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ФЕДЕРАЛЬНОЕ АГЕНТСТВО ПО ОБРАЗОВАНИЮ РОССИЙСКОЙ ФЕДЕРАЦИИ ГОУ ВПО «АЛТАЙСКИЙ ГОСУДАРСТВЕННЫЙ УНИВЕРСИТЕТ» МЕЖДУНАРОДНЫЙ ИНСТИТУТ ЭКОНОМИКИ, МЕНЕДЖМЕНТА И ИНФОРМАЦИОННЫХ СИСТЕМ В ЭКОНОМИКЕ КАФЕДРА ИНОСТРАННЫХ ЯЗЫКОВ ЭКОНОМИЧЕСКОГО И ЮРИДИЧЕСКОГО ПРОФИЛЕЙ ENGLISH FOR THE ECONOMISTS (Correspondence Department) Издательство Алтайского государственного университета Барнаул 2009 Составитель: канд. пед. наук, доцент Н.Д. Усвят Рецензенты: канд. филол. наук, доцент Губернаторова Э.В. канд.пед.наук, доцент Ларина Т.А. Учебное пособие предназначено, главным образом, для студентов высших учебных заведений, продолжающих изучение английского языка на базе средней школы. Пособие составлено в соответствии с требованиями «Программы по английскому языку для студентовзаочников высших учебных заведений неязыковых специальностей», которая определяет главную цель обучения как «формирование умения самостоятельно читать литературу по специальности с целью извлечения информации из иноязычных источников». Тексты учебного пособия заимствованы из современной английской и американской экономической литературы, сети Интернет, периодических изданий и переработаны автором. Типография Алтайского государственного университета: 656099, Барнаул, ул. Димитрова, 66 Условные обозначения: словарь, обязательный для изучения тексты для изучающего чтения упражнения для закрепления лексических навыков задания на следующую сессию Contents Basics of Economics.................................................................................................................................... 6 Part I ........................................................................................................................................................... 8 Text 1. Basics of Economics ........................................................................................................................ 8 Text 2. What are microeconomics and macroeconomics? ........................................................................... 12 Text 3. Macroeconomics............................................................................................................................ 13 For the next session ................................................................................................................................... 16 Part II........................................................................................................................................................ 24 Text 1. Modern World Economy................................................................................................................ 24 Text 2. The Nation’s Economy................................................................................................................... 26 For the next session ................................................................................................................................... 28 Management.............................................................................................................................................. 39 Vocabulary Exercises ................................................................................................................................ 40 Part I ......................................................................................................................................................... 42 Text 1. What is “management”?................................................................................................................ 42 Text 2. What is a manager?........................................................................................................................ 43 Text 3. Managers....................................................................................................................................... 44 Text 4. What Do Managers Do................................................................................................................... 45 Text 5. Theory X and Theory Y ................................................................................................................. 47 For the next session ................................................................................................................................... 48 Part II........................................................................................................................................................ 52 Text 1. The Selection Board....................................................................................................................... 52 For the next session ................................................................................................................................... 56 Finance and Credit..................................................................................................................................... 67 Part I. ........................................................................................................................................................ 67 Banks ........................................................................................................................................................ 67 Vocabulary Exercises ................................................................................................................................ 69 Text 1. The Financial System ..................................................................................................................... 70 Text 2. The Stock Exchange....................................................................................................................... 72 For the next session ................................................................................................................................... 74 Part II........................................................................................................................................................ 77 Money....................................................................................................................................................... 77 Vocabulary Exercises ................................................................................................................................ 78 Text 1. Money ........................................................................................................................................... 80 Text 2. History of Money........................................................................................................................... 82 Text 3. The Functions of Money ................................................................................................................ 82 For the next session ................................................................................................................................... 87 Accounting and Auditing ........................................................................................................................... 94 Text 1. Accounting and Auditing ............................................................................................................... 95 Text 2. Accounting and Bookkeeping......................................................................................................... 99 Text 3. The Double Entry System ............................................................................................................ 101 Text 4. The Balance Sheet ....................................................................................................................... 101 The Budget. Taxes................................................................................................................................... 103 Vocabulary Exercises .............................................................................................................................. 104 Text 1. The Budget .................................................................................................................................. 105 Text 2. Taxes........................................................................................................................................... 107 Information in Economics........................................................................................................................ 114 Text 1. Bill Gates and Microsoft Corporation ........................................................................................... 115 4 Предисловие Данное пособие предназначено для студентов экономического профиля, обучающихся по специальностям «Финансы и кредит», «Менеджмент организации», «Прикладная информатика в экономике», «Бухгалтерский учет, анализ и аудит», «Налоги и налогообложение», «Антикризисное управление» и «Экономика труда». Пособие имеет ярко выраженную профессиональную направленность и рассчитано на полный курс обучения в вузе (60 часов аудиторной работы и 240 часов самостоятельной работы). Цель данного пособия – развитие навыков работы с текстами по специальности, формирование лексических навыков, а также коммуникативной компетенции в сфере делового общения. Пособие состоит из шести самостоятельных разделов, соответствующих указанным выше специальностям. Они построены по единому принципу. Каждый раздел включает в себя профессионально ориентированные тексты, предназначенные для обучения различным видам чтения: изучающего, ознакомительного, просмотрового, поискового и систему упражнений для работы с ними, а также варианты лексических контрольных работ. На базе учебных текстов и текстов контрольных работ составлен тематический словарь-минимум, расположенный в начале каждого раздела. Тематика текстов, подобранных из оригинальных и отечественных источников, дает возможность повысить общеобразовательный и профессиональный уровень студентов. К данному пособию прилагается еще одно пособие, содержащее грамматический курс, который включает в себя теоретический материал, а также практическую часть, состоящую из системы упражнений. В качестве источников были использованы следующие материалы: Агабекян И.П. English for Managers Аванесян Ж.Г. English for Economists Любимцева С.Н. Английский язык для студентов финансовоэкономических специальностей вузов Lilia Raitskaya, Stuart Cochrane Macmillan Guide to Economics Simon Sweeney Management Charles Mercer New Business Matters, а также материалы сети Интернет. 5 Basics of Economics_________________________________________________ Basics of Economics Vocabulary basic – основной, главный to buy – покупать be concerned with – заниматься чем-л., касаться чего-л. business – дело, занятие capital goods – основные средства, средства производства capital resources – капитал компании, собственные фонды choice – выбор to choice – выбирать to make a choice – делать выбор to consume – потреблять consumer – потребитель consumer goods – товары народного потребления consumption – потребление to define – определять definition – определение distribution – распределение economic – экономический economic forces – экономические факторы economical – экономичный, экономный economically – экономично, экономно economics – экономика (как наука) economist- экономист economy – экономика (страны, мира) to economize – экономить to employ – нанимать на работу envisage – рассматривать expenditure – расходы goods – товары income – доход to invest – вкладывать to meet one′s wants – удовлетворять потребности money – деньги need – первостепенная необходимость precisely – точно producer – производитель product – продукт, продукция production – производство to produce – производить, выпускать to purchase – покупать, закупать 6 Basics of Economics purchase – покупка, закупка relationship – связь, отношение resource – ресурс, средство resources – ресурсы human resources – кадры, персонал natural resources – природные ресурсы scarce – дефицитный science – наука service – оказание услуг, обслуживание tax – налог to use – использовать, применять, употреблять use – использование, применение, употребление wants – потребности wealth – богатство Vocabulary Exercises Exc. 1. Choose the right variant. 1. I am a student of (economy, economics) now. 2. At school I didn’t study the (economy, economics) of Great Britain. 3. I hope he will be a good (economist, economy). 4. There are many (economic, economical) problems in the world. 5. This car is very (economic, economical). 6. I try to spend money and time (economical, economically). 7. This car (economize, economy) fuel. Exc. 2. Match the words with their definitions. 1) produce a) an amount of money that you must pay to the government 2) money b) when a person has his own company and he produces, buys or sells goods or services 3) tax c) to make things for sale 4) choice d) it helps you to buy things 5) business e) the right to choose between several things Exc. 3. Choose the right variant and complete the sentences. economist resource employ economy use 1. The system by which a country’s money and goods are produced and used is called ... . 2. Canada is rich in mineral ... . 3. The main aim of an ... is to study the way in which money and goods are produced and used and the systems of business and trade. 7 Basics of Economics_________________________________________________ 4. I always ... this sort of toothpaste. 5. The company ... 2000 people worldwide. Exc. 4. Read and translate the text. Defining Economics What do you think of when you hear the word economics? Money, certainly, and perhaps more complicated things like business, inflation and unemployment. The science of economics studies all of these, but many more things as well. Perhaps you think that economics is all about the decisions that governments and business managers take. In fact, economics study the decisions that we all take every day. Economics is a science concerned with how people use available resources to satisfy their wants through the process of production and exchange. There have been many definitions of economics in the past. The earliest definitions envisaged economics as the study of wealth and the older name for economics was “political economy”. Later economics was defined as “the practical science of the production and distribution of wealth”. At the turn of the 19th century economists defined economics as a study of man’s actions in the ordinary business of life. At that time economics focused on how men got their incomes and used them. In more recent years, the subject of economics was defined more precisely as “the science which studies human behavior as a relationship between ends and scarce means which have alternative uses”. Today economics deals with data on income, employment, expenditure, prices, production, consumption, transportation and trade. Exc.5. Discuss the following: - What does economics study? - Does it study only such things as business, inflation, money? - What is economics as a science concerned with? - What is the earliest definition of economics? - What definition of economics do you like more? - What does economics deal with today? Part I Text 1. Basics of Economics Task 1. Read and translate the text, paying attention to the italicized words. The study of the choices people make in an effort to satisfy their wants and needs is called economics. Wants and needs refer to people’s desires to consume 8 Basics of Economics certain goods and services. In economic terms, a good is a physical object that can be purchased. A record, a house, and a car are examples of a good. A service is an action or activity done for others for a fee. Lawyers, plumbers, teachers, and taxicab drivers perform services. The term product is often used to refer to both goods and services. The people who wish to buy goods and services are called consumers and the goods that they buy are called consumer goods. The people who make the goods and provide services that satisfy consumers’ wants and needs are called producers. Economists generally classify as needs those goods or services that are necessary that are necessary for survival. Food, clothing, and shelter are considered needs. Wants are those goods or services that people consume beyond what is needed for survival. The need for making choices arises from the problem of scarcity. Scarcity exists because people’s wants and needs are greater than the resources available to satisfy them. Thus people must choose how best to use their available resources to satisfy the greatest number of wants and needs. A resource is anything that people use to make or obtain what they want or need. Resources that can be used to produce goods and services are called factors of production. Economists usually divide these factors of production into three categories: (1) natural resources, (2) human resources, (3) capital resources. Today many economists have added technology and entrepreneurship to this list. Natural Resources Items provided by nature that can be used to produce goods and to provide services are called natural resources. Natural resources are found in/or on the earth or in the earth’s atmosphere. Examples of natural resources on the earth are fertile land, vegetation, animals, and bodies of water. Minerals and petroleum are examples of natural resources that are found in the earth. Atmospheric resources include the sun, wind and rain. A natural resource is considered a factor of production only when it is used to produce goods and to provide services. Human Resources Anyone who works is considered a human resource. Any human effort that is exerted in production process is classified as a human resource. The effort can be either physical or intellectual. Assembly-line workers, ministers, professional sports figures, physicians, store clerks, and sanitation engineers are all human resources. Capital Resources The money and capital goods that are used to produce consumer products are called capital resources. Capital goods include the buildings, structures, machinery, and tools that are used in the production process. Department stores, factories, industrial machinery, dams, ports, wrenches, hammers, and surgical scalpels are all examples of capital goods. Economists make an important distinction between capital goods and consumer goods. Capital goods are the manufactured resources that are used in 9 Basics of Economics_________________________________________________ producing finished products. Consumer goods are the finished products – the goods and services that consumers buy. Some products can be either capital goods or consumer goods, depending on how they are used. A bicycle purchased for personal use is a consumer good. The same is not true when the bicycle is purchased by a New York messenger service. Because the messenger service will use the bicycle to make deliveries – to provide a service – the bicycle is considered a capital good. Technology The use of science to create new products or more efficient ways to produce products is called technology. Technology makes the other factors of production – natural, human, and capital resources – more productive. Technological advances in the computer industry, for example, have increased efficiency in the workplace. Entrepreneurship The risk-taking and organizational abilities involved in starting a new business or introducing a new product to consumers are called entrepreneurship. The goal of entrepreneurship is to create a new mix of the other factors of production and thereby create something of value. The entrepreneur is a person who attempts to start a new business or introduce a new product. Essential Vocabulary entrepreneur – предприниматель entrepreneurship – предпринимательство factor of production – движущая сила производства fee – вознаграждение, гонорар for a fee – за плату satisfy – удовлетворять (кого-л.; чьи-л. требования, запросы) scarcity – нехватка, дефицит survival – выживание technological advances – технический прогресс technology – техника, технические и прикладные науки Task 2. Translate the following words and word combinations or find Russian equivalents. 1. to make delivery 2. wide range of goods 3. existing resources 4. necessary for survival 5. beyond what is needed for survival 6. to provide a service 7. to increase efficiency in the workplace 8. to take the risk 9. to start a new business 10. to introduce a new product Task 3. Translate the following sentences into Russian. 10 Basics of Economics 1. In economic terms, a good is a physical object that can be purchased. 2. The need for making choices arises from the problem of scarcity. 3. Resources that can be used to produce goods and services are called factors of production. 4. A natural resource is considered a factor of production only when it is used to produce goods and to produce services. 5. Economists make an important distinction between capital goods and consumer goods. 6. Technological advances in the computer industry, for example, have increased efficiency in the workplace. Task 4. Fill the gaps in the sentences below with the words and expressions from the box. There are two expressions which you don’t need to use. producers, factors of production, human resource, technology, wants, service, capital resources, consumer goods, entrepreneur, economics 1. The study of the choices people make in an effort to satisfy their wants and needs is called _______. 2. A __________ is an action or activity done for others for a fee. 3. The people who make the goods and provide services that satisfy consumers’ wants and needs are called _________. 4. ________ are those goods or services that people consume beyond what is needed for survival. 5. Resources that can be used to produce goods and services are called _______. 6. The money and capital goods that are used to produce consumer products are called __________. 7. The use of science to create new products or more efficient ways to produce products is called ____________. 8. The _________ is a person who attempts to start a new business or introduce a new product. Task 5. Find English equivalents for the following Russian expressions and words. 1. движущая сила производства 2. природные богатства 3. кадры 4. выживание 5. открыть новое дело / бизнес 6. за плату 7. товары народного потребления 8. средства производства 9. технический прогресс 10. внедрить новый продукт 11 Basics of Economics_________________________________________________ Text 2. What are microeconomics and macroeconomics? Task 1. Read and translate the text. Economists talk about microeconomics and macroeconomics. Microeconomics deals with people like you and me and private businesses. It looks at the economic decisions people make every day. It examines how families manage their household budgets. Microeconomics also deals with companies – small or large – and how they run their business. Macroeconomics, on the other hand, looks at the economy of a country – and of the whole world. Any economist will tell you, though, that microeconomics and macroeconomics are closely related. All of our daily microeconomic decisions have an effect on the wider world around us. Another way to look the science of economics is to ask, “what’s it good for?” Economists don’t all agree on the answer to this question. Some practice positive economics. They study economic data and try to explain the behaviour of the economy. They also try to guess economic changes before they happen. Others practice normative economics. They suggest how to improve the economy. Positive economists say, “this is how it is”. Normative economists say, “we should …”. So what do economists do? Mainly, they do three things: collect data, create economic models and formulate theories. Data collection can include facts and figures about almost anything, from birth rates to coffee production. Economic models show relationships between these different data. For example, the relationship between the money people earn and unemployment. From this information economists try to make theories which explain why the economy works the way it does. Task 2. Now read the text again and match each paragraph with the correct heading. a. How economists work b. Making deals every day c. Various ideas about economics d. Two areas of economics e. Two types of economists Task 3. Match the words with the definitions 1. budget A. the people who control a country and make laws 2. business B. information 3. convenience C. company that sells goods or services 4. data D. easiness 5. demand E. the amount of money you have for something 12 Basics of Economics 6. 7. 8. 9. government inflation resources trade – off 10. unemployment F. G. H. I. how much people want something the number of people without work rising prices giving away something in exchange for something J. something such as money, workers or minerals belonging to an organization, country, etc. which can be used to function properly Text 3. Macroeconomics Task 1. Read and translate the text. In the 1930s one of the world’s strongest economies suffered a devastating collapse. It was the American economy and the disaster was the Great Depression. The effects of the Great Depression were felt all around the world and it brought about a change in economic thinking. Economists began to realize that looking at the behaviour of individual consumers and suppliers in the economy was not enough. Economists and governments had to understand how the whole economy worked. In other words they had to have an understanding of macroeconomics. Microeconomics looks at how the details of the economy work. Macroeconomics takes a few steps back and looks at the whole picture. While microeconomics looks at supply and demand for a single product or industry, macroeconomics follows supply and demand patterns for the whole economy. Whereas microeconomics is about economic events at home, macroeconomics looks at how the domestic economy interacts with the economies of other countries. However, macroeconomics isn’t only about knowing what’s happening in the economy. After the shock of the Great Depression governments realized that an economy needs to be managed. Most governments aim to have steady economic growth to control inflation and to avoid recessions. Just managing an individual business is a hard enough task. How do you manage a whole economy? Governments have certain mechanisms which help them to do this. The first of these mechanisms is fiscal policy. Fiscal policy refers to the tax system and to government spending. By increasing or decreasing the amount of tax people must pay, the government can affect how much money people have available to spend (disposable income). This, in turn, has an effect on demand in the market. By increasing or decreasing their own spending governments can have a huge effect on the growth of the economy. The second mechanism is monetary policy. With its monetary policy a government sets interest rates and also controls the amount of money that circulates in the economy. The interest rate the government sets influences the rate that commercial banks set when they lend money to customers. Interest rates have 13 Basics of Economics_________________________________________________ a big impact on the economy. For example, they can affect people’s decisions about saving or spending money. The third mechanism is administrative approach. This is a range of things that governments do to increase the supply of goods and services to the economy but without increasing prices. There are a number of ways governments try to do this. For example, improvements in education and training can make the workforce more productive. Investment in technology can make industry more efficient. Governments can also change employment and business laws to make the market more competitive. With a combination of these methods governments try to steer or guide the economy on a steady and predictable path. They aim for gradual economic growth and to avoid disasters like the Great depression. Task 2. Now read the text again and answer the questions. 1. Which countries were affected by the Great Depression? A. only America B. just America and Europe C. the whole world 2. Which of the following is interested in foreign economies? A. microeconomics B. macroeconomics C. both microeconomics and macroeconomics 3. The three different mechanisms which governments use are … A. all concerned with how much money people have to spend. B. aimed at improving education and training. C. all different ways of managing an economy. 4. Which mechanisms involve changing interest rates? A. fiscal policy B. monetary policy C. administrative approach 5. Which mechanisms might involve creating job training schemes for school leavers? A. fiscal policy B. monetary policy C. administrative approach 6. What do governments want to achieve with their macroeconomic policies? A. to predict what will happen in the economy B. to create steady economic growth C. to combine different paths for economic growth Task 3. Match the words and phrases with the definitions. devastating collapse something that happens fiscal policy a method or tool for doing something domestic control of spending through taxation steady growth money you gave to spend after paying tax 14 Basics of Economics monetary policy recession mechanism disposable income interest circulate depression predictable event workforce a serious slowing down of the economy at a slow, unchanging rate move around control of the cost of borrowing and movement of money in economy the members of the population able to work something you know will happen complete destruction the cost of borrowing money not foreign a very bad period for the economy Task 4. Complete the crossword. Some letters have been given to help you. ACROSS 1. This kind of economy is both planned and free market. DOWN 2. This kind of economics looks at the whole picture. 3. The first kind of economy that existed 7. In this economy, the government decides everything. 4. The point where demand and supply meet. 5. This kind of economics simply describes the economy. 6. A measure of how much demand influences price. 8. This falls as prices rise. 9. In this kind of economy, price is set by supply and demand. 12. Something that can be measured, like money spent or babies born. 10.This kind of economics makes 15 Basics of Economics_________________________________________________ recommendations. 11.This kind of economics looks at the details of the economy. Task 5. Find six pairs of opposites. ■benefits ■ consumer ■ drawbacks ■drought ■ flood ■ manufacturer ■private sector ■ save ■ shortage ■spend ■ state sector ■ surplus Task 6. Now write five example sentences using as many words as possible from this exercise. Task 7. Complete the text with one word for each gap. The first fetter has been given. The traditional economy is the oldest form of economy. It has existed for thousands of years, although today it has almost disappeared. People in a traditional economy do not own (1) p………They do not earn a (2) s ……..and thus neither do they pay (3) t………In fact, there is no money. They live on the raw (4) m………that the forest provides them. They don't grow food or have any organized (5) a………with farms and (6) с………growing in fields. Instead, they (7) g………wild fruit and vegetables or (8) h………wild animals. They eat most of the food they find, and may (9) h………some food for the winter, but they do not sell it. It's a difficult life. There are often (10) s………of food when there is not enough to eat. When this happens, the (1l) t………must move on to another part of the forest. For the next session Types of Economies I VARIANT Text 1. The Traditional Economy Task 1. Read and translate the text It’s hard to imagine our lives without coins, banknotes and credit cards. Yet for most of human history people lived without money. For thousands of years human societies had very simple economies. There were no shops, markets or traders. There were no employers, paid workers or salaries. Today, we call this kind of economy the traditional economy, and in some parts of Asia, South America and Africa this system still exists. People who live in a traditional economy don’t have money because they 16 Basics of Economics don’t need it. They live lives of subsistence. That means they hunt, gather or grow only enough food to live. There is almost no surplus in the traditional economy, and there is almost no property. Families may own simple accommodation but land is shared by all the tribe. Economic decisions are taken according to the customs of the tribe. For example, every family may need to give some of the crops they grow to the tribal leader, but keep the rest for themselves. They don’t do this because it makes economic sense. They do it because the tribe has always done it. It’s simply a custom. Custom, also, decides what jobs people do in the traditional economy. People generally do the jobs that their parents and grandparents did before them. Anyway, there aren’t many jobs to choose from in the traditional economy. Men are hunters, farmers or both. The women’s place is at home looking after children, cooking and home-making. This division of labour between men and women is another characteristic of the traditional economy. Whatever the work is, and whoever does it, you can be sure it’s hard work. This is because traditional economies have almost no technology. Physical strength and knowledge of the environment are the tools for survival. Like any other economic system the traditional economy has its benefits and drawbacks. Probably the biggest benefit is that these are peaceful societies. People consume almost everything they produce and own practically nothing. They are equally poor. For all these reasons war is almost unknown in these societies. However people who live in traditional societies are among the poorest people in the world. Because custom decides what people do nothing in these societies ever changes. Because there is no technology, people depend on nature to survive. They have no protection from environmental disasters like droughts and floods. They are always in danger of hunger and disease. But the traditional economy is in danger itself. There are only a few examples left on the planet. In 100 years from now it may have disappeared forever. Task 2. Now read the text again and match each paragraph with the correct heading. Paragraph 1……….. Paragraph 2 ………. Paragraph 3 ………. Paragraph 4 ………. Paragraph 5 ………. Paragraph 6 ………. A. Life without money B. The advantages of the traditional economy C. The future of the traditional economy D. The disadvantages of the traditional economy E. The importance of tradition F. Work in the traditional economy 17 Basics of Economics_________________________________________________ Task 3. Read the text and do the following task. You are the leader of a scientific expedition to the forests of Central Africa. You spend six months living with the Mbuti. Give a short presentation about your expedition. Talk about: why you went why the Mbuti are important people to study what the environment is like the Mbuti lifestyle their economic system what we can learn from the Mbuti Text Pygmies are a race of people who live in the rain forest of Asia and Africa. Pygmies are famous for their height because adult pygmies stand only 1 metre 50 tall. But this is not the only reason why they are special. They are also special because they have some of the last traditional economies in the world. The Mbuti are a pygmy tribe who live in the forests of central Africa. The heavy rain and warm temperatures of the forest make them a rich source of food. In fact, the Mbuti take everything they need from the forest, which is why they call it “mother”. Fruit, roots, mushrooms and meat make up their diet. Their houses, too, come from the forest. These are huts made from the branches of young trees and covered in leaves. The Mbuti own almost nothing. Even their houses are temporary. When they can no longer find food, families will move to another part of the forest. Usually the Mbuti men go hunting with bows and arrows. Sometimes hunting is done using nets. Then women help, too. Women build the houses and do the cooking. However, both the men and the women help to look after the children. Because the forest is so rich in food, the Mbuti don’t spend much time hunting or collecting. Most of their day is spent in the tribal village singing, playing and telling stories. Text 2. The market economy Task 1. Read and translate the text. Have you ever walked through a busy street market? People push their way through crowds of others in order to reach the stalls first. The air is full of deafening shouts. Stall owners yell to advertise their goods. Buyers cry out their orders. It’s hard to imagine but behind this noisy confusion is a very logical economic theory: the market economy. The market economy is sometimes called the free market. A free market is 18 Basics of Economics not controlled in any way by a government. It is also free from the influence of custom or tradition. In a free market the only reason why things are bought and sold is because there is a demand for them. Prices for goods and services are simply what people are prepared to pay. The market economy is not really controlled by anyone. It controls itself. The street market where we began has many of the characteristics of the free market. Customers arrive at the market with a shopping list of things they need. They also come with an idea of how much they are prepared to pay. Stall owners sell what customers demand, and try to get the highest price they can for it. Supply and demand control what is on the market and how much it sells for. In the wider economy we are all customers and the stall owners are like companies. The role of the company in the free market is to supply what people want. However companies need an incentive. The incentive is profit. There are two ways for companies to make a profit. The first way is to raise their prices. The second way is to reduce their production costs. And this brings us to two more features of the market economy: competition and technology. Competition exists in a free market because, theoretically, anyone can be a producer. This means that companies have to compete with each other for a share of the market. Competition is good for consumers because it helps to control prices and quality. If customers aren’t happy with a product or service, or if they can’t afford it, they will go to a competitor. Technology exists in a free market because producers need ways to reduce their costs. They cannot buy cheaper raw materials. Instead, they must make better use of time and labour. Technology is the use of tools and machines to do jobs in a better way. This helps companies produce more goods in less time and with less effort. The result: more profit. People often think that most economies are free markets. However, at the macroeconomic level, a truly free market economy does not exist anywhere in the world. This is because all governments set limits in order to control the economy. Some governments set many limits, other governments set very few, but they all set some. For this reason, a true market economy is only theoretical. Nevertheless, many of the features of the market economy do exist in most societies today. Task 2. Now read the text again and answer these questions in your own words. 1. Who controls a market economy? 2. Who decides what products are for sale in a free market? 3. What do companies want? 4. Why is competition a good thing? 5. Why does technology exist in the market economy? 6. Why are there no true market economies in the world today? Writing Write an essay comparing the traditional economy with the market economy. Discuss the advantages and disadvantages of each economy. Decide which is best 19 Basics of Economics_________________________________________________ in your opinion. Remember, you should organize your ideas logically. These phrases will help you: firstly, secondly, furthermore, however, on the other hand. Paragraph 1 Introduce the subject by saying what a traditional economy is, and what a market economy is. Paragraph 2 Say what the advantages and disadvantages of the traditional economy are. Paragraph 3 Say what the advantages and disadvantages of the market economy are. Paragraph 4 Conclude by saying what you think the best system is. Write 200-250 words II VARIANT Text 1. The Planned Economy Task 1. Read and translate the text. In many ways the planned economy is the direct opposite of the market economy. In the market economy the forces of supply and demand decide everything: what is produced, how much is produced, the methods of production and the price. In the planned economy all of this is decided by the government. In every way that the market economy is free, the planned economy is controlled. Unfortunately, no economic system is perfect. If there was a perfect system, economists wouldn’t have anything to argue about! Market economies have their strengths but they have their problems too. Planned economies try to provide solutions to these problems. For example, the free market supplies the things that people want. However, what people want and what they need are not always the same. Fast food is always in demand but it’s bad for us. In a planned economy the government could decide to stop fast food restaurants operating in the market. A second problem with free markets is that producers always want the highest price. Often the poor can’t afford things. In a planned economy the government sets prices. They make sure that everyone can afford basic commodities. This is one way that planned economies try to share things equally. Another is to control how much people get paid. In a planned economy workers’ wages depend on the service they provide to society. If people can live without their service you get paid less. This is very different from the free market. In the free market someone’s salary mostly depends 20 Basics of Economics on the demand for his or her work. If people like what you do you get paid more. Before 1900 there were few examples of planned economies. During the th 20 century, however, the planned economy became the standard for socialist governments like the USSR and China. These countries experienced amazing economic growth in a very short time. In a market economy it takes a long time for big industries to grow from small companies. In a planned economy, however, huge industries can grow overnight. The government simply decides to spend money on factories and factories appear. Britain, for example, took centuries to develop her steel industry in a free market economy. China developed hers in a few decades. But as we said, no economic system is perfect. The planned economy has many drawbacks. One of these drawbacks is problems with supply. It is difficult for governments of planned economies to know exactly how much to produce to meet demand. In a market economy when the price of a commodity rises, this indicates a rise in demand. Companies then supply more to the market. This warning system doesn’t work in a planned economy because price is controlled by the government. The result is shortages. When shortages happen governments can do two things: ration goods or raise prices. In this situation people then start to hoard things and the problem gets even worse. As the population gets bigger shortages like this become more common. For this reason China – once the world’s biggest planned economy – is rapidly moving towards another system: the mixed economy. Task 2. Now read the text again and decide whether these statements are true or false. 1. In a planned economy the government decides how products are made. T/F 2. In a planned economy suppliers can sell anything that is in demand. T/F 3. In a planned economy a doctor should get paid more than a footballer. T/F 4. Planned economies grow more slowly than market economies. T/F 5. In a market economy greater demand for something makes it cheaper. T/F 6. Planned economies are difficult to run in countries with large populations. T/F Task 3. Match the words and phrases with the definitions. commodity when the government sets a limit on how much people can buy of something standard when there is not enough of something socialist a strong metal made of iron industry something you can buy or sell steel what is usual or typical indicate all the businesses and companies involved in the production of heavy goods, food, technology, etc. warning system describes someone/something aiming to share wealth equally shortage secretly storing and hiding goods for use later rapidly work ration show 21 Basics of Economics_________________________________________________ solution hoard operate wages very quickly money paid regularly for work done answer to a problem a system which tells us that something bad is going to happen Text 2. The mixed economy Task 1. Read and translate the text. Most economists would say that there are no examples in the world today of a completely free market or a completely controlled economy. Instead, every country operates a mixture of the two systems. Even in the freest economies like the USA there is some government control; even in the strictest planned economy there is some free enterprise. Economies mix government control and free market values in different ways. One way is to let privately owned businesses exist alongside state run industries. The economy becomes divided between the state sector and the private sector. The state sector often includes industries that the government thinks are important and need protection from the risks of the free market. Theses could include public transport, hospitals, schools and the postal service. The state sector can also include large industries that are important for a country’s economic health, such as oil, steel or agriculture. These are sometimes called primary industries because they provide basic materials to manufacturers. These state sector industries use money that the government collects in taxes. Often they do not need to compete with other companies because no other company is allowed to provide the same product or service. However, many countries have recently started a process called deregulation. Deregulation means freeing up the economy to allow private businesses to compete with state-run industries. The state sector should then run more efficiently in order to compete in the free market and because it now has less government protection. Deregulation of services like telecommunications, transport and banking has happened in many countries in recent years. People have generally accepted these changes. However, generally the public is less happy when governments start talking about deregulation in education and health services. Many people feel that profit motivation will harm these services rather than improve them. Another way in which economies today are mixed is that governments put limits on free enterprise. For example, governments may decide to ban trade in certain goods if they are dangerous. They may also create laws to make sure companies trade honestly or to prevent monopolies. If a company has a monopoly, normal market forces do not affect it. This is bad for consumers and the economy in general. Governments may also regulate methods of production. They do this to guarantee that products are safe for consumers and to protect the environment. Many economists would argue that the mixed economy is the best system for consumers. This is because consumers have two ways to control the economy: 22 Basics of Economics by choosing to buy a company’s goods or services and by choosing to give political parties their votes. Task 2. Now read the text again and answer the questions. 1. What do most economists believe about economies in the world today? A. There are a number of free markets. B. Some countries have a completely planned economy. C. A mixed economy exists in some way in all countries. 2. Why do governments choose to run some industries? A. So they can collect taxes. B. Because they need to be protected from the risks of the free market. C. To encourage a divided economy. 3. Why do governments deregulate some industries? A. To make the industries more efficient. B. To protect them. C. Because there is too much competition. 4. According to the text what is not very popular with the public? A. Deregulation of public transport. B. Deregulation of hospitals and schools. C. Deregulation of telecommunications and banking. 5. What type of state control is not mentioned in paragraph 5? A. Controlling the way companies do business. B. Controlling what companies sell. C. Controlling the prices companies set. Task 3. Complete each sentence with a word or phrase from the box. Agriculture, ban, efficiently, free, enterprise, manufacturers, monopoly, private sector, profit motivation, public transport, state sector, telecommunications, trade 1.……………is when businesses are able to trade without control from the government. 2. …………… industries belong to and are run by the government. 3. ……………. industries belong to and are run by independent businesses. 4. Buses, trains and planes are examples of ……………………… 5. ……………. is another word for farming. 6. …………….. produce new goods from raw materials. 7. When a business works ………., it runs successfully without wasting resources. 8. Telephone and Internet systems are part of the ……………. industry. 9. ……………. is what drives businesses in the market economy. 10. When the government puts a ………….. on a commodity people are not allowed to buy or own it. 11. If only one company controls part of the economy they have a …………………… 23 Basics of Economics_________________________________________________ 12. When companies …………… they do business with each other. Writing Write an essay comparing the planned economy with the mixed economy. Discuss the advantages and disadvantages of each economy. Decide which is best in your opinion. Use these words and phrases to organize your ideas: despite this, nevertheless, consequently, in contrast, similarly Read texts again and use these notes to help you. Write four paragraphs. Discursive essay Paragraph 1. What is a planned economy? What is a mixed economy? Introduce the subject by saying generally there are these two kinds of economies that have advantages and disadvantages. Paragraph 2. Describe a planned economy, explaining its advantages and disadvantages. Paragraph 3. Describe a mixed economy, explaining its advantages and disadvantages. Paragraph 4. Conclude by saying which system you think is best. or Explain why you think neither system is the best. Part II Text 1. Modern World Economy Task 1. Read and translate the text. The world economy is increasingly becoming a single economic unit. Individual national economies are developing closer ties through trade, capital investment and financial institutions. The role of global business in world affairs is becoming more important. Multinational corporations spread their activities across national boundaries, the international banking system carries on banking activities throughout the world, financial and commodity markets have become world markets. Over the last few decades export and import shares of output have increased considerably in practically all industrial sectors. For most industrial nations, exports and imports remain the most important international activity. In addition to 24 Basics of Economics visible trade, which involves the import and export of goods, they are trying to develop invisible trade, which involves the exchange of services between nations, thus improving their balances of trade. As the world is developing a single economy, international organizations, including the World Trade Organisation, the International Monetary Fund and the World Bank Group, are contributing to the liberalization of trade, monetary and economic cooperation. They have had a positive effect on economic growth, price stability and the flow of capital. Nevertheless, serious economic and social challenges remain: - how to bridge the gap between the industrialized and developing world; - how to prevent inflation; - how to improve employment opportunities: - how to maintain economic growth; - how to put an end to poverty. Task 2. Answer the following questions 1. What trend in the development of the world economy has been observed lately. 2. How is global business developing? 3. Do export and import of goods remain the most important activity for many countries? 4. What is invisible trade? 5. What role do international organizations play in the modern world economy? 6. What world problems have to be solved? Task 3. Practise these words and word combinations. Share Translate into Russian 1) Britain’s share of world trade has declined. 2) She owns shares in the business. 3) We will all have a share in the profits. 4) Share prices rose yesterday. To involve 1) My studies at university involve a great deal of hard work. 2) The students of our college are involved in the decision-making process, which gives them valuable experience for their future work. 3) Buying shares involves some risk. 4) His job involves collecting statistics. 5) I’m involved in an interesting project now. Task 4. Bear out (подтвердите) the following statements using the information from the text. 1. The world economy is increasingly becoming a single economic unit. 2. Over the last few decades export and import shares of output have increased considerably in practically all industrial sectors. 3. Nevertheless, serious economic and social challenges remain. 25 Basics of Economics_________________________________________________ Text 2. The Nation’s Economy Task 1. Read the text and translate it into Russian. Explain how the economy machine works. The economy of the country is like a machine which provides us with things we need, i.e. goods and services. The economy creates the wealth of the country. The better it works the better off are the people. The government through its economic policy plays an important role in the control of the economy machine. The major branches of economic policy are fiscal and monetary policies. Fiscal policy is concerned with taxes and government spending activities. Monetary policy is concerned with controlling the supply of money and credit. A nation’s economy can be divided into three sectors of activity. The primary sector deals with extraction of minerals, agriculture, fishing and forestry. Processing of the primary sector materials and production of manufactured goods is the field of the manufacturing sector. The service sector provides services of various kinds such as transportation, distribution, catering as well as financial services and tourism. The role of the manufacturing sector in the advanced industrialized countries is decreasing while the service sector is becoming more important. Words and word combinations you may need branch – отрасль экономики fiscal policy – бюджетно-налоговая политика monetary policy – кредитно-денежная политика supply – предложение supply of money and credit – денежная масса в обращении и предложение кредитных средств primary sector – первичный сектор deal with – иметь дело с extraction – добыча (минерального сырья) processing – переработка manufacturing sector – обрабатывающий сектор distribution – распределение, дистрибуция catering – общественное питание advanced industrialized countries – промышленно-развитые страны Task 2. Think of adjectives which are frequently used with the following words: enterprise, sector of economy, programme, finances, business, policy Task 3. Form the verbs from the following words and translate them into 26 Basics of Economics Russian employment, government, privatization, decision, growth, manufacturing investment, tax, extraction, production, transportation, distribution, supply Task 4. Match the infinitives in A with nouns in B. A B to produce an enterprise to privatize a climate to play raw materials to take assistance to create productivity to provide goods to raise a decision to process a role Task 5. Read the interview with a Russian economist published in one of the specialist journals. Sum up his assessment of the economic situation in Russia. Interview with the Economist Foreigner: How did your economy fare last year? Russian: Last year was one of the best for Russia. GDP grew at a reasonable pace, then we harvested a record crop. F.: I think it was due to very favourable weather conditions. What factors resulted in it in your opinion? R.: Undoubtedly, the weather conditions affected the crop. But I think that investment and reforms in agriculture started to pay back. F.: And how do you assess the manufacturing sector, your industry? R.: Industrial production went up in some branches, though the real sector still needs more investment if we want it to develop faster. F.: If you want foreigners to invest you must give them guarantees of law and order in the country, create a more favourable business climate. R.: I can’t agree more. Last year a lot of laws were passed to this effect. Suffice it to mention our tax system, it was simplified. F.: I see. Considerable progress was made in your country last year. Besides, as far as I know the living standards improved. R.: Yes, pensions were increased, salaries of state employees were raised too. Demand for consumer goods increased. Note on the dialogue How did your economy fare last year? – Как обстояли дела в вашей экономике в прошлом году? harvest – собирать урожай record crop – рекордный урожай due to – благодаря result in – привести к 27 Basics of Economics_________________________________________________ affect – оказывать воздействие pay back – окупаться real sector – реальный сектор, промышленность law and order – закон и порядок pass – принимать (законопроект) to this effect – в этих целях suffice it to mention – достаточно упомянуть simplify – упрощать demand – спрос consumer goods – потребительские товары Say/ write how you assess the economic situation in our country. For the next session I VARIANT Text 1. History of Economic Thought Task 1. Read and translate the text. Economic thought goes back thousands of years. The ancient Greek, Xenophon, used the word oikonomikos (from oikos, meaning family, household, estate, and nomos, for usage, law). He was talking about skilful or clever ways to manage land and households. We could call many of Aristotle’s political writings economics, although he did not use the word. The English word economics first appeared in the 19th century – two and a half thousand years after Xenophon. Early economic thought was all about the meaning of wealth or being rich. These early thinkers asked, “what makes a state or a country wealthy?” For nearly 2000 years, the answer was very simple: gold. A country or nation’s wealth depended on its owning precious metals. This simple view of the economy remained until medieval times. During medieval times – roughly the period between 1100 and 1500 AD, trading between nations grew, and a new social class appeared. These were merchants, people who made their money through the buying and selling of goods, and they began to write their own thoughts on the economy. They saw the economy as a way to make the state strong. For them the nation’s wealth depended on stocks of gold and the size of the population. More people meant bigger armies and a stronger state. These were still simple ideas. However, daily experience had also taught people many basic economic concepts. For example, they understood the importance of trade with other states. They realized that scarcity makes things more expensive and abundance makes them cheaper. Modern economics was really born in the 19th century. At this time, thinkers 28 Basics of Economics like Adam Smith wrote down ideas that are still important today. Adam Smith is often called the Father of Modern Economics, although the science was called political economy then. Smith realized that a nation’s wealth depended on its ability to produce goods. The value of these goods depended on the cost of production. The cost of production depended on the cost of workers, raw materials and land. This was really the first example of macroeconomics. Smith and other classical economists were writing at a time of great change. The industrial revolution had begun. Paper money began to replace precious metals. The middle classes were growing stronger. Economists’ theories echoed these changes. They wrote about the division of labour (each worker taking their part in the production process). They discussed the problems of population growth. They influenced thinking about social classes. For classical economists, the value of goods depends on the cost of production. However, the price of goods is not always the same as their real cost. Later economists developed new theories to explain this weakness in classical economics. These are known as the neoclassical economists and they were writing at the end of the 19th and early 20th centuries. In neoclassical economics, supply and demand make the economy work. In other words, the price of goods depends on how much people want them and how easily they can be found. Consumers want satisfaction from their resources (time and money). Firms want profit. In neoclassical economics this is the basic relationship in the economy. These ideas are still the basis of economic thinking today. Task 2. Now read the text again and decide whether these statements are true or false. 2. Aristotle did not use the word economics but he did write about economic ideas. 3. Early economists thought that a nation without gold was poor. 4. People in medieval times didn’t understand anything about economics. 5. In classical economics the value of something was measured in gold. 6. Economists later found a problem with the classical model. 7. In neoclassical economics supply and demand control price. Task 3. Complete each sentence with a word or phrase from the box. 1. The …… began in the late 18th century when machines started to replace human workers. 2. Sand and limestone are …. needed to make glass. 3. The …. to make a car involves many people and machines. 4. The extra money a company makes is called ….. . 5. People want ….. from the products they buy. 6. ….. is when there is very little of something. 7. ….. is when there is lots of something. 8. Gold and silver are examples of ….. . 9. Another word for idea is ….. . 29 Basics of Economics_________________________________________________ 10. The ….. is the number of people a country has. 11. A business or company is sometimes called a …. . 12. When we buy things or use services we are a …. . abundance, concept, consumer, firm, industrial revolution, population, precious metals, production process, profit, raw materials, satisfaction, scarcity Task 4.Give a two-minute talk on the history of economic thought. First, read text again and make notes below on the following - early economic thinking - the classical economists - neoclassical economists Writing In this unit you learnt about Adam Smith, a famous ‘thinker’ from Scotland. Who are the most famous ‘thinkers’ from your country? Magazine article Write a magazine article about one famous thinker from Russian history. Use the guide to help you organize your article. Title: …… Paragraph 1 Who is this thinker and what is he best known for? Paragraph 2 Biographical information: when and where born \family life\ important points in life. Paragraph 3 What was his\her message? What were his\her influential thoughts? Paragraph 4 Why do you think this person is important? Write 100-150 words. (Stolypin, Kondratyev, Lenin, Leontyev). II VARIANT Text 1. The Russian Economy in the 19th century Task 1. Read and translate the text. The Russian empire grew enormously during the 19 th century covering land from Poland in the West to the Pacific coast in the East. The population also grew quickly. In economic terms this meant an increase in two of the four factors of production: land and labour. You might think then that the Russian economy at 30 Basics of Economics this time was booming. But until the 1860s this was not true at all. Compared to other important powers like Britain, France and America Russia’s economy was hopelessly underdeveloped. Why was this so? The main problem was Russia’s feudal economic system. Almost 80 per cent of the population were peasants. They either worked on land owned by the state or they were serfs. Serfs worked land that belonged to a small number of wealthy landlords. In return for a small piece of land and a place to live serfs had to work for their landlords. In fact, the serfs didn’t just work for their landlords – they belonged to them. This system did not encourage economic growth. Peasants’ labour was used in subsistence farming for their families or working to maintain their landlord’s estate. Without surplus goods there were no profits or savings. With no savings domestic investment for growth was not possible. Russian agriculture still used the most basic technology and almost the whole workforce was unskilled and illiterate. In addition the empire’s industrial base was poorly developed. Before 1850 there were relatively few factories, mostly producing textiles. Some factories were run by the state but many were run on the estates of landlords. Industrial technology was basic and engineering education was not encouraged by the authorities. To make matters worse the Crimean Was from 1853 to 1856 had weakened the Russian economy even more. Eventually, the Russian authorities realized that they had to do something about the economy. The empire was now surrounded by modern industrial powers. Russia had to make an economic leap into a new age. The first step was the emancipation of the serfs. Tsar Alexander II finally made this happen in 1861. This meant that the population was no longer tied to the land and could provide labour for industry. With foreign investment Russia began to build up its industries. The iron and steel industries grew rapidly. Mining of raw materials increased and industrial centres developed along the Don and Dnepr rivers. The output of the iron and steel industries helped to build a huge railway network including the Trans-Siberian railway. Growth continued and by the 1890s the Russian economy was experiencing a real boom. From five per cent in the 1860s, annual growth reached nine per cent in the 1890s – higher than anywhere else in Europe at the time. However, much of the growth was built with foreign debt. Agricultural methods and technology were still primitive. And what about the economy’s human capital? The exploited serfs had now become exploited factory workers. The majority of the population remained totally illiterate and desperately poor. With the turn of the new century how much longer could the boom continue? Task 2. Now read the text again and answer these questions in your own words . 1. What aspects of the Russian economy increased in the 19th century? 2. Give three reasons why Russia’s economy was underdeveloped? 3. What two things helped the Russian economy grow? 31 Basics of Economics_________________________________________________ 4. How did ordinary people’s lives change after industrialization? Task 3. Complete each sentence with a word from the box. Authorities, emancipation, engineering, estates, feudal, landlord/landlady, peasant, serf, subsistence, textile illiterate, 1. In a ….system, landowners owned the land and the people who worked on it. 2. The Eiffel Tower is an amazing piece of …………. . 3. A person who makes their living from farming a small piece of land is often called a …….. . 4. People who cannot read or write are ………… . 5. Someone who owns property and rents it to others is a ………… . 6. A ………. was a person who belonged to the owner of land. 7. The aristocracy own large areas of land called ………….. . 8. ……………. farming means you only just manage to survive on what is produced. 9. The …….. industry produces cloth, cotton and wool. 10. The people who rule the country are sometimes called the …….. 11. …….. People have to be free – their …… is necessary. Writing Imagine that you are a factory inspector for the Russian government in 1890. You visit a textile factory and you are shocked by the conditions. Write a letter to the Finance Minister Sergei Witte telling him what you saw and what you want him to do about it. Letter from history Remember, this is a formal letter: Begin ‘Dear Sir’, and finish ‘Yours faithfully’ or ‘Dear Mr.Witte’, and finish ‘Yours sincerely’, Do not use contractions (eg. ‘is not should be used instead of ‘isn’t’) Use some or all of these words and expressions: I am writing in order to ….. Furthermore …. It was disgraceful to see ….. I would appreciate it if you could look into this matter. Greeting Paragraph 1 Say that you are writing to complain about conditions in the factories. Paragraph 2. Explain where you went and why. Say what you saw there (age of the workers, conditions of the factory, conditions of accommodation for workers). Paragraph 3. Explain more about the pay workers receive and the hours they have to work. Paragraph 4. Say what you want the Minister to do in order to improve conditions. 32 Basics of Economics Thank him and sign off. Write 150-200 words. Read for more information Text 1. Contemporary Russia: the fall and rise of the market economy Task 1. Read and translate the text. A recent survey compared the cost of living for expatriates in cities around the world. Not surprisingly, the top ten most expensive cities included Tokyo, London and new York. But more expensive than any of these was… Moscow! Less than two decades ago Moscow was the heart of the world’s biggest planned economy. There was no property for sale back then. The state-run shops had few consumer goods. Shortages for simple things like shoes were common. Today, things could not be more different. Moscow is the centre of a free market with some of the highest property prices in the world. The state-run shops have been replaced by expensive shopping centres and designer stores. But the change has not been easy. The figures for Russia’s real gross domestic product since 1991 when the economic reforms began show that the economy has been on quite a roller-coaster ride. In 1991 GDP was over $350 billion. That fell dramatically year after year until 1998 when GDP was just over $220 billion. However, the situation improved again from ’98. In fact Russia’s GDP increased steadily year after year from 1999 until 2006 when it reached around $740 billion. What caused such a change of fortunes? Changing over to a completely different economic system could never be painless. The Russian government of the early 1990s decided to use a shock therapy approach. They introduced severe fiscal and monetary policies. The government drastically reduced its spending. It cut subsidies to its crumbling state industries. Interest rates and taxes were raised. Government price controls on nearly all consumer goods were lifted. Only prices for staple goods like food and energy remained controlled by the government. New laws were introduced to allow private ownership and businesses to exist. All of these measures were intended to create conditions for a market economy to grow. However, they also caused great hardship for ordinary people. Most workers at that time were on fixed incomes. The measures caused the cost of living to rise but their salaries did not rise at the same rate. To make matters worse events in the banking system in 1992 caused the money supply to balloon. This resulted in hyperinflation levels of 2,000%. Despite Russia’s enormous reserves of oil and gas the economy went into a long and difficult depression. Finally in 1998 when an economic crisis hit the East Asian Tigers, oil prices began to fall around 33 Basics of Economics_________________________________________________ the world. For Russia it turned a depression into an economic crisis. However from 1999 world oil prices began to rise again. Mostly with money earned from energy exports Russia began to pay off its foreign debts. Inflation fell and the value of the rouble stabilized. The economy was recovering. GDP grew steadily year after year and foreign investors began to show confidence in investing in the country. Moscow’ place at the top of the list of the world’s most expensive cities is not enviable. However it is a clear sign that the Russian economy has survived a difficult time. Task 2. Now read the text again and match each paragraph with the correct heading. Paragraph 1 …………. Paragraph 2 …………. Paragraph 3 …………. Paragraph 4 …………. A. Recovery B. Drastic measures C. Ups and downs D. Hard times E. Then and now Task 3. Match the words and phrases with the definitions expatriate very high inflation consumer goods financial help from the government for a business state-run change hardship something that other people want reform managed by the government severe very strict or cruel subsidy basic things like food that everyone needs crumbling to grow very big very quickly staple goods things that people buy but don’t really need fixed incomes falling apart or collapsing to balloon very difficult times – poverty hyperinflation someone who lives and works away from their home country enviable salaries or pensions that do not grow with inflation stabilize become steady, unchanging Task 4. You are going to read about three persons expressing their views on the winners and losers in the Russian economic reforms. As you read, make notes in the table. 34 Basics of Economics Winners Losers People Industries Places Speaker 1: Well, in my view the only real winners have been the big business people – especially in the early days after the fall of the old system. I mean if you were in the right place at the right time you made a fortune. But what about the ordinary people? The truth is that for most of us things have got worse. Inflation is still high. In the early days lots of older people saw their life’s savings disappear overnight. Education and the health service are also in a mess. Teachers’ and doctors’ pay has really fallen – lots of doctors have left to make a living somewhere else. No, I don’t think ordinary people have been the winners. Speaker 2: With the rise in oil prices Russia’s energy sector has really grown. I mean our resources of oil and gas are some of the biggest in the world and the new economic reforms have helped us to exploit that. At the same time, though, Russia’s other manufacturing industries have suffered. For example, we used to have a huge transport industry making aeroplanes, cars and ships – but this has almost collapsed. You see these industries used to be subsidized by the Soviet government. They were never able to compete on the world market. And now their equipment and other capital is old and inefficient. So in truth these industries are dying. Speaker 3: The new economic reforms have been great for the big Russian cities – especially Moscow. They’ve got new shopping centres and expensive shops and new supermarkets. And of course there are lots more tourists visiting those places. But if you go out of Moscow and go to the other regions of Russia things are very dif. Foreign investment goes mostly to Moscow or St.Petersburg – but in the provinces very little has changed. There are still a lot of ‘one-factory’ towns and there is still a lot of poverty. Text 2. Economics and the Consumer Society Task 1. Read and translate the text. Do you agree with Keynes’s idea that the government should actively influence the economy? In the nineteenth century economists believed that there were limits to human wealth. In their opinion when one man became richer another grew poorer. If a country wished to improve its standard of living it had to export more than it imported. So in Britain the main argument in those days was about free trade and protectionism. The owners of textile factories naturally supported free trade. The farmers on the other hand were afraid of foreign competition. Free trade won because 35 Basics of Economics_________________________________________________ Britain at that time was able to import cheap raw materials from its colonies and re-export them as finished goods. If the government had introduced import controls at that time it would have damaged the position of Great Britain as the strongest manufacturing nation in the world. In America a similar belief in free trade eventually led to the Wall Street crash in 1929. People in the USA benefited from the expansion of the American economy in the First World War. They became convinced that money automatically made more money. If there had been no excessive speculation in stocks and if people had not become convinced that speculative investments were always profitable the effects of the “crash” would not have been so disastrous. Following the Wall Street crash the economist John Maynard Keynes introduced a new theory. In simple terms his solution to the problem was that there is no fixed limit to human wealth. He believed that if government helped factories, factories would create jobs, if factories paid good wages every worker would become a consumer, if people could afford to buy goods, factories would produce more. For a time, Keyne’s theory was successful. In the 1970s, however, people began to realize that the world’s resources were limited that they would be better off if they had economized. But it is difficult to persuade people to economise, especially when they are used to Keynes’s idea that the less we spend, the more unemployment we create. Perhaps time and further study will some day reveal whose economic concept are right. But it would be splendid if economists were able to diagnose and prescribe cures for economic problems more accurately. Economics and Its Great Men Text 1. Adam Smith Task 1. Sum up what you know about Adam Smith and his investigations Task 2. Pronounce correctly the following words: Economics, economy, economical, monopoly, competition, competitive, society, productivity, to export, to import, social, production, substitution, political, wealth, nation, industrialism Task 3. Write out: – from sentence 1, para 1 the group of words related to the word science; – from sentence 1, para 5 the group of words related to the word ranged; – the subject and the predicate in the last sentence, para 7. 36 Basics of Economics Task 4. Read and translate the text. Economics is a social science concerned with how mankind organizes itself to accommodate scarce resources to their wants through the process of production, substitution and exchange. By the beginning of the eighteenth century economics had taken shape as an academic discipline, largely as a branch of political economy. It should be noted that the old name of economics was “political economy”. Adam Smith was the founding father of modern economics as an academic discipline. Adam Smith was born in 1723. For most of his life he was a professor of philosophy in Glasgow, Scotland. His first and only economics book, The Wealth of Nations, was not published until 1776, when he was 53. Smith’s purpose was to explain why some nations become wealthier than others. He was fascinated by the rise of industrialism in the England and Scotland of his time. Over his lifetime Adam Smith’s economic investigations ranged from the theory of trade to economic growth and an attempt to model the working of the economy. He believed that a free market would maximize the welfare of the population. It followed from his works that the role of government in the economy should be minimal. The government should provide defence, justice and public works. The only market intervention should be to prevent monopoly and to promote competition. Smith argued that competitive business was not just a possible way but the best way to increase the wealth of a nation. He thought government restraints on competition did more harm than good. Division of labour was seen by him as the source of society’s capacity to increase its productivity. According to Adam Smith technical progress and free trade between nations were central to economic growth. If a country wished to improve its standard of living it had to export more than it imported. Text 2. David Ricardo and the Theory of Comparative Advantage Task 1. Read the text and answer the questions in written form. David Ricardo, the greatest of the classical economists, was born in 1772. His father, a Jewish immigrant, was a member of the London stock exchange. Ricardo entered his father’s business at the age of 14. In 1973, he married and went into business of his own. The young Ricardo quickly made a large fortune. In 1799, Ricardo read Adam Smith’s “The Wealth of Nations” and developed an interest in political economy (as economics was then called). In 1809, his first writings on economics appeared. These were a series of newspaper articles on “The High Price of Billion”. In 1814 he retired from business to devote all his time to political economy. 37 Basics of Economics_________________________________________________ Ricardo’s major work was “Principles of Political Economy and Taxation”. This work contains, among other things, a pioneering statement of the principle of comparative advantage as applied to international trade. Ricardo showed why it was beneficial for both countries, for England tp export wool to Portugal and import wine in return< even though both products could be produced with less labour in Portugal. The book covers the whole field of economics as it then existed. Ricardo held that the economy was growing toward a future “steady state”. Ricardo’s book was extremely influential. For more than half a century thereafter, much of economics was an expansion of or a commentary on Ricardo’s work. Although Karl Marx eventually reached conclusions that differed radically from any of Ricardo’s views, his starting point was Ricardo’s theory of value and method of analyzing economic growth. 1. What was David Ricardo? 2. To what did he devote himself after retiring from business? 3. Ricardo’s works influenced the most famous economist Karl Marx, didn’t they? 38 Management Management Vocabulary to assert – утверждать, заявлять to avoid – избегать authority – власть, полномочия board – правление completion – завершение employee – работник, служащий executive – администратор, руководитель executive director – директор-распорядитель program director – руководитель программы financial controls – финансовые средства управления goal – задача human resources – трудовые ресурсы leadership – руководство manager - глава, управляющий, специалист по менеджменту financial manager – финансовый менеджер first-line managers – руководство низшего звена functional manager – функциональный руководитель general manager – генеральный управляющий, директор предприятия marketing manager – менеджер по маркетингу middle managers – руководство среднего звена personnel manager – начальник отдела кадров product manager – руководитель, ответственный за производство product line manager – управляющий предметно-производственной специализацией project manager – руководитель проекта top (executive) manager – высший исполнительный руководитель sales manager – заведующий отделом продаж management - управление, заведование, руководство top management – высшее исполнительное руководство managerial – управленческий nonprofit organization – некоммерческая организация objective – цель practitioner – практик, профессионал profit-making organization – коммерческая организация project planning – планирование проекта promotions planning – планирование продвижения продукта на рынок skills – навыки subordinate – подчиненный to oversee – надзирать, следить, смотреть 39 Management to pursue – добиваться to refer to – иметь отношение, относиться to supervise – наблюдать, надзирать, заведовать Vocabulary Exercises Exc. 1. Match the job title with the best definition on the right. Job Titles Chief Executive Officer (CEO) Manager responsible for buying Information Systems director Purchasing Director Human Resources Director Systems Analyst Managing Director Finance Director Production Director Customer Service Manager Staff Development Officer Exports Manager Person who designs computer network British English term for senior manager of a company Manager responsible for the process of creating goods or services for sale to customers American English term for the top manager of a company Person responsible for setting up training opportunities for employees. The person responsible for computer operations in a company Person responsible for managing product development, promotion, customer service and selling Person responsible for markets in other countries. Manager responsible for personnel issues. Person responsible for relationships with customers. Person responsible for presentation and control of profit and loss. Manager responsible for buying. Exc. 2. Fill the gaps, using your active vocabulary. 1. Depending on the size of the organization m----- – m------- supervise first-level supervisors, chief executives supervise middle-managers and etc. 2. Successful m------- know how to motivate e--------. 3. Effective h---- resource management develops the abilities of job candidates and employees to meet the needs of the firm. 4. The terms l--------and m--------- are synonyms. 5. T--- - managers don’t deal with day-to-day activities. 6. P----- manager is responsible for the product and its service. 40 Management Exc. 3. a) Management of a large company is often hierarchical. Here is a typical model of management organization showing one division within a company. Complete any missing words. area, company, department, director, finance, human, junior, manager, middle, officers, teams b) Choose the correct variant. 1. The organization model above is a flat / hierarchical structure. 2. The model shows a traditional structure / an innovative structure. 3. The model shows a matrix / functional structure. 4. It is probably a services / manufacturing company. 5. It is typical of a small or medium-sized enterprise (SME) / large enterprise. 6. The business is probably simple / complex. Exc. 4. Use the expressions to be in charge of, to be at the head of, to be responsible for in the sentences made up according to the pattern. 41 Management Pattern: A Marketing Manager is a man who is in charge of sales promotion at the head of responsible for a) Sales Manager, Production Manager, Chairman, Import Manager, Export Manager, Personnel (Staff) Manager b) Production Department, Import Department, Sales Department, Export Department, the company’s policy, the company’s staff Part I Text 1. What is “management”? Task 1. Read and translate the text. Traditional interpretation There are a variety of views about this term. Traditionally the term “management” refers to the set of activities and often to the group of people involved in four general functions, including planning, organizing, leading and coordinating activities. All these four functions are highly integrated and interrelated. Another interpretation Some writers, teachers and practitioners say that the above view is rather out –of- date and that management needs to focus more on leadership skills, e.g., establishing vision and goals, communicating the vision and goals and guiding others to accomplish them. They also say that leadership must be more facilitating, participative and empowering in how visions and goals are established and carried out. Some people say that this really isn’t a change in the management functions but a new look at certain aspects of management. Another common view is that “management” is getting things done through others. Yet another view, quite apart from the traditional view, asserts that the job of management is to support employee’s efforts to be fully productive members of the organizations. To most employees, the term “management” probably means the group pf people (executives and other managers) who are primarily responsible for making decisions in the organization. In nonprofit organizations, the term “management” might refer to all or any of the activities of the board, executive director and\or program directors. Vocabulary facilitating – стиль управления, основанный на стремлении помочь participative - стиль управления, основанный на участии в чем-л. 42 Management empowering – дающий возможность или право что-л. сделать vision – видение, представление efforts – усилия Task 2. Give English equivalents for the following Russian words and expressions: практик, профессионал правление директор распорядитель работник, служащий некоммерческая организация навыки руководство администратор, руководитель утверждать, заявлять стиль управления, основанный на участии в чем-либо Task 3. Answer the following questions. 1. What are four general functions of management? 2. What is the difference between traditional and further interpretation of management? 3. What is the job of management? 4. What does the term ‘management’ mean to most employees? Text 2. What is a manager? Task 1. Read and translate the text. A number of different terms are often used instead of the term “manager”, including “director”, “administrator” and “president”. The term “manager” is used more frequently in profit-making organizations, while the others are used more widely in government and non-profit organizations such as universities, hospitals and social work agencies. So whom do we call “manager”? In its broad meaning the term “managers” applies to the people who are responsible for making and carrying out decisions within a certain system. A personnel manager directly supervises people in an organization. Financial manager is a person who is responsible for finance. Sales manager is responsible for selling of goods. A marketing manager is responsible for promotion of products on the market. Almost everything a manager does involves decision-making. When a problem exists a manager has to make a decision to solve it. In decision-making there is always some uncertainty and risk. 43 Management Management is a variety of specific activities. Management is a function of planning, organizing, coordinating, directing and controlling. Any managerial system at any managerial level is characterized in terms of these general functions. Managing is a responsible and hard job. There is a lot to be done and relatively little time to do it. In all types of organizations managerial efficiency depends on manager’s direct personal relationships, hard work on a variety of activities and preference for active tasks. The characteristics of management often vary according to national culture which can determine how managers are trained how they lead people and how they approach their jobs. The amount of responsibility of any individual in a company depends on the position that he or she occupies in its hierarchy. Managers, for example, are responsible leading people directly under them, who are called subordinates. To do this successfully, they must use their authority which is the right to take decisions and give orders. Managers often delegate authority. This means that employees at lower levels in the company hierarchy can use their initiative, that is make decisions without asking their manager. Vocabulary hierarchy – иерархия to delegate authority – передавать полномочия Task 2. Answer the questions: 1. What is manager’s role in an organization? 2. What concrete activities a production manager (financial manager, personnel manager, marketing manager) is responsible for? 3. What is the difference between sales management and marketing management? 4. What means to delegate authority? Task 3. Mark the following sentences as True or False. 1. The term ‘manager’ is used more frequently in non-profit organizations. 2. A personnel manager is in charge of human resources in the organization. 3. A manager is responsible for decision-making process. 4. Any managerial system is characterized in terms of three functions. 5. Management system doesn’t depend on national culture. 6. The terms ‘managers’ and ‘subordinates’ are synonyms. Text 3. Managers Task 1. Read and translate the text. There is a classic definition that “Leaders do the right thing and managers do things right”. A more standard definition is usually something like “managers work toward the organization’s goals using its resources in an effective and 44 Management efficient manner”. In a traditional sense, large organizations may have different levels of managers, including top managers, middle managers and first-line managers. Top (or executive) managers are responsible for overseeing the whole organization and typically engage in more strategic and conceptual matters, with less attention to day-to-day detail. Top managers have middle managers working for them and who are in charge of a major function or department. Middle managers may have first-line managers working for them and who are responsible to manage the day-to-day activities of a group of workers. Note that there are different types of managers across the same levels in the organization. A project manager is in charge of developing a certain project, e.g. development of a new building. A functional manager is in charge of a major function, such as a department in the organization, e.g., marketing sales, engineering, finance, etc. A product manager is in charge of a product or service. Similarly, a product line manager is in charge of a group of closely related products. General managers are in charge of numerous functions within an organization or department. Task 2. Correct the following statements. 1. Large organizations may have only top managers. 2. Top managers work without middle managers. 3. Middle managers are in charge of a major function of department. 4. A project manager is responsible to manage day-to-day activities. 5. A product manager is in charge of finance. 6. General managers oversee the function of whole organization. Text 4. What Do Managers Do Task 1. Read and translate the text. There are four major functions of managers: planning, organizing, leading and coordinating. What managers do is the following: 1) Planning, including identifying goals, objectives, methods, resources needed to carry out methods, responsibilities and dates for completion of tasks. Examples of planning are strategic planning, business planning, project planning, staffing planning, advertising and promotions planning, etc. 2) Organizing resources, to achieve the goals in an optimum fashion. Examples are organizing new departments, human resources, office and file systems, re-organizing business, etc. 3) Leading, including to set direction for the organization, groups and individuals and also influence people to follow that direction. Examples are establishing strategic 45 Management direction (vision, values, and goals) and using methods to pursue that direction. 4) Controlling or coordinating, the organization’s systems, processes and structures to reach effectively and efficiently goals and objectives. This includes constant monitoring and adjustment of systems, processes and structures accordingly. Examples include use of financial controls, policies and procedures, performance management processes, measures to avoid risks etc. Vocabulary staffing planning – планирование кадрового обеспечения performance management – управление производительностью file system – система регистрации и хранения Task 2. Answer the questions: 1. What are the four major functions of managers? 2. What is planning? What are the kinds of planning? 3. What are the examples of organizing the resources? 4. What is “leading?’ 5. What is the function of “controlling”? Task 3. The table shows four main roles of managers: planning, organizing, leading and controlling. Below the table is a list of management functions. Write each function under the correct heading. Planning Organizing taking on new staff ______________________ ______________________________ ______________________ ______________________________ ______________________ ___________Leading____________ ______Controlling_______ ______________________________ ______________________ ______________________________ ______________________ ______________________________ ______________________ ______________________________ ______________________ ______________________________ ______________________ ______________________________ ______________________ Management functions communicating with staff, comparing results with targets, deciding strategy, empowering staff to take decisions, identifying change, managing resources, monitoring quality standards, motivation, putting systems in place, setting objectives, taking on new staff, team-building supervision, time management Task 4. Defining management. Here are some definitions of management and the role of managers. Complete the sentences with words from the box. 46 Management Assembling, controlling, financial (x2), goals, human (x2), information, innovation (x2), leadership, leading, marketing, material (x2), organization (x2), organizing , planning (x2), process (x2), resources (x2). 1. Managers are responsible for the process of p_ _ _ _ _ _ _ _ , o_ _ _ _ _ _ _ _ _, l_ _ _ _ _ _ and c_ _ _ _ _ _ _ _ _ _ the efforts of o_ _ _ _ _ _ _ _ _ _ _ members and of using all organizational r_ _ _ _ _ _ _ _ to achieve stated organizational g_ _ _ _. 2. Management is the process of optimizing h_ _ _ _, m_ _ _ _ _ _ _ and f_ _ _ _ _ _ _ _ contributions for the achievement of organizational goals. 3. A modern view of management, expressed by Sir Roland Smith, is that ‘Management should be based on i_ _ _ _ _ _ _ _ _ , m_ _ _ _ _ _ _ _ and risk. 4. All managers may be involved with the operational aspects of management but as they are promoted and develop, their role becomes increasingly one of p_ _ _ _ _ _ _, i_ _ _ _ _ _ _ _ _ and l_ _ _ _ _ _ _ _ _ . 5. Management is ‘the _ _ _ _ _ _ _ of a _ _ _ _ _ _ _ _ _ and using r_ _ _ _ _ _ _ _ – h_ _ _ _, f_ _ _ _ _ _ _ _ and m_ _ _ _ _ _ _ and i_ _ _ _ _ _ _ _ _ _ – in a goal-directed manner to accomplish tasks in an o_ _ _ _ _ _ _ _ _ _ _ ‘. Text 5. Theory X and Theory Y Task 1. What do managers think of their staff? McGregor (1960) said there were two opposing views, Theory X and Theory Y. A. Read the text below, then answer the True/False questions. Theory X managers believe that people dislike work. Work is necessary because if you do not work you cannot live. People are naturally lazy. They prefer to be directed. So managers have to tell their subordinates what to do. Managers have to organize the workers and pressure them to do things. The manager’s job is to think about the goals of the organization then make workers realize the goals. Subordinates want security. They want managers to organize and control everything. So Theory X managers are authoritarian. Managers are the bosses. They decide the goals and give orders. They direct everything, from the top down. Theory Y is more or less opposite to Theory X. Theory Y managers believe that people like work. Work is necessary because people want to work to feel happy. People are naturally industrious. They prefer to participate in decisionmaking. Managers discuss with their subordinates what to do. Managers organize communication channels with the workers and listen to their opinions. The manager’s job is to establish the goals of the organization with the workers, so that together they can realize the goals. Subordinates want managers to involve them, to delegate decision-making, to allow them autonomy. Theory Y managers are team-oriented. They trust their subordinates. The organization is less hierarchical 47 Management and more creative. 1. Theory X and Theory Y are theories of leadership. True/False 2. Theory X is a more traditional description of management/worker relations. True/False 3. Theory Y is typical in hierarchical top-down organizations. True/False 4. Theory Y managers tell workers what they want. True/False Workers do it. 5. Theory X managers are authoritarian True/False 6. Theory Y workers are lazy and don’t want to work. True/False 7. For Theory X workers, work is natural. True/False 8. Theory Y working relationships are open, communicative and creative. True/False B. Put the words and phrases below into correct column. communication control cooperation creativity direction modern participation security traditional work is a necessity work is natural orders Theory X Theory Y ______________________________ _____communication_____ ______________________________ ______________________ ______________________________ ______________________ ______________________________ ______________________ ______________________________ ______________________ ______________________________ ______________________ For the next session Text 1. What is a manager? Task 1. Read and translate the text. For each question below, mark the letters a, b, or c. 48 Management The characteristics required by a good manager are well-documented and clearly definable. The person has to be, among other things, responsible communicative, supportive and approachable. These adjectives are not genderbased, and focus attention on interpersonal skills, but a fierce debate still rages as to who make the best managers – men or women. The implication is that, providing an individual has all the right traits, he or she will automatically become a successful manager. Surveys have been carried out to find out why certain individuals become national leaders. After all, if a person occupies the leading position in a country, there ought to be some common identifiable qualities which have universal appeal. The facts discovered are bizarre. For example, some leaders have been above average height or were well below it. They have been intelligent, but not geniuses and have had great enthusiasm, courage, determination, energy and faith. But possession of all these traits would be unusual in any one person. So these are necessary, but not sufficient conditions; good leaders have these qualities, but their possession alone does not make a good leader. In his book, Understanding Organisations, professor Charles Handy claims there is not right style of leadership. He says that leadership will be most effective when the requirements of the leader, the subordinates and the task fit together. This would seem to rather exclude personality from the equation. And yet, we can all recall managers whom we have liked or disliked, so there has to be more to the magic formula for a successful manager. Handy adds that managers need value systems which would acknowledge the desire for personal success and the planning and control of the actions of the people below them in the company hierarchy. In his later theories, he defines managers as people who are responsible for making things happen. These are professionals who are accountable to the people who pay them and to the people working with and for them. Managers take responsibility for the actions of others. This is a popular modern definition of a manager, and while Handy accepts that personal characteristics like assertiveness, patience, loyalty and consistency are very important, he has added further vital statistics which he calls the four Ps: Projects (in which teams are involved), Professionalism, Passion and Pride. 1. In the first paragraph the writer says that managers: a. can only be men b. need a balance of people skills c. are successful if they have strong, dominant personalities 2. What does the writer believe makes a successful national leader? b. people who are tall c. people who are intelligent and determined d. research has been of little help 49 Management 3. Charles Handy thinks: b. the tendency to be subordinate is vital for a manager c. managers should dominate the people below them d. there is no single form of good managership 4. The modern definition of a manager is: a. someone who is answerable to shareholders b. a person who is ambitious c. someone, who has a duty to both his or her subordinates and superiors Writing You have been asked by your Corporate Affairs Director to make hotel reservations for thirty people for a management conference during July or August. The following points are important. The hotel must have a conference room with Power Point available. All bedrooms must have private bathrooms. The restaurant must be at least four-star, and there should be a swimming pool and gymnasium. Your director has sent you the following hand-written note: Please check if the hotel caters for handicapped people, as one delegate is in a wheelchair. And don’t forget to ask for a good discount! Read the advertisements, select the best hotel, and then write a letter of 120140 words to the hotel management, attempting to obtain the best deal. 1. Royal Mariners Hotel Perth – A traditional enchanting hotel, all rooms en suite with TV/Telephone, tea and coffee. Three-star restaurant with mountain views. Conference room for 60 delegates with the latest computer facilities. Note – swimming pool closed for refurbishment during July and August. 2. The Oliver Hotel Baston New, modern hotel close to motorway access. Perfect for the businessperson who needs conference facilities, Internet access and the latest software. All rooms en suite with tea, coffee and mini-bar. Five-star restaurant stays open until midnight. Shakespeare Bar with real ale. Superb Olympic-style swimming pool, sauna and gymnasium. We take pride in our ability to look after our wheelchair-bound customers. 3. The Rose Bower Hotel Plympton Set in three acres of rolling countryside, the perfect escape for a relaxing holiday. All rooms en suite with home 50 Management comforts. Four-star award-winning restaurant with resident French chef. Visits to Exeter Cathedral and Dartmoor are a speciality. Bring the family. Please note, we do not offer conference bookings. 4. Hotel Bankside Bournemouth 120 en suite rooms and fully licensed bar. Twin, Double and Triple rooms available all year. Colour TV with 15 channels. Choice of 10 restaurants within walking distance. Parking for 80 cars. Sea views available. Four penthouse suites with magnificent sea views. 5. The Old Thatched Hamleton The perfect country hideaway-no mobile phones, TVs or computers. The perfect retreat for tired executives trying to escape the rat race. Five-star restaurant. Superb pool and gymnasium to burn off those extra pounds. Discounts available for group bookings. Text 2. Modern Management Theory Task 1. Read and translate the text and complete it with the correct headings from the box. Corporate downsizing Learning organizations Team-working Empowerment Just in Time Outsourcing Re-engineering Total Quality Management 1. Just-in-Time This system was introduced from Japan in the 1980s. It means ordering components exactly when you need them, and supplying goods exactly when the customer needs them. It eliminates storage time and reduces costs. 2. ______________________ Many large corporations and multinationals had grown too complex by the 1990s. Some sectors of the organization were less profitable. Many of these companies sold off or closed the underperforming sectors. 3. ________________________ Management increasingly understands the value of sharing power with others throughout the organization. This leads to more participation in decision-making. 4. ________________________ This is closely related to (3). By encouraging employees to work in very fluid teams, responsibility is shared. Employees and managers at all levels develop a better self-identity and work becomes more interesting. This system is seen as much more efficient than linear or hierarchical structures. 51 Management 5. __________________________ This is a total revision and restructuring of an entire company. It involves asking fundamental questions about the objectives of the business and how it operates. It aims to create big improvements in cost, quality, service and product. 6. ___________________________ This management approach focuses on measuring the quality of service in all aspects. The idea is to develop systems that are more efficient and more economical, but which are also more able to meet the needs of customers. 7. _____________________________ This approach recognizes that companies cannot do everything. It can be better to use external suppliers for some specialist operations, or particular components in manufacturing. This decision can create quality improvements and cost savings. 8.____________________________ Many companies have developed internal training programmes to help with staff development. This is an important investment in the workforce. It not only makes people better at their job but it also makes them happier. It may also help companies to keep their best managers and staff. Part II Selection of Personnel Text 1. The Selection Board Task 1. Read and translate the text. When Williams introduced his new policy designed to put Smallcrown back on its feet, there followed a number of resignations from men occupying key positions within the company. The posts that are vacant at the time are those of personnel Manager, Transport Manager, Deputy Company Secretary and Deputy Head of Product Development. Smallcrown advertises these posts and receives a great many applications. On the basis of the applicants’ curriculum vitae a short list of two candidates for each post is drawn up. Those selected are asked by a letter to attend an interview. For this purpose Williams forms a selection board to conduct the interviews. The board consists of himself, Robert Davis and Kevin Murphy. The problem is to select the most suitable applicants of the two applying for each post. Williams is the Chairman of the Selection Board and therefore responsible for leading each interview. Of course he may be not very active in asking questions, 52 Management but he must pay a great attention to the particular areas of each interview carried out by Davis or Murphy. It is quite clear that Davis, the marketing Manager, should approach each applicant with his marketing requirements firmly in mind, while Murphy, the Production Development Manager should be especially interested in the candidate’s previous experience and his ideas about his future work at Smallcrown. Before interviewing a candidate, each member of the selection board should think over a number of questions which will help to appreciate the essential qualities of the applicant. The points which may help the selection board to work out their attitude to this or that candidate can be the following: - the salary which will be offered, - the qualifications which are required for the job, - the value of the candidate’s previous experience, - the candidate’s attitude to the prospects that may be offered at Smallcrown. Vocabulary Notes on the Text a number of resignations – ряд заявлений об отставке to occupy a key position – занимать ключевую должность deputy Head – заместитель руководителя Task 2. Translate the following words and learn their pronunciation: advertise, application, applicant, apply, appreciate, attitude, candidate, curriculum vitae, experience, interview, position, particular, quality, qualification, requirement, resignation, selection, salary, value. Task 3. Explain the meaning of the following terms and expressions in English: An applicant, an application, a selection board, a curriculum vitae (a CV), an interview, a post, a qualification, a salary, a key position. Task 4. Give English equivalents to the following words and expressions. Use them in the sentences of your own: Отборочная комиссия, автобиография, оклад, ключевая должность, заместитель руководителя, заполнить анкету с заявлением о зачислении на работу. Task 5. Reproduce the text on behalf of: a) an applicant, b) one of the managers, c) the secretary, who is present at the selection procedure. Task 6. Complete the following sentences using the appropriate words from the box below: interview, appointment, apply, references, curriculum vitae, candidates, selection list, selection board, application 53 Management 1) When you see an advertisement for a job, and you want to _________ for this job, you send in an _________ . 2) You usually enclose a ______ with your letter. 3) If there are a great many ______ for a single job, the company usually draws up a ________. 4) Then the candidates are asked to come to an ________ which may take place before the ___________ or with a single person. 5) The ______ is made on the basis of the interview and the _________ from people who know the candidate. Task 7. Translate the following words and expressions and learn them. a vacancy, to apply for a post, to attend an interview, to write out a curriculum vitae, to choose the most suitable applicant, to make an appointment, a resignation, to fill in the application form, a reference, to attend an interview, to conduct an interview, to occupy a key position. Task 8. Translate into English: 1) Чтобы получить приглашение на интервью, необходимо заполнить анкету и заявление о приеме на работу, а также написать автобиографию 2) Вам придется начать работу с должности секретаря, чтобы приобрести необходимый опыт и потом занять одну из ключевых должностей. 3) К сожалению, в настоящее время у нас нет вакантной должности заместителя менеджера по сбыту. 4) В результате политики Уильямса ряд сотрудников, занимающих ведущее положение, подали заявления об отставке и компания была вынуждена объявить через газету о наличии вакансий. 5) Назначение на должность осуществляется на основании данных персонального интервью и рекомендаций от людей, знающих претендента на пост. Task 9. Answer the following questions: 1) What happened after Williams introduces his new policy? 2) What posts became vacant? 3) What does a company do when it wants to hire new employees? 4) What is the role of the Selection Board? 5) How should Davis and Murphy carry out the interview with the applicants? 6) Why should the members of the Selection Board work out the questions prior to the interview? Text 2. (Dialogue) Discussing a Candidate for the Post of a Product Executive Task 1. Read and translate the dialogue in pairs. Davis: 54 Now, that we’ve decided to revive the BSM-3 project we should engage a product executive to be directly responsible for marketing our new Management Williams: Davis: Williams: Davis: Williams: Davis: Williams: Davis: Williams: Davis: Williams: Davis: Williams: Davis: Williams: Davis: product. Do you have any suitable person in mind? Yes. I think we should approach Bob Lynch. He had dealings with us when he worked for the Ministry of Defence and is now looking for a job. What makes you think that he is the best one? What about his education, qualifications? They are perfect. He graduated from London University seven years ago with the qualification of an electronic engineer and a diploma with honours and joined the Ministry of Defence. I think his experience in negotiating contracts for the Ministry will be very valuable here. Why did he leave the Ministry? There seemed to be little chance of his ever rising to a higher position. He had worked for them for five years and hadn’t been promoted. Why do you think then he will be valuable here? He knows the way of handling electronic equipment, besides he has already gained some experience of the business world in general which is an important thing in my eyes. Where does he work at present? For some electronic equipment company, let me see … ah, Liverpool Motors. They offered him a job at a high salary with good prospects for promotion. And …? And after he had signed the contract of employment he found himself stuck behind a desk all day doing boring routine paperwork. Isn’t he too adventurous? He is. And it’s just what is necessary to be a good Product Executive. What about his references? You don’t believe but the best one is from the Ministry of Defence. They say that he is the first class material for a post such as technical salesman or product executive. Vocabulary Notes on the Dialogue to approach smb. – обратиться к кому-либо с предложением a diploma with honours – диплом с отличием to gain some experience of the business world – приобрести некоторый опыт в мире бизнеса found himself stuck – застрял adventurous – безрассудно смелый, предприимчивый Task 2. Give English equivalents of the following words and collocations: Рекомендации; кандидатура; диплом с отличием; обращаться с электронным оборудованием; обнаружил, что он застрял; скучная рутинная канцелярская работа; обратиться с предложением; приобрести опыт в мире бизнеса; предприимчивый; почти не иметь возможности занять более высокий пост; 55 Management первоклассный кандидат на должность. Task 3. Insert the correct prepositions: 1. Although Davis is not sure of Williams’s positive attitude, he has Bob Lynch ____ mind ____ the new post ____ product Executive ____ the BSM-3 project. 2. In the course ___ the interview it becomes more and more obvious that Lynch will be a suitable person ____ this post. 3. He has gained experience ____ electronic equipment while working ___ the Defence Ministry, though he dealt there only ____ the buying side. 4. ____ present he is working ____ an electronic equipment firm, and so he has already gained experience ____ the business world ___ general and the electronic industry___ particular, which is an important point _____ Davis’s eyes. Task 4. Complete the following sentences using the appropriate words from the box below: Promoted, vacancies, fill, promotion, contract of employment, high salary, position, possibility, subsidiary, management 1) Bob Lynch left the Ministry of Defence because there seemed to be little _____ of his ever rising to a higher ______. 2) He had been there for three years and had not been _____. 3) Meanwhile his friend had several ___ to _____ and he offered Bob a job at a ____. With good prospects for _______. 4) After he had signed the ____, he found out that he was to do a boring routine paperwork all day long. 5) So he asked the _____ if he could be transferred to one of their _____ companies. For the next session International management Global Careers Task 1. Before you read, discuss the following questions. 1. What qualities do you think a person needs in order to be a successful global manager? 2. What personal and professional skills do you need for a successful business career in your country, e.g. specialist training, knowledge of foreign languages, outgoing personality? 56 Management Task 2. Reading tasks. a) Understanding main points. 1. Which of these statements gives the best summary of the text below? a) A successful global manager needs many qualities. b) The qualities required to become a top manager differ from country to country. c) Many young managers are not interested in a global career. 2. Mark these statements T (true) or F (false) according to the information in the text. Find the part of the text that gives the correct information. a) International experience is essential if you want a global career. b) The demand for global managers is increasing. c) Young managers want to work internationally. b). Understanding details 1. Different qualities for career success are described for different cultures and nationalities. Match the qualities from the list below to the nationalities mentioned in the text. a) good communication skills b) technical creativity c) ability to network d) professional competence e) entrepreneurial skills f) knowing how to work within a hierarchical structure g) good interpersonal skills 2. Which national group considers communication and interpersonal skills to be more important – the British or the Dutch? 3. According to Andre Laurent, German, British and French managers see organizations as different kinds of networks. What words does he use to define these networks in each case? Task 3. Read the text and translate it. Text 1. Global careers Ideally, it seems a global manager should have the stamina of an Olympic runner, the mental ability of an Einstein, the conversational skill of a professor of languages, the detachment of a judge, the tact of a diplomat and the perseverance 57 Management of an Egyptian pyramid builder. And that is not all. If they are going to measure up to the demands of living and working in a foreign country they should also have a feeling for the culture; their moral judgment should not be too rigid; they should be able to merge with the local environment; and they should show no signs of prejudice. Thomas Aitken According to Colby Chandler, the former Chief Executive of Eastman Kodak Company, “these days there is not a discussion or a decision that does not have an international dimension. We would have to be blind not to see how critically important international experience is”. International companies compete with each other for global executives to manage their operations around the world. Yet what it takes to reach the top of a company differs from one country to the next. For example, whereas Swiss and German companies respect technical creativity and competence, British and French companies often view managers with such qualities as “mere technicians”. Likewise, American companies value entrepreneurs highly, while their British and French counterparts often view entrepreneurial behaviour as highly disruptive. Similarly, whereas only just half of Dutch managers see skills in interpersonal relations and communication as critical to career success, almost 90 per cent of their British colleagues do so. Global management expert, Andre Laurent, describes German, British and French managers’ attitude to management careers as follows: German managers, more than others, believe that creativity is essential for career success. In their mind successful managers must have the right individual characteristics. German managers have a rational outlook; they view the organization as a co-ordinated network of individuals who make appropriate decisions based on their professional competence and knowledge. British managers hold a more interpersonal and subjective view of the organizational world. According to them, the ability to create the right image and to get notices for what they do is essential for career success. British managers view organizations primarily as a network of relationships between individuals who get things done by influencing each other through communicating and negotiating. French managers look at organizations as an authority network where the power to organize and control others comes from their position in the hierarchy. French managers focus on the organization as a pyramid of differentiated kevels of power. They perceive the ability to manage power relationships effectively and to “work the system” as critical to their career success. As companies integrate their operations globally these different national approaches can send conflicting messages to success-oriented managers. Subsidiaries in different countries operate differently and reward different behaviours based on their unique cultural perspectives. The challenge for today’s global companies is to recognize local differences while at the same time creating globally integrated career paths for their future senior executives. There is no doubt the new global environment demands more, not fewer, 58 Management globally competent managers. Global experience, rather than sidetracking a manager’s career, is rapidly becoming the only route to the top. But in spite of the increasing demand for global managers, there is a potentially diminishing interest in global assignments, especially among young managers. A big question for the future is whether global organizations will remain able to attract sufficient numbers of young managers willing to work internationally. Text 2. Getting ready for the Board Meeting Task 1. Read and translate the text. Mr. Eldridge had still not made up his mind whom to support: Smallcrown or Modern Phones. Modern Phones had already sent all the relevant information on their project but nothing definite had been heard from Smallcrown. So Eldridge decided to phone Williams with a view of finding out what Smallcrown’ plans were. Eldridge told Williams that he could extend Smallcrown’s deadline only by two weeks and that he wanted to get the decision of the Board of Directors by that time. After Williams had finished talking to Mr. Eldridge, he rang up Robert Davis and told him to be ready with the report by the date of the coming Board meeting where it would be put on the agenda. While working on the report Davis asked to give him the exact production figures for the BSM-3 project. After he had got them he was shocked because Smallcrown’s specialists maintained that the production capacity of their firm would have to be increased by 25% if they were to go ahead with this project. Davis’s next step was to call up Dr. Adams but she was unable to supply any extra information at least none could seriously influence the final decision of the Board of Directors. Therefore when Davis submitted his report to Willams, the latter said that he very much doubted that the Board would agree to back the project on the evidence given in the report. In Willams’s opinion the production figures and the sales forecasts were far from optimistic. Yet he allowed Davis to arrange the demonstration of the BSM-3 for the Board. The meeting of the Board took place in ten days and Davis invited to explain and defend his report. At first Davis’s proposal to revive the BSM -3 project was greeted with a mixture of surprise and skepticism but when Davis demonstrated the model of the new radiophone the Board were very much impressed and so by the end of the meeting there was quite a different atmosphere in the Boardroom. Mr. John Williams – a Chairman and Managing Director of Smallcrown Mr.Eldridge – Director of the bank Mr.Davis – a Marketing Manager of Smallcrown 59 Management Vocabulary Notes on the Text relevant information – относящаяся к делу информация with a view of … – с целью, с намерением to extend the deadline – отодвинуть крайний срок production figures – производственные данные production capacity – производственная мощность to go ahead with something – продолжать делать что-либо on the evidence given in the report – с учетом данных доклада sales forecasts – прогнозы сбыта to arrange a demonstration – организовать показ Task 2. Translate the following words and learn their pronunciation. Agenda, capacity, mixture, skepticism, atmosphere, relevant, definite, forecasts, deadline, ahead, minutes Task 3. Find in the text words and expressions close in meaning to the following. Data, precise, to prolong, to exhibit, with the purpose of, additional, to be very much surprised, to go on doing something, to be of the opinion, to support Task 4. Explain the meaning of the following terms and expressions in English Sales forecasts, to arrange a demonstration, production figures, to go ahead with something, production capacity, minutes, deadline Task 5. Give English equivalents of the following Russian words and phrases а) крайний срок, смесь удивления и скептицизма, прогнозы сбыта, относящаяся к делу информация, производственные данные, повестка дня, дополнительная информация б) увеличить на 25%, внести в повестку дня, быть под впечатлением от чеголибо, представить доклад, возобновить проект, встретить что-либо с удивлением, сомневаться (в успехе). Task 6. Complete the following sentences using the appropriate words from the boxes below: Preliminary study, facts and figures, circulation, rumors, findings, to back, hard facts 1. Williams told Davis that the findings of the _____ ____ did not satisfy him. 2. As the ___ did not convince him, he felt that the study would not be enough to persuade the Board to _____ the BSM – 3 project. 3. He said he needed ___ ____ to present the Board, not ______. 60 Management 4. He added that the ___ ___ in the survey were not satisfying on their own and asked Davis to prepare another report for _____ by the date of the coming Board meeting. Minutes, agenda, discussion, item, subject (twice), changed, bringing up 1. Healey brought the ____ for the next Board meeting in to Williams. 2. As Willams didn’t want to discuss the details of the BSM-3 project, the wording of ____ three had to be ___. 3. Williams did this so that Coleman would have no chance of _____ the ____ of the BSM – 3 and pressing for ____ of the project. 4. He also told Healey to look up the _____ of the meeting at which the BSM-3 had been suspended in case he was unable to keep Coleman off the ____ of development projects. For Additional Reading Visiting Customers Task 1. Read and translate the text. I. In view of inevitably delayed delivery dates, it was very important to get in touch with all Smallcrown’s customers. The Sales and the Marketing Managers agreed that the sales force should approach customers individually and follow this up with an explanatory letter. Davis emphasized that they should reassure the customers that Small crown could still deliver the goods. They settled that Whitney himself would visit as many customers as possible after sending out an explanatory letter. Later that week Whitney together with one of his salesmen visited Boyd Hardware. Whitney supposed that Boyd Hardware’s case would be easy to handle but after the meeting with the chief of the company expecting a large order of hardware components by the end of the month, he was not so sure. During the meeting Whitney didn’t waste time making excuses or explaining Smallcrown’s problems. He just came straight to the point and questioned whether Boyd Hardware had sufficient stocks to give Smallcrown the chance to re-schedule its deliveries. By checking the stock levels it was established that Boyd Hardware had enough components to last for several months, so it would be possible to reschedule deliveries without disrupting Boyd Hardware’s production. Yet in spite of this the company chief pointed out that he didn’t like the idea of being overdependent on Smallcrown for supplies. He pointed out that it would have been almost impossible to find alternative supplies at short notice if the fire had been bad enough to halt production for several months. He added also that he 61 Management had got a number of attractive offers from some of Smallcrown’s competitors, though he hoped there would not be any necessity to make use of them. While Whitney was busy making tours of domestic customers, Davis was preparing to set off for the Continent. II. The first overseas customer that Davis visited was Rik Bekker in Antwerp. The news that Smallcrown was unable to deliver goods on time put Bekker in a difficult position. It was only a short time ago that he persuaded the reluctant Board of Directors to order components from a British firm. To admit now that the components would not be delivered on time would make things very unpleasant both for him and for Smallcrown. Davis noticed that Bekker’s order was extremely large and asked him if he really needed two thousand components per month right through the winter. Bekker admitted that there might be some seasonal variation in his schedules but just at that time they needed the goods urgently. So Davis failed to change Bekker’s mind on this point. From Antwerp Davis flew on to Bremen where he met Klaus Schneider, Smallcrown’s agent in Germany. During the course of their conversation Davis brought up the question of the BSM-3 project and was surprised to see that Schneider was extremely interested in it. Schneider even asked if Smallcrown would be willing to sell him the patents in Germany. He said that there was now market for this device although there had not been five years ago when the BSM-3 project was suspended. Next day Davis visited Dr.Scheeper, Smallcrown’s largest customer in Germany. Once again he had to explain how the fire had affected Smallcrown’s delivery schedules and apologize for the inevitable delays. Dr.Scheeper pointed one order for a consignment of 3500 components that he needed for his model BN33 and that could not be delayed. Although Davis knew hat it would be a problem to meet this order, he promised to do his best. Then Davis brought up the question of Dr.Scheeper’s previous orders and found out that Dr.Scheeper’s company no longer needed them as they had developed a cheaper model and were going to use components of other types. So Davis asked Dr.Scheeper to arrange an immediate delivery of the ordered components to Antwerp since their customers there needed exactly those components. Vocabulary Notes on the Text in view of inevitably delayed delivery dates – принимая во внимание неизбежную отсрочку в датах поставок sales forces – торговый персонал to approach customers – вести переговоры с заказчиками to handle the case – уладить дело to waste time making excuses – тратить время на извинения to come straight to the point – сразу перейти к делу 62 Management stocks – запас, резерв на складе to re-schedule deliveries – пересмотреть график поставок stock levels – количество товарного резерва at short notice – за короткий срок to halt production – останавливать производство to make tour of somebody – наносить визиты, посетить a consignment – партия товара to meet an order – удовлетворить (выполнить) заказ to do one’s best – сделать все, что в чьих-либо силах Task 2. Find in the text words and expressions close in meaning to the following A client, enough, on the spot, unavoidable, to start for, to make an order, to arrange, to settle an affair, to visit clients Task 3. Give English equivalents of the following words and phrases a) дата поставок, пересмотреть график поставок, сезонные отклонения от графика поставок, запас товаров на складе, проверить количество товарного запаса, остановить производство, сорвать производственный процесс, зарубежные/отечественные заказчики, вести переговоры с заказчиками, выполнить заказ, заказ на партию чего-либо, предыдущий заказ b) уладить дело, сразу перейти к делу, отправиться куда-либо, сделать вывод, поставить кого-либо в трудное положение, сделать все возможное, слишком зависеть от кого-либо To get more information about global management try to do the following tasks: Task 1. The characteristics of management often vary according to national culture, which can determine how managers are trained, how they lead people and how they approach their jobs. Below you will find five brief portraits of managers in five different countries. Using your knowledge of the United States, the United Kingdom, France, Germany and Sweden, decide which country each of these portraits correspond to. 1. Managers from this country: - go through an elitist educational system; - have a strong sense of hierarchy and power; - often have impersonal relationships at work; - analyze problems in great detail before taking decisions; - consider speaking skills to be particularly important; - move easily between state and private sectors. 2. Managers from this country: - receive a general education; - delegate authority; 63 Management - take a practical approach to management; - have a relatively formal relationships at work; - encourage their employees to work individually; - believe it is important to continue education and training at work. 3. Managers from this country: - consider professional and technical skills to be very important; - have a strong sense of authority; - respect the different positions in the hierarchy of their companies; - clearly define how jobs should be done; - are very loyal to their companies and expect their subordinates to obey them; - are often older than in other countries. 1. Managers from this country: - consider social qualities to be as important as education; - encourage their employees to take an interest in their work; - pay close attention to the quality of working life; - do not use as much authority as in other countries; - appreciate low-level decision-making; - are often women. 5. Managers from this country: - generally attend business schools; - communicate easily and informally at work; - admire the qualities of a leader; - expect everyone to work hard. Individual performance is measured and initiative is rewarded; - have competitive and sometimes aggressive attitudes towards work; - often accept innovation and change. What are the advantages and disadvantages of each approach to management and which one you would find the most attractive? Do any of these profiles correspond to management practices in your country? Management Task 2. Study the following information about management and say a) what the word “management” means; b) what the four functions of management are. Management is the art or practice of managing a business, money, products, and all the people employed by a company. In other words, management is a set of activities directed at an organization’s human, financial, physical and information resources with the aim of achieving organizational goals in an efficient and effective manner. In this case, “efficient” means “using resources wisely and without unnecessary waste” while “effective” means “doing the right things”. The chart below shows the four main functions of management. 64 Management Planning and decision making Determining the organization’s goals and deciding how best to achieve them, delegating responsibilities to subordinates. Organizing Determining how best to group activities and resources. Making all employees work together. Leading Motivating members of the organization to work in the best interests of the organization. Controlling Monitoring and correcting ongoing activities, receiving reports from subordinates, helping subordinates handle exceptions. The golden rule of successful management can be summed up in the following words: “The system works well as long as we don’t have any exceptions”. Successful management is getting things done through “others”, that is through the manager’s immediate subordinates. The word “management” is also used to denote the people who are in charge of a company or an organization. Although large organizations typically have a number of levels of management, the most common view considers three basic levels: top, middle and first line managers. More about Management Task 3. Read and translate this text to get additional information. Some people learn everything without the help of a teacher; others learn nothing even when carefully taught. Most of us, however, fall in the category where we can learn if we are taught. The better we are taught, the better we learn. A skill can definitely be taught. A skill is something that can be observed, analyzed, explained, practiced, criticized and practiced again. Management is the kind of skill that can be taught, learned and must be practiced. Management is not an academic subject to be absorbed passively. Even when managers have received degrees in their field, most of their learning gets done on the job. In this way learning to manager is a bit like learning to ride a bicycle. Management is a kind of house-keeping. But it is also home-making in that it involves dealing with people. Management means getting things done and no one not even the single entrepreneur can do it alone. The successful manager knows how to get the right people to do the right jobs. He/she knows how to delegate authority: how to make people feel good about the responsibility they are taking and the creativity they engage in. All of us need a sense of self-fulfillment and the successful manager will know how to give such a sense to the people who work with him/her. All management involves three elements: planning, execution and control. Every enterprise must be carefully planned before the first step is taken. That, of course, does not mean that plans cannot be changed mid-stream. The successful 65 Management manager should be flexible enough to let his/her original design go and switch gears when he/she feels it necessary to do so. Execution means that plans are realistic enough to be carried out and to see them to their fruition. Control is the sense of keeping one’s hands on the reins of things – seeing that the project doesn’t get too far out of touch with the possible, keeping people on track, keeping lines of communication open. Managers never work alone. They listen to others and they pay attention. The best way, of course, to know who the best manager is, is to look at the final result of the project – the proof of the pudding is in the eating – bon appetit! 66 Finance and Credit Finance and Credit Part I. Banks Vocabulary account – счет, расчет bank – банк bank lending – банковские ссудные операции banker – банкир banking – банковская деятельность central bank – центральный банк central bank – центральный банк investment bank – инвестиционный банк merchant (commercial) bank – коммерческий банк mutual savings bank – взаимно-сберегательный банк savings bank – сберегательный банк retail bank – банк, занимающийся обслуживанием мелкой клиентуры borrower – заемщик budgeting – составление бюджета building society – жилищно-строительное общество carry out – осуществлять checking account –чековый счет clearing houses – расчетные палаты collect cheques – инкассировать чеки comprise – включать, заключать в себе creditworthiness (solvency) – кредитоспособность currency exchange – валютная биржа current (running) account – текущий счет deal in securities – торговать ценными бумагами dealing – сделка demand deposit – бессрочный вклад deposit – депозит, вклад в банке deposit account – депозитный счет depositor – вкладчик developed country – промышленно-развитая страна discount bills – учитывать векселя electronic cash till (cash dispenser/machine, automatic teller machine, cashomat) – банкомат embrace – охватывать, включать eurobond – еврооблигация financial assets – финансовые активы financial institution – финансовый институт 67 Finance and Credit financial system – финансовая система financing – финансирование flow (flew, flown) – течь, перетекать foreign exchange market – валютный рынок fund – фонд; капитал; денежные средства; funds – средства insurance – страхование interest – процент interest rate – процентная ставка interest-free loan – беспроцентная ссуда intermediary – посредник issue banknotes – выпускать денежные знаки license – лицензировать, выдавать лицензии link – связывать loan – заем, ссуда locate – размещать, располагать в определенном месте long-term loan – долгосрочная ссуда maintain – удерживать, поддерживать ministry of finance – министерство финансов mortgage – закладная, ипотека network – сеть on-line banking – онлайновые банковские операции percentage return – доход в виде процента perform a function – осуществлять функцию private account – счет частного лица (фирмы) saver – вкладчик securities – ценные бумаги share – акция stock exchange – фондовая биржа stockbroker – биржевой брокер supervise – контролировать, осуществлять надзор take charge of clients’ valuables – брать на хранение ценности клиентов time deposit – срочный вклад to deposit – класть в банк, делать взнос to draw (to receive) interest – получать проценты to loan (to lend) – давать взаймы, одалживать to make a loan – взять ссуду to make a transaction – заключать сделку to pay off (to repay) a loan – вернуть to transfer – осуществлять перевод средств transaction (deal) – сделка, операция transfer – передача, перевод transfer money – переводить денежные средства transfer of funds – перевод средств vault – хранилище 68 Finance and Credit Vocabulary Exercises Exc. 1. Make up at least 10 word-combinations using the following words: rate pension cash mutual bank checking deposit to make money time fund transaction interest account loan savings to invest till electronic Exc. 2. Match the terms to their definitions. 1) payment for the credit stated by the bank 2) a business deal, especially a sale or purchase 3) a bank that acts as an intermediary between companies and the investing public 4) the large amount of money collected 5) an arrangement between a bank and a customer under which the customer deposits with the bank a sum of money 6) a machine from which the customer of a bank can obtain cash in bank-notes up to a certain value at any time of day or night putting a cash card into it 7) a contract by which money is borrowed to buy a house or some other property transaction electronic cash till fund account interest rate investment bank mortgage Exc.3. Cross one out. 1. transaction, deal, account, bargain 2. to loan, to lend, to credit, to borrow 3. to put in, to deposit, to establish, to invest 4. central, retail, savings, discount Exc.4. Fill in the blanks with the following words: fund, account, bankrupt, lend, interest 1. We will have to close the factory – our company is _________. 2. The best rate of ________ the banks can offer is around 14 per cent. 3. The bank doesn’t ________ her the money to buy the car because she has a bad credit record. 4. They used this money to set up a ________ for the refugees. 5. Some banks make it difficult to open an _________. Exc.5. Match the groups of words in column A to the words in column B. A B 1) checking private current a) fund 2) time demand fixed b) deposit 3) commercial investment universal c) money 69 Finance and Credit 4) pension mutual charity 5) to invest to put in to fund d) account e) bank Exc.6. Match English words and phrases with their Russian equivalents. 1) private account a) банкомат 2) time deposit b) ипотечные банки 3) cash till c) счет частного лица 4) low-interest loan d) положить деньги в банк 5) financial transactions e) денежные средства 6) monetary funds f) срочный вклад 7) mortgage banks g) финансовые операции 8) to deposit money in a bank h) ссуда под низкий процент Text 1. The Financial System Task 1. Read and translate the text. The financial system of a developed country is a network of financial institutions comprising organizations carrying out and regulating financial activities, the ministry of finance, the treasury, the central bank, the tax service, stock and currency exchanges. Financial activities embrace budgeting, financing, investment, banking, taxation and insurance. Financial assets flow in the system from savers, who act as sources of funds, to borrowers, who use them. Savers and borrowers in the system are linked by financial intermediaries – banks, finance, investment and insurance companies. Banks occupy a central place in any financial system. Historically the heart of financial services industry in Britain has been located in the famous “Square Mile” in the City of London. The City is one of the largest financial centres in the world. There re more overseas banks in the City than in any other financial centre. The banking sector in Britain accounts for about a fifth of total international bank lending. The world’s largest financial markets – the London Stock Exchange, the Foreign Exchange Market, the Financial Futures and Options Market, eurobond and Eurocurrency markets, the world’s largest international insurance market – are also located there. Note on the Text …”Square Mile” in the City of London. – … «Квадратная миля» в Лондонском Сити future – фьючерс option – опцион Task 2. Comprehension questions 70 Finance and Credit 1. 2. 3. 4. 5. What does a financial system comprise? What do financial activities embrace? Who are the savers and borrowers linked by? What is the “Square Mile”? What financial markets are located in London? Task 3. Find English equivalents for the following Russian phrases: - финансовая система развитой страны - сеть финансовых институтов (организаций) - осуществлять и контролировать финансовую деятельность - министерство финансов - казначейство - налоговая служба - фондовые и валютные биржи - финансовая деятельность охватывает - финансовые активы - вкладчики - источники финансовых средств - заемщики - финансовые посредники - занимать центральное место - иностранные банки - составлять (часть чего-л.) - банковские ссудные операции - рынок финансовых фьючерсов и опционов - рынок еврооблигаций - страховой рынок Task 4. Give derivatives of: financial organization regulating taxation saver borrower investment insurance service lending located Task 5. Read the text and translate it into Russian. Say what role banks play in any financial system. Banks play a very important role in any financial system. Most typically 71 Finance and Credit banks open accounts for their clients and receive money on current and deposit accounts. These funds are used by them to provide loans or for investment. Apart from these functions bankers perform many other functions of great value to their clients. Banks collect cheques, discount bills of exchange, transfer money, buy and sell securities for their clients, take charge of their clients’ valuables. As a rule, commercial banks in a country are supervised by the central bank, which acts as the government’s banker. Among other functions central banks have the sole right to issue banknotes and to license retail banks. Words and word combinations you may need apart from – не говоря уже о, кроме, не считая have the sole right – иметь монопольное право Task 6. Match the infinitives in A with the nouns in B. A B to carry out and to regulate a place to perform loans to license activities to occupy funds to buy money to borrow intermediaries to issue a role to use banknotes to act as an account to play bills to open a function to provide cheques to collect currency to discount banks Text 2. The Stock Exchange Task 1. Read and translate the text. A stock exchange is a highly organized financial market where bonds, shares and other securities can be bought or sold. Stock market business is worldwide. London, Johannesburg, New York, Melbourne, Tokyo, Calcutta, Paris, Amsterdam and Brussels are all famous centres of stock exchange activity. The function of a stock exchange is to put those who wish to sell securities in touch with those who wish to buy them. The London Stock Exchange plays a vital role in maintaining London’s position as a major financial centre. London has had a stock exchange for dealing 72 Finance and Credit in different securities for over 200 years, its first building was constructed in 1801. Then, in 1853 a new building was constructed on the same site. But to keep pace with modern requirements and to provide the most up-to-date facilities for both members and investors it was decided once again to rebuild the Stock Exchange on the same site. Work started in 1966. The Stock Exchange was completed in 1972. As a result of legal reforms implemented in 1986 and known as “Big Bang”, the Exchange has changed radically over recent years. The most fundamental change has been the move away from the traditional market floor to screen-based trading. Now stockbrokers deal in securities through telephones and computers which have linked London much more closely with the other major international financial centres. Note on the text to deal in – торговать to deal with – иметь дело с чем-либо vital role – жизненно важная роль keep pace with – идти в ногу с “Big Bang” – «Биг Бэнг» («Большой взрыв» – реорганизация Лондонской биржи) radically – радикально screen-based trading – электронная торговля Task 2. Comprehension questions 1. What is a stock market? 2. What function does a stock market perform? 3. Had the London Stock Exchange moved to different places and different buildings over more than 200 years of its existence? 4. What reform of the London Stock Exchange was implemented in 1986? Task 3. Find in the Text English equivalents for the following Russian words and phrases: - покупать и продавать облигации; - акции и другое ценные бумаги; - сводить вместе желающих продать и желающих купить ценные бумаги; - играть жизненно важную роль; - удерживать положение; - идти в ногу с современными требованиями; - обеспечить cовременными условиями для работы; - было решено; - осуществлять реформы; - продавать и покупать ценные бумаги с помощью телефона и компьютера. Task 4. Write out from the text international words, transcribe and translate them into Russian. 73 Finance and Credit Task 5. a). Read the text and translate it into Russian. b). Say whether you agree with the assessment of the Russian stock market given in the text. At present, the Russian stock market does not fully meet the Russian economy’s development requirements. The task of the market to accumulate savings and to transform them into investments in the real economy is not fulfilled effectively. Few securities are traded in the market. It is believed, however, that the market has a tremendous potential. If risks are lowered and a favourable investment climate is created in Russia, our market will become attractive to Russian and foreign investors. Words and word combinations you may need task – задача accumulate – накапливать transform – трансформировать, преобразовывать trade – покупать и продавать ценные бумаги lower risks – снижать риски tremendous – огромный Task 6. Match the infinitives in A with the nouns in B. A B to meet a climate to accumulate savings to fulfill a task to sell requirements to implement construction to play facilities to deal in a house to rebuild bonds to provide reforms to have securities to complete a role to create a potential For the next session Task 1. Read and translate the text. Banks If you work, you’ve probably got a bank account. You could keep the money you earn each month in a box under your bed but it wouldn’t be very sensible. One reason is that it’s not very safe. If your house gets burgled you’ll lose everything you’ve saved. Another reason is that your money will lose value. 74 Finance and Credit As price rise, the money in a box under your bed will be able to buy fewer and fewer things. Money in a bank savings account, however, will earn interest. The interest will help compensate for the effect of inflation. But banks are more than just safe places for your money. What other services do they offer? The other main service is lending money. Individuals and businesses often need to borrow money and they need a lender that they can trust. This is exactly what banks are – reliable lenders. In fact, most of the money that people deposit in their bank accounts is immediately lent out to someone else. Apart from storing and lending money banks offer other financial services. Most of these are ways of making money more accessible to customers. For example, banks help people transfer money securely. They give customers cheque books and credit cards to use instead of cash. They provide ATM machines so that people can get cash any time of the day or night. But how do banks make a living? Basically, they make a living by charging interest on loans. Of course, when you make a deposit into a bank savings account, the bank pays you interest on that money. However, the rate they pay savers is less than the rate they charge borrowers. The extra money they make by charging interest on loans is where banks earn most of their money. For banks, interest is also a kind of security. Sometimes people do not pay back money they borrow. This is called defaulting on a loan. When someone defaults on a loan the bank uses money earned from interest to cover the loss. All of this means that most of the money people have saved in the bank is not there at all. A small amount of the total savings is kept by the bank so that customers can make withdrawals. The rest, however, is made available for loans. The amount that is kept is called the reserve. The reserve must be a certain percentage of all the savings received from customers – for example 20 per cent. This figure is set by the central bank and this is one of the ways that governments can control the amount of money circulating in the economy. Task 2. Now read the text again and answer these questions in your own words. 1. What two reasons are given for saving your money in a bank account? 2. Why do people prefer to borrow money from banks? 3. Do banks do anything else for their customers other than store and lend money? 4. How do banks earn money? 5. Who decides how much money the bank keeps in reserve? Speaking Give a two-minute presentation on the history of money. First, read through text 1 again and make notes below on the following. - bartering - commodity money - fiat money You can also include recent developments not mentioned in the text, such as credit 75 Finance and Credit cards and digital money. Writing Write a promotional leaflet for a bank. The aim of the leaflet is to attract new customers and to inform existing customers about the services the bank offers. Use an informal, friendly style like you see in advertisements. Organise the leaflet using the plan shown here. Promotional Leaflet Paragraph 1 Give a brief history of the bank and say how big it is today (to give confidence to customers). Paragraph 2. Explain what your main services are and what advantages you offer compared to other banks (for example, interest rates). Paragraph 3. Say what other services you offer and how they can be useful to your5 customers: for example, special savings schemes for certain people (students / pension schemes for workers) and Internet banking. Paragraph 4. Say how customers (or potential customers) can contact the bank (e-mail, web page, phone number, local branches, etc). Write 200-250 words. 76 Finance and Credit Part II Money Vocabulary acceptability – приемлемость accounting – бухгалтерский учет accumulate wealth – накапливать состояние bill of exchange – вексель, тратта cash – наличные деньги check – чек checkbook money – деньги банковского оборота coin – монета commodity money – товарные деньги credit money – кредитные деньги cash – наличность currency – валюта foreign currency – иностранная валюта domestic currency – внутренняя валюта cheque (check) – чек traveller’s check – дорожный чек banker’s check – банковский чек cheque book – чековая книжка to draw a cheque – выписать чек to cash a cheque – обналичить чек bank-note (paper bill, paper note) – банкнота cost of expenditure – стоимость затрат demand deposit – депозит до востребования deteriorate – ухудшаться divisibility – делимость durability – продолжительность срока использования enhance – увеличивать, усиливать exchange – обмен; биржа exchange rate – обменный курс foreign exchange – иностранная валюта, курс иностранной валюты fiat – декрет, постановление, указ fiat money – деньги, считающиеся деньгами по указу figure – подсчитывать, считать means of payment – средство платежа 77 Finance and Credit medium of exchange – средство обращения meet the conditions – выполнять условия mint – чеканить money – деньги to make money – зарабатывать деньги to spend money – тратить деньги to waste money – растрачивать деньги to save money – экономить деньги to lend money – давать взаймы деньги to borrow money – брать взаймы деньги to change money – менять, разменивать деньги to lose money – потерять деньги to owe money – быть должным деньги to pay платить – расплачиваться деньгами to earn – зарабатывать деньги to invest – вкладывать, инвестировать деньги electronic money – электронные деньги paper money – бумажные деньги representative money – представительские деньги near money – субститут денег payable on demand – подлежащий оплате по предъявлении purchasing power – покупательская способность record keeping – ведение учета savings account – депозит, сберегательный счет stability in value – стабильность ценности stand for – означать, символизировать standard of value – мера стоимости store of value – средство накопления time deposit – срочный депозит transaction – сделка, операция uniformity – единообразие unit of accounting – единица учета реального капитала value – стоимость, цена, валюта wealth – богатство, состояние worth n. – цена, стоимость, ценность worth adj. – имеющий ценность, приносящий доход Vocabulary Exercises Exc. 1. Look through the following words and say: a). which of them refer to English money : b). which refer to American money. 1) a ten pence piece 78 Finance and Credit 2) 3) 4) 5) 6) 7) 8) a quarter a one pound point a dollar bill a five pound note a penny a dime fifty cents Exc. 2. Match the words with their definitions. pocket money cash change wages 1. money in notes and coins 2. money you get back when you buy something 3. money you get paid every year for working 4. money you get paid for doing a job 5. money parents give their children salary Exc. 3. Fill the gaps in the sentences below with the given verbs. pay spend waste invest earn save borrow 1. 2. 3. 4. 5. 6. If you work, you ... money. If you go shopping, you ... money. If you buy something, you ... for it with cash or a credit card. If you don′t use your money carefully, you ... it. If you haven′t got enough money, you ... it from friends or from the bank. If you want to ... money, you put it in the bank, or you ... it in a company, and hope the company is successful. Exc. 4. Define the following words into four groups. a bill a fine a money belt a cheque a fare a wallet a bank account a debit card a share a purse a credit card a piggy bank 1) 3 ways to pay for something: 2) 3 things you carry money in: 3) 3 things you must pay: 4) 3 ways to save money: Exc. 5.Match the expressions in the left column with their translation in the right one. 1. national currency обеспеченный и конвертируемый 2. gold standard золотой запас 3. medium of exchange национальный банк 4. banking system золотой стандарт 5. backed by and converted into государственный банк 6. in circulation бумажные деньги, обеспеченные золотом или серебром 79 Finance and Credit 7. paper currency 8. state bank 9. national bank 10. fiat money 11. representative money gold reserve банковская система национальная валюта находящийся в обращении бумажные деньги бумажные деньги ( не обеспеченные золотом) Exc.6. Complete the text using the words from the box. There are two words which you don’t need to use. Buy, sell, value, investment, denominations, coin, mint, rise currency, containing, gold, circulation, What is a Gold American Eagle? Gold coins have not been legal tender in the United States since the early 1930s. The Gold Bullion Act that President Reagan signed in 1985, however, once again allows the United States government to ____ coins. The American Eagle gold coin comes in ____ of $5, $10, $25 and $50. Each ____ contains a different amount of ____, with the $50 coin ____ a full ounce of gold. The actual price at which the gold coins ____, however, is higher than the face ____ of the coin. Most people who ___ the gold coins do so as an _____, hoping that the coins will ____ in value. In 1986, the $50 Gold American Eagle was selling for about $450. Text 1. Money Task 1. Read and translate the text The cash we use every day is something we take for granted but for thousands of years people traded without it. Before money was invented people used a system called bartering. Bartering is simply swapping one good for another. Imagine that you have milk, for example, and you want eggs. You simply find someone who has eggs and wants milk – and you swap. However, you can see that this isn’t a very convenient way to trade. First of all, you can’t be sure that anyone will want what you’ve got to offer. You have to hope that you’ll be lucky and find someone who has what you want and that he or she wants what you’ve got. The second problem with bartering is that many goods don’t hold their value. For example, you can’t keep your milk for a few months and then barter it. Nobody will want it. After some time people realized that some goods held their value and were easy to carry around and to trade with. Examples were metals like copper, bronze and gold and other useful goods like salt. These are examples of commodity 80 Finance and Credit money. With commodity money the thing used for buying goods has inherent value. For example, gold has inherent value because it is rare, beautiful and useful. Salt has inherent value because it makes food tasty. If you could buy things with a bag of salt, it meant you could keep a store of salt and buy things anytime you needed them. In other words, commodity money can store value. Using commodity money was much more convenient than ordinary bartering but it still had drawbacks. One of these drawbacks is that commodity money often lacks liquidity. Liquidity refers to how easily money can circulate. There is obviously a limit to how much salt you can carry around. There’s another problem with commodity money: not everyone may agree on the value of the commodity which is used as money. If you live by the sea, salt may not be so valuable to you. Money needs to be a good unit of account. In other words, everyone should know and agree on the value of a unit. This way, money can be used to measure the value of other things. The solution is to create a kind of money that does not have any real intrinsic value but that represents value. This is called fiat money. The coins and notes that we use today are an example of fiat money. Notes don’t have any inherent value – they are just paper. However, everyone agrees that they are worth something. More importantly, their value is guaranteed by the government. This is the reason why pounds and dollars and the world’s other currency have value. Task 2. Complete the table with information from the text. Examples Bartering Advantages swapping eggs for simple to understand milk (3)_________ and allows you to store Commodity (4)____________ (5)____________ money Fiat Money (8)__________ and (9)__________ Disadvantages not (1)____ way to trade foods don’t (2)_______ not (6)______ agrees on its value lack of liquidity means money can’t (7)____ easily value is (10) ______ by the government Task 3. Choose the correct word or phrase. 1. One reason why people buy goods is because it (holds its value/is taken for granted). 2. When we buy things, we (swap/represent) money for goods. 3. Diamonds are valuable because they are so (intrinsic/rare). 4. The dollar is the (cash/currency) of the USA. 81 Finance and Credit 5. When people (barter/guarantee) goods they simply exchange one good for another. 6. Banks will only lend to people who can (guarantee/barter) to pay back the loan. 7. Some shops won’t accept credit cards. They will only take (cash/currency). 8. When something (holds its value/is taken for granted) people don’t think it has great value. 9. Coins and notes are used to (swap/represent) value. 10. Metals have (intrinsic/rare) value because they can be used to make things. 11. If money can easily be moved around and used we say it has (liquidity/currency). 12. Centuries ago people paid using (commodity money/fiat money) such as gold and silver. 13. (Commodity money/fiat money) like banknotes and coins has intrinsic value. It only represents value. Text 2. History of Money Task 1. a). Read the text aloud. b). Look up the words you do not know in the dictionary. c). Why were such commodities as cattle, sheep, furs, leather, fish, tobacco, tea, salt, shells replaced by precious metals? d). Explain the role of goldsmiths in the appearance of banknotes. At different periods of time and in different parts of the world many different commodities have served as money. These commodities were: cattle, sheep, furs, leather, fish, tobacco, tea, salt shells etc. The experts underline that to serve effectively as money, a commodity should be fairly durable, easily divisible and portable. None of the above-mentioned commodities possessed all these qualities and in time they were replaced by precious metals. First they were replaced by silver and later by gold. When a payment was made the metal was first weighed out. The next stage was the cutting of the metal into pieces of definite weight and so coins came into use. Paper money first came into use in the form of receipts given by goldsmiths in exchange for deposits of silver and gold coins. After goldsmiths became bankers their receipts became banknotes. That’s how the first banknotes came into existence. Text 3. The Functions of Money Task 1. Read and translate the texts. Money, with its special characteristics, serves many important economic functions. 82 Finance and Credit Money is anything that people commonly accept in exchange for goods and services. Money has three basic functions. It serves as a medium of exchange, a standard of value and a store of value. Anything that serves any of these three functions is a type of money. Medium of exchange. The single most important use of money is as a medium of exchange. A medium of exchange is any item that sellers will accept in payment for goods or services. As a medium of exchange, money assists in the buying and selling of goods and services because buyers know that sellers will accept money in payment for products or services. Standard of value. The second use of money is as a standard of value. That is, money provides people with a way to measure the relative value of goods or services by comparing the prices of products. In this way, people can judge the relative worth of different items such as a television and a bicycle. They can also judge the relative values of two different models or brands of the same type of item by comparing their prices. Money’s function as a standard of value is also important to record keeping. Businesses need to figure profits and losses. Similarly, governments must be able to figure tax receipts and the cost of expenditures. Money, because it helps provide some uniformity to these accounting tasks, is also called a unit of accounting. Store of value. The third function or role of money is that it can be saved or stored for later use. For money to serve as a store of value, two conditions must be met. First, the money must be nonperishable. That is, it cannot rot or otherwise deteriorate while being saved. Second, it must keep its value over time. In other words, the purchasing power of the money must be relatively constant. If both of these conditions are met, many people will be hesitant about saving money today that will be worth little or nothing tomorrow. Characteristic of Money To be used as money, an item must have certain characteristics. The five major characteristics of money are durability, portability, divisibility, stability in value and acceptability. Durability. Durability refers to money’s ability to be used over and over again. Eggs would be a poor choice for money because they are fragile and perishable. Metals such as gold and silver, however, are ideal because they withstand wear and tear well. In fact, many coins minted in ancient times are still in existence. Portability. Money’s ability to be carried from one place to another and transferred from one person to another is its portability. As a medium of exchange, money must be convenient for people to use. Items that are difficult to carry make poor money. Divisibility. Divisibility refers to money’s ability to be divided into smaller units. Combining various coins permits buyers and sellers to make transactions of any size. Divisibility also enhances money’s use as a standard of value because exact price comparisons between products can be made. 83 Finance and Credit Stability in value and acceptability. For money to be useful as a store of value, it must be stable in value. Stability in value encourages savings and maintains money’s purchasing power. Most people who save money are confident that it will have approximately the same value when they want to buy something with it as it had when they put it into savings. Acceptability means that people are willing to accept money in exchange for their goods or services. People accept money because they know they, in turn, can spend it for other products. Types of Money Money comes in all shapes and sizes. The items used as money are a reflection of the society in which they are used. Money as a rule includes coins, paper money, checks and near money. Checks or checkbook money usually make up more than 70 percent of the nation’s money supply and nearly 90 percent of the transactions in most countries are completed by writing checks. Because checks are payable to the holder of the check on demand, checking accounts are often called demand deposits. Checks are representative money because they stand for the amount of money in a person’s account. They are generally accepted because the bank must pay the amount of the check when it is presented for payment. Checks, therefore, are considered money because they are a medium of exchange, a standard of value and a store of value. Other financial assets are very similar to money. These assets, such as savings accounts and time deposits are called near money and are not usually considered part of the nation’s money supply. Bills of exchange are examples of near money. Though they are easily accessible, these accounts cannot be used directly to buy goods or pay debts. Depositors, for example, cannot pay bills directly from their savings accounts. Since funds in these accounts can be easily converted into cash, however, they are considered near money. Sources of Money’s Value Money must have and retain value. All money falls into three categories according to what gives the money its value. The three categories of money are commodity money, representative money and fiat money. Commodity money. An item that has a value of its own and that is also used as money is called commodity money. Throughout history, societies have used many commodities as money. The ancient Romans sometimes used salt as money. Precious metals such as gold and silver and gems such as rubies, emeralds and diamonds have often been used as money. The majority of nations in the world today use currency – coins and paper bills – for money. The Lydians, an ancient people in Asia Minor, minted the world’s first coins about 700 B.C. The Chinese developed the first paper currency, perhaps as early as A.D. 1000 or A.D. 1100. 84 Finance and Credit Representative money. Money that has value because it can be exchanged for something valuable is representative money. Checks are representative money because they can be exchanged for currency as long as the check writer has sufficient funds on account. Fiat money. Value is attached o fiat money because a government decree, or fiat, says that it has value. Coins and paper money are examples of fiat money. The money has value because the government says that citizens must accept paper money and coins for all transactions. Essential vocabulary a.d. – anno domini – нашей эры b.c. – before christ – до нашей эры deteriorate – ухудшаться gem – драгоценный камень nonperishable – непортящийся over time – в течение длительного времени perishable – скоропортящийся stand for – означать, символизировать wear and tear – износ, изнашивание withstand – выдержать, противостоять Task 2. Translate the following words and word combinations or find Russian equivalents. 1. relative value 2. to figure profits and losses 3. tax receipts 4. accounting task 5. to accumulate wealth 6. to withstand wear and tear 7. to mint coins 8. stability in value 9. durability 10. acceptability 11. to make transactions 12. payable on demand 13. checkbook money 14. representative money 15. fiat money Task 3.Translate the following sentences into Russian. 1. Combining various coins permits buyers and sellers to make transactions of any size. 2. If both of these conditions are met, many people will accumulate their wealth for later use. 85 Finance and Credit 3. Metals such as gold and silver are ideal because they withstand wear and tear well. 4. Divisibility also enhances money’s use as a standard of value because exact price comparisons between products can be made. 5. Checks are representative money because they stand for the amount of money in a person’s account. 6. Acceptability means that people are willing to accept money in exchange for their goods or services. Task 4. Fill the gaps in the sentences below with the words and expressions from the box. There are two expressions which you don’t need to use. Standard of value, portability, fiat money, store of value, stability in value, commodity money, medium of exchange, representative money, acceptability, accumulate their wealth, relative value, durability 1. As a ________________, money assists in the buying and selling of goods and services. 2. Money enables people to judge the ____________ of different items by comparing their prices. 3. Money’s function as a _______________ is important to record keeping because it provides uniformity to accounting tasks. 4. As money is nonperishable and keeps its value over time it is considered a ___________. 5. People save money in order to ______________ for later use. 6. Money’s ability to be used over and over again is called _____________. 7. ____________ is money’s ability to be carried from one place to another and transferred from one person to another. 8. ____________encourages saving and maintains money’s purchasing power. 9. Precious metals such as gold and silver have often been used as __________ . 10. Checks are __________ because they can be exchanged for currency. Task 5. Find English equivalents for the following Russian expressions and words. 1. средство обращения 2. мера стоимости 3. средство накопления 4. ведение учета 5. стоимость затрат 6. единица бухгалтерского учета 7. покупательная способность 8. портативность 9. делимость 10. скоропортящийся 11. депозит до востребования 86 Finance and Credit 12. сберегательный счет 13. срочный депозит 14. вексель 15. товарные деньги For the next session Text 1. Fiscal Policy Task 1. Read and translate the text. Fiscal policy is one of the tools that governments have to keep the economy on a steady path. The two main components of fiscal policy are changes to the tax system and changes in government spending. But what changes can governments make in these two areas and how do changes affect the growth of the economy? Let’s look at the tax system and in particular at income tax. Income tax is one of the biggest sources of income for a government. Many governments operate a system called progressive taxation. This means that the more you earn, the more tax you pay. People are usually allowed to keep some of their income without paying any tax. This is called the personal allowance. The rest of their income is then taxed using the progressive system. For example: Income before tax &0 – &1,999 &2,000 – &29,999 &30,000 and over Personal allowance Tax to pay after allowance &5,000 10% 22% 40% Governments can decide to change the size of the personal allowance or change the percentage that each income group has to pay. If the economy is growing too fast and demand for goods and services is more than the economy can supply, the government will want to slow down spending. To do this they can decrease the personal allowance or they can increase the percentage to pay in tax. This will mean people have less disposable income and spending will slow down. If the economy is slowing down too much governments can do the opposite. What about government spending? How does that affect economic growth? The key to this is something called the multiplier effect. To understand how this works, let’s look at an example. Imagine that the economy is not growing. This will make aggregate demand fall. In turn, productivity falls. This situation means that the nation’s resources are not all being used. In other words, there are surplus 87 Finance and Credit raw materials, machines are not being used and workers are unemployed. What the economy needs is a pull in demand for goods and services. The government can provide this pull by spending a large amount of money on public projects. For example, imagine that the transport department decides to spend &200 million on building a new motorway. This will give work to building companies and jobs to unemployed workers. In other words, more resources are being used and the nation’s productivity is increased. Companies and workers on the motorway project will save some of the money they earn but also spend some. The money they spend will be income for others in the economy. If half of the &200 million is spent, then the total national income has grown by this much: &200 million + (0.5 x &200 million) Each time a proportion of the income is passed on, the economy grows again: &200 million + (0.5 x &200 million) + (0.5 x &100 million), etc. In theory, the multiplier effect will continue until there is full employment and the nation’s resources are being used to their fullest extent. Task 2. Now read the text again and answer these questions in your own words. 1. What are the two tools of fiscal policy? 2. What is someone’s personal allowance? 3. What will the government do to taxes if the economy is slowing down? 4. How can the government create more demand in the economy? 5. When does the multiplier effect stop working? Task 3. Choose the correct answer A, B or C from the list opposite. 1. The ______department of the government looks after roads, railways and airports. 2. The government hopes its _____ will help reduce unemployment. 3. The parts that something is made of are sometimes called ________. 4. _________ employment is when everyone who can work has a job. 5. The money that you have after you’ve paid taxes is called your ______ income. 6. The part of a person’s salary that is not taxed is called their personal ___________ . 7. The government plans many new ___________ projects, such as building new hospitals and schools. 8. Another word for extra goods that are not needed is _________. 9. When the economy is working at full __________, it is using all its resources for production. 10. A _____________ is a large, fast road which connects cities. 11. A _______ is a plan for achieving something. 88 Finance and Credit 12. In a _____ tax system, people who earn more pay more tax than people who earn less. 1. a. transport 2. a. components 3. a. income 4. a. absolute 5. a. full 6 a. allowance 7. a. personal 8. a. surplus 9. a. employment 10. a. path 11. a. component 12. a. surplus b. education b. allowance b. components b. complete b. disposable b. surplus b. public b. shortage b. income b. motorway b. project b. progressive c. defence c. policy c. capacity c. full c. spending c. capacity c. disposable c. allowance c. capacity c. railway c. scheme c. public Task 4. Make up an investment project. Background “Angel Investments” is based in Warsaw, Poland. It provides finance for start-up or young companies which need capital to develop their businesses. AI is run by a group of extremely rich people of various nationalities who made their fortunes in the computer and financial services industries. They enjoy the excitement of working with start-ups and small companies, and believe that Central and Eastern Europe offers outstanding opportunities for investment. They are willing to take risks and support projects which seem unusual or extraordinary. However they also expect to make money, usually by taking a stake in the business or a share of the profits. A team of AI investors is currently considering several proposals. After hearing presentations from individuals and companies, AI will decide which projects it will invest in, and how much money it will give to each one. They have €5.5 million to invest in the projects. You are an entrepreneur who needs finance for a new project; the rest of the group are AI investors. Key points for product presentations 1. The Business A description of the business · What does it do? · What is the name of the company? · What is the form of ownership and structure? · Who is it for? · Brief details about the team (age, education, experience, etc.). 89 Finance and Credit 2. The Product or Service A brief description – including artwork, if possible. · What are the advantages of the product or service? · What are its unique features? 3. Marketing · Who are the existing or target customers? · Who are the competitors or possible future competitors? · What are the competing products, if any? · What about pricing policy? · How will the product or service be launched and promoted? · What are the selling and distribution methods? 4. Finance · How much finance is required and for what purposes(in detail)? Proposals: New magazine You need to finance the first edition and launch of a new magazine. Amount required: € 2.5 million, to finance production, editorial, office administration, distribution costs and promotion. Relaxation tank centres At these centres, stressed business people can float in tanks and forget about their problems. Other services will include advice about diet and skin care, a solarium, and sun beds, etc. Amount required: € 2 million, to finance premises, equipment, staff and promotion. New sport league You have a background in sport and public relations. You want to set up a league for a sport which at present is not well-known, but could become very popular Amount required: €2.5 million to finance administration and promotion, endorsements of the league by famous sports people, travel and legal costs. International Publishing House The company will look for young talented authors all over the world and publish their works. Amount required. € 2 m. for research, premises, equipment, staff, legal costs. Higher Educational Institution. The College will train specialists in all economic (any 90 Finance and Credit other) and related spheres. Amount required: € 1,5 m. for premises, equipment, administration, promotion and inviting world-famous professors. High-tech Company Your company will promote alternative sources of electric power. Amount required: € 3 m. for search of ideas, production, testing, marketing, equipment. Your own idea for a product or service You have an idea for a product or service. You have not yet written a business plan, but the AI team are willing to listen to your presentation. Amount required: At least €3 million, to finance development, production, personnel, launch and marketing costs. For Additional Reading Task 1.Translate the texts into Russian and analyze grammatical and lexical problems of the translation with your teacher. The Central Banking System A major sector of any modern monetary system is the central banking system, which is important to the functioning of the private economy and the fiscal operations of the national government. Central banking is an activity separate from ordinary commercial banking. It is difficult to give a brief definition of a central bank that is both comprehensive and accurate. The nature of a central bank depends largely on its functions, which vary according to time and setting. The most important characteristic of the modern central bank is its control over the monetary system. The central bank implements the government’s monetary policy by regulating the supply, cost and availability of money and credit. The central bank is also a country’s leading bank which acts as bankers to the government and the banking system. Here the central bank receives, holds, transfers and disburses funds of the central government. Furthermore, the central bank provides services related to the public debt. The central bank acts as the government’s broker in its borrowing and lending operations, it issues and deals in government securities. Services to the banking system include, for example, the clearing and collecting of checks and distribution of coins and paper currency. The US Treasury 91 Finance and Credit The US Treasury was created by Congress in 1789. Since that time it has been one of the major financial organizations in the USA. At present the Treasury performs the following functions. 1. As the economic adviser to the President the Treasury has the responsibility for formulating internal and external financial policy, including recommendations on taxation. The Treasury possesses some authority that affects the working of the monetary system. Varied monetary influences are inherent in Treasury actions related to its management of the existing public debt. 2. In its role as a financial agent, the Treasury issues coins and banknotes, checks, saving bonds and other securities. Treasury borrowing through the issuance of new government securities is the major method for financing a budget deficit. 3. A significant aspect of the work of the Treasury is law enforcement (реализация законодательства, применение закона) related to federal taxes and the customs as well as collection of taxes and import duties. 4. A distinguishing feature of the US Treasury is its responsibility for conducting investigation and punishment of fraudsters, smugglers and counterfeiters. 5. Since the establishment of the Treasury its functions have been expanding as well as growing in complexity. In addition to its traditional activity the Treasury ensures the personal security of the President, exercises control over the sale of firearms and arranges the training of personnel for law enforcement. Personal Finances Many people regard financial security as the most important thing in family finances. This is not the same thing as being rich. It means being freed from the need to think about money, living within your means. For day-to-day living you need ready cash but you also need a bit in reserve for a rainy day. The first thing to think about is your current account and how much is in it. Credit cards can be a helpful way of handling unexpected expenses but credit is always costly and of course it’s just another form of debt. For some people, the English and the Americans, however, living on credit is a normal way of life. They believe that credit enables them to enjoy the use of goods and services before they have fully paid for them. Such people are not afraid to use consumer credit (credit from suppliers, hire purchase and loans from banks) because they have an income. If they want to buy a house they almost always borrow the money in the form of a mortgage from a building society or a mortgage bank. They pay for expensive things in instalments by means of a hire purchase plan. People earn money in different ways. First of all they get an income from employment, then from keeping in a savings account with a bank, from renting 92 Finance and Credit property and from investing in shares in the stock market. People who are paid by the hour get wages. People who are paid on an annual basis get salaries and people paid for a particular service, get fees. The worst-off people are the unemployed and the homeless. For those living at a subsistence level, even buying essentials is a struggle. People on low incomes sometimes take out loans, borrow money from banks. Very often they are unable to cope with repayments and interest on loans. Banks are not willing to lend money to such people. 93 Accounting and Auditing Accounting and Auditing Vocabulary accounting – бухгалтерское дело accounting – бухучет accounting information – данные учета accounting principles – принципы бухгалтерского учета accounting records – материалы бухгалтерского учета accumulate (v) – аккумулировать, накапливать analysis – анализ analyst – аналитик audit – аудит audit (v) – подвергать аудиторской проверке auditing – ревизование, аудит balance sheet – бухгалтерский баланс bookkeeping – счетоводство books – бухгалтерские книги capital budgeting – ставление смет капитальных вложений certified public accounting firms – фирмы дипломированных независимых бухгалтеров classify (v) – классифицировать column – столбец concerning – относительно, касательно conduct affairs (v) – вести дела customer – покупатель, заказчик double-entry – двойная бухгалтерия entity – хозяйствующий субъект entry – запись, внесение, занесение fellow citizens – сограждане financial accounting – финансовый учет financial analyst – финансовый аналитик financial position – финансовое положение financial statements – финансовая отчетность from this perspective – с этой точки зрения governmental accounting – учет в государственных учреждениях governmental institution – государственный институт, государственное учреждение in return – в ответ income statement account – счет прибылей и убытков income statements – декларация о доходах income tax form – бланк декларации на подоходный налог 94 Accounting and Auditing income taxation – обложение подоходным налогом information system – информационная система internal audit –внутренняя ревизия, внутренний аудитор labour union – профсоюз liquidity – ликвидность managerial accounting – управленческий учет non-business organizations –некоммерческие организации operating results – результаты работы operations – работа, деятельность pricing – калькуляция цен private accounting – учет в хозрасчетных организациях profitably – с выгодой, с прибылью public accounting – работа независимых бухгалтерских работников в качестве аудиторов record (v) – записывать, отражать recording of information – запись информации, отражение информации record-keeping – ведение учета records – (бухгалтерская) отчетность refer to (v) – относиться, касаться report (v) – давать отчет set up a business (v) – организовать, основать дело single-entry book-keeping – простая бухгалтерия society – общество state – заявлять, сообщать stockholder – акционер summarise – суммировать supplier – поставщик trade association – ассоциация производителей и дилеров одной отрасли transaction – операция Text 1. Accounting and Auditing Task 1. Read and translate the text. Whenever a man set up a business it is because he feels he can produce some useful commodity or service which will be needed by his fellow citizens. In return he expects to be able to earn a profit on his business. To conduct his affairs efficiently and profitably the businessman must have some knowledge of accounting. Accounting is the language of finance which all business decision-makers must understand. *It is the process of capturing, processing and communicating financial information. In other words, it is an information system that accumulates, records, classifies, summarises and reports commercial transactions. The aim of 95 Accounting and Auditing this process is to show the financial condition of a business entity. This information, in the form of financial statements is then communicated to those who make decisions concerning the operations of an enterprise. Bookkeeping is a small part of the system and deals with recordkeeping. Accounting information is used by managers, investors and different groups in society, for example, tax authorities, labour unions, local governments, financial analysts etc. From this perspective, accounting is divided into managerial and financial accounting. The major branches of accounting are public, private and governmental accounting. Public accounting refers to the work done by independent Certified Public Accountants (CPA), the corresponding professional British title being Chartered Accountants. They audit the books of companies to ensure that their financial statements and records are properly stated. Private accounting refers primarily to the private sector of the economy and involves the analysis and recording of financial information by accountants who are employees of the business entity. Governmental accounting is the accounting function performed for central (federal and state) and local governmental institutions. Note on the Text *It is the process of capturing, processing and communicating financial information. – Это процесс получения, переработки и предоставления финансовой информацию Task 2. Answer the comprehension questions to the text. 1. Why must businessmen have some knowledge of accounting? 2. What is accounting? 3. What does an accounting information system show? 4. Who needs financial information? 5. What are the major branches of accounting? Task 3. Find in the text English equivalents for the following Russian words and phrases: - производить полезные товары или услуги; - быть в состоянии заработать прибыль; - чтобы вести дела эффективно и с прибылью; - лица, принимающие решения; - накапливать; - отражать; - классифицировать; - суммировать и давать отчетность по коммерческим операциям; - финансовое состояние хозяйствующего субъекта; - финансовая отчетность; - налоговые власти; 96 Accounting and Auditing - профсоюзы; - финансовые аналитики; - бухучет подразделяется на …; - основные направления бухучета…; - подвергать аудиторской проверке бухгалтерские книги; - гарантировать, что финансовая отчетность составлена должным образом; - анализ и отражение финансовой информации. Task 4. Match the verbs in A with the nouns in B. A B to set up a commodity to produce affairs to earn information to conduct the books to communicate a function to audit profit to perform a business Task 5. Read the text and translate it into Russian. Say what you know about the accounting profession in Great Britain. The accounting profession in Great Britain is rich in tradition. Great Britain is the founding place of modern financial reporting and independent audit. The profession comprises private and public accountants. Private accountants are employed by business firms. They prepare budgets and performance reports which are used by managers to make managerial decisions. Many accountants work for government and non-for-profit organizations. Public accountants are independent professionals who provide services for a fee. They offer a number of services to their clients. One of the main ones is auditing. Accountants examine financial statements and offer their opinion on their accuracy and reliability. Words and word combinations you may need the founding place of – место, где были основаны… financial reporting – финансовая отчетность for a fee – за плату, на платной основе offer an opinion – дать аудиторское заключение accuracy – точность reliability – надежность Task 6. a) Read the interview. B) Say: - how one can become an auditor; - whether Russian follows international practice in auditing. Foreigner: As far as I know, you didn’t use to have auditing firms before your economic reforms. But now auditing is widely practiced here, isn’t it? 97 Accounting and Auditing Russian: That’s right. Our auditing profession is developing very fast. F.: Are there any professional organizations of auditors in Russia now? R.: Yes, there are. They help auditors in their professional activity. Now auditors are trained in institutes of higher education. F.: Can graduates perform audits? R.: No, they can’t. To carry out audits one must have a licence. F.: Do your auditors tale exams for that? R.: Like in your country they do. Requirements for people who take such exams are very strict. Then auditors must have several years of approved experience and constantly upgrade their skills. F.: I see. You follow international practice. What services do your auditors offer? R.: As a rule, they audit financial statements and provide opinion on their accuracy and reliability. Besides, they provide consultancy on financial management, taxation and designing of accounting systems. F.: These are most common things for auditors in market economy. R.: That’s true. Russia has been recognized as market economy lately. Words and word combinations you may need auditing firm – аудиторская фирма perform an audit – проводить аудиторскую проверку carry out an audit – проводить аудиторскую проверку licence – лицензия upgrade skills – повышать квалификацию consultancy services – консультационные услуги financial management – финансовый менеджмент designing of accounting systems – разработка систем бухучета Task 7. Say/write what you know about the accounting profession in Russia. Task 8. Translate the text into Russian and analyze grammatical and lexical problems of the translation with your teacher. Accounting: Changes and Prospects Significant changes are known to have taken place in accounting in recent years. The accountancy profession has gained a very high status. The modern accountant has begun to play an important role in business activity. As a result he is expected to perform various duties today, one of the major duties being provision of information to the management. By providing information to managers the accountant enables them to assess their own performance, to make economic decisions and to devise ways to improve their efficiency. Equally important is the task of designing accounting systems. In spite of the centuries of evolution the double-entry principle has remained the backbone of any accounting system. At the same time, however, one can’t deny the fact that the development of human society influences accounting and makes designing accounting systems for new fields like “social accounting”, 98 Accounting and Auditing “green accounting”, “tax accounting” etc. a challenging task. Another responsibility of accountants is to prepare financial statements, the four basic financial statements being the income statement, balance sheet, capital statement and the statement of cash flow. One of the biggest problems facing the accounting profession is the necessity of rapid adaptation to the changes connected with the enormous growth of industry, the world globalization process and development of information technology. In this context there is a general opinion in the profession about the need to improve the quality of accounting, professional competence and accounting education. Maintaining high ethical standards, compliance with relevant laws, as well as accounting and auditing standards are also on the agenda. Text 2. Accounting and Bookkeeping Task 1. Read and translate the text. What is accounting and bookkeeping? Accounting and Bookkeeping is the process of identifying, measuring, recording and communicating economic information about an organization or other entity. Bookkeeping is the record-keeping aspect of accounting. Accounting principles are applied in the preparation of financial statements and other financial information. Personal record keeping often uses a simple-entry bookkeeping, in which amounts re recorded in column form. Such entries include the date of the transaction, its nature and the amount of money. Record keeping of organizations is based on a double-entry system. Each transaction is recorded on the basis of its influence on the organization’s financial position or operating results. Information about financial position of an enterprise is presented in a balance sheet, while operating results are displayed in an income statement account. Data relating to an organization’s liquidity and changes in its financial structure are shown in a financial statement. Such financial statements are prepared to provide information about past performance, which in turn becomes a basis for readers to try to project what might happen in the future. Accounting information Accounting information can be classified into two categories: financial accounting or public information and managerial accounting or private information. Financial accounting includes information distributed to stockholders, creditors, customers, suppliers, financial analysts and trade associations. This information is also of interest to the company’s officers and managers. Such information relates to the financial position, liquidity (that is ability to convert to 99 Accounting and Auditing cash) and profitability of an enterprise. Managerial accounting deals with cost-profit-volume relationships, efficiency and productivity, planning and control, pricing decisions, capital budgeting and similar matters. This information is not generally distributed outside the company. Managerial accounting provides a wide variety of specialized reports for division managers, department heads, project directors, section supervisors and other managers. Specialized Accounting Of the various specialized areas of accounting that exist, the three most important are auditing, income taxation and accounting for non-business organizations. Auditing is the examination by an independent accountant of the financial data, accounting records, business documents and other documents of an organization in order to attest to the accuracy of its financial statements. Large private and public enterprises sometimes also maintain an internal audit staff to conduct examinations concerned with operating efficiency and managerial effectiveness. Income taxation is the second specialized area of accounting. Preparing an income tax form consists of collecting information and presenting data in a certain order; therefore both individuals and business frequently hire accountants to determine their taxes. Accounting for non-business organizations such as universities, hospitals, churches, trade and professional associations is the third area of specialization. These organizations differ from business enterprises in that they do not have a profit orientation and they have no defined ownership interests. As a result these organizations have differences in record keeping, in accounting measurements and in the format of their financial statements. Essential Vocabulary income statement account – счет прибылей и убытков accounting information – данные учета financial accounting – финансовый учет managerial accounting – управленческий учет stockholder – акционер financial analyst – финансовый аналитик trade association – ассоциация производителей и дилеров одной отрасли capital budgeting – составление смет капитальных вложений accounting records – материалы бухгалтерского учета internal audit – внутренняя ревизия, внутренний аудитор income tax form – бланк декларации на подоходный налог Task 2. Answer the following questions 100 Accounting and Auditing 1. What is done during the process of accounting and bookkeeping? 2. Where are accounting principles applied? 3. What is the difference between single-entry bookkeeping and a double-entry system? 4. What information is presented an a balance sheet? 5. Who is interested in financial accounting? 6. What does managerial accounting deal with? 7. Who can use managerial accounting information? 8. What is the aim of financial auditing? Text 3. The Double Entry System Task 1. Read and translate the text. As you enter information in your books you will always make two entries which exactly balance one another. Each entry has a left side – these are called debits and a right side – these are called credits. For each entry you must enter at least one debit and one credit and the total of the amounts on the right must equal the total on the left. Another “rule” is that debits are positive and credits are negative and if you add them all together the total is “zero”. If you go to the store and buy a drill you are decreasing your cash in the bank by $129.50. You are increasing your expenses by the same amount – and there you have your two entries. Cash gets the negative entry or credit and small tools gets the positive entry or debit. All your asset accounts (1000 series) are debit accounts which means they are positive numbers. An asset is a positive number in the system. The liability accounts (2000 series) are called credit accounts and they are negative numbers but generally when you look at them on the balance sheet you don’t show the minus sign. The 3000 series is sales. Sales are considered a credit account. You sell something and get some cash. Cash is a debit account. Make a sale and you better increase your cash – debit cash. Positive entry. The 4000 and 5000 series the expense accounts are all debit accounts. You enter an expense as a positive number (debit) to increase your record of what you’ve spent. Whenever you make a purchase of an item that goes to one of your expense accounts you always increase your expense which is a debit. Text 4. The Balance Sheet Task 1. Read and translate the text. Of the two traditional types of financial statements the balance sheet relates 101 Accounting and Auditing to an entity’s position and the income statement – or profit and loss account – relates to its activity. The balance sheet provides information about an organization’s assets, liabilities and owners’ equity on the last day of the accounting or fiscal period. The format of the balance sheet reflects the basic accounting equation: assets equal equities. Assets are economic resources of the organization. Equities consist of the organization’s liabilities together with the equity interest of its owners. (For example, a certain house has assets worth $70,000: its unpaid mortgage is a liability of $45,000 and the equity of its owners is $25,000). Assets are categorized as current or long-lived. Current assets are usually those that management could reasonably be expected to convert into cash within one year; they include cash, receivables, merchandise inventory and short-term investments in stocks and bonds. Long-lived assets include land, buildings, machinery, motor vehicles, computers, furniture and fixtures. Lon-lived assets also include intangible such as patents and trademarks. 102 The Budget. Taxes The Budget. Taxes Vocabulary budget – бюджет contain – содержать corporate tax – корпоративный налог customs duty – таможенная пошлина developments – обстоятельства, события direct tax – прямой налог economic performance – экономические показатели excise duties – акцизы expenditure – расходы financial year – финансовый год follow – осуществлять (политику) forecast – прогноз income tax – подоходный налог indirect tax – косвенный налог issue – выпускать издавать (о документе) means – средства objective – цель property tax – налог на имущество revenue – доходы review – рассматривать, делать обзор sales tax – налог с дохода set out – излагать source – источник statement – заявление, официальный отчет tax – налог tax on income – подоходный налог taxation – налогообложение value added tax – налог на добавленную стоимость 103 The Budget. Taxes Vocabulary Exercises Exc. 1. Match the terms with their definitions. 1) corporate tax a) a tax based on the value of someone′s house 2) income tax b) a tax paid by companies on their profits 3) tax on liquor and cigarettes c) a tax paid on the money you earn 4) sales tax d) a tax on goods that are brought into the country 5) property tax e) a tax on the most popular and harmful goods 6) customs duty f) a tax that you have to pay in addition to the cost of something you are buying 7) direct tax g) an amount that is added to the price of goods and services that people buy 8) indirect tax h) a tax that is collected from person’s earnings Exc. 2. Make the phrases, combining given words with the words tax and taxation (e.g., tax accounting, progressive taxation). 1. ..... accounting ..... 2. ..... allowance ..... 3. ..... authority ..... 4. ..... avoidance ..... 5. ..... consultant ..... 6. ..... corporation ..... 7. ..... deductible ..... 8. ..... direct ..... 9. ..... evasion ..... 10. ..... free ..... 11. ..... haven ..... 12. ..... income ..... 13. ..... indirect ..... 14. ..... inspector ..... 15. ..... loophole ..... 16. ..... loss ..... 17. ..... payer ..... 18. ..... progressive ..... 19. ..... rates ..... 20. ..... rebate ..... 21. ..... regressive ..... 22. ..... return ..... 23. ..... sales ..... 24. ..... shelter ..... 104 The Budget. Taxes 25. ..... withholding ..... 26. ..... year ..... Text 1. The Budget Task 1. Read and translate the text. The budget is the government’s main economic statement of the year. It is forecast of revenue and expenditure for the coming year. In Great Britain the budget is prepared and usually issued in March. In major speech to Parliament, the Chancellor of the Excheque reviews the nation’s economic performance and describes the government’s economic objectives and the economic policies it intends to follow in order to achieve them. In November 1993 Great Britain introduced the “so-called” Unified Budget. Under this budget the government presents taxation and spending proposals to Parliament at the same time. The Budget now covers both the government’s taxation plans for the coming financial year and its spending plans for the next three years. The proposals are announced to the House of Commons by the Chancellor of the Exchequer in the Budget statement and are published in the Financial Statement and Budget Report. This report also contains a review of recent developments in the economy, together with an economic forecast and sets out the fiscal and monetary policies. The main sources of revenue are: - Tax on income; - Taxes on expenditure, which include VAT (Value Added Tax) and customs and excise duties; - National Insurance contributions. Vocabulary List Chancellor of Exchequer – канцлер казначейства Taxation and spending proposals – предложения по налогообложению и расходам The House of Commons – палата представителей National insurance contributions – взносы в национальную систему страхования Task 2. Comprehension questions 1. How is “the budget” defined in the text? 2. When is the budget issued and how is it presented in the UK? 3. What budget was introduced in Great Britain in November 1993? 4. What does it provide for? 5. What are the main sources of revenue? 105 The Budget. Taxes Task 3. Find in the text English equivalents for the following Russian words and phrases: - прогноз доходов и расходов - бюджет представляется (выпускается) в марте - экономические показатели - задачи развития экономики - экономическая политика - намереваться проводить политику - в соответствии с бюджетом - представляет предложения по налогам и расходам - предстоящий финансовый год - объявлять предложения - последние события экономической жизни - излагать бюджетно-налоговую и кредитно-денежную политику - источники доходов - подоходный налог - налоги на расходы - НДС - таможенные пошлины - акцизы Task 4. Match the infinitives in A with the nouns in B. A B to forecast documents to prepare the budget to announce revenue and expenditure to follow plans to achieve the policy to present objectives to publish proposals Task 5. a). Read the text and translate it into Russian. b). Say what you know about the procedure of adopting the federal budget in Russia. Russia began the publication of annual budgets in 1860. At present, draft budgets are prepared by the government and are submitted to the State Duma for consideration and approval in autumn. The draft must pass through 4 readings, during which different amendments are made into the draft. Traditionally, the second reading is the most difficult because it is at the second reading that budgetary expenditures are determined. If the State Duma and the Federation Council approve the draft budget it goes to the President who signs it into law. Words and word combinations you may need draft budget – проект бюджета 106 The Budget. Taxes submit for consideration – представить на рассмотрение The State Duma – Государственная Дума approval – одобрение pass through a reading – пройти чтениеg make an amendment – внести поправку determine – определять approve – одобрять the Federation Council – Совет Федерации Task 6. Write words which are frequently used with the word “budget”, compare the list with your partner’s list. Text 2. Taxes Task 1. a) Read and translate the text. B). Answer the comprehension questions to the text. Taxes are a compulsory financial contribution by a person or body of persons towards the expenditure of a public authority. The government has a choice of taxing income, wealth or consumption to finance its expenditure on defence, social services, municipal services etc. The main forms of direct tax are income tax paid by individuals and corporation tax paid by businesses. Income tax in Great Britain dates from the 1790s and has until recently been the major source to generate tax revenue. Income tax can be progressive, proportional or regressive. The idea of a progressive tax is to take more from those who earn more. Indirect taxes are imposed on certain products or services that people buy. The main ones are value added tax and excise duties. Pressure to increase government expenditure may lead to a search of new taxes. Some people argue for a more direct link between specific taxes and particular items of government expenditure. For example, taxes from motorists could be spent on roads and the transport system while the tax from alcohol and tobacco could be spent in the national health service. But it is impossible for the government to match all individual taxes with particular spending programmes. The major principles of a tax system are that it should be equitable and reasonable. Then the incentive to avoid and evade tax would be less. The system of tax collection shouldn’t be costly and shouldn’t contain a lot of tax allowances and exemptions. Vocabulary List compulsory – обязательный body of persons – группа лиц 107 The Budget. Taxes public authority – орган власти defence – оборона generate – производить progressive – прогрессивный proportional – пропорциональный regressive – регрессивный impose – вводить pressure – давление argue (for) – приводить доводы в пользу link – связь specific – конкретный particular – отдельный motorist – автомобилист while – в то время как alcohol – алкогольный напиток tobacco – табак National health service – Национальная система здравоохранения match – увязывать principle – принцип equitable – справедливый incentive – стимул avoid taxes – избегать уплаты налогов tax allowance – налоговая льгота tax exemption – налоговое освобождение Task 2. Comprehension questions 1. What definition of taxes is given in the text? 2. What can be taxed to raise money to finance the expenditure on defence, social services etc? 3. How are taxes classified? 4. What tax in the UK has been the major source to generate tax revenue for years? 5. How can income tax be charged? 6. How do people want governments to spend the money collected in taxes? 7. What should be the major principles of a tax system? Task 3. Find in the text English equivalents for the following Russian words and phrases: - налоги – это обязательные платежи - расходы органов власти - налогообложение дохода, богатства или потребления - финансировать расходы на оборону, социальные услуги, муниципальные услуги - прямой налог - подоходный налог 108 The Budget. Taxes - источник для получения налоговых доходов прогрессивный налог вводить налоги НДС акцизы непосредственная связь конкретные налоги основные принципы налоговой системы справедливый и разумный уклоняться от уплаты налогов система сбора налогов налоговые льготы и освобождения Task 4. Match the infinitives in A with the nouns in B. A B to tax allowance and exemptions to finance income to impose defence to generate expenditure to increase money to spend taxes to contain tax revenues Task 5. a). Read the text and translate it into Russian. b). Say what you know about taxation in Russia. The Federal Tax Service in Russia is a relatively new organization but its role is becoming very important because the private sector is developing fast. Taxation is the most important factor in implementing economic reforms. The Russian Government is trying to lower the tax burden and to simplify the tax system. For example, the government departed from the progressive income tax system and introduced a flat income tax which individuals pay at a 13% rate irrespective of the income. There are plans to reduce profit tax and VAT. The government is going to eliminate some tax allowances and exemptions. Words and word combinations you may need tax burden – налоговое бремя simplify – упрощать depart from – отходить от чего-либо flat income tax – единый подоходный налог irrespective of – вне зависимости от … at a rate – по ставке 109 The Budget. Taxes eliminate – отменять, уничтожать Task 6. Write verbs and nouns which are frequently used with the word “taxes”, compare the list with your partner’s list. Task 7. Read the interview with the financier and sum up his assessment of the situation with the budget. Interviewer: The work of the draft budget is over and it has been submitted to the Government for consideration. How do you assess the draft? Financier: I like the budget. It provides for a surplus. Int.: It’s great. But don’t you foresee problems with servicing the foreign debt? F.: No, the debt will be repaid under the schedule. We have reserves for that. Int.: I see. You mean money from privatization, from the sale of oil and other raw materials, don’t you? F.: Yes, you are right. First of all, I mean export receipts from foreign economic activity. But then, I’d like to stress, we are learning to manage the federal budget expenditure better. Int.: The Treasury contributes to that, doesn’t it? F.: Yes, it does. Int.: Let’s hope the draft will be passed in four readings by the 1st of January. F.: Let’s hope the legislative branch adopts the budget without delay. Int.: How is the budget for this year being implemented? F.: It’s being implemented according to the approved appropriations. Though spendings on health, education and science have been increased, personal incomes have gone up too, I mean wages and pensions. There is no deficit. Int.: It’s nice to hear that but as far as I know, administrative spendings have gone up. F.: Yes, you are right. It’s a problem. Words and word combinations you may need assess – оценивать provide for – предусматривать surplus – профицит foresee – предвидеть debt – долг export receipts – экспортные поступления manage – управлять treasury – казначейство legislative branch – законодательная ветвь власти approved appropriations – утвержденные ассигнования personal incomes – доходы населения deficit – дефицит 110 The Budget. Taxes Task 8. Say/write what you know about “the budget”, the Russian budget and its adoption procedure. Texts for Additional Reading Translate the texts into Russian and analyze grammatical and lexical problems of the translation with your teacher. The Federal Budget The federal budget of the US provides an analysis of expected future revenue and a detailed plan of spending for the upcoming year. The budget is prepared under the supervision of the President. Then it is submitted to Congress for modification and approval. Budget accounts are audited at the close of each year. Except for areas of national security, all citizens have the right to review the audits and inspect how public funds were received and spent. The successive stages in budgeting – preparation, authorization, execution and audit are known as the budget cycle. The budget is designed to indicate major categories of revenue sources such as personal income tax, sales tax, profit tax etc. Expenditures are listed by the government departments and agencies and are often enumerated in broad terms such as amounts for health, national security or education. Preparation of the budget is a complex political process. The President makes the final decision on how much to request from Congress for different spheres and programmes. If the budget bill is approved by the House of Representatives and the Senate, it is sent to the President for signature. Taxation In the United States, federal, state and local governments cover their expenses mainly through taxation. Each level of government depends chiefly on one or two types of taxes. In general, local governments receive most of their tax revenue from property taxes. State governments depend on sales tax, state income tax and excises. The federal government’s chief source of revenue is the federal income tax. Other federal taxes include the corporate profit tax and social insurance taxes. In October 1986 the president signed into law the Tax Reform Act of 1986 – perhaps the most massive reform of the US tax system. The tax reform was aimed at improving the fairness of the federal tax system and at restoring confidence in the system by eliminating inequalities. As elsewhere some taxpayers try to find loopholes in legislation and evade taxes. Some others do not pay taxes or do not pay them fully because they do not understand the procedure of tax collection. The US Internal Revenue Service try to educate taxpayers, to provide them 111 The Budget. Taxes with information to help them to comply with the tax laws. Different educational programmes designed for specific groups of taxpayers have been worked out. Factors of Production This is the collective term for the economic resources in the production system. It is these inputs that are transformed into the output of final goods and services. Economists group the resources into four categories. Land is the term for all natural resources that are used in production. Raw materials are therefore taken from the stock of natural assets. The economic reward that goes to the owners of this factor of production is called rent. Labour can be defined as the sum of all the physical and mental effort that goes into production and includes the tasks of management. The economic return to those who supply labour is wages / salaries. Capital is the economic term for any man-made productive asset. It is business capital that is the factor of production rather than personal or social capital. Business capital refers to the physical capital equipment and property of firms. The economic reward to capital is called interest. Enterprise is regarded as the coordinating factor of production. It involves both the organization of the economic resources and an element of risk taking, its reward is profit. TAXATION Everyone knows that taxation is necessary in a modern state. Taxes are a part of life. Governments argue that taxes are a necessary evil – the price of a «civilized society». In fact, taxes help governments to pay massive amounts of money to operate and provide necessary services. Taxes are needed to pay salaries, they provide roads, schools and hospitals and help to pay the bill for such services as garbage collection* and postal delivery*. Without taxes it would not be possible to pay the soldiers and policemen who protect us; not the workers in government offices who look after our health, our food, our water, and all other things that we cannot do for ourselves; not also the ministers and members of parliament who govern the country for us. By means of taxation we pay for things that we need just as much as we need somewhere to live and something to eat. Taxes can be divided into two categories: direct and indirect. Income tax, corporate tax, and property tax are examples of direct taxes. Income tax is probably the most resented, because in some lands it is progressive – the more you earn, the more tax you pay. Indirect taxes include sales taxes, taxes on liquor and cigarettes, and customs duties. Though everyone knows that taxation is necessary, different people have different ideas about how taxation should be arranged. Should each person have to pay certain amount of money to the government each year? Or should there be a tax on things that people buy and sell? If the first kind of taxation is used should everyone pay the same tax, whether he is rich or poor? If the second kind of 112 The Budget. Taxes taxation is preferred should everything be taxed equally? Nobody enjoys paying taxes, many people try to find different ways to avoid paying certain taxes. That′s why whenever a new tax is proposed, legislators try to close any possible loopholes*. Vocabulary List garbage collection – вывоз мусора postal delivery – доставка почты loophole – лазейка Task 1. Скажите, верны ли следующие утверждения согласно тексту? 1. Taxes are useless in our society. 2. Taxes are needed to provide necessary services. 3. The main idea of progressive income tax – the more you earn, the less tax you pay. 4. All people prefer to pay taxes. 5. Direct taxes include income tax, corporate tax and property tax. Task 2. Ответьте на следующие вопросы: 1. How many categories of taxes can you name? 2. How do taxes help government to operate and provide necessary services? 3. Do all people agree with the main principle of taxation? 113 Information in Economics Information in Economics Vocabulary browser – браузер (программа навигации и просмотра в интернете) computer industry – – промышленность средств вычислительной техники computer literacy – компьютерная грамотность computer technology – компьютерные технологии computerized robots – роботы с компьютерным управлением disappear – исчезать domain name – имя домена enormously – чрезвычайно flow – поток, движение hack – «взламывать» чужой компьютер hardware – аппаратура, оборудование illegally – незаконно keep smth. secret – держать в секрете keyboard – клавиатура log on to the net – входить в интернет monitor – осуществлять контроль network communication – передача информации в глобальной сети programming language – язык программирования progress – двигаться вперед provide access – обеспечивать доступ realize – представлять себе, ясно понимать relating to – связанный с, касающийся remote – удаленный site – сайт (любой адрес в интернете, где хранится информация) software – программное обеспечение software program – компьютерные программы superhighway internet service providers – провайдер (компания, предоставляющая доступ удаленным пользователям к интернету) to dial – набирать код virtual circuit – виртуальная цепь, виртуальный канал voice command – команды, подаваемые человеческим голосом web – – сокр. от www всемирная паутина website – узел глобальной сети Task 1. Match the words. website subnet 114 база данных узел глобальной сети ____________________________________________Information in Economics browser software program virtual circuit message site to dial online order database виртуальная цепь в режиме онлайн сообщение компьютерная программа набирать код сайт подсеть программа навигации Task 2. Cross one out. 1. web, site, freeway 2. billboard, software, hardware 3. off-line, fill-in forms, on-line 4. time-consuming, online order, place an order Text 1. Bill Gates and Microsoft Corporation Task 1. Read and translate the text. William (Bill) H. Gates is chairman and chief software architect of Microsoft Corporation, the worldwide leader in software services and Internet technologies for personal and business computing. Gates’ foresight and his vision for personal computing have been central to the success of Microsoft and software industry. In August 23, 1995 an unprecedented marketing and media frenzy reached its peak throughout the world. The level of publicity and excitement had rarely been seen before but it was not for a new movie or even a new car. It was for a piece of software. By midnight, customers had already queued up outside computer stores to be among the first to purchase Windows 95, an upgraded operating system for IBM and IBM-compatible personal computers. Microsoft Corporation, the company behind Windows 95, spared no expense in exciting the demand for its new product. Born on October 28, 1955, William Henry Gates grew up in Seattle, Washington, in a socially prominent family with his two sisters. Their father was a lawyer with a well-connected firm in the city. Their mother, Mary Gates, was a schoolteacher, active in charity work. Gates attended public elementary school and the private Lakeside school. There, he discovered his interest in software and began programming computers at the age of 13. “He was a computer nerd before the term was invented”, as one of his teachers described Gates at the time. In 1973 Gates entered Harvard University as a freshman, where he lived down the hall from Steve Ballmer, now Microsoft’s chief executive officer. While at Harvard, Gates developed a version of the programming language BASIC for the first microcomputer – the MITS Altair. In his junior years Gates left Harvard to devote his energies to Microsoft, a 115 Information in Economics company he had begun in 1975 with his childhood friend Paul Allen. Guided by a belief that the computer would be a valuable tool on every office desktop and in every home, they began developing software for personal computers. Gated and Allen were not typical entrepreneurs. They had no business plan, no venture capital, no bankers or Small Business Administration loans. But they had the most important tools needed for software development: brains and computers and they had everything necessary for entry into the porous computer industry of the time: they had product, programming expertise and most importantly, a vision of greater possibilities. The introduction of Windows 95 mirrored the rapid changes in the marketplace and marked a new crucial point for Bill Gates. His role in the personal computer revolution had given him a net worth estimated in the summer of 1996 at $18 billion and had turned him into an icon of information technology. Few American businessmen have ever occupied such a niche in the popular imagination. Just as John D. Rockfeller created order from chaos in the most important new industry of the late nineteenth century, Gates and his company did the same in the most crucial industry of the late twentieth century: computers. And, like Rockfeller, Gates found ways to force the rest of the industry to follow his lead. Gates was married on January 1, 1994, to Melinda French Gates. They have three children. Gates is an avid reader and enjoys playing golf and bridge. In 1999 Gates wrote Business and the Speech of Thought, a book that shows how computer technology can solve business problems in fundamentally new ways. The book was published in 25 languages and is available in more than 60 countries. Gates’ previous book, The Road Ahead, published in 1995, held the No. 1 spot on the New York Times’ bestseller list for seven weeks. Though an innovative and forward-thinking entrepreneur, Bill Gates didn’t invent crucial technology. Rather, he shrewdly adapted and improved products first made by others. He recognized the coming of the personal computer (PC) long before others did and deduced that operating systems and applications (software) would be at least as important to the PC business as the nuts-and-bolts equipment (hardware). Part of the reason for Microsoft’s dominance in the field lies precisely in Gates’ ability to anticipate developments in computer technology and to judge when the public will be ready for them. Another part of Microsoft’s success lies in Gates’ unwavering confidence in his own ideas. Through the force of his personality, as much as through the popularity of his products, Bill Gates has imposed his own order on the burgeoning computer industry. Gates has donated the proceeds of both books to non-profit organizations that support the use of technology in education and professional skills development. Under Gates’ leadership, Microsoft’s mission has been to continually advance and improve software technology and to make it easier, more cost-effective and more enjoyable for people to use computers. Philanthropy is also important to Gates. He and his wife, Melinda, have endowed a foundation with more than $24 billion to support initiatives in the areas of global health and learning, including the Gates Library Initiative to bring 116 ____________________________________________Information in Economics computers, Internet Access and training to public libraries in low-income communities in the United States and Canada. Essential Vocabulary bestseller – сенсационная книга, бестселлер compatible – совместимый computer nerd – компьютерный фанат crucial – ключевой, решающий donate – передавать в дар endow – пожертвовать капитал, делать дар executive officer – должностное лицо expertise – опыт, знание дела, компетенция foresight – предвидение forward-thinking – прогрессивно мыслящий frenzy – безумие information technology – информационные технологии innovative – новаторский lead – лидерство, руководство net worth – собственный капитал предприятия operating system – операционная система personality – индивидуальность, личность proceeds – выручка, доход software architect – разработчик структуры системного программного обеспечения software development – разработка программного обеспечения software industry – промышленность по производству программного обеспечения unwavering – непоколебимый, твердый upgrade – модернизация to upgrade – модернизировать venture capital – венчурный капитал; капитал, вложенный в новое предприятие vision – предвидение Task 2. Translate the following word combinations or find Russian equivalents. 1. software 2. software industry 3. media frenzy 4. IBM-compatible personal computers 5. to spare no expenses 6. venture capital 7. computer industry 8. programming expertise 9. non-profit organizations 117 Information in Economics 10. professional skills development Task 3. Translate the following sentences into Russian. 1. Gates’ foresight and his vision for personal computing have been central to the success of Microsoft. 2. The unprecedented marketing and media frenzy was for a piece of software Windows 95. 3. Through the force of his personality Bill Gates has imposed his own order on the burgeoning computer industry. 4. Microsoft’s mission has been to continually advance and improve software technology. 5. Bill Gates devoted his energy to make it easier, more cost-effective and more enjoyable for people to use computers. Task 4. Fill the gaps in the sentences below with the words and expressions from the box. There are two expressions, which you don’t need to use. Software, computer technology, an upgraded operating system, information technology, net worth, innovative, foresight, marketplace, business problems, computer nerd, software architect, forward-thinking, executive officer, demand, Internet technologies 1. Bill Gates is chairman and chief ______ of Microsoft Corporation. 2. Bill Gates is the worldwide leader in software services and _____ for personal and business computing. 3. Customers queued up outside computer stores to purchase Windows 95, ________ for IBM and IBM-compatible personal computers. 4. Microsoft Corporation spared no expense in exciting the ______ for its new product, namely Windows 95. 5. Bill Gates was a _____ before the term was invented: he devoted all his energies to developing _____ for personal computers. 6. The introduction of Windows 95 mirrored the rapid changes in the ______ and marked a new crucial point for Bill Gates. 7. Gates’ ability to anticipate _____ developments in _____ had given him in 1996 a ______ of $18 billion. 8. Bill Gates’ role in the personal computer revolution had turned him into an icon of ____________. 9. In 1999, Gates wrote a book that shows how computer technology can solve ______ in fundamentally new ways. 10. Being an _______ and ______ entrepreneur Bill Gates found ways to force the rest of the industry to follow his lead. Task 5. Find English equivalents for the following Russian expressions and words. 1. лидер на мировом рынке 118 ____________________________________________Information in Economics 2. программное обеспечение 3. Интернет 4. операционная система 5. стимулировать спрос 6. компьютерный фанат 7. язык программирования 8. разработка программного обеспечения 9. ключевой момент 10. непоколебимая уверенность Task 6. Translate the following sentences from Russian into English. 1. Успех «Майкрософт» состоит в непоколебимой убежденности Гейтса в своих собственных идеях. 2. Гейтс разработал версию языка программирования BASIC для первого микрокомпьютера. 3. У Гейтса были самые важные инструменты, необходимые для разработки программного обеспечения: мозги и компьютеры. 4. У Гейтса было все для компьютерной промышленности: продукт, опыт программирования и предвидение еще больших возможностей. 5. Гейтс пожертвовал гонорар, полученный за обе книги, общественным организациям. Dialogue 1. Computers in Russia Task 1. Read and translate the dialogue. Foreigner: Many people think that Russians tend to lag behind other countries in computer literacy of the population. Is that True? Russian: To some extent you are right if you mean the number of computers. But over the last few years we have progressed enormously. Two decades ago few people realized that computers would become part of our daily lives. Not only computers, many of the things that we do now were thought to be impossible 20 years ago. F.: Yes, the world has changed. In advanced countries computers are everywhere these days. Computers monitor the flow of materials in plants and factories, computerized robots take over dangerous jobs in factories. They are widely used in business and finance, in science and medicine. R.: They even help secretaries to get letters and contracts typed accurately and quickly. To be serious, the progress in computer technologies is amazing. F.: Yes, soon computers will be able to recognize voice commands, people won’t be using keyboards. R.: Undoubtedly within 20 years from now all information will be coming through computers even in my country. It will affect the labour market drastically. F.: Can’t agree more. Many jobs will have disappeared by, say, 2015. Besides, computers provide access to the Internet. Do young people in your country 119 Information in Economics R.: F.: R.: F.: R.: F.: R.: use the system? I’d say an overwhelming majority of young people do use the Internet. They show an interest in websites relating to their occupations and studies. Do you often visit Internet shops? No, I log on to the Net from my office. Many people, however, are disappointed and embarrassed by the situation. We’ve become too dependent on computers. That’s right. Clerical staff cannot do simple arithmetic without calculators. Not only that. It’s difficult to keep information held on computers secret. Yes, even kids can hack the computers of large corporations, they can hack into banks and transfer huge amounts of cash. Connecting to other people’s computers secretly and illegally has become a problem. People may be right that the spread of computers has brought us as many problems as it has solved. Vocabulary List lag behind – отставать to some extent – до некоторой степени voice command – команды, подаваемые человеческим голосом drastically – коренным образом disappear – исчезать overwhelming majority – подавляющее большинство be embarrassed – быть смущенным, растерянным do arithmetic – делать арифметические подсчеты take over – брать на себя Task 2. Comprehension Questions 1. Has Russia made progress in computer literacy of the population? 2. Did many people in Russia foresee the future of computer technologies as far as two-three decades ago? 3. What can be done with the help of computers? Are they used in offices, at plants, in research institutes? 4. What breakthrough in computer technologies is likely to happen in the near future? 5. How do computers affect the labour market? 6. Do young people in Russia use the Internet? 7. How can people get access to the Internet? 8. Does hacking pose a serious problem? 120 ____________________________________________Information in Economics Texts for additional reading Text 1. Computers in Education Task 1. Read and translate the text First it was the movie, then the radio receiver and then the television. Each was once seen as magical technology that would transform education. Now it is the computer. Many governments have equipped schools with computers, convinced that their presence would improve the pace and efficiency of learning. Some thought that installing computers was a good way to teach children and to fit them for the 21st century. Studies of children whose teachers use and do not use computers in the classroom suggest that the hopes for computers are just as wrong as those for classroom movies, radio and television. The researchers found no evidence that the use of computers improved children’s test scores. In fact, they found the reverse. There are signs that computers may even impede learning. It’s obvious that young children, in particular, learn best when they face the teacher. Educational software is one-sizefits-all; it is not tailored to the varied abilities of pupils in a class. Money should be spent to cut class size and to improve teacher training. Words you may need magical – волшебный transform – преобразовывать pace – темп, скорость install – устанавливать evidence – свидетельство, доказательство the reverse – обратное impede – затруднять tailor – специально приспосабливать для какой-либо цели Task 2. Decide, if these statements are true or false. 1. First it was the radio, then the television and then the movie. 2. Many governments have equipped schools with computers. 3. The researchers found a lot of evidence that the use of computers improved children’s test scores. 4. It’s obvious that young children learn best when they face the computer. Text 2. The origin of the Internet Task 1. Read and translate the text. Internet is being used now to gather information, to shop or just for 121 Information in Economics entertainment. You’re probably familiar with the process of dialing in and moving from website to website. But do you really understand how you’re doing what you’re doing as you move from web location to web location? How did Internet get started? The Internet began in the late 1960s as an experiment by the U.S Department of Defense to see if a non-centralized network could be built to withstand the destruction of one or more of its parts. Unlike previous networks, this new network did not have a single central point. Instead, all sites on the network were interconnected. Out of this network came a protocol for linking computers together. A protocol is a set of standards for how network communication takes place. The protocol is called TCP/IP (Transmission Control Protocol/Internet Protocol). This protocol is the standard that makes it possible for different computers all over the globe to talk to each other. The TCP/IP protocol is the foundation of the Internet. At first, the Internet was used solely by the US government but soon universities and other institutions connected themselves to the Internet to communicate with one another and collaborate on projects. The Internet grew to connect hundreds of different sites all across the world. Each organization on the Internet was responsible for maintaining its part of the network, so the Internet was not owned or controlled by any one organization. Today, the Internet connects up to 40 million people around the globe and is growing by as much as 10% per month. Task 2.Answer the questions. 1. When and how did Internet get started? 2. What happened in the late 1960s? 3. What was the difference between previous network and a new one? 4. What is the TCP/IP protocol? 5. Who was the first user of Internet? Text 3. Getting connected Task 1.Read the text. The Internet is like a system of roads, freeways and bridges. The term “Information Superhighway” describes how the Internet works. From any road in any city you can get to almost any other road in any other city. From your country you can send an electronic mail message to someone sitting at a computer in Helsinki, Warsaw or Moscow. Internet access companies or Internet Service Providers (ISP) provide physical connections that allow you to access the Internet. These connections are called “POPs”, which stands for “points of presence”. Your computer uses a modem to dial into a POP which connects you to the Internet. Once connected to a POP, you have access to all the resources of the Internet. Most ISP’s will also supply you with software available for work in the 122 ____________________________________________Information in Economics Internet: a Web browser. 1. 2. 3. 4. Task 2. Correct the following statements. The Internet is like a mixture of roads, freeways and bridges. The term “Information Superhighway” describes how the Internet appears. You can send an electronic mail message to someone sitting at a computer only in Helsinki, Warsaw or Moscow. Internet access companies or Internet Service Providers are different organizations. Text 4. The Birth of Domain Names In the 1980’s a major change occurred as a result of the increase in scale of the Internet and its associated management issues. To make it easy for people to use the network, hosts were assigned names, so that it was not necessary to remember the numeric addresses. Originally, there were a fairly limited number of hosts so it was feasible to maintain a single table of all the hosts and their names and addresses. The shift to having a large number of independently managed networks or so called Local Area Networks (LANs) meant that having a single table of hosts was no longer feasible and the Domain Name System (DNS) was established. A domain name is the letters or words that visitors must type in to come to your website. The DNS permitted the conversion of a numeric host address (i.e. 215.72.87.66) to a simpler, easier to remember name address (e.g.www.prospekt.org). The Birth of the Web Browser In October of 1994, Mosaic Communications Corporation (renamed “Netscape Communications” on 11 November 1994) introduced the first public version of their browser, “Mosaic NetScape”. A browser is a software program which reads the computer language (Hyper Text Markup Language – HTML) used to code information on the Web and allows you to view documents on the Web. This was one of the first web browsers to be freely distributed across the Internet. How does email work? Let’s say you are sending mail to (user name @domain name). When you have finished composing your email, your mailer (email software) performs a gethostbyname system call to look up the IP address of the remote host (aol.com). The IP address (INTERNET PROTOCOL address) is an assigned number, which identifies a host in an Internet. It has three parts: network, optional subnet number and host number. Your system queries an Internet name server to find the address of aol.com. Your mailer opens a virtual circuit over the Internet to “joy’s” mailer. It 123 Information in Economics communicates with the remote mailer by using the Simple Mail Transfer Protocol (SMTP). If all goes well, the mail is usually delivered within a few seconds, even if the recipient’s machine is on the other side of the world. If the Remote site is down, your mailer will keep trying every hour or so, usually for a couple of days. If the site still can’t be reached, the mail will be returned to you as “undeliverable message”. People and organizations without fulltime Internet connections may also use the Post Office Protocol (POP). Vocabulary department of defense – министерство обороны to withstand – выдержать, противостоять freeway – автострада высшего класса host – хост (сетевой узел, использующий протоколы tcp\ip host address – ведущий адрес scale – масштаб, размер subnet – подсеть query – запрос server – сервер mailer – почтальон (программа доставки электронной почты адресату) email software – программа для электронной почты down – не работающий, не функционирующий (о компьютере) undeliverable message – недоставленное сообщение Task 2. Answer the questions. 1. How is the host address expressed in DNS? 2. What is browser? 3. What is a domain name? 4. What is the IP address? Text 5. Who owns the WWW? Who owns the World Wide Web (WWW)? The answer is – NOBODY! How can that be? – you could ask. This concept is a bit difficult to grasp unless you understand the structure of the Internet and its component parts, including the WWW. We have called the Internet “The Information Superhighway” and that is still the most accurate analogy. The Internet is a network of independently-owned and operated interconnecting communication pipelines, just as the system of roads and bridges is a network of independently-owned and operated thoroughfares. From dirt roads to gravel roads to two lane paved roads to the largest multi-lane superhighways. Each road and each bridge was built by an independent entity and 124 ____________________________________________Information in Economics continues to be owned and controlled by that entity, including sale or other transfer of interest. Anyone can connect to an interstate highway, if the price is right. The beauty of the system, however, is that anyone can drive on any of these roads, usually for free. Once you get on one road in the system, you can use it to access any number of other roads, to go anywhere on the network you choose. All you need is a vehicle – a car or a computer with a modem and software. The Internet works the same way. Some parts of the Internet were installed and now maintained by government agencies, some by universities, some by private businesses, some by individuals. Each new connection to the Internet is achieved by acquiring permission to connect to someone who is already connected. It can be as simple as an individual signing up for a dial-up access account through an ISP, or as complicated as a new ISP establishing a high-speed data connection to a major backbone, with dozens of pieces of computer hardware to regulate and route the traffic. Once you’re on, you’re on. You can go anywhere. The WWW is merely a subset of information published on the Internet. The only thing distinguishing information on the Web from other types of information on the Internet is the format in which the information is published. Web documents are published in Hyper-Text Markup Language (HTML). In order to put up a web page of your own, whether individual or business, you need to get access to the WWW by either renting space on an existing commercial Web server or by putting up your own Web server and paying for a connection to someone else’s data pipeline. Either way, you’ll own a piece of the WWW yourself! Vocabulary pipeline – канал (связи, снабжения, коммуникации) thoroughfare – транспортная магистраль entity – организация for free – бесплатно to sign up – подписаться на услуги провайдера dial-up access – наборный доступ (по телефону) user account – учетная запись пользователя (пароль и имя пользователя) subset – подмножество web page – cтраница или ряд страниц, хранимые в сети web server – web-сервер (компьютер, предоставляющий доступ к службам и страницам www ) to put up – организовывать, устраивать Task 2. Answer the questions 1. How is new connection to the Internet achieved? 2. What is the difference between Internet and WWW? 3. What language is used in WWW? 4. What are the two ways of putting up a web page in the Internet? Task 3. Complete the following sentences, using the words given below. 125 Information in Economics 1. The Internet is a _______ of independently-owned and operated interconnecting communication pipelines. 2. Each road and each bridge was built by an independent _____. 3. The beauty of the system, however, is that anyone can drive on any of these roads, ________. 4. All you need is a ________ with a modem and software. 5. The WWW is merely a ______ of information published on the Internet. Subset, 126 computer, entity, for free, network. 127
