Profits

After deductions have bееn made to the funds, the rest of the profit is divided between the partners in proportion to their share in the authorized fund.

The profit due to the foreign partner mау bе placed in the bank, spent within the country оr repatriated abroad. Profits mау bе transferred from Russia to foreign countries bу way of import substitution.

А joint venture is subject to а tах оn its profits. According to the tax regulations а joint venture is exempt from the profit tax for 2 years. The tах holiday begins from the moment profits аге first made bу а joint venture.

Legal status

А joint venture is а legal person. It mау sue and bе sued and mау also appeal to Russian and third party courts. In case of dissolution the foreign participant has the right to recover the initial contribution which he made to the authorized fund.

A. Study the topical vocabulary.

strategic alliance	союз; объединение; альянс
synergies	успешные совместные усилия; совместная деятельность
market share	доля рынка
shareholder value	акционерная стоимость
merger	поглощение; слияние, объединение
take over bid	предложение о поглощении (предложение о покупке контрольного пакета акций, сделанное акционерам поглощаемой компании другой компанией)
acquisition	приобретение, покупка, закупка
to enhance	увеличивать, усиливать, улучшать (особ. качество, значимость, ценность, важность, привлекательность чего-л.)
economies of scale	экономия от масштаба, эффект масштаба (снижение средних затрат по мере увеличения объема выпуска)
equation	уравнение; равенство
cost-efficient	доходный, прибыльный, рентабельный
to gain	выигрывать, добиваться, выгадывать, получать, приобретать
to survive	пережить, оставаться в живых, продолжать существование
from legal point of view	c юридической точки зрения
to cease	переставать (делать что-л), прекращать(ся)
to swallow	глотать, проглатывать
to go forward	продвигаться, идти вперед; продолжать (делать)
precisely	точно, строго, пунктуально
surrender	отказываться, сдавать, передавать, вручать, уступать
to proclaim	провозглашать; объявлять
connotation	подтекст, скрытый смысл; то, что подразумевается
palatable	приятный
hostile	враждебный, неприязненный, недружелюбный
cost savings	снижение себестоимости
reduction	сокращение
job cuts	увольнения
stationery	канцелярские товары; канцелярские принадлежности
business applications	приложения для деловой сферы, бизнес-приложения
competitive edge	конкурентное преимущество (отличие)
to expand	расширять(ся)
investment community	сообщество инвесторов
compensation package	компенсационный пакет (совокупность всех видов вознаграждений работника или управляющего, включающая заработную плату, различные виды премиального вознаграждения по результатам работы, страховую премию и т. п. )

B. Match the verbs with the nouns.

1) set uр	agreement
2) carry out	funds
3) develop	profit
4) satisfy	product
5) sign	transactions
6) raise	account
7) covег	protocol of intent
8) manufacture	requirements
9) conclude	joint venture
10) ореn	relations
11) make	objective

C. Use proper prepositions:

has bееn registered ... the Ministry of Finance

the agreement … partners

is managed... а Board … Directors

contribution ... kind оr... cash

in proportion ... the share... the authorized fund

mау bе transferred … Russia ... foreign countries

... way... import substitution

is exempt... the profit tax … 2 years

D. Find synonyms to the following words:

to establish, to determine, to form, to satisfy, to be taxed, to take part, to decrease, needs, goal, national, principal, by means of, juridical, tax-free.

E. Give Russian equivalents to the following words:

by means of, tax-free, in the early 1920s, authorized fund, tax-deductible, the rest of, to satisfy the requirements, to sign a Protocol of Intent, to be subject to the tax, due to, annual deductions, to recover initial contributions, is obliged, may be placed, in one’s own name, overwhelming majority, cease to exist.

F. Answer the following questions.

1. What kind of organizations are called “joint ventures”?

2. When were joint ventures set up in our country for the first and for the second time?

3. When did the overwhelming majority of joint-stock companies in the territory of Russia cease to exist?

4. What are the main features of interest to Russian participants nowadays?

5. What document is signed if the Parties want to form a partnership&

6. In what case does a joint venture become a juridical person?

7. What are the most important documents for the application procedure?

8. What body is a joint venture managed by?

9. How is the authorized fund formed?

10. In what way is the reserve fund formed?

11. Why is the research and development fund exempt from tax?

12. In what proportion is the profit divided between the partners?

13. How can foreigners’ profits be transferred from Russia to foreign countries?

14. Is joint venture a legal or a physical person?

15. What can a foreign participant do in case of dissolution?

G. Match the terms on the left to the definitions on the right.

alliance	getting control of a company by buying over 50% of its shares
joint venture	two or more companies joining to form a larger company
LBO (leveraged buyout)	what stocks in a public company are worth
MBO (management buyout)	a business activity in which two or more companies have invested together
merger	when a company's top executives buy the company they work for
takeover / acquisition	an offer to buy
shareholder value	additional advantages, profits that are produced by two organizations combining their ideas and resources
bid	buying a company using a loan borrowed against the assets of the company that's being bought
vertical integration	controlling all stages of one particular type of business
synergy	an agreement between two or more organizations to work together

H. Work in pairs. Imagine that you work for a small company which has just been bought by a big multinational. Discuss the following questions:

1. Where the various potential culture clashes may occur?

2. How you think you personally would adapt to the new culture?

3. What could be done by both companies to ensure smooth transition from one corporate culture to another?

Reading 3: Takeover

A. Read the text about takeover and choose one of the three connectors to fill each gap.

1. although/ for example/ however

2. because/ furthermore/ owing to

3. therefore/ in other words/ yet

4. in other words/ on the contrary/ owing to

5. for instance/ on the contrary/ thus

6. because of/ due to/ moreover

7. although/ however/ for instance

8. because/ even though/ for example

9. conversely/ i.e. / since

10. although/ however/ for instance

11. due to/ nevertheless/ therefore

12. although/ because/ moreover

13. because/ nevertheless/ yet

14. consequently/ even though/ in addition to

Mannesmann’s chairman, Klaus Esser, opposed the Vodafone bid. He insisted that British and American style ‘predator’ capitalism has no way in Germany. He pointed out (1), that no German company had ever made a hostile bid for another German company. Germans believed that the permanent threat of a takeover or a buyout, which exist in America and Britain, is a disincentive to long-term capital investment. (2), many German commentators claimed that workers are at least as important as shareholders, and companies are places where people work rather than assets to be bought or sold. (3) Esser’s main argument against Vodafone was that its offer price of $129 billion was too low. He claimed that the bid did not represent good value for shareholders, and the company had a better strategy and future plans than the British phone operator.

Many German business leaders argued that their corporate culture preferred consensus: (4) Companies want to please a large majority of their shareholders, not just the few who are looking for a quick profit. Most British commentators, (5), claimed that German search for consensus was just a way of resisting change and inevitable global trends. (6), German companies regularly bought foreign ones: in the previous few years, (7), BMW had bought the British car companies Rolls Royce and Rover.

(8) Many financial analysts considered the original offer price to be generous – (9) Too high – Vodafone was obliged to increase it several times. Arbitrageurs succeeded in buying about 10% of Mannesmann’s shares in the hope of making a quick profit. Esser was very critical of these people. He accepted, (10), that this was the nature of capital markets, and that there was nothing he could do about it. (11), 60-70% of Mannesmann shares were owned by institutional investors. (12) Some of these were German banks, most of them were foreign financial institutions. When Vodafone increased its offer price sufficiently, several of these investors accepted the bid, often (13) They already possessed Vodafone shares. (14), Vodafone was able to acquire Mannesmann for $160 bn.

Listening: An Interview with an Executive who has recently made a large acquisition

(Market Leader, New Edition, Upper Intermediate Business English CB by D. Cotton, Unit 13)

Speaking

Think about arguments for and against leveraged buyouts and hostile takeovers. Which do you find most persuasive? Present your ideas to the class and think of any further arguments either for or against.

Over to you

Think about a recent merger or takeover. What benefits were claimed for it at the time of it announcement? Have they materialized?

Make a presentation of you research to the class. Discuss the outcome of this merger or takeover.

Module 3 Management

Starting up

A. Quick management test.

1) Every successful business is dependent on good …

manages

management

managerial

manager

2) It is said that good management has always been the invisible ingredient of …

successfully

succeed

successful

success

3) Management gurus are people whose role is to … and spread around new and effective management practices.

interpretation

interpret

interpreted

interpreter

4) Peter Drucker¹ is the management guru who … the notion of 'management by objectives'.

inventor

inventive

invention

invented

5) Successful gurus are adept at … management theory and practice response to a constantly changing world.

reformulation

reformulating

reformulate

reformulates

6) Effective management in a turbulent world is … the major international challenge for business.

increasingly

increasing

increased

increase

7) Douglas McGregor² … two main styles of management: X-Theory which is authoritarian, autocratic and repressive; and Y-Theory which is participative, delegating, and developmental.

defined

defining

has defined

was defined

Reading 1: Basics of Management

A. Study the topical vocabulary.

1	to be involved in management	быть связанным с процессом управления/ быть вовлеченным в процесс управления
	according to smb	по словам к-л
	to launch new products	создать новый продукт
	to conduct market survey	провести исследование рынка
2	human being	человек
	to accomplish the objectives	успешно решать задачи
	decisional activities	действия по принятию решений/ принятие решений
	to maintain relations	поддерживать отношения
	superior	начальник
3	chief executive	президент компании/ глава фирмы
	by virtue	благодаря ч-л/ в результате ч-л
	to appoint	назначать
	civil servant	чиновник/ госслужащий
	public sector undertaking	предприятие/ компания государственного сектора; государственная служба
	to enjoy high standard of living	иметь высокий уровень жизни
4	to consider	рассматривать, считать
5	managerial position	управленческая должность
	vice versa	наоборот
	the amount of authority	объем полномочий
	administrative level	высший уровень управления
	executory level	средний уровень управления
	supervisory level	оперативное управление
6	ultimate source of authority	основной источник власти
7	in accordance with	в соответствии с
	supervisor	контролер, диспетчер
	foreman	мастер, бригадир
	section officer	должностное лицо отдела
	superintendent	руководитель подразделения
	to assign job	давать/ распределять/ поручать работу
	to entrust with the responsibility	возлагать ответственность
	to ensure discipline	обеспечивать дисциплину
8	hierarchy	иерархия
	to be concerned with	заниматься ч-л, быть вовлеченным во ч-л

A. Do pre-reading tasks before each abstract, then read and translate the abstracts about the basics of management.

What do you think management is?

1 Management is a universal phenomenon. All organizations - business, political, cultural or social are involved in management because it is the management which helps and directs the various efforts towards a definite purpose. According to Harold Koontz¹, “Management is an art of getting things done through and with the people in formally organized groups. It is an art of creating an environment in which people can perform and individuals can co-operate towards attainment of group goals”. According to F.W. Taylor², “Management is an art of knowing what to do, when to do and see that it is done in the best and cheapest way”.

Management is a purposive activity, and the goals vary from one enterprise to another. For one enterprise it may be launching of new products by conducting market surveys and for other it may be profit maximization by minimizing cost.

Management can be defined in detail in some categories - Management as an Activity, Management as a Group, Management as a Science, Management as an Art etc.

Can you add two more categories filling the missing letters?

d

s

s

Let’s consider some of the categories stated above.

What kind of Activities does M include? What activities do you consider to be the most important responsibility of a manager at any level?

2 Like various other activities performed by human beings such as writing, playing, eating, cooking etc., management is also an activity because a manager is one who accomplishes the objectives by directing the efforts of others. According to Koontz, “Management is what a manager does”.

Management as an activity includes informational activities, decisional activities, inter-personal activities.

Informational activities. In the functioning of business enterprise, the manager constantly has to receive and give information orally or in written. A communication link has to be maintained with subordinates as well as superiors for effective functioning of an enterprise.

Decisional activities. Practically all types of managerial activities are based on one or the other types of decisions. Therefore, managers are continuously involved in decisions of different kinds since the decision made by one manager becomes the basis of action to be taken by other managers. E.g. Sales Manager is deciding the media and content of advertising.

Inter-personal activities. Management involves achieving goals through people. Therefore, managers have to interact with superiors as well as the sub-ordinates. They must maintain good relations with them. The inter-personal activities include dealing with the sub-ordinates and taking care of the problem.

Do you think M as a Group refers to all managers taken together or only the top management?

3 Management as a group refers to all those persons who perform the task of managing an enterprise. When we say that management of ABC & Co. is good, we are referring to a group of people those who are managing. Thus as a group technically speaking, management will include all managers from chief executive to the first-line managers (lower-level managers). But in common practice management includes only top management i.e. Chief Executive, Chairman, General Manager, Board of Directors etc.

Management as a group may be looked upon in 2 different ways:

• All managers taken together.

• Only the top management.

The interpretation depends upon the context in which these terms are used. Broadly speaking, there are 3 types of managers:

• Patrimonial / Family Managers: Those who have become managers by virtue of their being owners or relatives of the owners of company.

• Professional Managers: Those who have been appointed on account of their specialized knowledge and degree.

• Political Managers / Civil Servants: Those who manage public sector undertakings.

Managers have become a part of elite group of society as they enjoy higher standard of living in the society.

Unjumble the sentence: science. art an is both and Management a

4 The above mentioned points clearly reveal that management combines features of both science as well as art. It is considered as a science because it has an organized body of knowledge which contains certain universal truth. It is called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge and art deals with the application of knowledge and skills.

The old saying that “Managers are Born” has been rejected in favor of “Managers are Made”. It has been aptly remarked that management is the oldest of art and youngest of science. To conclude, we can say that science is the root and art is the fruit.

Look through this mini-text and fill in the gaps.

5 The term “… … …” refers to a line of demarcation between various managerial positions in an organization. The number of … in … increases when the size of the business and work force increases and vice versa. The … of … determines a chain of command, the amount of authority and status enjoyed by any managerial position. The … of … can be classified in three broad categories:

• Top level / Administrative level

• Middle level / Executory

• Low level / Supervisory / Operative / First-line managers.

Who does each management level comprise?

6 Top Level of Management consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions.

Middle Level of Management

The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions.

Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc.

What are the main activities performed by each management level?

What M level do these three sets of activities belong to?

• They execute the plans of the organization in accordance with the policies and directives of the top management.

• They make plans for the sub-units of the organization.

• They participate in employment and training of lower level management.

• They interpret and explain policies from top level management to lower level.

• They are responsible for coordinating the activities within the division or department.

• It also sends important reports and other important data to top level management.

• It prepares strategic plans and policies for the enterprise.

• It appoints the executive for middle level i.e. departmental managers.

• It controls and coordinates the activities of all the departments.

• It is also responsible for maintaining a contact with the outside world.

• It provides guidance and direction.

• The top management is also responsible towards the shareholders for the performance of the enterprise.

• Assigning of jobs and tasks to various workers.

• They guide and instruct workers for day to day activities.

• They are responsible for the quality as well as quantity of production.

• They communicate workers problems, suggestions, and recommendatory appeals etc. to the higher level and higher level goals and objectives to the workers.

• They are responsible for providing training to the workers.

• They arrange necessary materials, machines, tools etc. for getting the things done.

• They prepare periodical reports about the performance of the workers.

• They ensure discipline in the enterprise.

What is the degree of administration and management at different levels?

7 Practically, there is no difference between management & administration performed by the different levels of management. Every manager is concerned with both – administrative management function and operative management function. However, the managers who are higher up in the hierarchy denote more time on administrative function and the lower level denote more time on directing and controlling worker’s performance i.e. management.

Do you know any M functions? What do they imply?

8 The most widely accepted functions of management are Planning, Organizing, Staffing, Directing and Controlling. For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are highly inseparable. Each function blends into the other and each affects the performance of others.

B. Speak about Management according to the plan.

Listening: An interview with a project manager

(Market Leader, Intermediate Business English CB by D. Cotton, Unit 8)

Reading 2: Business Management Styles

A. Do you agree with following quotations?

“People are definitely a company’s greatest asset. It doesn't make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps”. Mary Kay Ash

“Care about your people and they will care about your business. Forget that and watch profits go down the drain”. Hal Rosenbluth

B. Match these management expressions (1-9) with their definitions.

line management	the skill of administering your time so as to work effectively
brand management	managing systems in a company so that each department works effectively and produces products of the required standards
risk management	direct management of staff level between senior management and junior management
asset management	how a company tries to control its brands and brand image
time managements	process of dealing with difficult situations
quality management	process of assessing and measuring possible dangers and evolving strategies to deal with them
middle management	the activity of managing how a company deals with its cash, how quickly it gets paid by customers, pays its suppliers, etc.
crisis management	the organizing of large events such as conference and concerts
cash management	the managing of money for investment so that it makes as much profit as possible, for a financial institution or for another person or organization

C. Study the topical vocabulary.

to go down the drain	быть истраченным впустую
employee turn-over	текучесть кадров
paternalistic	патерналистский, отеческий
laissez-faire	невмешательство, либеральный стиль руководства
abdication	сложение полномочий, отказ
business acumen	деловые качества
dealmaker	специалист по организации сделок, дилер
collaboration	сотрудничество
legal implications	правовые последствия
flexibility	гибкость
integrity	честность, добросовестность
to exacerbate	ухудшать
to one’s benefit	на благо, с выгодой
to count on	полагаться на

D. Read the text and say what management style you prefer and why?

As a manager, you need to understand what the common business management styles are (autocratic, paternalistic, democratic, and passive). And you need to understand what your style is, and how that style affects business results.

Autocratic. The manager makes all the decisions; a "command and control" (militaristic) management style; focus is on business; doesn't want any people to get in the way; quick decisions; one way communication (from the top down). The cost is in high employee turn-over as employees find this style difficult, and stressful.

Paternalistic. The manager prefers to make all decisions (or most of them) but focuses on what's best for employees. The benefit is that employees feel the business is taking care of them. The cost is that employees don't take care of business - they are uninvolved, have little at risk and expect the “boss” to make all the decisions.

Democratic. The manager wants input from the whole 'team' and majority rules. Often good decisions are made and employees feel involved in the business (the benefit to this style) but the process is very slow and you can't always make everyone happy. Strong two-way communication.

Passive or “laissez-faire” (lets you do your own thing). The manager is disengaged and often hard to find. This type of abdication is often considered by the manager to be delegation. The benefit is that employees often step forward and learn in this environment. The cost is that the direction is scattered and there can be numerous false starts because there is no real manager. Can work in an environment of creative types (independent) or highly technical (such as engineers).

Managers typically use more than one style, depending on the situation. If brainstorming creative new product ideas is today’s focus, then the manager may want to use a democratic or passive style. If a decision about keeping or firing an under-performing employee must be made, the manager may need to use an autocratic or paternalistic style.

Reading 3: Basic Management Skills

A. How do you think what kind of skills a good manager must possess?

Qualities and characteristics of a good manager can be divided into 3 main groups as follows: Personal characteristics, Business characteristics and Relationship qualities.

Personal characteristics: a genuine interest in and respect for people; patience, understanding and the ability to listen non-judgmentally; excellent oral and written communication skills and presentation skills; objectivity and tact; the ability to motivate and inspire clients; good organizational and planning skills

Business characteristics: Some level of business acumen is important when you are a manager. While you may not need to be on the level of a professional dealmaker, familiarity with basic business principles and practices can be helpful

Relationship qualities: You will need to know how to manage relationships between yourself and your subordinates. You should also know how to develop relationships with your superiors, and coordinate relationships between those above you and below you in the hierarchy.

B. 1) Read Management qualities and characteristics given in the box and categorize them into Personal, Business and Relationship qualities.

Self-motivation Industry knowledge Communication qualities Integrity Business hierarchy Collaboration Team player Dependability/Reliability Calmness Legal implications Basic money management Flexibility Ability to delegate Respect Organization Value others Customer service