LECTURAS DE ESTUDIO

STOCK EXCHANGE

A stock exchange is a facility where stock brokers and traders can buy and sell securities, such as shares of
stock and bonds and other financial instruments. Stock exchanges may also provide facilities for the issue
and redemption of such securities and instruments and capital events including the payment of income and
dividends. Securities traded on a stock exchange include stock issued by listed companies, unit trusts,
derivatives, pooled investment products and bonds. Stock exchanges often function as "continuous auction"
markets with buyers and sellers consummating transactions via open outcry at a central location such as the
floor of the exchange or by using an electronic trading platform.,

In October of 1987, journalist James Kilpatrick wrote, “Those of us who know nothing about the stock market
will never understand it. That puts us right in the same class with economists and brokers who know all about
the stock market.” The general public tends to agree with Mr. Kilpatrick. Not many people have a complete
understanding of the complex workings of the stock market.

The stock exchange, in very simple terms, is basically a paper economy because it deals only with money,
certificates of ownership, and certificates of debt. The stock market is the headquarters for the buying and
selling of these certificates, which are called stocks and bonds by the business community.

The place where stocks and bonds are bought and sold is called an exchange. The London Stock Exchange
in England lists the most stocks, and the Tokyo Stock Exchange in Japan has the most activity, but the New
York Stock Exchange (NYSE) in the United States has the greatest value of publicly traded stocks in the
world. In 1992 the buying and selling of stock shares through the NYSE totalled more than $4 trillion.

When a company, large or small, needs money, it can either borrow it or issue stocks. When a company
borrows money from the public, it takes out a bond, or a certificate of debt. This certificate shows that the
bondholder has lent a specific amount of money to a company and will be repaid with interest at a specified
later date.

The other way for companies to raise money is to issue stocks; these certificates represent ownership of the
company. There are two basic kinds of stock: common and preferred.

Common stock entitles the owner to vote on company policy (the number of shares owned equals the number
of votes) and to a dividend if one is declared. Preferred stock, while still representing ownership, generally
does not include the right to vote on company policy but it does entitle the owner to be paid dividends before
the common stockholders.

A person cannot travel to the nearest exchange in order to buy stock in a company. The usual way to buy
stock is through a stockbroker. After receiving an order, the stockbroker contacts a member of his brokerage
firm who is at the exchange. The member then approaches one of the many buyers and sellers who are
trading stocks on the exchange floor and completes the desired transaction. These days much of this is done
through computers. In fact, computers have enabled entrepreneurs and others to bypass brokers and to
purchase stocks on their own.

Not long ago all stock market transactions took place over the phone and customers held onto actual paper
certificates as proof of their stock ownership. But this method of trading stocks is disappearing. Recent
advances in electronic communication have greatly increased the speed of stock market activity and computer
memories are now storing proof of ownership. The Tokyo Stock Exchange has nearly eliminated stock
certificates and the U.S. Treasury Department no longer prints T-Bills or bond certificates.
This shift away from the original paper-based market economy represents the influence of today’s computer
age. Electronic business is easier, quicker, and more flexible for the huge volumes of activity in today’s stock
markets.

WHAT IS SUPPLY CHAIN MANAGEMENT?

Before reading the text check the meaning of the Key Words in the dictionary.
Nouns: objective, capacity, inventory, factory, plant, mix, metrics, invoice, decision, payment
Verbs: to eliminate, to optimize, to implement, to integrate, to seek, to test, to monitor, to improve, to prepare,
to communicate, to source, to set up, to decide, to pay, to support
The term Supply Chain Management (SCM) was introduced in the 1980s. The primary objective of supply
chain management is to fulfil customer’s needs through the most efficient use of resources, including
distribution capacity, inventory and labour.
Various aspects of optimizing the supply chain may include

 Communicating with suppliers to eliminate bottlenecks in the supply chain.

 Sourcing strategically to establish balance between the lowest material cost and transportation.
 Implementing JIT (Just-In-Time) techniques to optimize manufacturing flow.
 Maintaining the right mix and location of factories and warehouses to serve customer markets.
 Using location and distribution analysis, vehicle routing analysis, traditional logistics optimization
methods to maximize the efficiency of the distribution.

The five basic components of SCM are the following:

1. Plan. Logistics Companies must create a strategy for managing their resources in order to meet
customer demand for their product or service. SCM planning includes developing a set of metrics to
monitor the supply chain so that a) it is efficient, cost-effective; b) it delivers high quality and value to
customers.
2. Source. Logistics companies must choose suppliers to deliver the goods and services they need for
creating their product. Therefore, supply chain managers must
3. develop a set of pricing, delivery and payment processes with their suppliers; b) create metrics for
monitoring and improving these relationships.
4. Make. Supply chain managers must schedule the activities that are necessary for manufacturing,
testing, packaging and preparation for delivery.
5. Deliver. Logistics companies have to develop a network of warehouses, select carriers that will get
products to customers and establish an invoicing system for receiving payments.
6. Return. Supply chain planners have to create a responsive and flexible network for receiving defective
or surplus (excess) products back from their customers. They must provide support to those customers
who have problems with delivered products.

Supply chain managers make decisions at different levels.

 Strategic level. At this level, managers develop strategic decisions that affect the long-term
performance of the company, such as the size and location of manufacturing sites, partnerships with
suppliers, products to be manufactured and sales markets.
 Tactical level. Tactical decisions focus on taking measures that will produce cost benefits, such as
using industry best practices, developing a purchasing strategy with preferred suppliers, working with
logistics companies to develop cost-effective transportation and creating warehouse strategies to
reduce the cost of storing inventory.
 Operational level. Decisions at this level are made each day. Such decisions are often administrative
in nature. Operational decisions involve making schedule changes to production, purchasing
agreements with suppliers, taking orders from customers and moving products in the warehouse.