BUSINESS ENGLISH 1 – ORAL EXAM

1. Economics/Economy Economics is the study of the way in which wealth is produced and used. In other words it is the study of how individuals and governments allocate scarce resources in an attempt to satisfy unlimited wants.

Economics is present in our lifes from the first day when we purchased something and by that became an „economic player“. Every decision we make, whether it is which clothes we buy, what car we drive, what college we go to, or what business deal we make, those are all economic resolutions that affect economy and economics. By studying it we become better informed players.

Economy is the system by which country's goods and services are produced and used. Money, industry and trade are organised. An economy consists of the economic system of a country or other area, the labor, capital and land resources, and the economic agents that socially participate in the production, exchange, distribution, and consumption of goods and services of that area.

A given economy is the end result of a process that involves its technological evolution, history and social organization, as well as its geography, natural resource endowment, and ecology, as main factors.

There are three types of economies: Planned, Market and Mixed economy

2. Economic systemsThe function of an economy is to allocate resources amongst unlimited wants and to solve the basic economic problem often broken down into three questions: What shoul be produced? How should it be produced? For whom should it be produced?

How the above questions are answered will depend on the type of economic system: the planned economy, the mixed economy and the market economy. The way business activity is organised will be different in each of the systems.

3. Planned economyPlanned economy is the type in which resources belong to the state and government has a vital role. It plans, organises, and co-ordinates the whole production. In planned economies, there tends to be a more equal distribution of wealth and income, production is for need rather than a profit, people tend to work efficiently and the standard od living is often lower compared with countries which use other types od economic system.

4. Mixed economyIn mixed economy resources are allocated by the government (the public sector) and by the market forces of demand and supply (the private sector). The role of government depends on the level of development and the state usually provides a minimum standard of living for those unable to work. Another role of government is to ensure that there is a fair competition.In mixed economy public goods are usually provided free when used and are paid for by taxes.

5. Market economyIn market economies resources are allocated automaticaly by the forces of demand and supply, which stimulates competition. That should lead to lower costs, a wider choice of goods and services. The role of government in a free market system is limited. Some of its main functions are to pass laws, to provide certain essential products and services such as policing, national defence and the judiciary, and to ensure a level playing competition. Firms may often choose to sacrifise public interest in exchange for lower costs.

6. Decline of manufacturing

7. GDPGross Domestic Productgoods & services produced within a country’s bordersGDP = C + G + I + NXC = all private consumption/consumer spendingG = government spendingI = investment/all the country’s business spending on capitalNX = total net exports (total exports minus total imports)

More jobs - more moneyLower inflation – cheaper productionMore exports – more money

Higher growth – better standard of livingSocial welfare – health, comfort happiness

8. Good society (Galbraith) The good society accepts the basic market system and its managers, but there are some things the market system does not do either well or badly. In the good society there are the responsibilities of the state.

1.What areas does Galbraith describe as responsibilities of the state?Good low-cost housing, health care but also parks, recreational facilities, police, libraries, the arts and others.2.What does Galbraith say about the people who criticise government services? He says those are usually the affluent ones who can afford to provide all the services for themselves and don’t think about the underclass.3.Why the market system is not sufficient to guarantee scientific research?It doesn’t want to risk so much money in something that doesn’t give profit right away but in a long term.

9. Sectors of economyThere are three sectors of economy: the primary, the secondary and the tertiary sector.

10. Primary sectorThe primary sector of the economy involves changing natural resources into primary products. Most products from this sector are considered raw materials for other industries. Major businesses in this sector include agriculture, fishing, forestry and all mining and quarrying industries. Primary industry is a larger sector in developing countries.

11. Secondary sector

The secondary sector processes the raw materials from the primary sector. This means that they take the raw materials and make them into finished items.

It includes manufacturing capital and consumers goods and building and counstruction. Utilities, textiles, toiletries, transport, software and automotive companys are some of the most typical ones for this sector.

12. Tertiary sector

The tertiary sector of the economy is also known as the service sector or the service industry.The basic characteristic of this sector is the production of services instead of end products.

The focus is on people interacting with people and serving the customer rather than transforming physical goods.

Services may involve the transport, distribution and sale of goods from producer to a consumer, wholesaling, retailing, entertainment, restaurant industry.

13. Public sectorThe public sector is made up of organizations which are, directly or indirectly, owned or controlled by central or local government. They are funded by the government and in some cases from their own trading surplus of profit.The main goal in public sector is a socal wellfare and to serve the public interest.State provides services as defence and some merit goods like health care and education, and is an owner of some public enterprises such as the National bank, utilities and rail. The main role have ministers and the board of directors which is commonly made up of politicians.

14. Public sector companies15. Municipal enterprisesThe municipal undertakings also belong to the public sector. Some of them are cemeteries, street cleaning, waste dumps, car parks, street lighting, fire protection, recreation facilities, theatres, galleries, museums and airports.From all these enterprises and taxes the government raises money to pay for expences and funds.

16. PrivatizationIn the broadest sense, privatization means relying less on the government to meet people's needs for goods and services, and more on private institutions such as the marketplace, the family and voluntary organizations.

An oft-stated aim is to wring more efficiency out of the enterprises being privatized, and thus to make the economy in general more productive.Governments also use privatizations to raise money.Another aim of privatizing, particulary in developing nations, is to invigorate and expand to local capital markets and to attract foreign capital.

17. Advantages of privatization competition – lower prices more choice better quality innovation /new products, diversification/ sensitive to demands of consumers managers make decisions freely growing number of shareholders selling the state owned industries raises revenue for the government

18. Disadvantages of privatization Laying off workers Some services cannot be provided without state finance (e.g. railway network) Concentrating on profit Privatised firms may hand over control to foreigners Trade unions not able to protect workers State owned firms can only be sold once

19. Private sector companiesThe private sector is a part of the economy which includes businesses set up by individuals or group of individuals. Their goal is to make profit, and these companies are not controlled by the government.There is sole proprietorship, partnership, private and public limited company. They are distincted by liability and whether they are unincorporated or incorporated.a) Sole trader (unincorporated)b) Partnership (unincorporated) X & Yc) Private limited company (incorporated) Ltd. d) Public limited company (incorporated) Plc.

20. LiabilityThere are two types of liability: limited and unlimited one. The limited one is when the owner is responsible for only the amount of money he invested. In case of a bankrupcy he wouldn't be taken his personal wealth to pay for debts. Unlimited liability, means that the owner risks to sell his personal assets to pay for debts. Those assets could be land, shares, buildings, machines, cash, in other words, anything that has some material value. That's why unlimited liability is considered more risky.21. Sole proprietorship, 22. Partnership, 23. Ltd, 24. Plc

Sole trade(Sole

proprietorship)

Partnership Private Limited

Company(Ltd.)

Public Limited Company

(Plc.)

OWNERSHIP 1 sole trader2 – 20 partners

2 - ….Xshareholders

2 - ….Xshareholders

DOCUMENTS Few legal requirements

Deed of Partnership

Memorandum of AssociationArticles of AssociationCertificate of Incorporation

Memorandum of AssociationArticles of AssociationCertificate of Incorporation

FINANCEsavings, bank loans, overdrafts

capital of partners, bank loans, overdrafts

sale of shares(in private)

Sale of shares (in public, on the Stock Exchange)

CONTROL one person partners Board of Directors

Board of Directors

ADVANTAGES

direct controlquick decisionsfew legal requirementsclaim on profits

more financespecializationsharing losses

limited liabilitymore financelarger scale organization

limited liabilitycontinuity of businessgrowing capitallarge scale organization

DISADVANTAGES

unlimited liabilityno specializationbusiness ends on death of the owner

unlimited liabilitysharing profitsbusiness ends on death of any partner

legal requirements(strict laws)

legal requirements(strict laws)

25. Documents for limited companies

When forming a limited company the Memorandum of Association and the Articles of Association are required.

The Memorandum of Association sets out: the name of the company the type of business the total share capital

It deals with the outside world.

The Articles of Association sets out: the powers and duties of the directors the issue and transfer of shares the calling of general meetings the salary and appointment of Managing Director

It deals with running the company internally.

26. Process of forming a limited companyIf the Registrar is satisfied with all of the details he registers the company and issues them with a certificate of incorporation. This gives the new company permission to start trading.

PEOPLE WANTING TO FORM A COMPANY

LAWYER

CERTIFICATE OF INCORPORATION

MEMORANDUM OF ASSOCIATION AND

ARTICLES OF ASSOCIATION

THE REGISTRAR OF COMPANIES

27. Entrepreneurship

Entrepreneurship is the act of being an entrepreneur. The aim of production is to provide with the goods and services that people need or want.

28. Characteristics of entrepreneursSuccessful entrepreneurs come in all shapes and sizes- the dynamic, the cautious and the greedy. But all of them have a few things in common.

Most entrepreneurs, unlike managers don’t come from fairly conventional background. They are crackpots, dreamers, outsiders who drop out of college to get a job, discover a flair for building companies from nothing, get bored quickly and move on.

They are independent, have guts to take risks and chances, and what’s more important they have the killer instinct and are ingenious.

To become entrepreneur doesn’t require much. All you need is to get an idea, identify your customer and make a sale. It’ll probably take you many years to become successful in what you do, which is why you must be determined and dedicated to what they are doing. However, not everyone can be prosperous entrepreneur. Some people just aren’t good organizes and leaders who can start a business and see the possibility of new products, technologies or production.

likely to be an outsider, a troublemaker, a rebel drop out of school discover a flair for business get bored quickly masters of risk - management

29. Reasons for start-ups• INDEPENDENCE• KEEPING ALL THE PROFITS• CREATIVITY• USING REDUNDANCY MONEY

30. Venture capital

--funds invested in a new enterprise, esp. a risky oneProvided by: a) the government b) the private sector

Support by: legal, educational & financial systems

31. Company structureEach company has its internal organization which depends on type of business activity, size of business and the number of employees. It is also important to stress that the company structure depends on the type of business organization and the sector it is in. However, generally speaking on the top of a company is always a manager or the president of the board of directors, then there are executives which can be senior, middle and junior managers. Below them are departments which contain of staff or in other words employees and finally there is a shop floor.

Despite everything all companies have the same business purpose which is to maximise productivity, creativity, innovation and wealth and to danger competition. To achieve all this it is important to have functional and firm structure where everyone knows who is in charge, who are they responsible to, for what are they responsible and by who are they supported. In other words, everybody should know they're place and their role in the company.

32. Hierarchyhierarchy or chain of command - a system of authority with different levels, one above the other, e-g- a series of management positions, whose holders can make decisions, or give orders and instructions

Hierarchy also known as the chain of command is the type of structure with one person or a group of people at the top, and an increasing number of people below them at each successive level. All the people in the organization know what decisions they are able to make, who their line manager is, and who their immediate subordinates are. The owners of small firms want to keep as much control over their business as possible, whereas managers in larger businesses who want to motivate their staff often delegate decision making and responsibilities to other people. A problem with hierarchy is that people at lower levels can't take important decisions and the resposibility is passed on bosses. However, there is a trend of flattening, which is reducing the chain of command and taking out the layers of management. 33. Board of Directors

• elected by the shareholders• look after shareholders’ interests• at the top • President/Chairperson• Chief Executive Officer (CEO) / Managing Director (MD)• Chief Operating Officer (COO)• Chief Financial Officer (CFO)

a) Representatives from within the company - Chairperson - inside directors – executive directors - Managing Director (Chief Executive Officer) b) Representatives independent from the company - outside directors – non-executive directors

34. People to whom managers are responsible owners - to achieve the best possible return on the capital invested clients - to provide goods and services of the specified quality,

within the agreed time, at a fair price employees - to provide the safest and most comfortable working

conditions, to pay a fair wage

35. Management functions1. planning – making decisions / policy / methods - to achieve the

objectives2. co-ordinating – integrating activities in order to form a united strategy3. m otivating – encouraging 4. c ontrolling – supervising and checking

36. Two - tier corporate hierarchy

There is a two-tier corporate hierchy in management: board of directors and management team. Board of directors is elected by shareholders and consists of internal and external directors and monitor managers. It role is to make strategic decisions such as which market to enter or pull off, how to finance expansion, develop new products and how to take over new products by buying other companies. Management team includes the CEO and departmental managers. It is involved in day-to day operations.

a) Board of directors - elected by shareholders - internal – inside directors (executive) - external – outside directors (non-executive) - monitor managers (report to owners) - make strategic decisions:

which markets to enter/pull off how to finance expansion develop new products acquire / take over new products by buying other companies

b) Management team - the CEO – the top manager - involved in day-to day operations - departmental managers (Finance, Production, Marketing, Legal, Research & Development, Distribution ........

37. Duties of managerso set objectiveso work out methods to achieve themo analyse the activitieso divide the work into individual jobso select peopleo form effective teamso motivate (pay, promotion)o measure the performance of the staffo train and develop their staff

38. Human Resources Department

recruit / lay off provide a job contract (rights and obligations) motivate (rewards systems) measure productivity train (new skills, new systems) take care of lighting, heating, hygiene, canteen, sports develop (opportunities, promotion) negotiate with trade unions

HR DEPARTMENT 1. advertises the job / vacancy in the appointments page ( local, national, international advertising; trade journals) 2. notifies Job Centres (employment agencies) 3. uses private recruiting agencies - head-hunters (for top staff)

39. Recruitment process

When wanting to recruit new employees, recruiters first define their needs.Before meeting with the job applicant, the hiring manager must decide upon the responsibilities of the position. He must be clear about the educational background, professional experience and qualitative manners he seeks in the ideal candidate.

Once the responsibilities, requirements and the salary range of a job is determined, the hiring manager may post want ads on online job search sites or in traditional publications like trade journals in the appontments page. He/she may also utilize the services of a staffing agency that maintains a pool of qualified, pre-screened candidates. Another way to find the adequate staff is to use private recruiting agencies, head-hunters. If one decides for the advertisement, he/ she must give job description. It should include job title, responsibilities, working hours, working conditions, pay, fringe benefits and holidays. Fringe benefits could be everything from bonuses, free meals, usage of car, mobile phone, house, free insurance to profit sharing and social facilities.

When wanting to apply for a position, applicant sends a CV and the letter of application. Resume should include information like personal detalis, qualifications, work experience, personal qualities and skills and references.When resumes begin to pour in, a hiring manager must screen each one. His goal is to weed out those lacking the proper educational or professional background. Once he/she has identified the most appropriate resumes, he puts them on a shortlist. Those applicants will get the opportunity to attendt an interview.

When an ideal candidate has been identified, the hiring manager extends a formal offer of employment. The final step in recruitment process id signing as a contract.

40. Job advertisement – job description/ job specification

Job description- job title (responsibilities)- working hours/conditions- holidays- pay (salary/wages)- fringe benefits (perks)

Job specification (CV)- personal details (age, place/date of birth, address, e-mail)- qualifications (diploma, degree, courses)- experience- personal qualities- skills (computer, languages, driving licence)- references

41. Job safety/job security- knowing that there is little risk of loosing one's employment

42. Job satisfactionStrategies for raising job satisfaction and quality of work life (qwl)

improving work conditions and security increasing the worker’s responsibility providing financial stability enhancing the worker’s sense of self- worth providing opportunities for social

relationships within the organisation

43. Fringe benefits bonus (additional payment) free meals (subsidised canteen) use of car/mobile phone/house free insurance profit sharing social facilities (sports clubs)

44. Conflicts between managers and employeesa) the employers want to minimise wage costsb) the employees want to achieve higher pay

45. Work and motivation

There are few factors that affect work motivation: individual differences, job characteristics and organisational practice. Good motivation leads to more productive environment, competitive workers and more profitable work.

Some employees like to work while others have to be forced.

Motivation is what drives us to try to reach certain goals. Motivation is a decision-making process through which a person chooses

desired outcomes and behaves in ways that will lead to acquiring them. Motivation is the willigness to make the effort to achieve certain goals.

46. McGregor’s Theory X/Theory YTheory X has a traditional and pessimistic approach. It assumes that people are lazy and will avoid work and responsibility if they can, in other words there is a lack of ambition. Workers have to be threatened and rewarded with incentives because they can only be motivated by money. Theory X believes that workers have to be closely supervised and controlled and told what to do, since most people are incapable of taking responsibility. That's why managers are autoritarian, they direct everything, from top down.

Theory Y is more progessive. It assumes that people have s psychological need to work and given the right conditions, such as job security and financial rewards, they will be creative, ambitious and self-motivated by the satisfaction of doing a good job. This theory believes that workers are motivated by many needs and they like to work.They are responsible-prefer to participate in decision-making and like autonomy. Unlike Theory X, Theory Y thinks that managers should trust workers and help them do their best, be team-oriented and organise communication channels and listen to their subordinate's opinion.

47. Herzberg’s Hygiene FactorsFrederick Herzberg believes that 'hygiene factors' also known as satisfiers can only keep workers contented but not motivated. They are: clean, quiet and safe working conditions, adequate rest breaks, good labour relations, good wages and benefits and job security. However, what really encourages workers to do their best are so cold motivators. They include things such as having a challenging and interesting job, recognition like praise from management, responsibility and career advancement like promotion.However, if the hygiene factors are poor then the motivating factors won't work.

48. Trade unions

Trade unions regulate relations between employers and employees and protect the interest of their members. To employ skilled officials to act on their behalf workers have to pay a small subscription. When being a member of a trade union workers have representatives that negotiate with their employers.

Apart from union members there are others that make the structure of a trade union. Shop stewards also called union representatives are elected by members of the union to represent them to management. Branches support union members in different organizations locally. District and/or regional offices are usually staffed by full time union officials. Finally there is a national office. It is the union’s headquarters which offers support to union members and negotiates or campaigns for improvements to their working conditions.

Trade union aims to improve wages and working conditions, reduce working hours, protect full employment, fight for job security and against unfair dismissal, provide benefits for those who are sick, retired, on strike and to participate in company decision processes. It provides collective bargaining which are talks between representatives od employees and employers and restrictive methods like industrial action.

49. Types of industrial actionIndustrial action is a general term for strikes, go-slows, work-to-rules, etc.There are a few forms of industrial action. First and most common one is strike, a stoppage of work, as a protest against working conditions, low pay, and so on. It can be official and unofficial one. Official is with union approval, and it is paid from funds contributed by members, while unofficial one, also known as wildcat is without union backing. Second form of industrial action is overtime ban, when workers refuse to work additional hours. Third form is work-to-rule. It is deliberately obeying every regulation in an organization, which severly disrupts normal operation and slows the work. Go slow or slowdown is a deliberate reduction in the rate of production. Work is at a slower pace and there is a fall in output. Another form of industrial action is picket, a protest outside a factory or other workplace, and try to persuade workers and delivery drivers not to enter. Final form is blacking, when workers refuse to move machines.

50. Decline of trade union membershipHowever, there has been a decline in trade union membership. With the economy being a free-market one there are less people working in manufacturing which is why is harder to organize unions. Also, there are laws that have reduced their power and more firms refuse to recognize and negotiate with trade unions.

1. PresentationsPresentation is a prepared talk which is used to inform on a certain subject. One of the most popular is sales presentation, but one can also give presentations at conferences, lectures, board meetings, forums etc.Before presenting, it is necessary to be well prepared. For the beginning, the content must contain only important information and relevant points. Furthermore, structure must have three main parts : the beginning, the middle and the end. Presenter must take care of the internal and external factors. One must know who is the audience, their level of knowledge and how many people will be there. Also, presenter should be calm, confident, speak loud enough and make eye content because without audience's attention all effort is useless.

2. Business planPURPOSE

1. Helps focus and research the business’s development2. Provides framework for strategies over the next 3-5 years3. Basis for discussion with third parties (shareholders, agencies, banks,

investors…)4. Benchmark (actual performance can be measured and reviewed)

1. Vision2. Mission3. Objectives4. Values5. Goals

Strategies - rules by which the vision / mission / objecives may be achievedSTRUCTURE& CONTENT OF A BUSINESS PLAN

1. Introduction table of contents

2. Executive summary (business description): Overview of your industry (vision, mission, goals) Description of products/services Labour requirements The market (customers, size and trends, competition) Market opportunity (method of sales, advertising and promotion) Management (ownership, Board of Directors, support services) Financials (financial statements, profitability)

3. Conclusion

3. CV/Letter of application 4. Economic agents/the market

5. Role of government – areas of responsibility1. Maintenance of a low level of unemployment2. Price stability (low levels of inflation)3. High economic growth (GDP)4. Balance on foreign trade (more exports than imports)

6. Public corporation vs. Plc 7. Partnership vs. Ltd company

8. PPP/P3 – contracting outPRIVATE PUBLIC PARTNERSHIPpublic sector authority + private party

a) public serviceb) public goods (infrastructure)c) the company putting in the lowest bid – the cheapest price – gets the

contractd) places in old people’s homes, catering in hospitals, cleaning...has been

put out to tender

9. Standard economic theory/Factors of productionFACTORS OF PRODUCTION

LAND - fixed in supply geographical area natural resources

LABOUR - man’s physical and mental contribution (skills/knowledge)

CAPITAL - a) fixed - buildings, machinery, equipment b) working - stocks of raw materials, cash, bank

balance

STANDARD ECONOMIC THEORYThe general equilibrium model:Economic agents (consumers, households, companies, organisations) influence prices and quantities “adjust themselves” until supply meets demand.

10. Changes in company organizations

11. Downsizing / flat hierarchyhttp://www.youtube.com/watch?v=STED8sSHJU8&feature=related

Downsizing – reducing a firm in size by laying off employees to become more efficient

Flat hierarchyIt is a type of hierarchy with just a few levels of hierarchy. It offers way to reduce cost as the way of reduce cost is to reduce staff, which we can do by delayering. In flat organization a manager has large number of staff

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12. Maslow’s “hierarchy of needs”

13. “Fat cats” http://www.investopedia.com/video/play/fat-cat-ceoCEO is supposed to guide a company through vision and leadership, but for some CEOs it's all about the money. They are nicknamed Fatcats. Those CEOs can hurt the bottom line simply by costing the company more than they work. They forget that their jobs are to serve the company and their shareholders and not to pad their own wallets. Fatcats can ruin the company with his/her greed and negligence. They are so focused on recieving production bonuses that they will push the company to produce beyond sustainable levels. They take the money and run, leaving for the next company before the damange is understood. If a CEO is costing a company too much it's better to pass up the investment for a company who's management acctually adds value.

14. Motivation for staff to perform better in work Staff are mostly motivated by increment and bonuses Staff feel motivated and perform better at work if they are given a chance

in decision making Company events, like family outings, dinner and dance usually motivate

staff and they feel closer to each other Flexible working hours motivate staff to perform better in work Some employees adore challenges such as working overseas which keep

them motivated Awards keep the staff going Tea breaks usually allow employees to perform better Caring bosses usually motivate staff