7 gradul riscului de in/esti<ie
9e,t+eAuit$ ratio 7 ra<ia de3it2ac<iuni
Pu,lic spending 7 chletuieli pu3lice
Receipts 7 EncasDri, /enituri
Treasur$ ,onds 7 certificate de tre@orerie pe termen lung
Treasur$ ,ills 7 certificate de tre@orerie pe termen scurt
Match up the /ords or phrases on the le%t /ith the corresponding
ones on the right.
1 in/estors 6 the amount of a loan
2 issuing 3onds B 3orro'ing mone(
3 principal C date at 'hich the mone( 'ill 3e
4 maturit( = fall in interest rates
5 pension funds $ keep their 3onds till maturit(
3u(2and2hold in/estors ; default
! non2pa(ment ) profits on the sale assets
" price appreciation 4 pro/iders of funds
# price depreciation I retirement mone(
1% capital gains 1 rise in interest rates
Match up the e(pressions on the le%t /ith the de%initions on the
1 eLuit( financing 6 a securit( 'hose o'ner is not
registered 'ith the issuer
2 de3t financing B easil( sold Jturned into cashM
3 3earer certificate C the rate of interest paid 3( a fi0ed
interest securit(
4 liLuid = the rate of income an in/estor recei/es taking into account a
securit(+s current price
5 par $ issuing 3onds
coupon ; issuing shares
! (ield ) nominal or face /alue J1%%XM
3&. 2utures options and s/aps
Match up the %ollo/ing /ords and de%initions.
- 2utures
6 contracts gi/ing the right, 3ut not the o3ligation, to 3u( or sell a
securit(, a currenc(, or a commodit( at a fi0ed price during a certain
period of time
2 @ptions
B contracts to 3u( or sell fi0ed Luantities of commodit(, currenc(, or
financial asset at a future date, at a price fi0ed at the time of making
the contract
3 Commodities
C a general name for all financial instruments 'hose price depends on
the mo/ement of another price
4 9eri!ati!es
= 3u(ing securities or other assets in the hope of making a capital
gain 3( selling them at a higher price Jor selling them in the hope of
3u(ing them 3ack at a lo'er priceM
" ;edging
$ making contracts to 3u( or sell a commodit( or financial asset at a
pre2arranged price in the future as a protection or Ninsurance+ against
price changes
5. Speculation
; ra' materials or primar( products Jmetals, cereals, coffee, etc.M that
are traded on special markets
Select ten or ele!en o% the %ollo/ing /ords that $ou /ould e(pect
to %ind in an introductor$ te(t a,out %utures and options.
Assets (eer (ush call commodities contracts
Copper currencies discount store foodstuffs hedge
'ia(ilities plastic phone ra" materials
&pot market supermarket tea
No/ read the te(t and see i% $ou %ind the /ords $ou selected.
$/er( 'eekda(, enormous amounts of commodities,
currencies and financial securities are traded for immediate deli/er( at
their current price on spot markets. Get there are also futures markets
on 'hich contracts can 3e made to 3u( and sell commodities,
currencies, and /arious financial assets, at a future date Je.g. three, si0
or nine months adeadM, 3ut 'ith the price fi0ed at the time of the deal.
:tandardi@ed deals for fi0ed Luantities and time periods Je.g. 25 tons
of copper to 3e deli/ered ne0t 1une 3%M are called futures? indi/idual,
non2standard, No/er2the+counter+ deals 3et'een t'o parties Je.g. 1.!
3illion (en to 3e e0changed for dollars on :eptem3er 15, at a rate set
toda(M are called forward contracts.
;edging and speculating
;utures, options and other deri/ati/es e0ist in order that
companies and indi/iduals ma( attempt to diminish the effects of, or
profit from, future changes in commodit( and asset prices, e0change
rates, interest rates, and so on. ;or e0ample, the prices of foodstuffs,
such as 'heat, mai@e, coca, coffee, tea and orange 5uice are freLuentl(
affected 3( droughts, floods and other e0treme 'eather conditions.
ConseLuentl( man( producers and 3u(ers of ra' matrials 'ant to
hedge, in order to guarantee ne0t season+s prices. ,hen commodit(
prices are e0pected to rise, future prices are o3/iousl( higher than Jat
a premium onM spot prices? 'hen the( are e0pected to fall the( are at a
discount on spot prices.
In recent (ears, especiall( since financial deregulation,
e0change rates and interest rates ha/e also fluctuated 'idl(. .an(
3usinesses, therefore, 'ant to 3u( or sell currencies at a guaranteed
future price. :peculators, anticipating currenc( appreciations or
depreciations, or interest rate mo/ements, are also acti/e in currenc(
futures markets, such as the >ondon International ;inancial ;utures
$0change J>I;;$, pronounced Nlife+M.
6s 'ell as currencies and commodities, there is no' a huge
futures market in stocks and shares. 9ne can 3u( options gi/ing the
right 7 3ut not the o3ligation 7 to 3u( and sell securities at a fi0ed
price in the future. 6 call option gi/es the right to 3u( securities Jor a
currenc(, or a commodit(M at a certain price during a certain period of
time. 6 put option gi/es the right to sell an asset at a certain price
during a certain period of time. These options allo' organi@ations to
hedge their eLuit( in/estments.
;or e0ample, if (ou think a share 'orth 1%% 'ill rise, (ou can
3u( a call option gi/ing the right to 3u( at 1%%, hoping to sell this
option, or to 3u( and resell the share at a profit. 6lternati/el(, (ou can
'rite a put option gi/ing someone else the right to sell the shares at
1%%Q if the market price remains a3o/e 1%%, no one 'ill e0ercise the
option, so (ou earn the premium.
9n the contrar(, if (ou e0pect the /alue of a share that (ou
o'n to fall 3elo' its current price of 1%%, (ou can 3u( a put option at
1%% Jor higherMQ if the price falls, (ou can still sell (our shares at this
price. 6lternati/el(, (ou could 'rite a call option gi/ing someone else
the right to 3u( the share at 1%%Q if the market price of the underl(ing
securit( remains 3elo' the option+s e0ercise price or strike price, no2
one 'ill take up the option, and (ou earn the premium.
9ptions are merel( one t(pe of deri/ati/e instrument, 3ased
on another underl(ing price. .an( companies no'ada(s also arrange
currenc( s'aps and interest rate s'aps 'ith other companies or
financial institutions. ;or e0ample, a ;rench compan( that can 3orro'
francs at a preferential rate, 3ut 'hich also needs (en, can arrange a
s'ap 'ith a 1apanese compan( in the opposite position. :uch
currenc( s'aps, designed to achie/e interest rate sa/ings, are of
course open to the risk of e0change rate fluctuations. 6 compan( 'ith
a lot of fi0ed interest de3t might choose to e0change some of it for
another compan(+s floating rate loans. ,hether the( sa/e or lose
mone( 'ill depend on the mo/ement of interest rates.
Call option 7 op<iune de achi@i<ie
Put option 7 op<iune de /Fn@are
*(ercise price L strike price 7 pre< de e0erci<iu
S/ap 7 schim3
Complete the %ollo/ing sentences
1 The difference 3et'een futures and for'ard contracts is O.
2 Producers and 3u(ers often choose to hedge 3ecause O.
3 :peculators can make mone( on currenc( futures if O
4 If (ou 3elie/e that a share price 'ill rise, possi3le option strategies
include O
5 9n the contrar(, if (ou think a share price 'ill fall, possi3le option
strategies include O
. The risk 'ith currenc( and interest rate s'aps is that O
2ind /ords in the te(t that are in an o,!ious sense the o!!osite o%
the terms ,elo/.
Appreciate call discount drought floating
2edging spot market strike price
Acceptance 7 acceptare JtratDM
Acceptor 7 tras, acceptor
Allo/ credit 7 a acorda un credit
All+time high 7 un record de creBtere a cursului
All+time lo/ 7 un record de scDdere a cursului
Amount 7 o sumD, un total
Amount to 7 a se ridica la, a a5unge la
Arrears 7 datorii, restan<e, arierate
Articles o% Association 7 statutul societD<ii
Assess to estimate 7 a e/alua, a estima
Assessment an estimate 7 o e/aluare, o estimare
Assets K acti/ul
Auction 7 o /Fn@are prin licita<ie
Austerit$ 7 austeritate
'ack 7 a sus<ine financiar
'ad cheAue dud check 7 cec fDrD acoperire
'ad de,t 7 o crean<D neplDtitD
'alance o% account 7un sold de cont
'alance o% Pa$ments 7 3alan<a de plD<i
'alance o% Trade 7 3alan<a comercialD
'ank clerks 7 func<ionari 3ancari
'ank <A.*. discount= rate 7 rata scontului BDncii centrale
'ank account 7 cont 3ancar
'ank tellers 7 casieri Jla 3ancDM
'ank /ickets 7 ghiBee ale 3Dncii
'anking regulation 7 reglementDri 3ancare
'anknotes JA.*. ,illsM 7 3ancnote
'argain 7 a negocia
'arrier 7 o 3arierD
'arter L counter+trade 7 troc
'ase rate L prime rate 7 ta0D preferen<ialD L rata de 3a@D
'e in the ,lack 7 a fi creditor
'e in the red 7 a fi descoperitP En deficit
'ear 7 un speculator de 3ursD Jcare mi@ea@D pe scDderea cursuluiM
'ear an interest 7 a produce o do3FndD
'earer 7 un purtDtor
'earer cheAue 7 cec la purtDtor
'ene%it 7 un a/anta5
'ill a check <US= 7 o notD de platD
'ills 7 facturi, note de platD, efecte 3ancare
'ills o% *(change J'.*.M, dra%ts 7 cam3ii, poli<e, trate
'ite 7 a a/ea efect
'lank cheAue 7 cec En al3
'lue chips 7 ac<iuni ale marilor companii
'oard o% directors 7 consiliul de administra<ie
'ond 7 o o3liga<iune
'onus issue shares L stock di!idends 7 ac<iuni gratuite, di/idente
'oom 7 un a/Fnt JperioadD de succesM
'oost 7 a relansa
'orro/ 7 a lua cu Emprumut
'orro/er 7 cel care ia cu Emprumut
'ranch 7 sucursalD
'rand 7 o marcD comercialD
'reak e!en 7 a echili3ra conturile
'ring do/n 7 a micBora, a diminua
'risk 7 acti/, animat
'uck 7 3ancnotD sau 3ancnote de un dolar J6.$. familiarDM
'uilding societ$ 7 o 3ancD popularD de economii pentru cumpDrare de
'ull 7 un speculator de 3ursD Jcare mi@ea@D pe creBterea cursuluiM
'ullion 7 lingou din metal pre<ios
'uo$ant 7 sus<inut, 3ine orientat
'u$ %or/ard 7 a cumpDra la termen
'$la/ 7 pre/edere regulamentarD
Cap ta(es 7 a fi0a un plafon pentru impo@ite
Cash a cheAue 7 a Encasa un cec
Cash %lo/ K flu0 de numerar
Cash point 7 un aparat distri3uitor de 3ancnote
Cashier 7 casier En unitD<i economice
Ceiling 7 plafon, ni/el ma0im
Central 'ank 7 3anca centralD
Change %rancs into pounds 7 a schim3a francii En lire
Charge 7 ta0D, pre<, cheltuieli
CheAue+,ook 7 carnet de cecuri
CheAue+,ook JA.*. check,ookM 7 carnet de cecuri
Chie% e(ecuti!e o%%icer L managing director 7 director general
Clearance sale 7 o /Fn@are la solduri
Clearing+house 7 camerD de compensarePdecontarePoficiu cliring
Close 7 Enchidere
Close do/n 7 a a/ea un curs scD@ut la Enchidere
Coin mone$ 7 a 3ate monedD
Coins 7 monede, 3ani metalici
Collapse 7 a se prD3uBi
Collateral 7 garan<ie, ga5 P garant, girant, gir
Collect 7 a Encasa, a percepe Jimpo@iteM
Commercial L retail ,ank 7 3ancD comerciale P 3ancD de depo@it
Commodit$ 7 o marfD Jde larg consumM
Compete /ith s,. 7 a concura cu cine/a, a face concuren<D cui/a
Competiti!e 7 competiti/
Composite rate 7 ratD compusD
Contri,ution 7 coti@a<ie, contri3u<ie
Con!ergence criteria 7 criterii de con/ergen<D
Cost accounting 7 conta3ilitate analiticD P anali@a costurilor
Cost e%%ecti!e2 renta3il, care EBi meritD pre<ul
Cost o% li!ing 7 costul /ie<ii
Council ta( 7 impo@ite locale
Counter 7 ghiBeu
Counter%eit 7 a contraface, a falsifica, a face 3ancnote false
Credit a sum to an account 7 a /ira o sumD Entr2un cont
Credit an account 7 a credita un cont
Credit rating 7 e/aluare a sol/a3ilitD<ii clientelei
Credit sAueeBe 7 restrFngere a creditului
Credit standing 7 situa<ie financiarD, gradul de sol/a3ilitate
Creditor 7 creditor
Crisis 7 o cri@D
Cross out 7 a 3ara
Crum,le 7 a se prD3uBi
Cur, 7 a frFna, a stDpFni
Currencies 7 de/i@e
Current L checking account 7 cont curent
Current account de%icit 7 un deficit al 3alan<ei de plD<i curente
Current account? account current 7 cont curent
Custom+made 7 fDcut pePla comandD
Customs 7 /amD
9a,,le on the Stock *(change 7 a 5uca la BursD
9eal 7 o tran@ac<ie
9ealer 7 un dealer
9e,it a sum %rom an account 7 a de3ita o sumD dintr2un cont
9e,it an account ,$ a sum 7 a de3ita un cont dintr2o sumD
9e,t 7 o datorie
9e,tor 7 un de3itor
9ecline 7 a decDdea, o scDdere
9eeds 7 acte, contracte
9e%ault 7 a nu onora
9e%ault on a pa$ment 7 a nu onora o platD
9e%aulter 7 rDu platnic
9e%er 7 a amFna, a EntFr@ia
9e%icit 7 un deficit
9e%lation 7 defla<ie
9ela$ 7 a amFna, a EntFr@ia
9emand 7 cerere
9eposit 7 a depune
9eposit L time L notice account 7 cont de depunere
9eposit account 7 cont de depunere la scaden<D, de depo@it
9eposit ,ank 7 3ancD de depuneri
9epositor 7 depunDtor
9epreciation 7 amorti@are, depreciere
9eregulation K dereglementare
9e!aluate 7 a de/alori@a
9e!alue 7 a de/alori@a
9ip 7 a scDdea, a descreBte
9irect de,it 7 de3itare directD
9irecti!e 7 o directi/D
9iscontinue 7 a Enceta Jde a mai face ce/aM, a Entrerupe
9iscount 7 a sconta Jo poli<DM
9iscount a dra%t 7 a sconta o tratD
9iscount ,ank 7 3ancD de scont
9i!idends 7 di/idente
9o/nturn a do/ns/ing 7 un regres
9ra/ on an account 7 a scoate dintr2un cont, a retrage dintr2un cont
9ra/ on sight 7 a trage la /edere
9ra/ on someone 7 a trage Jo tratDM asupra cui/a
9ra/ee 7 tras
9ra/er 7 trDgDtor
9rop to %all to come do/n 7 a scDdea, a se micBora
9ull 7 inacti/
9ut$ 7o ta0D
*arn an interest 7 a produce o do3FndD
*arnings 7 cFBtiguri, /enituri JsalarialeM
*ase 7 a se rela0a
*ncash 7 a Encasa un cec Jla 3ancDM
*ndorse 7 a andosa
*ndorse a cheAue 7 a andosa un cec
*ndorsement 7 andosare
*nAuir$ inAuir$ 7 cerere de informa<ii
*Auities 7 ac<iuni ordinare
*rasure 7 Btergere, BtersDturD
*(ceed 7 a depDBi
*(change 7 schim3
*(change ,roker 7 agent de schim3
*(change ,ureau 7 3irou de schim3
*(change rate 7 ratD de schim3
*(ecuti!e 7 administrator
*(penses 7 cheltuieli, plD<i
2ace !alue 7 /aloarea nominalD
2all ,ack 7 a se replia
2all due 7 a sosi la scaden<D
2all drop in prices 7 o scDdere a pre<urilor
2ederal Reser!e 'ank Jthe 2edM JA.*.M 7 3anca federalD de re@er/e,
3anca centralD a :.A.6.
2ee 7 un onorariu
2igure 7 o cifrD
2ile %or ,ankruptc$ to %ile under chapter -- <US= 7 a2Bi depune
3ilan<ul, a cere falimentul
2ill in a %orm 7 a completa un formular
2inance to %und 7 a finan<a, a acorda fonduri
2inancial ,acking <support= 7 sus<inere financiarD, spri5in financiar
2irm 7 ferm
2lat rate 7 ratD uniformD
2loat <a currenc$= 7 a faceP a lDsa sD oscile@e o monedD strDinD
2loat a compan$ 7 a lansa o societate
2lourish 7 a prospera
2oot the ,ill 7 a achita nota de platD
2orecast an outlook 7 o pre/i@iune
2oreign L o!erseas trade 7 comer< e0terior
2oreign resident 7 re@ident strDin
2orge 7 a falsifica, a contraface J3ancnote, documenteM
2orger$ 7 contrafacere, falsificare, falsuri J3ancnote, documenteM
2ree trade 7 li3er schim3
2ringe ,ene%it 7 3eneficiu suplimentar JEn afara salariuluiM
2utures market 7 pia<a tran@ac<iilor la termen
:ain 7 a cFBtiga P un cFBtig, o plus2/aloare
:ilt+edged securities 7 /aloriPtitluri fDrD risc Jo3liga<iuni de statM
:iro 7 cecuri poBtale
:iro account 7 cont2cecuri poBtal
:i!e notice 7 a da un prea/i@
:lo,alise 7 a se e0tinde la scarD mondialD
:o ,ell$ up <US= 7 a da faliment
:o into administration 7 a fi supus unei proceduri de lichidare
:o into liAuidation 7 a intra En lichidare
:o on a /el%are 7 a se Enscrie la asisten<D socialD
:o pu,lic 7 a intra la BursD, a fi acceptat la BursD
:o up to rise 7 a creBte, a urca, a se mDri
:oods /ares 7 produse, mDrfuri
:rant 7 a acorda, a aloca P o aloca<ie, un a5utor financiar
:rant a loan 7 a acorda un Emprumut
:rant credit 7 a acorda un credit
:reen,acks 7 dolari Jamericanism familiarM
:ross 9omestic Product 7 Produsul Intern Brut
:ross National Product 7 Produsul *a<ional Brut
;ard cash 7 3ani ghea<D
;edge 7 a se acoperi JriscM
;ike prices <US= 7 a mDri, a creBte pre<uri
;istorical cost accounting 7 conta3ilitatea costurilor de achi@i<ie P
;older 7 titular Jcarte de creditM
;older o% an account account holder 7 de<inDtor al unui cont
;ome sa!ings plan 7 plan de economii pt. Jconstruc<ia deM locuin<e
;ome trade 7 comer< intern
;ot mone$ 7 3ani fier3in<i Jcapital atras din strDinDtate de do3Fn@i
ridicate sau de un climat politic sigurM
0n cash 7 En numerar
0n custod$ 7 En custodie
0n real terms 7 En 3ani constan<i
0n the red o!erdra/n 7 epui@at, descoperit Jun contM
0ncenti!e 7 un stimulent
0ncome statement <A.*.=Loperating statement <'.*.= 7 cont de
e0ploatare, cont de profituri Bi pierderi
0ncome ta( 7 impo@it pe /enit
0nde( 7 a inde0a
0nde(+linked 7 inde0at
0n%lation 7 infla<ie
0n%lationar$ 7 infla<ionist
0nheritance ta( 7 drepturi de succesiune
0nterest 7 do3FndD
0nternational Monetar$ 2und <0.M.2.= 7 ;ondul .onetar
Interna<ional J;...I.M
0n!estment <'.*. merchant= ,ank 7 3ancD de in/esti<ii
0n!estments 7 in/esti<ii
0n!oice 7 facturD
0ssue 7 a emite
Hack up 7 a mDri pre<uri
He/els 7 3i5uterii
Hoint account 7 cont comun
Hunk ,onds 7 o3liga<iuni fDrD /aloare
Iickstart the econom$ 7 a impulsiona economia
.ea!e a deposit 7 a lDsa o garan<ie
.egal tender 7 ofertD legalD, curs legal
.end 7 a da cu Emprumut
.ending rate 7 rata de Emprumut
.e!el o%% 7 a se rela0a
.e!erage 7 capacitate de influen<D P raportul dintre crean<e Bi capital P
creBterea renta3ilitD<ii capitalului unei societD<i ca urmare a
contractDrii de datorii
.e!eraged ,u$out 7 rDscumpDrarea unei societD<i datoritD creBterii
renta3ilitD<ii capitalului ca urmare a contractDrii de datorii
.e!$ 7 a percepe, a impune Jo ta0D, un impo@itM P o ta0D
.ia,ilities K pasi/ul
.iAuidation 7 lichidare
.isted compan$ 7 societate pe ac<iuni
.oan shark 7 un cDmDtar
.oans 7 Emprumuturi
.ook up to pick up 7 a se redresa
.oss 7 o pierdere
.oss+making unpro%ita,le 7 nerenta3il
.ump sum settlement 7 platD forfetarD, platD glo3alD
Make 7 o marcD Jde fa3ricDM, fa3rica<ie
Maturit$ <o% a loan= 7 scaden<a unui Emprumut
Mercantile *(change 7 Bursa de mDrfuri
Merchant ,ank 7 o 3ancD comercialD
Merchant ,ank L 0n!estment ,ank 7 3ancD comercialD P de in/esti<ii
Mint 7 institut 3ritanic de emisiune monetarDP .onetDria :tatului
Monetar$ 7 monetar
Monetar$ suppl$ 7 masD monetarD
Mone$ order 7 mandat poBtal
Mortgage 7 ipotecD
Mutual 2und 7 societate de in/esti<ii cu capital /aria3il
Note 7 3ancnotD di/i@ionarD
@%%set 7 a contra3alansa, a compensa
@pen up 7 a a/ea un curs ridicat la deschidere
@pt+out clause 7 o clau@D e0cep<ionalD
@rder 7 o comandD
@utlet 7 un de3uBeu, un punct de desfacere
@utstanding 7 neachitat, EntFr@iat Jla platDM
@!erdra%t 7 descoperire En cont, sold de3itor
@!erdra/ <an account= 7 a descoperi, a epui@a un cont
@!erdue 7 e0pirat, EntFr@iat, scadent
@!erheads %i(ed costs K cheltuieli fi0e
@!erheat 7 a supraEncDl@i
@!er+the+counter market 7 pia<D de titluri fDrD /aloare
Pace 7 3eneficiar
Paper mone$ 7 3ani de hFrtie, 3ancnote
Pa/n 7 a ga5a, a amaneta
Pa/n,roker 7 cDmDtar
Pa$ <in= cash 7 a plDti En numerar, a plDti cu 3ani ghea<D
Pa$ as $ou earn <PA5*= 7 plata prin prele/are direct de la sursD
Pa$ ,ack to repa$ 7 a ram3ursa
Pa$ into an account 7 a /Drsa Entr2un cont
Pa$ee 7 3eneficiar
Pa$+in slip 7 foaie de depunere sau de /DrsDmFnt
Pa$ment ,$ installments K platD En rate
Pa$ment in cash 7 platD En numerar
Pa$ment+in 7 /irament JEntr2un contM
Pick up the ta, 7 a achita nota de platD
Plough ,ack pro%its 7 a rein/esti profiturile
Plummet 7 a merge foarte prost, a a/ea greutD<i mari
Polic$ 7 o politicD, o strategie
Port%olio 7 un portofoliu Jde /aloriM
Postpone 7a EntFr@ia, a amFna
Premise 7 loca<ie
Price inde( 7 un indice de pre<
Prime rate <A.*.= 7 ratD de 3a@D
Pri!ate limited compan$ 7 societate cu rDspundere limitatD
Pri!atise 7 a pri/ati@a
Production output 7 produc<ie
Pro%it margin 7 o mar5D de profit
Promissor$ note 7 3ilet de ordin, cam3ie, titlu de ga5, o3liga<iune
Pundit 7 un e0pert
Purchase 7 o achi@i<ie, o cumpDrare
Cuali%ied ma4orit$ 7 ma5oritatea calificatD
Cuid <'.*.= 7 3ancnotD sau 3ancnote de o lirD JfamiliarM
Cuota 7 o cotD2parte
Cuote 7 a cota
Cuoted or listed compan$ 7 societate cotatD la 3ursD
Rall$ 7 a se reface, a se EntDri
Reco!er 7 a se resta3ili, a2Bi re/eni, a se reface
Recurring 7 care se repetD, periodic, recurent
Recurring e(penses 7 cheltuieli recurente
Reduce to cut ,ack 7 a reduce
Re%und 7 a ram3ursa
Registrar o% companies 7 registrul de comer<
Regulation 7 regulament, reglementare
Remittance 7 /DrsDmFnt
Rents 7 chirii
Repa$ to pa$ ,ack 7 a ram3ursa
Residual !alue 7 /aloare re@idualD
Restrict 7 a impune o restric<ie
Retail price inde( 7 indicele pre<urilor cu amDnuntul
Re!alue 7 a ree/alua
Re!enue 7 /enituri
Rights issue 7 emisiuni re@er/ate ac<ionarilor
Rise in prices 7 o creBtere a pre<urilor
Running costs K cheltuieli /aria3ile
Sa%e 7 casD de 3ani
Sa!ings 7 economii, 3ani economisi<i
Sa!ings account 7 cont de economii
Sa!ings 'ank 7 casD de economii
Securit$ 7 titlu de /aloare
Sell at a premium 7 a /inde su3 pre<ul pie<ei
Sell short 7 a /inde la termen, a su3e/alua
Set,ack 7 o cDdere, o in/olu<ie, un regres
Settle 7 a echili3ra un cont, a plDti
Settlement 7 platD
Share 7 a EmpDr<i, a participa EmpreunD
Share 7 o ac<iune
Shoot up 7 a creBte /ertiginos
Short term 7 pe termen scurt
Shortage 7 o penurie
Short%all 7 o lipsD, o insuficien<D
Sight /ithdra/al 7 retragere la /edere
Single market 7 o pia<D unicD
Slacken to slo/ do/n 7 a Encetini, a frFna
Slash 7 a reduce radical
Slide 7 a scDdea
Slo/ pa$er 7 rDu platnic
Slump 7 a scDdea masi/
Small amount small sum 7 sumD micD
Sol!enc$ 7 sol/a3ilitate
Spending 7 cheltuieli
Spin+o%% 7 o schim3are radicalD
Spot market 7 pia<a tran@ac<iilor cu plata pe loc
Spread L Margin 7 mar5D, margine
SAueeBe 7 a presa, a constrFnge
Stag%lation 7 stagfla<ie, Jstagnare economicD W infla<ieM
Stagnate 7 a stagna
Stake 7 participare, interest
Standard o% li!ing 7 standardul de /ia<D
Statement o% account 7 e0tras de cont 3ancar
Stead$ 7 sta3il
Stimulate 7 a sitmula
Stock *(change 7 Bursa de Calori
Stock market 7 o pia<D 3ursierD
Stock securities 7 /alori, titluri
Stock,roker 7 un agent de schim3P3ursD
Stu, counter+%oil 7 cotor, talon, matcD Jde chitan<D, cec etc.M
Su,scri,e 7 a su3scrie
Su,scription 7 a3onament
Su,side 7a su3/en<iona
Sue 7 a face un proces, a chema En instan<D
Sum 7 o sumD
Summit 7 o EntFlnire de /Frf
Suppl$ P pro!ide s,. ?ith sth. 7 ofertD, a furni@a ce/a cui/a
Sur!e$ 7 un studiu, o anchetD
S/ap 7 s'ap Jopera<ie de schim3 Entre douD de/i@e pre/D@utD pentru
o anumitD perioadDM
Target 7 o <intD
Tari%% 7 un tarif /amal
Ta( 7 a impune ta0e, a impo@ita
Ta( allo/ance 7 scutire de ta0e
Ta( ,reak 7 o reducereP scDdere de impo@it
Ta( collector 7 un perceptor
Ta( ha!en 7 un paradis fiscal
Ta( relie% 7 degre/are de impo@it
Ta(pa$er 7 un contri3ua3il
Telegraphic mone$ order 7 mandat telegrafic
Thri!e to prosper 7 a prospera
Tighten one3s ,elt 7 a strFnge cureaua
Trade 7 a face comer<
Trade ,ank 7 3ancD comercialD
Trade gap 7 un deficit comercial
Trans%er 7 a transfera, a /ira
Tra!eller3s cheAues JA.*. tra!eler3s checksM 7 cecuri de cDlDtorie
Treasur$ 7 te@aurul pu3lic
Trend 7 o tendin<D
Trust 7 a a/ea Encredere, a Encredin<a
Turno!er 7 /olumul afacerilor
Under/rite 7 garantarea su3scrierii unei emisiuni
Upturn an ups/ing 7 o redresare, o ascensiune
1alua,les 7 o3iecte de /aloare
1alua,les L deeds 7 acte, /alori
1alue added ta( 7 ta0D pe /aloarea adDugatD
1enture capital 7 capital de risc
1eto sth. 7 a2Bi e0prima dreptul de /eto fa<D de ce/a
1olatile 7 ner/os, fe3ril
?ind up 7 a lichida
?ithdra/ 7 a retrage
?ithdra/al 7 pre/elare, retragere
?rite out <to make out= a cheAue 7 a trage, a Entocmi un cec
5ield 7 a aduce, a produce /enit
5ield 7 randament
5ield an interest 7 a produce o do3FndD
Cheia e(erciPiilor
Module -
Reading 7 :ummar( B is the 3est. The other t'o are, according to
the te0t, 'rong.
Practice - K a model !ersion o% the dialogue
+isitor2 4ello, m( name+s 4enrik /an der >inden from 6mtel. I ha/e
an appointment 'ith :andra Bates.
Rece!tionist2 9h, (es, .r Can der >inden. ,elcome to =atalink. .s
Bates 'ill 3e along in a fe' minutes. :he+s 5ust finishing a meeting.
Can I get (ou something to drink-
+isitor2 *o thanks, I+m fine. $r, 3ut I 'onder if I could use the
Rece!tionist2 Ges, of course. 6nd an(thing elseO if (ou need to
send a fa0 or an(thingO
+isitor2 *o, it+s oka(, 5ust the phone.
Rece!tionist2 8ight, 'ell (ou can use this one.
+isitor2 Thanks. JdialsM 4allo, JfadeM
Ja fe' minutes laterM
+isitor2 Jfade inM 6u re/oir. JclickM Thank (ou /er( much.
Rece!tionist2 *ot at all. If there+s an(thing else (ou need, please ask.
+isitor2 Ges, I 'as 'ondering ho' far is it to the station-
Rece!tionist2 It+s a3out t'o miles 7 ten minutes 3( ta0i. :hall I 3ook
+isitor2 $r, (es, thank (ou. that 'ould 3e good. Can 'e sa( four
Rece!tionist2 8ight, I+ll do that. 9h, I think .s Bates is free no'.
:hall I take (ou to her office-
+isitor2 ,ith pleasure. Thanks.
*(ercise - K 2irst /ords
CisitorQ a, d, f, g, i, k PP the person recei/ing the /isitorQ 3, c, e, h, 5, l,
*(ercise 2 K *nding the small talk
aM B? 3M 6? cM B? dM B? eM 6
Module 2
Reading K %ind /ords
1 literal a. direct and clear
2 understatement 3. less strong 'a( of talking
3 deduce 3. 'ork out
4 /ague a. unclear
5 de/ious 3. dishonest
pleasantries c. polite remarks
*(ercise - K Making a call
Jin orderMQ speak to? through? office? can? hello? 3ad? speak? speaking?
put? through? hold? office? moment? num3er? ring? 3ack? on? message?
rang? call
Practice - K a model ans/er
Rece!tion2 )ood morning, )orli@ and Uimmerman.
,ara Camden2 4ello, m( name+s >ara Camden from Bulmer Ca3les
>td. Please could I speak to .r. Conrad Bird-
Rece!tion2 I+m sorr(, 3ut .r. Bird is not in at the moment.
,ara Camden2 I see. $rO 'hen do (ou think I could contact him-
Rece!tion2 ,ell, at the moment he+s a'a(. ,ould (ou like to lea/e
a message-
,ara Camden2 Ges, perhaps (ou 'ould ask .r. Bird to call me- .(
name+s Camden, >ara Camden, on %1"1 2## 42.
Rece!tion2 8ight, that+s >ara Canden on %1"1 2## 42. 9ka(-
,ara Camden2 Ges, erO Camden. CO6O.O=O$O*.
Rece!tion2 9h (es, sorr(R I+/e got that no'.
,ara Camden2 Thank (ou. I look for'ard to hearing from .r. Bird.
Rece!tion2 It+s a pleasure. Thanks for calling. B(e for no'.
Practice 2 K a model e(ample o% the con!ersation
.ntershi!2 Intership, good morning.
ComputechQ 4ello, m( name+s 6le0 4all from Computech 6rcos in
IntershipQ :orr(, did (ou sa( 6le0 4all from Computech 6rcos-
ComputechQ Ges, that+s right.
IntershipQ 9ka(, ho' can I help (ou, .r. 4all-
ComputechQ ,ell, I+d like an appointment 'ith .r. =ionis.
IntershipQ Can (ou tell me 'hat+s a3out-
ComputechQ Certainl(. I+d like to discuss the transporting of goods
from :ingapore to 6thens.
IntershipQ I see. ,hen 'ould 3e a good time for (ou to come here-
ComputechQ .a( I suggest ne0t 'eek-
IntershipQ I+m sorr(, ne0t 'eek+s not possi3le 7 .r. =ionis is a'a(
ne0t 'eek. 4o' a3out the 3eginning of the ne0t month-
ComputechQ Ges, that 'ould 3e oka(. Could 'e sa( .onda( 3
IntershipQ $r, unfortunatel( .r. =ionis is 3us( all da( on that
.onda(. 4e could make it Tuesda( 4
ComputechQ That+s fine. :hall 'e sa( ten a.m.-
IntershipQ Ges, that+s a good time for us. $rmO can I ask (ou to
confirm 3( fa0- 6nd 'ould (ou like us to 3ook (ou a hotel-
ComputechQ I+ll fa0 7 and thank (ou 3ut no, the hotel 3ooking isn+t
necessar(. I think that+s e/er(thing, for no' 7
IntershipQ 8ight, man( thanks, 'e look for'ard to (our fa0 to
confirm the meeting. )ood3(e, .r. 4all.
ComputechQ B(e for no'.
A model o% a %a( message o% con%irmation6
Computech Arcos
>orong 9ne Toa Pa(oh
:ingapore 1253
TelephoneQ WW5 35% 5!4
2a(6 QQ#" 2"E ""2
;a0 toQ .r. =ionis JIntership :.6.M
;a0 *um3erQ 3% 1 5!!! Page 1 of 1
;romQ =ateQ 1# 6pril 1#Z
8e. Meeting /ith Mr. 9ionis
,ith reference to our phone con/ersation of this morning I 'rite to
confirm m( appointment 'ith .r. =ionis ne0t month.
:u35ectQ Transport of goods from :ingapore to 6thens.
=ate of .eetingQ Tuesda( 4
.a( at 1% a.m.
I also confirm that I 'ill make m( o'n hotel arrangements.
I look for'ard to meeting .r. =ionis ne0t month.
Best regards
*(ercise 2 K Changing arrangements
:ee language input.
Practice 3
Tao ,oon2 4ello, :ales 9ffice here.
,uisa2 4ello, m( name+s >uisa =omingue@. I+m ringing from :pain
7 from Berraondo Compan(.
Tao ,oon2 4o' can I help (ou, .s =omingue@-
,uisa2 The pro3lem concerns a printer order. >et me gi/e (ou the
order num3er 7 it+s 4;51". It+s 7 it+s for t'ent( printers. The
pro3lem is that onl( se/enteen ha/e arri/ed.
Tao ,oon2 8eall(- I+m surprised to hear that.
,uisa2 ,ell, I+m afraid it+s the second time 'e ha/e recei/ed and
incomplete deli/er( and no3od( told us there 'ould onl( 3e
Tao ,oon2 ,ell, no, I think it 'as pro3a3l( an administration
,uisa2 Ges, I+m sure. *o', 'e need the other three printers
urgentl(. =ela(s are causing us pro3lem 'ith our customers. The( are
rather unhapp(.
Tao ,oon2 9ka(, er, at the moment 'e ha/e some stock pro3lems.
,uisa2 ,ell, can (ou gi/e me a deli/er( date 7 it+s /er( urgent.
Tao ,oon2 8ight 7 let me see. ,e can promise (ou a despatch ne0t
,uisa2 *o, I+m sorr(, that+s not good enough. ,e need despatch
Tao ,oon2 I+m sorr( 7 that+s not possi3le. But 'e+ll despatch on
.onda(, I assure (ou.
,uisa2 ,ell, 'ill (ou please send a fa0 to confirm that.
Tao ,oon2 9f course. 6nd I do apologi@e for the pro3lem.
,uisa2 8ight, good3(e for no'.
Tao ,oon2 )ood3(e.
a. True? 3. True? c. ;alse? d. ;alse? e. True? f. ;alse
Module 3
Practice -
Tok(o medical congress
a. Pro3a3l( /er( formal.
3. 4igh e0pectations in terms of technical support, a fair amount of
detail and clearl( a lot of e0pertise.
c. 4igh le/el of specialist kno'ledge 7 audience are e0perts.
d. =epends on congress organi@ation 7 pro3a3l( less then an hour.
e. =epends on congress organi@ation 7 pro3a3l( Luestions follo'.
f. Ase of /isual supports 'ith ke( information, plus later pu3lication
of Congress Proceedings
Purchasing and Product .anagers of a Tai'anese compan(
a. Pro3a3l( semi2formal.
3. 4igh e0pectations in terms of technical support, a fair amount of
detail and clearl( a lot of e0pertise.
c. 4igh le/el of specialist kno'ledge 7 at least the Product .anager
'ill 3e /er( e0pert, the Purchasing .anager perhaps less so.
d. =epends on o35ecti/es and on comple0it( of eLuipment. Could 3e
a /er( long presentation, e/en a 'hole da( or a one hour
presentation might 3e enough.
e. Pro3a3l( interruption are encouraged to make e/er(thing clear as
the presenter goes along.
f. Ase of /isual support, photographs, diagrams, or the actual
machine itself. ;ollo'2up documentation 'ill also 3e a/aila3le.
Internal meeting P administrati/e staff
a. Informal.
3. 8easona3l( high e0pectations in terms of speaker+s kno'ledge.
c. The audience 'ill pro3a3l( ha/e good 3ackground kno'ledge 3ut
ha/e come to learn a3out a ne' s(stem.
d. Pro3a3l( short 7 thought it might 3e half a da(R
e. Interruptions encouraged.
f. Pro3a3l( illustrations, possi3l( handouts.
6 staff meeting P charit( e/ent
a. Informal.
3. >o' e0pectations.
c. The audience ha/e come to hear ideas.
d. Pro3a3l( short 7 fi/e or ten minutes-
e. Interruptions encouraged.
f. &eep to clear simple structure making one or t'o important
Practice 2
:u35ect P title of talk. 1
Introduction to oneself, 5o3 title, etc. 4
8eference to Luestions and P or discussion. 2
8eference to the programme for the da(. 4
8eference to ho' long (ou are going to speak for. 3
8eference to the /isual aids (ou plan to use. 5
The scope of (our talkQ 'hat is and is not included. 4
6n outline of the structure of (our talk. 1
6 summar( of the conclusions. 4
$ote) There are no hard rules a3out 'hat should 3e included. .ost
suggestions here are open to discussion and
/ariation, depending on circumstances.
Cisuals make information more memora3le
4elp the speaker
:ho' information 'hich is not easil( e0pressed in 'ords
4ighlight information
Cause audience to emplo( another sense to recei/e information
Bring /ariet( and therefore increase audience+s attention
:a/e time
Clarif( comple0 information
Presenters sometimes place the ma5or emphasis on /isual aids and
relegate themsel/es to the minor role of narrator or technician
Cisuals must support 'hat the speaker sa(s
It is not enough 5ust to read 'hat the /isual sa(s
;ind out a3out the audience.
;ind out 'hat the( need to kno'.
Plan 'hat (ou+re going to sa(.
:a( it clearl( and concisel(.
Introduce information using lists.
)i/e a link 3et'een parts of the presentation.
Pro/ide a logical seLuencing of information.
Ase careful repetition of ke( information.
=on+t gi/e too much information or too man( fact.
a. The main 3od( of the presentation contains the details of 'hat
'as introduced in the introduction.
3. :ee figure included in the te0t.
Practice 4 K a model o% presentation
)ood morning, e/er(one. I+d like to talk a3out the ad/ertising mi0 for
the ne' Cheri range of 3eaut( products. ,e are planing t'o
categories of ad/ertising, a3o/e2the2line and 3elo'2the2line. I+ll talk
first a3out a3o/e2the2line ad/ertising. There are three kindsQ these are
tele/ision commercials, secondl(, ne'spapers 7 ne'spaper
ad/ertising. The third kind is maga@ines. There are t'o 3asic t(pes 'e
aim atQ (outh maga@ines and those aimed specificall( at the 'omen+s
market. *o', 3elo'2the2line ad/ertisingQ there are three methods here
alsoQ the first is in2store ad/ertising, then there+s on2pack promotions
and finall( targeted mailing. :o, in2store ad/ertisingQ 'hat does it
mean- Basicall(, displa(s in the shop, merchandising, and that sort of
thing. The second 3elo'2the2line ad/ertising is on2pack promotions 7
there are man( kinds, most o3/iousl( things like coupons,
competitions, 5oint promotions and free samples. The last kind of
3elo'2the2line ad/ertising is targeted mailing, using a mailing list.
That completes the o/er/ie' of 'hat 'e can do to launch the product,
a. *o response from the audience.
6 trul( successful and interesting talk 'ill a/oid the pro3lem.
The speaker can gi/e an instruction to the audience 7 especiall( in
sales presentations.
To ha/e Luestion prepared to ask the audience, or identif(
someone 'hom (ou kno' 'ill ha/e something to sa(.
;andling Auestions
=ifficulties ma( arise 3ecauseQ
5 Luestions P discussion is relati/el( unstructured
5 the speaker has less control
5 speaker has to s'itch into listen and ans'er mode
5 it ma( 3e difficult to hear, to understand, to ans'er or to
distinguish 3et'een an opinion and a Luestion.
Practice " K model ans/ers
1. :o, that concludes 'hat I 'ant to sa(, so no' I+d like to ask (ou
for (our comments, opening up discussion, or perhaps (ou ha/e a
Luestion or t'o-
2. $r, in fact 'hat I said 'as this process has 3een going on for a
/er( long time. I+m sorr( if I 'as not clear on this point.
3. I 'onder if an(one can suggest 'h( this has happened or if
an@one has an( comments on it-
4. Ges, (ou+re right, 3ut can I suggest one or t'o other factors- 9ne
is the increasing num3er of take2o/ers of smaller companiesO
5. :o are (ou sa(ing that in the A:6 or $urope that could not
. Ges, I agree, 3ut the situation is changing.
!. :orr(, I don+t Luite follo' (ou. Can (ou sa( that again O put it
another 'a( O-
*(ercise - K The ne/ product
0ntroducing $oursel%
)ood morning ladies and gentlemen? 'e ha/en+t all met 3efore so I+d
3etter introduce m(self. I+m >uis >ope@ from the de/elopment
department of Citrus IncorporatedO I should sa( 3efore 'e start that I
hope (ou+ll e0cuse m( $nglish. I+m a little out of practiceO
Preparing the audience
6n('a(, I+m going to 3e talking this morning a3out a ne' product
'hich 'e are planning to launch in t'o months+ time? it+s called
&99>29AT, that+s &29292> dash 92A2T, and it+s a lemon2fla/oured
,ell, I+ll start 'ith the 3ackground to the product launch? and then
mo/e on to a description of the product itself, I+m going to list some
of the main selling points that 'e should emphasi@e in the ad/ertising
and sales campaign. I think if (ou don+t mind, 'e+ll lea/e Luestions to
the endO
9eli!ering the message
*o' firstl(, as (ou all kno', 'e had a gap in our soft2drink product
range for the last t'o (ears? 'e ha/e 3een manufacturing mi0ed2fruit
drinks and orange drinks for the last ten (ears, 3ut 'e stopped
producing lemonade t'o (ears ago? I think 'e all agreed that there
'as room on the market for a completel( ne' lemon2fla/oured drink
O :econdl(, the market research indicated that more and more
consumers are using soft drinks as mi0ers 'ith alcohol, so in other
'ords, the market itself has e0panded.
This 3rings me to m( ne0t point 'hich is that 'e ha/e rather ne'
customer2profile in mind? I must emphasi@e that this product is aimed
at the (oung2professional, high2income, market and not the traditional
consumer of old2fashioned lemonade. 6t this point 'e must consider
the importance of packaging and design, and if (ou look at the /ideo
in a moment, (ou+ll see that 'e ha/e completel( re2/amped the
container itself as 'ell as the la3el and sloganO
*o' to digress for 5ust a moment, the more sophisticated packaging
means a high unit cost, and this ma( 3e a pro3lem in the selling area,
3ut 'e+ll ha/e a chance to discuss that aspect laterO so O to go 3ack
to m( earlier point, this is a totall( ne' concept as far as Citrus
Incorporated are concerned? as (ou see 'e are using 3oth the ne'2si@e
glass 3ottle and the miniature metal cans.
;inall(, let+s look at the ma5or attractions of the product. In spite of
the higher price it 'ill compete 'ell 'ith e0isting 3rands? the design
is more modern than an( of the current ri/al products, and incidentall(
the fla/our is more realistic and naturalO it+s lo' calorie, too.
9.&., so 5ust 3efore closing, I+d like to summari@e m( main points
againO ,e ha/e &99>29AT, a ne' design concept, aimed at a
relati/el( ne' age and income group? it+s designed to 3e consumed on
its o'n, as a soft drink, or to 3e used as a mi0er in alcohol23ased
drinks and cocktails. It comes in 3oth 3ottle and can and this 'ill
mean a slightl( higher price than 'e are used to? 3ut the impro/ed
fla/our and the package design should gi/e us a real ad/antage in
toda(+s marketO 'ell, that+s all I ha/e toda( for the moment, thank
(ou for listening, no' if there are an( Luestions, I+ll 3e happ( to
ans'er themO
*(ercise 2 K The product presentation
:ee the model presentation and use the 'ords in italics.
*(ercise 3 K Can 0 interrupt here7
6 2? 3 3? c 4? d 5? e 1
*(ercise 4 K Anticipating Auestions
JsuggestionsM a. I can hear (ou sa(O 3. *o' (ou ma( 'ell ask, 'hat
does he mean 3(O c. 6n o3/ious pro3lem is the cost of the
accessories. d. Gou 'ill ha/e noticed thatO e. *o' (ou ma( 'ell
Module 4
Practice -
a. ,elcome, e/er(3od(. Thank (ou for coming.
3. ,e are here toda( to talk a3out O Jand to decide O? to look atM
c. ,e ha/e an agenda 'ith three points. JGou+/e all seen the agenda.
I+d like to ask if an(one has an( comments on it.M
d. I think .r. &ano is read( to tell us something a3out O JCan I ask
O to open 'ith his remarks.M
e. If (ou don+t mind, can 'e let .r. &ano finish- J:orr(, O, I can+t
allo' us to consider that Luestion 5ust (etOM
f. Thank (ou for that O
g. *o', can I ask .s Pere@ de :anche@ to tell us her /ie'sO
h. $r, can 'e tr( to keep to the topic 7 I think 'e ha/e gone a'a(
from it a little.
i. I+d like to sum up the main points. J:o let me summari@e that.
Gou sa( that OM
5. ,ould an(one like to sa( an(thing else on this- J=oes an(one
ha/e an(thing to add to that-M
k. I think 'e ought to mo/e on to the ne0t topic on the agenda.
l. :o, 3efore the ne0t meeting, I+ll send out a report on this one, .r
&ano 'ill prepare JOM and 'ill then fi0 a ne' date, some time
ne0t month.
m. Thank (ou. that+s e/er(thing. That+s it for toda(.
Practice 2
-. A model o% Agenda
A(is 2inance .imited
.arketing )roupQ Gear2end meeting
TimeQ ;inishQ
1. 6pologi@es for a3sence
2. .inutes of pre/ious meeting
3. Chair+s opening address
4. Personnel changes
5. 8e/ie' of marketing performance in the current (ear
. *e' products
!. .arketing plans for ne0t (ear
". 6n( other 3usiness
#. =ate of ne0t meeting
2. The chair3s opening statement6 a model
9ka( I think 'e should 3egin. Thanks for coming 7 and as (ou kno'
7 this is O 'e are here for our annual meeting. 6s (ou kno' from the
agenda there are four main issues to discuss. The first to re/ie' is the
personnel changes. :econdl(, 'e+ll look at the marketing
performances in the current year. Then 'e+ll discuss a3out ne"
products. 6nd finall(, 'e+ll e0amine the marketing plans for the ne0t
(ear. :o 7 an( comments, an( suggestions, or is e/er(one happ( 'ith
the agenda- 9ka(, then let+s start 'ith item one on the agenda. I think
.r. :mith has prepared a statement on the personnel changes so I+ll
hand o/er to him.
Practice 3 K a model con!ersation
A2 The fall in sales is mainl( due to the recession affecting 'orld
B2 $r, can (ou tell us e0actl( ho' much sales ha/e gone do'n-
A2 ,ell, it+s a general fall of around 5 X in sales for most product
areas. 6lso, specificall( in the oil processing sector, 'e ha/e much
lo'er sales, mainl( 3ecause 'e sold our A& su3sidiar(, 6nglo 9ils.
B2 Can 'e talk a3out the decision to sell 6nglo 9ils O
A2 ,ell, no, I+d rather not go into that. ,e discussed that in pre/ious
meetings. I+d prefer to talk a3out future prospects. The outlook is /er(
good 5ust no'O
B2 ,hat- I+d sa( things look Luite 3ad.
A2 I+m /er( surprised (ou sa( that. In fact, sales forecasts are much
3etter no'. 6n('a(, let me tell (ou O
B2 :orr(, I think I+d like to hear more a3out ne' markets.
A2 *e' markets- Ges, 3ut can 'e talk a3out ne' markets later- I
ha/e some important information on that. But firstO
B2 ,ait, don+t (ou think 'e should take a short 3reak 7 ha/e a
A2 Take a 3reak- ,e+/e onl( 5ust startedR
a. =ecision making meetings.
3. The structure of decision makingQ see the 3ulleted points in the
second paragraph.
c. Communication has to 3e a t'o2'a( process to 3e successful.
a. *ot all meetings are to make decision 7 as implied in the first
sentence of the te0t. =ecisions ma( alread( ha/e 3een made, so a
meting is called to tell people a3out the decision Jan information
gi/ing meetingM.
3. 6n alternati/e description of the structure of decision making is
the =$:C model, 'hich is included in the :kills Checklist.
c. In man( instances of communication, a message is gi/en and it is
sufficient that it is comprehended, 'ithout e/en an
ackno'ledgement Ja recorded message, for e0ampleM. 4o'e/er,
this ma( 3e slitting hairsQ the point is that in meetings at least an
ackno'ledgement or agreement is e0pected. It seems fair to sa(
that in most cases, communication is a t'o2'a( process.
d. It is true that often an agreement, or a consensus, can 3e arri/ed at
'ithout a formal /oteQ it is the leader+s responsi3ilit( to make
clear 'hat the consensus is and ask if e/er(one accepts it.
a. consensus
3. time2 and cost2effecti/e manner
c. goal
d. set an o35ecti/e
e. imperati/es
f. desira3les
g. e/aluate alternati/es
h. perception
i. a'areness P empath(
5. e/ol/e
k. /er3ali@e
a. 7 a restatement of o35ecti/es
5 a summar( of 'hat has 3een accomplished
5 a summar( of 'hat action must 3e taken after meeting
3. .eetings should 3e part of a learning e0perience, so future
meetings can 3e impro/ed 3( asking participants to e/aluate
Practice 4 K a model con!ersation
A2 Can 'e reach a decision on this-
B2 ,ell, I O I think O er, I think 'e need more information.
A2 4mm. Can (ou e0plain 7 sa( e0actl( 'hat sort of detail (ou think
'e need-
B2 ,ell, I feel first of all, 'e need to kno' more a3out the effects of
a price increase.
A2 Perhaps 'e should, er, commission some market research-
B2 Ges, I agree. That+s right. ,e could ask 4amid to recommend
A2 ,ell, I think 3efore that 'e could look at our o'n e0perience of
price rises. Then later 'e can perhaps ask a marketing consultanc(.
=oes e/er(one agree 'ith that proposal-
All2 Jmurmur of agreementM
A2 9ka(, let+s mo/e to the ne0t item on the agenda.
Practice " K a model e(ample
:o, 'e+/e almost finished. =oes an(one ha/e an(thing else to sa(-
,ell, 'e had to decide on action regarding training courses. To
summari@e, to confirm our decision, 'e+/e agreed a \1%,%%% 3udget.
6nd also that Peter is going to identif( three possi3le training
organi@ations. Is e/er(one happ(- Is that oka(- *o', Peter 'ill
organi@e a presentation for ne0t 'eek, on the 14
at 2 p.m. until then,
thanks e/er(one for coming. That+s it for toda(.
*(ercise - K Chairing a meeting
Chairman I+d like us to reach a decision toda( a3out item 1. The
issue is falling sales in the Italian market. 4enr( 'ill e0plain the
3ackground to this, and the present situation.
2enry Thanks. ,ell, as (ou kno', in Ital( 'e+/e al'a(sO so that+s
ho' things are at the moment.
Chairman Thank (ou, 4enr(. *o', let+s look at possi3le courses of
Bo( Could I 5ust sa( something - The Italian market isn+t as
important to us as the 8ussian orders. I 'as in .osco' last 'eek, and
learnt some prett( interesting things a3out the 'a( things are mo/ing
out there.
Chairman >et+s keep to the immediate su35ect, 'hich is the Italian
Arnold :orr( to interrupt, 3ut if 'e launch a ne' ad/ertising
campaign in Ital( it 'ould cost a fortuneR Gou said (ourself that 'e
ha/en+t enough mone( to ad/ertise on e/er( tele/ision in $uropeR
Chairman >et+s not 5ump too far ahead at this stage.
Bo( .( o'n feeling is this Q in (ears of e0perience, in man(
different markets throughout the 'orld, I+/e often found that, 'henO
and (ou kno', if I could pass on m( e0perience to the (ounger people
here, I+d sa( that the onl( 'a( to sell in Ital( is to go there and see the
market for (ourself, instead of asking (our agents to do it.
Chairman :orr( to interrupt (ou, Bo3, 3ut I+d like to kno' if the
others agree. ,hat do (ou think a3out this, ,alter-
Walter I+m not too sure a3out this . .( o'n feeling is that ifO
Bo( I don+t kno' 'h( (ou don+t ask me. I+/e 3een to Ital( so man(
times recentl(.
Chairman Could (ou let ,alter finish- I+d like to ha/e his /ie' on
this .
Walter ,ell, I+d like to sa( that for the last t'o (ears 'e ha/en+t had
a stand at the .ilan Trade ;air. I understand that the ;air has
produced lots of contracts in the past.
Chairman That+s an interesting point, ,alter . >et+s summari@e 'hat
'e+/e said so far. Bo3 thinks 'e depend on the agents too much, and
,alter suggests that the Trade ;air is important.
*(ercise 2 K 2ormal meetings
a. address? appro/e? mo/e? second? carried? casting? on
3. trueQ 1, 2, , !
falseQ 3, 4, to second means to gi/e formal support to the motion
for presentation to the 3oard, 5 to a,stain means to decide no to
*(ercise 3 K Could 0 ask $ou a Auestion7
GouQ I+m afraid I can+t comment at the moment.
GouQ 6 statement 'ill 3e issued shortl(.
GouQ I+m sorr(, 3ut I can+t comment at this stage.
GouQ Ges, I+m pleased to 3e in (our countr(.
GouQ I can+t tell (ou an(thing 3efore the statement is issued.
GouQ I 'ould rather not ans'er that Luestion at present.
GouQ I did not sa( that at all.
Module "
Practice - K a model
a. ,ell, 'elcome to O It+s /er( good that (ou could come to see us
3. I hope (ou had a good trip- *ot too long O- =id (ou get a ta0i
'hen (ou arri/es here-
c. 6t lunchtime 'e+ll 3e a3le to sho' (ou a little 3it of the cit( 7
ha/e something to eat in a local restaurant.
d. ,ell, shall 'e make a start-
e. 9ka(, 'ell, can I ask >uke ;o0, from our .arketing =epartment,
to 3egin our discussion 'ith some opening remarks. I think
(ou+/e met 1ames alread( this morning, and a little 'hile ago too-
f. ;irstl(, 'e see this meeting as an e0plorator( session, I think it+s
3est for 3oth of us that 'e look at some general Luestions.
g. ,e+d like to esta3lish the 3eginnings of a partnership O It 'ould
3e particularl( interesting for us to learn a3out (our suppl(
s(stems O a3out price /ariations and a3out suppl( costs.
Practice 2
Identif( (our minimum reLuirements. 2
Prepare (our opening statement. !
=ecide 'hat concessions (ou could make. 3
&no' (our o'n strengths and 'eaknesses. 4
&no' (our role as part of a team.
Prepare (our negotiation position 7 kno' (our aims and o35ecti/es.-
Prepare an( figures, an( calculations and an( support materials (ou
ma( need. 5
a. &no'ing (our aims and o35ecti/es
ii. helps clear thinking and purpose.
3. &no'ing (our o'n strengths and 'eaknesses
i/. helps (ou to kno' the market, the conte0t in 'hich (ou 'ant to
c. Preparing an( figures, calculations and other materials
5 means (ou can support (our argument.
d. Preparing an opening statement
iii. creates reasona3le e0pectations.
a. T
3. ; Better not to guess Jthough pri/atel( (ou might to some e0tendM.
c. T
d. ; Issues are 3est dealt together 'ith other issues, in a package.
e. T 9ne should usuall( 3e prepared to make concessions.
f. T
g. ; *o, one can keep on talking and find a 'a( round the pro3lem.
a. Check 'hat the( sa( 'ithout commenting, at least not
3. Car( the Luantit( or the Lualit(, or 3ring in third parties.
c. Be prepared, think a3out the 'hole package, 3e constructi/e.
Practice 3
5 ,e can gi/e (ou free deli/er( 'ith a larger order.
5 ,e pro/ide free on2site training for onl( a small price increase.
d. ,e can gi/e 5 X discount if (ou agree to pa(ment on deli/er(.
e. ,e can offer (ou an e0tra Y5%,%%% compensation in e0change for
(our agreement not to go to la'.
f. ,e promise to impro/e safet( for staff pro/ided that 'e reach
agreement on ne' contracts.
g. The compan( 'ill introduce 3etter 'orking conditions if the staff
accept shorter 3reaks.
Practice 4
4?an!era2 ,ell, 'e+re happ( to 3u( a machine if (ou can gi/e us a
good price.
Bec(2 I+m sure 'e can. 6s (ou kno' our prices are /er( competiti/e.
4?an!era2 $/en so, I+m sure (ou can allo' us a discount-
Bec(2 9ka(, 'ell a discount could 3e possi3le if (ou agree to pa( for
the shipping costs.
4?an!era2 That sounds oka(, if the discount is a good one.
Bec(2 4o' a3out 4 X-
4?an!era2 X 'ould 3e 3etter.
Bec(2 I+m sorr(, 'e can+t manage that unless (ou pa( for the
4?an!era2 9ka(, our engineers 'ill take care of that.
Bec(2 9ka( then, so to confirmQ a X discount 3ut (ou pa( all the
shipping and installation costs.
4?an!era2 That sounds all right.
Practice "
:0'S@N TRUST .0M0T*9
Anits #212 $ast :ide .onks Cross Industrial $state B8I:T9> B:I4
Telephone %12!2 54!!!! ;a0 %12!2 54!!%1
*eil ;inch
.inistr( of Ar3an =e/elopment
14%2 144 ,hitehall
>ondon ,CI 48;
.a( 2 2%%Z
=ear *eil,
Re6 Meeting in 'ristol April 3E +++ FRail/a$ .and Sale3
I am 'riting to JaM confirm points J3Magreed in the a3o/e meeting,
held to discuss the sale of go/ernment o'ned rail'a( land to )i3son
Trust >imited.
,e 'ould like to confirm through this letter and the JcM enclosed
dra'ings that the propert( JdM included in the a3o/e sale consists of
the land presentl( occupied 3( the station 3uildings and also the
former car parks to the east of the station, the offices to the 'est and
the 'arehouse alongside the tracks. The go/ernment2o'ned housing
on the north side of the rail'a( lines is JeM e0cluded .
,e also agree that the station 'ill 3e reno/ated 3( the Transport
=epartment and that the go/ernment 'ill 3e responsi3le for running
an e/entual museum and pa(ing a rent of Y 1%%,%%% per (ear to
)i3son Trust. The remaining land 'ill 3e JfM de/eloped 3( )i3son
Trust and later sold off separatel(. The de/elopment is intended to 3e
for commercial and residential use. The e/entual use of the land
should 3e JgM specified in the contract.
9ur ne0t meeting 'ill 3e on .a( 15 at 1% a.m., at 'hich de/elopment
plans 'ill 3e JhM e0amined. :oon after this, contracts 'ill 3e JiM dra'n
up. Then 'e 'ill need time to consider the contracts 3ut hopefull(
the( 'ill 3e J5M signed 3( the end of :eptem3er.
=o contact us if (ou ha/e an( comments or alterations (ou 'ould like
to make to this summar(. Thank (ou once again for a /er(
constructi/e meeting and 'e look for'ard to seeing (ou again on .a(
Gour sincerel(,
1ill &earne
Chief *egotiator
$ncs. JIM
a. emphasi@e the 3enefits a/aila3le to 3oth sides
3. in/ent ne' options for mutual gain
c. change the package
d. ad5ourn to think and reflect
e. change location
f. change negotiator Jpersonal chemistr(-M
g. 3ring in a third part( Jmediator-M
h. fi0 an off2the2record meeting
Practice #
&ituation 1
The pro3lem is that 'e ha/e ne/er offered the kind of 'arrant( (ou
are looking for.
&ince "e have a difficulty here% may I suggest "e leave the pro(lem of
the "arranty and come (ack to it later3 *erhaps "e could talk a(out
training for our technical staff3
&ituation 0
There+s a num3er of issues on the ta3le. ,e seem to 3e a long 'a(
from an agreement.
Can I suggest a lo"er price% (ut link this "ith us paying the shipment
costs or agreeing to different payment terms3
&ituation 6
The price (ou are asking is rather high, Luite a lot higher than 'e 'ere
Well% if it "ould help% "e could agree to longer payment terms
&ituation M
There are se/eral pro3lems. ,e think there is Luite a lot of negotiation
ahead 3efore 'e can agree on a common strateg(.
The (enefits of reaching agreement are considera(le. We "ill have
more glo(al influence and (etter prospects for the future.
Strategies in dealing /ith con%lict
:trateg( 1
I think 'e+re not reall( making much progress. Perhaps it 'ould 3e
3etter to lea/e this point for a 'hile and come 3ack to it later. Could
'e talk a3out a different aspect to the deal, perhaps the Luestion of
:trateg( 2
I think it is important to think a3out 'hat could happen if 'e do not
reach agreement. The most o3/ious conseLuence 'ill 3e that 'e 'ill
3oth lose market share. The onl( 'inners 'ill 3e our competitors. It
could 3e serious for 3oth of us.
:trateg( 3
There seem to 3e a num3er of pro3lems, 3ut I+d like to summari@e the
positi/e elements 7 issues 'here 'e ha/e made progress. ;irst, 'e
agree that 'e ha/e to settle the dispute 3et'een us, 'e understand
ho' important this is. :econd, 'e agree that the terms of our original
agreement need to 3e changed. Third, 'e also agree that the change
'ill depend on the different market conditions 'hich affect our
productsO These are important points of progress.
:trateg( 4
Can I suggest 'e take a short 3reak- I think it 'ill help if 'e look at
some of the issues that are di/iding us. Perhaps 'e 'ill see areas
'here 'e can make a fresh offer.
:trateg( 5
The point at issue, .r. Cinis, is Luite simple. ,e can offer (ou an
e0tra 5 X discount, 3ut onl( if the order is increased 3( 2% X o/er the
ne0t three (ears.
Practice &
&ituation 1
>et me make a suggestion. If (ou agree to 3u( 1%% units e/er( month
for the ne0t t'el/e months, 'e+ll agree a 1% X discount.
Anfortunately% I can4t say ho" many "e4ll need in si> months and
certainly not in t"elve. I can4t take the risk on such a large order at
this stage.
&ituation 0
The price 'e are offering e0cludes installation costs 3ut does include
a t'el/e month+s guarantee.
I4m afraid that4s not really accepta(le. 7ou kno" that other suppliers
offer free installation and t"o year parts and la(our "arranty3
&ituation 6
I think the a3solute minimum in/estment in ad/ertising must 3e
\4%,%%%, other'ise 'e cannot reach enough of our market. It+s not
much to ask for.
It4s a pity (ut it4s still more than our (udget. I can4t go that high.
&ituation M
*o', some e0cellent ne'sQ 'e+d like to increase our order. 8ight no'
(ou are sending us 35% 3o0es a month. ,e need at least 5%%, demand
is /er( high O
Well% I4m glad you4re having a lot of success "ith our products% (ut
the (ad ne"s is that our order (ooks are full% and the plant is "orking
at full capacity. We4re a (it stuck I4m afraid
Practice )
&ituation 1
It+s 3een a long meeting, 3ut finall( I+m /er( glad 'e+re a3le to reach
agreement. I think it 'ould 3e good if 'e could go on to a restaurant
no', 'e+d 3e pleased if (ou can 5oin us.
&ituation 0
I+m sorr( our efforts to reach agreement ha/e not 3een successful. I
suggest 'e stop here, 3ut I hope that in the future 'e might 'ork
together on something.
&ituation 6
Anfortunatel( I feel it 'ould 3e 3etter if I don+t 5oin (ou on this
pro5ect, 3ut no dou3t there+ll 3e plent( of other things 'e+ll 'ork on.
&ituation M
I+d like to repeat our order, 3ut not on those terms. I+m sorr(, 'e can+t
agree to this. I think 'e+ll go else'here, 3ut thanks an('a(.
&ituation N
I+m sorr(, 3ut it reall( is ph(sicall( impossi3le. ,e cannot suppl(
goods in so short time. It+s 5ust impossi3le. :orr( 'e can+t help (ou.
*(ercise - K 5our turn to negotiate
:uggested repliesQ >et+s see ho' 'e get on. ,h( such a long deli/er(
period- This is our position. ,e need deli/er( of si0 'eeks
ma0imum, 'ith four 'eeks for installation. I+m sorr(, 3ut I can+t
accept eight 'eeks. Gou+ll ha/e to do 3etter than that, I+m afraid. I+m
afraid I can+t increase the deli/er( period an( further. I ha/e m(
instructions. .a( I make a suggestion- If (ou can promise deli/er( in
si0 'eeks, then 'e ma( 3e a3le to talk a3out further order. >et+s go
through the termsQ si0 'eeks for deli/er( and four 'eeks for
installation? and the decision a3out the ne0t order to 3e taken 3( the
. 6greed-
*(ercise 2 K Ten rules %or negotiating
a 4? 3 ? c 1? d "? e 2? f 5? g !? h 3.
*(ercise 3 K ?hen things get di%%icult
5 ,ould (ou like me to go through that again- B. I+ll ha/e to come
3ack to (ou on this. C. Could (ou gi/e me a moment to do some
calculations- =. ,hat is the 3asis of calculation for transport- $.
I+m 5ust looking. Could (ou 3ear 'ith me a moment- ;. The
figure for installation costs- ,hat is the 3asis for calculation- ).
I+m sorr(, could (ou go through it again-
*(ercise 4 K 1oca,ular$ %or contracts
5 agreement? parties? sections? clauses? conditions. 3. pro/ides for,
3inding? a3ide 3(Pcompl( 'ith? 3reach c. ar3itration? litigation?
compromise? court? out of court d. term? terminate.
*(ercise " K .icensing terms
Jin orderMQ ha/e the legal rights o/er? let (ou ha/e? permission?
countr(? an immediate pa(ment? 5 X to pa(? (earl( 3ottom limit?
period? further (ears? 'hen it ended? illegal cop(ing? official
manufacturer? ask for a 3an? copier+s.
Module #
6 personal choice of LualitiesQ =, ;, 4, and 1.
a. 1 resources 2 managea3le 3 setting, communicate
4 super/ise, performance 5 achie/ed 3oard of directors
!. inno/ations
5 Common collocations includeQ allocate resources Jor peopleM?
communicate information or decisions? de/elop strategies Jor
people or su3ordinatesM? make decisions? measure performance?
moti/ate people? perform 5o3s? set o35ecti/es? and super/ise
Module &
1 C? 2 $? 3 B? 4 6? 5 ;? )? ! =
A functional structure
' matri0 structure
C line structure
9 staff position
9escri,ing compan$ structure
4ere is a short description of the organi@ation chart illustrated.
The chief $0ecuti/e 9fficer reports to the President and the Board of
=irectors. The compan( is di/ided into fi/e ma5or departmentsQ
Production, .arketing, ;inance, 8esearch V =e/elopment, and
4uman 8esources. The .arketing =epartment is su3di/ided into
.arket 8esearch, :ales and 6d/ertising V Promotions. The ;inance
=epartment contains 3oth ;inancial .anagement and 6ccounting.
:ales consists of t'o sections, the *orthern and :outhern 8egions,
'hose heads report to the :ales .anager, 'ho is accounta3le to the
.arketing .anager.
Module )
a. 1 su3contractor 2 component
3 outsourcing or contracting out 4 capacit( 5 plant
location ! in/entor( " lead time
,. 1 6 and $ 2 C 3 = 4 6 and $ 5 6 and $ =
! ; " $ # ; 1% $ 11 B 12 $ 13 B 14 C and $
15 B and ;
1 component 2 su3contractor 3 in/entor( 4 outsourcing
5 location plants ! capacit( " lead times
1. ,hat is a product- P The definition of a product.
2. Brand names.
3. Product lines and product mi0es.
4. >ine2stretching and line2filling.
1 credit facilities 2 'arrant( or guarantee 3 shelf
4 3rand2s'itchers 5 JproductM life c(cle profita3ilit(
! opportunities " market share # image 1% niche
Module G
1 6 2 I 3 ; 4 4 5 = 1 ! $ " B # C
1% )
Paragraph 1 7 the selling and marketing concepts
Paragraph 2 7 identif(ing market opportunities
Paragraph 3 7 the importance of market research
Paragraph 4 7 the marketing mi0
Paragraph 5 7 compan(2to2compan( marketing
". Customer needs? 2. .arket? 3. Coordinated marketing? 4. Profits
through customer satisfaction
1 'ord2of2mouth ad/ertising 2 institutional or prestige ad/ertising
3 ad/ertising agencies 4 an account 5 an ad/ertising 3udget
a 3rief ! ad/ertising campaign
" target customers or target market # media planners
1% the threshold effect 11 the comparati/e2parit( method
12 counter2c(clical ad/ertising
The num3ers of respodents 'ho agreed 'ith the statements 'ere as
1. #%X 2. !2X 3. "5X 4. 51X 5. 41X . 4#X !. %X ". 5!X
1 target 2 a'areness 3 medium 4 tactics
5 trial maturit( ! aimed " lo(alt( # ad/ertising
1% channel
1 ,hen a ne' product is launched, the producer has to inform
customers a3out its e0istence and de/elop 3rand a'areness.
2 Promotion is one of the four elements of the marketing mi0? sales
promotions are one of the four different promotional tools.
3 The ad/antages of pu3licit( include the fact that it is much cheaper
than ad/ertising, and can ha/e a 3etter impact, 3ecause it seems that
people are more likel( to read and 3elie/e pu3licit( than ad/ertising.
4 The four stages of the standard product life c(cle Je0cluding the pre2
launched de/elopment stageM are introduction, gro'th, maturit( and
5 8easons to offer temporar( price reductions include attracting price2
conscious 3rand2s'itchers, offsetting a promotion 3( a competitor,
and, for stores, attracting customers 3( 'a( of Nloss leaders+.
#. :ales promotions need not onl( 3e aimed at customers? the( can
also 3e used 'ith distri3utors, dealers and retailers, and 'ith a
compan(+s sales force.
1%. 6part from selling a compan(+s products, sales representati/es
3ring information 3ack to a compan( from its customers,
including ideas for ne' products.
1. competitors 2 'ord2of2mouth ad/ertising 3 3rand2s'itchers
4 points of sale 5 3rand name line2stretching ! packaging
" product impro/ement # media plan 1% packaging
Module -E
1 .arket leaders
2 $0panding markets
3 .arket challengers
4 .arket follo'ers
5 $sta3lishing a niche P =angers faced 3( market follo'ers
1 market share 2 promotions 3 monopol(
4 competitors 5 slogan market segmentation ! niche
" differential ad/antage # turno/er 1% recession
1 to inno/ate Jinno/ationM 2 to di/ersif( Jdi/ersificationM
3 to merge Ja mergerM 4 a raid 5 a takeo/er 3id
hori@ontal integration ! /ertical integration " 3ack'ard
integration # for'ard integration 1% s(nerg(
1 The fact that man( large conglomerates+ assets 'ere 'orth more
than their stock market /aluation demonstrated that the( 'ere clearl(
not ma0imi@ing stockholder /alue, i.e. gi/ing their stockholders the
ma0imum possi3le return on their in/estment.
2 8aiders 3ought conglomerates in order to strip them of their assets,
i.e. to restructure them, split them up, and resell the pieces at a profit.
3 8aiders sho'ed that the stock market did not necessaril( /alue
companies+ assets correctl(, especiall( land, 3uildings and pension
4 8aiders 'ere particularl( interested in companies 'ith large cash
reser/es, companies 'ith successful su3sidiaries that could 3e sold,
and companies in fields that are not sensiti/e to a recession.
5 In/estors 'ere prepared to lend mone( to finance >B9s 3ecause
the( recei/ed a high rate of interest 'hich more than compensated for
the risk that the 3onds 'ould not 3e repaid.
11. 8aiders argue that the possi3ilit( of a 3u(out forces compan(
managers and directors to do their 5o3s 'ell, and to use their
capital producti/el(.
1 charities 2 legitimac( 3 perfect competition 4 'elfare
5 threatening /italit( ! free enterprise " conforming
# em3odied 1% proponents
Module --
1 B 2 C 3 = 4 ) 5 6 $ ! ;
1 shareholders or stockholders 2 earnings or income 3 lia3ilities
4 turno/er 5 assets depreciation or amorti@ation
! de3tors or accounts recei/a3le " creditors or accounts
pa(a3le # stock or in/entor( 1% o/erheads or o/erhead
1 assets 2 stock or in/entor( 3 depreciation or
amorti@ation 4 shareholders or stockholders 5 earnings or income
turno/er ! o/erheads or o/erhead " lia3ilities
# de3tors or accounts recei/a3le 1% creditors or accounts
1oca,ular$ K 2inancial statements
1 turno/er 2 o/erheads 3 depreciation 4 freehold properties
5 historical cost de3tors ! cash in hand and at 3ank
" corporation ta0 # net assets 1% called2up share capital
6 The period of gold con/erti3ilit(.
B ;loating e0changes rates.
C The a3olition of e0change controls.
= Inter/ention and managed floating e0change rates.
$ The po'er of speculators and the collapse of the $.:.
; ,h( man( 3usiness people 'ould prefer a single currenc(.
) The introduction of the single $uropean currenc(.
1 ;alse 2 ;alse 3 True 4 ;alse
5 True True ! True " ;alse
-. 1 B 2 = 3 6 4 C 5 ; $
2. 1 ad5ust 2 con/ert 3 a3olish 4 suspend
5 fluctuate di/erge
Module -2
1 o/erdraft 2 credit card 3 cash dispenser or 6T.
4 loan 5 standing order or direct de3it mortgage ! cash card
" home 3anking # current or checking account 1% deposit or
time or notice account
1 Commercial 3anking
2 In/estment 3anking
3 Ani/ersal 3anking
4 Interest rates
5 $urocurrencies
-. 1 deposit 2 foreign currencies 3 (ield 4 liLuidit(
5 maturit( under'rite ! takeo/er " merger
# stock3roking 1% portfolio management 11 deregulation
12 conglomerate 13 3lue chip 14 sol/enc( 15 collateral
12. Common collocation includeQ charge interest? do 3usiness?
e0change currencies? issue 3onds? make loans? make profits? offer
ad/ice? offer loans? pa( interest? raise funds? recei/e deposits?
under'rite securit( issues
1B 2 6 3 6 4 B 5 C 6 ! B " C # C
1% B
6 The functions of ta0ation.
B 6d/antages and disad/antages of different ta0 s(stems.
C Ta0 e/asion.
= 6/oiding ta0 on salaries.
$ 6/oiding ta0 on profits.
1 depreciation 2 disincenti/e 3 regressi/e 4 consumption
5 self2emplo(ed national insurance ! perks
" ta0 shelters # ta02deducti3le 1% ta0 ha/ens
Module -3
1 lia3ilit( 2 creditor 3 3ankrupt 4 assets
5 to liLuidate lia3ilities ! to put up capital
" /enture capital # founders 1% premises
11 under'rite 12 di/idend
1 mutual fund 2 portfolio 3 stock3roker 4 3lue chip
5 defensi/e stock gro'th stock ! market2maker
" institutional in/estors # inside share2dealing
1 4 2 B 3 6 4 C 5 I $ ! ; " = # 1
1% )
1 ; 2 $ 3 6 4 B 5 ) C ! =
1 B 2 6 3 ; 4 C 5 $ =
1 The difference 3et'een futures and for'ard contracts is that futures
are standardi@ed deals and for'ards are indi/idual No/er2the2counter+
agreements 3et'een t'o parties.
2 Producers and 3u(ers often choose to hedge 3ecause this allo's
them to guarantee prices for se/eral months.
3 :peculators can make mone( on currenc( futures if the( correctl(
anticipate e0change rate appreciations or depreciations or interest rate
4 If (ou 3elie/e that a share price 'ill rise, possi3le option strategies
include 3u(ing a call, 'hich (ou 'ill 3e a3le to sell at a profit, and
'riting JsellingM a put, 'hich 'ill ne/er 3e e0ercised, so (ou earn the
5 9n the contrar(, if (ou think a share price 'ill fall, possi3le option
strategies include 3u(ing a put, so (ou 'ill 3e a3le to sell (our shares
at a3o/e the market price, and 'riting a call, 'hich 'ill ne/er 3e
e0ercised, so (ou earn the premium.
The risk 'ith currenc( and interest rate s'aps is that the e0change
and interest rates ma( change unfa/oura3l(.
6ppreciate 7 depreciate
Call 7 put
=iscount 7 premium
=rought 7 flood
;loating 7 fi0ed
4edging 7 speculation
:pot market 7 futures market
:trike price 7 market price
The 'ord Npremium+ is used t'ice 'ith t'o different meanings in the
te0t. N6t a premium+ means a3o/e the nominal or market price?
premium also means the price of an option contract.
*(tra Readings
JIndustr( Profile and Career 9/er/ie' from ,et;eet.comM
Ad!ertising R PR 0ndustr$
6d/ertising and pu3lic relations are like a micro'a/e and a free@erQ
totall( different, 3ut the( 'ork together reall( 'ell. In fact, man(
large ad/ertising agencies offer P8 ser/ices. Both industries deli/er
'ords and pictures, 3ut 'hat the( reall( sell is intangi3les, such as
image and reputation. The( are paid to persuade peopleQ to 3u( goods
or ser/ices, to /ote for a political cause or candidate, or to in/est in a
compan(. The( often 3ase ad/ertising or pu3licit( campaigns on
market research, 'hich is t(picall( gathered 3( independent
companies that speciali@e in customer interviews, focus grou!s, and
In 3road terms, an ad/ertising agenc( is a marketing consultant. It
helps the client Ja manufacturer of consumer products like *ike,
perhaps, or a ser/ice2oriented compan( like Charles :ch'a3 V Co.M
'ith all aspects of its marketing effortsZe/er(thing from strateg( to
concept to e0ecution. :trateg( in/ol/es helping the client make high2
le/el 3usiness decisions, like 'hat ne' products the client should
de/elop or ho' the client should define or S3randT itself to the 'orld.
Concept is 'here the agenc( takes the client+s strateg( and turns it
into specific ideas for ad/ertisementsZsuch as a series of ads
featuring e0treme athletes for a soft2drink maker 'hose strateg( is to
make inroads in the teen market. $0ecution is 'here the agenc( turns
the concept into realit(Zthe production of the actual adsQ the print
la(out, the film shoot, the audio taping. ;ull2ser/ice agencies also
handle the placement of the ads in ne'spapers, maga@ines, radio, and
so onZso that the( reach their intended audience. :ometimes the
agenc( 'orks in con5unction 'ith the client+s marketing department?
other timesZ'hen the client doesn+t ha/e a marketing departmentZ
the agenc( takes on that role.
But that+s onl( a strict definition of 'hat people in ad/ertising do. In
3roader terms, the industr( includes e/er(thing from P8 agencies
J'hich tr( to place ne's items a3out clients in the mediaM to direct
marketers J'ho send out all that anno(ing 5unk mailM to Internet
ad/ertising and design firms J'hich create popBup or 3anner ads or
design 'e3sites for clientsM. .an( of the 3iggest and most successful
agencies ha/e units that focus on each of these acti/ities.
P8 firms, on the other hand, generall( tr( to persuade media to
pu3lici@e their messages as ne's. ,hen the( represent trul(
ne's'orth( clients, such as political candidates, getting pu3licit( is
eas(, and the challenge is to put their clientbs spin on ho' a ne's item
is presented in the media. ,hen the client is less ne"s"orthy, such as
a compan( that 'ants pu3licit( for its products 'ithout 3u(ing an ad,
the 5o3 is more difficult. P8 professionals 'rite creati/e, and
sometimes not so creati/e, !ress releases that dress up compan(
messages as topical ne"s, in the hope that it "ill (e run as such on the
front page or reported at the 3eginning of the e/ening ne's on
P8 firms also pro/ide ser/ices such as s!eech writing, ghost writing,
investor relations, and damage controlZthe term for limiting 3ad
pu3licit( that results from misadventureQ the plane that crashes, the car
that 3ursts into flame, the pain pill that poisons people, the computer
chip that canbt add num3ers correctl(, the political candidate 'hose
past catches up "ith him.
>ike so man( other industries, ad/ertising and pu3lic relations firms
ha/e e0perienced a lot of consolidation in recent (ears, as companies
5oin forces to lo'er costs and sta( competiti/e in the glo3al
marketplace. In ad/ertising, 3igger si@e means more clout 'ith media
outlets, and therefore lo'er ad/ertising costs. This trend is also a
result of the fact that 3( o'ning se/eral different ad/ertising agencies,
a single holding company can control se/eral competing accounts
'ithout conflict of interest.
Account *lanning
Account !lanningZalso kno'n as strategic !lanningZ'as
de/eloped in $nglish ad agencies in the 1#%s and 1#!%s. It took a
'hile, 3ut in recent (ears the 6merican ad/ertising industr( has
disco/ered account planning in a 3ig 'a(. 6ccount planning is a
discipline that aims at increasing understanding of the consumer.
Toda(, account planning is such an integral part of man( 6merican ad
agencies that it+s the account planners 'ho do most of the strategi@ing
on 3ehalf of clients, rather than the account management staff.
ther $e" Media
The Internet is not the onl( ne' medium 'hen it comes to ad/ertising.
It seems that people are .aded 3( the o/erload of ads in traditional
media, like tele/ision or ne'spapers, and often 'on+t e/en pa(
attention to ads. 6s a result, ad/ertisers are no' tr(ing to get (our
attention through nontraditional ad/ertising media like the mo/ies,
'here product placement has 3ecome a permanent part of 3usiness.
9ther nifty places 'here (ou can no' see adsQ on 3us rooftops Jads
atop 3uses reach the professional market that 'orks in office to'ers,
apparentl(M and at the 3ottom of golf holes. Beer ads ha/e e/en 3egun
to sho' up on disinfectant cakes in men4s room urinals, of all places.
Targeted Marketing
Computer data3ases let ad/ertisers store detailed information a3out
each of their customers. nBdemand printing lets ad/ertisers
customize 3rochures to indi/idual customers. $2mail and automated
direct mailing let ad/ertisers reach indi/idual customers
economicall(. :o, for the first time, the ad/ertising industr( is
learning ho' to create ads like smart 3om3s, capa3le of deli/ering a
customi@ed message to a precise target. That means that technological
e0pertise is increasingl( important 'ithin ad/ertising agencies and, to
a lesser e>tent, P8 firms.
$ow .t Brea(s *own
Though 3outiLue agencies are gro'ing in num3er and revenue, the 3ig
names continue to handle most of the accountsZand earn most of the
dollars. The( also are the primar( source of emplo(ment
opportunities. In addition to the si@e of the firm, (oubll need to think
a3out its location, its client list, and the kind of ad/ertising it doesQ
3randing /s. promotional, general /s. specific industries, all media
/ersus specific media.
Big <lo(al $et"orks
In the past decade, glo3al has 3ecome the 'a( to go. :e/eral huge
glo3al marketing and media conglomerates no' dominate the
ad/ertising industr(. These include 9mnicom, the ,PP )roup, the
Interpu3lic )roup, Cordiant, 4a/as, and Pu3licis )roupe. The( are
5oined 3( ad/ertising agencies that ha/e e0panded their operations 3(
opening offices around the 'orld and 3( acLuiring other marketing
and media companies. These include the )re( )lo3al )roup.
Together, these firms o'n man( of the ma5or pla(ers in traditional and
interacti/e ad/ertising. 9mnicom, for e0ample, o'ns BB=9
,orld'ide, ==B ,orld'ide, and TB,6 ,orld'ide. Cordiant o'ns
Bates ,orld'ide. 4a/as 6d/ertising o'ns $uro 8:C) ,orld'ide
and 6rnold ,orld'ide Partners. The ,PP )roup o'ns 9gil/( V
.ather and 1. ,alter Thompson. Interpu3lic o'ns .cCann2$rickson
,orld'ide, >o'e JThe PartnershipM, ;CB )roup, =eutsch, and
Camp3ell2$'ald. 6nd Pu3licis )roupe o'ns Pu3licis ,orld'ide and
:aatchi V :aatchi ,orld'ide, and recentl( acLuired Bcom3 )roup,
'hich o'ns >eo Burnett ,orld'ide and =+6rc( .asius Benton V
Bo'les Jthe latter no longer e0ists under this name, 3ut has 3een
folded into Pu3licisM.
In the old da(s, 3eing 3ig meant 3eing corporate and account2dri/en.
Though that+s still often the case, it+s not the rule it once 'as. 9ne
reason is that ad/ertising has changed, 'ith man( ad/ertisers no'
recogni@ing the /alue of catch( creati/e 'ork. 6nother is that 3ig
companies no' o'n 'hat 'ere until recentl( independent shops
kno'n for strong creati/e. 9mnicom, for instance, o'ns )ood3(
:il/erstein, and Interpu3lic o'ns the >o'e )roup.
&maller &hops
,hile a lot of hot shops ha/e 3een snatched up 3( the 3ig glo3al
holding companies, there are still plent( of smaller shopsZsome 'ith
as fe' as fi/e emplo(ees. 9ften these are creati/e (outi?uesV
agencies started 3( people from 3igger agencies 'ho ha/e hung out
their o"n shingle in order to follo' their /ision of 'hat makes good
6t smaller agencies, the 3oundaries 3et'een different departments are
often not as pronounced as at larger agencies. ,hile the staff at 3igger
agencies is di/ided 3( client, in a smaller agenc( people 'ill often 3e
'orking on se/eral accounts at once. .ad =ogs V $nglishmen in
*e' Gork and Butler, :hine V :tern in :ausalito, California, are t'o
of the hundreds of smaller shops.
Interactive Agencies
Interacti/e agencies speciali@e in online marketing and ad/ertising.
This includes e/er(thing from concepting, designing, and placing
3anner ads to designing corporate 'e3sites to de/eloping e2commerce
solutions for corporations. This segment of the industr( has 3een
de/astated in recent times. 6s Corporate 6merica cut (ack on
ad/ertising e0penditures, online2ad clickBthrough rates plummetedZ
resulting in dismal online2ad/ertising re/enues. But the segment looks
to (e on the re(ound, as ad/ertisers tr( out ne' online strategies 'ith
a ne'l( realistic perspecti/e on 'hat ad/ertising on the Internet can
and cannot do.
*u(lic +elations
;irms that speciali@e in pro/iding P8 ser/ices include $delman,
&etchum P8, and 4ill and &no'lton Jo'ned 3( ,PPM. Internall(, one
difference 3et'een P8 and ad agencies is that P8 firms tend to
organi@e themsel/es around practice areas, such as pu3lic affairs,
in/estor relations, la3or relations, crisis management, entertainment,
media relations, consumer2product marketing, and corporate2
reputation management. :maller P8 firms, like ad agencies, ma(
speciali@e in a particular field, such as the Internet, health care,
telecommunications, or consumer2product marketing.
$onagency pportunities
Be(ond the traditional ad and P8 agencies, there are a num3er of
other 5o3 sources in this field. 8esearch firms, such as I8I
JInformation 8esources, Inc.M, *ielsen Jof TC2ratings fameM, )allup,
and 1.=. Po'ers all measure the success of agenc( campaigns. 9ther
firms speciali@e in certain aspects of the ad/ertising 'orld, such as
direct marketing or promotions. 6lthough some of these are
independent, others are o'ned 3( 3ig pla(ers.
6lso, large corporations usuall( ha/e marketing communications
JmarcomM departments, 'hich create and produce brochures, !roduct
sheets, and other so2called mar(eting collateral. .arcom departments
also often 'rite and distri3ute press releases and perform other P8
functions. T(picall(, marcom 'ork is not on the creati/e edge, 3ut on
the other hand, (ou 'onbt lose (our 5o3 if (ou canbt come up "ith a
3rilliant idea e/er( 'eek.
:ome corporations create and produce some or all of their o'n
ad/ertising. ;or e0ample, Charles :ch'a3 V Co. and .asterCard 3oth
ha/e inBhouse ad departments. Asuall(, these 'ill 3e more corporate
in feel and 'ill produce ad/ertising that+s not as e0citing as that of
general agencies.
;o( *rospects
The ad/ertising industr( has taken a 3ig hit due to recent economic
e/ents, particularl( the decline of the dot coms and the o/erall
recession. 8emem3er all those e0pensi/e dot2com :uper Bo'l ads
from a fe' (ears 3ack- 6 lot of those companies are no longer in
3usinessZand, like their more2traditional (ricksBandBmortar
Corporate 6merica cousins, those that are still around are much less
'illing to plunk do"n millions of dollars on ad/ertising.
The ad and P8 industries are going through a difficult c(cle currently,
and as a result, 5o3s in the industr( are scarce. Add in the fact that it+s
e>ceedingly difficult to start in this industr( in an(thing 3ut an entr(2
le/el position, and (ou end up 'ith a 'hole lot of competition for
relati/el( fe' lo'2pa(ing 5o3s. :o, if (ou 'ant to 'ork in ad/ertising,
3e prepared to start at the 3ottom and 'ork (our contacts to get
inter/ie's. ,hile some of the 3igger agencies do recruit on campus
for entr(2le/el account2management hires, most entr(2le/el hires are
not recruited. The easiest routes into the marketing and 3usiness side
of ad/ertising are entr(2le/el media positions and administrati/e
assistant positions. The( don+t pa( that 'ell and the( in/ol/e lots of
grunt 'ork, 3ut (ou+ll get a chance to sho' (our stuff and get
promoted. If (ou+re a creati/e, (ou can+t get a 5o3 in ad/ertising
'ithout a 3ook of (our 'ork. ;or entr(2le/el cop('riting or art2
direction positions, this means designing and producing mock
The first thing 5o3 seekers should kno' a3out ad/ertisingQ It isnbt eas(
to 3reak into, and it doesnbt pa( 'ell 'hen (ou start. :econd, e0pect to
'ork in *e' Gork Cit(, Chicago, :an ;rancisco, or >os 6ngeles,
'here the 3iggest agencies are headLuartered. In P8, too, (oubll
t(picall( start at the 3ottom Jan internship is a fa/orite 'a( to 3reak
into the industr(M, and (ou pro3a3l( 'onbt make a huge salar( to start,
3ut the 'ork can 3e interesting and re"arding.
Cocus grou! K a group of consumers 3rought together to gi/e
opinions a3out products, ad/erts etc.
("ar(et) survey K a stud( of the state of the market.
Account K customer 'ho does a large amount of 3usiness 'ith a
firm and has an account.
&ress Release K sheet gi/ing ne's a3out something 'hich is sent
to ne'spapers and TC and radio stations so the( can use the
'!eech writing K scrierea discursurilor
>host writing K the 'riting of a 3ook or a stor( for another person
'ho then sa(s it is their o'n 'ork
.nvestor relations K the relations 'ith in/estors 7 the person 'ho
gi/es mone( to a compan(, 3usiness or 3ank in order to get profit
$olding com!any K companie holding P a compan( 'hich o'ns
more than 5% X of the shares in another compan( P compan(
'hich e0ists onl( or mainl( to o'n shares in su3sidiar(
companies J6m. *roprietary companyM
'trategic !lanning K pre/i@iune strategicD P planning the future
'ork of a compan(
Bouti5ue = agency K agen<ie tip 3outiLue Jde mici dimensiuniM
"ar(eting collateral K au0iliare de marketing
*ot coms K a compan( that primaril( does 3usiness /ia the
Inroads K atac, nD/alD
Take on K a2Bi asuma
*opBup K care sare, se miBcD rapid P a 3ook, card, toaster etc that is
designed to make something suddenl@ spring out of it.
$e"s"orthy K important or interesting enough to 3e reported as ne's
&pin K a 'a( of pro/iding information that makes it seem to 3e
fa/oura3le for a particular person or political part(
Topical ne"s S Btiri de actualitate
+eport K a face un reporta5
To (e run K a circula, a <ine, a apDrea En @iar
Misadvanture K accident, moarte accidentalD
To catch up "ith K a a5unge din urmD pe cine/a
Clout K puterea sau autoritatea de a influen<a deci@ia altora
Media outlets K pia<D de desfacere media
;aded K isto/it, epui@at
$ifty K gro@a/, straBnic
Ads atop K reclame pe acoperiBuri
Men4s room urinals K closet
nBdemand printing K tipDrituri la cerere
Customize K to lok special or uniLue
To a lesser e>tend K Entr2o mai micD mDsurD
+evenue S /enit
9old up K if an organi@ation folds or folds up it closes 3ecose it does
not ha/e enough mone( to continue
&natched up (y K a fi apucat, EnhD<at
To hung up your o"n shingle K to start (our o'n 3usiness, especiall(
as a doctor or a la'(er
Cut (ack K a micBora, a reduce
ClickBtrough K care se accesea@D prin click2ul mouse2lui computerului
+ates K cota<ii
*lummet K to suddenl( and Luickl( go do'n in /alue or amount
To (e on the re(ound K a2Bi re/eni
Come up "ith K a concepe, a /eni cu ce/a Jo ideeM
InBhouse K interior
-ue to K datoritD
To plunk do"n K a arunca
BricksBandBmortar corporates K SclDdiriT, companiile care EBi
desfDBoarD acti/itatea En mod tradi<ional
Add in K a adDuga
Currently K En pre@ent, acum
/>ceedingly K gro@a/ de, e0trem de, foarte
2ires K slu53D, anga5are
<runt "ork K the hard, uninteresting part of a piece of 'ork Jdonke(2
Mock K model, simulare
MockBup K model of a ne' product for testing or to sho' to possi3le
Internship K po@i<ie internD
+e"arding K plin de satisfac<ii
6ds seem to 3e e/er('hereQ filling maga@ines, on 3ill3oards lining the
road, and sho'ing up at regular inter/als on tele/ision. Their o35ectQ
to market and sell goods and ser/ices. 6ccording to 6d 6ge, a trade
maga@ine, companies spent close to \"% 3illion dollars on ad/ertising
in 1##".
Careers in ad/ertising can 3e lucrative. Gou might go into the
3usiness side of account or account planning? the creati/e side, 'here
(oubll create ads Jman( people interested in /isual arts, designZ
particularl( graphic designZand editorial and 'riting careers 5oin ad
agencies as creati/esM or media planning or production. :ome people
interested in ad/ertising ma( find the( prefer pu3lic relations, 'here
(oubll ha/e a similar goal, though (our means 'ill 3e Luite different.
An advertising agency is a marketing consultant. It helps a clientVa
manufacturer of consumer products such as $ike% or a serviceB
oriented company such as Charles &ch"a( W Co.V"ith its marketing
efforts% from strategy to concept to e>ecution.
:trateg( in/ol/es helping a client make high2le/el 3usiness decisions,
such as ho' to 3rand a ne' line of suntan lotions. The agenc( takes a
clientbs strateg( and turns it into a specific concept for ad/ertisements
Zsuch as a series of ads featuring e0treme athletes for a soft2drink
maker 'ith a strateg( of making inroads in the teen market.
$0ecution is 'here an agenc( turns a concept into realit(Zthe
production of actual adsQ the print la(out, the ,e3 design, the film
shoot, or the audiotaping. $0ecution also in/ol/es placing the adsZ
3u(ing space in ne'spapers, on tele/ision, or in su3'a( stations.
6ccount2dri/en agenciesb ads usuall( focus on product 3enefits, 'hile
creati/e agenciesb ads focus on 3rand image. 6s a result, account2
dri/en agencies end up 'ith accounts such as $nergi@er 3atteries, for
'hich an c$nergi@er Bunn(c campaign e>tolled the productbs long life.
Creati/e agencies end up 'ith accounts 'here lifest(le or image is
more important, such as 9ld *a/(, 'hich uses retro clothing st(les to
connect 'ith its teen and t'ent(2something market.
6d/ertisers pla( a role in shaping the ads that shape our culture. The
'ork (ou do 'ill 3e determined partl( 3( the t(pe of agenc( (oubre in
and (our role 'ithin it. Goubll 'ork in one of fi/e departmentsZ
account management, account planning, media, production, or
6ccount management is the clientsb primar( contact. There (oubll
.uggle a num3er of pro5ects, and ensure that the( come in on time, on
3udget, and on strategic target.
In account planning, (oubll tr( to understand consumer 3eha/ior and
use (our kno'ledge to devise strategies for clients.
.edia decides 'here to place ads, and in 'hich mediumZradio,
tele/ision, print, or ,e3Z'hen, and for ho' long.
Production in/ol/es ph(sical creation of the ads, either in2house or
outsourced. If (oubre a creati/e, (oubll 3e responsi3le for turning
strategies into concepts that can 3e made into finished adsZfor
e0ample, sho'ing 'ell2dressed people dri/ing up to a discount store
to highlight a change in product selection.
Creati/e departments also create storyboardsZcartoon2st(le
summaries of 'hat an ad 'ill contain.
:ome larger agencies contain traffic departments to handle the flo' of
pro5ects 3et'een departments? ne'23usiness departments, 'hich keep
track of possi3le ne' clients and gather resources in preparation for
pitches? and pu3lic relations departments, 'hich direct pu3licit(
To succeed in ad/ertising, (ou need to 3e creati/e, organi@ed,
moti/ated, good 'ith people, tactful, culturall( a'are, decisi/e,
resilient, and a3le to handle deadlines and stress. Goubll also ha/e to
3e a3le to 'ork indi/iduall( and in a team en/ironment, understand
3u(ing and selling patterns, understand and incorporate technolog(,
and appreciate creati/it(.
;or a career in account planning, (oubll also ha/e to 3e capa3le of
carr(ing out Lualitati/e and Luantitati/e research. )ood media
planners are detail2oriented, good at math, and ha/e a thorough
understanding of marketing. 9n the creati/e side, (oub/e got to 3e a3le
to handle pressure and deal 'ith the frustration of ha/ing clients 'ho
ma( not understand or appreciate (our creati/e /ision.
'ucrative K profita3il
&untan lotion K lo<iune pentru 3ron@at
/>tol K a pre<ui foarte mult
;uggle K a 5ongla
-evise K a in/enta a plDnui P to plan or in/ent a 'a( of doing
something, especiall( something complicated and cle/er
*itches K to tr( to make a 3usiness agreement, or to sell something 3(
sa(ing ho' good it is
&ales pitch K 'hat a person sa(s a3out a product to persuade people to
3u( it
+esilient K re@istent
Pu,lic Relations
c:ome are 3orn great, some achie/e greatness, and some hire pu3lic
relations officers,c said the historian, =aniel 1. Boorstin. 4is point- In
pu3lic relations, (our 5o3 is to make (our client seem great 'ithout
an(3od( kno'ing (ou 'ere tr(ing.
9f course, those in P8 do more than make their clients seem great.
The( speak on 3ehalf of client organi@ations? help mitigate harmful
pu3licit( 'hen, for instance, the federal go/ernment sues a client for,
sa(, antitrust violations? and generall( represent a client to the media
in order to get the most fa/ora3le pu3licit( possi3le. Gou might think
of P8 as a speciali@ed area of marketing and akin to ad/ertising,
'hich incorporates a similar client2oriented structure. 6nd in man(
sectors itbs a fast2gro'ing field.
P8, 'hich is also kno'n as communications, is all a3out relating Jor
communicatingM to the pu3licZa relationship generall( mediated 3(
the press. Anlike an ad/ertising agenc(, a P8 agenc( communicates a
compan(bs message to the press, rather than directl( to the clientbs
target market. The o35ecti/e in P8 is to use the press to reach the
target market 3ecause, 'hen mediated 3( a supposedl( o35ecti/e third
part(, the message 'ill 3ecome more po'erful.
Because of their role in generating media co/erage, P8 professionals
are sometimes thought of as disingenuous, deceitful, hucksterish
flacks tr(ing simultaneousl( to pull the "ool over the eyes of their
clients and the pu3lic at large. Thatbs inaccurate. The fact is, in toda(bs
3usiness 'orld, e/er( compan(, C$9, cele3rit(, and association 'ants
to sho' the 3est possi3le face to the pu3lic, and all of them are using
pu3lic relations to do so.
P8 ser/es those fighting to legali@e medical mari5uana, as 'ell as the
Internet start2up seeking funding from in/estors. .ichael 1ordan
consults 'ith P8 pros to figure out ho' he can 3est maintain his
image? so does Intel, seeking to maintain its image. ,hen (ou read
something in the ne'spaper a3out the phone compan(, itbs likel( that a
P8 pro 'as 3ehind the scenes, either pitching the stor( or furnishing
the reporter 'ith statistics to 'rite it.
=a( to da(, P8 pros cpitchc stor( ideas to reporters, tr(ing to elicit
co/erage of su35ects important to their clients. The( also ser/e as
compan( spokespeople, plan and hold e/ents intended to generate
pu3licit(, and de/elop strategies that 'ill spark media interest. 6n
actressbs appearance at an a'ards ceremon( 'earing nothing 3ut a
potholder, for instance, could 3e a P8 ploy to get her in the papersZa
'ell2considered one, perhaps, if the 'oman happens to 3e .adonna,
3ut less effecti/e if the 'oman is *anc( 8eagan.
Asuall(, (oubll spend much of (our da( 'orking 'ith the media.
Goubll make phone calls, issue press releases, and plan e/ents.
8eporters 'ill complain, perhaps, 3ut in a 'orld glutted 'ith
information, the( rel( on pu3lic2relations practitioners for information
the( donbt ha/e the time or 3udget to gather themsel/es.
Those 'ith more e0perience in P8 'ill 'rite speeches, strategi@e the
3est time to announce a ne' product, 'ork alongside an ad/ertising
agenc( to position products in the mind of the pu3lic, de/elop and
pu3lish ne'sletters, and manage crises, endeavoring to put a positi/e
spin on e/ents for a client organi@ation. 6nd along 'ith representing
the client to the pu3lic, P8 practitioners 'ill represent the pu3lic to
the client, helping the client understand 'hat the pu3lic 'ants, needs,
and is concerned a3out.
Those 'ho do 'ell in P8 ha/e strong communication skills, are
articulate 3oth 'ith the 'ritten and spoken 'ord, are a3le to
understand a /ariet( of people, are confident, and Luick studiesZ
(oubll need to learn Luickl( 'hat (our clients do in order to
communicate their messages effecti/el(. P8 professionals should also
3e Luick thinkers and persuasi/e.
,hile there are some 3ehind2the2scenes opportunities such as research
that could accommodate intro/erted t(pes, most 5o3s in the P8 field
reLuire assertiveness and an outgoing personality. 9ne insider sa(s
that if (ou kno' (oubre sh(, P8 pro3a3l( isnbt the 3est career choice
for (ou. 6 pu3lic relations professional 'ho is afraid of the pu3lic
'onbt 3e a3le to represent his or her clients authoritatively.
Mitigate K to make a situation or the effects of something less
unpleasant, harmful, or serious
Antitrust !violations# K 'hich attacks monopolies and encourages
Akin to K foarte asemDnDtor cu
2uckster!ish# K someone 'ho uses /er( strong, direct selling
methods, sometimes dishonest
9lack K strong criticism
To pull the "ool over the eyes of some(ody K to decei/e someone 3(
not telling the truth
/licit K to succeed in getting information or a reaction from someone,
especiall( 'hen it is difficult
&park K a stFrni interesul cui/a En ce/a
*otholder K a piece of thick material used for holding hot cooking
*loy K a cle/er method of getting an ad/antage, especiall( 3(
decei/ing someone
Issue K a emite
<lutted K EncDrcat, plin de
*ractitioners K someone 'ho regularl( does a particular acti/it(
/ndeavor K a Encerca din greu
Assertive!ness# K 3eha/ing in a confident 'a( so that people notice
Authoritative!ly# K En mod autoritar, plin de Encredere Bi care impune
utgoing K liking to met and talk to ne' people
Account Management
6ccount management com3ines sales 'ith customer ser/ice. 6ccount
management professionals 'ork 'ith clients to ensure the(+re getting
the most out of the products and ser/ices their emplo(ers sellZand to
persuade clients to continue to do 3usiness Jprefera3l( more and more
3usinessM 'ith their emplo(ers o/er time. In high tech as 'ell as in
more traditional manufacturing industries, this means making sure that
clients are happ( 'ith (our compan(+s products. 6nd man( ser/ice2
oriented 3usinesses such as ad/ertising and pu3lic relations agencies
pro/ide similar support to their customers.
What 7ouEll -o
6ccount management acts as a liaison 3et'een a compan( and its
clients. 6ccount managers 'ork closel( 'ith customers to determine
the customersb needs. Then the( make sure their compan( de/elops
products or ser/ices to meet those reLuirements.
Gou can think of account managers as corporate 5ugglers. The( create
3udgets and schedules, enforce deadlines, and e0plain clientsb agendas
to their staffs and management. The( also identif( and solicit ne'
6ccount managers coordinate e/er(thing and e/er(one. The( make
sure no details fall through the cracks. Clients can depend on them to
protect their interests.
6ccount managers keep a careful e(e on pro5ects in de/elopment.
The( let customers kno' ho' their accounts are progressing and are
the first to hear a3out pro3lems. ,hen something 3lo's upZsuch as
'hen deadlines aren+t met or, in the ad/ertising industr(, 'hen a
client hates 'hat the agenc(+s creati/es ha/e put togetherZthe( do
their 3est to smooth things o/er and maintain a good 'orking
6ccount managers 'ork in man( different industries. $0amples
include emplo(ment agencies, consultant firms, ,e32design
companies, and ad/ertising and pu3lic relations firms. 6n( compan(
that ser/es other 3usinesses hires account managers tonesses hires
account managers to needs are 3eing met.
In ad/ertising, a 3usiness hires an agenc( to come up 'ith an ad
campaign. The account manager 'orks 'ith the client to determine
the t(pe and scope of the campaign. 4e or she then communicates
those concepts to the ad agenc(bs creati/e team. 6s the pro5ect
progresses, the account manager makes sure the campaign meets the
clientbs specifications.
Who -oes Well
6ccount managers need to 3e detail oriented. 9rgani@ation is a ke(
part of the 5o3. Gou 'ill 3e e0pected to keep on top of e/er( aspect of
the pro5ect. )ood communication skills are also necessar(. 6ccount
managers interact 'ith clients, creati/e staff, and management.
Promises made to customers must 3e kept. Gou canbt offer more than
(our compan( can deli/er. Gou need to kno' e0actl( 'hat ser/ices
(ou can pro/ide and ho' Luickl( a pro5ect can 3e completed.
6n e0perienced account manager understands that kno'ledge is
po'er. Clients e0pect the account management team to understand the
needs of their 3usinesses.
Gou 'ill need to learn as much as (ou can a3out (our clients. The
more industr( insight (ou 3ring to the ta3le, the 3etter. 8ead up on
changing 3usiness trends and strategies. Gour kno'ledge 3ase 'ill
attract ne' accounts and keep the ones (ou alread( ha/e.
Anfortunatel(, all pro5ects do not go as planned. :ometimes a client
'onbt like the 'ork that has 3een done. Itbs up to the account manager
to fi0 the pro3lem. 4e or she 'ill talk to the client, find out 'hatbs
'rong, and tr( to come up 'ith a solution.
:ome clients 'ill 3e harder to 'ork 'ith than others. Gou ma( need to
hold a clientbs hand as (ou 'alk him or her through a pro5ect. ,hen a
deadline looms, long hours ma( 3e reLuired. ,hate/er the case, an
account manager seeks the 3est solution for his or her client and
'usiness 9e!elopment
Business de/elopment Jalso kno'n as 3i@ de/M is e0actl( 'hat it
sounds likeQ It in/ol/es figuring out ho' to 3uild or de/elop a
3usiness. Gou can find 3usiness de/elopment 5o3s in all industriesZat
e/er(thing from tech start2ups to huge pharmaceuticals companies.
,hat the 'ork entails depends on ho' esta3lished a compan( is and
'hat its 3usiness model is.
What 7ouEll -o
Business de/elopment people constantl( askQ c,hat ten things 'ill
ha/e the 3iggest positi/e impact on m( compan(bs 3usiness, and ho'
can 'e make them happen-c Their o35ecti/e is to e0pand the market
reach or re/enue of their companies in 'a(s that make the most of
their companiesb resources and capa3ilities.
Bi@ de/ e0ecutes the compan(bs strateg( 3( cdoing dealsc 'ith
complementar( 3usinesses. $0actl( 'hat that means /aries from
compan( to compan(. 6 deal might 3e a co23randing initiati/e, a
technolog(2 or content2licensing arrangement, an e2commerce
partnership, or some com3ination of the three.
Who -oes Well
Business de/elopment in/ol/es /ar(ing degrees of sales and strateg(.
In some companies, 3i@ de/ people ma( focus on getting ne'
corporate sales accounts, 'hile in others the( ma( lead ne' product
de/elopment. 6t larger companies such as 69> Time ,arner, Cisco,
or .icrosoft, one of 3i@ de/bs man( responsi3ilities ma( 3e to decide
'hich smaller companies the compan( should acLuire ne0t to ensure
that it retains its market strength in the future.
,orking in 3usiness de/elopment is an e0cellent 'a( to 3ecome adept
at 3usiness strateg( 'hile gaining hands2on e0perience in negotiating
deals and managing partner relationships. Business de/elopment 5o3s
are also highl( cross2functional, reLuiring close colla3oration 'ith
/arious internal and partner2compan( teams such as sales,
engineering, and marketing to ensure that a deal is consummated.
,ith its focus on strateg(, 3i@ de/ steers the direction of a compan(Z
the deals forged toda( determine 'hat the rest of the compan( 'ill 3e
'orking on tomorro'.
:eneral Management
=o (ou ha/e a corporate /ision- Anderstand ho' an industr( operates
and ho' to impro/e it- &no' ho' to manage and moti/ate
emplo(ees- If so, consider a career in general management.
What <eneral Management Is
)eneral managers J).sM, also kno'n as e0ecuti/es, or the e0ecuti/e
team, run a compan(bs 3usiness. The( include the chief e0ecuti/e
officer JC$9M, chief operating officer JC99M, president, and others.
Their kno'ledge a3out an industr( and their a3ilit( to pro/ide
direction can mean the difference 3et'een an organi@ationbs success
and failure. The( are in/ol/ed in planning and polic( making at
almost e/er( le/el, including 3oth the long2term strateg( and its da(2
to2da( e0ecution.
6 ). decides 'hat products to produce, 'hich markets to go after,
and the compan(bs general philosoph(. ).s are also e0pected to raise
mone(, keep a compan( profita3le, and ans'er to shareholders.
What 7ouEll -o
;or the most part, general managers control ho' an organi@ation
operates. The( de/elop corporate structures and policies, direct and
coordinate emplo(ee acti/ities, find and de/elop alliances 'ith
suita3le 3usiness partners, raise mone( to gro' their organi@ations,
and make s(stematic changes, as needed, to keep their 3usinesses
).s are e0pected to see and understand the 3ig picture. The health of
a compan( rests firml( on their shoulders. The( de/elop strategies
that 'ill make their organi@ations successful, (ear after (ear.
).s also need to 3e their companiesb 3iggest ad/ocates. The(
communicate the /alue of their organi@ations to the outside 'orld.
$mplo(ees, strategic partners, shareholders, and e/en a compan(bs
chairperson rel( on the general management team to promote the
compan(bs interests at e/er( turn. ).s gi/e their su3ordinates a
reason to 'ant to 'ork for them. The( instill a sense of pride in
)eneral managers tell the press 'h( people should care a3out their
products, marketing strateg(, and goals. ,ithout their guidance a
compan( could flounder. )eneral managers 3ring a measure of order
and purpose to their organi@ations.
:mall 3usinesses and start2ups often ha/e limited management teams.
The founders, 'ho take on the titles of C$9 and president, t(picall(
lead such companies. 6s a compan( gro's and departmentali@es, the
general management function is di/ided into a famil( of positions.
,hile the C$9 and president remain committed to the o/erall mission
of the organi@ation, other positions ha/e more speciali@ed
responsi3ilities. :ome e0amples are the chief operations officer
JC99M, chief financial officer JC;9M, chief technical officer JCT9M,
and general manager J).M. Anderneath them are department heads
'ho run specific areas of an organi@ation, such as marketing or human
resources. The( in turn hire and o/ersee managers 'ho handle the
da(2to2da( super/ision of lo'er2le/el emplo(ees.
In this 'a(, larger corporations ha/e de/eloped a 'ell2defined chain
of command. >o'er2le/el emplo(ees ans'er to operational managers,
'ho o/ersee their dail( 'ork. .an( firms ha/e se/eral la(ers of
frontline and middle managers. :uch super/isors are responsi3le for
managing the functions of an organi@ation. The( set pro5ect goals,
make hiring decisions, settle staff disputes, and ensure that deadlines
are met.
9perational managers report to department heads 'ho set polic( and
determine the goals of their di/isions. =epartment heads ans'er to the
e0ecuti/e officer 'ho controls their area of specialt(. ;or e0ample, the
heads of ,e3 de/elopment and information technolog( ans'er to the
$0ecuti/e officers 'ork together to set the goals and policies of a
corporation. Their 'ork is o/erseen 3( the general manager or
president, 'ho super/ises the entire organi@ation. 63o/e them is the
C$9, the highest2ranking manager. The C$9 is held accounta3le for
all aspects of the 3usiness. 4o'e/er, the C$9 still has to ans'er to
the 3oard of directors.
In pu3licl( held corporations, the 3oard is ultimatel( responsi3le for
the success of an organi@ation. .em3ers of the 3oard ha/e a fiduciar(
responsi3ilit( to look after the stockholdersb Jo'nersbM interests first
and foremost. If the compan( 3egins to falter, the( ha/e the right and
the dut( to correct the situation using an( means possi3le, up to and
including firing the C$9 or an( other top e0ecuti/e. In some cases,
the 3oard takes control of all managerial functions until a 3usiness has
Who -oes Well
).s can 3e found in e/er( industr( and organi@ation, from pu3licl(
held companies to non2profits and go/ernmental agencies. Before
entering management, ).s should ha/e first pro/en themsel/es in
their core industries. Asuall( the( 'ork for a 'hile as operations
managers, then slo'l( 'ork their 'a( up the corporate ladder.
).s can e0pect to 3e in the spotlight most of the time. $/er( decision
the( make and e/er( polic( the( set is su35ect to scrutin( 3( those
around them. There 'ill 3e no place to hide. C$9s and presidents of
large organi@ations are the stars of the corporate 'orld. The( are gi/en
as little pri/ac( as their 4oll('ood mo/ie2star counterparts.
The trade press follo's a ).bs e/er( mo/e closel(. $mplo(ees and
shareholders 'ant to kno' 'hat makes ).s tick, 'hat the( do in
their spare time, and ho' much mone( the( made last (ear. 6s long as
profits are up, the( can do no 'rong. But e/en a slight 3lip in the
markets can change pu3lic perception. The( are often the first to 3e let
go. 4o'e/er, the pu3lic dismissal of a ). 'ill 3e padded 3( a large
settlement offer and the ).bs eLuit( in the compan(Zthe so2called
cgolden parachute.c
,hen (ou think a3out cola, 'hat do (ou think- Coke- Pepsi- Thatbs
due to marketing. ,hat comes to mind 'hen (ou think of computers-
=ell- 6pple- IB.- Thatbs no coincidence. Those companies ha/e
spent a lot of mone( so that (oubll associate a generic product such as
a computer 'ith a 3rand name.
What 7ouEll -o
Broadl( speaking, marketing is the intermediar( function 3et'een
product de/elopment and sales. In a nutshell, itbs the marketerbs 5o3 to
ensure that consumers look 3e(ond price and functionalit( 'hen
the(bre 'eighing consumption options.
.arketers create, manage, and enhance 3rands. J6 3rand can 3e
thought of as the 'a( consumers percei/e a particular compan( or its
products and ho' a compan( reinforces or enhances those perceptions
through its o/erall communicationsZits logo, ad/ertising, packaging,
and so on.M .arketers 'ant the consumer to askQ c,hich 3rand helps
me look and feel m( 3est- ,hich 3rand can I trust-c Their goal is to
make the 3rand the( represent the o3/ious and uncontested ans'er to
those Luestions in the consumerbs mind. In marketing terms, this is
called o'ning share of mind.
9f course, a 3rand canbt 3e all things to all people. 6 ke( part of a
marketerbs 5o3 is to understand the needs, preferences, and constraints
that define the target group of consumers J'ho ma( 3e from the same
geographic region, income le/el, age range, lifest(le, or interest
groupM or the market niche corresponding to the 3rand. 4o' can a
compan( aggressi/el( e0pand its market share and keep customers
satisfied- That Luestion is central to e/er(thing a marketer does.
.arketing is a function at e/er( compan( in e/er( industr(. In the
consumer products industr(, marketing Jcalled 3rand managementM is
the lead function. In other industries marketing ma( pla( a supporting
role to another function. 6t a high2tech compan(, for instance,
marketing ma( pla( a supporting role to research and de/elopment.
6nd in ad/ertising, market research, and pu3lic relations, a speciali@ed
marketing function is the industr(.
Who -oes Well
.arketing appeals to creati/e thinkers as 'ell as num3ers2minded
statisticians. $ngineers, for e0ample, 'ork 'ith customers to help
define ne' products Ja marketing functionM? ps(chologists anal(@e
consumer 3eha/iour so that marketers can 3etter target their
promotions. 6 single purpose underlies the di/ersit( of opportunit(
and the /ariet( of marketing rolesQ to create something customers 'ill
'ant and to communicate 'h( the( should 'ant it.
Pro4ect Management
$/er(one practices pro5ect management to some degree. 6 'riter
3locks out her no/el, homeo'ners plan their house'ork, the host of a
dinner part( makes sure the meal is ser/ed on time.
In 3usiness, pro5ect management is an art, a skill, and a demanding
full2time 5o3. Pro5ect managers are ke( emplo(ees in such industries
as construction, engineering, architecture, manufacturing, and real
estate de/elopment, 3ut man( opportunities for P.s e0ist outside
these areas. In computer hard'are and soft'are for e0ample, pro5ect
managers are responsi3le for launching ne' products, de/eloping ne'
technologies, and managing alliance programs 'ith strategic partners.
>arge corporations such as insurance companies and 3anks ma( also
hire P.s to manage the implementation of ne' standards or practices
in their man( 3ranch offices. Internet companies often look for pro5ect
managers to o/ersee site launches or the de/elopment of ne'
,hether a pro5ect in/ol/es constructing a 3uilding, releasing a
product, or launching a rocket, pro5ect managers make sure e/er(thing
comes together in a timel(, cost2effecti/e mannerZand take the heat
if it doesnbt. Their high2profile, high2risk 'ork demands multitasking
a3ilit(, anal(tical thinking, and e0cellent communication skills.
What 7ouEll -o
Pro5ect managers li/e and 3reathe 3( their schedules. In most cases, a
pro5ect is planned do'n to the dail( or e/en hourl( le/el, and a formal
schedule is de/eloped using the Critical Path .ethod JCP.M, a
precedence23ased techniLue that determines the seLuence in 'hich
things must happen. .ilestones punctuate most pro5ect schedules,
indicating the reLuired completion of /arious steps.
6ll pro5ect managers are familiar 'ith at least one CP. scheduling
soft'are application, such as .icrosoft Pro5ect, Prima/era, :citor
Pro5ect :cheduler, 6$C ;astTrack, C62:uperPro5ect, or &idasa
.ilestones. .an( scheduling applications are tailored to specific
industries or pro5ect t(pes, 3ut all use CP. precedence methodolog(.
.ost scheduling programs also help allocate resources, another 3ig
part of a pro5ect managerbs 5o3. If (ou are running a soft'are
de/elopment pro5ect, for e0ample, (ou ha/e to kno' ho' man(
engineers 'ill 3e a/aila3le and ho' man( hours the(bll need to 'ork.
>ike'ise, if (oubre running a construction pro5ect in/ol/ing cranes and
e0ca/ators that must 3e leased on an hourl( 3asis, (oubll need to kno'
'hen to ha/e those machines on site to get the most 'ork done for the
least mone(. Balancing limited la3or, materials, and other resources is
a difficult task that earns a good pro5ect manager top dollar.
Who -oes Well
.an( pro5ect managers cite stress as the main do'nside to their 5o3s.
P.s are responsi3le for their pro5ectsb successes or failures, 'hich
determine 3oth their income and their status 'ithin a compan( and
industr(. In construction, if a pro5ect isnbt 3rought in on time, the
3uilder has to pa( damages for each da(bs dela(, and the pro5ect
manager 'ill lose a 3onusZand possi3l( e/en his or her 5o3.
;or some, the 3lack2and2'hite scenario is a refreshing challenge.
=eli/ering a pro5ect con time and under 3udgetc can pro/ide great
emotional re'ards. The 5o3 offers the opportunit( to lead, and ne'
pro5ects keep the 'ork fresh. If (ou ha/e an anal(tical mind, good
people skills, and the 'illingness to rise or fall on the demonstrated
success of (our 'ork, pro5ect management ma( 3e for (ou.
;uman Resources 0ndustr$
The role of human resources J48M in 3usiness has increased in recent
(ears and has e/ol/ed from an e0clusi/el( in2house function to
3ecome its o'n industr( pro/iding a complete range of 48 ser/ices.
,hether in2house or third part(, 48 is the field of personnel
recruitment and administration of a compan(+s relations 'ith its
emplo(ees. The range of roles and tasks in 48 is 3road and /aried.
The 5o3 reLuires fle0i3ilit(, grace under fire, and the a3ilit( to Luickl(
s'itch gears from administrator, to counselor and negotiator. 48
handles all aspects of the emplo(erPemplo(ee relationship from
staffing, training, compensation, 3enefits, and emplo(ee disputes.
48 has come a long 'a( since the +%s and +!%s 'hen it 'as la3eled a
Stouch(2feel(T 5o3. 6t the time, clerical staff tended to 3e assigned
human resources tasks? the( 3ecame proficient in these tasks, and
mo/ed up through the ranks sans 3usiness strateg( skills. 6lthough
48 is a3out 'orking 'ith emplo(ees, a successful 48 manager+s
mission is to 3alance the o/erall compan(+s 3usiness reLuirements
'ith indi/idual emplo(ee needs. It+s often the case that 48 is charged
'ith making the compan(+s goal of profita3ilit( central to his or her
3usiness planning.
In toda(+s 3usiness en/ironment, there is a gro'ing need for 48
professionals 'ho ha/e a strong grounding in 3usiness, accounting,
statistics, and legal issues. .an( in the field ha/e master+s degrees
and certifications. Top 48 officers in corporations are usuall( ke(
mem3ers of the e0ecuti/e team, sitting right alongside his or her
counterparts in research, finance, operations, sales, and marketing.
Because all 'orkplaces need at least some 48 support, the need for
48 staff e0ists in /irtuall( all industries. 48 emplo(ees can 3e hired
directl( into a compan( or organi@ation, or the( can 'ork for a third2
part( outsourcing compan(.
If (oubre an anal(tical 'hi@, a natural seller of ideas and concepts, or a
good listener and shre'd 5udge of people, (ou ma( ha/e a future in
this field J'hich used to 3e called personnel, though this name has
fallen out of fa/orM. Altimatel(, human resources reLuires that (ou
find it more satisf(ing to 'ork 'ith people than 'ith products? if (ou
do, the 48 industr( offers an arra( of opportunities.
The +ise of the Third *arty
Companies are increasingl( outsourcing their 48 'ork to third2part(
companies. In 2%%1, !4 percent of all companies outsourced at least
one 48 function, according to a stud( 3( the :ociet( for 4uman
8esource .anagement J:48. M and the consulting firm ,illiam ..
.ercer Inc. 6 ne' t(pe of firm, called a professional emplo(er
organi@ation JP$9M, has sprung up and is eLuipped to take on the
entire scope of human resources acti/it(. .ost P$9 clients are small2
to medium2si@ed companies that sign up 'ith a P$9 in co2op fashion
Zo3taining 3etter deals on the purchase of 3enefits as a group rather
than as a single small entit(. B( contracting 'ith a P$9, small firms
can afford to gi/e emplo(ees a range of 3enefits compara3le to those
offered 3( larger companies. This helps le/el the pla(ing field for
small companies, 'ho are competing 'ith large firms in hiring top
>arger companies are also outsourcing 48 tasks, 3ut the( more
t(picall( go 'ith specialt( firms. The most commonl( outsourced
function is emplo(ee assistance, follo'ed 3( pension and retirement
plan management, training, outplacement ser/ices, and finall( pa(roll.
The Cultural 1anguard
To a certain e0tent, 48 takes on the responsi3ilit( of molding a
compan(+s culture 3( setting policies that dictate the compan( dress
code, grie/ance resolution, the kinds of 3enefits it 'ill offer, and e/en
'ho the compan( 'ill hire. In the earl( 1##%s and prior to that, some
of 48+s functions 'ere seen as Se0trasT or Snice to ha/es.T 6s such,
48 folks 'ere often among the first to go in a la(off. ,hile 48
emplo(ees, in general, are still /ie'ed as less crucial to the 3ottom
line than other re/enue2generating positions, companies ha/e 3egun to
take some of these Snice to ha/eT 48 functions more seriousl(. The(
are 3eginning to understand that a strong, 'ell2defined culture can 3e
a competiti/e ad/antage to attracting the 3est candidates during 3oom
times. 6nd 'hether good times or 3ad, 48 can ser/e as the compan(
3ack3one 3( administering programs that 3olster the compan(+s
culture and /alues.
9inding and 8eeping X2uman CapitalY
*o' more than e/er, a compan(+s culture, it+s ethical conduct, and set
of /alues are seen to ha/e a direct impact on ho' the compan( does
financiall(. The demise of $nron and other companies due to
unethical accounting practices ha/e certainl( 3rought this connection
into the spotlight. Therefore, the stress on in/esting in top2Lualit(
human capital is e/en greater. Companies are tr(ing to hire candidates
'ho are a good match 'ith the compan(+s culture and goals of
profita3ilit(. :ome emplo(ers no' 3elie/e that fostering emplo(ee
lo(alt( 'ill result in a stronger 3rand identit( that 'ill in turn 3oost
the compan(+s pu3lic and financial standing.
<ro"ing +eliance on Technology
48 departments are increasingl( rel(ing on soft'are applications and
Internet access for t'o main reasonsQ to streamline administrati/e
tasks Jreduce clerical tasks or paper'orkM and gain access to more
information ke( to recruiting and setting emplo(ee polic(. .an(
companies no' rel( on pu3lic 'e3sites as an important recruiting tool
for collecting resumes and disseminating information to potential hires
a3out the compan(+s management, histor(, and culture. Compan(
net'orks and e2mail also make it simpler and faster for 48 to
communicate 'ith and distri3ute information to emplo(ees.
6utomating s(stems that 'ere once clunk( and slo' paper processes
has freed up 48 administrators to focus on tasks more directl( tied to
the compan(+s 3usiness goals.
Weathering the &torm
Because of the recession, recruiters are in lo' demand. 4o'e/er, in
high demand are outsourcing firms that place 'orkers 'ho ha/e lost
their 5o3s due to la(offs or closures. T'o (ears ago, 'hen companies
'ere in 'hat the staffing industr( calls a S'ar for talent,T e/er(3od(
'as hiring recruiting firms. *o' that the 3u33le has 3urst,
outsourcing firms are the hotter commodit(. SIt+s al'a(s a 3u(er+s
market,T sa(s one out2of2'ork recruiter. SBefore, the 3u(ers 'ere
companies looking for 'orkers. *o', it+s 'orkers looking for 5o3s.T
9utsourcing has gro'n 3( 12 to 14 percent in 2%%1 and 2%%2 and not
5ust 3ecause of the recession. 8ecalling the tight talent market of t'o
(ears ago, man( emplo(ers are using outsourcing as a 'a( to sta( in
the good graces of some of their more Lualified laid2off emplo(ees in
case the( cut 3ack too deepl( and ha/e to rehire them as contractors.
;o/ 0t 'reaks 9o/n
,e di/ided the opportunities in 48 into in2house staff and ser/ice
organi@ations that include staffing firms, consultants, and 48
information s(stems. ,ithin each of these segments, (oubll 'ant to
think a3out the specific functional areas (oubd like to pursue.
InB2ouse 2+ &taff
48 emplo(ees deal 'ith all of these issuesQ staffing Je/er(thing from
sourcing to orientation to retentionM, emplo(ee relations,
compensation and 3enefits, training, and information s(stems. In
larger organi@ations, se/eral 48 people ma( 'ork on each of these
functions, further su3di/ided into specialt( areasZfor e0ample, the
comps and 3enefits staff ma( include specialists in fields such as
pa(roll, health insurance, and 4%1JkM plans. In smaller organi@ations,
the 48 person ma( 'ear man( hats, 3ut almost e/er( compan( in the
countr( has some3od( on 3oard to handle 48 issues. 6s a 5o3 seeker,
one thing (oubll 'ant to e/aluate is the relati/e importance of the 48
department to the companies (oubre considering. If the 48 office is
still do'n in the 3asement, right ne0t to the furnace, (ou ma( 'ant to
cross that compan( off (our list.
&taffing 9irms
These firms replace or supplement in2house 48 functions. The(
include companies such as .anpo'er, &ell(, Interim, and smaller
organi@ations that focus on temporar( positions, adding a fee to the
hourl( rates of the candidates the( place. It also includes the
e0ecuti/e2recruitment firms J4eidrick V :truggles, :pencer :tuart,
and othersM that place higher2le/el candidates into full2time positions
and charge clients a heft( percentage of the candidatebs first2(ear
salar(. 1o3s in these organi@ations usuall( reLuire (ou to 3e a sharp
5udge of people and a good salesperson and negotiator. Gou also need
the a3ilit( to think 3e(ond the clientbs immediate needs. 48
outsourcing pro/iders ma( speciali@e in functional areas. ;or e0ample,
.anpo'er and 6decco pro/ide temporar( staffing? &orn2;err(
International and 4eidrick V :truggles offer e0ecuti/e recruitment?
6=P pro/ides pa(roll processing? 8ight 6ssociates offers
outplacement consulting.
Compensation and Benefits Consultants
The 'ork here entails e/er(thing from polic( de/elopment to the
selection of health care pro/iders to communication a3out programs to
the rank and file. Pla(ers in this field include 48 consulting firms like
4e'itt, 4a(, and To'ers Perrin, and specialists in managing 3enefit
programs, such as Ceridian, and e/en some of the in/estment houses
and insurance companies that offer 3enefits packages. This field
reLuires an interest in research, anal(tical a3ilit(, good
communication and negotiating skills, and patience.
2+ Information &ystems !2+I&#
Pla(ers here include ser/ice 3ureaus, such as 6=P and Pa(che0 for
pa(roll, and IT firms such as People:oft and 8esumi0 that offer
soft'are and s(stems for operating the compan(bs pa(roll, emplo(ee
information, human resources management, and recruitment s(stems.
48I: has much in common 'ith IT 5o3s else'here in a compan(,
reLuiring the a3ilit( to 'ork 'ith users in defining needs and 'ith
/endors in understanding the capa3ilities and 'eaknesses of their
'ares. :uccess in this di/ision also reLuires technical kno'ledge
a3out s(stems and soft'are and an a3ilit( to plan and implement
;o( *rospects
The Bureau of >a3or :tatistics e0pects 2!,!"" ne' human resources
5o3s to 3e created 3et'een 2%%% and 2%1%, and has identified the
computer and data processing ser/ices as the largest area of gro'th.
,hile human resource 5o3s are e0pected to gro' 3( onl( 12.! percent
Jlo'er than the a/erage for 5o3s o/erallM, 48 5o3s in the computer
industr( are e0pected to gro' 3( an impressi/e percent.
>ook for changes in the 48 profession to reflect o/erall lifest(le and
population trends. ;or instance, as the population ages, residential care
and home health care ser/ices are e0pected to gro'. Those t'o
industries are tied for second place in terms of e0pected 48
emplo(ment gro'th. 6lso related to the aging population is the need
for more human resources 'orkers in hospitals and in health allied
6nother area of e0pected gro'th isn+t an industr( per se, 3ut rather
the area of speciali@ed 48 3usiness ser/ices. The staffing industr( is
rated fourth 3( the B>: as an area of e0pected gro'th 3( the end of
the decade. Both B>: statistics and studies 3( :48. indicate that
speciali@ed third2part( firms dealing in compensation, legal ser/ices,
and 3enefits 'ill also gro'.
;uman Resources
Is the information technolog( department a/oiding (our phone calls-
=o (ou ha/e a cool idea to increase office producti/it(- Gou canbt tell
the difference 3et'een (our I86 and 4%1JkM plan- It might 3e time to
talk to someone in (our human resources department.
What 7ouEll -o
Chances are, the first thing that comes to mind 'hen (ou think of an
48 administrator is someone responsi3le for screening and
inter/ie'ing potential emplo(ees. ,ell, this is one of those times
'hen perception is realit(. *inet(2nine percent of 48 'orkers
responding to a 2%%1 industr( sur/e( said the( 3oth conducted
searches for ne' staff and ran inter/ie's. .ost of the sur/e(+s
respondents 'ere in2house 48 staff, 3ut 'hen (ou add to this the
more than ,%%% people 'orking in personnel outsourcing companies,
(ou+/e accounted for a health( chunk of 'hat the ma5orit( of 48
e0perts do.
In addition to recruiting, the range of 48 duties and speciali@ations
continues to gro', 3ut at the e(e of the hurricane remains the ke(
relationship 3et'een emplo(er and emplo(ee. Common tasks includeQ
recruiting and screening potential emplo(ees? pro/iding and arranging
training programs for them? managing and administering their
3enefits, determining their compensation, maintaining their records?
dealing 'ith la3or unions that represent them? dealing 'ith legal
issues such as occupational safet(, di/ersit(, 'orkers 'ith disa3ilities,
and se0ual harassment. In some cases, 48 duties ma( also include
distri3uting emplo(ee mailings, administering 'orkplace securit(
programs, and e/en coordinating food ser/ices.
48 personnel must 3e accessi3le to prospecti/e and current
emplo(ees as much as possi3le, 'hich means the( need to 3e
a/aila3le from "Q%% a.m. to Q3% p.m. most da(sZand on 'eekends
se/eral times a (ear.
Who -oes Well
4uman resources acts as the administrator 3et'een an organi@ation+s
management and its 'orkers. This reLuires 'earing man( hatsQ It+s an
48 administrator+s 5o3 to make sure that emplo(ees are 'orking in a
safe en/ironment? that disputes are settled? and that 3enefits are
understood and functioning properl(. 6t the same time, 48 is charged
'ith recruiting ne' emplo(ees 'ho 'ill 3oth fit in 'ell and help the
compan( achie/e its goal of profita3ilit(. The( also represent
management 'hen negotiating for 3enefits 'ith companies
administering these 3enefits and 'hen implementing compan('ide
policies that 'ill ultimatel( 3ring do'n costs or 3oost profits. The
needs of 48 co/er a 'ide range of tasks, and therefore, reLuire
someone 'ho is not onl( good 'ith people, 3ut also organi@ed,
anal(tical, 3usiness2minded, and a3le to 5uggle man( pro5ects at once.
0nternet R Ne/ Media 0ndustr$
Tr(ing ardentl( to fulfill the promise of the ,e3, Internet companies
Zstart2ups as 'ell as online e0tensions of clicks2and2mortar
companiesZha/e singled out some acti/it( to rein/ent 3( conducting
it on the InternetZdistri3uting te0t3ooks, soft'are, or greeting cards?
disseminating medical information, fiction, or la' school classes?
planning parties? or s'apping /acation homes. ;or all of these
acti/ities, and man( more, the Internet makes it possi3le to distri3ute
information of all kinds and conduct a transaction at the same time,
an('here in the 'orld, immediatel(.
In the process, companies are doing a stunningl( 'ide /ariet( of
things onlineZselling products, producing ne'spaper2 and maga@ine2
st(le pu3lications, pro/iding ser/ices like tra/el agencies and stock
3rokerages, deli/ering search engines, recruiting emplo(ees, 3uilding
3rands, and de/eloping online gaming net'orks, to name a fe'. 6dd
to this all of the companies that underpin and ser/ice these endea/ors
Zthe online ad agencies, Internet :er/ice Pro/iders JI:PsM, and
management consultanciesZand (ou get a sense of 5ust ho' 3road
this industr( is.
In the past couple of (ears, Internet companies ha/e 'itnessed a
precipitous decline in ad/ertising re/enue. 6s a result, man( pure2pla(
Internet companies ha/e gone under, and some old2econom(
companies decided to scale 3ack their ,e3 operations, lea/ing tens of
thousands of people out of 'ork. ,hat happened- It turns out that
man( of the 3iggest online ad/ertising spenders happened to 3e the
struggling Internet companies themsel/es. Iuick mone( from cash2
rich dot coms 'illing to 'antonl( spend for market share and 3rand
a'areness is gone. 6nd old2econom( companies facing cost2cutting
pressures in a difficult economic en/ironment 3ecame less likel( to
spend for online ad/ertising. The resultQ a dried2up re/enue stream,
and hard times for Internet companies 'ith an ad/ertising re/enue
model. $/en 3ehemoths like GahooR and 69> Time ,arner ha/e
3een hit hard.
In the ne' 'orld order, Internet companies must demonstrate
profita3ilit( or a clear plan for it, or risk near2term financial disaster.
In other 'ords, to make it on the ,e3 these da(s, (ou+d 3etter ha/e a
strong e2commerce component, or at least a /ia3le su3scription model
if (ou+re primaril( a content pro/ider.
In the case of pu3lic Internet companies, the ma5orit( ha/e
disappointed stakeholders 'ith lo'er re/enues and longer than
pro5ected Spaths to profita3ilit(.T 6s far as the remaining pri/ate start2
up shops are concerned, most are /er( short on cash? the much2needed
/enture capital funding no longer flo's freel(. The resultQ $ither
companies fold or scale 3ack considera3l(. ;or most pure2pla(
Internet companies, an IP9 is no longer a /ia3le e0it strateg(. J6s
e/idence, take :eptem3er 2%%1, the first month since 1#!5 that not a
single compan( 'ent pu3lic.M
'ayoffs and Closed &hops
The harsh realities of the economic decline, 3udget cuts, hiring
free@es, and, 'orst of all, la(offs, ha/e hit the Internet industr( hard.
:uch cost2cutting actions are nothing ne' to corporate /eterans, 3ut
ha/e 3ecome painful lessons to the ne', (ounger generation of dot2
com 'orkers. 9ften in dro/es, and more often 'ithout 'arning, tech
firms are asking emplo(ees to lea/e in order to trim their costs. $ach
month the unemplo(ment rate seems to reach a ne' high. .arketing
and content 5o3s ha/e 3een slashed the most. :afest are techies and
salespeople, though e/en the( can face the a0. 6nd if a compan(
closes its doorsZas man( ha/e in recent times J!1 companies closed
up shop 3et'een 1anuar( 2%%% and *o/em3er 2%%1MZe/er(3od( is
out of a 5o3, no matter 'hat his or her 5o3 title.
The Bright &pots
The Internet seems to 'ork 3est, from a 3usiness perspecti/e, for
companies engaged in lo'2o/erhead e2commerceZfor instance,
financial, soft'are, and tra/el2ser/ices sites that don+t deal in storing
or shipping in/entor( ha/e lo' costs once the(+/e esta3lished their
technological infrastructure. ;or e0ample, $0pedia, a leading tra/el
site, operates on a !% percent profit margin., on the other
handZ'hich has to deal 'ith procuring and shipping actual ph(sical
productsZoperates at a 2 percent margin.
Back in the 1##%s, ,e3 pundits h(ped the a3ilit( of the Internet to
3ring people together on a one2to2man( 3asisZto gi/e Internet users a
/oice the( didn+t ha/e pre/iousl(, and thus make the 'orld a smaller
place. It might not 3e doing Luite that, 3ut the promise of one2to2man(
connections is 3eing fulfilled these da(s 3( the 'e3log phenomenon.
,e3logsZS3logs,T for shortZare a kind of online diar(, in 'hich the
author, or S3logger,T 'rites regular postings a3out 'hate/er interests
him or her, often including h(perlinks to other ,e3 pages containing
information a3out the topic at hand. *o' ,e3 pundits are making the
claim that 3logs are going to change the face of 5ournalism? again,
'e+ll ha/e to 'ait and see on that claim. But there+s no dou3t 3logs
are proliferatingZand that e/en 5ournalists and ne'spapers are getting
in on the act.
;o/ 0t 'reaks 9o/n
The industr( is a 3agg( monster that resists classification. The
follo'ing 3reakdo'n is not a definiti/e ta0onom( 3ut rather a chance
for the uninitiated to make some sense of a rapidl( changing
9nline pu3lications make mone( 3( selling ad/ertising or
su3scriptions or 3oth. .ost of the pla(ers are losing mone(, and
'idespread profita3ilit( seems unlikel( in the near future. .an(
pla(ers in this field are online /entures of alread(2esta3lished media
3rands. :ome e0amples include The ,all :treet 1ournal Interacti/e
$dition, a su3scription23ased /ersion of the leading 3usiness
ne'spaper? and $:P*.com, an e0tension of the sports ca3le channel.
There are also a num3er of important pla(ers 'hose primar( presence
is online. 6 fe' e0amples are C*et, 'hich pro/ides ne's and
information on the online 'orld, and Cit(:earch, 'hich is actuall( a
cluster of pu3lications, each de/oted to life Jrestaurants, mo/ies,
communit(2ser/ice opportunities, and so onM in a gi/en cit(. 6nd
hundreds of dail( ne'spapers put all or part of their content on
'e3sites that are still e0ploring the differences 3et'een reporting for
print and for the ,e3.
Cendors make mone( 3( selling goods or ser/ices. The 3est2kno'n
online seller of goods is .ail2order companies 'ith
'e3sitesZ>andsb $nd, for e0ampleZfall into this categor(. 9ther
sellers pro/ide ser/icesQ $dT86=$ and Charles :ch'a3 act as
stock3rokers, $0pedia acts as a tra/el agent, and ;ree.arkets creates
customi@ed 3usiness2to23usiness online auctions for large 3u(ers of
industrial parts, ra' materials, and commodities.
Aggregators and *ortals
:ome of the 3usiest sites on the ,e3 fall into this categor(. :earch
enginesZ'hich account for fi/e of the ten 3usiest 'e3sitesZare
aggregators Jso named 3ecause the( offer a huge aggregation of links
to other 'e3sitesM. Portals Jalso referred to as gate'a(s or start pagesM
are sites that ser/e as home 3ase for ,e3 surfers. The home page of
69>, for e0ample, is designed as an Internet portal. In a mo/e that
t(pifies the fluidit( and opportunism of this industr(, the leading
search engines, such as GahooR, ha/e positioned themsel/es as
gate'a(s, and /ice /ersa. 9ther so2called freestanding search engines
like the popular ) ha/e opted for search performance o/er
the glit@ and glam of gate'a(s.
6ll of these sites make mone( from 3anner ad/ertising Jthink
3ill3oards on (our computer screenM or, increasingl(, through alliances
'ith companies that pa( a lot of mone( to 3e the gate'a( or
aggregatorbs cpreferred pro/iderc of tra/el ser/ices, greeting cards,
and so on.
9nline communities ser/e as centers for people 'ho share special
interests. )eoCities is one of the largest, hosting a num3er of
communities 'ith interests as /aried as fashion, golf, and go/ernment.
9ther e0amples of communit( sites include .otle( ;ool for small
in/estors? Ba3(Center, a site for parents? iCillage, a site for 'omen?
and Planet9ut, a site for ga(s and les3ians. 6ll of these sites
encourage users to sign up for free mem3erships 3( offering access to
chat, ne'sletters, and 3ulletin 3oards? some offer mem3ers the
opportunit( to construct ,e3 pages, 'hich then reside in the
communit(bs site and ser/e as a dra' for more mem3ers. >ike man(
other Internet concerns, these sites used to make mone( from
ad/ertising and alliances, 3ut are tr(ing to pump up re/enue streams
like e2commerce and su3scriptions.
Consulting and &upport
This categor( encompasses all of the companies that ha/e sprung up
to support and pro/ide ser/ices to the industr(. The I:P JInternet
:er/ice Pro/iderM 'orld is still di/ided 3et'een large pla(ers like
6merica 9nline and smaller local pla(ers, although man( of the latter
are 3eing 3ought and consolidated into national companies. .ost of
the ma5or phone companies are also competing as I:Ps. >ocal and
long distance carriers such as PacBell and 6TVT pro/ide the latest in
=:> and high2speed ca3le Internet connections.
This segment also includes a /ariet( of no' struggling consulting
firms that help de/elop 'e3sites, pro/iding ser/ices including
management and strategic consulting speciali@ed for ,e3 companies,
online ad/ertising, e2commerce de/elopment, user2interface design,
and, increasingl(, all of the a3o/e. Companies in this categor( include
=iamondCluster International, 8a@orfish, 9rganic, and :apient.
;o( *rospects
This industr( is in the doldrums. 6ll those 5o3s that 'ere created 3(
hot start2ups a fe' (ears 3ack- ,ell, most of those start2ups ha/e
disappeared, and e/en those that ha/en+t ha/e cut 3ack on staff. The
resultQ 6 tough road to hoe for 5o3 seekers. But 'hile there+s little
demand for ne' hires in 3usiness de/elopment, marketing, research,
and operations in toda(+s tight 5o3 market, there is still a need for
good programmers and engineers.
Hournalism R Pu,lishing 0ndustr$
Pu3lishing is changing a'full( fast for a 'ell2esta3lished industr( that
3egan se/eral thousand (ears ago, fi/e hundred (ears ago, or in the
1""%s, depending on 'hether (ou date it from the first use of pap(rus
and stone ta3lets, the standardi@ation of mo/a3le t(pe, or the in/ention
of the >inot(pe machine.
Toda(, the 5ournalism and pu3lishing industries continue to produce
3ooks, ne'spapers, and periodicals that entertain us, educate us, and
3ring us the ne's 'e need to 3e informed citi@ens. .ass2market 3ook
pu3lishing resides in a decreasing num3er of large corporations, some
of them parts of giant 'orld'ide entertainment conglomerates, most
of them 3ased in *e' Gork Cit(. $ach of them pu3lishes under man(
imprints, the pu3lishing 'orldbs term for 3rands. 6cademic and
scholarl( pu3lishing is performed 3( pu3lishing houses connected to
the great uni/ersities, and man( smaller ones. There is also a huge
market for technical 3ooks for /irtuall( all occupations, from
3rickla(ers to soft'are engineers. Technical pu3lishers, such as
6ddison2,esle(, also tend to cluster in *e' Gork Cit(, though man(
are found else'here.
.an( mass2market maga@ines like Time, The *e' Gorker, 8olling
:tone, and Canit( ;air are pu3lished in *e' Gork Cit(. :o are man(
of the special2interest maga@ines pu3lished 3( outfits like 4achette
;ilipacchi J,omanbs =a(, $lle, Car and =ri/er, and .etropolitan
4omeM. 4o'e/er, 'hile man( of the thousands of trade maga@ines are
also pu3lished in *e' Gork, a good num3er are pu3lished in the
centers of their respecti/e industries? Cariet( is pu3lished in
4oll('ood, and numerous computer maga@ines are pu3lished in and
around :ilicon Calle( 3( companies like .iller ;reeman.
=ail( ne'spaper circulation has 3een decreasing for a3out a decade,
3ut the /estigial empires of ,illiam 8andolph 4earst and 1oseph
Pulit@er are not gi/ing in. *e'spapers continue to 3e pu3lished in
A.:. cities, though the num3er of cities ser/ed 3( t'o or more ma5or
papers can pro3a3l( 3e counted on one hand.
The ma5or difference 3et'een ne'spapers and periodicals on one
hand and 3ooks on the other is that the former is supported 3(
ad/ertising. That means that their content and their production are
3oth influenced 3( the interests of 3ig ad/ertisers, though editorial
staffs 'age a ceaseless 'ar for independence from the dictates of
ad/ertising sales departments, 'ith pu3lishers pla(ing ar3iter. Book
pu3lishing is a little different. :ales does not mean 3ringing in
ad/ertisers? it means securing deals 'ith distri3utors like Ingram, 'ith
huge chains like Barnes and *o3le or Borders, and ,e3
merchandisers like
*op ;ournalism
6s circulation num3ers 3ecome increasingl( important in toda(bs tight
market, e/en the most prestigious ne's pu3lications are 3eing accused
of pandering to popular taste. Breaking from the legendar( editorial
tradition of choosing 'orth'hile topics in spite of general appeal,
online 5ournals and print pu3lications alike are deferring to the
num3ers in setting la(out, content, and tone standards. A:6 Toda(
'as a pioneer in the eas(2to2s'allo' strateg(Q Peppered 'ith 3rightl(
colored photos and accessi3le information in graph form and sold in
coin3o0es designed to look like tele/ision sets, the dail( ne'spaper
achie/ed immediate success Jand disdainM as a protot(pe of the
TCPne'spaperPcomic 3ook h(3rid.
We(logs and ;ournalism
The promise of one2to2man( connections is 3eing fulfilled these da(s
3( the 'e3log phenomenon. ,e3logsZS3logs,T for shortZare a kind
of online diar(, in 'hich the author, or S3logger,T 'rites regular
postings a3out 'hate/er interests him or her, often including
h(perlinks to other ,e3 pages containing information a3out the topic
at hand. *o' ,e3 pundits are making the claim that 3logs are going
to change the face of 5ournalism? again, 'e+ll ha/e to 'ait and see on
that claim. But there+s no dou3t 3logs get the ne's in front of reader
in a hurr(, or that the( are proliferatingZand that e/en 5ournalists and
ne'spapers are getting in on the act.
6t the same time as the ,e3 is making it easier for uniLue 5ournalistic
/oices to 3e heard, the companies at the top of the heap in the industr(
are getting e/er2larger. In recent (ears, 69> s'allo'ed Time ,arner,
Tri3une acLuired Time .irror, )annett acLuired Central *e'spapers,
and .c)ra'24ill acLuired Tri3une $ducation. 9ften this .V6
acti/it( is accompanied 3( a lo'ering of costs JreadQ la(offsMZso 3e
a'are that in pu3lishing, as in most an( other industr( these da(s,
there are /er( fe' 5o3s 'hose future is 1%% percent secure.
;o/ 0t 'reaks 9o/n
*e'spapers remain the 3iggest segment of the pu3lishing 'orld,
accounting for nearl( 4% percent of the industr(bs re/enue. The 3ig
pla(ers here are )annett, &night28idder, Times .irror, =o' 1ones,
The *e' Gork Times, and The ,ashington Post. .ost of these also
o'n su3stantial interests in 3roadcasting, ca3le, and ne' media.
Traditional ne'spapers, like all traditional pu3lications, are entering a
ne' eraQ .ost con/entional ne'spapers 3oast online content on their
o'n 'e3sites or those of partners. Insiders e/en foresee personali@ed
ne's ser/ices in 'hich customers 'ill su3scri3e to 'ritings 3(
particular 5ournalists.
This is a multi3illion2dollar industr( that e0pands each (ear, 'ith top
pu3lishers such as 69> Time ,arner JTime, People, :ports
Illustrated, ;ortuneM, .c)ra'24ill JBusiness ,eekM and the
,ashington Post J*e's'eekM leading in the ;ortune rankings. TC
)uide still outstrips them all in sales, and tele/ision ne's programsb
increasing influence on the maga@ine format of glit@ier features
suggests the possi3ilit( of more links 3et'een the t'o media Jto the
chagrin of serious readersM. *iche pu3lications focusing on health,
nutrition, tra/el, golf, and such are a gro'ing presence, tooZthe(b/e
3een thri/ing for the past 2% (ears and are slated for e/en more
impressi/e gro'th.
In the past, 3ook pu3lishers acted as gatekeepers, offering authors the
onl( /ia3le means of producing 3ooks and persuading stores to sell
them. But the proliferation of the ,e3 and the pu3lishing alternati/es
it offers are challenging this staid )oliath. 6s technolog( forges
ahead, this segment lags 3ehindZreluctance to em3race ne' media is
common among traditional pu3lishersZand c(nics allege that the
death of print is approaching. But ha/ing reco/ered from similar
catastrophes, such as the introduction of radio, tele/ision, and C=2
89., the 3ook pu3lishing industr( is realisticall( predicted to
'eather the storm.
In spite of the current identit( crisis, this segment is a multi3illion2
dollar 3usiness of pulp titles and 3lock3usters that accounts for a3out
a fifth of the pu3lishing industr( pie. The 3ig pla(ers are *e' Gorkbs
clashing titansZBertelsmann J8andom 4ouseM /ersus Ciacom J:imon
V :chusterM /ersus 69> Time ,arner J,arner BooksMZ'hose
di/ersified interests put them on the path to'ards 'orld domination.
nline Information
This is an e/er2e0panding uni/erse. 6 Luick 3ro'se on the ,e3 'ill
produce a spectrum of pu3lications, including enc(clopedias, dail(
5ournals, interacti/e ne'spapers, and e/en no/els. The rapid
dissemination rate and glo3al capa3ilities of this far2reaching medium
e0ceed traditional methods and offer information that can 3e easil(
updated. 8e/enue is generated 3( ad/ertisements, su3scriptions, and
e2commerce partnerships, 3ut long2term profita3ilit( is (et to 3e
determined. The 3iggest pla(ers are 'ell2esta3lished pu3lications that
support an online presence, such as the ,all :treet 1ournal Interacti/e
$dition, and focused content23ased sites like C*et.
;o( *rospects
Pu3lishing has 3een marked recentl( 3( massi/e mergers,
consolidations, decreased circulation, and lo'er ad/ertising re/enues.
6s a result, the 5o3 market is stagnant 'ith emplo(ment e0pected to
gro' more slo'l( than other occupations through the (ear 2%1%
according to the Bureau of >a3or :tatistics.
Pu3lishing is still one of the 3right and shining career options for
humanities ma5ors and people 'ho lo/e to read, think, and discuss
their ideas, 3ut it 'ill continue to 3e one of the more difficult
professions to 3reak into. 6n internship or apprenticeship is often the
3est idea for recent gradsZ(oubll gain /alua3le e0perience and make
industr( connections. :easoned reporters concede that 'hate/er onebs
education, on2the25o3 e0perience is 'here most skills are culti/ated.
9nce (ou enter the field, there are m(riad possi3ilities due to the
di/erse interests of corporate emplo(ers.
The di/ersification of the media giants has had interesting
repercussions on the 5o3 market. 6s recentl( as 15 (ears ago, if (ou
3egan life as a print reporter, (ou did not generall( end up in
tele/ision or 3ook pu3lishing. If (ou co/ered hard ne's stories, (ou
did not moonlight in P8 and other promotional cop(. The mi0 is much
more fluid no'. 6nd although a fe' old2school 5ournalists decr( these
de/elopments, the( make (our 5o3 prospects more interesting than
the( once 'ould ha/e 3een.
Peter 1ennings. Bar3ara ,alters. 8ush >im3augh. 9prah ,infre(.
4o'ard :tern. ,hat do the( all ha/e in common- Besides 3eing
e0tremel( rich and famous, these on2air personalities all started their
3roadcasting careers as unkno'n announcers at local radio and
tele/ision stations.
,hile such dramatic rises to superstardom attract man( (oung
hopefuls to 3roadcasting, there are man( more professionals 'orking
3ehind the scenes. ;or e/er( 'ell2kno'n ne'scaster or talk2sho'
host, therebs a score of people hired to create a program and keep it
running. In addition to on2air announcers, 3roadcasting stations hire
'riters, program directors, and producers 'ho manage the o/erall
creation and deli/er( of station content.
What Broadcasting Is
;rom 'orld ne's to local 'eather and the Top 4% countdo'n,
3roadcasting generall( encompasses an( audio or /isual programming
that is disseminated to a large num3er of radio or tele/ision recei/ers.
6lthough that definition could 3e e0panded to include ,e323ased
media outlets, this career profile focuses on opportunities in radio and
tele/ision ne's production and station management.
What 7ouEll -o
Broadcasting is a lot like other entertainment sectors. 6t the end of the
da(, a stationbs success depends on its a3ilit( to entertain its audience,
or satisf( its audiencebs hunger for information, or 3oth.
6nnouncers, producers, directors, and e/er(one else must 'ork
together to tailor a stationbs programming to attract the largest possi3le
audience, 'hich in turn attracts ad/ertising re/enue or, in the case of
nonprofit stations, pu3lic funding and support. In smaller markets,
stations ma( also 3e responsi3le for producing ads.
Who -oes Well
If (ou 'ant to 'ork in 3roadcasting, it helps to ha/e a 3ackground in
5ournalism, communications, or production, depending on the position
(oubre after. But talent and skill alone ma( not 3e enough to succeed
in 3roadcastingZit takes a certain amount of 3usiness smarts and
determination to 3ecome the ne0t ,alter Cronkite or Ted Turner, not
to mention serendipit( and star Lualit(.
In truth, the glamour 5o3s in 3roadcasting are fe' and far 3et'een,
and the competition for entr(2le/el 5o3s is fierce. .an( 5o3s in fact are
unpaid internships, and e/en permanent positions donbt often pa( /er(
'ell, and reLuire grueling hours. If itbs mone( (oubre after, (ou might
ha/e more luck teaching in a pu3lic school.
Those 'ith more realistic goals, ho'e/er, can find creati/e and
engaging careers in 3roadcasting. *ot e/er(one in the 3usiness gets
the chance to inter/ie' the president, 3ut man( more are satisfied 3(
the opportunities to speak 'ith local political figures, produce ne'
programs and commercials, and get intimatel( in/ol/ed in their
*ditorial and ?riting
6n(one 'hobs corrected the spelling on a memo or Luestioned the
insight of a ne'spaper reporter has edited. If (oub/e composed a letter
or an e2mail, (oub/e 'ritten. If (ou 'ant to turn that editing and
'riting into a career, (oubll need an ongoing engagement 'ith
languageZand a keen desire to communicate ideas to people
effecti/el( and efficientl(.
What 7ouEll -o
$ditors and 'riters tell stories. Business 'riters tell stories a3out
companies and their management teams, organi@ational structures, and
economic successes and failures. ;eature 'riters tell stories a3out
cele3rities, mo/ies, and people doing different, sometimes unusual
things. Cop('riters use language to con/e( a stor( a3out the 3enefits
of a 3rand or product.
,riting almost al'a(s reLuires research or kno'ledge a3out a
particular su35ect. ,hile man( 'riters start out as generalists, in the
course of reporting or 'riting a stor(, the( must 3ecome e0perts. 6n
in/estigati/e stor( in a maga@ine into the causes of drug a3use, for
instance, might include con/ersations 'ith doctors, drug a3users,
sociologists, legislators, drug2polic(2reform groups and e0perts on
organi@ed crime, as 'ell as research into pu3lic documents a3out
go/ernment polic( and the causes of drug a3use. The reporter then
anal(@es and s(nthesi@es inter/ie's and research, and organi@es it into
a stor(Zhoping, perhaps, to 'in a Pulit@er Pri@e.
$ditors often start out as 'riters, and in man( cases their role in/ol/es
su3stantial 'riting. 4o'e/er, their role also 3ridges the space 3et'een
'riter and pu3lication. The( help 'riters craft stories, make sure
'riters adhere to st(le guidelines and rules of grammar, and ensure
that e/er( article is suita3le for a particular pu3lication. In their role,
the( straddle management and production, managing 'riters and
3udgets, setting deadlines, scheduling 'hat 'ill run and 'hen, and
enforcing general editorial standards of Lualit(.
,riting and editing careers /ar( 'idel(. The su35ect, length, and st(le
of 'hat one 'rites or edits are /aria3les that depend on 'here one
'orks and 'hat one has chosen to do.
1arieties of pportunity
$ditorial and 'riting careers span industries. 6d/ertising agencies
hire cop('riters to create compelling cop( that 'ill sell readers on a
3rand. P8 agencies use 'riters to create press releases, 'rite annual
reports, draft speeches, and create op2eds Jopinion pieces that P8
firms tr( to cplacec in ne'spapers to reach target groupsM. Computer
soft'are and hard'are companies use technical 'riting and editors to
de/elop documentation and technical information on soft'are and
hard'are products.
Who -oes Well
$ditors and 'riters need to ha/e a strong command of language.
Goubll need to understand its rulesZand 'hen to 3reak them. ,riters
and editors should 3e curious and resourceful, a3le to find
information, s(nthesi@e it, and e0plain it. ,hile some 'riting is highl(
persuasi/e, 'riters and editors should 3e a3le to look at a su35ect
o35ecti/el(. Gou 'ill 3e reLuired to interpret the facts (ou find, and
the 3est approach to those facts is 'ith an open mind.
6n a3ilit( to organi@e language and think criticall( and a desire to
communicate to others are critical skills. 6 good sense of ho' to tell a
stor( is also important, as is a master( of the form in 'hich (our 'ork
.ost 5o3s reLuire 3oth 'riting and editing skills, though people
generall( start off in a role more primaril( 'riting23ased or editing2
3ased. 6s a truism goes, all good editors are 'riters, and all good
'riters are editors.
*ntertainment R Sports 0ndustr$
In entertainment and sports, the profits come from discretionar(
spending, so these industries en5o( the most success in economicall(
sta3le countries 'here leisure dollars flo' freel(. Industr( companies
suppl( their audiences 'ith large2scale sporting e/ents, music
concerts, TC situation comedies, and sil/er2screen masterpieces.
:impl( put, the(bre in the 3usiness of fun.
$/en during economicall( depressed periods, this industr( flourishes
as an escape from hard timesZfor all 'alks of life. 6nd standing at
the pinnacle of entertainment culture are the cele3ritiesQ the mo/ie
stars and Luarter3acks and rock stars and talk2sho' hostesses 'ho
seem to reali@e our dreams and there3( gi/e us hope. This is the onl(
industr( 'hose product is an illusionZneither a good nor a ser/ice,
and (et 3oth at the same time.
The culture in this industr( is one of anti2corporate, studied
casualness. There are still uniformsZan e/er2changing arra( of
3ase3all caps and 5ackets in the music 3usiness, for e0ample. But
the(bre in/aria3l( less starch(, more e0pressi/e of indi/idualism, than
an(thing 'orn to 'ork in the fields of finance or la'. The people-
,ell, therebs no people like sho' people, and the sports 'orld has
e/en more pep. This is a high2energ( cro'd. Itbs also a 3ig2ego cro'd,
and 'orking 'ith its mem3ers can 3e 3oth stimulating and frustrating.
Bottom line, though, is that e/en if (our 5o3 does not 3ring (ou into
contact 'ith the creati/e mem3ers of the industr(, the glamour ru3s
off, lending an aura of e0citement to mundane tasks that 'ould 3e
3oring in an( other industr(. Poring o/er *ielsen ratings all da(
doesnbt sound so 3ad 'hen (ou descri3e it to (our dinner companions
as anal(@ing the relati/e se0 appeal of 1err( :pringer, 9prah ,infre(,
and =an 8ather.
1ertical Integration
6 fe' enormous conglomerates dominate the entire entertainment
industr(, each controlling tele/ision, film, pu3lishing, ne' media, and
music 3usinesses under one um3rella. 9ften, the( o'n professional
sports franchises as part of the package. Congress has encouraged this
integration 3( easing restrictions on ho' man( tele/ision stations one
compan( can o'n and 3( passing the 1## Telecommunications 6ct,
'hich lifted an important 3an on telecom companies de/eloping ne'
media content.
6t the same time, technological de/elopments are leading to a
con/ergence of digital tele/ision, digital audio s(stems, and the
Internet, so that all home entertainment ma( soon 3e distri3uted
through a single so2called set2top 3o0, as simpl( as .P3 music files
are no' distri3uted o/er the Internet. If (ou are interested in this
industr(, 'atch for une0pected potential emplo(ers such as .icrosoft
and Intel, companies that are e0pected to pla( ma5or roles in the
industr(bs de/elopment.
The War for Control of Copyrighted /ntertainment *roducts
The fight against *apster, an online music file2s'apping application,
'as 5ust the 3eginning of the entertainment industr(+s efforts to make
sure it doesn+t lose profits due to ne' technologies that allo'
consumers to access entertainment products 'ithout pa(ing for them.
In terms of online music file2sharing, the industr( has no' turned its
sights on technologies such as those offered 3( &aUaa and
6udiogala0(, hoping to pre/ent them from allo'ing the sharing of
cop(righted songs. In addition to citing the legal protections due to
cop(righted materials and initiating legal 3attles 'ith file2sharing
pro/iders, some 3ig entertainment companies ha/e resorted to taking
o/er or partnering 'ith these companies to ensure the( make mone(
from the sharing of cop(righted filesQ B.), for instance, partnered
'ith *apster, and Ci/endi took o/er .P3. 9thers are 3anding
together to pro/ide their o'n online ser/icesQ 69>, $.I, and
Bertelsmann, for instance, formed .usic*et. 6nd a good chunk of
ne' music products these da(s come 'ith cop(right2protection
soft'are that limits users+ a3ilities to cop( files.
In the 3roader fight to make mone( off all use of cop(righted
entertainment products, the industr( is no' tr(ing to make the case
that all PCs and other digital products that run entertainment soft'are
should come loaded 'ith soft'are Ske(sT that 'ill SunlockT soft'are
protections em3edded in the industr(+s digital products. ;ile2sharing
ad/ocates point to the rise of the CC8 market as e/idence that the
industr( is misguided in its efforts? =espite the mo/ie industr(+s
ho'ls of protest 'hen CC8s came on the market some 2% (ears ago,
CC8 technolog( ended up /astl( increasing consumption of the
industr(+s productsZand pumped up profits in the process.
A $e" Television 'andscape
In the old da(s, the ma5or net'orksZ6BC, *BC, and CB:Zruled
the tele/ision roost. *o'ada(s, ca3le channels Je/er(thing from 4B9
to .TC to Comed( CentralM make for a much more fragmented
landscape. 6dding to the confusion has 3een the success of upstart
net'orks like ;o0, AP*, and the ,B. To enhance their mone(making
a3ilit(, the ma5or net'orks ha/e adopted an Sif (ou can+t 3eat +em,
5oin +emT strateg(, making all kinds of production and distri3ution
agreements 'ith their ca3le competition.
;o/ 0t 'reaks 9o/n
=espite the 3lurring lines 3et'een sports, music, mo/ies, ca3le, and
pu3lishingZand the media 3ehemoths that preside o/er them allZ
these /arious forms of entertainment are distinct domains. 6nd though
at Time ,arner (ou could concei/a3l( en5o( a career that includes
'orking for the 6tlanta Bra/es, 4ome Bo0 9ffice, :i0 ;lags theme
parks, and the 6tlantic record la3el, most people choose one area and
stick 'ith it. These 'orlds are closel( knit, and 'hom (ou kno' and
'hom (ou o'eZand 'ho o'es (ouZcounts for a great deal,
particularl( 'hen (oubre looking for 'ork.
In the da(s of celluloid mo/ie factories, the ma5or studios controlled
the pro5ect from the earliest script draft to the opening night at 8adio
Cit(. .ost films 'ere completed in under a month and cost as little as
\2%%,%%% to produce. Toda( there are si0 ma5or entertainment
companiesQ *e's Corp, 69> Time ,arner, Ci/endi, :on(, Ciacom,
and ,alt =isne(. &no'n as the Big :i0, the( all ha/e their roots in
the original 4oll('ood studiosQ .)., ,arner Brothers, Paramount,
and others. But the modern studios control 4oll('ood in a different
'a( no'Q The( solicit pro5ects, pro/ide the financing, and make the
deals 'ith thousands of smaller production companies. The indies
JindependentsM remain onl( marginall( profita3leZand are often
o'ned 3( one of the Big :i0. J.irama0, for e0ample, is a =isne(
>ike most mo/ies, music is often created 3( committee and on the
'him of the record la3el. But the artists retain some control. 6t least,
some do? the Bill3oard charts al'a(s seem to ha/e room for packaged
products like .enudo, the .onkees, and *b:(nc. The 1##
Telecommunications 6ct lifted restrictions on ho' man( radio
stations a compan( can o'n and the ensuing domination 3(
conglomerates resulted in more standardi@ed Jand oft2critici@edM
pla(lists nation'ide.
Be(ond the Top 4%, music is also 3ig 3usiness in con5unction 'ith the
ad/ertising industr(Q ,hoe/er o'ns the rights to songs used in 3ig
national ad campaigns stands a good chance of making e/en more
than the record compan( or the artist. :on( is currentl( the
ackno'ledged leader in the 3usiness. 9ther top music companies are
Time ,arner J6tlanticM, $.I JCirgin, CapitolM, Ci/endi JPol()ram,
Ani/ersalM, and Bertelsmann J6rista, 8C6M.
The old ne's in tele/ision is the emergence of ca3le, the decline in
net'ork /ie'ership, and the surprising success of ;o0 TC, the onl(
ne' net'ork to date that has threatened the supremac( of reigning
giants CB:, *BC, and 6BC. The more interesting and pertinent ne's
for 5o3 seekers is the slo' 3ut ine0ora3le digital con/ergence of
computer technolog(, the Internet, and tele/ision, and also the 1##
Telecommunications 6ct, 'hich allo's phone companies and po'er
utilities, among others, to create and distri3ute entertainment content.
These de/elopments opened the floodgates for telecommunications
and technolog( companies to enter the competitionZPacific Telesis
J*G*$e and :BCM, 6TVT JTCIM, Intel, and CompaL ha/e 3ecome
strong pla(ers. 6lso 3uilding on this technolog(, .icrosoft and other
companies are melding 3road3and ca3le and electronic media to
enhance Internet capa3ilities.
,hen 'orld2class athletes cr(, c:ho' me the mone(,c team o'ners,
managers, agents, and sponsors dance to the tune. The popularit( of
professional sports teams is phenomenal, and sk(2high re/enues are
pulled in through a /ariet( of a/enues including ad/ertising,
sponsorships, team name and logo licensing, ticket sales, and
'orld'ide 3roadcasts.
6s far as professional organi@ations go, the *ational ;oot3all >eague
J*;>M leads the pack in profits, 'ith the *ational Basket3all
6ssociation J*B6M, .a5or >eague Base3all J.>BM, and the *ational
4ocke( >eague J*4>M not far 3ehind. Teams, once o'ned 3(
indi/iduals, are increasingl( o'ned 3( companiesQ 69> Time ,arner
Jpu3lisher of :ports IllustratedM o'ns 3ase3allbs 6tlanta Bra/es,
3asket3allbs 6tlanta 4a'ks, and hocke(bs 6tlanta Thrashers? the
Tri3une Compan( o'ns 3ase3allbs Chicago Cu3s? ,alt =isne( o'ns
hocke(bs .ight( =ucks of 6naheim and 3ase3allbs 6naheim 6ngels?
and *e's Corp., Ca3le/ision, Comcast, The .olson Companies, and
6nheuser2Busch all ha/e teams as 'ell.
;o( *rospects
&eep in mind that this could 3e the most competiti/e industr( out
there. )etting a 5o3 in sports or entertainment is a difficult undertaking
that reLuires persistence, intense net'orking, and good luck. Anless
(our dad kno's Ted Turner, donbt count on landing e/en an entr(2
le/el slot easil(. $/er( (ear, hundreds upon thousands of 5o3 seekers
flood *e' Gork and >os 6ngeles hoping to 3ecome cele3rities, and
the ma5orit( of them 'ind up 'aiting ta3les to make ends meet 6nd, if
the( decide to sta( in sho' 3i@, the( e/entuall( end up taking 5o3s in
production or administration. Take heart in the fact, though, that
companies canbt ignore talent. If (ou pro/e that (oub/e got the skills to
thri/e in a challenging and nontraditional 'ork en/ironment, then
(oubre in for a thrilling ride.
Careers in this industr( usuall( start at the entr( le/el? agents, personal
managers, and studio e0ecuti/es usuall( got their start as lo'l(
assistants. 9nce launched on their careers, people in the entertainment
industr( tend to change 5o3s freLuentl(, and contacts in the industr(
are crucial.
;or those of (ou 'ith a 3usiness or technical 3ackground, 'ork is
more readil( a/aila3le. The 3ig corporations that dominate the
industr( al'a(s need people in the standard management functions
such as finance, 48, IT, marketing, and communications. Technicians
are needed in traditional fields such as sound engineering and
photograph(, and in the rapidl( e0panding fields of digital special
effectsQ =o@ens or perhaps hundreds of companies in :outhern
California and the :an ;rancisco Ba( 6rea emplo( soft'are engineers
and other specialists to create digital special effects, 'hich are at the
center of films like The .atri0, .onsters Inc., >ord of the 8ings, and, and contri3ute uno3trusi/el( to scores of other films,
remo/ing un'anted telephone ca3les from outdoor scenes and
'rinkles from starsb faces. >eading companies in this field include
Pi0ar, P=I, :on( Pictures Image'orks, and Industrial >ight and
The difficult( of getting a 5o3 in the mo/ie 3i@ is legendar(Zmaking
a feature2length film can take (ears and a cast of thousands, (et (ou
'ill 3e competing 'ith hundreds for e/en the most menial short2term
contracts and per diem arrangements. ,hen (ou finall( land a 5o3,
(our initial contri3utions are generall( limited to contracts,
spreadsheets, gophering, and creating da@@ling promotional cop(. But
o/er time (ou often actuall( come to kno' the stars and other industr(
3ig'igs (ou ser/e, and these relationships e/ol/e into the e/er2
important industr( contacts that 'ill make or 3reak (our career.
To get a 5o3 in the music industr(, (oubll ha/e to follo' a path almost
as long and comple0 as that from the first stirrings of a tune in a
musicianbs head to the final song (ou hear e/er( time (ou turn on the
radio. The important support 5o3s in the music industr( are co/er2art
production, promotional /ideo production, pu3lishing rights,
marketing and sales, and pu3licit(Zand then more pu3licit(, and then
different pu3licit( for radio, clu3s, and 3oth the mall stores and anti2
mall stores such as To'er 8ecords and Cirgin 8ecords. If (oubre
interested in marketing to an online audience or the challenge of
de/eloping 3etter online audio, these are also 5o3 areas to e0plore. :o
are .P3 pla(ers and =C=s, 'hich are gro'ing apace and are
graduall( replacing C=s and /ideocassettes.
6s the sports industr( e0pands to include lucrati/e ancillar(
emplo(ment in marketing, promotion, sports medicine, and agenc(
representation, (our options e0tend 'ell 3e(ond one team or sport.
Gou can earn almost as much as a good left2handed pitcher if (our
legal skills include licensing and contract negotiation.
Manu%acturing and Production
,ithout manufacturing and production, therebd 3e no products to
market or sell. 6ccountants 'ouldnbt ha/e an(thing to account for.
The retail trade 'ould collapse. Programmers 'ould 3e 'ithout
computers to program on.
In short, therebd 3( /er( little need for an( other career.
In this career profile, ,et;eet focuses on outlining the technical 5o3s
in manufacturing and production, 'ith an emphasis on high2tech
industries. :ee our career profile on operations management for
information a3out operational responsi3ilities outside of
manufacturing and production.
What It Is
.anufacturing and production are relati/el( interchangea3le terms for
making a product, including all of the processes in/ol/ed in making it.
6ll products are manufactured and produced. The clothes (ou 'ear,
3ooks (ou read, and computers (ou use 'ere manufactured. :o 'ere
the te0tiles for the clothes, the paper for the 3ooks, and the
components of the computers.
People 'ho 'ork in manufacturing and production donbt 5ust create
products? the( create them as Luickl( as possi3le, as ine0pensi/el( as
possi3le, and in the necessar( Luantities. Those 'orking in
manufacturing and production kno' that time is mone(Q The faster
and 3etter that the( and the machines around them 'ork, the 3etter
their companies perform.
It doesnbt matter if (oubre producing silicon chips or Pokemon to(s.
The manufacturing challenge is to de/elop 3etter production
processes, secure the right material and component supplies at the
least cost, reduce production time, eliminate 'aste, and ensure Lualit(
in the final product.
What 7ouEll -o
,hile the introduction of industrial automation technolog( has
reduced the num3er of 3lue collar and semiskilled positions in
manufacturing, the e/olution of the manufacturing process itself has
opened up a 'ide range of opportunities for technicians, mechanical
and electrical engineers, industrial designers and managers.
6s production lines 3ecome less la3or intensi/e, the( depend more on
computers, sensors, and ro3otics. Programma3le logic controllers
JP>CsM handle 'hat human hands used to do in the past, and step23(2
step production control is left to seLuencing eLuipment that controls
the production flo'.
But P>Cs are 5ust the 3eginningQ :ophisticated ro3ots and cintelligentc
computer soft'are programs can no' run entire factories, and skilled
programmers and soft'are engineers are reLuired to de/elop human2
machine interfaces J4.IsM, 'hich allo' ro3ots to communicate 'ith
their human masters. That ma( sound like science fiction, 3ut some of
the most ad/anced technolog( on earth is no' used to produce /ast
Luantities of consumer goods and industrial products for an e0ploding
glo3al econom(.
6s companies mo/e their production centers around the glo3e,
e0perienced production professionals are needed to direct o/erseas
plant construction and eLuipment installation and to train local
technicians and engineers. 6s trade 3arriers and tariffs fall, the
sourcing of necessar( components and su3assem3lies has 3ecome an
international enterprise. Production managers, process engineers, and
others in/ol/ed in manufacturing tra/el e0tensi/el( to cLualif(c
foreign suppliers or introduce ne' s(stems and techniLues to their
international su3sidiaries.
Who -oes Well
.anufacturing and production professionals toda( are highl( skilled,
mission2critical emplo(ees in an area 'here time is mone(. To
succeed, (oubll need technical skills, attention to detail, and the
creati/it( to impro/e processes. Goubll also need to 3e a3le to endure
stress, as management demands ne' 'a(s to produce ne' and old
goods faster and cheaper.
:ales is the culminating function of commercial enterprise. $ither
directl( or indirectl(, selling goods and ser/ices keeps the econom( in
motion, 3ecause e/er( item that someone o'ns is an item someone
has 3ought and, therefore, someone has sold.
What 7ouEll -o
The goal of toda(bs salesperson is the same across all industriesQ
pro/ide customers or clients 'ith goods and ser/ices, there3( earning
mone( for the compan( that produces those items. ,hat /aries are the
sellerbs product, techniLue, income, and title. ;or e0ample, people 'ho
sell for their li/elihood ma( go 3( the name of account e0ecuti/e,
3roker, manufacturerbs representati/e, or merchandiser Je/en the term
crelationship managerc is used in certain ,est Coast setsM.
The dou3le2talking, door2to2door charlatan intimidating house'i/es
into purchasing a ne' /acuum cleaner or a ,orld ,ar II chess set is
3ecoming an anachronism. Toda(bs salespeople ma( sell for a small
insurance compan(, ne/er lea/ing the home office in =uluthZor the(
ma( spend half of their time a3road, selling soft'are applications to
firms on the other side of the 'orld.
Who -oes Well
6 salesperson must 3ecome an e0pert in his or her fieldZ3e it
telecommunications eLuipment, real estate, or pharmaceuticalsZ
suppl(ing ans'ers and information as much as goods or ser/ices. The
contemporar( salesperson is a listener more than a talker and tailors
the sale to fit the customerbs needs.
$sta3lishing and maintaining a 'ide2reaching customer 3ase is the
salespersonbs primar( responsi3ilit(. Though cold callingZthe act of
initiating contact 'ith a potential customerZis still a ma5or techniLue
in creating such a data3ase, it+s 3ecoming less crucial in man(
industries. Cold calling has 3een su3sumed under the larger um3rella
of prospecting, 'hich incorporates attending trade sho's and using
data marketing Jrel(ing on market research to determine likel(
customersM in its mi0 of strategies.
6t man( companies the sales department 'orks closel( 'ith
marketing to ensure that a product is getting into the right peoplebs
hands and that the right people kno' a3out the product.
.aintaining the client 3ase is the ke( to acLuiring ne' customers
3ecause most industries depend on repeat 3usiness for sur/i/al. To
ensure client satisfaction, duties traditionall( associated 'ith customer
ser/ice ha/e 3ecome significant elements of the sales function.
:alespeople are often e0pected to handle paper'ork, address client
pro3lems and grie/ances, and manage special circumstances Jsuch as
super/ising unusual deli/er( conditions or alternati/e pa(ment plansM.
,ages /ar( greatl( in the 'orld of sales. Base pa( ma( 3e literall(
\%.%% per (ear for those confident enough to take a commission2onl(
position. But salaries fall all along the income spectrum, and earnings
at the high end can 3e in the si02figure range. .ost sales positions
offer a small 3ase salar( and pa( a commission on each deal.
.anagement positions generall( command a reasona3le 3ase salar(
and donbt earn commissions 3ecause managers usuall( arenbt directl(
responsi3le for sales.
Though pressure in commission2onl( positions can 3e tremendous, the
percentage that, sa(, a real2estate 3roker makes on a sale can 3e Luite
heft(. In such situations the salesperson can potentiall( earn an
unlimited amount of mone(Zand often earns more than his or her
6re (ou a tri/ia 5unkie, a science 3uff, a 3ook'orm, or an armchair
philosopher- =o (ou get a rush out of conducting scientific
e0periments, de3ating opposing /ie'points, translating ancient te0ts,
or deconstructing postmodern political thought- If so, (ou might find
(our professional calling in research.
Careers in research are di/erse. 8esearch can pla( a significant role if
(our career is in science, education, pharmaceuticals and
3iotechnolog(, marketing, or in/estment 3anking. In this career
profile, 'e e0plain 'hat research entails, regardless of the field (oubre
in, and suggest specific career options to those 'ho 'ant research to
pla( a significant role in their careers.
What 7ouEll -o
6ll researchers share one primar( o35ecti/eQ to unco/er the meaning,
significance, causes, and effects of 'hate/er su35ect the(bre
in/estigating. The 'ork the( do can ha/e academic, commercial,
political, or scientific impact.
In in/estigating a particular su35ect, researchers ha/e se/eral
purposes. The( ma( 3e tr(ing to ad/ance societ(bs understanding and
appreciation of a particular su35ect, or de/elop products or practical
applications 3ased on their findings, or ad/ocate changes in polic(.
=uring the course of their 'ork, researchers re/ie' pre/iousl(
pu3lished findings, formulate h(potheses, and gather original data to
support or re3ut their h(potheses. In technical or scientific fields,
researchers de/elop e0periments and conduct trials to test their
h(potheses and gather ne' data.
The results of research /ar( depending on its su35ect and purpose. 6n
academicbs research ma( result in a paper that proposes a ne' 'a( to
understand A.:. foreign polic( after the Cold ,ar. 6 researcher at an
in/estment 3ank tries to determine the proper /aluation and prospects
for a compan(.
6 market researcher might in/estigate the market potential and pu3lic
reaction to a ne' food product, such as a hot dog made of fruit.
:cientists at high2tech companies in/estigate scientific principles that
can 3e applied to de/eloping a ne' t(pe of computer chip or 'ireless
data transfer.
Who -oes Well
To 3e successful in a research career, (ou need to ha/e an inLuisiti/e
mind, a hunger for kno'ledge, and a passion for (our su35ect. Gou
also need to 3e resourceful in finding 'a(s to gather information and,
in some cases, funding for (our pro5ect. It takes an anal(tical mind to
interpret the data (ou find, and communication skills to present (our
findings to the pu3lic, a professional group, or (our 3oss. Gou ha/e to
3e determined and 'illing to accept failure 3ecause, more often than
not, (oubll 'ind up at se/eral dead ends 3efore hitting the 5ackpot.
Cualit$ Assurance and Cualit$ Control
It used to 3e that Lualit( control 'as the 8odne( =angerfield of the
manufacturing industr(Zgetting no respect and /er( little attention
from management. The o/erriding goal 'as to ship as much product
as possi3le, and if a fe' lemons got throughZ'ell, the profits from
sales 'ould more than co/er the reclamations.
Thatbs no longer the case. Toda(bs Lualit( assurance JI6M and Lualit(
control JICM specialists can hold their heads high. In fact, I6 and IC
professionals ha/e the po'er to stop production, stop a shipment,
dela( a 'e3site launch, and e/en demand personnel changes if Lualit(
standards slip.
What 7ouEll -o
Iualit( assurance professionals 'ork 'ith 3usiness managers and
clients to de/elop policies, procedures, and programs to ensure the
Lualit( of manufactured products. IC specialists are responsi3le for
emplo(eesb da(2to2da( adherence to Lualit( programs. In ,e3
companies and soft'are firms, Lualit( assurance specialists diagnose
pro3lems, recommend solutions, and determine if program
reLuirements ha/e 3een met.
In manufacturing companies, IC 'orkers are usuall( engineers 'ho
'ork closel( 'ith manufacturing technicians and engineers on the
factor( floor to ensure products and processes conform to Lualit(
standards and procedures. IC engineers often act as in2house
independent inspectors, and must appro/e production lots 3ased on
their assessment of the productsb le/el of Lualit(.
,ithin information technolog(, IC technicians test soft'are 3efore it
is released to market. Their challenge is to tr( to crash the soft'are,
re/ie' and critici@e the user interface or opera3ilit(, and generall( 3e
the de/eloping engineerbs 'orst nightmare. In toda(bs fast2paced
marketplace, an( product thatbs glitch( 'ill die a Luick deathZand a
'e3site 'ith 3ugs or dead links can kill customer enthusiasm.
Iualit( assurance professionals often seem to ha/e a more glamorous
life than their colleagues in Lualit( control. I6 specialists often
accompan( salespeople and 3usiness de/elopment managers to client
sites to make presentations, and I6 managers and directors often
ha/e a seat at e/en the most top2le/el staff meetings. ,hile man(
people progress from IC to I6, the nature of I6 'ork, particularl(
in manufacturing, usuall( reLuires an .B6 or an ad/anced
engineering degree.
The I& G555 *rogram
Cer( often, the sole reason for the e0istence of a I6PIC department
is to de/elop, implement, and maintain an I:9 #%%% certification
In manufacturing 3usinesses, the I:9 #%%% program inculcates a ctotal
Lualit( philosoph(c throughout an organi@ation, from senior managers
do'n through the 5anitorial staff. The I:9 program esta3lishes Lualit(
management policies and procedures for all aspects of manufacturing,
from suppl( management and /endor Lualification and product
inspection and testing, all the 'a( through to packaging and shipping.
The initials I:9 stand for the International 9rgani@ation for
:tandardi@ation, 'hich 'as esta3lished 3( A.*. charter in 1#4! as a
means of facilitating international cooperation and trade in the 'ake
of ,orld ,ar II. Based in )ene/a, :'it@erland, the I:9 is a
nongo/ernmental organi@ation J*)9M that has esta3lished 'orld'ide
standards for Lualit( management through its certification programs.
The I:9 #%%% program is actuall( a series of specific standards,
namel( I:9 #%%1, I:9 #%%2, I:9 #%%3, and I:9 #%%4. These are all
Lualit(2standards programs that pertain to different t(pes of
manufacturing andPor product suppl(.
Asset Management
If mone( makes the 'orld go +round, the $arth 'ould grind to a
screeching halt 'ithout the asset management industr(. 6sset
management is the 3usiness of making mone( 'ith mone(Zor at least
tr(ing to. B( Smone(,T 'e+re not talking a3out salaries and 3onuses
J'hich can indeed 3e significantM, 3ut the gains (ou endea/or to make
for in/estors 'ho ha/e forked o/er their cash in hopes that (ou,
through (our market sa//( and keen instincts, can turn their nest egg
into a fanc( omelet 'ith toast and hash 3ro'ns on the side.
What 7ouEll -o
6sset managers manage mone(Zother peoplebs mone(, and go3s of
it. )enerall(, the( con/ert that mone( into assetsZstocks, 3onds,
deri/ati/es, and other t(pes of in/estmentsZand tr( to make that
mone( make more mone( as fast as possi3le. .utual funds, for
instance, hire asset managers? so do corporations 'ith lots of mone(
sitting around, 3anks, and high net2'orth indi/iduals.
6sset managers ha/e one simple goalQ to in/est other peoplebs mone(
'isel( and profita3l(. 6sset managers use a com3ination of
in/estment theor(, Luantitati/e tools, market e0perience, research, and
plain dum3 luck to pick in/estments for their portfolios, ranging from
high2risk stocks to commercial real estate to cash accounts.
6s soon as the(b/e picked their 3asket of in/estments, the(b/e stuck
their necks out on the 3lock. 6nd the a0 'ill fall if the portfolio
doesnbt 3eat its 3enchmarkZa peer group Jcompetitor funds 'ith the
same in/estment o35ecti/eM, or a market inde0 Jsuch as the :VP 5%%M.
Who -oes Well
6s an asset manager, (ou canbt 5ust 3et (our hunches. The profession
reLuires e0cellent Luantitati/e and anal(tical skillsZif (ou hated
statistics, (ou ma( 'ant to look else'here.
But asset management isnbt 5ust a matter of adding up the num3ers. It
reLuires the organi@ational skillsZand ner/eZto make split2second
decisions 'ith millions of dollars riding on the line. 6nd though the
profession has seen tremendous gro'th in the last decade, itbs still
tough to 3reak into, especiall( for those 'ho onl( ha/e an
undergraduate degree. :ometimes .B6s 'ork as fund managers right
out of school, though more often the( start as anal(sts in order to
pro/e the( ha/e the right com3ination of caution and chut@pah to
make a great asset manager.
Competition for 5o3s is fierce at all le/els, 3ut if (ou ha/e strong
Luantitati/e and anal(tical skills, good ner/es, and can consistentl(
3eat the market, then therebs pro3a3l( a place for (ou. *et'orking and
a single2minded pursuit of (our goal are 3ig helps, too.
+ecommended +eading
The .utual ;und Business, 3( 8o3ert C. Po@en and :andra =. Crane,
.IT Press J1##"M is the first te0t3ook de/oted to the mutual fund
industr(. It includes articles 3( /arious industr( e0perts as 'ell as case
studies and other e0ercises for the student. Coauthored 3( ;idelit(
C$9 8o3ert C. Po@en, the 3ook includes an introduction to funds, a
histor( of funds and the la's that regulate them, a look into ho' fund
managers make and e0ecute in/estment decisions, an e0planation of
the marketing and 3ack2office ser/icing of funds, and a series of
speciali@ed topics, including fund glo3ali@ation, technolog( issues,
and institutional in/esting. It makes an e0cellent introduction to the
industr( as a 'hole.
Mutual 2unds R 'rokerage 0ndustr$
,hen a large amount of mone( is needed for an( enterprise, from
3uilding a factor( to funding a corporation to drilling 'ells in a ne'
oil field, that mone( is raised from in/estorsZusuall( a large num3er
of them. Commonl(, the enterprise raises that mone( 3( either selling
o'nership shares in itself or simpl( 3orro'ing it. ,hen o'nership is
sold, the in/estor gets stock shares. ,hen mone( is 3orro'ed, the
in/estor gets 3onds. :tocks and 3onds are 3oth securities. In/estors
3u( and sell indi/idual securities through 3rokers, also called
securities dealers.
6dditionall(, mutual fund companiesZand other so2called asset
management firmsZform funds, 'hich consist of a /ariet( of
securities. The asset management compan( 3u(s and sells the
securities in a fund, seeking to ma0imi@e its /alue, and it sells shares
in these funds to in/estors directl( and through securities 3rokers. The
mutual fund compan( charges a fee for picking the securities in a
fund. In turn, the shareholder is shielded from the risk of in/esting in
indi/idual securities.
But 'h( lump together t'o pre/iousl( distinct areas of the financial
ser/ices industr(Zsecurities 3rokerage and asset management-
Principall( 3ecause the 'a( (our parents in/ested is not ho' most
people do it these da(s. .ore people in/est in securities toda( than
e/er 3efore, and the( ha/e more choices. *ot onl( are there more
in/estments to choose from, including stocks, 3onds, real2estate trusts,
limited partnerships, and an e/er2gro'ing di/ersit( of mutual funds?
there are also more 'a(s to in/estQ full2ser/ice 3rokerages, discount
3rokerages, and electronic trading for most of us? e0clusi/e
opportunities such as hedge funds and /enture capital funds for so2
called high net2'orth indi/iduals, such as multimillionaires, and
institutional in/estors, such as pension funds, insurance companies,
and uni/ersit( endo'ments.
There is an unimagina3l( large amount of mone( chasing in/estments
these da(s, 'hich is part of the reason that the stock market rose so
steepl( during the 1##%s. Brokerages and mutual funds are the t'o
primar( means 3( 'hich all these in/estments are made.
The 9inancial &upermarket
Brokerage firms Jsuch as .errill >(nch, CitigroupP:alomon :mith
Barne(, and discounters Charles :ch'a3 and $2TradeM and mutual
funds Jlike ;idelit(, Canguard, and =re(fusM ha/e in/aded each
otherbs turf in an e/er2escalating financial2ser/ices 'ar. ;idelit( 'as
the first fund to offer a large discount23rokerage operation. Cirtuall(
e/er( national and regional 3rokerage firm no' offers its o'n famil(
of mutual funds, in addition to traditional offerings of funds run 3(
other firms like ;idelit(, $aton Cance, *u/een, Putnam, and .;:.
But all that 'as merel( prelude.
In late 1###, Congress repealed the 1#33 )lass2:teagall 6ct, opening
the door for 3anks, securities 3rokers, and insurance companies to
engage in each otherbs formerl( e0clusi/e 3usinesses, 'ithout
restrictions. .ore consolidation of financial companies and of
ser/ices 'ithin indi/idual companies has follo'ed. The aisles of
financial supermarkets of the future 'ill 3e lined 'ith not 5ust mutual
funds, 3ut e/er( other kind of 3rokered in/estmentZe/en credit
transactions. In one account (ou might com3ine mutual funds?
indi/idual stocks, 3onds, and options? credit products such as credit
cards, credit lines, and home mortgages? and e/en a mone( market
checking account.
9earful Investors
The struggling econom(, an increasing num3er of e0amples of
corporate financial shenanigans, and a plummeting stock market ha/e
com3ined to gi/e in/estors cold feetZLuite a change from the late
1##%s, 'hen e/er(one from the gu( 3ehind the counter at the corner
deli to (our neigh3orhood pedicurist 'as talking a3out corporate
earnings and upcoming stock splits and looking for'ard to tearing
open the en/elope containing their ne0t 3rokerage2account statement.
*o'ada(s, indi/idual in/estors are sta(ing a'a( from the market.
,hich means fe'er trades and fe'er commission dollars for 3rokers,
and less mone( going into mutual funds, and thus lo'er commission
re/enues for them as 'ell. Anless the market turns around, the
corporate2accounting scandals dr( up and 3lo' a'a(, or the Bush
administration starts doing a 3etter 5o3 of reassuring in/estors a3out
A.:. 3usiness prospects, it appears the ne' paradigm of softer
in/estment2ser/ices earnings 'ill 3e around for a 'hile. ,hich is not
good ne's for 5o3 seekers.
;o/ 0t 'reaks 9o/n
Though 'e di/ide the industr( up into 3rokerages and mutual funds,
'ithin the t'o segments there are significant differences among the
pla(ers. Goubll 'ant to make sure (ou not onl( kno' 'hich segment
(oubre interested in, 3ut also ho' the particular compan( 'ith 'hich
(oubre inter/ie'ing is distinguished from the competition.
6 3roker acts as the intermediar( 3et'een the 3u(er and seller in a
securities transaction. The 3u(er and seller, not the 3rokerage firm,
assume the risk. JIf the firm acts as the principal or dealer, it deals
from its o'n account and assumes some of the risk itself.M Brokers
charge their clients a commission. 6 full2ser/ice firm such as .errill
>(nch charges commissions up to se/eral hundreds of dollars for
transactions 3ut offers e0tras such as tailored research, strateg( and
planning, and asset2management accountsZchecking, credit
Jincluding lending on marginM, and 3rokerage, all in one con/enient
6 discount 3roker, such as T= ,aterhouse, generall( 5ust e0ecutes
trade orders and issues a confirmationZfe' or no frills. ;rills or no
frills, to 3e authori@ed to trade on the /arious e0changes (ou need to
3e a registered representati/e and licensed 3( the *6:= J*ational
6ssociation of :ecurities =ealersM.
Mutual 9unds
,hereas 3rokers act on in/estorsb orders, mutual2fund managers raise
cash from shareholders and then in/est it in stocks, 3onds, mone(2
market securities, currencies, options, gold, or 'hate/er else seems
likel( to make mone(. .utual funds often ha/e a specific in/estment
focusZ3e it income, long2term gro'th, small cap, large cap, or
foreign companies. 6nd managers are restricted in 'hat kinds of
in/estments the( can make. Compared to indi/idual portfolios, funds
hope to persuade in/estors the( offer se/eral ad/antagesQ professional
mone( management? liLuidit(? and more di/ersification than most
indi/iduals can create or afford in a personal portfolio, particularl(
no' that s'itching 3et'een funds is allo'ed.
6ll in/estors share eLuall( in the gains and losses of a fund, and
pro3a3l( the most important factor in choosing oneZ'hether to 'ork
for or in/est inZis (our tolerance for risk. Bull markets tend to make
man( funds look good, 3ut a do'n'ard turn or a 5ump in interest rates
can ha/e a significant negati/e impact that ma( take longer to correct
for a fund than in the nim3le independent in/estorbs portfolio.
;o( *rospects
,ith the tremendous proliferation of 4%1JkM, I86, and other t(pes of
retirement plans during the 1##%s, more people than e/er 3efore can
no' 3e classified as in/estors, either directl( or indirectl(. The
choices for the small2time in/estor ha/e ne/er 3een greater, and the(
include stocks, 3onds, mutual funds, real estate trusts, indi/iduall(
managed accounts, and /arious alternati/e in/estments. There+s also a
range of /enue options a/aila3le should one ha/e an itch to in/est,
including traditional full2ser/ice firms, discount 3rokerages, and do2it2
(ourself online trading. This all 3oils do'n to a 'ide range of career
options in a d(namic and gro'ing industr(. The Bureau of >a3or
:tatistics predicts that this increase in in/estments 3( 3usinesses and
indi/iduals 'ill result in faster than a/erage emplo(ment gro'th
through 2%1%.
The greatest challenge to esta3lishing a career in retail 3rokerage is
getting a 5o3. The ne0t 3ig challenge is keeping it. 1ust 3ecause (ou
graduated at the top of (our class at 4ar/ard Business :chool doesn+t
mean the 3rokerage houses are 'aiting for (ou 'ith open arms. =ue
to huge industr( turno/er and a h(per2competiti/e market, hiring
plans ha/e changed dramaticall( in recent (ears. But those 'ho ha/e
3een a3le to tough it out for fi/e (ears or more report that it can 3e
Luite re'arding 3oth personall( and financiall(.
In addition to 3rain anal(sts and sa//( fund managers, most mutual
funds also need retail sales personnel, marketers, and a sle' of
operational folks. There 'as \5.5 trillion in mutual funds in 1###, and
'hile that num3er has diminished some'hat o/er the past fe' (ears
as portfolio /alues ha/e declined and in/estors ha/e pulled out,
there+s still a pile of cash in/ested in funds.
,hether (ou choose a 3rokerage firm or mutual fund, career gro'th
and income can 3e e0cellent after (our first three to fi/e (ears. But
those first fe' (ears of 3uilding a client 3ase and learning the markets
are difficult. Therebs little patience in this industr( for either mediocre
or incompetent performance resulting in slo' or @ero gro'th in client
assets Jand correspondingl( in firm income from those assetsM. 6lso,
hiring num3ers are 'a( do'n due to the current 3ear market, 3ut
e0pect the situation to change as the market regains ground.
Corporate 2inance
If (ou 'ork in pri/ate enterprise, (our compan( measures its success
at the end of the (ear 3( comparing ho' much mone( it made to ho'
much it spent. If it has made more than it has spent, it 'as a good
(ear. If it has made less than it has spent, it 'as a 3ad (earZor the
compan( is in an in/estment phase. JIn other 'ords, like, it spent more than it made 3ecause the compan( and its
in/estors 3elie/ed it 'ould reali@e a profit in the near future.M
People 'ho 'ork in corporate finance and accounting are responsi3le
for managing the mone(Zforecasting 'here it 'ill come from,
kno'ing 'here it is, and helping managers decide ho' to spend it in
'a(s that 'ill ensure the greatest return.
This career profile focuses on opportunities in corporate finance and
accounting in pri/ate industr(. To learn a3out other areas in financial
ser/ices, read our industr( profiles for in/estment 3anking, mutual
funds and 3rokerage firms, commercial 3anking, insurance, and
accounting. These profiles detail a /ariet( of speciali@ed financial
functions 3e(ond those in pri/ate enterprise.
$/er( compan( has a corporate2finance function. The responsi3ilities
that fall under finance and accounting range from 3asic acti/ities such
as 3ill pa(ing to /er( sophisticated ones such as forecasting the /alue
of a potential acLuisition. The stakes can amount to hundreds of
millionsZsometimes 3illionsZof dollars and thousands of 5o3s.
Careful assessment of the financial implications of particular strategic
decisions can 3e critical to a compan(bs success or failure.
9f course, a compan(bs si@e, comple0it(, economic sector, and stage
of de/elopment Jstart2up or esta3lished 3usinessM influence 'hat tasks
the corporate finance team undertakes e/er( da(. 6ll companies need
to 3alance their 3ooks. :ome large technolog( companies, for
e0ample, hire financial e0perts to /aluate potential acLuisitions.
9thers Jsuch as insurance companiesM ha/e hundreds of millions of
dollars to in/est and need financial 'i@ards to manage it.
What 7ouEll -o
Corporate finance includes t'o ke( functionsQ accounting and finance.
6ccounting concerns itself 'ith da(2to2da( operations. 6ccountants
3alance the 3ooks, track e0penses and re/enue, e0ecute pa(roll, and
pa( the 3ills. The( also compile all the financial data needed to issue a
compan(bs financial statements in accordance 'ith go/ernment
;inance pros anal(@e re/enue and e0penses to ensure effecti/e use of
capital. The( also ad/ise 3usinesses a3out pro5ect costs, make capital
in/estments, and structure deals to help companies gro'.
In spite of their different roles, finance and accounting are 5oined at
the hipQ The higher le/els of accounting J3udgeting and anal(sisM
3lend in 'ith financial functions Janal(sis and pro5ectionsM. Thus,
finance and accounting are often treated as one, 'ith different
di/isions undertaking particular tasks such as cash management or
Retail 0ndustr$
Consumer mone( dri/es the econom(, and retail is 'here consumers
spend that mone(. BoutiLues and department stores, mail2order
companies and discount outletsZthese are the esta3lishments 'here
consumers spend their hard2earned dollars. ,hen goods are put in the
hands, or shopping 3ags, of consumers, retailers reali@e re/enuesZ
and so do the 'holesalers, distri3utors, and manufacturers that make
up the rest of the consumer2goods distri3ution chain. In addition, retail
transactions ser/e as the means for collecting sales ta0es, 'hich
support pu3lic ser/ices of all kinds.
8etail goods are traditionall( di/ided into dura3le goods, like
furniture, cars, and large appliances, 'hich are e0pected to last at least
three (ears, and non2dura3le goods, 'hich include food, clothing, and
other categories far too numerous to mention 3ut 'hich e/entuall(
form the 3ulk of the stuff (ou see on makeshift ta3les at garage sales.
.ost of the retail industr(bs emplo(ees are salespeople and clerks, 3ut
the industr( also has opportunities for people interested in determining
'hat goods 'ill 3e sold, getting these goods to the right place at the
right time, and managing the operations, finances, and administration
of retail companies. 8etail e0ecuti/e2training programs are crammed
'ith energetic 2%2somethings, all hoping to perform those functions as
sales and merchandise managers, 3u(ers, and marketers at ma5or retail
organi@ations, such as 6nn Ta(lor, .ac(s, 1.C. Penne(, The >imited,
and :aks.
Mom and *op -isappearVand Traditional &tores Are in Trou(le
The retail landscape is changing as ne' store categories start to
dominate the marketplace. .ass merchandisers J,, TargetM,
discount clu3s JCostcoM, so2called categor( killers J4ome =epot,
Barnes V *o3le, :taplesM, and specialt( retailers J1. Cre', CoachM
ha/e all de/eloped successful retail models. 6t the same time, 3oth
smaller mom2and2pop stores and traditional department stores, like
:ears, .ac(bs Jo'ned 3( ;ederated =epartment :toresM, and .er/(nbs
Jo'ned 3( =a(ton 4udsonM, ha/e found the competition intense.
Indeed, in 2%%1, 'hile , and Target sa' re/enue gro'th J3(
15 and " percent, respecti/el(M, ;ederated e0perienced a 15 percent
decline in re/enue. But e/en in the mass2merchandising segment, the
competition is fierce, as is e/idenced 3( &mart+s 3ankruptc(
announcement in 2%%2.
Though 'e3sites carr( onl( a miniscule percentage of retail
transactions, the num3er is gro'ing. .an(, though not all, ma5or retail
organi@ations ha/e online stores. Companies like, 'hich
helped pioneer retail e2commerce, are 3eing follo'ed 3( 3ricks2and2
mortar and catalog retailers like 1. Cre', 'hich are e0panding retail e2
commerce into ne' markets.
4o'e/er, retail e2commerce raises serious Luestions. It has the
potential to put so2called 3ricks2and2mortarZthat is, ph(sicalZstores
out of 3usiness on a large scale and to drasticall( reduce local
go/ernment re/enues, since man( retail e2commerce transactions are
not su35ect to sales ta0. :o far, there has not 3een a shakeout, 3ut the
e2tail phenomenon is 5ust 3eginning its e/olution, and its full impact is
(et to 3e felt.
<lo(al Brands and $ame Brands
The 3ig gu(s are all con/erging in the middle of the market. 9n the
one hand, discount and mass retailers are finding it ad/antageous to
introduce name23rand e0clusi/e merchandise lines, 'hich enhance
their 3rands and 3ring in increased re/enue? for e0ample, consider the
.ichael )ra/es line at Target. 9n the other hand, more e0pensi/e
department store chains are tr(ing to lo'er costs and increase unit
sales 3( de/eloping store 3rands, 'hich essentiall( offer consumers
the same Lualit( as 3rand names 'ithout the higher price tag Jand 'ith
higher margins for the retailerM.
;o/ 0t 'reaks 9o/n
8etailing and 'holesaling encompass a lot of consumer goods? 'ebll
focus here on three areasQ general merchandise, apparel, and furniture.
These categories include computers, clothes, sports eLuipment, 3eaut(
products, 5e'elr(, and home furnishings, 3ut lea/e out food, autos,
and 3uilding materials. 4erebs a look at the 3reakdo'nQ
-epartment &tores
6 fe' (ears ago, names like :ears, 1.C. Penne(bs, .ac(bs, and
.ontgomer( ,ardbs dominated malls and do'nto'ns all o/er
6merica. 9/er the last decade or so, ho'e/er, department stores ha/e
suffered. In part this is a result of changing shopping patterns and
increased competition from discount stores. It has also come from
financial 3urdens incurred 3( companies that acLuired competitors
and gre' too fast. Itbs unlikel( that these pla(ers 'ill disappear from
the market. 4o'e/er, e0pect more 3umps as the strong get stronger
and the 'eak get a3sor3ed.
-iscount &tores
These are giants such as ,, the largest retailer in the 'orld,
and 'arehouses such as Costco. 9riginall( set up to ser/e mem3ers
onl(, the deep discounters no' face competition from categor( killers,
non2mem3ership 'arehouses, and mass merchandisers like 8oss.
$/en more alarming is the gro'ing reali@ation among their harried
shoppers that traipsing through endless aisles of merchandise 5ust to
3u( a roll of tape and some under'ear isnbt 'orth the sa/ings.
Category 8illers
These are the giant retailers that dominate one area of merchandise
J9ffice =epot, To'er 8ecords, and The :ports 6uthorit(M. The( are
a3le to 3u( 3athroom tiles, file ca3inets, electronic goods, or pet food
in such huge /olume that the( can then sell them at prices e/en fairl(
large competitors canbt match. The outlook for this categor( is 3etter
than for man( of the more general discounters, 3ut the same
emplo(ment ca/eats appl(. ;or most 5o3 seekers, these companies
offer earn2and2learn e0periences 'ith /endors and distri3utors 3efore
(ou mo/e on'ard and up'ard.
&pecialty &tores
These include Crate V Barrel, the Bod( :hop, and Cictoriabs :ecret.
These stores concentrate on one t(pe of merchandise and offer it in
some manner that makes it special. :ome are /er( high2end J>ouis
CuittonM? others cater to the price2conscious masses J9ld *a/(M. .an(
are so successful that department stores ha/e started to emulate their
3u(ing, marketing, and merchandise displa( strategies. Industr(
e0perts predict gro'th in this segment, particularl( for home
furnishings and home impro/ement, and it seems to attract man( of
the 3est and 3rightest in retail. Promotion and responsi3ilit( come
Luickl( to those 'illing to 'ork hard, and in man( of these stores the
hand of 3ureaucrac( is not hea/(.
,hile most retailers ha/e online storefronts, strictl( online pur/e(ors
'ith no 3ricks2and2mortar counterparts are hoping to snare a
percentage of the retail profit. 6nd ma5or pla(ers, such as, ha/e generated enough 3usiness to cause top 3ricks2
and2mortar competitors to follo' up 'ith their o'n Internet sites.
Traditional retailers like , and :tar3ucks, hugel( successful
in their o'n right, ha/e also set up online stores so as not to miss out
on the re/enue opportunities that the Internet offers.
;o( *rospects
8etailers are feeling the economic pinch of the recession as 'ell as a
changing retail landscape. Consolidation of corporations and
automation of functions means man( 5o3s 3ecome o3solete, resulting
in la(offs. But this also means that there 'ill 3e opportunities for
3usinesspeople a3le to na/igate through the mess of reconstruction as
'ell as for people 'ho can get products to consumers 3( means other
than traditional retail stores.
6ccording to the Bureau of >a3or :tatistics, 5o3s in department,
apparel, and accessor( stores is e0pected to increase 3( onl( 4 percent
o/er the 2%%% to 2%1% period, slo'er than the 15 percent increase
pro5ected for all industries com3ined. This is due mainl( to the
increasing popularit( of cmega2retailersc and discount stores like ,al2
.art and Costco that stress self2ser/ice and thus are less la3or2
intensi/e. $mplo(ment in department stores, on the other hand, is
e0pected to increase, 3ut still more slo'l( than the a/erage for all
industries. The gro'th of 'holesale trade 5o3s 'ill 3e cur3ed 3( the
increase of e2commerce sales, industr( consolidation, and ad/ances in
technolog( that allo' for more efficient means of tracking goods and
6mong other areas, the follo'ing should gro' in demand in coming
(earsQ distri3ution specialists and merchandise planners? 3u(ers 'ith
product de/elopment and pri/ate2la3el e0perience? an(one 'ho
understands data2interpretation technolog( and digital s(stems such as
Iuick 8esponse, $lectronic =ata Interchange, and point2of2sale JP9:M
terminals? and all (ou managers 'ith either e2commerce or o/erseas
marketing e0pertise.
0nsurance 0ndustr$
If (ou 'ant to impress (our friends and famil( 'ith a 5o3 full of
glamour, si@@le, and prestige, insurance is the 'rong game for (ou.
But 'hile no industr( offers genuine 5o3 securit( these da(s,
insurance comes closer than most.
63out 1,"%% A.:. insurance companies offer personal and commercial
product lines including 3asic healthPlife and propert(Pcasualt(
protection as 'ell as a long list of other co/erages ranging from
automo3iles to mortgages to insurance for insurance companies
Jkno'n as reinsuranceM. These products protect customers from losses
resulting from illegal actions, medical needs, theft, earthLuakes and
hurricanes, and a /ariet( of other causes.
Insurance companies calculate the likel( cost of a gi/en loss, di/ide it
3( the num3er of people 'ho 'ant protection against it, add
something for profit, and reach an amount that the( charge each
customer for a polic( guaranteeing compensation should the loss
occur. But thatbs onl( the 3eginning. Insurance companies also mount
huge marketing campaigns to con/ince customers that the( need
protection in general and the compan(bs products in particular.
The( also function as financiers, deri/ing a large part of their re/enues
from in/estments. Insurance companies must maintain enormous
reser/es of capital to 3ack up potential claims o3ligations. The( in/est
those reser/es in stocks, 3onds, and real estate, 'ithin the A.:. and
o/erseas, pro/iding an enormous amount of liLuidit( to financial
markets and gi/ing the industr( an influence on the national econom(
far out of proportion to its si@e. That can 3e a risk, as 'hen
industr('ide o/er2in/estment in >atin 6merica during the 1#!%s led
to huge losses for the entire industr( and repercussions far 3e(ond the
insurance industr( itself.
=espite the fact that it is regularl( accused of decepti/e sales practices
and e/en consumer fraud, 6merica+s securit( 3lanket also protects the
econom( against losses of all kinds. A.:. companies are currentl(
pla(ing catch2up to 'orld'ide pla(ers in the glo3al marketplace and
a3sor3ing mammoth deregulation legislation.
Terrorism and Insurance
In the 'ake of :eptem3er 11, 2%%1, insurance companies 'ere faced
'ith tremendous claims? estimates range from \3% to \!% 3illion. 6s a
result, reinsurers stopped 'riting terrorism policies in the A.:.
Primar( insurers, as a result, started stripping terrorism co/erage out
of polic( rene'als, in states 'here that 'as legal, and stopped
offering andPor rene'ing policies that included terrorism insurance in
states 'here it 'as not. In response, the Bush administration stepped
into the picture 'ith the Terrorism 8isk Insurance 6ct of 2%%2, 'hich
acts as a kind of safet( net for 'riters of commercial insurance. The
6ct reLuires insurers to pa( terrorism2related claims up to a ceiling?
3e(ond that ceiling, the go/ernment 'ill pa( the 3ulk of claims, thus
limiting the insurance industr(+s risk e0posure.
=eregulation is redefining 'ho can offer insurance. 8epeal, in late
1###, of the 1#33 )lass2:teagall 6ct J'hich formerl( separated all
arenas of financial ser/icesM promised a ma5or facelift for the
insurance industr(. Insurers, 3anks, and securities 3rokers are no'
free to merge and cross2sell each othersb products. This clears the 'a(
for financial ser/ice superstores that 'ill offer insurance as 'ell as
in/estment and sa/ings options. Commercial 3anks ha/e 3een making
modest inroads on traditional insurance markets for se/eral (ears, 3ut
repeal of )lass2:teagall could lead to much greater and Luicker
changes in the role of traditional insurance agents.
&hift in -emand
The shape of the life insurance sector has morphed o/er the past
generation. *o'ada(s, demand goes 3e(ond straightfor'ard life
insurance. 8ather, the market is looking to the insurance industr( to
pro/ide in/estment products, such as annuities, 'hich pro/ide the
consumer 'ith regular pa(ments for life or for a fi0ed period. ,hat
this means in macro terms is that the life insurance sector has had to
shift its primar( capa3ilit( from anal(@ing and predicting mortalit(
rates to a more in/estment2management capa3ilit(. The recent
collapse of the stock market has made annuities relati/el( e/en more
attracti/e. 6nd in a creati/e mo/e insurers are 3uilding a market for
products that protect the in/estor against a /ariet( of risks
simultaneousl( 'hile allo'ing them to dra' do'n a death 3enefit
'hile still ali/e.
The Internet promises to cut costs in a competiti/e market, pro/ide a
ne' 'a( for consumers to compare Luotes and choose policies, and
make for a more con/enient ser/iceZthe ideal customer2friendl(
com3ination. This transition is ha/ing an impact on the 5o3 market,
'ith companies increasingl( seeking tech2sa//( candidates 'ho can
support the mo/e to e2commerce.
Continuing the trend that essentiall( 3egan 3% (ears ago, insurance
companies are responding to glo3al competition and the need for cost
efficienc( 3( forming strategic alliances, merging into conglomerates,
and 3u(ing smaller companies. This trend is doing a'a( 'ith the
independent agencies that used to define the industr(. Consolidation
also means that companies 'ill offer a full range of insurance
products instead of speciali@ing in certain realms such as propert( or
;o/ 0t 'reaks 9o/n
'ife and 2ealth Insurance
The policies in this sector pro/ide 3enefits packages that
polic(holders pa( a premium to en5o(. 4ealth insurance has gone
through some ma5or o/erhauls, including the replacement of fi0ed2fee
Blue CrossPBlue :hield2inspired policies 'ith managed care net'orks.
The life insurance 3usiness is e0periencing slo' gro'th, and life
insurance companies are likel( to 3e merging 'ith 3anks and
securities firms. 4artford, Prudential, and .etropolitan >ife are A.:.
leaders in the life insurance game, 'hile 6etna and CI)*6 rule the
4.9 realm.
*roperty and Casualty !*@C# Insurance
The focus in this sector is on protection for o'ners of cars, homes,
and 3usinesses from loss, damage, and in5ur(. Competition is fierce in
this sector, and profits are falling. 9nl( the strong 'ill sur/i/e as
'eaker companies continue to tank and e/en more secure ones sell off
this line.
Insurance Brokers
Brokers act as go23et'eens, uniting 3u(ers and sellers of insurance
and creating the contracts that 3ind them. ;urthermore, the( pla( the
role of risk consultants for large clients, researching industr(
information to ad/ise companies ho' to manage risk e0posure. .a5or
pla(ers include 6on and .arsh V .c>ennan Companies.
In the most simple terms, reinsurance is the insurance of insurance
companies. Insurance companies pa( reinsurers to assume some or all
of the risk the insurers ha/e taken on in 'riting policies for their
clients. Insurers use reinsurance to protect against the risk of unusual
losses. 8einsurers 'rite reinsurance 3ecause their 3usiness allo's
them to pool enormous num3ers of indi/idual insurance risks, making
their risks e/en more predicta3le than the risks faced 3( primar(
;o( *rospects
=ue to the replacement of agents 3( Internet sales, 5o3 opportunities in
this industr( are increasing at a 3elo'2a/erage pace. But the entrance
of insurance companies into the grand arena of financial ser/ices
marks a ne' eraQ 6gents 'ill 3e called upon to pro/ide a full range of
ser/icesZincluding insurance, in/estment 3anking, and sa/ingsZin
multidisciplinar( teams, on a glo3al scale. Companies are looking to
hire college grads 'ith pro/en a3ilit( in sales and information
anal(sis. )ro'ing occupations include s(stems anal(sts, ad5usters,
and e0aminersQ These positions reLuire fe'er hands2on skills and
more interaction 'ith information, especiall( the a3ilit( to gather and
manipulate information strategicall(. ;urthermore, the insurance
industr( 'ill 3ecome more hungr( for techies as computers pla( an
e/er more integral part in 3usiness processes.
,ant to 'ork a3road- There are opportunities in insurance. $urope
and Canada are still a focus for claims processing and in/estment and
actuarial ser/ices, 3ut 6sian marketsZparticularl( 1apan, Tai'an, and
:outh &oreaZare e/en more attracti/e places to land ne' 3usiness. If
international financial markets are something (ou understand, and (ou
speak a foreign language, (oubre someone insurance companies 'ill
'ant to talk to.
,hat (ou donbt kno' a3out insurance can hurt (ouZat least, it can
hurt (our career. Insurance is full of 5o3s that pa( 'ell, usuall(
'ithout the long hours reLuired in some other financial ser/ices
sectors. Get man( 5o3 seekers 'ho 'ant to use their anal(tical skills
or get into financial ser/ices ne/er seriousl( consider these attracti/e
career options.
In general terms, insurance means protection. Insurance compan(
clients pa( fees JpremiumsM 'ith the understanding that if specific
misfortunes 3efall themZif a fire 3urns do'n their house, for
instance, or the( ha/e an accident and need hospitali@ationZthe( can
make a claim and the insurance compan( 'ill pa( them an amount
agreed upon in the insurance polic(.
To learn more a3out the insurance industr(, check out ,et;eet.combs
industr( profile.
What 7ouEll -o
Careers in insurance are /aried. 6ctuaries, for instance, assess the
relati/e likelihood of /arious t(pes of accidents 3( performing a
statistical anal(sis of an(thing the( deem rele/ant to the su35ect. The(
use the resulting information to determine polic( prices, as 'ell as to
'hom the( should sell 'hich polic(.
6gents fill a sales function, and actuall( sell the policies. Ander'riters
determine ho' much o/erall risk a 3u(er 'ill add to the compan(bs
3usiness and figure out the premium at 'hich to insure a 3u(er.
.one( managers in/est the mone( the insurance compan( takes in
through premiums. Claims ad5usters decide 'hat, if an(thing, the
compan( 'ill pa( on claims. 8isk managers determine and help
implement policies and processes to help clients a/oid making claims.
Insurance companies also hire folks for marketing, 3usiness
de/elopment, IT and corporate finance positions.
Insurance companies tend to 3e large in terms of 3oth emplo(ees and
assets, 3ecause the( need to take in a lot of premiums from a /ariet(
of customers in order to di/ersif( and lo'er their risk of 3eing put out
of 3usiness 3( a small num3er of large claims.
Insurance companies also manage their risk 3( pa(ing reinsuance
companies to take on some of that risk. 8einsurers essentiall( insure
insurance companies against une0pectedl( large claims. B( 'riting
policies 'ith a /ariet( of insurance companies, reinsurers effecti/el(
take on man( times the num3er of indi/idual risks as primar(
insurance companies do. This lessens the likelihood that a small
num3er of large claims 'ill result in an unforeseen risk to their 3ottom
.an( 5o3s in insurance reLuire certification or licensing. :ince
insurance regulations differ from state to state, certification and
licensing reLuirements /ar( accordingl(.
Who -oes Well
If (ou like sales, ha/e a strong Luantitati/e 3ent, or like to in/estigate
m(steries, this is a /er( good place to consider looking for a 5o3. Itbs
also a great field to consider if (oubre looking for top2notch 3enefits,
reasona3le hours, and a sense of 3elonging to a large organi@ation.
Therebs also a place in the industr( for entrepreneurs 'ho 'ant to run
an insurance agenc( or 'ork in other sales positions.
Accounting 0ndustr$
Bean counters. $3ene@er :crooge. .ention accounting, and until
recentl( these 'ould 3e the images people t(picall( con5ured. ,ho
kne' that the accounting industr( could 3e the source of so much
intrigue, that the pu3lic 'ould open the ne'spaper each morning to
eagerl( read a3out the inner 'orkings of accounting firms-
9f course, 'e+re referring to the scandals that ha/e rocked the
accounting 'orld and contri3uted to the greatest undermining of trust
in corporations and the markets in recent memor(. Because of the
misdeeds of 6rthur 6ndersen accountants 'orking on $nron+s 3ooks,
6ndersen, once considered the gold standard of the accounting
industr(, is no' for all practical purposes out of 3usiness. Before
6ndersen+s collapse, the top tier of the pu3lic accounting industr( 'as
kno'n as the Big ;i/e? no', it+s the Big ;our J=eloitte Touche
Tohmatsu, $rnst V Goung, &P.), and Price'aterhouseCoopersM.
But 6ndersen isn+t the onl( firm implicated in accounting scandals.
$rnst V Goung, &P.), and Price'aterhouseCoopers JP'CM ha/e all
faced scrutin( in recent times. In 2%%2, &P.) 'as censured 3( the
:$C for auditing a mone(2market fund it 'as in/ested in? in 2%%1,
P'C paid the :$C \5 million to settle allegations of audit2
independence /iolations of its o'n, the largest fine e/er for such
/iolations? and $rnst V Goung is 3eing in/estigated 3( the :$C for
alleged /iolations of audit independence for teaming up 'ith an audit
client to sell soft'are. Clearl(, there+s a pro3lem 'ith ho' the
accounting industr( has operated of late.
Critics of the industr( think the( kno' 'hat that pro3lem is. In the
1##%s, the( sa(, accounting firms 3ecame o/erl( reliant on re/enue
generated 3( their consulting arms. Indeed, in 2%%%, &P.), )eneral
$lectric+s auditor, 'as paid \23.# million to audit )$+s 3ooksZa
fraction of the \!#.! million )$ paid &P.) for IT and other
consulting 'ork in that same (ear. 4o', critics ask, can auditors
maintain their o35ecti/it( if their firms are so 3eholden to clients for
consulting re/enue- Because IT consulting has recentl( 3ecome less
lucrati/e Jsince companies cutting costs often cut 3ack on tech
consulting purchasesM, accounting firms ha/e alread( 3een mo/ing
a'a( from their reliance on consulting re/enue? indeed, $rnst V
Goung, &P.), and P'C ha/e all sold off their IT consulting arms.
But due to the crisis in accounting and the markets, the clamor to split
accounting and consulting is louder than e/er. 6 num3er of states are
going so far as to consider legislation 3arring accounting firms from
doing consulting 'ork for audit clients.
6s (ou step into the 'onderful 'orld of accounting, (ou ha/e three
o3/ious career optionsQ 1M 'ork for a Big ;our pu3lic accounting firm?
2M 'ork for a smaller national or regional pu3lic accounting firm? or 3M
'ork in the accounting department of a pri/ate or go/ernment
If (ou go the pu3lic accounting route Joptions 1 and 2M, (oubll
t(picall( start 3( stud(ing for and taking the CP6 e0am and then
'orking for se/eral (ears on a /ariet( of ta0 or audit assignments. 6t
that point, assuming (ou 'ant to remain in accounting, (oubll either
lea/e to 5oin a client or sta( and tr( for the partner track. If (ou start in
the pri/ate sector Joption 3M, (ou ma( or ma( not 3e a3le to get (our
CP6 Jsome states reLuire e0perience 'orking for a pu3lic accounting
firm to do thisM, 3ut (ou 'ill learn a3out one 3usiness in far greater
depth than (our pu3lic accounting pals 'ill in their short2term
auditing assignments.
6ll three options can e/entuall( lead to lucrati/e and interesting
responsi3ilities in senior management. 6nd all three 'ill also ser/e as
e0cellent preparation for a /ariet( of 3usiness careers should (ou 'ant
to lea/e the 'orld of de3its and credits 3ehind.
In terms of ho' 'ould23e accountants are 3eing affected 3( the
accounting scandals, the accounting industr( is refocusing on ethics.
6 num3er of schools ha/e 3eefed up ethics2related aspects of their
accounting programs. The Big ;our, the 6merican 6ccounting
6ssociation, the 6merican Institute of Certified Pu3lic 6ccountants
J6ICP6M, and the Institute of .anagement 6ccountants ha/e all
announced plans to 5oin 'ith uni/ersities to de/elop changes in
accounting curricula. 6nd the 6ICP6 is considering changing the
CP6 e0am to 3etter gauge test2takers+ a3ilit( to think independentl(
as accountants. :o if (ou inter/ie' for an accounting 5o3, e0pect to 3e
asked to shed light on (our high ethical standards. J9f course, there
are those 'ho are c(nical a3out this ne' focus on ethics. 9ne insider
sa(s that the accounting industr( put a similar focus on ethics
follo'ing the :a/ings V >oan crisis, onl( to ha/e ethics 3ecome a
secondar( consideration during the 1##%s.M
CuttingB/dge Technology
6s recentl( as 1##%, (oubd go into an audit 'ith nothing 3ut a legal
pad and a couple of sharp pencils, according to one senior accounting
recruiter. *o', auditors arri/e 'ith far more serious electronic
artiller( in to', in some cases 3oasting e0pertise in /arious
speciali@ed soft'are applications that automate accounting tasks, from
spreadsheets to ledger packages. To do 'ell in this field, (oubll still
need to ha/e (our 5ournal entries do'n pat, 3ut increasingl( (oubll
need to 3e a3le to use computers. Big ;our firms are reno'ned for
their technolog(. These firms ha/e 3een among the most sa//( and
aggressi/e users of intranets, e0tranets, and e2commerce technologies.
9ne insider sa(s, SI take a lot of it for granted, 3ut 'e reall( ha/e an
unreal amount of information at our fingertips. The intranet, e0ternal
,e3, the research capa3ilitiesZit+s almost information o/erload at
>ike so man( other facets of economic life, accounting is increasingl(
immune to international 3orders. 6s corporations 3ecome
multinational, so do their accounting firms. ,hile each countr( still
has its o'n canon of standard accounting practices, there is a
gathering mo/ement to'ard international accounting rules. *umerous
issues ha/e 3een raised 3( glo3ali@ation, 3ut fe' if an( ha/e 3een
resol/ed. 9ne thing is sure, ho'e/er? international accounting 3odies,
such as the International ;ederation of 6ccountants JI;6CM, the
International 6ccounting :tandards Committee JI6:CM, and perhaps
the Institute of :ocial and $thical 6ccounta3ilit( JI:$6M, 'ill ha/e
more influence than in the past.
;o/ 0t 'reaks 9o/n
The o3/ious 3reakdo'n in accounting is the one 'e made a3o/eQ Big
;our, smaller pu3lic2accounting firms, and pri/ate and go/ernment
accounting. In pu3lic accounting, most people 'ill go into either audit
or ta0. In pri/ate accounting therebs a 'ider range of 5o3s, including
in2house accounting.
The Big 9our
This group used to 3e the Big ;i/e, 3ut 'ith the demise of 6ndersen
in the 'ake of the $nron scandal, it+s no' the Big ;our. These are the
ma5or pu3lic accounting firmsQ =eloitte Touche Tohmatsu, $rnst V
Goung, &P.), and Price'aterhouseCoopers. The( are mammoth in
si@e? each has annual re/enues in the tens of 3illions of dollars, and
the smallest among them in 2%%1, $VG, had "",%%% emplo(ees. These
are the most prestigious emplo(ers for accounting grads. ,h(- Big
;our clients are ;ortune 1%%% companies, 'hich means that
emplo(ees are e0posed to comple0 accounting issues. 6nd a 5o3 'ith
a Big ;our firm is a great career mo/e for someone entering the
accounting profession. $ither (ou+ll mo/e up the ladder in (our Big
;our firm Jto partner, hopefull(M, or, if (ou decide to go to 'ork for
another pu3lic accounting firm, an in2house accounting position in
industr(, or a go/ernment accounting positionZor decide to hang out
(our o'n shingleZ(our Big ;our e0perience 'ill shine on (our
Big ;our firms+ central focus is audit ser/icesQ The /erification of the
accurac( of clients+ 3ooks. The( also include non2audit lines of
3usiness, including actuarial 'ork Jrisk anal(sis and managementM, ta0
consulting, human resources management, and merger and acLuisition
In the 'ake of the 6ndersen collapse, the other 3ig pu3lic accounting
firms are picking at the 6ndersen carcass. B( mid2fall 2%%2, $rnst V
Goung had picked up more than 2%% e026ndersen clients, 'hile the
other Big ;our firms had picked up in e0cess of 1%% each. In some
cases, the Big ;our ha/e acLuired entire 6ndersen offices? in other
cases, teams of accountants ha/e gone from 6ndersen to the other
firms, 3ringing clients 'ith them.
+egional *u(lic Accounting 9irms
6lthough the Big ;our get most of the pu3licit(, there are man(
smaller, less 'ell2kno'n national pla(ers and regional pu3lic
accounting firms that do a lot of accounting and hire lots of people.
8epresentati/e national firms include )rant Thornton, 8:.
.c)ladre(, B=9 :eidman, and .oss 6dams. ,ithin different
regions of the countr(, there are also strong regional pla(ers that
usuall( affiliate themsel/es 'ith some national net'ork of other such
pla(ers. Insiders tell us that the hours are often a little 3etter than at
the Big ;our, the path to partner a little Luicker, and the 'ork itself
more /aried and interesting. If (ou go to a Big ;our firm, (our onl(
responsi3ilit( for three months might 3e to audit the cash account at
IB.. AghR 6ccording to one insider, at a regional firm (oubll 3e a
3igger fish in a smaller pond.
InB2ouse Accounting
,hether pu3licl( traded or not, e/er( compan( has internal
accountants to set 3udgets, manage assets, and keep accurate track of
pa(roll, accounts pa(a3le and recei/a3le, and other financial matters.
;or medium2si@ed and large firms, the internal staff 'orks closel(
'ith the pu3lic auditors at the fiscal (ear2end and 'ith senior
management and IT staff (ear round.
Controllers and C;9s at smaller firms often en5o( e/en more
important and influential roles in running and de/eloping the 3usiness.
These 5o3s are 5ust as demanding as those in pu3lic accounting.
.ost accountants in the pri/ate sector sta( in one place, in one 5o3,
'orking 'ith the same colleagues, for e0tended periods. 4o'e/er,
should (ou choose to mo/e around, accounting skills are /er(
:ome 3usinesses prefer to outsource their internal audit functions to a
third part(. ;or these companies, and for auditors 'ho 'ant to 'ork in
this capacit(, accounting firms like 1efferson ,ells International are
the ans'er.
6lthough it+s not the 3iggest 3lip on the radar screen for aspiring
accountants, the go/ernment hires a lot of people 'ith accounting
skills. The 3iggest federal emplo(ers are traditionall( the =epartment
of =efense, the )eneral 6ccounting 9ffice, the :ecurities and
$0change Commission, and the Internal 8e/enue :er/ice. In addition
to monitoring indi/idual and corporate ta0 returns, go/ernment
accountants at the state and federal le/els formulate and administer
3udgets, track costs, and anal(@e pu3licl( funded programs.
6s an accountant, (ou can al'a(s hang out (our o'n shingle,
indi/iduall( or in partnership 'ith other accountants, especiall( once
(ou ha/e (our CP6. There is plent( of 3usiness preparing ta0 returns
and ad/ising small 3usinesses, pro/ided (ou ha/e the rele/ant
e0pertise, such as a thorough kno'ledge of ta0 la's. Gou also 'ill
need to 3e a3le to market (our ser/ices and manage (our o'n
3usinessZtime2consuming acti/ities that not e/er(one en5o(s.
;o( *rospects
6ccording to the Bureau of >a3or :tatistics, accounting and
accounting2related 5o3s 'ill gro' on a/erage 'ith emplo(ment
o/erall 3et'een 2%%% and 2%1%. CP6s 'ill continue to en5o( a 'ide
range of opportunities, especiall( as more and more states reLuire a
minimum 15% hours of course'ork to take the e0am making the
certification harder to o3tain. Proficienc( in accounting and auditing
soft'are, e0cellent communication skills, and a strong sense of
team'ork 'ill gi/e (ou an ad/antage o/er the competition.
The accounting industr( has 3een rocked 3( scandal in recent times,
'ith one ma5or firm, 6rthur 6ndersen, 3eing forced out of the picture.
Before 6ndersen+s collapse, the top tier of the pu3lic accounting
industr( 'as kno'n as the Big ;i/e? no', it+s the Big ;our J=eloitte
Touche Tohmatsu, $rnst V Goung, &P.), and
Price'aterhouseCoopersM. :till, clients need Big ;our accounting
ser/ices, and as a result the accounting industr( 'ill continue to 3e a
source of man( 5o3s, especiall( for those interested in entr(2le/el
What 7ouEll -o
6ccounting concerns itself 'ith the da(2to2da( operations of
3ookkeeping. 6ccountants 3alance the 3ooks, track e0penses and
re/enue, e0ecute pa(roll, and pa( the 3ills. The( also compile all of
the financial data needed to issue a compan(bs financial statements in
accordance 'ith go/ernment regulations.
6ccountants are taking a step a'a( from the ledger sheets and are
3ecoming essential to e/er( successful 3usiness team. The(bre the
ones 'ho understand the language of mone( and a compan(bs
comple0 financial situation. ConseLuentl(, accountants are
increasingl( 3eing called on to offer ad/ice and e/en make 3usiness
decisions 3ased on hard facts rather than on speculation or gut instinct.
To 3e sure, an accountantbs da(2to2da( 'ork is still /er( different from
that of a lion tamer, especiall( for those 'ho are 5ust entering the
field. .ost pu3lic accountants, for e0ample, still need to kno' the
specifics of ta0 la' and must file audits that meet the generall(
accepted principles of accounting J)66PM. 4ere, therebs little room
for people 'ho 'ant to think outside of the 3o0. The 3o0 has 3een
'ell thought out, and itbs the accountantbs 5o3 to make sure a
compan(bs records fit inside it and are in lockstep 'ith the la'.
Who -oes Well
;inance and accounting 5o3s reLuire critical, detail2oriented thinking.
If (ou ha/e a knack for using num3ers to understand patterns that
influence 3usiness, (oubre going to 3e /alua3le to a compan(. If (ou
canbt crunch and anal(@e them, this isnbt going to 3e the right 5o3 for
(ou. Gou should also like, and 3e good at, sol/ing pro3lems and 3e
a3le to think criticall( a3out the num3ers (oubre 'orking 'ith.
,hile accountants need to 3e good at math and ha/e strong anal(tical
thinking skills, attention to detail is usuall( considered more
important. 6nd as accountants are increasingl( 3eing promoted to the
3oardroom, the( are finding it increasingl( necessar( to de/elop
strong 'ritten and /er3al communication skills.
The 6merican Institute of Certified Pu3lic 6ccountants strongl(
recommends that all accountants 3alance their technical 3usiness
training 'ith a classicall( li3eral education. ;urthermore, as 3usiness
is increasingl( 3eing performed electronicall(, accountants need to
pick up as much kno'ledge a3out computers and information s(stems
as possi3le, not onl( to understand their utilit( 3ut also to assess their
/alue to a compan(.
Commercial 'anking 0ndustr$
6sked 'h( he ro33ed 3anks, ,illie :utton replied, cBecause thatbs
'here the mone( is.c That 'as in the b3%s, 3ut e/en toda(, despite
changes, a lot of the mone( is still in commercial 3anks. .ost of us
maintain checking accounts at commercial 3anks and use their 6T.s.
The mone( 'e deposit in our neigh3orhood 3ank 3ranch or credit
union supports local economic acti/it( through small 3usiness loans,
mortgages, auto loans, and home repair loans. The 3ank also pro/ides
loans in the form of credit card charges, and it renders local ser/ices
including safe deposit, notar(, and merchant 3anking. The 3ank
3ranch or credit union office remains the cornerstone of .ain :treet
economic life.
Consolidation and $e" ;o(s
;or decades, 3anks profited 3( simpl( holding customersb mone( and
charging them check 'riting fees and interest on loans. 1o3s 'ere 'ell
defined and sta3le, and promotion paths 'ere clear and secure. *ot
an(more. Consolidation, competition, and technological change are
shaking the industr( to its core, forcing la(offs 3ut also creating
:ince 1##5, more than 2%% large and small 3anks ha/e merged.
:e/eral of these and a handful of recentl( consolidated giantsZ
Citigroup, Bank of 6merica, Bank 9neZdominate the 3anking
industr(. The ne' 3ehemoths are entering ne' markets, 'hile at the
same time closing 3ranches and replacing ser/ice personnel 'ith
online and other technologies. 4o'e/er, hiring 3( a gro'ing num3er
of non3anks compensates for this trend to a degree. These firms,
'hich are pioneering ne' 'a(s of deli/ering financial ser/ices,
include .B*6 and Capital 9ne, 'hich are credit card lenders?
transaction processing and data ser/ices like ;irst =ata and ;iser/?
and 3ill2pa(ment2ser/ices marketers like .;:=C and Integrion.
The )lass2:teagall 3ill, passed 3( Congress in 1#33, ser/ed as the
3ack3one of 3anking regulation. =uring the late b#%s, ho'e/er, 3anks
and other financial institutions found 'a(s around the restrictions
placed on them 3( )lass2:teagall and related legislation. ;inall(, in
late 1###, )lass2:teagall 'as repealed, eliminating the legal
frame'ork for =epression2era 3oundaries that had alread( 3een
a3andoned 3( large financial ser/ices firms, including 3anks.
In theor(, the repeal of )lass2:teagall opened the floodgates to
consolidation, spa'ning superfirms that 'ill offer 3anking, insurance,
and securities. 4o'e/er, 3ig firms are alread( doing this through
affiliated companiesZCitigroup, for e0ample, offers insurance
through its Tra/elers su3sidiar(Zso the impact of the )lass2:teagall
repeal remains to 3e seen.
*ro(lem 'oans and 'o"er *rofits
The recent spate of corporate accounting misdeeds, and the resulting
3ankruptc( of some companies, means that some 3anks are stuck
tr(ing to recoup loans from corporations that are cash2star/ed. 9n the
consumer side of the 3usiness, in 1anuar( 2%%2, 4.# percent of all
home loans 'ere past due, a full point higher than a (ear earlier. 6nd
the a/erage household has \",%%% in credit card de3t, up from \3,%%%
in 1##%. Profits at deposit2taking 3anks declined 5 percent in 2%%1,
and in the current economic en/ironment, 3anks+ performance could
get e/en 'orse.
;o/ 0t 'reaks 9o/n
6s a 5o3 seeker, the most important distinction to keep in mind is
3et'een regional 3anks and the 3ig glo3al ones. 4ere 'eb/e 3roken
do'n the industr( 3( t(pe of 3anking, rather than si@e of pla(er, since
3anks are increasingl( adding ne' ser/ices to their arra( of traditional
Consumer or +etail Banking
This is 'hat most people think of 'hen the( think of 3ankingQ 6 small
to midsi@ed 3ranch 'ith tellers and platform officersZthe men and
'omen in suits sitting at the nice 'ooden desks 'ith pen setsZto
handle customersb da(2to2da( needs. 6lthough thousands of small
communit( 3anks, credit unions, and sa/ings institutions still e0ist,
emplo(ment opportunities are increasingl( coming from a fe'
megapla(ers such as Citi3ank, Bank of 6merica, and Bank 9ne, most
of 'hich seem hell23ent on 3uilding nationalZand e/en international
Z3anking operations.
9ne complicating factor in this picture is that the 3anks mentioned
a3o/e, in addition to e0tending their consumer23anking operations,
ha/e added to their portfolios 3( strengthening their in/estment2
3anking and asset2management capa3ilities, among others. :o, if (ou
'ant to 'ork at a Citi3ank 3ranch, make sure that (oubre appl(ing to
the right part of the organi@ation.
Business or Corporate Banking
.an( of the pla(ers in this group are the same ones in the consumer2
3anking 3usiness? others (oubll find on ,all :treet, not .ain :treet.
6t the highest le/el, the larger pla(ers JBankers Trust, Bank of *e'
Gork, and 1.P. .organ Chase V Co. 3eing three names to add to the
list of megapla(ers a3o/eM pro/ide a 'ide range of ad/isor( and
transaction2management ser/ices to corporate clients. =epending on
'hich institution and acti/it( area (ou 5oin, the 'ork can resem3le
3ranch 3anking or in/estment 3anking.
&ecurities and Investments
Traditionall(, this field has 3een the domain of a fe' ,all :treet
firms. 4o'e/er, as federal regulations ha/e eased, man( of the
3iggest commercial 3anks, including Bank of 6merica, Citi3ank, 1.P.
.organ Chase V Co., and others, ha/e aggressi/el( added
in/estment23anking and asset2management acti/ities to their
portfolios. ;or people interested in corporate finance, securities
under'riting, and asset management, man( of these firms offer an
attracti/e option. 4o'e/er, the hiring for these positions 'ill
freLuentl( 3e done separatel( from that for corporate and consumer
$ontraditional ptions
Increasingl(, a num3er of non3ank entities are offering opportunities
to people interested in financial ser/ices. Pla(ers include credit card
companies such as 6merican $0press, .asterCard, and Cisa? credit
card issuers like Capital 9ne and ;irst A:6? and credit2reporting
agencies such as T8,. 6lthough people at these firms are still in the
mone( 3usiness, the specific 5o3s /ar( greatl(, perhaps more 'idel(
than 5o3s at the traditional 3anks do. In particular, gi/en the /olume of
transactions that man( of these organi@ations handle, there are
e0cellent opportunities for people 'ith strong technical skills.
;o( *rospects
Banks remain in the 3usiness of profiting from other peoplebs mone(,
3ut no' the( need to do it in as man( markets at home and a3road as
possi3le, as aggressi/el( as possi3le. Competition has forced 3anks to
mo/e Luickl( and more creati/el( into mortgage lending, securities
and deri/ati/es trading, and transactions processing.
Throughout 3anking there are positions for people 'ho understand
technolog(, the full gamut of financial ser/ices, and ho' to market to
ne' customers. Banks also emplo( sales and marketing staffs,
de/elopers of ne' products, mortgage and securities e0perts, and
credit anal(sts. 6t the same time, though, 3anks ha/e taken a hit
during the current do'n c(cle of the econom(, so the opportunities to
get into 3anking are fe'er and farther 3et'een than the( ha/e 3een in
some time.
Banking and 3ank2related 'ork are a good fit if (ou kno' something
a3out finance and (ou like soft'are de/elopment? if (oubre interested
in marketing and sales? if (oubre a 3usiness school grad and (ou 'ant
a solid career start? if (oubre not a B2school grad 3ut (oubre looking for
'ork e0perience the eLui/alent of an .B6? if (oubre fluent in
:panish, 1apanese, or another language and (ou 'ant to li/e o/erseas
for a fe' (ears? or if (ou 5ust 'ant the kno'2ho' to e/entuall( start
(our o'n 3usiness. 9ne thing a3out 3anking skillsQ The( are
e0tremel( useful and porta3le. :o e/en if (ou 5oin a 3ank that gets
go33led up 3( a competitor and (ou end up a merger casualt(, (ou can
usuall( transfer (our e0pertise some'here else 'ith relati/e ease.
Commercial 'anking
Banks used to 3e the dork( cousins of the hot and flash( in/estment
3anks and 3rokerages. *o longer. The legislation that kept 3anks and
in/estment 3anks separateZ)lass :teagallZ'as struck do'n 3(
Congress in 1###. :o 3anks are no' mo/ing into highl( /isi3le
spheres of acti/it(, such as in/estment 3anking, mutual funds, and
What It Is
Commercial 3anks hold customers+ mone( and suppl( loans, in
e0change for check2'riting fees and interest collected from loans. The
'ork of commercial 3ankers is criticalZretail consumers get their
credit lines e0tended, their checking accounts upgraded, their
mortgages, cars, and home impro/ement loans appro/ed.
:mall 3usinesses are also highl( dependent on the good'ill of
commercial 3ankers. $/en as dot coms, angel in/estors, and CCs
monopoli@e the ne's, most small 3usinesses continue to fund their
gro'th 'ith commercial loans. :uch loans allo' them to secure ne'
in/entor(, co/er pa(roll, remodel their stores, 3u( registers, and
manage their o/erseas accounts recei/a3les.
What They -o
Commercial 3ankers perform core financial anal(sis to assess risk,
credit'orthiness, and the likelihood a 3usiness 'ill succeed. The(
pla( a ke( part in deciding the 3est 3usiness initiati/es, e0panding
e0isting 3usinesses, de/eloping ne' markets and clients, and creating
ne' products for e2commerce, the Internet, international markets, and
Commercial 3ankers ha/e to com3ine 3usiness acumen 'ith strong
accounting and interpersonal skills. 6fter all, commercial 3ankers are
at the front lines of the 3anking 3usiness. Ideall(, the( kno' their
clientsb li/es intimatel( and can recommend additional products and
ser/ices. Commercial 3ankers are a ke( distri3ution point and referral
source for the rest of a 3ankbs financial ser/ices acti/ities.
.an( commercial 3anks are consolidating in order to 3ranch out and
pro/ide other ser/ices such as mortgage, mutual funds, in/estment
3anking, and insurance. 6s other financial firms e0pand their ser/ices,
commercial 3anks are di/ersif(ing to keep up, and often a merger 'ith
a peer compan( is the 3est 'a( to do this. :ince 1##5, more than 2%%
large and small 3anks ha/e merged. Consolidation usuall( results in
la(offs and fe'er 5o3 opportunities, 3ut 5o3s in 3anks that are more
di/ersified offer more opportunities for career de/elopment. 6nd a
gro'ing num3er of non23anks are pioneering ne' 'a(s of deli/ering
financial ser/ices, pro/iding more 5o3s in the finance industr(.
Technolog( is changing the 5o3 reLuirements for 3ankers. There are
fe'er 5unior staffers, and the a3ilit( to manipulate data intelligentl(
and disco/er trends is ke( to long2term success. Banks 'ant to
maintain their record le/els of profita3ilit( 3( reducing defaults and
increasing efficienc(, resulting in an increasing reliance on technolog(
and more finance 5o3s a/aila3le to 5o3 seekers 'ith technical
.an( 3anks ha/e lost profits tr(ing to recoup loans. The recent spate
of corporate accounting misdeeds has resulted in seriousl( diminished
funds for some corporations and 3ankruptc( for others, lea/ing 3anks
holding an empt( 3ag. 9n the consumer side of the 3usiness, in
1anuar( 2%%2, 4.# percent of all home loans 'ere past due, a full point
higher than the (ear earlier. Profits for deposit2taking 3anks declined 5
percent in 2%%1, and in the current economic en/ironment, 3anks+
performance could get e/en 'orse.
Who -oes Well
If (ou like intense pro5ect 'ork, 'ith a good deal of financial anal(sis
and customer contactZif (ou like helping ne' families and ne'
3usinesses create 3rilliant futuresZcommercial 3anking might 3e for
(ou. Goubll 5ust ha/e to function in a larger organi@ation, tr(ing to
3uild s(nergies 'ith other product groups across different customer
and product platforms.
0n!estment 'anking 0ndustr$
In/estment 3anks are e0perts at calculating 'hat a 3usiness is 'orth,
usuall( for one of t'o purposesQ to price a securities offering or to set
the /alue of a merger or acLuisition. :ecurities include stocks and
3onds, and a stock offering ma( 3e an initial pu3lic offering JIP9M or
an( su3seLuent Jor Ssecondar(TM offering. In 3oth cases, I23anks
charge heft( fees for pro/iding this /aluation ser/ice, along 'ith other
kinds of financial and 3usiness ad/ice.
,hen 3anks under'rite stock or 3ond issues, the( ensure that
institutional in/estors, such as mutual funds or pension funds, commit
to purchasing the issue of stocks or 3onds 3efore it actuall( hits the
market. In this sense, I23anks are intermediaries 3et'een the issuers of
securities and the in/esting pu3lic. I23anks make markets to facilitate
securities trading 3( 3u(ing and selling securities out of their o'n
account and profiting from the spread 3et'een the 3id and the ask
price. In addition, man( I23anks offer retail 3rokerage Jretail meaning
the customers are indi/idual in/estors rather than institutional
in/estorsM and asset management ser/ices.
*ot surprisingl(, the center of this industr( rests in the loft( aeries
a3o/e ,all :treet and .idto'n in *e' Gork Cit(. 9ther hot spots
include >ondon, :an ;rancisco, and :ilicon Calle(. ;irms also
compete in ;rankfurt, Tok(o, 4ong &ong, and other foreign markets
24 hours a da(.
6s the glo3al economic climate cools do'n, so has in/estment
3anking. In 2%%1 and 2%%2, I23anking hea/('eights Credit :uisse
;irst Boston, .errill >(nch, 1P.organ Chase, and )oldman :achs all
laid off a significant chunk of their emplo(ees. But the 3ulge23racket
firms 'ere not the onl( ones to feel the pinch of thinner profitsZor to
react 3( cutting costs /ia la(offs. In 2%%1 alone, appro0imatel( 3%,%%%
,all :treet 'orkers 'ere laid off. 6lso, I23anking 3onuses, 'hich can
comprise half or more of some emplo(ees+ total annual compensation,
fell 3( some 3% percent in 2%%1. I23anks ha/e also pulled 3ack on
college and .B6 recruitingZ3ut, 3ecause it+s cheaper to emplo( a
recent grad than someone 'ith more e0perience, there are still 5o3s to
3e had for the cream of the crop from the 3est schools. .ore than
e/er, though, those 'ho do I23anking internships 'ill ha/e the 3est
shot at full2time openings.
-eregulation and 9inancialB&ervices Consolidation
In/estment 3anking has 'itnessed a rash of cross2industr( mergers
and acLuisitions in recent times, largel( due to the late21### repeal of
the =epression2era )lass2:teagall 6ct. The repeal, 'hich marked the
deregulation of the financial ser/ices industr(, no' allo's
commercial 3anks, in/estment 3anks, insurers, and securities
3rokerages to offer one anotherbs ser/ices. 6s I23anks add retail
3rokerage and lending to their offerings and commercial 3anks tr( to
3uild up their in/estment 3anking ser/ices, the industr( is undergoing
some serious glo3al consolidation, allo'ing clients to in/est, sa/e, and
protect their mone( all under one roof. Coupled 'ith a slo'ing
econom(, these mergers ha/e also triggered la(offs, as I23anks make
an effort to cut spending and reduce o/erlap. 6mong the recent .V6
acti/it(Q =onaldson, >ufkin V 1enrette 'as acLuired 3( Credit :uisse
;irst Boston? 1.P. .organ and 4am3recht V Iuist 'ere s'allo'ed 3(
Chase? 8o3ertson :tephens 'as acLuired Jand then dumpedM 3(
;leetBoston? and 6le0. Bro'n 'as acLuired 3( =eutsche Bank.
*+ $ightmareVr &omething Worse3
The s'ing in the markets from up, up, up to do'n, do'n, do'n
focused a lot of scrutin( on firms on the :treet. The 3iggest issue so
far has 3een 'hether 3anks o/errated the in/estment potential of client
companies+ stocks intentionall(, decei/ing in/estors in the pursuit of
fa/ora3le relationships and ongoing 3anking re/enue opportunities
'ith those companies. The outcomeQ a regulator( settlement released
=ec. 2%, 2%%2, directs the nation+s largest securities firms to pon( up
\45% million o/er fi/e (ears to 3u( stock reports from independent2
research firms, ones not in/ol/ed in I23anking. This means in/estors
'ill 3e a3le to /ie' at least one research report that 'as de/eloped
outside of the 3rokerage firm 'ith 'hich the( ha/e dealings. 6s 'ell,
I23anking firms ha/e 3een mandated to put stock ratings from /arious
sources on 3rokerage statements sent to in/estors after the( 3u( a
stock. CitigroupP:alomon :mith Barne(, Credit :uisse ;irst Boston,
)oldman :achs, and .organ :tanle( 'ill also ha/e to pa( fines of
\5% million on up. 6nd a restitution fund 'ill 3e put into place for
in/estors 3urned in such dealings.
9f course, a lot of the details still need to 3e 'orked out, such as 'hen
this regulator( settlement is to take effect and 'hat makes a research
firm trul( Sindependent.T These t(pes of issues and other potential
Luagmires put into Luestion ho' effecti/e this settlement 'ill 3e.
6ccording to the *e' Gork 6ttorne( )eneral $liot :pit@er, all
changes 'ill take place 3efore the end of 2%%3.
;o/ 0t 'reaks 9o/n
The Bulge Bracket
Therebs no clear and uniforml( accepted definition of this group, 3ut it
3asicall( includes the 3iggest of the full2ser/ice in/estment 3anks.
This is the group that matters most in in/estment 3anking, and their
names confer distinction, 'hether (oubre a start2up 'ith an IP9 to sell,
a ;ortune 5%% compan( planning an acLuisition, or a 5o3 seeker
sending out rfsumfs. .errill >(nch, .organ :tanle(, )oldman :achs,
CitigroupP:alomon :mith Barne(, >ehman Brothers, Credit :uisse
;irst Boston, and 1P.organ Chase hold top spots in this 3racket, at
least for the moment. 6 'hole host of others fall into the second tier
of ma5or pla(ers, including Bear :tearns and AB: ,ar3urg, the
in/estment23anking di/ision of the giant :'iss 3ank, AB:.
Bouti?ues and +egional 9irms
93/iousl(, the in/estment 3anking 'orld e0tends 3e(ond *e' Gork
and the 3ulge 3racket, 3ut the list of small firms is getting smaller as
the market consolidates. The strongest 3outiLue firmsZ4am3recht V
Iuist, .ontgomer( :ecurities, and 6le0. Bro'nZha/e all 3een
acLuired 3( commercial 3anks. But thatbs not to sa( independent firms
are nearing e0tinction. The eLuit( markets are strong, and that means
3ig 3usiness for niche firms focusing on technolog(, 3iotechnolog(,
and other high2gro'th industries. In *e' Gork, 6llen V Co. and
>a@ard ;rgres still do 3ig 3usiness in speciali@ed fields. Colpe Bro'n
,helan and Thomas ,eisel are :ilicon Calle( firms capitali@ing on
their technolog( connections and e0pertise.
;o( *rospects
In/estment 3anking is one of the 3est 'a(s a (oung person can learn
a3out finance and make a lot of mone( right out of school. $/en if
(ou ultimatel( decide to reclaim (our personal life 3( pursuing other
options, the skills (ou learn on ,all :treet 'ill 3e /alua3le in most
3usiness careers.
But 3efore (ou can cash in on those potential returns, (ou+ll ha/e to
put up 'ith some /er( su3stantial hardships, including high pressure,
long da(s and nights of hard 'ork, a fe' difficult personalities, and
the e0pectationZno, the reLuirementZthat all personal plans are
su35ect to the demands of 'ork.
In addition, (ou+ll find that life on the :treet is /er( much at the
merc( of the markets. Bull markets 3ring more 'ork to do than is
humanl( possi3le, 3ut (ou+ll 3e re'arded 'ith a pa(check that can
sometimes dou3le (ear2to2(ear. Bear markets can lea/e (ou sitting at
(our desk 'ith a pile of deals on hold, hoping that the rumored la(offs
and smaller2than2usual 3onuses don+t come to pass. =espite this
inherent uncertaint(, the field remains a popular destination for
undergraduates and .B6s. 6nd, 3ecause of the current difficult
economic en/ironment, count on competition for open spots in
in/estment 3anking to 3e especiall( stiff.
:till, firms are al'a(s looking for ne' JreadQ cheaperM 3odies? e/en
though the( certainl( aren+t hiring to the e0tent the( did a couple of
(ears 3ack, 3anks are still 3ringing on 3est2and23rightest hires for
anal(st and associate programs 3( 'a( of summer internships for the
most part. 6s one recruiter puts it, S,e+ll ne/er not hire ne' talent,
e/en during a merger, e/en during a do'nturn.T
0n!estment 'anking
Gou+/e heard a3out the long hours, the 3ig 3onuses, and the
mega3illion2dollar deals. Gou can recite the names of the 3ig firms 3(
heart. Gou can e/en 'rite a good enough co/er letter or 3id enough
points to land a co/eted first2round inter/ie' slot 'ith one or more of
these firms. But suddenl( it da'ns on (ou. ,hat the heck is
in/estment 3anking- Gou panic. ,hat do in/estment 3ankers do-
,hat+s the difference 3et'een sales and trading and corporate
finance- .ore to the point, 'h( do (ou 'ant to 3e a 3anker-
What IBBanking Is
The intensel( competiti/e, action2oriented, profit2hungr( 'orld of
in/estment 3anking can seem like a 3igger2than2life place 'here deals
are done and fortunes are made. In fact, it+s a great place to learn the
ins and outs of corporate finance and pick up anal(tical skills that 'ill
remain useful throughout (our 3usiness career. But in/estment
3anking has a /er( steep learning cur/e, and chances are (ou+ll start
off in a 5o3 'hose duties are more ,orking )irl than ,all :treet.
,all :treet is filled 'ith high2energ(, hard'orking (oung hotshots.
:ome are in/estment 3ankers 'ho spend hours hunched 3ehind
computers, poring o/er financial statements and churning out
spreadsheets 3( the pound. 9thers are traders 'ho keep one e(e on
their Bloom3erg screen, a phone o/er each ear, and a 3u(er or seller
on hold e/er( minute the market+s in session. Traders 'ork hand in
hand 'ith the institutional sales group, 'hose mem3ers hop from
airport to airport tr(ing to sell 3ig institutions a piece of the ne' stock
offering the( ha/e coming do'n the pipeline. Then there are the
anal(ticall( minded research anal(sts, 'ho read, 'rite, li/e, and
3reathe 'hiche/er industr( the( follo', 24P!.
In/estment 3anking isn+t one specific ser/ice or function. It is an
um3rella term for a range of acti/itiesQ under'riting, selling, and
trading securities Jstocks and 3ondsM? pro/iding financial ad/isor(
ser/ices, such as mergers and acLuisition ad/ice? and managing assets.
In/estment 3anks offer these ser/ices to companies, go/ernments,
non2profit institutions, and indi/iduals.
6n in/estment 3ank acts as an ad/iser to corporations. In that capacit(
it ser/es man( functions. Itbs a middleman in the creation and issuance
of financial products Jstocks, 3onds, and the likeM? a sales2and2
distri3ution organi@ation for the same financial products? a ma5or
in/estor, market maker and position taker in the financial markets? and
a research organi@ation.
What 7ouEll -o
Traditionall(, commercial 3anks and in/estment 3anks performed
completel( distinct functions. ,hen 1oe on .ain :treet needed a loan
to 3u( a car, he /isited a commercial 3ank. ,hen :print needed to
raise cash to fund an acLuisition or 3uild its fi3er2optic net'ork, it
called on its in/estment 3ank. Pa(checks and lifest(les reflected this
di/ision too, 'ith in/estment 3ankers re/eling in their large 3onuses
and glamorous 'a(s 'hile commercial 3ankers 'orked nine2to2fi/e
and then 'ent home to their families. Toda(, as the la's reLuiring the
separation of in/estment and commercial 3anking are reformed, more
and more firms are making sure the( ha/e a foot in 3oth camps, thus
3lurring the lines and the cultures. The action and pla(ers are still
centered in *e' Gork Cit( and a fe' other mone( centers around the
'orld, 3ut the list of pla(ers is getting smaller as the industr(
consolidates. Toda(, leading 3anks include .errill >(nch, )oldman
:achs, .organ :tanle(, :alomon :mith Barne(, Credit :uisse ;irst
Boston, and 1P.organ Chase. These and other firms are regular
/isitors to campus career centers.
In/estment 3ankers issue financial products? sell and trade them Jsee
,et;eetbs profile on securities sales and tradingM, in/est in them,
research them, and ad/ise others on financial transactions. 6 full2
ser/ice in/estment 3ank includes three ma5or professional di/isionsQ
in/estment 3anking J'hich includes corporate finance, mergers and
acLuisitions, and pu3lic financeM, sales and trading, and research.
*earl( all 3anks ha/e a staff of research anal(sts 'ho stud( economic
trends and ne's, indi/idual compan( stocks, and industr(
de/elopments in order to pro/ide proprietar( in/estment ad/ice to
institutional clients and in2house groups, such as the sales and trading
di/isions. The research di/ision also pla(s an important role in the
under'riting process, 3oth in 'ooing the client 'ith its kno'ledge of
the client+s industr( and in pro/iding a link to the institutions that o'n
the client+s stock once it+s pu3licl( traded.
The corporate finance group JfreLuentl( kno'n as S3ankingT or
SCorp;inTM ser/es the sellers of securities. These ma( 3e either
;ortune 1%%% companies looking to raise cash to fund gro'th or,
freLuentl(, pri/ate companies 'anting to go pu3lic Jthat is, to sell
stock on the pu3lic markets for the first timeM. Think of in/estment
3ankers as financial consultants to corporations. This is 'here C$9s
and C;9s turn 'hen the(+re tr(ing to figure out ho' to finance their
operations, ho' to structure their 3alance sheets, or ho' 3est to mo/e
ahead 'ith plans to sell or acLuire a compan(.
The acti/ities of the Corp;in department can range from pro/iding
pure financial ad/ice to leading a compan( through its first eLuit(
issue Jor IP9M. 6s a result, industr( or product kno'ledge is ke(, and
man( in/estment 3anks di/ide their corporate finance departments
into industr( su3groups, such as technolog(, financial institutions,
health care, communications, entertainment, utilities, and insurance, or
into product groups like high2(ield, pri/ate eLuit(, and in/estment2
grade de3t.
The 5o3 of salespeople is to ensure their 3ankbs financial sta3ilit( 3(
getting in/estors to commit to 3u(ing Jsu3scri3ing toM stock and 3ond
issues 3efore the ne' securities actuall( hit the market. The mergers
and acLuisitions department pro/ides ad/ice to companies that are
3u(ing other companies, or 'hich are 3eing acLuired 3( others.
Who -oes Well
Gou shouldn+t go into 3anking 5ust for the mone(Zthe lifest(le is too
demanding. To sur/i/e in in/estment 3anking, much less to do 'ell,
(ou+ll need to like the 'ork itself. 6nd, Luite honestl(, e/en if (ou
lo/e the 'ork, an in/estment 3anking career can still 3e a tough road.
If the market or (our industr( group is in a slump Jor if (our firm
suddenl( decides to get out of a certain segment of the 3usinessM,
there+s al'a(s the chance that (ou ma( find a pink slip on (our desk
.onda( morning.
But, if (ou like fast2paced, deal2oriented 'ork, are at ease 'ith
num3ers and anal(sis, ha/e a tolerance for risk, and don+t mind
putting (our personal life on hold for the sake of (our 5o3, then
in/estment 3anking ma( 3e a great career choice. But if this doesn+t
sound like (ou, a 5o3 in in/estment 3anking could turn out to 3e a 3ad
dream come true.

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