3. A balance sheet

A balance sheet (or statement of financial position), is a summary of a firm's assets, liabilities, and owners equity accounts at a particular time, showing the various money amounts that enter into the accounting equation. The balance sheet must demonstrate that the accounting equation does indeed balance. That is, it must show that the firm's assets are equal to its liabilities plus its owners' equity. The balance sheet is prepared at least once a year. Most firms also have balance sheets prepared semiannually, quarterly, or monthly.

4. An income statement

An income statement is a summary of a firm's revenues and expenses during a specified accounting period. The in­come statement is sometimes called the statement of income and expenses. It may be prepared monthly, quarterly, semiannually, or annually. An income statement covering the previous year must be included in a corporation's annual report to its stockholders.

5. The importance of the above two statements

The information contained in these two financial statements becomes more important when it is compared with corresponding information for previous years, for competitors, and for the indus­try in which the firm operates. A number of financial ratios can also be computed from this information. These ratios provide a picture of the firm's profitability, its short-term financial position, its activity in the area of accounts receivables and inventory, and its long-term debt financing. Like the information on the firm's financial statements, the ratios can and should be compared with those of past accounting periods, those of competitors, and those representing the average of the industry as a whole.

UNIT 8

OPERATIONS MANAGEMENT

Operations management consists of all the activities that managers engage in to create products (goods, services, and ideas). Operations are as relevant to service organizations as to manufacturing firms. In fact, production is the conversion of resources into goods or services.

1. A technology is the knowledge and process the firm uses to convert input resources into output goods or services. Conversion processes vary in their major input, the degree to which inputs are changed, and the number of technologies employed in the conversion.

2. Operations management often begins with the research and product development activities. The results of R&D may be entirely new products or extensions and refinements of existing products. The limited life cycle of every product spurs companies to invest continuously in R&D.

3. Operations planning is planning for production. First, design planning is needed to solve problems related to the product line, required production capacity, the technology to be used, the design of production facilities, and human resources. Next, operational planning focuses on the use of production facilities and resources. The steps in this periodic planning are (1) selecting the appropriate planning horizon, (2) estimating market demand, (3) comparing demand and capacity, and (4) adjusting output to demand.

4. The major areas of operations control are purchasing, inventory control, scheduling, and quality control. Purchasing involves selecting suppliers and planning purchases. Inventory control is the management of stocks of raw materials, work process, and finished goods to minimize the total inventory cost. Scheduling ensures that materials are at the right place at the right time — for use within the facility or for shipment to customers. Quality control ensures that products meet their design specifications.

5. Automation, the total or near-total use of machines to do work, is rapidly changing the way work is done in factories and offices. A growing number of industries are using programmable machines called robots to perform tasks that arc tedious or hazardous to human beings. The flexible manufacturing system combines robotics and computer-aided manufacturing to produce smaller batches of products more efficiently than the traditional assembly line.

UNIT 11

MANAGEMENT INFORMATION TECHNOLOGY (IT)

1. Today business, government, and other organizations de­pend on computers to process data and to make information available for decision making. A computer is an electronic ma­chine that can accept, store, manipulate, and transmit data in accordance with a set of specific instructions. Although computers are a relatively recent invention, we have already seen five generations of computers. Currently, firms can choose mainframe computers, minicomputers, or microcomputers to match their information needs.

Mainframe computers may be as big as a good-sized room, can handle huge quantities of data, perform a variety of operations on these data in fractions of a second, and provide output information in several different forms. The largest and most powerful mainframe computers are sometimes called supercomputers. These very large computers are used almost exclusively by universities and government agencies that are involved in research activities that require large memories and high-speed processing.

Minicomputers are smaller (more or less desk-sized) computers that made computers available to most firms.

The microcomputer, sometimes called a personal computer (PC), is a desktop computer. It was made possible by the development of microprocessor chips, a fraction of an inch in size, that contain all the electronic circuitry required to perform large-scale data processing. Although microcomputers are often purchased for use at home many smaller firms find them completely satisfactory for their limited needs. Each of these machines consists of at least one input unit, a memory, a control unit, an arithmetic-logic unit, and an output unit. Firms can also establish a computer network — a system in which several computers can either function individually or communicate with each other.

2. Computers require software, or programs, which are operating instructions. Today, software has been developed to satisfy almost every business need. Database management programs can store and transform data into information. Data contained in a database program can also be stored. Graphics programs make it possible to display in graph form data and conclusions. Spreadsheets are software packages that allow users to organize data into a grid of rows and columns. Spreadsheets allow managers to answer "what if questions by changing data to match new assumptions. Word processing programs allow users to store documents in the computer's memory or on a disk. Once entered, the material can be revised, edited, deleted, printed, or simply used at a later date. Most experts predict that in the future computers will affect every aspect of human life. Specific trends that will affect business include the increase in available information, the use of automation, and the need for employees that know how to use a computer.

3. A management information technology (MIT) is a means of providing managers with the information they need to perform management functions as effectively as possible. The data that are entered into the system must be relevant, accurate, and timely. The information provided by the system must be all of these. Managers in different areas of a business generally require information pertaining to their own areas. The management information technology should match the firm it serves in capacity and complexity.

4. The four functions performed by MIT are collecting data, storing and updating data, processing data, and presenting information. Data may be collected from such internal sources as accounting documents and other financial records, conferences and meetings, and sales and production records. External sources include customers, suppliers, bankers, publications, and information-gathering organizations.

5. With a computer, data can be stored on magnetic tapes and disks and used when they are needed. Data should be updated regularly to maintain their timeliness and accuracy. Updating can be accomplished manually or via computer.

6. Data processing is the MIT function that transforms stored data into a form that is useful for a specific purpose. Large groups of numerical data are usually processed into summary numbers called statistics. Although statistics can provide information in a manageable form, the user is responsible for correctly interpreting statistics.

Finally, the processed data (which can now be called information) must be presented for use. Verbal information is generally presented in a text form. Numerical information is often displayed in graphs and charts or tables.

UNIT12

HUMAN RESOURCES MANAGEMENT (HRM)

1. General Definition. Human resources management is a set of planning activities. They include the acquisition, maintenance, and development of an organizations human resources. In general, human resources planning consists of forecasting the hu­man resources that the firm will need in the future.

Acquisition includes planning that leads to hiring new personnel.

Maintenance of human resources consists of motivating employees to remain within the firms and to work effectively. Motivation includes the following aspects:

• Rewarding an employee through monetary payments.

• Providing benefits and promotions to ensure an employee's well being.

Development aspect of HRM is concerned with improving employees' skills and capabilities. Employee training and development programs enhance the ability of employees to contribute to the firm.

Candidates for open positions may be recruited from within or outside the firm. In the selection process applications, resumes, interviews and references may be used to obtain information about candidates.

2. Employment Applications. Everyone who applies for a job (an applicant) must submit an application. An employment application is useful in collecting factual information on a candidate's education, work experience, and personal history. The data obtained from applications are usually used for two purposes: to identify candidates who are worthy of further scrutiny and to familiarize interviewers with applicants' backgrounds. A typical employment, application represents a special form to be filled in.

3. Resumes. Many job candidates submit resumes to employers, and some firms require them. A resume is a short summary of the candidate's background and qualifications. It includes a description of the type of job the applicant is seeking. A resume may be submitted along with an employment application. In Britain a resume is often referred to as a curriculum vitae (CV).

4. Interviews. The employment interview is the most widely used selection technique. Job candidates arc usually interviewed by at least one member of the HRM staff and by the person for whom they will be working. Interviews provide an opportunity for the firm and the applicant learn more about each other. Interviewers can ask different questions to learn something about the candidate's attitude to the job and motivation.

Very often interviewers ask different questions of different applicants, so that it becomes impossible to compare candidates' qualifications. Some of these problems can be solved through the use of structural interviews. A structural interview is an interview in which an interviewer asks a prepared set of questions.

5. References. A job candidate is generally asked to indicate the names of references — people who can verify background information and provide personal evaluation of the candidate. Personal evaluations obtained from references may not be of much value because applicants list only the references who say good things about them. However, references are often contacted to verify such information as previous job responsibilities and the reason an applicant decided to leave a former job.

6. Orientation. All the information collected during the selection process is then used to select the most appropriate candidates for the job. Newly hired employees should go through a firm's orientation program. Orientation is the process of acquainting new employees with the organization.

7. Feedback. Feedback is talking of a manager to subordinates to let them know how well they are doing and how they can work better in the future. In other words, it is performance appraisal. These appraisals may be positive or negative. Feedback must help eliminate job-related weaknesses. For a good job employees get rewards such as pay raises and promotions.

UNIT 14

BUSINESS ETHICS

Ethics is the system of moral principles, rules of conduct, and morality of choices that individuals make.

Business ethics is the application of moral standards to business situations. Business ethics has become a matter of public concern.

All business people face ethical issues daily, and they stem from a variety of sources. Although some types of issues arise infrequently, others occur regularly. Let's take a closer look at several ethical issues.

1. Fairness and Honesty. Fairness and honesty in business are two important ethical concerns. Besides obeying all laws and regulations, business people should refrain from deceiving, misrepresenting, or intimidating others.

2. Organizational Relationships. A businessperson may be tempted to place his or her personal welfare above the welfare of the organization. Relationships with customers" and coworkers often create ethical problems — since confidential information should be secret and all obligations should be honored. Unethical behavior in these areas includes not meeting one's obligations in a mutual agreement, and pressuring others to behave unethically.

3. Conflict of Interest. Conflict of interest results when a business person takes advantage of a situation for his or her own personal interest rather than for the employer's or organization's interest. Such conflict may occur when payments and gifts make their way into business deals. A wise rule to remember is that anything given to a person that might unfairly influence that person's business decision is a bribe, and all bribes are unethical.

4. Communications. Business communications, especially advertising, can present ethical questions. False and misleading advertising is illegal and unethical, and it can infuriate customers. Sponsors of advertisements aimed at children must be especially careful to avoid misleading messages. Advertisers of health-related products must also take precautions against deception.

PRESSURES INFLUENCING ETHICAL DECISION MAKING

5. Relationships. Business ethics involves relationships between a firm and its investors, customers, employees, creditors, and competitors. Each group has specific concerns, and each exerts some type of pressure on management.

Investors want management to make financial decisions that will boost sales, profits, and returns on their investments.

Customers expect a firm's products to be safe, reliable, and reasonably priced.

Employees want to be treated fairly in hiring, promotion, and compensation.

Creditors require bills to be paid in time and the accounting information furnished by the firm to be accurate.

Competitors expect the firm's marketing activities to portray its products truthfully.

6. Business ethics. Although there are exceptions, it is relatively easy for management to respond in an ethical manner when business is good and profit is high. However, concern for ethics can dwindle under the pressure of low or declining profit. In such circumstances, ethical behaviour may be compromised.

Expanding international trade has also led to an ethical dilemma for many firms operating in countries where bribes and payoffs are an accepted part of business. In the U.S. government

agencies have prosecuted several companies for "illegal payoffs", in spite of the fact that there is as yet no international code of business ethics. Until stronger international laws or ethics codes are in place, such cases will be difficult to investigate and effective prosecution is not possible.

ENCOURAGING ETHICAL BEHAVIOR

7. Ethics. When no company policy exists, a quick check if a behavior is ethical is to see if others — coworkers, customers, suppliers, and the like — approve of it. Openness will often create trust and help build solid business relationships.

What affects a person's inclination to make either ethical or unethical decisions is not entirely clear. Three general sets of factors influence the ethics of decision making. First, an individual's values, attitudes, experiences, and knowledge influence decision making. Second, the absence of an employer's official code of ethics may indirectly encourage unethical decisions. Third, the behaviors and values of others, such as coworkers, supervisors, and company officials, affect the ethics of a person.

8. Ethics and Etiquette. There is some difference between business ethics and etiquette. Etiquette means rules for formal relations or polite social behavior among people in a society or a profession.

If you are a manager you should stick to the following rules in your everyday activities.

• Don't order, ask and be polite.

• Remember that people work with you, not for you. They like to be treated as associates, not slaves.

• Keep your promises, both important and less important promises.

• Criticize, if you must, only in private — and do it objectively. Never criticize anyone in public or in anger.

• You should say "Good morning" when you come in and "Please" and "Thank you" at every opportunity.

UNIT 15

ENVIRONMENTAL PROBLEMS

1. Introduction. Many years ago man lived in harmony with nature, because industry was not much developed. Today, however, the contradictions between man and nature are dramatic. Every year world industry emits into the atmosphere about 1000 million tons of soot and other harmful substances. The acid-rain problem has spread rapidly in recent years, and experts fear the situation will worsen if the nations begin to bum more coal to generate electricity. People of many countries suffer from smog. Forests are disappearing. Water pollution in oceans, seas, lakes and rivers, air pollution and the destruction of the ozone layer could lead our planet to a global disaster. The Earth is our home, that's why we must take care of it, for ourselves and for the generations to come. We must keep our environment clean.

2. Air Pollution. Usually two or three factors combine to form air pollution in any given location. The first factor is large amounts of carbon monoxide and hydrocarbons emitted by motor vehicles concentrated in a relatively small area. The second is the smoke and other pollutants emitted by manufacturing facilities. These two factors can be partially eliminated through pollution-control devices on cars, trucks, and smokestacks.

The third factor that contributes to air pollution — one that cannot be changed — is the combination of weather and geography.

How effective is air pollution control? Most authorities agree that there has been progress since the mid-1970s. A number of countries have cleaner air today than they had twenty years ago Numerous chemical companies have recognized that they must, take responsibility for operating their plants in an environmentally safe manner. Some of them now devote as much as 20 percent of their capital expenditures to purchasing antipollution devices However, air levels of sulfur dioxide and nitrogen dioxide — the main elements that cause acid rain — as well as of soot continue to increase.

3. Water Pollution. Surface waters on our planet remain severely polluted. Currently, one of the most serious water-quality problems result from the high level of toxic pollutants found in these waters.

Among the serious threats to people posed by these pollutants are respiratory irritation, cancer, kidney and liver damage, anemia. and heart failure. Toxic pollutants also damage fish and other forms of wildlife.

A pulp-and-paper factory was built on the shores of Lake Baikal. As a result, because of the water pollution, the world's purest water has been spoiled. The whole ecological system of the lake has changed greatly. Some organisms that can be found only in Lake Baikal are disappearing, trees are dying from soot and gas emissions from the factories.

That's why scientists, writers, and other people put the problem of Lake Baikal into the press, to public bodies and the government. Lake Baikal and its shores have been declared a specially protected zone of the country. There is a hope that one of the most beautiful and the deepest lakes of the world will never die.

The Aral Sea was a bright blue sea with a lot of fish. The Amudarya and Syrdarya rivers supplied it with water. But then the water of the rivers was diverted to cotton plantations. As a result the Aral now is in a very dangerous condition. If no immediate measures are taken, the Aral Sea will disappear by the year 2010.

The Mediterranean Sea and the North Sea are half dead because great amounts of chemical and nuclear waste were dumped into their waters.

4. Land Pollution. Air and water quality may be improving, but land pollution is still a serious problem in many areas. The fundamental issues are (1) how to restore damaged or contaminated land at a reasonable cost and (2) how to protect unpolluted land from future damage.

The land pollution problem has been worsening over the past few years, as modern technology has continued to produce increasing amounts of chemical and radioactive waste.

Manufacturers produce and dump more than 100 million tons of contaminated oil, solvents, acids, and sludges each year. Service businesses, utility companies, hospitals, and other industries also dump vast amounts of wastes into the environment.

Individuals contribute to the waste disposal problem. On the average, each of us accounts for approximately 1,547pounds of garbage each year. A shortage of landfills makes garbage disposal an especially serious predicament. Incinerators are a possible solution to the problem of a landfill shortage, but they bring with them their own problems. They reduce the amounts of garbage but also leave tons of ash to be buried — ash that has a high concentration of harmful substances.

5. Nuclear Power. They say that nuclear power is "cheap, clean and safe"... The explosion in Chernobyl shows it can go wrong. Nuclear weapons could destroy the world. Nuclear weapon tests increase the amount of radiation in the atmosphere. Nuclear power produces high-level radioactive waste which can be dangerous for thousands of years.

Before it's too late, people have to change their way of life. We have to stop ruining the land, water and air.

We can help clean up the planet. Our planet needs immediate help. Each of us must do everything possible to save it.

UNIT 16

INFORMATION EXCHANGE

FAX MESSAGES