People in business organization

Введение

Методические материалы для аналитического чтения по дисциплине «Иностранный язык (английский)» разработаны в соответствии с учебным планом и рабочей программой данной дисциплины, входящих в состав документации основных профессиональных образовательных программ для обучающихся по направлениям подготовки 38.03.01 «Экономика», 38.03.02 «Менеджмент». Дисциплина «Иностранный язык (английский)» входит в базовую часть учебного плана основных профессиональных образовательных программ направлений подготовки 38.03.01 «Экономика», 38.03.02 «Менеджмент».

Цель настоящих методических материалов состоит в следующем: закрепление знаний, навыков и умений во всех видах речевой деятельности (чтение, аудирование, говорение, письмо); совершенствование навыков диалогической и монологической речи; расширение представлений, знаний о культуре страны изучаемого иностранного языка и развитие навыков и умений использовать полученные представления и знания в непосредственном и опосредованном иноязычном общении; совершенствование профессиональной компетентности обучающихся средствами иностранного языка путем извлечения профессионально-ориентированной информации из иноязычных источников; развитие умения общаться в деловых ситуациях межкультурных контактов; развитие способности к самостоятельной деятельности по изучению иностранного языка; формирование положительного отношения (мотивации) к изучению иностранного языка за счет практического применения полученных знаний, навыков и умений (участие в олимпиадах, конкурсах, конференциях, выпуск газет факультетского и вузовского масштаба и т.д.).

Выполнение предусмотренных методическими материалами заданий по данной дисциплине позволит обучающимся получить и закрепить необходимые знания, умения и навыки и обладать следующими компетенциями:

– направление 38.03.01 «Экономика»: способность к коммуникации в устной и письменной форме на русском и иностранных языках для решения задач межличностного и межкультурного взаимодействия (ОК-4),

– направление 38.03.02 «Менеджмент»: знанием базовых ценностей мировой культуры и готовностью опираться на них в своем личностном и общекультурном развитии (ОК-1); умением логически верно, аргументировано и ясно строить устную и письменную речь (ОК-6); владеть одним из иностранных языков на уровне, обеспечивающем эффективную профессиональную деятельность (ОК-14).

К началу освоения дисциплины «Иностранный язык (английский)» обучающиеся должны знать основы грамматики русского и иностранного языка, уметь логически верно и ясно строить свою речь, владеть лексическим минимумом на иностранном языке, навыками устного и письменного перевода и иметь представление о культуре страны изучаемого иностранного языка. Обучающийся должен быть готов к самостоятельной деятельности при изучении иностранного языка, к извлечению профессионально-ориентированной информации из иноязычных источников, к изучению иностранного языка за счет практического применения полученных знаний, навыков и умений.

Методические материалы содержат по каждому разделу: лексический и терминологический минимум по темам, тексты для различных видов деятельности, лексико-грамматические упражнения, тексты для реферирования и аналитического чтения.

 

Содержание

UNIT 1 HUMAN RESOURCES …………………………………………………..……………..4

Text 1 People in Organization……………………………………………….………………... 6

Text 2 Organization……………………………………………………………….…………….8

Text 3 Job Specification………………………………………………………………………..11

Text 4 Entrepreneurs………………………………………………………….………………..12

Text 5 Organizational Climate…………………………………………………………..……..13

Text 6 Features of online-marketing…………………………………………………………...14

UNIT 2 INTERNATIONAL BUSINESS ……………………………………………….…………16

Text 1 The Field of International Business………………………………………….………...18

Text 2 Why are Companies referred to………………………………………….……………..19

Text 3 Types of International Business………………………………………………………..20

 

UNIT 3 INTERNATIONAL BANKING ………………………………………………...….26

Text 1 The Emergence of Modern Banking………………………………………….…….….28

Text 2 The Role of Banks in Theory……………………………………………….……..…. 30

Text 3 No title……………………………………………………………………….……..… 33

Text 4 International Banking………………………………………………………….…..…..34

Text 5 The regulation of International Banking……………………………………….….…..36

Text 6 Bretton Woods…………………………………………………………………..……..37

Text 7 How does a Swiss Bank Account Work ……………………………………………...39

 

UNIT 4 MANAGEMENT SKILLS: EMPLOYEE MOTIVATION AND RECRUITMENT …. 46

Text 1 Art or Science……………………………………………………………………….….49

Text 2 Principles of Management………………………………………………...…….…..….50

Text 3 No title……………………………………………………………………………..…...52

Text 4 Knowing Yourself……………………………………………………………………..53

Text 5 “International” Managers………………………………………….……………….….54

Text 6 Recruiting………………………………………………………………….………….55

Text 7 Employee Motivation……………………………………………………………..…..56

Text 8 Case Analysis………………………………………………………………………….57

Text 9 Problem Solving ……………………………………………………………………...58

Text 10 Meetings……………………………………………………………………………..60

 

UNIT 5 MARKETING SKILLS: BRANDING AND CONSUMER ACCEPTANCE................66

Text 1Evolution of Marketing……………………………………………………………...….69

Text 2 No title………………………………………………………………………………….70

Text 3 Finding the right Market …………………………………………………………..….70

Text 4 The Nature of Lifestyle…………………………………………………………….….71

Text 5 Consumers are so Different………………………………………………………..….72

Text 6 Satisfying Consumer Needs…………………………………………………………..74

Text 7 The Uniqueness of Service………………………………………………………...….76

Text 8 Branding……………………………………………………………………………….77

Text 9 International Marketing…………………………………………………………….….78

Text 10 Cultural Environment…………………………………………………………….….80

Text 11 Alternatives for International Operations…………………………………………….82

 

Additional Topic for Discussion TAXATION ……………………………………………………….87

 

 

U N I T 1

HUMAN RESOURCES

 

Vocabulary

aptitude- способность

manual dexterity – ловкость рук

to live by creeds and values – жить согласно кредо и ценностям

embedded – вложенный, встроенный

unconscious – бессознательный

indisputable – бесспорный

inherent – неотъемлемый

innate – врожденный

cunning and immature – хитрый и незрелый

intrinsic interest – внутренний интерес

To apply for a job – устраиваться на работу

career prospects - карьерные перспективы

a job application form – заявка на трудоустройство

human rights – права человека

Decision-making skills

Entrepreneur - предприниматель

Values - ценности

 

Before you read

T E X T 1

Read the text and be ready to answer what theory you would follow as a manager. Give your reasons.

PEOPLE IN ORGANIZATION

If there is any one characteristic of people which is universally valid and important, it is that they differ. To say that all persons are created equal is a statement of human rights under the law. It communicates nothing at all about human nature. As a matter of fact, people differ greatly in intelligence, aptitudes, physical strength, manual dexterity, knowledge, skill, interests, personality traits, motivation, and many other attributes which potentially influence behavior and productivity.

We are rational—but only to a point. We plan, set goals, think, reason, and live by creeds and values. But we also become frustrated and behave in ways that can be perceived as rational only by someone who understands all our deeply embedded, sometimes conflicting needs, aspirations, and perceptions. In many situations our motivation is unconscious so that not even we understand our own actions.

The fact that one’s environment strongly influences behavior is indisputable. A number of prominent psychologists have assumed that human freedom is an illusion. Human choices are thought to be totally determined. This, of course, is an assumption. Many people do not subjectively perceive themselves in this way. It is significant that behavior and expectations are strongly influenced by what a person believes to be true. Individuals feel responsible for their actions. Also, people consciously believe that their choices are real, regardless of any awareness of philosophical arguments to the contrary. Organizations cannot function optimally without these pragmatic assumptions.

There are, of course, innumerable statements which one might make about human nature, but they would not all have a direct influence on how people should be dealt within the work environment. The late Douglas McGregor did an excellent job of conceptualizing some of the assumptions about human nature which are relevant to organizational behavior. He labeled these, Theory X, the classical or traditional view, and Theory Y, a progressive view upon which he believed a new model for human relations in organizations could be developed.

Theory X. This theory holds that the average person inherently dislikes work, is innately lazy, irresponsible, self-centered, and security oriented, and consequently is indifferent to the needs of the organization. Because of these characteristics, the average person must be threatened, and controlled. In fact, most people prefer to be directed and controlled. They seek security above all, prefer to avoid responsibility, and both want and need external control in the work situation. Because people are basically cunning and immature, management should experience little difficulty in using a highly directive and manipulative style of supervision.

Theory Y. Experience has shown that Theory X assumptions result in a great deal of difficulty for management although they remain popular with some managers. McGregor’s Theory Y makes the opposite assumptions. People do not inherently dislike work and are not inherently lazy. Rather they have learned to dislike work, to be lazy, and to be irresponsible because of the nature of their work and supervision. They have a high capacity for developing an intrinsic interest in their work, for committing themselves to organizational objectives, and for working productively with a minimum of external controls.

Two points should be made with reference to these theories. First, the Theory X characteristics are said to be inherent or innate. To be such, they would necessarily apply to everyone, which is obviously absurd. On the other hand, under Theory Y, people are said to have the potential or capacity for the responsible behavior and attitudes described. If anyone possesses these qualities, and a great many people do, then everyone has the potential for them. Second, McGregor speaks of assumptions about the average person, and one must ask, «Average on what dimensions?» Are we talking about intelligence? education? experience? Average is a statistical concept. The average person is nonexistent, hypothetical construct. When we make assumptions about the average person, at best we are referring to most people, and in doing so must recognize that there are exceptions.

Define the main idea of each paragraph. What are the key sentence(s) of each paragraph?

 

T E X T 2

Read the text. Define the main idea of each paragraph. What are the key sentence(s) of each paragraph?

ORGANIZATION

Early in human existence people learned that their individual efforts often fell short of success. They found that they were unable to accomplish many tasks that require more than individual effort. The result was that only limited goals could be attained. Therefore the necessity of group activity was discovered relatively early in human existence.

Group activity could be aimed at some higher, more complex set of goals and could thus bring greater benefits to all concerned. This quality of group activity must be counted as one of the chief requirements for success. Cooperation is a prime element of a group of people who want to achieve more than they can acting individually. A system of group relationships built upon and fostering cooperation, then, is basically the meaning of an organization.

This system of cooperation consists of several parts: the human element, the physical element, the work element, and the coordination element. All of these elements, taken collectively, can be thought of as an organization. Today, this system of cooperation is much more complex than it was in the first attempts at organization.

Thus, organization is an open, dynamic, purposeful social system of cooperation designed to enhance individual effort aimed at goal accomplishment; consists of the human element, the physical element, the work element, and the coordination element; transforms resources into outputs for users.

It is important to examine the various parts or components of organization theory in order to outline its broad scope. These components are: goals, work, power and authority, delegation, structure.

It was stated earlier that organizations were established to enable an individual to accomplish more in a group than he could as an individual. In other words, organizations are devices for pooling talent and ability into an effective whole that can accomplish some desired objective. Every organization is initially built to accomplish some goal. The goal or purpose is an unrealized state or condition that the members do not possess but which they deem desirable. It is imperative that organizational goals be clearly defined and communicated to all organization members who are to be affected by them. Goals are the starting point for the design and maintenance of the organization itself. At the same time, these goals must meet a need that society has defined as important. Thus, consumer needs play a crucial role in organization.

Once the goal of an organization is established, it is time for the members to decide on the type of work activity that will be necessary to accomplish these goals. Basically, any organization must perform two fundamental types of work: primary and secondary. The primary work (it also commonly referred to as line work) consists of production and distribution of goods and services that will satisfy consumer needs. The secondary work (it is often termed staff work) consists of all those activities that support and extend the operations of primary work. For example, in a manufacturing firm, the secondary work would include accounting, personnel and quality control.

No theory of organizations would be complete without a treatment of the roles that power and authority play in organizational activity. These two components of theory help explain the network of relationships that tie the other components of an organization together into some logical pattern.

Power is the ability to influence others successfully. It comes from any single or combination of possible sources. For example, one can have power over others because of one’s intelligence, skill, or money. Regardless of its source, power enables its holder to exercise one’s will over others. Thus, in order to understand the total workings of an organization, one must have an appreciation of the role that power plays in these workings.

Authority can be defined as power that has been given official recognition bythe organization. Once an organization legally authorizes an individual to act on its behalf, that person is said to possess authority. Every member of the organization has some amount of authority to take action necessary to carry out his responsibility. The concern of the theorist is to understand how authority comes to be officially recognized by the organization and what considerations should be made regarding its use.

Organizations that enjoy any measure of success find it necessary to increase their membership and to assign duties to these additional members. The process that is used to add members to the organization will result in the necessity to divide the work of the organization into sub-units or groups. Each of these groups will be under the direction of a manager or managers. In order for these managers to perform their managerial duties properly, they must be granted appropriate responsibility and authority. The means for making these assignments is termed delegation.In general, delegation may be defined asthe process of transferring an obligation (responsibility) and anaccompanying right(authority) from a superior to a subordinate position in the organization. It is this basic process that enables an organization to grow. Without delegation, an organization simply cannot exist and prosper.

The patterns of work divisions and their hierarchical arrangements constitute the basic components of structure. Structure, then, is the hierarchical pattern of authority, responsibility, and accountability relationships designed to provide coordination of the work of the organization. It is basically a managerial tool that aids in guiding the organization towards its goals and can be considered the skeleton of the organizational body. The idea of hierarchy of authority, the division of organization by function, the differentiation of responsibility of the line (doers) and the staff (the advisors) are all inventions of the church and military leaders who were faced with the need to manage large aggregations of human, technical, and material resources. Organizations create an officially sanctioned structure known as the formal organization or de jure organization. This structure is often depicted by a chart as that seen in Fig. 1.

A formal organization is only half the story, for superimposed on these relationships is a whole series of informal or de facto relationships that are not sanctioned by the organization. These include informal work groupings of employees, informal leaders, informal channels of communication and informal power and status differentials. Usually the structure of an organization is rather permanent and stable but in some cases a temporary, ad hoc, organization may be created. The organization exists to reach a certain goal or set of goals and disbands once the goal is achieved.

1.What did people find early in human existence?

2.What is the meaning of the organization?

3.What is an organization?

4.What are the components of organization theory?

5.What role do power and authority play in building every organization?

6.What is the starting point for the design of an organization?

7.What is delegation and why is it necessary in today’s organization?

8.Which is more important: formal or informal structure?

9.Can you give any example of an ad hoc organization?

 

 

Foster – способствовать

to enhance – увеличивать, усиливать

accomplishment – выполнение

to accomplish -выполнять

 

 

T E X T 3

JOB SPECIFICATION

An interesting feature of the labour markets is that many organizations do not specify the type of person they require instead they will give the details of a job in a job specification. The Department of Employment has given the following definitions of a job description and job specification:

Job description: a broad statement of the purpose, scope, duties and responsibilities of a particular job.

Job specification: a detailed statement of the physical and mental activities involved in the job. The specification is usually expressed in terms of behaviour: what the worker does, what knowledge he uses in doing it, the judgments he makes and the factors he takes into account when making them.

The great variety of job specifications which exists in business illustrates the range of specification in occupation. The five categories given below do not cover this wide range, but can become a guide to the role of manpower in organization.

1. Unskilled. Many jobs do not require any training or previous experience, for example manual labour or assembly work. These occupations are often highly repetitive and boring, as well as being poorly paid.

2. Mechanical or motor skills. There are some tasks in business which are performed by machines which require an operator. The more complicated the machine, then generally the more the operator must be.

3. Intelligence and knowledge. Occupations which require a high level of motor skill sometimes also demand a high level of intelligence and aptitude. But there are jobs which do not need mechanical skills but make demand on people’s knowledge.

4. Administrative or managerial skills. The ability to organize other people is a rare skill. It not only requires knowledge and understanding of the functions within an organization, but also the ability to motivate people. In addition managers must be able to organize nonhuman resources using techniques of forecasting, planning, coordinating and controlling. These are techniques which require judgment as well as knowledge.

5. Decision-making skills and initiative. Decision-making is an everyday occurrence for everyone. We decide what to eat, what to wear, where to go, and so on. Similarly, decisions are part of an organization’s everyday activities. The higher one goes up the hierarchy, the more necessary is the skill of decision. The risks which all organizations face mean that that organizations have to be run by people who have the ability to diagnose and assess the risk, and the capacity to decide on the correct strategy. Business is constantly changing and organizations require people with enterprise and initiative in order to survive.

 

1. Give your own examples of a trade or profession illustrating each category of the job specification.

 

T E X T 4

ENTERPRENEURS

Entrepreneur is a person who organizes and managers a business. This is a French word that has been accepted into the English language. Its popularity probably has something to do with its grand sound which befits anyone who has the initiative to create and run a business.

Entrepreneurs are a mystery to some people, especially those who are only comfortable with a nine-to-five existence and assured weekly paychecks and fringe benefits. The entrepreneur is a business person who prefers to take calculated risks in order to be his or her own boss.

Sometimes the entrepreneur is regarded as a business person who takes risks. This is not so. An entrepreneur is a business person who minimizes risks. He or she does this by advance planning, research, and meticulous consideration of all factors that could affect and possibly endanger her or his enterprise. When the entrepreneur forgets to do advance investigation and preparation, then he or she is a gambler at best, and a failure statistic at worst.

Speaking about entrepreneurship, Professor K. Vesper of the University of Washington says that “ Businesses continue to be launched by people who didn’t make it the first time around. A driving force in entrepreneurship… is addictiveness. Once people have a taste of freedom in a business of their own, they like it. They don’t want to go back to working for someone else.”

While the percentage of growth for men entering into business independence could be measured in the teens, women’s increase in a single decade was 69 percent. There is no mystery here. Women go into business for the same reason men do – to make money and to be their own bosses. The rise in female entrepreneurship is reminiscent of what the early-20^th-century immigrants did – and the more recent waves of immigrants from different parts of the world. Entrepreneurship is regarded to be the first track to success. Rather than to take low-wage, big-industry job, people opt to use their wits and energy to climb the ladder of independence the entrepreneurial way.

The American magazine Venture attempted to dissect entrepreneurs and to see what makes them tick. They conducted a survey to which 2,740 readers responded. Here is what they had in common:

1) Typically they were firstborn children who had a positive relationship with their father.

(2) They held jobs before they were 15 and started their first businesses by the time they reached 20.

(3) They borrowed money to launch their enterprises and made themselves personally liable.

(4) Most of them are college graduates, consider themselves demanding of others, and start work early in the day (82 percent start work before 9 a.m.).

(5) Twenty percent described themselves as successful; another 53 percent claimed moderate success; 27 percent reported the expectation of success.

While these entrepreneurs are intrepid adventurers on the business sea, they still seek the approval of others—often after they have launched an action. Respondent Richard M. Ask, president of the 2000-member National Association of Entrepreneurs, wrote, "I go out and do what I damn well please, and then I look around for approval to reinforce the action."

 

1. Do you belong to the people who are comfortable with a nine-to-five existence? Are there many people of this type among your friends, relatives, colleagues?

2. “Calculated risk’—what is it?

3. Give your variant of an entrepreneur profile (age, traits of character, business, backgrounds, etc.)

T E X T 5

What is meant by «organizational climate»? Why is it important? What part does an organization’s culture play in the daily lives of its members?

Read the text and be ready to discuss each point of cultural values. Can you add any more?

ORGANIZATIONAL CLIMATE

Although the concept of organizational climate is somewhat nebulous, it is valuable in understanding several aspects of organizational behavior. Organizational climate is the overall favourability of member attitudes and perceptions with reference to specific activities and featuresof an organization.

Organizations tend to have their specific culture: a peculiar mix of values, attitudes, norms, habits, traditions, behaviors and rituals. Some organizations are well aware of their culture and regard it as a powerful strategic tool, used to orient all units and individuals toward common goals, mobilize employee initiative, ensure loyalty, and facilitate communication. They aim at creating a culture of their own and making sure that all employees understand it and adhere to it. The specific cultural values of an organization may concern, for example:

· the organization’s mission and image (high technologies, innovative spirit, superior quality);

· seniority and authority (respect for seniority; seniority as a criterion of authority);

· the treatment of people (concern for people and their needs, equitable treatment or favouritism, privileges, respect for individual rights, training and developing opportunities, how people are motivated);

· the importance of different management positions and functions (authority of personnel department; importance of different vice-presidents’ positions; respective role and authority of research and development);

· work organization and discipline (voluntary versus imposed discipline; punctuality; use of time clocks; flexibility in changing roles at work; use of new forms of work organization);

· decision making process (who decides; who has to be consulted; individual or collective decision making; need to reach consensus);

· circulation and sharing of information (employees amply or poorly informed; information readily shared or not);

· communication pattern (preference for oral or written communication; rigidity or flexibility in using established channels, use of meetings; who is invited to what meeting; established behaviour in the conduct of meeting);

· ways of handling the conflicts (desire to avoid conflict; preference for informal or formal ways; involvement of higher management);

· performance evaluation (confidential or public; by whom carried out; how results are used);

· socialization patterns (who socializes with whom during and after work; facilities such as separate dining rooms or reserved clubs);

· management and leadership style (paternalism; authoritative, consultative or participative style; flexibility and adaptability);

· identification with the organization (manager and stuff adherence to company objectives and policies; enjoying working with organization).

 

to match -- соответствовать, удовлетворять

to be aware – знать, быть в курсе

to conclude -- делать выводы

suspicious -- подозрительный

to convince -- убеждать

TEXT 6

Unit 2

INTERNATIONAL BUSINESS

mark-up - наценка

Self-interest – собственный интерес

well-being - благосостояние

 

Ex.1. Look at the following Latin words. They may be helpful in your work with the texts on Economics and Business.

e.g. exempli gratia for example

i.e. id est that is

etc. et cetera and so on

viz. vide licet namely

c circa about, around (time)

v vide see

et al et ali and others

per se in itself

qua as

vice versa the reverse

ad hoc for this particular purpose

vs versus opposed

via 1.through

2.with the help of

per capita per head

ceteris paribus other things equal

ad valorem according to value

 

Ex.2. Add appropriate words where there are blanks in the sentences below and you’ll get the definitions of the words in bold. Some word can be used in their different meanings.

BEFORE YOU READ

Ex.3. Translate into Russian in written form.

In 1776, the Scottish professor of philosophy, Adam Smith, published The Wealth of Nations. In this book, the first systematic study of capitalism, Smith described his principle of the “ invisible hand ”. This principle states that each person, pursuing his or her self-interest without interference by government, will be led, as if by an invisible hand, to achievethe best good for society.

Self-interest drives people to action, but alone it is not enough. People must understand the effects of their decision and their economic well-being. They must think rationally if they are to make the right decisions.

Because of this, economists long ago introduced the concept of economic man. This notion holds that each person is motivated by economic forces. In other words, each person will always attempt to obtain the greatest amount of satisfaction for the least amount of sacrifice or cost. This satisfaction may take the form of greater profits for a businessperson, higher wages or more leisure time for a worker, and greater pleasure from goods purchased for a consumer.

Of course, these assumptions are not entirely realistic. People may be motivated by forces other than self-interest. Nevertheless, the idea of economic man does deserve as a reasonable approximation of the prevailing pattern of economic behaviour in a capitalistic society. And in economics, as in other social sciences, reasonable approximations are often the best that can be made.

 

Reading & Speaking

T E X T 1

СЕМЬ ЗАПОВЕДЕЙ БИЗНЕСМЕНА

Давать обещания и не выполнять их стало у нас просто нормой жизни. В этой связи полезно вспомнить 1912 год, когда российскими предпринимателями было выработано семь основных принципов ведения дел:

Первый принцип – «Уважай власть». Власть – необходимое условие для эффективного ведения дел. Во всем должен быть порядок. В связи с этим проявляй уважение к блюстителям порядка в узаконенных эшелонах власти.

Второй принцип – «Будь честен и правдив». Это – фундамент предпринимательства, предпосылка здоровой прибыли и нормальных отношений в делах. Российский предприниматель должен быть безупречным носителем добродетелей, честности и правдивости.

Третий принцип – «Уважай право частной собственности». Свободное предпринимательство – основа благополучия государства. Российский предприниматель обязан в поте лица своего трудиться на благо свой Отчизны. Такое рвение можно проявить только при опоре на частную собственность.

Четвертый принцип – «Люби и уважай человека». Любовь и уважение к человеку труда со стороны предпринимателя порождает ответную любовь и уважение. В таких условиях возникает гармония интересов, что создает атмосферу для развития у людей самых разнообразных способностей, побуждает их проявлять себя во всем блеске.

Пятый принцип – «Будь верен своему слову». Успех в деле во многом зависит от того, в какой степени окружающие доверяют тебе.

Шестой принцип – «Живи по средствам». Не зарывайся. Выбирай дело по плечу. Всегда оценивай свои возможности. Действуй сообразно своим средствам.

Седьмой принцип – «Будь целеустремленным». Всегда имей перед собой ясную цель. Предпринимателю такая цель нужна как воздух. Не отвлекайся на другие цели. Служение двум господам противоестественно. В стремлении заветной достичь цели не переходи грани дозволенного. Никакая цель не может затмить моральные ценности.

Ex. 11. Translate the text in written form.

Business is the exchange of goods and services, and money, on an arm’s length (objective) basis, that results in mutual benefit or profit for both parties involved. An individual engages in business because he or she believes that the rewards, or possible future benefits, of business are greater than risks, or possible future sacrifices, of business.

Business activities are events that involve making and carrying out the operating, investing, and financing decisions that deal with business assets or obligations.

In a profit-seeking business, there are three types of business activities that correspond to the three types of business decisions. Operating activities are the profit-making activities of the enterprise. They include those business activities that generate revenues, such as selling merchandise for cash or on credit or providing services for a fee. They also include activities that result in increased expenses, such as purchasing goods for manufacture or resale, paying wages, or combining goods and labour to manufacture products.

Investing activities include the purchase and a sale of long-term assets in addition to other major items used in a business’ operations.

Financing activities are activities that involve obtaining the cash or using other non-cash means to pay for investments in long-term assets, and to repay money borrowed from creditors, and to provide a return to owners.

 

 

Unit 3

INTERNATIONAL BANKING

Repayment schedule – график погашения кредита

Necessity of collateral – необходимость залога

Debt retirement – выплата (погашение) долга

Outstanding principle – непогашенная основная сумма ссуды

Balloon payment – конечный разовый платеж

Installment closed-end credit – кредит погашаемый равными платежами, с фиксированным сроком погашения

Non-installment credit – кредит, погашаемый одним платежом

Revolving open-end credit – возобновляемый кредит открытого типа

Home mortgage – ипотечный кредит

Division of a bank – отделение банка

Retail bank – банк, занимающийся розничным бизнесом

Central bank – центральный банк

Financial intermediary – финансовый посредник

Valuables – ценности

Safe deposit box – сейф для хранения ценностей в банке

Branch – филиал банка

ATM – automated teller machine – банкомат

Ancillary financial services – дополнительные финансовые услуги

Stock broking – выполнение агентских функций по операциям с ценными бумагами

Ex.1. Translate the following sentences. Pay attention to the italicized words.

 

1. Don’t bank on going abroad this summer, we may not have enough money.

2. The morning began fine, but now clouds are banking up.

3. I have always bank with the Royal Bank.

4. They have an access to huge banks of public data or library information.

5. The only way out is to ask your bank for a loan.

6. I am not sure if I should buy this suit. – Come on! It won’t break the bank.

7. Mr. Smith had bankrolled them when they had nothing.

 

Ex. 2. Match the term with its definition.

 

Before you read

T E X T 1

Read the text. In each paragraph, define the sentences that can be omitted without damaging much the content of the text.

THE ROLE OF BANKS IN THEORY

Banks are financial intermediaries, similar to credit unions, savings and loan associations, and other institutions selling financial serv­ices. The term financial intermediary simply means a business that interacts with two types of individuals or institutions in the economy: (1) deficit-spending individuals or institutions whose current expenditures for consumption and investment exceed their current receipts of income and who, therefore, need to raise funds externally by negotiating loans with and issuing se­curities to other units; and (2) surplus-spending individuals or institutions, whose current receipts of income exceed their current expenditures on goods and services so they have surplus funds to save and invest. Banks perform the indispensable task of intermediating between these two groups, offering convenient financial services to surplus-spending indi­viduals and institutions in order to raise funds and then loaning those funds to deficit-spending individuals and institutions.

There is an ongoing debate in the theory of finance and economics about why banks exist. What essential services do banks provide that other busi­nesses and individuals couldn't provide for themselves?

This may at first appear to be an easy question, but it has proven to be extremely difficult to answer. Why? Because research evidence has accu­mulated over many years showing that our financial system and financial markets are extremely efficient. Funds and information flow readily to both lenders and borrowers, and the prices of loans and securities seem to be determined in highly competitive markets. In a perfectly efficient financial system, in which pertinent information is readily available to all at negligible cost, in which the cost of carrying out financial transactions is negligible, and all loans and securities are available in denominations anyone can afford, why are banks needed at all?

Most current theories explain the existence of banks by pointing to im­perfections in our financial system. For example, all loans and securities are not perfectly divisible into small denominations that everyone can afford. To take one well-known example, U.S. Treasury bills—probably the most popular short-term marketable security in the world—have a minimum denomination of $10,000, which is clearly beyond the reach of most small savers. Banks provide a valuable service in dividing up such instruments into smaller securities, in the form of deposits, that are readily affordable for millions of people. In this instance a less-than-perfect financial system creates a role for banks in serving small savers and depositors.

Another contribution banks make is their willingness to accept risky loans from borrowers, while issuing low-risk securities to their depositors. In effect, banks engage in risky borrowing and lending activity across the financial markets by taking on risky financial claims from borrowers, while simultaneously issuing almost riskless claims to depositors.

Banks also satisfy the strong need of many customers for liquidity. Fi­nancial instruments are liquid if they can be sold quickly in a ready market with little risk of loss to the seller. Many households and businesses, for example, demand large precautionary balances of liquid funds to cover expected future cash needs and to meet emergencies. Banks satisfy this need by offering high liquidity in the deposits they sell.

Still another reason banks have grown and prospered is their superior ability to evaluate information. Pertinent data on financial investments is both limited and costly. Some borrowers and lenders know more than others, and some individuals and institutions possess inside information that al­lows them to choose exceptionally profitable investments while avoiding the poorest ones. Banks have the expertise and experience to evaluate financial instruments and choose those with the most desirable risk-return features.

Moreover, the ability of banks to gather and analyze financial information has given rise to another view of why banks exist in modern society—the delegated monitoring theory. Most borrowers and depositors prefer to keep their financial records confidential, shielded especially from competitors and neighbors. Banks are able to attract borrowing customers, this theory suggests, because they pledge confidentiality. Even a bank's own depos­itors are not privileged to review the financial reports of its borrowing customers. Instead, the depositors hire a bank as delegated monitor to analyze the financial condition of prospective borrowers and to monitor those customers who do receive loans in order to ensure that the depositors will recover their funds. In return for bank monitoring services, depositors pay a fee that is probably less than the cost they would have incurred if they monitored the borrowers themselves.

By making a large volume of loans, banks as delegated monitors can diversify and reduce their risk exposure, resulting in increased deposit safety. Moreover, when a borrowing customer has received the bank's stamp of approval, it is easier and less costly for that customer to raise funds elsewhere. In addition, when a bank uses some of its owners' money as well as deposits to fund a loan, this signals the financial marketplace that the borrower is trustworthy and has a reasonable chance to be suc­cessful and repay its loans.

1.What does the term ‘financial intermediary’ mean?

2.Explain the meaning of the following terms ‘deficit-spending individuals’ and ‘surplus-spending individuals’.

3.What task do banks perform?

4.Why do bank exist?

T E X T 3

Read the text. Divide it into logical parts. Defend your division. Give the title to the text.

Why are most banks so closely regulated? A number of reasons for this heavy burden of government supervision have been offered over the years, some of them centuries old. First, banks are among the leading repositories of the public's savings — especially the savings of individuals and families. Many savers lack the financial expertise and depth of information to correctly evaluate the riskiness of a bank. Therefore, regulatory agencies are charged with the responsibility of gathering all the information needed to assess the fi­nancial condition of banks in order to protect the public against loss. Cameras and guards patrol bank lobbies to reduce the risk of loss due to theft. Periodic bank examinations and audits are aimed at limiting losses from embezzlement, fraud, or mismanagement. Government agencies stand ready to loan funds to banks faced with unexpected short­falls of spendable reserves. While most of the public's savings are placed in relatively short-term highly liquid deposits with ready access, banks also hold large amounts of long-term savings for retirement in pension programs and Individual Retirement Accounts (IRAs). The loss of these funds due to bank failure or bank crime would be catastrophic in many cases. Regulation acts as a safeguard against such losses by providing deposit insurance and by periodically examining bank policies and practices in order to promote sound management of the public's funds, while minimizing the volume of claims made against the government's deposit insurance fund. On the other side of the coin, however, although safeguarding the public's savings may justify having a deposit insurance system (preferably, one in which banks creating greater risk for their depositors and for the deposit insurance fund pay higher insurance fee s), it is not sufficient by itself to justify the entire basket of modern banking regulations. Banks are also closely watched because of their power to create moneyin the form of readily spendable deposits by making loans and invest­ments (extending credit). Moreover, changes in the volume of money creation appear to be closely correlated with economic conditions, es­pecially the creation of jobs and the presence or absence of inflation. However, merely because banks create money which impacts the vitality of the economy, this is not necessarily a valid excuse for regulating banks. As long as central banks can control money supply growth through their policies and operating procedures, the volume of money individual banks create should be of no great concern to the regulatory authorities or to the public. Banks are also regulated because they provide individuals and insti­tutions with loans which support consumption and investment spend­ing. Regulatory authorities argue that the public has a keen interest in an adequate supply of loans flowing from the banking system. Moreover, discrimination in the granting of credit would represent a significant obstacle to personal well-being and an improved standard of living. This is especially important if access to credit is denied because of age, sex, race, national origin, residential neighborhood, or similar factors. Per­haps, however, discrimination in providing services to the public could be significantly reduced or eliminated simply by promoting more com­petition among banks and other providers of financial services, such as by vigorous enforcement of the antitrust laws, rather than through reg­ulation.

 

1.Why are regulatory agencies charged with the responsibility of gathering the information needed to assess the financial condition of banks?

2.What are periodic bank examinations and audits aimed at?

3.What is regulation aimed at?

4.What are other reasons of bank regulation?

1. Do the activities and responsibilities of central banks vary from country to country? Give your examples.

2. What is the BIS?

3. What does the BIS provide?

 

T E X T 4

INTERNATIONAL BANKING

Banks have been heavily involved in selling their services across national borders from the industry’s very beginning. The first banks were located principally in global trading centers around the Mediterranean Sea, including Athens, Cairo, Jerusalem, and Rome, aiding merchants in financing shipments of raw materials and goods for sale and exchanging one nation’s currency and coin for that of another to assist travelers as well as local merchants.

Nowadays international bankers face unprecedented challenges in both raising and allocating funds. E. Gerald Corrigan, president of the Federal Reserve Bank of New York, perhaps has best captured the essence of today's global bank management problems: “Financial markets and institutions are caught up in an unprecedented wave of change and innovation which makes it very difficult to distinguish ends from means, causes from effects, and actions from reactions”.

As the bankers themselves admit, inter­national bank fund-raising increasingly is being affected by three forces:

1. Financial markets are broadening rapidly into worldwide institu­tions, and many of these markets (such as the markets for Eurocurrency deposits, commercial paper, foreign exchange, and government secu­rities) are becoming 24-hour markets linking Europe, North America, the Far East, and the Middle East in a chain of continuous trading. Not far behind are the stock and futures markets, with overseas exchanges ex­panding to accommodate multiple listings of companies and financial instruments (as evidenced, for example, by the recent expansion of the Tokyo Stock Exchange and LIFFE and SIMEX in London and Singapore). Moreover, the developing nations, confronted with huge capital needs and the decline of these traditional funding sources, are seeking to tap the surplus liquidity of industrialized countries and recycle global savings.

2. Old kinds of debt and borrowing methods are being transformed into new kinds of financial instruments and new fund-raising techniques. Among the most notable developments here are securitized loans, cur­rency options and dual-currency bonds, and global mutual funds. In re­cent years, international banks have found it increasingly difficult to bring in low-cost deposits and must reach farther a field for funds, encouraging financial innovation but also bringing international banks into compet­itive conflict over sources of funds with thousands of other financial institutions. At the same time, scores of desirable loan customers have found innovative ways to raise their own funds (such as through direct sales of short-term notes to investors) without the banker's help.

3. The barriers between securities dealers and international banks are falling in many countries, aided by London's "Big Bang" and deregu­lation in leading countries. This erosion of traditional roles is making it harder for the public to see real differences between financial institutions. While banks were the first to internationalize their operations, securities dealers have followed in the 1970s and 1980s, capturing many former customers that traded almost exclusively with international banks.

Many international banks and other financial firms see their future success closely linked to their ability to establish a firm beachhead in all major global markets and to offer a complete line of financial services, centered around securities trading and underwriting, investment plan­ning and saving, credit insurance, and risk management. This is partic­ularly important in fund-raising by international banks because of the necessity in today's intensely competitive environment for each bank to find the cheapest funds sources, whenever they may be found, around the globe.

1. Where were the first banks located?

2. What forces is international bank fund-raising being affected by?

3. What do many international banks see their future success in?

 

T E X T 5

BRETTON WOODS

As World War II came to an end, an international monetary conference was held in July 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire. More than seven hundred people from 44 countries came to this small mountain resort to construct a workable international monetary system. As is typically the case with such conferences, the plan had been drafted by a few experts and largely accepted beforehand by the principal nations. In this case, England and the United States were the most important participants, and the primary architects were the English economist John Maynard Keynes and an Assistant Secretary of the U.S. Treasury, Harry D. White.

The Bretton Woods agreement attempted to restore fixed exchange rates without the domestic disruption caused by the classic gold standard. The partic­ipating nations agreed to make whatever currency transactions were necessary to keep exchange rates within 1 percent of the initial fixing. In exceptional circumstances, a nation would be permitted a one-time devaluation of up to 10 percent.

A central reserve fund, the International Monetary Fund (IMF), was established to lend money to nations that needed to purchase their currency in order to support its value. Instead of the deflationary shock inflicted by the pure gold standard, these loans would give a nation time to take gradual steps to strengthen its currency; an escalation of the fees on these loans was intended to discourage procrastination. The central reserve fund — $6.8 billion in gold, U.S. dollars, and other strong currencies — was financed by contributions from the members, principally the United States and Britain. The IMF was given a home in Washington, D.C, and a staff to administer the reserve fund and to advise and prod nations with weak currencies.

Under the original rules of the Fund, a member nation could borrow no more than 25 percent of its quota in any one year, up to a total of 125 percent of its quota over a five-year period. The nation could borrow the first 25 percent of its quota, the gold tranche, almost automatically, without any restrictions or conditions. For further borrowings (in subsequent years), the credit tranche, the Fund charged higher and higher interest rate and imposed more and more supervision and conditions to ensure that the deficit nation was taking appropriate measures to eliminate the deficit. If the Fund’s holding of a nation’s currency fell below 75 percent of its quota, the nation could borrow the difference from the Fund without having to repay its loan. This was called super gold tranche.

Like a doctor called in at the last minute, the IMF is often asked to resuscitate ailing economies. This ‘structural adjustment’ process is a crucial first step before receiving development assistance from other sources. Acceptance of the IMF plan is usually seen as a sign that a nation is prepared to seriously address its economic illnesses, paving the way for long-term funding from the World bank and other sources.

The economic medicine prescribed by the IMF is often painful. For example, it often calls for debtor governments to reduce subsidies to failing state industries and insists on strict anti-inflationary measures such as increasing the prices of basic goods and services. During the difficult restructuring processes, the IMF often provides temporary ‘standby’ loans to keep the country afloat until more long-term funding can be arranged.

Borrowing from the Fund was restricted to cover temporary balance-of-payments deficits and to be repaid within three to five years so as not to tie up the Fund’s resources in long-term loans. Long-run development assistance was to be provided by the International Bank for Reconstruction and Development (IBRD or World Bank) and its affiliates, the International Development Association (established in 196o to make loans at subsidized rates to the poorer developing nations) and the International Finance Corporation (established in 1956 to stimulate private investments in developing nations from indigenous and foreign sources).

The major role of the World Bank is to provide a helping hand to countries in need. Its first activity was to channel funds from the USA and other nations into rebuilding Europe after World