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FOURTH YEAR ENGLISH
Recenzenti:Prof. dr Dejan PopovićProf. dr Sima Avramović
Univerzitet Singidunum,Beograd, Danijelova 32
Prof. dr Milovan Stanišić
Dizajn korica:Aleksandar Mihajlović
P R E F A C E
FOURTH YEAR ENGLISH is the fourth book of a four-year course in English language for the students who are learning English language at the Singidunum Unive- rsity, Belgrade. The aim in writing this coursebook has been to provide students who are learning essay writing, summary writing and oral presentation with detailed guida-nce in language and subject matter, but at the same time to leave them with the oppo-rtunity for personal expression.
The plentiful exercises will help to consolidate what has been learnt in the fields of study relating to financial management, insurance and audit. Also, it will
help students to further build and enhance writing and oral skills in their respective fields of study.
There is ample material intended both to encourage students to read with un-derstanding and enjoyment, and to inspire them to write with zest and open-mind-edness. In addition to numerous topics suggested for essay writing and summary writing, there are various subjects for oral self-expression, i.e., oral presentation. There is strong emphasis on the disciplines necessary for correct writing, including comprehension, systematic training in grammar, vocabulary, punctuation, dictionary usage, delivery issues, etc.
However, the text presupposes that the best students have gone well beyond the requirements of the pro? ciency examinations in English language and should be found suitable for doing advanced work in the writing and speaking of English as a foreign language. Care has been taken to make the coursebook interesting to them as well. The course has been designed with this possibility in view.
I hope you will enjoy reading and studying this coursebook as much as I did preparing it for you.
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CON T E N T S
Communication Module: Part I
ESSAY WRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.3
UNIT 1 Leadership and Trust: Should All Managers Be Leaders? Conversely, Should All Leaders Be Managers? Is Leadership Always Important? . . . . p.15
Communication Module: Part II
SUMMARY WRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.33
UNIT 2 Understanding Communication and Why It Is Important to Managers . . . p.38
Communication Module: Part III
ORAL PRESENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.59
UNIT 3 Communication and Interpersonal Skills: Empowerment Skills, Con� ict Management, and Negotiations Skills . . . . . . . . . . . . . . . . . . . p.66
UNIT 4 Business Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.77
UNIT 5 About the European Union. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.90
UNIT 6 Outlines On the European Union Legislation . . . . . . . . . . . . . . . . . . . p.101
UNIT 7 Services Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.112
UNIT 8 International Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.122
BIBLIOGRAFY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.137
Communicat ion Module
WRITTEN COMMUNICATION – ESSAY WRITING
I BUILDING UP YOUR SENTENCEInstructions
1. TYPES. No matter how many ideas it may contain, a sentence must always express a complete thought. There are three types of sentences: simple, compound, and complex.
(a) The Simple Sentence expresses one idea only and has one subject and predicate.
E.g. The � rm (subject) asked for a loan (predicate).
(b) The Compound Sentence contains more than one idea. In this type of sentence all the ideas expressed have an equal value.
E.g. The � rm asked for a loan and waited for an answer.
(c) The Complex Sentence contains one main idea (called the main clause) and one or more secondary ideas (called subordinate clauses).
E.g. As soon as the � rm asked for a loan (subordinate clause), the bank approved it. (main clause).
2. JOINING SENTENCES. The words which are used to combine sentences are called “conjunctions”.
(a) Compound sentences. The main conjunctions used to form compound sentences are: and, but, yet, both ... and, either ... or, neither ... nor, not only ... but, etc.
E.g. He learned how to read English. He learned how to write it.He not only learned how to read English, but also how to write it.
E.g. I bought a new car last year. I am not satis� ed with it.I bought a new car last year, but I am not satis� ed with it.
(b) Complex sentences. Some of the main ways in which different ideas can be joined to make complex sentences include, inter alia, which, who, whom, whose, etc.
E.g. The girl is our new secretary. You saw her a moment ago.The girl who you saw a moment ago is our new secretary.
E.g. The man had to pay a � ne. His car was parked on the wrong side of the road.The man whose car was parked on the wrong side of the road had to pay a � ne.
3. CONNECTING AND LINKING WORDS. To further build your vocabu-lary, you should also know the words of time, condition, cause, reason, purpose and result, concession and contrast, as well as the words of addition and discourse markers in writing:
(a) One thing happening before another: formerly, before, earlier on, previously.
E.g. Before going to work I wrote some letters.
(b) Things happening at the same time: while, as, just as, whenever, at the very time/moment, during, throughout.
E.g. While I waited I read the newspaper.
E.g. Whenever I watch a sad � lm I cry.
E.g. During the war I lived in Belgrade. (it does not specify how long within a period of time)
E.g. Throughout the war food was rationed. (from the beginning to the end of a period of time)
(c) One thing happening after another: after, afterwards, following.
E.g. After I had � nished my work I went home.
E.g. Following my visit to Paris, I bought several books about France.
(d) Time when: when, as soon as, once, the moment/the minute
E.g. When I’m rich and famous I’ll buy a house.
E.g. As soon as the � rm asked for a loan, the bank approved it.
(e) Connecting two periods of events: till then, since then, by the time, meantime.
E.g. Dinner will be ready in an hour. In the meantime, relax and have a drink.
E.g. By the time I retire will have worked here for 26 years.
(a) In addition to if, there are several other words and phrases for expressing condi-tion: unless, on condition that, in case of, provided that, in the event of.
E.g. You can borrow the money provided that you return it within 30 days.
(b) The –ever suf� x means ‘it does not matter much ...’. The stress is normally on ever: however, whoever, whenever, whichever.
E.g. However you do it will cost a lot of money. (no matter how you do it)
E.g. You’ll get to the station, whichever bus you take. (no matter which bus you take)
(c) Some nouns which express condition: condition, prerequisite, requirement.
E.g. Certain conditions must be met before the negotiations can begin.
E.g. A good standard of English is a prerequisite for studying at a British University.
• Cause, reason, purpose and result:
(a) Cause and reason are expressed by: because, since, owing to, due to, arise from, give rise to.
E.g. Owing to the icy conditions, the two lorries collided.
E.g. The CEO’s statement gave rise to/provoked/generated a lot of criticism.
(b) Reasons for and purposes of doing things: reason for, prompt, with the aim of.
E.g. Her reason for not going with us was that she had no money.
E.g. I wonder what prompted him to send that letter. (reason/cause)
E.g. I’ve invited you here with the aim of exposing the scandal. (purpose)
(c) Results: as a result, as a consequence, consequently, result in, outcome, upshot, ensue.
E.g. He did not work. As a result/as a consequence/consequently, he failed his exams.
E.g. The events had an outcome that no one could have predicted.
E.g. The upshot of all these problems was that we had to star again.
E.g. When the election results were announced, chaos ensued.
• Concession and contrast:
(a) Concession means accepting one part of an idea or fact, but putting another, more important argument or fact against it: although, nevertheless, accept, acknowl-edge, admit, concede.
E.g. Although they were poor, they were independent.
E.g. He is a bit stupid. He’s very kind nevertheless.
E.g. I acknowledge/accept that he has worked hard but it’s not enough. (I agree but ... accept)
E.g. I admit I was wrong, but I still think we were right to doubt her. (I admit I’m guilty, but ...)
E.g. I concede that you are right about the goal, but not the method. (You have won this point)
(b) Adverbs and other phrases showing contrast: that’s all well and good, after all, admittedly.
E.g. That’s all well and good, but how are you going to pay us back?
E.g. You shouldn’t seem so surprised. After all, I warned you.
(c) Collocating phrases for contrast: poles apart, world of difference, yawning gap.
E.g. When it comes to politics, they are poles apart.
E.g. There is a world of difference between being a friend and a lover.
E.g. There is a huge discrepancy between his ideals and his actions.
• Words of addition:
(a) Words for linking sentences/clauses: and, also, too, in addition, furthermore, what is more, besides.
E.g. For this job you need a degree. In addition you need some experience.(more formal than and, also/too)
E.g. Video cameras are becoming easier to use. Furthermore/moreover, they’re becoming cheaper.
E.g. It’ll take ages to get there and it’ll cost a fortune. Besides, we’ll have to change trains.(a more emphatic way of adding information; similar in meaning to anyway))
E.g. It’ll take ages to get there and it’ll cost a fortune. Besides, we’ll have to change trains.(a more emphatic way of adding information; similar in meaning to anyway))
(b) Words at the end of clauses/sentences: and so on, etc., and so on and so forth.
E.g. They sell chairs, tables, beds, and so on/etc. (and so on is more informal than etc.)
E.g. I’ll go to my lawyer, then to the court, then to the bank and so on and so forth.
(c) Words that begin, or come in the middle of, clauses/sentences: furthermore, as well as, along with, apart from.
E.g. Further to my letter of May 12, I am writing to inform you ... (formal opening of a letter)
E.g. He is on the School Board, as well as being a local councillor.
E.g. Apart from having a salary, he has also a private income.
E.g. My CEO was there, along with a few other people I didn’t know.
• Discourse markers in writing
(a) Certain common words and phrases used to organise formal written texts: � rst, next, � nally, turning to, in parenthesis, leaving aside, in summary, in conclusion.
E.g. First/� rstly/� rst of all, we must consider ... (secondly and thirdly are also used for lists)
E.g. Turning to the question of foreign policy, ... (changing to a new topic)
E.g. In summary/to sum up, we may state that ... (listing/summing up the main points)
E.g. In conclusion/to conclude, I should like to point out that ... (� nishing the text)
(b) Markers for explaining, exemplifying, rephrasing, etc.: in other words, that is to say, for example, for instance, brie� y, so to speak, as it were.
E.g. Brie� y, these consist of two main types.
E.g. She is, so to speak/as it were, living in a world of her own.
(c) Signposts around the text, i.e., words and phrases that point the reader to different parts of a text: the following, the above, below, overleaf, refer to.
E.g. The following points will be covered in this essay ... (used to introduce a list)
E.g. It was stated before/earlier that the history ... (earlier in the text)
E.g. A full list is given overleaf. (turn the page and you will � nd the list)
4. SEQUENCE OF TENSES. A sentence can contain a main verb or more subordinate clauses, i.e., a group of words containing a subject and verb and forming a
part of a sentence. It is important for you to learn to know which is the main verb of a sentence because of the important rule about the sequence of tenses.
E.g. He gave it to me because he trusted me.
The rule about the sequence of tenses applies also to indirect speech when the introductory verb is in a past tense:
E.g. He said: “I know the bridge is unsafe.” (He said that he knew the bridge was unsafe.)The rule also applies to clauses with “if”, with its three basic forms:E.g. (i) If he invites me I shall go.
(ii) If he invited me I would go.(iii) If he had invited me I would have gone.
5. WORD ORDER. You should keep to the basic pattern: Subject – Verb – Object - Qualifying Phrase. Though there are certain exceptions, a subject may only be separated from its verb by an adverb of frequency.
E.g. He found a ring in his garden yesterday.
6. PUNCTUATION. As you already know it is the the practice or system of using certain conventional marks or characters in writing or printing in order to sepa-rate elements and make the meaning clear, as in writing a string of nouns or ending a sentence or separating clauses.
Below are given the most important uses.
�� for the � rst letter of a sentence
Banking is the business of operat-ing a bank.
�� for countries, nation-alities, languages, reli-gions, names of people, places, events, organisa-tions, trademarks, days, months, titles
Portugal, Africa, Russian, MoslemAnn, Peter, Geneva, Belgrade, The World Trade Fair, Jaguar, the Internet, Monday, January, Mr./Mrs./Dr./Professor
�� for titles of books, � lms The Wealth of Nations, Wuthering Heights
�� for abbreviations HP, OECD, VAT, CEO, HRM
Full stop (UK)Period (US)
�� at the end of a sentence He was a successful banker at the time.
�� sometimes after an abbre-viation
Marton Rd./Mrs. Brown/Dr. Morton
�� as the decimal point in � gures and amounts of money. This is usually read out as ‘point’.
�� to separate parts of e-mail and web addresses. This is read out as ‘dot’.
�� after a direct question Where do you come from?
�� to show doubt P. Morton (1853?-1911) was little known until after his death.
�� at the end of a sentence in order to show surprise/shock, etc.
It is impossible!Wow! It looks delicious!
�� to indicate a loud sound “Bang! Bang! You’re dead!” said the child, pointing a plastic gun at me.
�� between items in a list Will you buy some bread, butter, jam and sugar.
�� to show a pause in a long sentence
They didn’t want to start negotia-tions before the he’d arrived, but he was an hour late.
�� when you want to add ex-tra information
The manager, who I told you about before, will be coming.
�� before tag questions He does know his job, doesn’t he?
�� for missing letters I’ll (I will), it’s (it is), don’t (do not)�� for possessives
Tom’s bank account
1. words ending in ‘s’ don’t need another ‘s’ added.
Charles’ bank account
2. it’s can only be an abbre-viation for it is or it has. There is no apostrophe in the possessive case.
It’s my turn to do something for you.The company increased its pro� ts.
�� to introduce a list or a quo-tation in a sentence
I want you to buy the following: bread, butter, jam and sugar.
�� in the US following the greeting in a business letter
Dear Customer:Dear Mr. Brown:
;�� to separate two parts of a
sentenceI spoke to the bank manager on Friday; the bank can’t loan me money to buy a car.
-�� to join two words together off-budget fruit-tree, pick-me-up�� to show that the word has
been divided and contin-ues on the next line
No one knows exactly what hap-pened but several people have been hurt.
–�� to separate parts of sen-
tencesThe man – the one on your left – is wearing a pinstripe suit.
�� to mean to The London – Paris train leaves every morning at nine.
Quotation marks/UK alsoInverted Commas
‘ ’“ ”
�� to show that words are spoken
‘She is revered by stockholders and reviled by subordinates,’ he said.“I wish to speak to the bank manager,”she said.
�� to show that someone else originally wrote the words
She had described her boss as ‘a screaming, combative, ruthless task-master who always gets her way’.
Note: Single quotation marks are more usual in UK English, and double quotation marks are more usual in US English.
7. ABBREVIATIONS. An abbreviation is shortened form of a word or phrase used chie� y in writing to represent the complete form. Some still clearly show the alphabetic origin, like FBI from the Federal Bureau of Investigation. Such forms are the principal ingredient of today’s “alphabet soup” of government agencies and tech-nological innovations.
Some words, which are read as words, are called acronyms and are not written all in capital letters: laser (Light Ampli� cation by Stimulated Emission of Radiation), radar (Radio Detection and Ranging), yuppy (Young Urban Professional), etc.
Within a written text some abbreviations are used as notes to organise the lan-guage and give extra information to the reader: etc. - and so on [Latin, et cetera]; i.e. - that is to say [Latin, id est]; e.g. - for example [Latin, exempli gratia]; NB - please note [Latin, nota bene], etc.
Also, there are clippings, i.e., some words which are normally used in an abbre-viated form in informal situations: ad/advert (advertisement); exam (examination); rep (representative); phone (telephone); exec (executive), etc.
Finally, some abbreviations you might see on a letter/fax/envelope: c/o (care of – the letter goes to); enc. (enclosed – documents enclosed with a letter, e.g. enc. application form); RSVP (please reply – French: répondez s’il vous plâit), etc.
8. USING A DICTIONARY. Everybody knows that the dictionary is for get-ting quick answers to immediate questions about things like meaning and spelling.
Small bilingual dictionaries often give three or four translations for a word you look up, without any explanation: e.g. sofa, divan, couch, setee. All the words are pos-sible. However, some people feel that sofa and couch are a bit ‘lower class’, and that settee is the so-called ‘re� ned, middle-class word’. Divan could also be used, but its normal British English meaning is a kind of bed with a very thick base. It can also, less commonly, mean a kind of sofa with no back or arms. Or, take the word hairy in the following examples: The creature had a very hairy face. It was a really hairy journey on the mountain road. The exam contained some hairy questions.
English vocabulary has a remarkable range, � exibility and adaptability. Owing to the periods of contact with foreign languages and its readiness to coin new words out of old elements, English seems to have far more words than other languages. For example, alongside kingly (from Anglo-Saxon) we � nd royal (from French) and regal (from Latin). They all refer to that which is closely associated with a king, or is suit-able for one. What is KINGLY may either belong to a king, or be be� tting, worthy of, or like a king: a kingly presence, appearance, graciousness. REGAL is especially ap-plied to the of� ce of kingship or the outward manifestations of grandeur and majesty: regal authority, bearing, splendour, muni� cence. ROYAL is applied especially to what pertains to or is associated with the person of a monarch: the royal family, word, robes, salute; a royal residence.
There are many such sets of words which add greatly to our opportunities to express subtle shades of meaning at various levels of style. It is not enough to know the meaning or meanings of a word. You also need to know which words it is usually connected with, its grammatical characteristics, and whether it is formal, informal or neutral. In other words, in your writing you should use words that commonly go to-gether, i.e., collocations:
(a) adjectives + nouns, e.g. cost of living, make a living, kingly presence, common sense.
(b) verbs + nouns, e.g. to express an opinion, to take sides.
(c) nouns in phrases, e.g. in touch with, a sense of humour.
(d) words + prepositions, e.g. at a loss of the words, thanks to you.
II BUILDING UP YOUR PARAGRAPHInstructions
1. Just as the words that you write are arranged in sentences, so your sentences should be arranged in paragraphs. Each paragraph represents a stage of the story you are telling or the description or argument you are writing.
2. Choose a title which interests you if you are not given one.
3. Think carefully about what you are going to say before writing.
4. Always indent the � rst sentence of your paragraph.
5. Try to make your story or description interesting from the very � rst sentence.
6. The � rst sentence should give the reader some idea of what the paragraph is about. In other words, the � rst sentence tells the reader the topic of the paragraph, and all the other sentences in the paragraph expand that topic.
7. Write short, complete sentences.
8. Keep to the subject.
9. Take great care to connect your sentences so that your work reads smoothly. Words like however, for, since, although, afterwards, meanwhile, etc., will en-able you to do this.
10. Save the most interesting part until the end or near the end.
11. Work neatly. Make sure your writing is clear, your spelling and punctuation cor-rect, and that there are margins to the left and the right of your work.
12. Abbreviations like don’t, haven’t, wouldn’t, etc., are not normally used in written English. These words must be written in full: do not, have not, would not, etc.
13. Never on any account write your paragraph in your mother tongue and then at-tempt to translate it into English.
14. Avoid using a dictionary. Never use words that are entirely new to you.
III BUILDING UP YOUR ESSAYInstructions
1. INTEREST Writing an essay is not simply a matter of getting the required number of words down on paper. You must do all to make you can to make your essays interesting so that they will hold reader’s attention to the very end. To achieve this it is not necessary to go to absurd lengths to be original. Once you have found something de� nite to say, your essay will be interesting to read.
2. UNITY. Just as it is important to connect your sentences within a paragraph, you should make sure that your paragraphs lead naturally to each other. Answer the question closely. Do not repeat yourself. Make sure that every paragraph adds some-thing new to the essay.
3. BALANCE AND PROPORTION. Keep a sense of proportion. The length of a paragraph will depend on what one has to say; however do not let yourself be car-ried away by fascinating but unimportant details. Never attempt to write an essay in a single paragraph.
4. PERSONAL STATEMENT. Do not address the reader or make comments on the topic like, “I do not like this subject and do not know how to begin ...” or, “... and now it is time to � nish my essay,” etc.
5. TEST FOR QUALITY. If in your effort to reach the word-limit you � nd yourself counting the number of words you have used every time you add another sentence to your essay, it is a sure sign that there is something basically wrong with your treatment of the subject. If you are so bored with your own writing that you have to keep counting the number of words to � nd out if you are nearing the end, it is more than likely that your reader will be equally bored when he or she has to read what you have written. If your essay gave you pleasure to read, it is quite probable that it will be enjoyable to read. This is good – but not always reliable test for quality.
6. RE-READING. It is absolutely necessary to read your work through when you have � nished writing. While doing so, keep a sharp look out for grammatical mis-takes – especially those connected with word order or the sequence of tenses.
7. TITLES. After you have � nished your essay choose a good short title, if not given. Make sure it has to do with the subject, but it should not give the reader too much information.
UNIT 1 LEADERSHIP AND TRUST: SHOULD ALL
MANAGERS BE LEADERS?
CONVERSELY, SHOULD ALL LEADERS BE
MANAGERS?IS LEADERSHIP ALWAYS IMPORTANT?
MANAGER AS A GENERALIST
The early model of the manager was the one who had mastered such subjects as � nance, accounting, audit, marketing, production, and so on. Later it was recog-nized by theoreticians and practicing managers alike that management was a good deal more than the sum of these specialised functions, and this realisation in turn led to the conception of the manager as a generalist, who must be able to perform si-multaneously planning, organizing, leading and control activities if he or she wants to be successful.
LEADERSHIP AS ONE OF THE FOUR BASIC ACTIVITIES
For our purposes, let us consider leadership as one of the four basic activities and clarify the distinction between managers and leaders. Although they are frequently used synonymously, they are not necessarily the same. Managers are appointed. They have legitimate power that allows them to reward and punish. Their ability to in� uence is based on the formal authority inherent in their positions. In contrast, leaders may either be appointed or emerge from within a group. Leaders can in� uence others to perform beyond the actions dictated by formal authority.
MANAGERS vs. LEADERS
Should all managers be leaders? Conversely, should all leaders be managers? We can state that all managers should ideally be leaders. However, not all leaders nec-essarily have capabilities in other managerial functions, and thus not all should hold
managerial positions. The fact that an individual can in� uence others does not mean that he or she can also plan, organise and control. Therefore, by leaders we mean those who are able to in� uence others and who possess managerial authority.
TRAIT THEORIES OF LEADERSHIP
Ask the average person on the street what comes to mind when he or she thinks of leadership. You are likely to get a list of qualities such as intelligence, charisma, deci-siveness, enthusiasm, strength, bravery, integrity and self-con� dence. These responses represent, in essence, trait theories of leadership, i.e., theories that isolate characteris-tics that differentiate leaders from non-leaders. Six traits on which leaders are seen to differ from non-leaders include drive, the desire to lead, honesty and integrity, self-con� dence, intelligence, and job-relevant knowledge.
Yet traits alone do not suf� ciently explain leadership. The inability to explain leadership solely from the traits led researchers to look at the behaviour of specif-ic leaders. In their studies, the researchers explored three leadership behaviours or styles: autocratic, democratic and laissez-faire, the last of which can be further clas-si� ed in two ways: consultative and participative. A democratic-consultative leader hears the concerns and issues of employees, but makes the � nal decision himself or herself. A democratic-participative leader often allows employees to have a say in what is decided.
EMERGING APPROACHES TO LEADERSHIP
However, this review cannot be complete without presenting the two emerging approaches to the subject: charismatic leadership and visionary leadership. Studies on key characteristics of charismatic leaders say that they possess self-con� dence, vision, ability to articulate the vision, strong convictions about the vision, behaviour that is out of the ordinary, appearance as a change agent, and environmental sensi-tivity. On the other hand, visionary leaders exhibit three skills: the ability to explain (both orally and in writing) the vision to others, in a way that it is clear in terms of required actions; the ability to express the vision not just verbally but through leader’s behaviour, and the ability to extend the vision to different leadership contexts, gaining commitment and understanding of organisational members.
GENDER DIFFERENCES IN LEADERSHIP
One must not forget that there are also gender differences in leadership. Are men better leaders, or does that honour belong to women? Even asking those questions is certain to evoke emotions on both sides of the debate. The evidence indicates that the two sexes are more alike than different in the way they lead. Much of this similarity is based on the fact that leaders, regardless of gender, perform similar activities in in� u-encing others. That is their job, and the two sexes do it equally well. However, the most common difference lies in leadership styles. Women use a more democratic style. They encourage participation of their followers and are willing to share their positional pow-er with others. In addition, women tend to in� uence others best through their charisma, expertise, contacts, etc. Men, on the other hand, tend to typically use a task centered leadership style – such as directing activities and relying on their positional power to control the organisation’s activities. All things considered, when a woman is a leader in a traditionally male-dominated job (such as that of a police of� cer), she tends to lead in a manner that is more task centered.
CONTEMPORARY LEADERSHIP ISSUES
However, as you may have deduced from the foregoing, the concept of leadership is continually being re� ned as researchers continue to study leadership in organisa-tions. Let’s take a look at the three of contemporary leadership issues: team leadership, national culture and trust.
1. WHAT IS TEAM LEADERSHIP?
TEAM LEADERSHIP is different from the traditional leadership, i.e., the role performed by � rst-line managers or supervisors. J. D. Bryan, a � rst-line manager at the textile plant. One day he was happily overseeing a staff of 15 as-sembly-line workers. The next day he was informed that the company was mov-ing to teams and that he was to become a “facilitator”. “I am supposed to teach the teams everything I know and then let them make their own decisions,” he said. Confused about his new role, he admitted “there was no clear plan on what I was supposed to do.”
Many leaders are not equipped to handle the change to teams. As one prominent consultant noted, “even the most capable managers have trouble making the tran-sition because everything (command-and-control things) they were encouraged to do before is no longer appropriate.” The challenge for most managers, then, is
to become an effective team leader. And to do that team leaders are liaisons with external constituencies, troubleshooters, con� ict managers, and coaches.
2. DOES NATIONAL CULTURE AFFECT LEADERSHIP?NATIONAL CULTURE is an important situational factor determining which
leadership style is most effective. National culture affects leadership style be-cause leaders cannot choose their styles at will: They are constrained by the cul-tural conditions that their followers have come to expect. Also, one must not forget that most leadership theories were developed in the United States, using U.S. subjects. Therefore, they have an American bias. They emphasize follower responsibilities rather than rights; assume hedonism rather than commitment to duty or altruistic motivations, etc.
3. BUILDING TRUST: THE ESSENCE OF LEADERSHIPTRUST, or lack of trust, is an increasingly important issue in today’s organisa-
tions. Let us further explore this issue of trust by de� ning what trust is and show how trust is a vital component of effective leadership.
What is trust? It is a POSITIVE EXPECTATION that another will not – through words, ac-
tions, or decisions – act opportunistically. Most important, trust implies familiar-ity and risk. The phrase positive expectation assumes knowledge of and familiar-ity with the other party. Trust takes time to form. Most of us � nd it hard, if not impossible, to trust someone immediately if we do not know anything about him or her. At the extreme, in case of total ignorance, we can gamble, but we cannot trust. But as we get to know someone and the relationship matures, we gain con-� dence in our ability to make a positive expectation. The word opportunistically refers to the inherent risk and vulnerability in any trusting relationship.
Trust involves making oneself vulnerable as when, for example, we disclose in-timate information or rely on another’s promises. By its very nature, trust provides the opportunity to be disappointed or to be taken advantage of. But trust is not tak-ing risk per se; rather it is a willingness to take risk. So when we trust someone, we expect that they will not take advantage of us. Whence follow the � ve dimensions of trust: integrity, competence, consistency, loyalty and openness.
Why is trust one foundation of leadership?It appears that trust is a primary attribute of leadership. In fact, if you look
back at our discussion of leadership traits, you will � nd that honesty and integrity
are among the six traits consistently associated with leadership. When followers trust a leader, they are willing to be vulnerable to the leader’s actions – con� dent that their rights and interests will not be abused.
Now, more than ever, managerial and leadership effectiveness depends on the ability to gain the trust of followers. However, in times of change and instability, people turn to personal relationship for guidance, and the quality of these rela-tionships are largely determined by the level of trust.
What are the three types of trust? There are three types of trust: deterrence-based trust – referring to the most
fragile relationship, knowledge-based trust – existing when one understands someone else well enough to be able to accurately predict his or her behaviour, and identi� cation-based trust – being the highest level of trust that is achieved when there is an emotional connection between the parties.
IS LEADERSHIP ALWAYS IMPORTANT?
In keeping with the foregoing, we conclude this text by offering this opinion: The belief that a particular leadership style will always be effective regardless of the situation may not be true. Leadership may not always be important. Data from numerous studies demonstrate that, in many situations, any behaviour a leader ex-hibits is irrelevant.
For instance, characteristics of employees such as experience, training, profes-sional orientation, or need for independence can neutralise the effect of leadership. These characteristics can replace the need for a leader’s support. Similarly, jobs that are unambiguous and routine may place fewer demand on leadership. Finally, such or-ganisational characteristics as rigid rules and procedures, or cohesive work groups can act in place of formal leadership.
1. READING FOR COMPREHENSION
Answer the below given questions.
1. De� ne leader and explain the difference between managers and leaders.
2. Is the possession of six traits on which leaders differ from non-leaders a guaran-tee of leadership? Discuss this issue.
3. Identify the qualities that characterise charismatic leaders.
4. Do you agree or disagree with the following statement: “Charismatic leadership is always appropriate in organisations.” Support your opinion.
4. Describe the skills that visionary leaders exhibit.
5. Explain the four speci� c roles of effective team leaders.
6. Contrast the three types of trust. Relate them to your experience in personal rela-tionships.
7. When might leader be irrelevant?
2. MATCHING EXERCISES
(a) Match the six traits on the left-hand side with their explanations on the right-hand side.
1. Drive (a) Leaders need to be intelligent enough to gather, to synthesise, and interpret large amounts of information and to be able to create visions, solve problems, and make correct decisions.
2. Desire to lead (b) Followers look to leaders for an absence of self-doubt. Leaders, therefore, need to show self-assurance in order to convince followers of the rightness of goals and decisions.
3. Honesty and integrity (c) Effective leaders have a high degree of knowledge about the company, industry, and technical matters. In-depth knowledge allows leaders to make well-informed decisions to understand the implications of those decisions.
4. Self-con� dence (d) Leaders have a strong desire to in� uence and lead others. They demonstrate the willingness to take responsibility.
5. Intelligence (e) Leaders exhibit a high effort level. They have a relatively high desire for achievement, they are ambitious, they have a lot of energy, they are tirelessly persistent in their activities, and they show initiative.
6. Job-relevant knowledge (f) Leaders build trusting relationships between themselves and followers, by being truthful or non-deceitful and by showing high consistency between word and deed.
(b) Match the three leadership behaviours or styles on the left-hand side with their explanations on the right-hand side.
1. Autocratic style (a) A leader who tends to involve employees in decision-making proc-ess, to encourage participation in deciding work methods and goals.
2. Democratic style (b) A leader generally gives his or her employees complete freedom to make decisions and complete their work in whatever way they see � t.
3. Laissez-faire (c) A leader who typically tends to centralise authority, dictate work meth-ods, make unilateral decisions, and limit employee participation.
(c) Match the seven key characteristics of charismatic leaders on the left-hand side with their explanations on the right-hand side.1. Self-con� dence (a) They are able to make realistic assessments of the
environmental constraints and resources needed to bring about change.
2. Vision (b) Charismatic leaders are perceived as being strongly committed to and willing to take on high personal risk, incur high costs, and engage in self-sacri� ce to achieve their vision.
3. Ability to articulate the vision (c) They engage in behaviour that is perceived as being novel, unconventional, and counter to norms. When successful, these behaviours evoke surprise and ad-mirations in followers.
4. Strong convictions about the vision (d) Charismatic leaders are perceived as agents of radi-cal change rather than as caretakers of status quo.
5. Behaviour that is out of the ordinary (e) They are able to clarify and state the vision in terms that are understandable to others. This articulation demonstrates an understanding of the followers’ needs and, hence, acts as a motivating force.
6. Appearance as a change agent (f) They have an idealised goal that proposes a future better than the status quo. The greater the disparity between this idealised goal and the status quo, the more likely that followers will attribute extraordi-nary vision to the leader.
7. Environmental sensitivity (g) Charismatic leaders have complete con� dence in their judgement and ability.
(d) Match the three skills of visionary leaders on the left-hand side with the examples, exhibiting their skills respectively on the right-hand side.1. Ability to explain the vision (a) Herb Kelleher at Southwest Airlines lives and breaths
his commitment to customer service. He is famous within the company for jumping in, when needed, to help check in passengers, load baggage, or do anything else to make the customer’s experience more pleasant.
2. Ability to express the vision (b) The vision has to be as meaningful to people in account-ing as to those in marketing and to employees in Prague as well as in Pittsburgh.
3. Ability to extend the vision (c) Former President Reagan – the so-called “great com-municator” – used his years of acting experience to help him articulate a simple vision for his presidency: a re-turn to happier and more prosperous times through less government, lower taxes, and a strong military.
(e) Match the four speci� c roles of team leaders on the left-hand side with their explanations on the right-hand side.1. Liaison with external (a) The leader helps to process the disagreement that constitu-
encies surface among team members. He has to detect what the source of con� ict is, as well as to identify persons in-volved in it and disputable issues. Also, he has to � nd out what resolution options are available and to determine ad-vantages and disadvantages of each.
2. Trouble shooters (b) The leader clari� es expectations and roles, teaches, offers support, cheerlead, and whatever else is necessary to help team members improve their work performance.
3. Con� ict managers (c) The leader sits in on meetings to assist in resolving problems that arise for team members. This rarely relates to technical issues because the team members typically know more about the tasks than does the team leader.
4. Coaches (d) The leader represents the team to other constituencies, both external (including upper management and other internal teams) and internal (customers and suppliers) to the organisa-tion, secures needed resources, clari� es others’ expectations of the team, gathers information from the outside, and shares this information with the team members.
(f) Match the � ve dimensions of trust on the left-hand side with their explana-tions on the right-hand side.
1. Integrity (a) Willingness to share ideas and information freely. Can you rely on the person to give you the full truth?
2. Competence (b) Willingness to protect and save face for another person.
3. Consistency (c) Technical and interpersonal knowledge and skills Does the person know what he or she is talking about? You are unlikely to listen to or depend upon someone whose abilities you do not respect. You need to believe that a person has the skills and abilities to carry out what he or she says they will do.
4. Loyalty (d) Reliability, predictability, and good judgement in handing situations. This dimension is particularly relevant for managers: “Nothing is no-ticed more quickly than a discrepancy between what executives preach and what they expect their associates to practice.”
5. Openness (e) Honesty, conscientiousness, and truthfulness. Of all � ve dimensions this one seems to be most crucial.
(g) Match the three types of trust on the left-hand side with their explanations on the right-hand side.
1. Deterrence-based trust (a) Trust based on the behavioural predictability that comes from a history of interaction. It exists is you understand someone well enough to be able to predict his or her behaviour.
2. Knowledge-based trust (b) Trust based on an emotional connection between the parties.
3. Identi� cation-based trust (c) Trust based on fear of reprisal if the trust is violated.
Choose the right preposition from the list below to complete the passage In what way does national culture affect leadership? Some of the prepositions are used more than twice.
without in from for to about towards of at
It can help explain, for instance, why executives ……… the highly success-
ful Asia Department Store ……… central China blatantly brag ……… practicing
“heartless” management, require new employees to undergo two ……… four weeks
……… military training with units ……… the People’s Liberation Army ………
order to increase their obedience and conduct the store’s in-house sessions ………
a public place ……… which employees can openly suffer embarrassment ………
Also, consider the following: Korean leaders are expected to be paternalistic
……… their employees. Arab leaders who show kindness or generosity ……… be-
ing asked to do so are seen by other Arabs as weak. Japanese leaders are expected to
be humble and speak infrequently. And Scandinavian and Dutch leaders who single
out individuals ……… public praise are likely to embarrass those individuals rather
than energise them.
Fill in the blank with the appropriate article or leave it blank to indicate that no article is necessary.
One Manager’s Perspective: Betsy Reifsnider, CEO of Friends and River
Betsy Reifsnider, ……… CEO of Friends and River, ……… conservation group
staffed by both paid professionals and unpaid volunteers. Betsy Reifsnider’s primary
responsibility is setting ……… budget and ensuring it is met as well as working with
……… conservation director to develop new programmes. She allows her staff to
……… great deal of autonomy, which she feels contributes to high morale, produc-
tivity and creativity as well as creating ……… team environment of mutual commit-
ment and trust. In her weekly meetings with her more senior managers Betsy discusses
……… budget, personnel and management issues, but she also encourages all staff
members to come to her with any problems. Trust is enforced with ……… con� den-
tiality in which she holds these conversations. She has ……… simple rule: “I don’t
violate their con� dences.” Reifsnider also stops at people’s desks during ……… day to
chat with them about their work. Keeping up to date also earns trust of employees who
know from her quiet interest that she shares stakes in their success.
Fill in the blank spaces in the text with correct verb forms.
Insights into personality: Linda Wachner, CEO of Warnaco
In today’s dynamic organisation, we continue ……………… (HEAR) about
management’s need to be sensitive to others and ……………… (TREAT) employees
with kid gloves, but not all managers ……………… (FOLLOW) this model. One such
manager ……………… (BE) Linda Wachner, CEO of Warnaco and Authentic Fitness,
makers of sports and intimate apparel.
As a diligent student, after she …………………… (GRADUATE) from
High School at 16, she ……………… (GO) on to SUNY Buffalo to study econom-
ics and business administration. She ………………… (WORK) in a variety of in-
dustry apparel jobs before she ………………… (MOVE) to Warnaco, where within
a year, she ……………… (BECOME) the � rst woman vice president in the � rm’s
100 hundred years history. She …………………… (TAKE OVER) Warnaco in
1986 and within a year she ………………… (BUILD) the apparel maker into $1.4
billion behemoth, responsible for …………………… (MANUFACTURE) and
………………… (DISTRIBUTE) more than a third of all the bras sold in the USA.
If you ……………… (ASK) others to describe her, you ……………… (HEAR)
less-than-� attering descriptions. She …………………… (CHARACTERISE) as
a screaming, combative, ruthless taskmaster who always ……………… (GET) her
way. She ……………… (KNOW) for ………………… (HUMILIATE) employees in
front of their peers. She ……………… (DISMISS) attacks on how she ………………
(TREAT) organisational members by one simple motto: “You can’t run a company with
a ‘bunch of babies.’ If you don’t like it, leave. This is not a prison.” Her advice to senior
managers ……………… (BE) simple: Be tough. She ……………… (ADVISE) them
to show employees they ……………… (BE) serious. How? By ……………… (FIRE)
a few employees to set an example.
In spite of that, she …………………… (BE) an ef� cient manager – one
who only ……………………… (REWARD) work performance. Since she
……………… (BECOME) head of the company, pro� ts and company stock prices
How does she see herself? As effective and good, with an excellent record. When
she ………………… (EARN) the title from Fortune magazine as one of the seven
toughest bosses in the United States, she ………………… (MAKE) no apologies.
However, for a woman who ………………… (USE) to wearing trousers
as well as ………………… (MAKE) and ………………… (SELL) them, these
must be hard times. On June 11th Linda Wachner had to watch the company, fa-
mous for making Calvin Klein jeans and Speedo swimwear and lingerie, which she
………………… (RUN) for the past 15 years � le for bankruptcy with debts of $3.1 bil-
lion, some 30% more than the value of its assets. In November of that year Linda (FIRE).
She (SUE) Warnaco for $25 million in severance, but (SETTLE) for $452,000.
REVIEW AND DISCUSSION QUESTIONS
The below given Hiroski Okuda’s story will tell you something about lead-ership. On one hand, it is the leaders in organisations who make things happen. However, the way they do this may vary widely. After reading through the text try to answer the below given questions.
1. Prior to becoming chairman, Okuda served as Toyota’s president – the � rst non-family member in over 30 years to head the company. He also sticks out in his executive circles, because in Japan executives are supposed to be unseen. Okuda justi� es his outspoken and aggressive style as necessary to change a company that has become lethargic and overly bureaucratic.
2. Okuda moved ahead at Toyota by taking jobs that other employees didn’t want. For example, when the company faced dif� culties in trying to build a plant in Taiwan, many at Toyota were convinced that the project should be scrapped. Okuda thought differently. He did not want to give up. He restarted the project and led it to success. His drive and ability to overcome obstacles were central to his rise in the company.
3. When Okuda ascended to the presidency in 1995, Toyota was losing market share in Japan to both Mitsubishi and Honda. Okuda attributed this problem to several factors. One of them was that Toyota had been losing touch with customers in Japan for several years. For example, when engineers redesigned the Corlolla in 1991, they made it too big and too expensive for the Japanese tastes. Then four years later, they stripped out so many of the costs in the car that Corolla looked too cheap. Toyota’s burdensome bureaucracy also bothered Okuda. A decision that took � ve minutes to � lter through the company at Suzuki Motor Corporation took three weeks at Toyota.
4. In his � rst 18 months on the job, Okuda implemented some drastic changes. In a country in which lifetime employment is consistent with the culture, he replaced nearly one third of Toyota’s highest-ranking executives. He revamped Toyota’s long-standing promotion system based on seniority, adding performance as a fac-tor. Some outstanding performers were moved up several levels in management at one time – something unheard of in the history of company.
5. Okuda also worked with vehicle designers to increase the speed at which a ve-hicle went from concept to market. What once took 27 months was shortened to
18. Finally, he is using the visibility of his job to address larger societal issues facing all Japanese businesses. He recently accused Japan’s Finance Ministry of trying to destroy the auto industry by driving up the yen. And he has been an audible voice in the country, condemning the lax lending practices that force Japanese banks to write off billions of dollars in bad loans and that led, in part, to the economic crisis in the country.
6. Unfortunately, some of Okuda’s actions may have back� red. Speculations that he overstepped his boundary by his “blunt demands” may have offended the found-ing family – leading to his removal as president of the company in June 1999. However, his strategic leadership and the good he has done for the company did not go unnoticed – they helped him ascend to the chairman’s job.
1. How would you describe Hiroski Okuda’s leadership style? Cite speci� cs where appropriate.
2. When a company is in crisis, do you believe that a radical change in leadership is required to turn the company around? Support your position.
3. Would you describe Okuda’s leadership style to be (a) charismatic, (b) visionary, and (c) culturally consistent with the practices in Japan? Explain.
Building your writing skills:
Write an essay of between 250 and 350 words on each of the following subjects. You should spend about an hour and a quarter on your essay. The best way to divide your time is as follows: plan: 10-15 minutes; writing: 45-50 minutes; re-reading: 10-15 minutes. Where necessary, give your essay a title.
1. Are all � t to be managers? To answer this question, it is necessary to be aware of some links to practices, such as Emotional intelligence (EI), referring to non-cognitive skills. It differs from intelligence quotient (IQ) and includes awareness of one’s own feelings, awareness of one’s own emotions and impulses, the abil-ity to sense how others feel, and the ability to handle the emotions of others. If
future hires have high EI scores, they will be more successful. The next includes Machiavellianism (Mach), after Niccolo Machiavelli, who gave the two follow-ing instructions on how to gain and manipulate power: (a) the maintenance of emotional distances; and (b) ends justify means. Whether high Machs make good employees or not depends on the kind of job. If their business requires bargaining skills (labour negotiations), high Machs are productive. Otherwise, it is dif� cult to predict their work performance. On the other hand, self-esteem (SE) refers to an individual’s degree of like or dislike for himself or herself. High SEs believe that they possess the ability to succeed at work and vice versa. They will take more risks in job selection. Also, they are more likely to choose unconventional jobs than are people with low SEs, and are more satis� ed with their jobs than low SEs. One should not forget charisma either. Are charm and grace all that is needed to create followers? Should one be sensitive to other’s feelings and needs? What about sensitivity to the environment and unconventional behaviour? What about our country?
2. Differences in international business cultures. Describe in what way national culture affects leadership, bearing in mind that culture varies from country to country. It is obviously not enough to categorise Italians as people spending most of their time in the sun while eating pizza and drinking wine. There is more to be learned to become a successful manager in a foreign market. Where did Eurodisney in Paris go wrong? The Disney management de� nitely ignored many basic questions before launching this project. One of their mistakes was also re-lated to a cultural aspect: Did Eurodisney, for example, prohibit drinking alcohol inside the park? In the � rst place, the French visitors were emmbarassed, for drinking wine to a meal is typically French. Disney has changed the regulation later on but in the beginning they did not respect or take the foreign culture into account. What can one do to avoid such mistakes or at least to minimise them?
3. Gender roles. Each culture handles gender roles more or less differently. The equality in political, private and business issues is dependant on a country’s ju-risdiction. The � rst time in Europe when females got the right to vote was in the beginning of the 19th century in Finland. Nowadays, the development has reached nearly equal rights between males and females. In contrast, China’s � rst law protecting women workers dates only from 1988. Western cultures vary just in small ranges concerning gender roles in business life: for instance, in France women are equally treated in certain � elds of professions like law and � nance, but there are restrictions against women working in industry sectors. In contrast,
German men show prejudice against women, which is why they have to achieve better and higher quali� cations and work harder to get into leading positions. What about our country? Is gender a universal issue? Does it affect personal identity and on power-values which are determined by culture?
4. The role of trust. Given the importance trust plays in the leadership equation, today’s leaders seek to build trust with their followers. Give your suggestions for achieving that goal.
5. Power distance. It refers to the extent to which less powerful members of in-stitutions and organisations within a country expect and accept that power is dis-tributed unequally. Power distance describes also the extent to which employees accept that superiors have more power than they have. Furthermore, the opinions and decisions are right because of the higher position someone has. Are employ-ees too afraid to express their doubts and disagreements with the autocratic and paternalistic bosses in countries with high power distance? What about small countries? Do bosses and subordinates work together and consult each other? Given the salary range is low between the top and the bottom in companies, do subordinates expect to be consulted within the decision-making process? Do sub-ordinates expect to be told what to do from their superiors because they consider each other as unequal in companies with higher power distance? Are inequalities normally expected and privileges seen as desirable by superiors in such compa-nies? What about our country?
6. Succession to the CEO. Imagine you are the new CEO of a multi-billion dollar corporation. You are succeeding the founder’s son-in-law who held the position for more than 33 years – growing it to the company that it is today. Your prede-cessor was dynamic. You are considered mellow. And he is not really leaving, just going to the position of the Chairman of the Board to “keep an eye” on things. Describe how you would feel and what you should do.
Communicat ion Module
WRITTEN COMMUNICATION - SUMMARISING
WHAT IS A SUMMARY?
This module assumes that you have learned how to extract the meaning from a text and that you are ready to go on to the later stages.
De� nition. A summary or précis is a brief and clear statement in a connected and readable shape of the substance of a longer passage. It is valuable because it oblig-es you to read intelligently and then to write simply and economically.
The journalist who is reporting a speech needs to pick out its main points and omit what was least important in it. Usually the newspaper will only have the space to print a shortened version of it. The student may need to read a chapter of a text-book and then make brief notes on what was most important in it. In any examination you take, the examiners are likely to test your ability to read, to write, and to think, by asking you to write a summary or précis. The reasons for managers to learn how to summarise are rather sensible. To express in your own words somebody else’s ideas, i.e., write the gist of it, even when you do not agree with those ideas, is good practice both in clear writing and clear thinking. In one way or another you will often be called upon to give your superior a brief account of the main items in a message received or a meeting attended, or, if you are an executive, you will have to brief your subordinates about what the job would entail. It will not always be called a summary but it will be one all the same.
Brief. In writing a summary a great deal of meaning must be put into as few words as possible – a very desirable thing in all forms of writing, but necessary in
précis. In an examination it is usual to ask for a summary in not more than a limited number of words. It is necessary to keep within this limit. All words including “a” and “the” count. If no number is stated, you should aim at a version one-third the length of the passage for summary.
Clear. It is even more important to be clear than to be brief. The two usually go together. If they appear to con� ict, it is always better to be clear.
Connected. In any piece of writing, especially if it is an argument, ideas do not appear separately one at a time. They come in groups and some are more important than others, but all are linked to the main point of the text. In summarizing, these links of thought must be preserved, otherwise the result is a succession of apparently uncon-nected jerky ideas, the meaning of which is not clear.
Readable. A summary is not a kind of telegram and it must be written in normal English without any omissions of words or incomplete sentences.
Substance. Making a précis is excellent discipline for the mind because one has to say fairly and exactly what the other man said, whether one agrees or not. It is not as easy as many people think.
First, one must say no more and no less than is said in the original.Secondly, one must add nothing of one’s own to the originalThirdly, it is necessary to keep to the facts in the same proportion as the original,
not altering the general balance. This alteration of balance is a common trick of news-papers reporting the political speeches. They take a phrase or a sentence out of the rest of the speech and comment on that, giving it by so doing an importance different from that intended by the speaker. When this is done deliberately, it is just as dishonest as stealing, and more dangerous.
This “substance” test is the one your summary will be judged by. Does it say what the original says, and leave the same impression on the mind of the reader though the words used are yours? If so, it has done its proper work.
Getting rid of idle words. The � rst necessity is to learn to notice and avoid all forms of wordiness, that is, using more words than are necessary to make the reader understand exactly what is being said. The two commonest kinds of wordiness are roundabout expressions and repetition.
1. Roundabout expressions. Perhaps the commonest form of roundabout phrase is that where a single adjective such as “unpleasant” appears as (“of an unpleasant character”) a whole phrase that adds nothing to the meaning. For example: It was an unpleasant experience.
It was an experience of unpleasant character.
Both express the same thing, but the former, as it wastes no words, is greatly to be preferred.
Here are some more examples of phrases that would be better expressed in single words:
of a disagreeable nature disagreeableof a silly kind sillyof a delightful description delightfulin a brief manner brie� y
[The only common exception to this is ‘in a friendly way’. This is often preferred to ‘friendly’ because that is so dif� cult to say.]
Other similar expressions to be avoided are: with regard to in the case of
having regard to the fact that with a view toin reference to in view of
Here are some examples, all taken from the same government circular that will show you how easy it is to write wordily and also how wordiness might have been avoided:
Original Summarised Boys whose way of life is cast town boys
in an urban environment ... together with the addition of ... also special attention will be paid to activities with an eye special attention will be paid to activities
to the cultivation of the qualities of initiative, etc., ... to cultivate initiative judged in the light of their results ... judged by their results In this connection it should be said ... Here it should be said
2. Repetition. People seem sometimes to think that what they say twice is more impressive than what they say once. A proper attention to the meaning of words would show such people that repetition makes for weakness not strength. For example:
Original Text Summarised Text For three years the economy is in continuous growth; For three years the economy has been
this state of affairs goes on for the whole of that continuously growing.time without cease.
Other ways of being brief. So far we have only considered getting rid of useless words, but, if the passage we want to summarise is well written, there will be no useless
words. How then can we shorten it? There are two ways: putting ideas together that are separate, and generalisation.
1. Putting ideas together. This can be done by subordinating the less to the more important ideas, reducing sentences to clauses, clauses to phrases, phrases to words, etc. For example: Original Text Summarised Text It was quite dark; for the sun had set an hour An hour after sunset one dark, moonless
before and the moon had not risen yet when the night, the thief crept out of his cottage to thief carefully opened the door of his cottage go about his business.and prepared to go about his business.
I am now at liberty to confess that much The critics of my late friend’s books werewhich I have heard objected to my late friend’s often right.writings was well-founded.
Twenty-one words instead of thirty-six, i.e., ten instead of twenty-one and the meaning so little changed as to be almost the same.
2. Generalisation. The second way of shortening is by generalisation. Instead of giving all the details given in the original you give only the general impression made by them. For example: Particular General Nothing in the of� ce was in its place. Books The of� ce was in complete disorder. were piled on chairs, on tables, on the � oor, everywhere except on the shelves. Some sheets of old newspaper were blowing about the � oor. Cushions were off the chairs, ashtrays off the tables, and even the carpets were wrinkled and twisted.This method of shortening has its dangers, because the meaning is changed.
The single word “disorder” has to call up in the reader’s imagination all the details that the original shows him. It is therefore necessary to use exactly the right word when making the generalisation, i.e., to � nd some general word or phrase to sum up details or particulars.
Particular General My mother often sent me to buy � our, My mother often sent me shopping to the
sugar, coffee and the biscuits at one shop grocer’s and the adjacent greengrocer’s.and potatoes, carrots, apples and orangesat another near at hand.
Thirteen words instead of twenty-six if you know the exact words for the shops where groceries and vegetables are bought. The more words you know (e.g. ‘wet’ is wetter than ‘damp’ but no so wet as ‘soaking’), the easier it will be for you to write a shortened form by generalisation.
How to set about writing a summary. In a methodical and businesslike way, i.e., by adhering to the rule of six steps, which reads as follows:
Step 1. Read and UNDERSTAND the passage. Ninety-nine out of every hun-dred failures to make a good summary are caused by not understanding the text. As soon as you have grasped the meaning EXPRESS THE WRITER’S MAIN POINT AS CLEARLY AND BRIEFLY AS YOU CAN, preferably in one sen-tence. Write this sentence at the top of your summary.
Step 2. Read the passage again to test whether your sentence really expresses the writer’s main idea, and to note and mark the division into which it falls. Give to each division its appropriate number of words from the total you are allowed.
Step 3. Take a large, clean sheet of rough paper and set to work on divi-sion one cutting wordiness and shortening as you go. Do NOT COPY OUT ANY PHRASES FROM THE ORIGINAL. Go on section by section until you reach the end.
Step 4. Read your summary, keeping in mind the sentence you made � rst and make sure
(a) that your summary says what the original says;
(b) that it reads like normal English;
(c) that you have kept the connections of thought;
(d) that it is perfectly clear;
(e) that it is not wordy.
Step 5. Count the number of words (excluding, of course, the sentence you have written at the top). If you have too many, shorten still further. If you have a great many too few, consider whether you have not left out something of importance.
Step 6. COMPARE YOUR SUMMARY CAREFULLY, DETAIL BY DETAIL WITH THE ORIGINAL to make sure that nothing important has been left out and nothing whatever has been added. When you are satis� ed, write the fair copy, READ IT OVER, and write the number of words it contains in the end.
UNIT 2 UNDERSTANDING COMMUNICATION
AND WHY IT IS IMPORTANT TO
WHAT IS COMMUNICATION AND HOW DOES THE COMMUNICATION PROCESS WORK?
Communication is the transference and understanding of meaning. The com-munication process begins with a communication sender (a source) who has a mes-sage to convey. The message is converted to symbolic form (encoding) and passed by way of a channel to the receiver, who decodes the message. To ensure accuracy, the receiver should provide the sender with feedback as a check on whether understanding has been achieved.
ARE WRITTEN COMMUNICATIONS MORE EFFECTIVE THAN VERBAL ONES?
Written communications include memos, letters, e-mail, organisational periodi-cals, etc., or any other device that transmits written words or symbols. Why would a sender choose to use written communication? Because they are tangible, veri� able, and more permanent than the oral variety. Also, having to put something in writing forces a person to think more carefully about what he or she wants to convey. Therefore, written communications are more likely to be well thought out, logical and clear.
Of course, written messages have their drawbacks. Writing may be more pre-cise, but it also consumes a great deal of time. The other major disadvantage is feed-back, or rather, lack of it. Oral communications allow the receivers to respond rapidly to what they think they hear. However, written communications do not have a built-in feedback mechanism. Sending a memo is no assurance that it will be received; if it is received, there is no guarantee that the recipient will interpret it as the sender meant. It is best in such cases merely to ask the receiver to summarise what you have said. An accurate summary presents feedback evidence that the message has been received and understood.
IS THE GRAPEVINE AN EFFECTIVE WAY TO COMMUNICATE?
The grapevine is an unofficial channel of communication in an organisation. It is neither authorised nor supported by the organisation. Rather, information is spread by word of mouth – and even through electronic means. Ironically, this is a two-way process - good information passes among us rapidly; bad information, even faster.
The biggest question raised about grapevines, however, focuses on the ac-curacy of the rumours. Research on this topic has found somewhat mixed results. In an organisation characterised by openness, the grapevine may be extremely accurate. In an authoritative culture, the rumour mill may not be accurate. But even then, although the information flowing is inaccurate, it still contains some element of truth. Rumours about major lay offs, plant closings, and the like may be filled with inaccurate information regarding who will be affected or when it may occur. Nonetheless, the reports that something is about to happen are prob-ably on target.
HOW DO NON-VERBAL CUES AFFECT COMMUNICATIONS?
Some of the most meaningful communications are neither spoken nor written. These are non-verbal communications. A red siren or a red light at an intersection tells you something without words. A college professor does not need words to know that students are bored; their eyes get glassy or they begin to read papers during class. Similarly, when papers start to rustle and notebooks begin to close, the message is clear: Class time is about over. The size of a person’s of� ce and desk or the clothes he or she wears also convey messages to others. However, the best known areas of non-verbal communication are body language and verbal intonation.
Body language refers to gestures, facial con� gurations, and other movements of the body. A snarl, for example, says something different from a smile. Hand motions, facial expressions, and other gestures can communicate emotions or temperaments such as aggression, fear, shyness, arrogance, joy and anger.
Verbal intonation refers to the emphasis someone gives to words or phrases. To illustrate how intonations can change the meaning of a message, consider the student who asks the professor a question. The professor replies, “What do you mean by that?” The student’s reaction will vary, depending on the tone of the professor’s response. A
soft, smooth tone creates a different meaning from one that is abrasive with a strong emphasis on the last word. Most of us would view the � rst intonation as coming from someone who sincerely sought clari� cation, whereas the second suggests that the per-son is aggressive or defensive.
In other words, every oral communication has a non-verbal message, the im-pact of which is likely to be the greatest. One researcher found that 55% of an oral message is derived from facial expression and physical posture, 38% from verbal intonation, and only 7% from the actual words used. Most of us know that animals respond to how we say something rather than to what we say. Apparently, people are not much different.
WHAT BARRIERS EXIST TO EFFECTIVE COMMUNICATION AND HOW CAN MANAGERS OVERCOME COMMUNICATION BARRIERS?
A number of interpersonal and intrapersonal barriers help to explain why the message decoded by a receiver is often different than that which the sender intended. Filtering, selective perception, information overload, emotions, language, and com-munication apprehension barriers are but some of the more prominent barriers to ef-fective communication.
Managers can overcome communication barriers by using feedback (ensuring the fact that the message was received as intended), simplifying language (using language that is understood by your audience), listening actively (to capture the true meaning of the message being sent), constraining emotions (not allowing emotions to distort your ability to properly interpret the message), and watching non-verbal cues (aligning the non-verbal with the verbal).
GENDER ISSUES IN THE COMMUNICATION PROCESS: DO MEN AND WOMEN COMMUNICATE DIFFERENTLY?
Research suggests they do. When men talk they emphasize status and inde-pendence. Women talk to create intimacy and connections. Men frequently com-plain that that women talk on and on about their problems. Women, however, criti-cise men for not listening. When a man hears a woman talking about a problem, he frequently asserts his desire for independence and control by providing solutions.
Many women, in contrast, view conversing about a problem as a means of promot-ing closeness. The woman presents the problem to gain support and connection, not to gain the man’s advice.
Therefore, both men and women need to acknowledge that there are differences in communication styles, that one style is not better than the other, and that it takes real effort to talk with each other successfully.
THE IMPORTANCE OF COMMUNICATION TO MANAGERS
The importance of effective communication for managers cannot be overempha-sized for one speci� c reason: Everything a manager does involves communicating. Not some things but everything! A manager cannot make a decision without information. That information has to be communicated. Once a decision is made, communication must again take place. Otherwise, no one will know that a decision has been made. The best idea, the most creative suggestion, or the � nest plan cannot take form without communication skills. Managers therefore need effective communication skills. It is not suggested that good communication skills alone make a successful manager. We can say, however, that ineffective communication skills can lead to a continuous stream of problems for the manager.
1. READING FOR COMPREHENSION
Answer the below given questions.
1. De� ne communication.
2. Describe the communication process.
3. State the grapevine motto.
4. Is the grapevine an effective way to communicate? Why? Explain your position.
5. What are the best known areas of non-verbal communication?
6. Explain body language and verbal intonation as the two best known areas of non-verbal communication.
7. List techniques for overcoming communication barriers.
8. Do men and women communicate in the same way? Explain.
9. Explain the importance of communication to managers.
2. MATCHING EXERCISES
(a) Match the terms referring to the communication process on the left-hand side with their explanations on the right-hand side.
1. Source (a) A receiver’s translation of a sender’s message.
2. Message (b) The degree to which carrying out the work activities required by a job results in the individual’s obtaining direct and clear information about the effectiveness of his or her performance.
3. Encoding (c) The person to whom the message is directed.
4. Channel (d) The conversion of a message into some symbolic form.
5. Receiver (e) A purpose to be conveyed.
6. Decoding (f) The term refers to a communication sender.
7. Feedback (g) The medium by which a message travels.
(b) Match the terms referring to the barriers to effective communication on the left-hand side with their explanations on the right-hand side.
1. Filtering (a) Undue anxiety when one is required to interact face to face.
2. Selective perception (b) Words have different meanings to different people. Receivers will use their de� nitions of words communicated, which may be different for what the sender intended.
3. Information overload (c) Messages will often be interpreted differently depending on how happy or sad one is when the message is being communicated.
4. Emotions (d) When the amount of information one has to work with exceeds one’s processing capacity.
5. Language (e) Receiving communications on the basis of what one selectively sees and hears depending on his or her needs, motivation, expe-rience, background, and other personal characteristics.
6. Communication (f) The deliberate manipulation of information to make it apprehension appear more favourable to the receiver.
(c) Match the terms referring to the overcoming barriers to effective communi-cation on the left-hand side with their explanations on the right-hand side.
1. Use feedback (a) Listen for the full meaning of the message without making premature judgements or interpretations – or thinking what you are going to say in response.
2. Simplify language (b) Be aware that your actions speak louder than your words. Keep the two consistent.
3. Listen actively (c) Recognise when your emotions are running high.
4. Constrain emotions (d) Check the accuracy of what has been communicated – or what you think you heard.
5. Watch non-verbal cues (e) Use words that the intended audience understands.
(d) Match the parts of the memo (1-6) with the descriptions (a-f).
DATE 9th JuneTO Vincent Mills, Human Resources ManagerFROM Philip Groves, Managing DirectorSUBJECT Seminars on Japanese culture and management
���→ The trip to Japan has been con� rmed for the 15th of this month. I’ve decided to go ahead with the seminars as we discussed.
Could you contact the consultant you mentioned and get back to me about the following: - the topics she covers - short description of each topic - whether you think we should use her services or look for someone else.
���→ We haven’t much time, so could you do this a.s.a.p. and also check the avail-ability of the executives who will be involved in this training.
(a) The body of the ‘memo’.
(b) A Short heading which tells you what the memo is about.
(c) When the memo is sent.
(d) The conclusion of the memo, which often recommends the course of action.
(e) Name of the person to whom the memo is sent.
(f) A brief introduction to the memo giving the most important information.
Supply the missing prepositions to complete the passage Why must we listen actively?
When someone talks, we hear. But too often we do not listen. Listening is an ac-
tive search ……… meaning, whereas hearing is passive. ……… listening, two people
are thinking – the receiver and the sender.
Many ……… us are poor listeners. Why? Because listening is dif� cult, and it is
usually more satisfying to be the talker. Listening, in fact, is often more tiring than talk-
ing. It demands intellectual effort. Unlike hearing, active listening demands total con-
centration. The average person speaks ……… a rate ……… about 150 words ………
minute, whereas we have the capacity to hear and process ……… the rate ………
nearly 1,000 words ……… minute. The difference obviously leaves idle time ………
the brain and opportunities ……… the mind to wander.
Active listening is emphasized ……… empathy ……… the sender – that is,
……… placing yourself ……… the sender’s position. Because senders differ ………
attitudes interests, needs, and expectations, empathy makes it easier to understand the
actual content of a message.
Fill in the blank spaces in Some of the more prominent barriers to effective com-munication with correct verb forms.
Filtering …………… (REFER) to the way that a sender …………………
(MANIPULATE) information so that it ………… (SEE) more favourably by the
receiver. For example, when a manger ………… (TELL) his boss what he …………
(FEEL) that boss …………… (WANT) to hear, he …………… (FILTER) informa-
tion. Does this happen much in the organisation? Sure it …………… (DO), and most
likely it so …………… (HAPPEN) in organisations in which there is emphasis on
status differences and among employees with strong career mobility aspirations. So,
expect …………… (SEE) more � ltering taking place in large corporations than in
small business � rms.
Individuals cannot assimilate all they …………… (OBSERVE), so they are se-
lective. They …………… (ABSORB) bits and pieces, which are not chosen randomly;
rather they …………… (CHOOSE) depending on the interests, experience, etc. The
receivers in the communication process, therefore, selectively see and hear. Therefore,
selective perception …………… (ALLOW) us to “speed read” others but not without
the risk of …………… (DRAW) an inaccurate picture.
Individuals have a � nite capacity for …………… (PROCESS) data. For instance,
research …………… (INDICATE) that most of us have dif� culty working with more
than about seven pieces of information at one time. When the information ……………
(EXCEED) our processing capacity, the result is information overload. What ……………
(HAPPEN) when individuals have more information than they can sort out and use?
They …………… (TEND) to select out, ignore, pass over or forget information. In any
case, the result is lost information and less effective communication.
When people feel threatened, they tend …………… (REACT) in ways
that …………… (REDUCE) their ability to achieve mutual understanding. In
other words, if emotions …………… (INVOLVE), messages often ……………
(INTERPRET) differently, depending on how happy or sad one is when the mes-
sage is being communicated.
Words …………… (MEAN) different things to people: “The meanings of words
are not in the words; they are in us.” Age, education, and cultural background are three
of the more obvious variables that …………… (INFLUENCE) the language a person
…………… (USE) and the de� nitions he or she …………… (APPLY) to words. In an
organisation, employees usually …………… (COME) from diverse backgrounds, and
therefore have different patterns of speech. Additionally, the grouping of employees
into departments …………… (CREATE) specialists who develop their own jargon or
Another roadblock to effective communication ……… (BE) that some peo-
ple – an estimated 5% to 20% of the population – suffer from ………………
(DEBILITATE) communication apprehension or anxiety. Although lots of people
dread ………… (SPEAK) in front of a group, communication apprehension is a more
serious problem because it …………… (AFFECT) a whole category of communica-
tion techniques. People who suffer from it ………………… (EXPERIENCE) undue
tension and anxiety in oral communication, written communication, or both. As a re-
sult, they may rely on memos or faxes to convey messages when a phone call would
not only be faster but more appropriate.
REVIEW AND DISCUSSION QUESTIONS
Why the emphasis on non-verbal cues? Well, if actions speak louder than words, then it is important to watch your actions to make sure that they align with and reinforce the words that go along with them. Given this fact, the effective communicator watches his or her non-verbal cues to ensure that they, too, convey, the desired message.
This is why some organisations, such as Doorway Rug Service, Inc., are teaching many of their employees – especially in marketing and sales – to make decisions on the basis of non-verbal communication cues.
For Karen Vesper, vice president of Doorway, focusing on non-verbal commu-nications has become an important part of her interpersonal dealings. After reading through Karen Vesper Reads the Signals, try to answer the below given questions.
1. Several years ago, Karen became interested in how body movements and man-nerisms truly re� ect what an individual is saying. Continually reading in this area of study, Vesper has been able to make decisions about potential employees and potential customers by “reading” them. For example, Vesper believes that body language can give a person competitive advantage. It can make the difference when closing the sale, or in Doorway’s case, � ring new employees.
2. During interviews, for example, Vesper pays constant attention to the job can-didate’s eye movements and mannerisms. Vesper believes that she can correctly predict if the job candidate will be an aggressive salesperson while simultane-ously being personable and friendly. How does she do that? By looking at their eyes and the way that they present themselves.
3. In one case a hiring decision came to two people. Candidate 1 was animated and made constant eye contact. Candidate 2 never looked Karen in the eye, leaned back in his chair, and crossed both his legs and arms. Candidate 1 demonstrated the communication skills that Vesper found aligned with successful performance in her organisation.
4. Vesper believes that non-verbal communication can play a signi� cant role in helping her organisation achieve its annual sales goals. Personally she has found that it has helped her “qualify” customers. For instance, even though a potential customer says Yes, crossed arms and legs emphatically state No! Understanding
this, Vesper is in a better position to probe further into the possible objections the customer has. She has found that, in many cases, she is able to steer conversation in a direction that ultimately leads to successfully closing a sale. And that is a major competitive advantage.
1. Describe the communications process that Karen Vesper uses in her dealings with job candidates and employees.
2. What problems might Karen encounter by her heavy reliance on the non-verbal communication?
3. What communication guidance would you give to Vesper and individuals like her who place an inordinately high value on body language?
Today we rely on a number of sophisticated electronic devices to carry out in-terpersonal communications. We have closed-circuit television, voice-activated com-puters, cellular phones, fax machines, pagers and e-mail. For example, e-mail, which allows us to instantaneously transmit written messages on computers, is one of today’s most widely used ways for organisational members to communicate. E-mail is fast, convenient, cheap, and you can send the same message to dozens of people at the same time. After reading through the text, try to answer the below given questions.
1. E-mail has taken on its own vocabulary and verbal intonation. Acronyms have found its ways into e-mail to create shortcuts for both the sender and the receiver. These abbreviations, which consist of the � rst letters of each word in a phrase and are used when writing an e-mail or when discussing a subject in a chat room, are called netcronyms. Below is given the list of some of them:
Netcronym De� nition Usage Example
• AAMOF As a matter of fact AAMOF, he happens to be the boss too.
• ATM At the moment I’m busy ATM.
• B4* Before B4 we begin, let’s recap yesterday’s events.
• CU* See you CU you in class tomorrow.
• DIY Do it yourself I’m not doing your job for you. DIY.
• EOD End of discussion You have no facts. EOD.
• F2F Face to face We met F2F for the � rst time in the courtroom.
• GOK God only knows GOK how hard I worked.
• HAND Have a nice day Thank you for your help. HAND.
• IMO In my opinion IMO, you should take a rest.
• LOL Laughing out loud. LOL. That was a great joke.
• MYOB Mind your own business Sop bugging me. MYOB.
• NP No problem It’s NP. I like helping others.
• OMG Oh my God OMG. That was scary.
• PAW Parents are watching Send me the � le later. PAW.
• PTMM Please tell me more. PTMM, I’m interested.
• SITD Still in the dark I’m SITD as to what you are talking about.
• THX Thanks THX for the help today.
• WBS Write back soon Please WBS.
• YW You’re welcome YW. Just glad to help.
2. However, one of the problems with communications over the Internet is the lack of in� ection and body language which, combined with user’s geographic and cultural diversity, increases the chance that humorous or sarcastic messages will be misunderstood.
3. Interestingly, emotions can also be displayed in e-mails. It is done by way of emoticons or smileys, i.e., a series of typed characters that, when turned side-ways, resemble a face and express an emotion. Some common emoticons that are often encountered on the Internet include:
• :-) or :) I’m smiling at the joke here (smiley)
• :D or :-D I’m overjoyed (a big smile)
• ;-) I’m winking and grinning at the joke here (the winkey)
• :- I’m sad about this
• :-7 I’m speaking with tongue in cheek
• :-O either a yawn of boredom or a mouth open in amazement
• :-* a kiss
• :-&; tongue-tied, used when you � nd it dif� cult to express yourself
• >:-( very angry
• &<:-( a dunce (a stupid person)
• :-p tongue sticking out, used when you want to be rude to someone
• :'-( crying
1. Is the wave of communication’s future in electronic media?
2. Search on the Internet for common communication shortcuts used by e-mail users.
3. Identify 15 acronyms and describe what they mean.
4. How should these acronyms be used? Describe any barriers these acronyms may cause a user.
5. Emoticons have been widely played in popular media, and though they are dis-dained by many writers, they often serve a useful function in on-line communica-tions. Do you agree or disagree with this statement. Defend your position.
Building your writing skills:Summary Writing
To test your accuracy and understanding and to enhance your skill in writing summaries:
1. Read the below given passages and then answer the questions which follow them to test your accuracy and understanding.
(a) A man who studies a particular subject may learn a lot about that subject. But a man who wants to be able to judge what is best for his country must study more than one subject. An expert mathematician will not necessarily be a bet-ter judge of foreign policy than a man who cultivates the soil.
Does the writer say:
(a) that no one should study just one subject?
(b) that a mathematician is no use at anything else?
(c) that a politician should study more than one subject?
(d) that cultivators are good judges of foreign policy?
(e) that cultivators are bad judges of foreign policy?
(f) that cultivators are better or worse judges of foreign policy than mathematicians?
(g) that cultivators have only studied one subject?
(h) that a man learned in only one subject is not always the best judge of what is good for his country?
(i) that an expert biologist is not necessarily a better judge of prison reform than a carpenter?
(j) that a country needs more people who have studied many subjects than experts in single subjects?
(b) With more irrigation it would be possible to grow more crops; but it is not certain that markets could be found for the food produced.
Does the writer say:
(a) that irrigation would increase the amount of food which can be produced?
(b) that this would increase the wealth of the country?
(c) that more irrigation is possible?
(d) that the only way to get more crops is by irrigation?
(e) that markets could not be found for the food produced?
(f) that markets could be found for the food produced?
(g) that if markets could be found the rest would be easy?
(h) that the country could grow more barley?
(i) that it would be foolish to grow more crops if markets could not be found for them?
2. Read the below sentence and then consider how it can be shortened. A man who travels to foreign countries will see more than a man who stays at
home, but it does not follow that he will be able to talk in an interesting way about what he has seen, nor that he will be any wiser than the man who stays at home.
3. Read the below given passage and:
(a) Divide it into six paragraphs;
(b) Summarise each paragraph in one sentence;
(c) Think of a title for the passage.
D. L. Rogers Corp., based in Bedford, Texas, owns and operates 54 fran-chises of Sonic Corp., a chain of fast-food drive-in restaurants. Jack Hartnett, Roger’s president prides himself on knowing everything about his employees – both at work and at home. If they have marital problems or credit-card debt, he wants to know. And he thinks nothing of using that information if he thinks he can help. For instance, how many executives you know who counsel employees on their sex life? When a wife of one of his managers called Hartnett to say her husband was impotent and did not know what to do, he had an answer. Hartnett met with the couple in a motel room, where he prodded the fellow to confess to an affair and beg for forgiveness. Is Hartnett’s style intrusive? Yes. But neither he nor his employees consider it a problem. “There are no secrets here,” he says. No subject is too delicate for his ears. And his defence? He is merely doing what any good friend might do. Also, he believes that the more he knows about his workers, the more he can help them stay focused at work and happy at home. Hartnett plays golf with his managers, sends them personally signed birthday cards, and drops by their homes to take them to dinner. But if you think he is “Mr. Nice Guy,” think again. He badmouths academic theories that propose that lead-ers need to persuade workers to buy in to the leader’s vision. Hartnett instructs
his employees to “do it the way we tell you to do it.” He is perfectly comfortable using the authority in his position to make rules and dish out punishments. One of Hartnett’s basic rules is “I will only tell you something once.” Break one of his rules twice and he will � re you. The managers who work for Hartnett are well compensated for meeting his demanding requirements. His unit managers and regional managers earn an average of $65,000 and $150,000, respectively. This compares with industry averages of $30,000 and $52,000. Moreover, Hartnett’s managers are eligible for upwards of a 15% bonus programme as well as an op-portunity to own 25% of the company. Does Hartnett seem inconsistent? Maybe. He believes in openness, integrity, and honesty, but he expects as much as he gives. It is not an option. So he is “your best friend,” and, at the same time, he is rigid and autocratic. He admits to purposely keeping everybody slightly off bal-ance, “so they will work harder”. Hartnett’s approach to leadership seems to be effective. Moreover, people seem to like working for him. In an industry known for high turnover, Hartnett’s managers stay about nine years, compared with an industry average of less than two.
4. Write summaries of the below given passages.
(a) It begins with a source, i.e., sender, who has a message to convey. The source initiates a message by encoding a thought, i.e., the conversion of a message into some symbolic form. Four conditions affect the encoded message: skill, attitudes, knowledge, and the social-cultural system. One’s total communica-tive success includes speaking, reading, writing, listening, and reasoning skills. Attitudes, on the other hand, affect our behaviour. We hold predisposed ideas on numerous topics, and our communications are affected by these attitudes. Furthermore, we are restricted in our communicative activity by the extent of our knowledge of the particular topic. We cannot communicate what we do not know, and should our knowledge be too extensive, it is possible that our receiver will not understand our message. And � nally, just as attitudes in� uence our be-haviour, so does our position in social-cultural system in which we exist.
The message is the actual physical product from the source: when we speak – the speech is the message; when we write – the writing is the mes-sage; and when we gesture – the movements of our arms, the expressions on our face are the message.
The channel is the medium through which the message travels. It is se-lected by the source, who must determine which channel is formal and which one is informal. Formal channels traditionally follow the authority network within the organisation, and other forms of messages, such as personal or so-cial, follow the informal channels.
The receiver is the person to whom the message is directed. However, before the message can be received, the symbols in it must be translated into a form that can be understood by the receiver. This is the decoding of the mes-sage. Just as the encoder was limited by his or her skills, attitudes, knowledge, etc., the receiver is equally restricted. Accordingly, the source must be skilful in writing or speaking; the receiver must be skilful in reading or listening, and both must be able to reason.
To ensure accuracy, the receiver should provide the sender with feed-back as a check on whether understanding has been achieved.
(b) The ability to listen is too often taken for granted because we often confuse hearing with listening. Listening requires attention, interpreting, and remem-bering sound stimuli. Effective listening is active rather than passive. In pas-sive listening, you resemble a tape recorder. You absorb and remember the words spoken. If the speaker provides you with a clear message or makes his or her delivery interesting enough to keep your attention, you will prob-ably hear most of what the speaker is trying to communicate. Active listening requires you to get inside the speaker’s mind to understand the communica-tion from his or her point of view. Active listening is a hard work. Let us take students and their instructors as an example. Students who use active listening techniques for an entire 75-minute lecture are as tired as their instructor when the lecture is over because they have put as much energy into listening as the instructor put into speaking.
In order to enhance your active listening skills you should consider de-veloping appropriate behaviours related to active listening. Let us consider the following behaviour: How do you feel when somebody does not look at you when you are speaking? If you are like most people, you are likely to interpret this behaviour as disinterest. Therefore, you should look the speaker in the eye to focus your attention and encourage the speaker.
Also, the active listener shows interest in what is being said through exhibition of af� rmative nods and appropriate facial expressions. However, in addition to showing interest, you must avoid actions that suggest that your mind is somewhere else, such as looking at your watch, shuf� ing papers, play-ing with your pencil, etc.
The critical listener analyses what he or she hears and asks questions, which behaviour provides clari� cation, ensures understanding, and so forth. Also, the effective listener uses phrases such as “What I hear you saying is ...” or “Do you mean ...?” Let the speaker complete his or her thought be-fore you try to respond and do not try to second guess where the speaker’s thoughts are going.
Further, most of us rather express our own ideas than listen to what some-one else says. Talking might be more fun and silence might be uncomfortable, but you cannot talk and listen at the same time. Finally, the effective listener makes transitions smoothly from speaker to listener and back to speaker. From a listening perspective, this means concentrating on what a speaker has to say and practicing not thinking about what you are going to say as soon as you get your chance.
(c) Prior to becoming chairman, Okuda served as Toyota’s president – the � rst non-family member in over 30 years to head the company. He also sticks out in his executive circles, because in Japan executives are supposed to be unseen. Okuda justi� es his outspoken and aggressive style as necessary to change a company that has become lethargic and overly bureaucratic.
Okuda moved ahead at Toyota by taking jobs that other employees didn’t want. For example, when the company faced dif� culties in trying to build a plant in Taiwan, many at Toyota were convinced that the project should be scrapped. Okuda thought differently. He did not want to give up. He restarted the project and led it to success. His drive and ability to overcome obstacles were central to his rise in the company.
When Okuda ascended to the presidency in 1995, Toyota was losing market share in Japan to both Mitsubishi and Honda. Okuda attributed this problem to several factors. One of them was that Toyota had been losing touch with customers in Japan for several years. For example, when engineers re-designed the Corlolla in 1991, they made it too big and too expensive for the Japanese tastes. Then four years later, they stripped out so many of the costs in the car that Corolla looked too cheap. Toyota’s burdensome bureaucracy also bothered Okuda. A decision that took � ve minutes to � lter through the company at Suzuki Motor Corporation took three weeks at Toyota.
In his � rst 18 months on the job, Okuda implemented some drastic changes. In a country in which lifetime employment is consistent with the culture, he replaced nearly one third of Toyota’s highest-ranking executives. He revamped Toyota’s long-standing promotion system based on seniority, adding performance as a factor. Some outstanding performers were moved up several levels in management at one time – something unheard of in the his-tory of company.
Okuda also worked with vehicle designers to increase the speed at which a vehicle went from concept to market. What once took 27 months was short-ened to 18. Finally, he is using the visibility of his job to address larger societal issues facing all Japanese businesses. He recently accused Japan’s Finance
Ministry of trying to destroy the auto industry by driving up the yen. And he has been an audible voice in the country, condemning the lax lending practices that force Japanese banks to write off billions of dollars in bad loans and that led, in part, to the economic crisis in the country.
Unfortunately, some of Okuda’s actions may have back� red. Speculations that he overstepped his boundary by his “blunt demands” may have offended the founding family – leading to his removal as president of the company in June 1999. However, his strategic leadership and the good he has done for the com-pany did not go unnoticed – they helped him ascend to the chairman’s job.
(d) Several years ago, Karen became interested in how body movements and mannerisms truly re� ect what an individual is saying. Continually reading in this area of study, Vesper has been able to make decisions about potential employees and potential customers by “reading” them. For example, Vesper believes that body language can give a person competitive advantage. It can make the difference when closing the sale, or in Doorway’s case, � ring new employees.
During interviews, for example, Vesper pays constant attention to the job candidate’s eye movements and mannerisms. Vesper believes that she can correctly predict if the job candidate will be an aggressive salesperson while simultaneously being personable and friendly. How does she do that? By look-ing at their eyes and the way that they present themselves.
In one case a hiring decision came to two people. Candidate 1 was ani-mated and made constant eye contact. Candidate 2 never looked Karen in the eye, leaned back in his chair, and crossed both his legs and arms. Candidate 1 demonstrated the communication skills that Vesper found aligned with suc-cessful performance in her organisation.
Vesper believes that non-verbal communication can play a signi� cant role in helping her organisation achieve its annual sales goals. Personally she has found that it has helped her “qualify” customers. For instance, even though a potential customer says Yes, crossed arms and legs emphatically state No! Understanding this, Vesper is in a better position to probe further into the pos-sible objections the customer has. She has found that, in many cases, she is able to steer conversation in a direction that ultimately leads to successfully closing a sale. And that is a major competitive advantage.
Communicat ion Module
ORAL COMMUNICATION – ORAL PRESENTATION
ORAL, SPEAKING, OR VERBAL COMMUNICATION: FACE-TO-FACE CONTACT AND NON-FACE-TO-FACE CONTACT
Any management effort must begin and end with communication, whether it be a face-to-face contact communication or a non-face-to-face contact communication. The former is one of the most frequently used ways for managers to run their business. Managers are due to know how to manage their meetings and presentations. It is a very important task and this is why speaking anxiety or delivering an effective presentation is often a problem.
WHAT IS AN EFFECTIVE PRESENTATION?
Most of us remember that � rst time in speech class when we were required to give a � ve-minute speech. It was typically a time of high anxiety – the realisation that we would have to get up in front of a group of people and talk. The nervousness, the excuses, the sweat rolling off the brow were all indicators that time was getting near. And then it was over, and many people hoped that they would never have to get up and give speech again. Comedian Jerry Seinfeld may have spoken for most of us when he said that “people prefer death over public speech”.
The ability to deliver effective presentation is an important skill for career suc-cess. Unfortunately, organisations have not spent much time helping students or em-ployees. But that is changing. Upper level courses are frequently requiring students to make group presentations.
HOW DO YOU REDUCE SPEECH ANXIETY AND ENHANCE PRESENTATION SKILLS?
Frightened about making a public speech? You are not alone. Even for the most skilled speaker “podium fright” is not unusual. However, research shows that it is one of the most needed skills for those seeking career advancement. So learn to speak pub-licly, and practice whenever you can. You will look back one day and be thankful you developed sound presentation skills.
REDUCING SPEECH ANXIETY
Your speech anxiety can be reduced by following the below given 10 steps:
• Know the room. It is a good idea to become familiar with the room in which you will speak. Arrive early and walk round the room including the speaking area.
• Know the audience. If it is possible, greet some of the audience as they arrive and chat with them. It is easier to speak to a group of friends than to a group of strangers.
• Know your material. If you are not familiar with your material or are uncom-fortable with it, your nervousness will increase. Practice your speech presenta-tion and revise it until you can present it with ease.
• Learn how to relax. You can ease tension by doing exercise. Sit comfortably with your back straight. Breathe in slowly, hold your breath for 4 to 5 seconds, and then slowly exhale. To relax your facial muscles, open your mouth and eyes wide, and then close them tightly.
• Visualise yourself speaking. Imagine yourself walking con� dently to the stage as the audience applauds. Imagine yourself speaking, your voice loud, clear and assured. When you visualise yourself as successful, you will be successful.
• Realise that people want you to succeed. All audiences want speakers to be interesting, stimulating, informative and entertaining. They want you to suc-ceed – not fail.
• Do not apologise for being nervous. Most of the time your nervousness does not show at all. If you do not say anything about it, nobody will notice. If you mention and apologise for your nervousness, you will only be calling attention to it.
• Concentrate on your message. Not the audience!
• Turn nervousness into positive energy. The same nervous energy that causes fright can be transformed into enthusiasm.
• Gain experience. Experience brings con� dence, which is the key to effec-tive speaking. Most beginning speakers � nd their anxieties decrease after each speech they give.
ENHANCING PRESENTATION SKILLS
Your presentation skills can be enhanced by following some of the below given suggestions.
• Prepare for the presentation. Singer Ethel Merman was once asked, just before a major performance, if she was nervous. Her answer was: “Why should I be nervous? I know what I am going to do! The audience should be nervous. They do not know what is going to happen.”
What the Merman quote tells us is that when preparing for a presentation, you must identify the key issues you want to express. In essence, why are you making the presentation? You also need to know who will be in your audience so you can anticipate their needs and speak their language. The better you prepare and anticipate questions that may be thrown at you, the more comfortable you will be in the presentation.
• Make your opening comments. The � rst few minutes of a presentation should be spent welcoming your audience, describing what you know about the issues your audience faces, citing your experience or credentials, and identifying your presentation agenda. If you want your audience to do something at the end of your presentation – like approve your budget request, buy something, or so forth – tell them in your opening comments what you want them to do. By telling them ahead of time what you would like at the end of your presentation, you frame the presentation and assist in having the audience actively listen to you.
• Make your points. This is the heart of your presentation. It is where you will discuss the pertinent elements of presentation. Here you justify why you should get funds or why your particular product or service should be purchased. In the discussion, you need to describe why your ideas are important and how they will bene� t your listeners. Any supporting data you have should be presented at that time.
• End the presentation. The end of a presentation includes nothing new. Rather, in the conclusion, you restate what you know about the issues facing your audi-ence and what you recommended. If you had a request for action in the introduc-tory part, you now come back to the action and seek closure on it. If the presenta-tion is simply an information-sharing experience, there may not be a requested action of the audience.
• Answer questions. In many cases, questions will be posed at the end of your presentation. However, questions may come at any point of the presentation and may even be invited by you at the beginning. Regardless of where questions are asked, there a few simple rules to follow. First, clarify the question. This requires you to actively listen to the question. If you are not sure what the question was, ask for clari� cation. Do not assume you know what the questioner is asking. When you understand the question, answer it. Then go back to the questioner and make sure your response answered the question. If it did not, you would probably get another question. Handle it the same way.
WHAT ABOUT DELIVERY ISSUES?
The importance of delivering an effective presentation is open to debate. One side of the debate focuses on having a polished presentation, � ashy multimedia sup-port, and speaking without the irritating mannerisms that distract from a presentation. There is no doubt that overindulgence in any of these can decrease the effectiveness of a presentation.
But do not make the assumption that your speech has to be perfect. The other side of the debate promotes being natural in your presentation but ensuring that you address what is important. For example, the following passage appeared in an issue of Forbes magazine:
A Canadian judge threw a case out of court because a witness was too boring. The case was originally reported in the Forensic Accountant Newsletter. The judge said
the man was “beyond doubt the dullest witness I’ve ever had in court ... [he] speaks in a monotonous voice ... and uses language so drab that even the court reporter cannot stay conscious.” The judge said, “I’ve had it. Three solid days of this steady drone is enough. I cannot face the prospect of another 14 indictments. It is probably unethical, but I don’t care.”
What is the message here? If your audience is interested in what you have to say, they will listen. They will overlook a casual “um” or “ah” and disregard your hand ges-tures. So put your effort in presenting the material and meeting the audience’s needs. Any quirks in your mannerisms or your delivery will not matter greatly. But your too formal, digni� ed and sometimes rhetorical speech will.
EVERYDAY ENGLISH IN YOUR DELIVERY
The conversation of educated Englishmen is simple and straightforward. It avoids long or high-sounding expressions. In conversation, they often use striking compari-sons to give � avour and piquancy to their intercourse, the comparisons being expressed in short pithy phrases. When the words like or as are used, they are called similies.
Take care not to use any lengthy comparisons in your presentation as they would be, as a rule, out of place. Use words and phrases which by their vividness arrest attention.
• Common comparisons. Short forms in expression and slight exaggerations in meaning, which would not be admissible in writing, are allowable in your presen-tation without risk of misunderstanding. These are called idiomatic common com-parisons, many of which would hardly be met with in high-class essays, but may generally be found in such writings as reproduce conversation or presentation.
[Take the following sentence as an example: “There were � fty-seven of us sitting in a very small meeting room, like sardines in a tin.” Why mention sardines? Well, we have all seen how very tightly sardines are packed together in a tin, and this comparison makes us realise how close together the people were sitting. Of course, it is an exag-geration, for if the people had been packed as tightly as sardines they would have been unable to sit at all. Still, this is a fairly common comparison which serves its purpose.]
The following are instances: as cool as a cucumber (calm and relaxed), as � t as a � ddle/a � ea (to be very healthy and strong), as clear as a day (very easy to understand), as clear as mud (very dif� cult to understand), as hungry
as a hunter (famished); as large as life (in person); as mad as a March hare (extremely mad), as regular as clockwork (never late), etc.
Notice how often they depend on alliteration: as cool as a cucumber, as hun-gry as a hunter, as large as life, etc.
To this must be added certain common comparisons which do not take the shape of the aforementioned. For instance, a lady with a sweet voice is said to sing like a nightingale, or a thrush; a person is said to be like a � sh out of water when he or she is out of his/her element and therefore ill at ease; a person is said to sleep like a top/log when he or she sleeps soundly; a person is said to take like a duck to water when he or she adapts very readily, etc.
And there are several other expressions used in such common comparisons: to spread like a wild� re, to follow like a shadow, as merry/happy as the day is long, etc.
• Conversation-building expressions. There are some common expressions that help to modify what you are saying. The following are instances: to take the conversation back to an earlier point - As I was saying, I haven’t seen such a good project for years; As I/you say, we’ll have to work hard to win this $3 million worth contract; Talking of investing, whatever happened with their promises; If you ask me, he’s heading for trouble; That reminds me, I haven’t asked him yet; Come to think about it, did he give you his phone number? I think he may have forgotten, etc.
• Discourse markers in speech. These are words and phrases which organise, comment on or in some way frame what you are saying. An example from spoken language is well: So you think it will turn into a pro� table business? Well, the Browns didn’t lose any money ... Well here shows that the speaker is aware he or she is changing the direction of the conversation. Another example is how the superiors use words like Right/OK: Okay, he’s in charge of the accounting de-partment. Okay is used as a way of showing that you are going to start something new or take action.
Here are some common markers which organise the different stages of a con-versation, which, inter alia, include now, � ne/great, good, etc. Another example is how one, who is in control of the conversation, says as follows: Now then, I want you to look at this plan.
Some markers modify or comment on what is being said: I found it quite quickly, mind you, it wasn’t easy. Mind you is an expression used to qualify the previous statement. Let me see, listen/look, hang on/hold on, you see, you know, sort of, anyway, still, at the end of the day, etc., are also included in the list.
NON-FACE-TO-FACE CONTACT COMMUNICATION
The most ef� cient and powerful tool in non-face-to-face contact is telephone. Managers should be careful when using telephone because if things start out badly they may never progress in the future. This is why telephone manners are very important for a professional image of a manager.
There are few tips that should be obeyed when using telephone:
• Smile while you are on the telephone – your customer will “hear” it.
• Answer the telephone pleasantly and maintain a pleasant demeanour while on the phone.
• Never answer the phone with food in your mouth or try to eat quietly while talking.
• Return all phone calls within 48 hours.
• When you place a call that you know might be lengthy, ask if it is a good time to talk.
• Know what you want to say before making an important call.
• Do not read from the script during the call. Try to memorise it.
• Make a telephone appointment when you want to have a longer (15 or more min-utes) conversation with someone who is normally busy.
• Do not do things, such as open mail, flip through the newspaper or do paper-work while on the telephone. The person you are talking with will know you are distracted.
• Listen and respond to the person on the other end of the line.
• When you are doing a lot of telephone work, energise yourself after every hour.
UNIT 3 COMMUNICATION AND INTERPERSONAL
SKILLS: EMPOWERMENT SKILLS,
CONFLICT MANAGEMENT, AND
DEVELOPING INTERPERSONAL SKILLS
Would it surprise you to know that more managers are probably � red because of poor interpersonal skills than for a lack of technical ability? A comprehensive study of people who hire students with undergraduate business degrees under the assump-tion that they will � ll future management vacancies shows the importance of interper-sonal skills. The study found that the areas in which the graduates were most de� cient were leadership and interpersonal skills. Because managers ultimately get things done through others, competences in leadership, management, and other interpersonal skills are prerequisites to managerial effectiveness. We shall focus on three interpersonal skills that every manager needs.
Today managers are increasingly leading by empowering their employees. Millions of employees and teams of employees are making decisions that directly affect their work. The increased use of empowerment is being driven by two forces: First is the need for quick decisions by those who are most knowledgeable about the issues, which requires moving decisions to lower levels. Second is the reality that the downsizing of organisations during the past two decades left many managers with considerably larger spans of control than they had previously. In order to cope with the demands of an increased load, managers had to empower their employees. To be effective managers need to understand the value of delegating and knowing how to do that.
DELEGATION – DON’T MANAGERS ABDICATE THEIR RESPONSIBILITY WHEN THEY DELEGATE?
Delegation is the assignment of authority to another person to carry out speci� c ac-tivity. It should not be confused with participation. In participative decision making there is sharing of authority. With delegation, employees make decisions on their own.
When done properly, delegation is not abdication. If you as a manager dump tasks on an employee without clarifying the exact job to be done, the range of the employee’s discretion, the expected level of performance, the time frame in which the tasks are to be completed, and similar concerns, you are abdicating responsibility and inviting trouble. Do not fall into the trap, however, of assuming that, to avoid the appearance of abdicating, you should minimise delegation. Unfortunately, that is how many new and inexperienced managers interpret the situation. Lacking con� dence in their employees or fearful that they will be criticised for their employees’ mistakes, these managers try to do everything themselves.
Therefore, behaviours related to effective delegating are clarifying the assign-ment, specifying employees’ range of discretion, allowing employees to participate, informing other that delegation has occurred, and establishing feedback channels.
CONFLICT MANAGEMENT AND ITS IMPORTANCE
When we use the term con� ict, we are referring to perceived incompatible dif-ferences resulting in some interference or opposition. Whether the differences are real is irrelevant. If people perceive differences, then a con� ict state exists. The ability to manage con� ict is undoubtedly one of the most important skills a manager needs to possess. A study of middle- and top-level managers of the American Management Association reveals that the average manager spends approximately 20% of his or her time dealing with con� ict.
WHAT ARE THE CONFLICT-HANDLING STYLES?
The steps to be followed in analysing and resolving con� ict situations begin by � nding out your underlying con� ict-handling styles, meaning that not every con� ict justi� es your attention. Some are not worth the effort. Some are outside realm of your in� uence. Then select only con� icts that are worth the effort and that can be man-aged. Third, evaluate the con� ict players. Fourth, assess the source of con� ict. Finally, choose the con� ict-resolution option that best re� ects your style and situation.
WHAT ABOUT THE OTHER SIDE OF CONFLICT MANAGEMENT – SITUATIONS THAT REQUIRE MANAGERS TO STIMULATE CONFLICTS?
We know more about resolving con� ict than about stimulating it. For almost all of us the term con� ict has a negative connotation, and the idea of purposely creating con� ict seems to be the antithesis of good management. However, a manager might want to stimulate con� ict if his or her unit suffers from apathy, stagnation, a lack of new ideas, or unresponsiveness to change. A manager can stimulate con� ict by chang-ing the organisation’s culture through the use of communications, by bringing in out-siders, by restructuring the organisation, or by appointing a devil’s advocate, i.e., a person who purposely presents arguments that run counter to those proposed by the majority or against current practices.
WHAT ARE NEGOTIATIONS SKILLS?
We know that lawyers spend a signi� cant amount of time on their jobs negotiat-ing. But so, too, do managers. They have to negotiate salaries for incoming employees, make contracts or close orders with others outside their organisations, resolve con� icts with their employees, etc. For our purposes we will de� ne negotiation as a process of in which two or more parties who have different preferences must make a joint decision and come to an agreement.
HOW DO BARGAINING STRATEGIES DIFFER?
There are two general approaches to negotiation – distributive bargaining and integrative bargaining.
For instance: you see a used car advertised for sale in the newspaper. It appears to be just what you have been looking for. You go out to see the car. It is great and you want it. The owner tells you the asking price. You do no not want to pay that much. The two of you then negotiate the price. The negotiating process you are engaging in is called distributive bargaining. Every dollar you can get the seller to cut from the price of the used car is a dollar you save. Conversely, every dollar more he or she can get from you comes at your expense. Thus the essence of distributive bargaining is negotiating over who gets what share of a � xed pie. In other words, distributive bargaining refers to negotiation in which any gain made by one party involves a loss to the other.
When engaged in distributive bargaining, you should try to get your opponent to agree to your speci� c target point or to get to it as close as possible. The sales-credit ne-gotiation is an example of integrative bargaining. A sales representative for a women’s sportswear manufacturer has just closed a $25,000 order from an independent cloth-ing retailer. The sales rep calls in the order to her � rm’s credit department. She is told that the � rm cannot approve credit to this customer because of a past slow-pay record. The next day, the sales rep and the � rm’s credit manager meet to discuss the problem. The sales rep does not want to lose the business. Neither does the credit manager, but he also does not want to get stuck with an uncollectible debt. The two openly review their options. After considerable discussion, they agree on a solution that meets both their needs. The credit manager will approve the sale, the clothing store’s owner will provide a bank guarantee that will assure payment if the bill is not paid within 60 days. Therefore, integrative bargaining refers to negotiation in which there is at least one settlement that involves no loss to either party.
HOW DO YOU DEVELOP EFFECTIVE NEGOTIATION SKILLS?
The essence of effective negotiation can be summarised in the following six rec-ommendations: research you opponent; begin with a positive overture; address prob-lems, not personalities; pay little attention to initial offers; emphasize win-win solu-tions; and be open to accepting third party solutions.
1. READING FOR COMPREHENSION
Answer the below given questions.1. Why are effective interpersonal skills so important to manager’s success?2. The increased use of empowerment is being driven by two forces. Identify and
explain them.3. De� ne delegation and identify behaviours related to effective delegating.4. What is con� ict?5. Describe the steps in analysing and resolving con� icts.6. Explain why a manager might stimulate a con� ict?7. Contrast distributive and integrative bargaining.8. How do you develop effective negotiation skills?
2. MATCHING EXERCISES
(a) Match the terms referring to contingency factors in delegation on the left-hand side with their explanations on the right-hand side.1. The size of the organisation (a) If management has con� dence and trust in employees,
the culture will support a greater degree of delegation. However, if top management does not have con� dence in the abilities of lower-level managers, it will delegate au-thority only when absolutely necessary.
2. The importance of the duty (b) The more complex the task, the more dif� cult it is for top management to possess current and suf� cient technical in-formation to make decisions. Such tasks should be delegat-ed to people who have the necessary technical knowledge.
3. Task complexity (c) Delegation requires employees with skills, abilities, and motivation to accept authority and act on it.
4. Organisational culture (d) The more important a duty or decision, the less likely it is to be delegated. For instance, a department head may be delegated authority to make expenditures up to $7,500 and division heads and vice presidents up to $50,000 and $125,000, respectively.
5. Qualities of employees (e) The larger the organisation, the more dependent top man-agers are on the lower-level managers. Therefore, manag-ers in large organisations resort to increased delegation.
(b) Match the strategies used in con� ict management on the left-hand side with the situations in which and when they work best on the right-hand side.1. Avoidance (a) The issue under dispute is not that important to you (as to others) or
when you want to build up credits for later issues.2. Accommodation (b) Con� icting parties are about equal in power, when it is desirable to
achieve a temporary solution to a complex issue, or when time pres-sures demand an expedient solution.
3. Forcing (c) Time pressures are minimal, when all parties seriously want a win-win solution, and when the issue is too important to be compromised.
4. Compromise (d) Con� ict is trivial, when emotions are running high and time is needed to cool them down.
5. Collaboration (e) You need a quick resolution on important issues that require unpopular actions to be taken and when commitment by others to your solution is not critical.
Fill in the blank with the appropriate article or leave it blank to indicate that no article is necessary in How do we delegate effectively?
Assuming that delegation is in order, how do you delegate? First of all you have
to clarify …… assignments by determining what is to be delegated and to whom. You
need to identify …… person who is most capable of doing …… task and then deter-
mine whether he or she has …… time and motivation to do …… job.
Second, you have to specify …… employee’s range of discretion. In other words,
you are delegating …… authority to act but not unlimited authority. You are delegating
…… authority to act on certain issues within certain parameters.
Third, one of …… best ways to decide how much authority will be necessary is
to allow …… employees who will be held accountable for …… tasks to participate in
that decision. However, allowing such people too much participation in deciding what
tasks they should take on and how much authority they must have to complete those
tasks can undermine …… effectiveness of …… delegation process.
Fourth, delegation should not take place in …… vacuum. It means that not only
…… people outside …… organisation, but also the people inside …… organisation
need to know that what has been delegated and how much authority has been granted.
…… failure to inform others makes con� ict likely and decreases …… chances that
your employees will be able to accomplish …… delegated act ef� ciently.
And, � fth, there is always …… possibility that …… employees misuse ……
discretion they have been given if …… feedback channels are absent.
Supply the missing prepositions to complete the passage Three views of con� ict.
……… the years, three differing views have evolved ……… con� ict ……… or-
ganisations. The early approach assumed that con� ict was bad and would always have
a negative impact ……… an organisation. Con� ict became synonymous ……… vio-
lence, destruction and irrationality. Management had a responsibility to rid the organi-
sation ……… con� ict. The human relations position argued that con� ict was a natural
and inevitable occurrence ……… any organisation. It need not be evil, but, rather, has
the potential to be a positive force ……… contributing ……… an organisation’s per-
formance. The third and most recent perspective proposes encourages con� ict ………
the grounds that a harmonious, peaceful, tranquil, and cooperative organisation is prone
to become static, apathetic, and non-responsive ……… change and innovation.
5. BUSINESS SKILLS: - Are you a good negotiator?
Complete the below given questionnaire, then discuss the scores with your part-ner and suggest areas for improvement.
1 = strongly disagree 10 = strongly agree
1. I can stay cool when I am in the middle of a con� ict.
2. I am willing to compromise when I have to.
3. I realise that others have needs.
4. I am very patient.
5. I can identify the most important issues very quickly.
6. If necessary, I can remain calm when I am being personally attacked.
7. I am willing to research and analyse issues carefully.
8. I believe in and work towards situations where both sides can win.
9. I can deal with stressful situations.
10. I am a good listener.
If your total score was 80 or above, you are aware of most of the important issues in negotiation and have the makings of a good negotiator. If you scored between 60 and 79, you will make a good negotiator but there are some areas that you need to improve. If your score was below 60, you may want to rethink some of your attitudes about negotiation and get some additional training.
REVIEW AND DISCUSSION QUESTIONS
Being a successful manager depends in part on knowing how to negotiate. For our purposes let us consider George Cohon who had to negotiate to bring his company into a new area. George Cohon, a Canadian, made history when he opened the � rst McDonald’s restaurant near Moscow’s Red Square in the former Soviet Union, but it took him nearly 14 years to pull off his achievement. After reading through the text, try to answer the below given questions.
1. Getting the McDonald’s operating took many years of battling red tape and cul-tural as well as economic obstacles. Discussions with individuals at several lev-els of the Soviet government at times appeared to be going in circles. When an agreement � nally appeared within reach, the negotiations became even more intense. The Soviet delegates, for instance, � atly demanded his consent on such issues as rents for land and the percentage for sales that were to be paid Cohon’s Canadian company. Although Cohon found negotiations in a foreign language to be dif� cult, it was nothing compared to dealing with a totalitarian government as a prospective partner. As Cohon state, “this was a communication challenge straight from hell.”
2. Once the agreement had been reached, a new set of obstacles had to be overcome. Suppliers had to be found, and, at the time, the agricultural industry in the former Soviet Union was dismal, marred by constant crop failures and poor manage-ment. Moreover, staff had to be hired, trained, introduced to Mc Donald’s unique corporate culture focusing on quality, cleanliness, and consistency.
3. Could this culture be adapted to Russian workers? As Cohon stated, “When we began our training, most of our crew and our Soviet managers had never actu-ally tasted a hamburger, much less made or served one.” So to help facilitate this training, Soviet managers were � own to Toronto and schooled at the Canadian Institute of Hamburgerology. Taking the information they learned in Toronto, the Soviet managers began training employees on site.
4. On the � rst day of operation, Moscow Mc Donald’s served over 30,000 people. Since then, the chain has expanded throughout Russia. It was a major accom-plishment that George Cohon pulled off. He managed to create a reliable system of suppliers, overcome government bureaucracy, and train employees to function at the high level demanded by McDonald’s. And he did all of this in a country that was going through one of its greatest periods of upheaval. This was a major vic-tory for Cohon and demonstrated that effective communication is fundamentally linked to successful performance.
1. George Cohon pulled off his achievement through his effective negotiation skills. What is Cohon’s trick? Explain.
2. How do you develop effective negotiation skills?
3. Assume that you have found an apartment that you wanted to rent and the ad had said: “$750/month, negotiable.” What could you do to improve the likelihood that you would negotiate the lowest possible price?
4. Give your opinion on the following statement: “Here’s the rule for bargains: ‘Do other men, for they would do you.’ That’s the true business precept.”
Building your speaking skills:
1. Develop a 10-minute response to the following statement: “Not all leaders are managers, nor are all managers leaders.” Present both sides of the argument and include supporting data. Conclude your presentation by defending and support-ing one of the two arguments presented.
2. Are companies run by bosses or leaders? After reading the below given text (i.e., a poster on a wall of a government of� ce in Harare) give your opinion on whether a company should be run by a boss or a leader? Time allowed is 15 minutes.
The Boss Drives His MenThe Leader Inspires ThemThe Boss Depends on AuthorityThe Leader depends On GoodwillThe Boss Evokes FearThe Leader Radiates LoveThe Boss Says “I”The Leader Says “We”The Boss Shows Who Is WrongThe Leader Shows What Is WrongThe Boss Knows How It Is DoneThe Leader Knows How To Do ItThe Boss Demands RespectThe Leader Commands RespectSo Be a LeaderNot a Boss
3. In a 10-minute speech contrast the three types of trust and relate them to your experience in personal relationships.
4. How much authority should a manager delegate? Should he or she keep authority centralised, delegating only the minimal amount to complete the delegated duties? After considering the mentioned questions prepare a 10-minute presentation.
5. “Ineffective communication is the fault of the sender/receiver.” Build a case that presents both sides of this argument. Provide speci� c examples. Time allowed for your speech is 10 minutes.
6. Do some research on male versus female communication styles. Do they commu-nicate differently? If so, what are the implications of your � ndings for managers? Give a speech on this topic in not more than 15 minutes.
7. A � nancial analyst is an expert on a speci� c business sector, whose opinion is used by investors to decide whether to invest in a particular business at a given time. Give a short presentation (maximum 10 minutes) of a company’s results,
based on the � nancial highlights section of an annual report. The objective of the presentation is both to report on the company’s performance in its sector and to explain the different terms used.
8. After reading the problems below, give your opinion on what you would do in each situation. Time allowed for your presentation is 10 minutes each.
(a) You are a new manager. Your predecessor, who was very popular and who is still with your � rm, concealed from your team how far behind they are on their goals this quarter. As a result, your team members are looking forward to a promised day off that they are not entitled to and will not be getting. It is your job to tell them the bad news. How will you do it?
(b) You have spent the last month preparing a report for the head of� ce. You have just learned that your boss has taken all the credit for the work.
(c) Your boss gave you a highly con� dential report to read over the weekend. Now you cannot � nd it and you think you may have left it on the train.
(d) You have been sent to negotiate an important new contract for your � rm. During the negotiations your counterpart makes it clear that he expects a personal cash contribution (a bribe) from you if your company is to win the contract.
(e) Two years ago your company signed an agreement to become the exclu-sive importer of kitchen equipment from Swedish supplier. You have just received con� rmation that another company is selling the same product at a lower price.
UNIT 4 BUSINESS ETHICS
THE NEW CONCERN OF BUSINESS ETHICS
Business ethics is no longer concerned solely with the criticism of business and business practices. Pro� ts are no longer condemned along with “avarice” in moralizing sermons, and corporations are no longer envisioned as faceless, soulless, amoral mono-liths. The new concern is just how the pro� t should be thought of in the larger context of productivity and social responsibility and how corporations can best serve both their own employees and the surrounding society. Business ethics has evolved from a wholly critical attack on capitalism and “the pro� t motive” to a more productive and construc-tive examination of the underlying rules and practices of business.
THE CORPORATION IN SOCIETY: THE IDEA OF SOCIAL RESPONSIBILITY
The central concept of much of recent business ethics is the idea of social re-sponsibility. It is also a concept that has irritated many traditional free market enthu-siasts and prompted a number of bad arguments, amongst which the most famous is the diatribe by Nobel-winning economist Milton Friedman entitled “The social re-sponsibility of business is to increase its pro� ts.” Friedman’s argument is, in essence, that managers of a corporation are employees of the stockholders and, as such, have a responsibility to maximise their pro� ts. Giving money to charity or other social causes (except as public relations aimed at increasing business) and getting involved in com-munity projects (which do not increase the company’s business) is akin to stealing from the stockholders.
The overall rejoinder to Friedmanesque arguments of this sort that has recently become popular in business ethics can be summarised in a modest pun: instead of the stockholder, the bene� ciaries of corporate social responsibilities are stakeholders, of whom the stockholders are but a single sub-class. The stakeholders in a company in-clude the employees, the consumers and the suppliers as well as the surrounding com-munity and the society at large.
OBLIGATIONS TO STAKEHOLDERS: CONSUMERS AND COMMUNITY
The managers of corporations have obligations to their shareholders, but they have obligations to other stakeholders as well. In particular, they have obligations to consumers and the surrounding community as well as to their employees. The purpose of the corporation is, after all, to serve the public, both by way of providing desired and desirable products and services and by not harming the community and its citizens. For example, a corporation is hardly serving its purpose if it is polluting the air or the water supply, if it is destroying the natural beauty of the environment or threatening the � nancial or social well-being of the local citizens. To consumers, the corporation has the obligation to provide quality products and services. It has the obligation to make sure that these are safe, through research and through appropriate instructions and, where appropriate, warnings against possible misuse. However, before 1960s, few people asked if large corporations were irresponsible because they discriminated against women and minorities as shown by the obvious absence of female and minority managers at the time, or if a company like Dow Corning was ignoring its social respon-sibility by marketing breast implants when data indicated that leaking silicone could be a health hazard, or if tobacco companies were ignoring health risks associated with nicotine and its addictive properties, etc. Even today, good arguments can be made for both sides of the social responsibility issue.
Arguments aside, times have changed. Managers are now regularly confronted with decisions that have a dimension of social responsibility; philanthropy, pricing, employee relations, resource conservation, product quality, etc., in countries with op-pressive governments are some of the more obvious factors. They are addressing these areas by re-assessing forms of packaging, recyclability of products, environmental safety practices, and the like. The idea of being environmentally friendly or “green” will have an effect on all aspects of business – from the conception of products and services to use and subsequent disposal by customers. In a globally competitive world, few organisations can afford the bad press or potential rami� cations of being seen as socially irresponsible.
WHAT DO WE MEAN, THEREFORE, WHEN WE TALK ABOUT SOCIAL RESPONSIBILITY?
Social responsibility is a � rm’s obligation, beyond that required by the law and economics, to pursue long-term goals that are good for society. Note that this de� nition
assumes that business obeys the law and pursues economic interests. It is taken as a given that all business � rms - those that are socially responsible and those that are not – will obey all laws that society imposes.
Social responsibility also adds an ethical imperative to do those things that make society better and not to do those that could make it worse. Social responsibil-ity requires business to determine what is right or wrong and thus seek fundamental ethical truths.
HOW DO MANAGERS BECOME MORE SOCIALLY RESPONSIBLE?
Ethics commonly refers to a set of rules or principles that de� ne right and wrong conduct. Understanding ethics may be dif� cult, depending on the view that one holds of the topic. Regardless of one’s own view, whether a manager acts ethically or unethi-cally will depend on several factors. These factors include the individual’s morality, values, personality, and experiences; the organisation’s culture; and the issue in ques-tion. People who lack a strong moral sense are much less likely to do the wrong things if they are constrained by rules, policies, job descriptions, or strong cultural norms that discourage such behaviours.
For example, someone in your class has stolen the � nal exam and is selling a copy for $50. You need to do well on this exam or risk failing the course. You ex-pect some classmates have bought copies. Do you buy a copy because you fear that without it you will be disadvantaged, or do you refuse to buy a copy and try to do your best?
The example of the � nal exam illustrates how ambiguity about what is ethical can be a problem for managers. Codes of ethics are an increasingly popular tool for reducing that ambiguity. A code of ethics is a formal document that states an organisation’s primary values and the ethical rules it expects managers and opera-tive employees to follow. Ideally, these codes should be speci� c enough to guide organisational personnel in what they are supposed to do yet loose enough to allow for freedom of judgement.
In isolation, ethics codes are not likely to be much more than window dressing. Their effectiveness depends heavily on whether management supports them and how employees who break the code are treated. If management considers them to be impor-tant, regularly con� rms its content, and publicly reprimand rule breakers, ethics codes can supply a strong foundation for effective corporate ethics programme.
1. READING FOR COMPREHENSION
Answer the below given questions.
1. State the new concern of business ethics.
2. Do you agree or disagree with the diatribe by Nobel-winning economist Milton Friedman entitled “The social responsibility of business is to increase its pro� ts.” Discuss this issue.
3. Differentiate stockholders from stakeholders.
4. Identify the purpose of the corporation. Illustrate it with appropriate examples.
4. De� ne social responsibility.
5. How do managers become more socially responsible?
2. MATCHING EXERCISES
Match the three levels of business or business ethics on the left-hand side with their explanations on the right-hand side.
1. Micro-ethics (a) The institutional or cultural rules of commerce for an entire society – “the business world.”
2. Macro-ethics (b) It concerns the basic unit of commerce today – the corpora-tion.
3. Molar-ethics (c) The rules for fair exchange between two individuals.
Supply the missing prepositions to complete the below given text.
Manufacturers are and should be liable …… dangerous effects and predict-
able abuse …… their products, e.g., the likelihood …… a young child swallowing a
small readily detachable piece …… a toy made specially …… that age group, and it
is now suggested …… some consumer advocate group that such liability should not
be excessively quali� ed …… the excuse that “these were mature adults and knew or
should have known the risks …… what they were doing.” This last demand, how-
ever, points …… a number …… currently problematic concerns, notably, the con-
sumer and the question …… reasonable limits …… liability …… the part …… the
producer. …… what extent should the manufacturer take precautions …… clearly
idiotic uses of their products? What restrictions should there be …… manufacturers
who sell and distribute provably dangerous products, e.g., cigarettes and � rearms
– even when there is considerable consumer demand …… such items – and should
the producer be liable …… what is clearly a foreseeable risk …… the part …… the
consumer? Indeed, it is increasingly being asked whether and …… what extent we
should reinstate that now ancient warning, “Buyer beware,” to counteract the runa-
way trend …… consumer irresponsibility and unquali� ed corporate liability.
Fill in the blank spaces in the text with correct verb forms.
We sometimes ………… (HEAR) employees (and even high level execs)
……………… (COMPLAIN) that their “corporate values con� ict with their per-
sonal values.” What this usually ……………… (MEAN), I suggest, ………… (BE)
that certain demands that …………………… (MAKE) by their companies
………… (BE) unethical or immoral. What most people …………………… (CALL)
their “personal values” are in fact the deepest and broadest values of their culture. And
it ………… (BE) in this context that we …………………… (UNDERSTAND) that
now-familiar tragic � gure of contemporary corporate life – the “whistle-blower.” The
whistle-blower ………… (BE) not just some eccentric that cannot “� t” into the or-
ganisation he or she …………… (THREATEN) with disclosure. The whistle-blower
……………… (RECOGNISE) that he or she cannot tolerate the violation of mo-
rality or the public trust and ……………… (FEEL) obliged to do something about
it. The biographies of most whistle-blowers ……………… (NOT/MAKE) happy
reading, but their very existence and occasional success ……………… (BE) ample
testimony to the interlocking obligations of the corporation, the individual and soci-
ety. Indeed, perhaps the most singularly important result of the emergence of busi-
ness ethics in the public forum ……………… (BE) to highlight such individuals
and ……………… (GIVE) renewed respectability to what their employers wrongly
……………… (PERCEIVE) as nothing but a breach of loyalty.
REVIEW AND DISCUSSION QUESTIONS
Ethical Dilemma In Management
Making ethical choices can often be dif� cult for managers. Obeying the law is mandatory, but acting ethically goes beyond mere compliance with the law. It means acting responsibly in those “grey” areas, where right and wrong are not de-� ned. After reading through the texts, try to answer the questions relating to ethical dilemmas in management.
I Intentional Distortion of Information
1. Incident 1: You have just seen your division’s sales report for last month. Sales are down considerably. Your boss, who works 2,000 miles away in another city, is unlikely to see last month’s sales � gures. You are optimistic that sales will pick up this month and next so that your overall quarterly numbers will be right on target. You also know that your boss is the type of person who hates to hear bad news. You are having a phone conversation today with your boss. He happens to ask in passing, how last month’s sales went. What do you tell him?
2. Incident 2: An employee asks you about a rumour she has heard that your de-partment and all its employees will be transferred from New York to Baltimore. You know the rumour to be true, but you would rather not let the information out just yet. You are fearful that it could hurt department morale and lead to prema-ture resignations. What do you say to your employees?
3. These two incidents illustrate dilemmas that managers face related to evading the truth, distorting facts, or lying to others. And here is something else that makes the situation even more problematic: It might not always be in a manag-er’s best interest or those of his or her unit to provide full and complete informa-tion. Keeping communications fuzzy can cut down on questions, permit faster decision making, minimise objections, reduce opposition, make it easier to deny one’s earlier statements, preserve the freedom to change one’s mind, permit one to say no diplomatically, help to avoid confrontation and anxiety, and provide other bene� ts to the manager.Dilemma: Is it unethical to purposely distort communications to get a favourable
outcome? What about “little white lies” that really do not hurt anybody? Are these ethi-cal? What guidelines could you suggest for managers who want guidance in deciding whether distorting information is ethical or unethical?
II When Is Competitive Intelligence Unethical?
Knowing as much as you can about your competition is simply good business sense, but how far can you go to obtain that information. It is clear that over the past few years, competitive intelligence activities have increased – but sometimes these same well-intended actions have crossed the line to corporate spying. For example, when a company pays for information that was obtained by someone who hacked a company’s computer system, receiving that data, is illegal. By the late 1990s, nearly 1,500 U.S. companies were victims of some type of corporate espionage, resulting in more than $300 billion in losses for these organisations.
Most individuals understand the difference between what is legal and what is not. That is not the issue. Although some competitive intelligence activities may be legal, they may not be ethical. Consider the following scenario:
1. You obtain copies of lawsuits and civil cases that have been � led against a com-petitor. Although the information is public, you use some of the surprising � nd-ings against your competitor in bidding for a job.
2. You pretend to be a journalist who is writing a story about the company. You call company of� cials and seek responses to some speci� c questions regarding the
company’s plans for the future. You use this information in designing a strategy to compete better with this company.
3. You apply for a job at one of your competitors. During the interview, you ask spe-ci� c questions about the company and its directions. You report what you have learned back to your employer.
4. You dig through a competitor’s trash and � nd some sensitive correspondence about a new product release. You use this information to launch your competing product before your competitor’s.
5. You purchase some stock in your competitor’s company in order to get the annual report and other company information that is sent out. You use this information to your advantage in developing your marketing plan.
Dilemma: Which if any of these events are unethical? Defend your position. What ethical guidelines would you suggest for competitive intelligence activities? Explain.
III Is Sharing Software Okay?
1. Duplicating software programmes for friends and co-workers has become a widespread practice. It has been estimated that nearly $250 billion worldwide is lost each year due to the theft of intellectual property – including software piracy. It affects all software companies such as Microsoft, Adobe Lotus, etc. Yet almost all of these duplicated programmes are protected by international copy-rights law, and being caught for pirating software subjects the offender to � nes up to $100,000 and � ve years in jail. How, then, has making illegal copies become such a common and accepted practice in people’s homes as well as at their places of employment?
2. Part of the answer revolves around the issue that software is not like other intel-lectual property. In other words, software is different from a book in that anyone can easily copy it, and an exact replication is achievable. Cultural differences are also a factor. A lot of piracy occurs in places such as Brazil, Malaysia, Hong Kong, Pakistan, Mexico and Singapore, where copyright laws do not apply. Moreover, only seven countries have agreed to sign an agreement with the United States for protecting intellectual property rights.
3. But do not think that software piracy is just an overseas phenomenon. It has been estimated that in the United States, about 27% of all software used is pirated. In
Canada, it is nearly 40%. This is “cheating these software developers out of bil-lions of dollars, reducing employment levels by more than 22,000 employees, and lessening tax collections by nearly a billion dollars. “
4. In the United States, employees and managers who pirate software defend their conduct with such answers as: “Everybody does it,” “I won’t get caught,” “The law isn’t enforced,” “No one really loses,” or “Our department budget isn’t large enough to handle buying dozens of copies of the same programme.”
5. Ask the same employees who copy software if it is acceptable to steal a book from the library or a tape from a video store. Most are quick to condemn such practices, but it seems as if they do not see copying as stealing. Some think that there is nothing wrong with making a copy of the tape and returning it despite the copyright statement and the Interpol warning at the beginning of the tape that speci� cally states that the act of copying is that tape is in violation of the law. Still, if they copy it, they can return the original to the store, no harm done.
Dilemma: Do you believe that reproducing copyright software is ever an ac-ceptable practice? As a manager, what guidelines could you establish to direct your employees’ behaviours regarding copying software?
IV Must Attitudes and Behaviours Align?
1. You work for a large international organisation that manufactures and sells com-puter hard drives. In your position as a recruiter, you have the primary respon-sibility to hire individuals to � ll entry-level positions in your company. Your organisation prefers to hire recent college graduates for these entry-level manu-facturing and marketing positions. It gets an opportunity to hire individuals who have the latest knowledge in their � elds at a discounted price.
2. Your job requires you to travel extensively. In fact, over the past several years, you have averaged visits to 35 colleges on three different continents during a semester. Your performance evaluation rests primarily on one factor – how many people you have hired.
3. Over the past several months, you have noticed a surge in open positions. These are not new positions but replacements for employees who have quit. A little investi-gating on your part � nds that, after about three years with your � rm, entry-level em-ployees quit. There is no upward mobility for them, and they burn out after working up to 12 hours a day, 6 days a week. Furthermore, you know that the bene� ts for
entry-level employees – especially vacation and sick leave – are not competitive with those offered by similar � rms in your industry. So you think you know why these employees quit. On the other hand, almost everyone who has quit has gone on to a bigger, better paid job with more responsibility and greater pay. To get the most productivity out of these employees, your company invested heavily in their training. Almost all workers in these positions receive over 40 hours of specialised training each year and have jobs that offer excellent learning experiences but little advancement opportunity. Top management believes it is better to hire new people than to pay the higher salaries that seniority and experience demand. Although you do not totally agree with management’s treatment of these employees, you recog-nise that the company is giving many of them a great start in their career.
Dilemma: Should you disclose to college recruits during interviews that the jobs they are considered for are dead-end jobs in their organisation? Why or why not? Would your response change if you were evaluated not only on how many people you hired but also on how long they stay with the organisation? Defend your position.
V Rewarding Appropriate Behaviour
1. You have just been hired as a customer service representative at the Barnett World Travel Agency in San Diego, California. Customers call you to arrange travel plans. You look up airline � ights, times and fares on your computer and help them make travel reservations that work best for them. You also provide assistance in reserving rental cars, � nding suitable hotel accommodations, and booking tours and cruises.
2. Most car rental agencies and hotels frequently run contests for the customer ser-vice representative who reserves the most cars for a particular � rm or books the most clients for a speci� c hotel chain. The rewards for doing so are very attrac-tive. For instance, one car rental � rm offers to place your name in a monthly drawing if you book just 20 reservations. Book 100 in the same amount of time, and you will be eligible for a $100,000 prize. And if you book 200 clients, you will receive an all-expense paid, four-day Caribbean vacation for two.
3. So the incentives are attractive enough for you to steer customers towards these companies even though it might not be the best arrangement or the cheapest for them. Your supervisor does not discourage your participation in these pro-grammes. In fact, the programmes are viewed as a bonus for your hard work.
Dilemma: Is there anything wrong with doing business those car rental and hotel � rms that offer kickbacks to you? How could your organisation design a performance reward system that would encourage you to high levels of bookings if it could not be certain that you gave highest priority to customer satisfaction?
VI Stress Interviews
1. Your interview day has � nally arrived. You are all dressed up to make that lasting � rst impression. You � nally meet Mr. Bedford: He shakes your hand � rmly and invites you to get comfortable. Your interview has started. This is the moment you have waited for.
2. The � rst few moments appear mundane enough. The questions, in fact, seem easy. Your con� dence is growing. That little voice in your head keeps telling you that you are doing � ne – just keep on going. Suddenly, the questions get tougher. Mr. Bedford leans backs and asks why you want to leave your current job – the one you have been in for only 18 months. As you begin to explain that you wish to leave for professional reasons, he starts to probe. His smile is gone. His body language is different. All right, you think, be honest. So you tell Mr. Bedford that you want to leave because your boss is unethical and you do not want your repu-tation tarnished by being associated with this individual. This situation has lead to a number of public disagreements with your boss, and you are tired of dealing with the problem. Mr. Bedford looks at you and replies, “If you ask me, that is not a valid reason for wanting to leave. It appears to me that you should be more assertive about the situation. Are you sure you are con� dent enough and have what it takes to make it in this company?”
3. How dare he talk to you that way! Who does he think he is? You respond in an angry tone. And guess what, you have just fallen victim to the one of the tricks of the interviewing business – the stress interview.
4. Stress interviews are becoming more commonplace. Every job produces stress, and at some point, every worker has a horrendous day. So these types of interviews predict how you may react under less-than-favourable conditions. Interviewers want to observe how you will react when you are put under pressure.
5. Applicants who demonstrate the resolve and strength to handle stress indicate a level of professionalism and con� dence. It is those characteristics that are being assessed. Individuals who react to the pressure interview in a positive manner
indicate that they should be able to handle the day-day-to-day irritations at work. Those who do not, well ...
6. On the other hand, these interviews are staged events. Interviewers deliberately lead applicants into false sense of security – the comfortable interaction. Then suddenly and drastically, they change. They go on the attack. And it is usually a personal assault on a weakness they have uncovered about the applicant. It is possibly humiliating; at the very least, it is the demeaning.
Dilemma: Should stress interviewers be used? Should interviewers be permit-ted to assess professionalism and con� dence and how one reacts to the every day nuisance of work by putting applicants into a confrontational scenario? Should human resources advocate the use of an activity that could possibly get out of control? What is your opinion?
Enhancing your communication skills
1. Write an essay (and where necessary give your essay a title) of between 250-350 words on each of the following subjects:
(a) A good business should be a part of society, and you have to take pride in what you do. There is no pride in making millions of dollars, but there is pride in helping people and the environment. Do you agree or disagree? Support your opinion.
(b) The idea now is global responsibility. Businesses are the true planetary citi-zens, they can push frontiers, they can change society? State your opinion.
(c) In the next decade, environmentalism will be the most prominent issue for business.
(d) The Code of Ethics and audit
(e) Business ethics and insurance business
2. Write a summary of one of the below given texts. You can � nd them in the Review and Discussion Questions section.
(a) When Is Competitive Intelligence Unethical?
(b) Is Sharing Software Okay?
(c) Must Attitudes and Behaviours Align?(d) Rewarding Appropriate Behaviour(e) Stress Interviews
3. After reading the below given text, give your opinion on whether proven en-vironmental commitment helps create committed customers. Are consumers in your country concerned about the environmental policies of business? Would you yourself pay more for things produced in an environmental-friendly manner? If so, how much more? Time allowed for your presentation s 15 minutes.
Thanks to the California-based retail � rm’s outdoor clothing catalogue and its exemplary method of communicating its corporate environmentalism, cus-tomers are not only knowledgeable about the company’s environmental prog-ress, but also loyal. It is strongly committed to environmental causes. It sells its products through retail outlets and by mail order. Patagonia is renowned for its spectacular catalogues which are � lled with its unusual and dramatic photos (all taken by customers) displaying the clothing in exciting ways. They also contain detailed product descriptions which include de� nitions of materials and explana-tions of manufacturing process.
The company makes jackets from recycled plastic bottles and produces clothing from organic materials. It offers courses to its employees on non-violent demonstrations and even pays bail for employees who get arrested. It also do-nates money to environmental groups and generally supports efforts that empow-er consumers to take action. Patagonia’s strategy isn’t just to give away money to good causes but to pioneer new, long-term practices of sustainability in business prove their economic viability and persuade other businesses to follow.
4. After reading the problems below, give your opinion on what you would do in each situation. Time allowed for your presentation is 10 minutes.(a) You have been sent to negotiate an important new contract for your � rm. During
the negotiations your counterpart makes it clear that he expects a personal cash contribution (a bribe) from you if your company is to win the contract.
(b) In your CV you lied about your quali� cations in order to get the job you wanted. You have just been offered the job, but your new employer asks you to see your certifcates.
(c) You have just seen in your bank statement that your employer has paid you $500 more than your monthly salary.
UNIT 5 ABOUT THE EUROPEAN UNION
INTRODUCTION TO THE EUROPEAN UNION
The European Union was known as the European Community (EC) - the col-lective designation of three organisations with common membership: the European Economic Community (Common Market), the European Coal and Steel Community, and the European Atomic Energy Community. The European Union was established in 1993, when the Maastricht Treaty, or Treaty on European Union, was rati� ed by the 12 members of the European Community - Belgium, Denmark, France, Germany, Great Britain, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain. Upon rati� cation of the treaty, the countries of the EC became members of the EU, and the EC became the policy-making body of the EU.
Under the Maastricht Treaty, European citizenship was granted to citizens of each member state. Customs and immigration agreements were enhanced to allow European citizens greater freedom to live, work, or study in any of the member states, and border controls were relaxed. A goal of establishing a common European currency was set for 1997.
ORGANISATION: PRINCIPAL INSTITUTIONS AND OTHER MAJOR BODIES
The Council of Ministers, European Commission, European Parliament, and European Court of Justice comprise the permanent structure. Decision making in the EU is divided between supranational European institutions (the European Commission and the European Parliament, both administered by the EU) and governments of the member states, which send representatives to the Council of Ministers (main law-making body of the EU). The European Commission serves as the executive branch of the EU. It makes policy proposals and presents them to the Council of Ministers. The European Commission also represents the EU in economic relations with other countries or international organisations. Members of the commission are appointed by agreement between the member governments.
The Council of Ministers is composed of a single representative from each of the member states. The council cannot draft legislation, but it can accept, reject, or request proposals from the commission. Summit meetings among the top leaders of the member states are called at least once every six months by the country holding the presidency of the Council of Ministers.
The European Parliament is the only body of the EU whose members are di-rectly elected by the citizens of member states. It also works with the Council of Ministers on the EU budget and can reject a budget plan if agreement cannot be reached within the council.
The � nal arbiter in all matters of EU law is the Court of Justice. The court deals with disputes between member governments and EU institutions and among EU institutions, and with appeals against rulings by the commission. Courts within EU member states often refer cases involving an unclear point of EU law to the Court of Justice. The court makes binding rulings on EU law to help guide the rul-ings of national courts. The Court of Auditors, which consists of one member from each of the member nations, is responsible for the external audit of the expenditures and revenue of the Union.
While the Maastricht Treaty increased the political powers of the European Council, other bodies took on advisory roles similar to those once held by the parlia-ment. The Economic and Social Committee (ESC) is one of the most important of these bodies. Its members represent employer and employee groups, as well as other inter-est groups. Another important group is the Committee of the Regions, created by the Maastricht Treaty to bring the EU closer to its citizens and to give regional and local authorities a voice in government. Its members are allocated in proportion to the popu-lation of each country. The European Investment Bank (EIB) has the task of providing loans to help � nance public and private investment in industry and infrastructure, and the European Central Bank is, inter alia, responsible for the de� nition and implementa-tion of the economic and monetary policy, the conduct of foreign exchange operations, smooth operation of payment, etc.
EUROPEAN UNION: STILL ENLARGING
The European Union is a living organism in a constant process of evolution. From the initial six members, it has grown to 9, 10, 12, and then to the current 15 through a series of enlargements. And the process is still continuing. The EU is now negotiating with 12 more candidates for membership, and preparing for negotiations
with Turkey. When this phase of enlargement is complete, EU citizens will be able to live, move and work across a territory that stretches from the Baltic to the Black Sea, and from Nicosia to Sweden. The new century offers the chance to make a truly Europe-wide European Union that fully re� ects the values of peace, democracy, the rule of law, respect for human rights, shared prosperity, and celebrates the rich diversity of the continent.
So, while the EU is inviting new members to join, it is insisting at the same time that they respect the EU’s values and adopt the full range of EU rules, practices and presumptions – what is usually referred to by the French expression the acquis (rough-ly, “what has been achieved”). Since 1998, the EU has been conducting a detailed as-sessment of their progress, constantly checking how far the candidates’ preparations have advanced on areas as diverse as telecommunications and taxation, � sheries and � nancial control, energy and economic and monetary union.
The candidates have entered into negotiations with the EU to seek agreements as to when and how each of them can join. The negotiations are based on the principle that each candidate must adopt the entire set of existing rules and legislation: the acquis is not negotiable.
It is not possible to estimate the length of each negotiation in advance, but the Nice summit looked forward to the EU being “in a position to welcome those new Member States which are ready as from the end of 2002”, and in time for the new mem-bers to join before the European Parliament elections in June 2004.
1. READING FOR COMPREHENSION
Answer the below given questions.
1. Identify the main concern which brought together the countries of Western Europe in the 1950s to form what eventually became the EU.
2. State the importance of the Maastricht Treaty.
3. Identify and explain the permanent structure of the EU.
4. List some other major bodies of the EU, and identify their responsibilities.
5. Identify the values on which the European Union is built.
2. MATCHING EXERCISES
(a) Match the principal institutions and other major bodies of the EU on the left-hand side with their explanations on the right-hand side.
1. Court of Auditors (a) Its membership is made up of one representative from each of the member national governments. It has the real power of decision in the EU.
2. European Economic and (b) It is charged with the formal and practical implementationSocial Committee of the various treaties of the Union and the various rules
issued by the Council of Ministers.
3. Committee of the Regions (c) It contributes to the EU objectives by � nancing public and private long-term investments.
4. European Central Bank (d) It expresses the opinions of organised civil society on economic and social issues.
5. Council of Ministers (e) The legislative branch of the EU, which is directly elected by the citizens of its member states.
6. Court of Justice (f) It is responsible for the sound and lawful management of the EU budget.
7. European Investment Bank (g) It expresses the opinions of regional and local authorities on regional policy, environment and education.
8. European Commission (h) It hears cases involving disputes between member states over trade, antitrust, and environmental issues, as well as issues raised by private parties, compensations for dam-ages, and so on.
9. European Parliament (i) It is responsible for monetary policy and foreign exchange operations.
(b) Match the institutions of the EU on the left-hand side with the appropriate branch on the right-hand side.
1. European Parliament (a) It serves as the executive branch of the EU.
2. European Court of Justice (b) It serves as the legislative branch of the EU.
3. European Commission (c) It serves as the judicial branch of the EU.
Fill in the blank with the appropriate article or leave it blank to indicate that no article is necessary.
It was concern about their security that brought …… countries of ……Western
Europe together in …… 1950s to form what eventually became …… European Union
(EU). …… so-called Schuman Declaration (May 9, 1950) laid out …… principles
of democratic European integration underpinning …… present EU. After signing
…… Treaty of Paris (1951), by which …… European Coal and Steel Community
(ESCS) was established, …… founding members, Belgium, France, Germany, Italy,
Luxemburg, and …… Netherlands, signed …… Treaty of Rome (1957) and estab-
lished …… European Economic Community (EEC), and …… European Atomic
According to …… EEC 1957 Treaty, …… purpose of …… new Community
was to promote …… harmonious development of economic affairs, …… increased
stability, …… accelerated raising of …… living standard, and closer relations between
…… six states belonging to it. This was to be achieved by establishing …… common
market and approximating …… economic policies of member states. …… Treaty also
postulated “Four freedoms”: …… free movement of goods, persons, services and capi-
tal, as well as providing for common agriculture and transport policies, …… customs
union, free competition, and legal machinery to resolve disputes and to harmonise ……
legislation of member states.
Supply the missing prepositions.
The 15 full members ……… 1996 were Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain,
Sweden, and United Kingdom. Austria, Finland, and Sweden entered the EU ………
Jan. 1, 1995; Norway was scheduled to join ……… the same time, but Norwegian
citizens ……… a November 1994 referendum voted ……… membership. Some
70 nations ……… Africa, the Caribbean, and the Paci� c are af� liated ……… the
Fill in the blank spaces in the text with correct verb forms.A negotiated enlargement
The candidates …………… (ENTER) into the negotiations with the EU
…………… (SEEK) agreement as to when and how each of them can join. The nego-
tiations …………… (TAKE PLACE) between ministers from the EU member states
and the candidate countries, and they …………… (EXPECT) to lead to accession trea-
ties. As each treaty …………… (DRAW UP), it will be submitted to the EU Council
of Ministers for approval and to the European Parliament for assent, and then to the
Member States and to the candidate countries for national rati� cation in line with na-
Accession negotiations …………… (OPEN) on 31 March 1998 with six coun-
tries: Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia. In December
1999, at its summit in Helsinki, the European Council …………… (DECIDE) to open
accession negotiations with six further candidates: Bulgaria, Latvia, Lithuania, Malta,
Romania, and the Slovak Republic; they …………… (BEGIN) on 15 February 2000.
Negotiations …………… (CONDUCT) individually, and the pace of each nego-
tiation …………… (DEPEND) on the degree of preparation by each candidate coun-
try and the complexity of issue to be solved. Each candidate …………… (JUDGE) on
its own merits.
There …………… (BE) no automatic acceptance of candidates into the negoti-
ating process. For instance, the Helsinki Council …………… (MAKE) the opening of
negotiations with Bulgaria “conditional upon a decision by the Bulgarian authorities,
before the end of 1999, on acceptable closure dates for units 1-4 in the Kozloduy nu-
clear power plant, and upon a con� rmation of the signi� cant progress accomplished in
the economic reform process”.
In order …………… (HELP) the candidate countries prepare for EU mem-
bership, the EU …………… (PROVIDE) assistance and …………… (PROMOTE)
investment in the candidate countries to stimulate change so that the candidates can
adapt more rapidly to EU requirements. Some examples of EU assistance projects
…………… (INCLUDE): improving safety at the Kozloduy nuclear power plant,
with training and with studies on how to detect leaks early or on the triggering of
alarms; establishing environmental management and warning systems along the
Danube, …………… (COORDINATE) the � ght against the pollution across the doz-
en countries it …………… (FLOW) through; training customs staff at Tallinn port
so they can speed handling while raising the quality of controls; supporting women in
business in the rural areas of Lithuania, cutting unemployment and setting up contacts
and training, etc.
The EU also …………… (PROMOTE) large-scale infrastructure projects,
through co-� nancing arrangements with the European Investment Bank. For instance,
the EIB’s loans in central and eastern Europe amounted to 2.17 billion euro in 1999
alone, and it …………… (HAVE) a loan potential of 16 billion euro for 2000-07 in
REVIEW AND DISCUSSION QUESTIONS
The success of the EU and the values it is based on have attracted successive waves of new members from countries with a wide variety of economic and political backgrounds. Each successive enlargement has brought bene� ts to Europe’s citizens, new opportunities for European businesses, and wider acceptance of European norms in � elds ranging from consumer and environmental protection to political rights and social provision. In the coming years, other countries may be expected to submit ap-plications for membership of the EU. The EU intends to be ready to welcome the � rst new Member States as from the end of the 2002. But it is too early to say when this phase of enlargement, with the 13 current candidate countries will be completed, or when negotiations with others may commence.
The EU is now in the process of signing stability and association agreements with the countries of the western Balkans too, and it has held out to them the prospect of pos-sible EU accession at a future date under certain conditions. In consideration of the fore-going, give your opinion on when and how our country can join the EU. To answer this question you will need to know more facts about the issue. Some are offered below. More information on the subject can be found on the web site of the European Commission’s Directorate General for Enlargement: europa.eu.int/comm/enlargement.
1. The most important elements of the Stabilisation and Association Process (SAP) are:
- trade liberalisation,
- political dialogue,
- stabilisation and association agreement (SAA), and
- � nancial assistance.
2. Economic and Monetary Union (EMU) criteria are as follows:
- public debt must not exceed 60% of GDP,
- public de� cit must not exceed 3% of GDP
- in� ation must not exceed the average of in� ation of the three best performing countries plus 1.5%,
- long-term interest rates must not exceed the average of the three best in� ation performers plus 2%,
- central bank independence,
- currency stability.
3. The Acquis: For the purposes of the negotiations for membership, the body of EU rules is divided into 31 chapters:1. Free movement of goods2. Freedom of movement for per-
sons3. Freedom to provide services4. Free movement of capital5. Company law6. Competition policy7. Agriculture8. Fisheries9. Transport policy10. Taxation11. Economic and monetary union12. Statistics13. Social and policy employment14. Energy15. Industrial policy16. Small and medium-sized under-
takings17. Science and research
18. Education and training19. Telecommunications and infor-
mation technologies20. Culture and audiovisual policy21. Regional policy and coordination
of structural instruments22. Environment23. Consumers and health protection24. Cooperation in the � elds of jus-
tice and home affairs25. Customs union26. External relations27. Common foreign and security
policy28. Financial control29. Financial and budgetary provi-
sions30. Institutions31. Other
Enhancing your communication skills
To test your understanding and to enhance your thinking and communication skills:
1. Write an essay of between 250 and 350 words on each of the subjects after an-swering the below given questions. Where necessary, give your essay a title.1. Which country has the largest area?2. Which country has the largest population?3. Which country has the highest birth rate?4. Which country is the most densely populated?
5. To which country does France export the most?6. To which country does Sweden export the most?7. Which country exports the most (a) crude oil? (b) cereals? (c) iron and steal? (d) citrus fruits?8. Per inhabitant, which country consumes the most and the least (a) cheese? (b) sugar? (c) wine? (d) cigarettes?9. Which country uses the most nuclear power as a source of energy?10. Which country has the most forested areas?11. Which country has the most magazines?12. In which country do women play the most active role in the workforce?13. Which country offers the longest paid holidays?14. In which country are the HQs of the European company with the highest turnover?
(a) The EU enlargement. Bear in mind that the enlargement to so many coun-tries, with such diverse backgrounds presents challenges and raises questions, such as the potential risks of mass migration, increased crime, lower environ-mental standards, consumer protection or cultural identity.
(b) Our country on its way to the EU. There are certain criteria which denom-inate the country’s development level and are divided into four categories, which, inter alia, include political elements, economic and business elements, and � nancial elements. What about our country? Is our country a developed or underdeveloped or developing country? What are the conditions that our country has to ful� ll in order to join the EU?
2. Write a summary on each of the below given texts:
(a) While the euro’s launch went smoothly and carried the EU through January in an optimistic mood, serious problems were developing at the Commission in Brussels. The trouble began when a junior internal auditor leaked documents to Green deputies of the European Parliament that showed that the appoint-ment of friends to high of� ce in the Commission and even, in some cases, corruption were being tolerated by members of the EU’s of� cial civil service. At � rst, the reaction from the Commission was a typical one of complacency mixed with savage denunciation of the whistle-blower himself. So arrogantly
did it handle the case that members of the democratically elected European Parliament, preparing for elections in June, sensed an opportunity for a high-pro� le battle in which they could bring the unaccountable Commission to book. In mid-January the Parliament came close to exercising what was known as its “nuclear option,” the power to dismiss the entire 20-person team of commissioners, which was appointed by heads of national governments to lead the administration in Brussels. The Parliament drew back only after the commissioners agreed to establish an independent inquiry into all the allega-tions by a team of former judges and auditors.
In March this team published a devastating report con� rming much of what the whistle-blower had alleged. It also uncovered a culture in which commissioners were not prepared to accept any sense of responsibility for what was going wrong inside the organisation they ran. The report was par-ticularly critical of Edith Cresson, the former French prime minister and one of France’s two appointments to the Commission. She was accused of having appointed cronies to well-paid jobs inside the Commission even though they had little or nothing to bring to her area of responsibility - research and educa-tion. On the night the report was published, President Jacques Santer and his 19 fellow commissioners were left with no option but to resign, leaving a huge hole at the heart of Europe’s institutional structure.
Reaction was sharply divided. Euroskeptics argued that the collapse of the Commission was proof that the ramming together of 15 different political and cultural systems simply did not work. Others saw the crisis as an opportu-nity to promote a long overdue shake-up of the EU’s organisational structures that would strengthen the system.
As most of the member states of the EU were determined to see greater integration, it was not long before the disaster in Brussels had been turned to the Union’s advantage. Within two weeks of the Commission’s resignation, EU leaders, meeting in Berlin, agreed to appoint Prodi, a former Italian prime minister, as Commission president. He was seen by many as an ideal choice.
(b) Passage on the Negotiated enlargement (p. 95)5. Prepare a 15-minute presentation concerning the following statement:
(a) “Since business will be able to operate on the basis of standard procedures across the world’s largest frontier-free market, it will truly be a � eld in which the early bird does catch the worm”.
(b) “Eventually the EU is likely to become a federal superstate as more of the economic decision-making is centralised.”
UNIT 6 OUTLINES ON THE EUROPEAN UNION
HARMONISATION OF LAWS
The removal of internal borders and the creation of a common external frontier are central to the creation of a single market between members of the European Union. The harmonisation of the laws regulating the market is another such element.
Harmonisation of laws has not been achieved in all areas and there is continuing debate as to the extent to which local rules for business may remain, without disturbing the single market. However, that being said, the regulatory framework for doing busi-ness in the single market is nearly always set by the Community, and where the gaps exist the underlying principles on the free movement of goods, services, capital and people seem to allow the European Court of Justice to � ll those gaps. Moreover, the court has also the power to invalidate the laws of EU member nations when those laws con� ict with Union law.
LAWS AND REGULATIONS GOVERNING COMMERCIAL ACTIVITY WITHIN A SINGLE MARKET
Doing business in the Union requires not only the knowledge of different com-mercial traditions, different languages, different consumer tastes, but also the knowl-edge of laws and regulations governing commercial activity. For the purposes of this unit, we shall brie� y deal only with Community law on the subject of companies and � nancial services, as well as Community legislation relating to banking and capital movements, insurance, and securities.
Among the fundamental freedoms accorded to citizens under the EC Treaty are the rights freely to establish and provide services in other Member States. These free-doms apply not only to individuals, but also to all European Union companies which pursue an economic objective. The adoption of Community company legislation is
designed to achieve the necessary harmonisation or co-ordination of Member States’ company laws to allow for the effective exercise of these rights. The rationale behind the legislation is to establish an equivalent degree of protection of interests of share-holders, employees, creditors and third parties to ensure that divergent national laws do not distort competition between Member States.
The European Commission has secured the adoption of several Directives in this � eld, dealing mostly with speci� c aspects of company law such as disclosure of infor-mation (regulated by the First Company Law Directive), formation of public compa-nies (regulated by the Second Company Law Second), mergers of public companies (regulated by the Third Company Law Directive), company accounts (regulated by the Fourth Company Law Directive), etc.
However, it has encountered serious political opposition to legislation which seeks widespread harmonisation or which touches on such thorny issues as the par-ticipation of employees in the management of companies. Proposals of this nature have almost reached a stalemate. For instance, the proposal for a Fifth Company law Directive which seeks to harmonise the structure of public limited companies was � rst put forward in 1972. More than twenty years later, Member States remain as divided as ever on issues such as the “one share, one vote” principle and employee participation in management, which is one of the main stumbling blocks in negotiations.
Similar issues have also impeded progress on the proposal for a European Company, which would create a supranational European Company subject mainly to Community law. While many current problems in the area of company law seem beset with dif� culties, this should not detract from the progress which has been achieved to date in developing harmonised company law rules.
There is no generally accepted de� nition of a � nancial service. For the purpose of this section, a � nancial service is understood to mean a service whereby persons are able either to invest their funds or, alternatively, to obtain funds temporarily for a particular general use. Here we shall brie� y examine the Community regulation of but a few institutions or companies: credit institutions, � nancial institutions and investment � rms.
Credit institutions. The essential feature of a credit institution’s activities is that the funds it collects are not earmarked as belonging to the investor; they are assets of the bank to deal with as it wishes. The regulation of credit institutions is primarily directed to ensuring that an institution will always have the liquidity to meet requests by investors for the withdrawal of funds, and will always have adequate “own” funds
to protect against the possible loss of asset value due to the default of its borrowers or the fall in the market value of investments in securities.
Financial institutions. A typical example would be an institution which bor-rows money on the interbank market in order to lend such funds to companies. Such institutions make their pro� t on the margin between the borrowing rate and the lending rate. Financial institutions are also regulated in areas which affect the � nancial system generally (e.g. protection against money laundering).
Investment � rms. They differ from credit institutions in that they do not receive funds from the public or grant loans except for the execution of a speci� c mandate (e.g. to invest in certain securities). As long as funds and securities of the investment � rm are kept separate from funds and securities of clients, the solvency risks which a bank has to provide for do not arise. However, investment � rms also invest in securities on their own account, and this exposes them to market position risk. It is, therefore, neces-sary to ensure that they, and also credit institutions which carry on investment business, have adequate capital to provide a buffer against sudden swings in market values of securities.
Community regulation is not concerned with regulating every detail of � nancial activity – this is a matter for the Member States. Community regulation is concerned to ensure that essential minimum standards of protection are respected in all Member States so that � nancial services can be provided through the Community on the basis of a “single licence”, which does not prevent the host state, namely the state in which the service is received, from regulating the relevant activity on a non-discriminatory basis to the extent necessary for the protection of the general good.
BANKING AND CAPITAL MOVEMENTS
One of the principles of the Community is that there should be freedom of establishment and freedom to provide services throughout the Community. The European Commission is now concentrating efforts on the standards of � nancial sta-bility which credit institutions must maintain and the management principles which it is obliged to apply.
Capital movements legislation provides that “Member States shall progressively abolish between themselves all restrictions on the movement of capital to persons resi-dent in Member states”, obliging, on the other hand, each Member State “to authorise, in the currency of the Member State in which the creditor or the bene� ciary resides, any payments connected with the movements of goods, services or capital, and any transfer of capital earnings, to the extent that movement of goods, services, capital, and persons between Member States has been liberalised pursuant to this Treaty”.
Future developments in the � nancial sector will be focused on the question of economic and monetary union. The � nal objective is to arrive at a stage where exchange rates are locked irrevocably and European Central Bank and the European System of Central Banks take up their monetary functions.
The legislation in the area of insurance and pension sector provides for the free-dom of establishment, services and movement of capital. The legislation harmon-ises the existing national regulations to the extent necessary to allow insurance un-dertakings established in one Member State (“the home Member State”) to establish a branch or provide services across borders in the other Member States (“the host Member State). At the same time, it seeks to protect the consumer from abuses, and, in particular, to ensure that those offering insurance services have suf� cient � nancial reserves to meet the claims.
There are still some barriers to conducting cross-border insurance business. One of the main reasons is taxation and the refusal by some Member States to al-low tax deductions for premiums paid to insurance companies in other Member States. So far the following categories of insurance are covered: re-insurance, co-insurance, non-life insurance (including credit insurance and tourist insurance), motor vehicle insurance, life insurance and insurance agents and brokers. Any future insurance legislation is likely to be directed at specific areas of problems (e.g. property insurance), while developments in other sectors (e.g. consumer pro-tection and liability for environment) will affect the direction of insurance activity in the Community.
The role of Community legislation in the securities markets is two-fold: to ensure the proper working and inter-penetration of securities markets in order to create a “common market” for capital; and to provide adequate supervision of the operations of the markets, and, thereby, provide minimum standards of protection of investors. To serve this end Council Recommendation concerning a European code of conduct relating to transactions in transferable securities was noti� ed in 1977. Although it is not binding and does not have the force of law, it has been taken seriously and professional bodies have adopted its rules. It lays down a series
of ethical and practical guidelines designed to improve and harmonise operations and the disclosure of information relating to transactions on the securities markets. Council Directive of March 5, 1979, is aimed at harmonizing the conditions for the admission of securities to of� cial stock exchange listing. These conditions are set out in Schedule A to the Directive and cover the status of the company, the minimum size of the company, the company’s period of existence, adequate distribution of the shares, etc. The conditions for admission of debt securities to of� cial stock ex-change listing are set out in Schedule B to the Directive. The obligations in relation to listed shares are set out in Schedule C to the Directive and, in relation to listed securities, in Schedule D to the Directive.
1. READING FOR COMPREHENSION
Answer the below given questions.
1. Explain the importance of harmonisation of laws and the role of the European Court of Justice.
2. Identify the fundamental freedoms that apply both to individuals and to EU com-panies.
3. Explain the rationale behind the legislation.
4. What do Company Law Directives regulate?
5. Identify the impediments to progress in developing harmonised company law rules.
6. De� ne the term � nancial service and list some of the institutions relating to � nan-cial activity.
7. What is Community regulation concerned with?
8. What does capital movements legislation provides for and obliges each Member State?
9. Identify some barriers to conducting cross-border insurance business.
10. List categories of insurance covered so far.
11. De� ne the role of Community legislation in the securities markets.
2. MATCHING EXERCISES
Match the institutions or companies on the left-hand side with explanations of their activities on the right-hand side.
1. Financial institutions (a) Institutions which take deposits from the public and re-invest funds collected for their own account.
2. Direct non-life insurance Co. (b) They provide a variety of services as intermediaries in the securities � eld.
3. UCITS (c) Institutions which, in return for the payment of pre-mium, cover risks linked to survival or death of the person paying the premium or a third party. A life insurance policy is a sort of investment, so ques-tions of investor protection arise.
4. Direct life assurance companies (d) Institutions which make loans and provide guaran-tees without taking deposits from the public.
5. Investment � rms (e) Undertakings for collective investment in transfer-able securities raise funds from public and invest them in a fund which operates on the principle of risk-spreading.
6. Credit institutions (f) Institutions which, in return for the payment of pre-mium, cover risks other than those linked to surviv-al and death. Non-life policies are not investments in the ordinary sense because they are a means of making � nancial provision against loss caused by the possible realisation of a risk.
Supply the missing prepositions.
Lobbying – a legitimate activity?
The word “lobbying” conjures up many ideas ……… the minds of the public. It
is as well to address these ideas because “lobbying” has many negative connotations.
Lobbying is a right of all citizens in a democracy. All those ……… a special in-
terest are entitled to lobby to obtain support ……… that interest. Whether to lobby as an
individual or as a group will depend ……… the circumstances and resources. Whether
to lobby ……… a professional agency or not will depend ……… circumstances, but
the advice ……… a professional person ……… this � eld should always be sought.
Information is the basis of any lobbying. The interested party needs to know
what is going on, who is doing what, why and when. Information needs to be obtained
……… good time so as to allow ……… re� ection and proper response.
Analysis is the second basic element ……… lobbying. Next is a clear and sim-
ple strategy, which is essential ……… successful lobbying. More cannot be obtained
……… the Community than the Community is capable ……… giving. Presentation
is very important ……… all phases of the lobbying process. ……… the information
side no one company, group or individual can hope to cover all the institutions or the
individuals ……… the Community Institutions.
Therefore, lobbying is a legitimate activity and one that becomes increasingly
important as the management of economic and social issues ……… a pan-European
scale. Lobbying is thus a part of the democratic process. This is especially the case
……… the European Community, which maintains its democratic legitimacy ………
the democratic nature of the Member States and their elected parliaments.
Lobbying is not ……… using corrupt, immoral or unfair means to attempt to
in� uence public of� cials or elected representatives; it is ……… fair presentation of
a case. As one of the � rst steps ……… future developments ……… this � eld, the
Commission called ……… the drawing ……… of their own rules of conduct ………
the lobbyists. The minimum requirements ……… a code of conduct, recommended
……… the Commission, are proper representation of the special interest group ………
the public; behaviour according ……… the highest possible professional standards;
the avoidance of situations where con� icts of interest are likely to arise; disclosure of
the name of the client ……… whom the work is done; and disclosure of Commission
of� cials contacted ……… the same issue.
Fill in the blank spaces in the text with correct verb forms.
The European Court of Justice
Because the Union is a legally based concept, the European Court of Justice
…………… (PLAY) an ever-increasing role, as the Supreme Court ………… (DO)
in the United States. In recent years, some member states …………… (OBJECT)
strongly to what they regard as “judge-made law” and attempts …………… (MAKE)
to restrict the powers and activities of the European Court. Nevertheless, the position
…………… (BE) and will remain that much “judge-made” law …………… (BE)
inevitable in a developing society. In the UK, the common law …………… (BE) itself
“judge-made” and so was equity. Now, despite the vast increase in statutory law, or pos-
sibly because of it, no inclination on the part of the judiciary …………… (TO STAND
ASIDE) is seen. Indeed, the more statute law there is, the greater the scope there is for
the judiciary …………… (TO PLAY) a signi� cant role. So far as the Community, or
Union, …………… (CONCERN), these developments …………… (MEAN) that it
is essential …………… (TO KEEP ABREAST) not only of the legislative provisions,
but also of the jurisprudence of the European Court of Justice.
For this reason it …………… (BE) essential for every businessman wishing,
not simply ……………………… (TO UNDERSTAND) what …………… (GO)
on in the European Union and how the Union …………… (DEVELOP), but also
…………… (BE) in a position to take informed decisions about his own business
strategy in order to maximise the opportunities now …………… (OPEN UP) in what
fast …………… (BECOME) the world’s greatest trading area. This, indeed, is a � eld
in which knowledge is the pre-requisite of success.
REVIEW AND DISCUSSION QUESTIONS
According to The Economist (October 7, 1995), community law, notably the di-rectives, regulations and decisions agreed upon by ministers of member states, is su-preme throughout the European Union. As the European Court of Justice (ECJ) rules in 1963, “The Community constitutes a new legal order of international law, in favour of which the States within certain areas have limited their sovereign rights”.
Add judgement in 1964, and the priority is set: where national and European law con� ict, the national must give way – which is why Germans now accept beer from Belgium, Britons import long-life milk from France, and the French (some of the time) take mutton from Britain. It is also why Europe’s footballers, thanks to preliminary opinion last month, should now have more freedom to move from club to club. Without community law, Europe’s “single market”, with the free � ow of people, goods, services and capital, could not be expected to work.
But community law spreads further, for example into labour and pension laws. If the ECJ rules that a national law is de� cient or wrong, it may cost a member govern-ment or its industrials dearly. In 1990, for example, the court ruled that the retirement age for men and women in pension schemes must be the same. Alarmed by the poten-tial claims, the Union’s governments limited any retroactive effect by adding a special protocol to the Maastricht treaty.
After reading the below given cases illustrating the approach of the European Court of Justice to this legislation, try to answer the below given questions.
1. In this case the Hoge Raad der Nederlanden (Dutch Supreme Court) requested the ECJ to give a preliminary ruling under Article 177 of the EC Treaty on the in-terpretation of the rules on nullity laid down in the First Company Law Directive. The question was whether the First Company Law Directive rules governing nullity are applicable when acts have been carried out in the name of a limited li-ability company, which has not been constituted under national law due to failure to complete the national law formalities on company formation. The Court came to the conclusion that the rules on nullity do not apply where the incorporation formalities have not been completed. (Case 136/87 Ubbink Isolatie BV v Dak- en Wandtechniek BV  ECR 4665)
2. A Greek national court requested the European Court of Justice to rule on wheth-er Article 25(1) of the Second Company Law Directive has direct effect. In other words, whether where it has not been implemented in national law, an individual can, nonetheless, rely on it against the administration in national court proceed-ings. The national court also asked whether Article 25(1) is applicable to rules
which govern the exceptional cases of undertakings of economic and social importance for society and which are undergoing serious � nancial dif� culties. Article 25(1) requires that any increase in capital must be decided on by the general meeting. The Court decided that Article 25(1) has direct effect and that, in the absence of a derogation provided for by Community law, Article 25(1) of the Second Directive must be interpreted as precluding the Member States from maintaining in force rules incompatible with the principle set forth in that article, even if those rules cover only exceptional situations. (Case C-19/90 and C-20/90 Karella and Karellas v Minister of Industry, Energy and Technology, and Organismos Anasygkrotiseos Epischeiriseon AE  ECR 2691; see also Case C-381/89 Sindesmos Melon Tis Elefthearas Evangelikis Ekklisias and Others v Greek State and Others  ECR 2111)
3. Still, the Union’s courts do need improvement. In the past 25 years, the number of cases brought before the court has risen from 70 a year to about 400. A prelimi-nary ECJ ruling, sought out by a national court to ensure that its decisions (say on taxes or employment) will not con� ict with community law, takes around 18 months to be delivered; a full case takes two years.
1. Explain the following statement: “Because the Union is a legally based concept, the European Court of Justice will play an ever-increasing role, as the Supreme Court has done in the United States.”
2. De� ne the term “judge-made law”.
3. “Judge-made law is inevitable in a developing society.” Do you agree or disagree with this statement? Support your position.
Enhancing your communication skills
1. Write an essay based on the following statements:
(a) “Case law and EU law can both affect business, and are harder to predict since they are independent of national governments”.
(b) “The powers of the EU Institutions are expanding and contracting.”
2. Write a summary of one of the bellow given passages:
(a) Lobbying – a legitimate activity? (p. 106).
(b) The EU and the Non-European Nations. Relations between the EU and the non-European industrialized countries, especially the United States and Japan, have been both rewarding and frustrating. The EU follows a protectionist poli-cy, especially with respect to agriculture, which on occasion has led the United States in particular to adopt retaliatory measures. In general, however, relations have been positive. The United States and Japan are the largest markets outside Europe for EU products and are also the largest non-European suppliers. By the mid-1990s, all underdeveloped countries could export industrial products to EU nations duty free; many agricultural products that competed directly with those of the EU could also enter duty free. In addition, the EU has reached spe-cial agreements with many countries in Africa, the Caribbean, and the Paci� c (the so-called ACP countries). In 1963, it signed a convention in Cameroon of-fering commercial, technical, and � nancial cooperation to 18 African countries, mostly former French and Belgian colonies. In 1975 it signed a convention in Togo, with 46 ACP countries, granting them free access to the EU for virtu-ally all of their products, as well as providing industrial and � nancial aid. The EU has concluded similar agreements with all the Mediterranean states except Libya, as well as other countries in Latin America and Asia.
3. Prepare a 10-minute presentation on each of the below given topics:
(a) The European Investment Bank;
(b) The European Monetary Institute;
(c) The European Central Bank; and
(d) The European System of Central Banks.
UNIT 7 SERVICES MARKETING
PHYSICAL PRODUCTS AND SERVICES
Products can be divided into physical products and services. For many marketers, the difference between services marketing and the marketing of physical goods is neg-ligible. Why is this so? Firstly, the marketer de� nes a product as a bundle of bene� ts: a person seeking to be cheered up may do this either by going to a good movie (a service) or by buying a new shirt (a physical product). For the marketer, the bene� t is basically the same. Secondly, most physical goods contain a service aspect, and more services contain a physical product. And thirdly, consumer orientation means that we should be looking at what the consumer thinks, needs and wants, not at de� ning our product in terms of its characteristics.
Having said that, there are clearly products where the service element is the ma-jor part of the cost of the product; for example, a restaurant meal. Here the cost of the raw materials (ingredients of the food served) is only a tiny part of the overall cost of the meal. The diner is also paying for the skill of the chef, the time and efforts of the waiters, and the pleasure of dining in a luxurious surroundings, not to mention not hav-ing to do the washing-up.
FACTORS DISTINGUISHING SERVICES
The main differences between service products and physical goods lie in a number of factors. First, services are intangible: an insurance policy is more than a pa-per written on; the key bene� t (peace of mind) cannot be touched. Second, production and consumption often occur at virtually the same time: a stage play is acted out at the same time as the consumer enjoys the performance. Third, services are perishable: an airline seat is extremely perishable; once the airplane takes off, the seat cannot be sold (services cannot be produced in advance and stockpiled). Fourth, services cannot be tried: it is not usually possible to try a haircut before agreeing to have it done, nor will most restaurants allow customers to eat the meal before deciding whether to order it. Fifth, services are variable, even from the same supplier: sometimes the chef has a bad day, or the waiter is in a bad mood; on the other hand, sometimes the hairdresser has a � ash of inspiration that transforms the client’s appearance.
From the consumer’s viewpoint, the risk attached to buying a service will in-evitably be higher than is the risk of buying a physical product. Physical products are easily returned if they fail to satisfy; it is impossible to return a poor haircut. The result of this is that consumers are likely to spend more time on information-gather-ing, and will rely more heavily on word-of-mouth recommendations than they would when buying a physical product. For example, a consumer looking for a doctor may want to know what experience and quali� cations the doctor has to treat a particular complaint; few car buyers would be interested in the quali� cations and experience of Ford’s chief design engineer.
While most of the risk attached to buying a physical product is limited to the purchase price (though no doubt there will be exceptions to this general rule), service purchasing carries additional risks. First, there are consequential losses, which arise when a service goes wrong and causes loss to the customer. For example, a poorly handled legal case could result in the loss of thousands of pounds. Service providers are usually careful to explain the risks beforehand, use disclaimers in contracts, and carry professional liability insurance. Consumers can sue for consequential losses. Next has to do with the purchase price risk, which is the possible loss of the purchase price when the consumer buys a service that does not work. The usual consumer re-sponse is to refuse to pay for the service, so it is advisable for the supplier to check during the service process that everything is satisfactory. This is why waiters will check that the food is satisfactory during a meal out, and why service stations call customers when they � nd something serious is wrong with the car. Third is misun-derstanding, which is common in service provision because of the lack of trying out services (trialability).
Because customers are buying a promise, they are more likely to use indirect measures of quality such as price. Diners tend to assume that more expensive restau-rants will provide better food and/or service; that expensive hairdressers will provide better hairdos; and that expensive lawyers are more likely to win cases. Having made a purchasing decision, the consumer is more likely to become involved with the service provider. Consumers therefore tend to have favourite restaurants, hairdressers, family solicitors, bank managers, brokers, etc., with whom the relationship might continue for a lifetime. Customers are reluctant to switch bank accounts, even when problems have become apparent; even though customers will readily change brand of canned tuna in order to save a few pence, they will still buy the tuna from the same supermarket as
usual. This is because the customer knows where everything is kept in the supermarket, understands the store’s policy on returned goods, knows which credit cards are accept-able, and perhaps even knows some of the staff on the tills.
Since most services involve direct contact between the producer and the consum-er, the attitude and behaviour of the people involved is an integral part of the product; a bank manager’s personality affects trade in a way that personality of a production-line worker does not.
Because the consumer is usually present during all or part of the process of pro-viding the service, the process becomes as important as outcomes in a service market. Lufthansa’s improved method of seating passengers (boarding window-seat passengers � rst and aisle-seat passengers last) makes the airline more pleasurable to � y with.
In many ways services can be marketed in similar ways to physical products. In most cases there is no clear demarcation between products and services, so the tech-niques for marketing them will not differ greatly.
This is why the decisions of the Lastminute.com, one of the most successful � rms, are perhaps closest to the product. Or, more precisely to the service, because Lastminute.com sells services such as theatre tickets, hotel rooms, � ights, restaurant booking and even hairdressing appointments over the Internet. The essence of Lastminute.com is that customers can book the service of their choice instantly, right up to the last minute due to the rapid communicating and processing powers of computers and the Internet. Part of the reason for the company’s success is its care over choosing suppliers, for it intends to ensure that the � nal consumers always have a good experience.
1. READING FOR COMPREHENSION
Answer the below given questions.
1. Why is the difference between services marketing and the marketing of physical goods negligible for many marketers?
2. Is the diner paying only for the ingredients of the food served in a restaurant? Explain.
3. State factors distinguishing services. Illustrate by examples.
4. Will the risk attached to buying a service be inevitably higher than is the risk of buying a physical product? Give your reasons.
5. Identify risks attached to service purchasing. Illustrate.
6. Can services be marketed in similar ways to physical products? Support your position by examples of some of the most successful � rms.
2. MATCHING EXERCISES
Match (1) physical product purchasing and (2) service purchasing on the left-hand side with their sequences on the right-hand side.
(a) Commitment to supplier. (b) Payment for goods.1. Physical product purchasing (c) Evaluation of service: satisfaction or otherwise. (d) Use of goods. (e) Decision to buy service.2. Service purchasing (f) Pay for service. (g) Receipt for goods. (h) Delivery and consumption of service. (i) Decision to buy goods. (j) Post-purchase evaluation: satisfaction or otherwise.
Supply the missing prepositions.
Marketing in different sectors
Services can be distinguished ……… products because they are intangible, in-
separable from the production process, variable, and perishable. Services are intangible
because they can often not be seen, tasted, felt, heard, or smelled before they are pur-
chased. A person purchasing plastic surgery cannot see the results ……… the purchase,
and a lawyer’s client cannot anticipate the outcome ……… a case before the lawyer’s
work is presented ……… court. To reduce the uncertainty that results ……… this
intangibility, marketers may strive to make their service tangible ……… emphasizing
the place, people, equipment, communications, symbols, or price of the service.
Services are inseparable ……… their production because they are typically pro-
duced and consumed simultaneously. This is not true ……… physical products, which
are often consumed long ……… the product has been manufactured, inventoried, dis-
tributed, and placed ……… a retail store. Inseparability is especially evident in enter-
tainment services or professional services. ……… many cases, inseparability limits
the production of services because they are so directly tied ……… the individuals who
perform them. This problem can be alleviated if a service provider learns to work faster
or if the service expertise can be standardised and performed ……… a number of in-
dividuals (as H&R Block, Inc., has done ……… its network of trained tax consultants
……… the United States).
The variability of services comes ……… their signi� cant human component. Not
only do humans differ ……… one another, but their performance ……… any given
time may differ ……… their performance ……… another time. The mechanics ………
a particular auto service garage, for example, may differ ……… terms ……… their
knowledge and expertise, and each mechanic will have “good” days and “bad” days.
Finally, services are perishable because they cannot be stored. Because of this,
it is dif� cult ……… service providers to manage anything other than steady demand.
When demand increases dramatically, service organisations face the problem of produc-
ing enough output to meet customer needs. When a large tour bus unexpectedly arrives
……… a restaurant, its staff must rush to meet the demand, because the food services
(taking orders, making food, taking money, etc.) cannot be “warehoused” ……… such
an occasion. To manage such instances, companies may hire part-time employees, de-
velop ef� ciency routines for peak demand occasions, or ask consumers to participate
……… the service-delivery process. ……… the other hand, when demand drops off
precipitously, service organisations are often burdened ……… a staff of service pro-
viders who are not performing. Organisations can maintain steady demand ………
offering differential pricing during off-peak times, anticipating off-peak hours ………
requiring reservations, and giving employees more � exible work shifts.
Fill in the blank with the appropriate article or leave it blank to indicate that no article is necessary.
If …… complaint is about …… physical product …… simple replacement of
…… faulty product will usually be suf� cient, but it is always better to go …… step
further and provide some further recompense if possible. Services fall into …… fol-
lowing categories, for …… purpose of correcting complaints.
• Services where it is appropriate to offer …… repeat service. Examples are ……
vacuum cleaners, domestic appliances, etc.
• Services where giving …… money back will usually be suf� cient. Examples are
retail shops, cinema and theatres, video rental companies, etc.
• Services where consequential losses may have to be compensated for. Examples
are medical services, solicitors, etc.
…… above mentioned categories are not necessarily comprehensive or exclu-
sive; sometimes it may be necessary to give back …… consumer’s money and also
make some other redress. It is important that …… dissatis� ed customers are allowed
to voice their complaints fully and that …… appropriate compensation is negotiated
in …… light of …… strength of …… complaint; …… degree of blame attaching to
…… supplier, from …… consumer’s viewpoint; and …… legal and moral relationship
between supplier and consumer.
…… failure to solve problems raised by post-purchase dissonance will, ultimate-
ly, lead to irreparable damage to …… � rm’s reputation. …… evidence from ……
research carried out by …… Coca-Cola Corporation is that …… consumers whose
complaints are resolved satisfactorily tend to become more loyal than those consumers
who did not have …… complaint in …… � rst place. In …… last analysis, it is always
cheaper to keep an existing customer than it is to attract …… new one.
Fill in the blank spaces in the text with correct verb forms.
Business marketing, sometimes ………… (CALL) business-to-business market-
ing or industrial marketing, …………… (INVOLVE) those marketing activities and
functions that …………… (TARGET) toward organisational customers. This type of
marketing involves ………… (SELL) goods and services to both public and private
organisations ………… (USE) directly or indirectly in their own production or serv-
ice-delivery operations. Some of the major industries that ……………… (COMPRISE)
the business market are construction, manufacturing, mining, transportation, public util-
ities, communications, and distribution. One of the key points that …………………
(DIFFERENTIATE) business from consumer marketing is the magnitude of the transac-
tions. For example, in the mid-1990s, a Boeing 747 airliner, selling for about $155 mil-
lion, ……………… (CAN TAKE UP) to four years to manufacture and deliver once the
order …………… (PLACE). Often, a major airline company …………… (ORDER)
several aircraft at one time, making the purchase price as high as a billion dollars.
REVIEW AND DISCUSSION QUESTIONS
Service industry is one of the fastest growing sectors of economy in developed countries. It now accounts for more than 60% of their economy in terms of GDP and employment. Service industries, while producing no tangible goods, provide services or intangible gains or generate wealth. In free market this sector generally has a mix of private and government enterprise. The industries of this sector include banking, � -nance, insurance, investment, and real estate services; wholesale and retail trade; trans-portation, information, and communications services; professional, consulting, legal, and personal services; tourism, hotels, restaurants, and entertainment; repair and main-tenance services; education and teaching; and health, social welfare, administrative, police, security, and defense services.
The below given Boston Aquarium text shows some of the problems that services marketing creates. They are different from those of goods marketing. Marketing prob-lems arise from the very nature of services. After reading through the text try to answer the below given questions.
1. Robert Sharp, the Director of the Boston Aquarium has just received a memo from Ms. Flounden, the Educational Programmes Co-ordinator. She has pro-posed that, starting autumn, the Boston Aquarium restrict weekday admissions to school tours during the hours from 10:00 a.m. to 03:00 p.m. and exclude the general public during these hours.
2. During the last school year, the Boston Aquarium offered 6 formal educational programmes for children from kindergarten and primary school. Children were also given guided tours by volunteer guides. The tours included various perfor-mances offered to general public. Although the tours were successful, both in-dividual visitors and teachers complained. Some members of the general public found it irritating to walk the galleries with “all the screaming kinds around”. The teachers, on the other hand, expressed disappointment in their inability to book their pupils into the aquarium programmes. Since the school market is very important to the aquarium and, besides, the weekday attendance by the general public was low the previous school year, Mr. Sharp thought he should give the proposal some serious consideration.
3. Closing the galleries to the general public on school days would have several affects:(a) The “con� ict” between the general public and the school tours would be eliminat-
ed, since the public would not be � ghting the crowds of schoolchildren. However, the annoyance with the school children may turn into anger at not being admitted at all, especially with the members, who see the aquarium as theirs.
(b) The Clam Gift Shop would not need to be open during the hours of school tours which would result in one less paid position during these hours.
(c) General public accounted for 70% of visitors during weekdays last year. Therefore, revenues from the school programme would have to be increased to cover at least part of the loss in general admissions revenues. The loss could not be made up by opening the aquarium admission after 03:00 p.m. since few visitors came at that time during winter.
1. Having in mind the nature of services, and referring to the previous services mar-keting texts: (a) what ways of increasing revenue would you suggest; and (b) how would you promote the Boston Aquarium in the next winter season?
2. High quality service cannot be offered without well-trained and motivated people, especially those who contact the customers. Since having more children groups would mean more effort on the part of the staff, how would you promote the new strategy to them?
3. The appearance and manners of � rst-line employees are extremely important. What should an ideal bank manager, stockbroker, insurance agent, customer sup-port engineer, etc. be like?
Enhancing your communication skills
1. Write an essay based on the following statements:(a) “For many marketers, the difference between services marketing and the mar-
keting of physical goods is negligible.”(b) “Complaints should be encouraged because they give the opportunity to cure
post-purchase dissonance and create loyal customers”.2. Write a summary of one of the below given passages:
(a) Marketing in Different sectors (p. 115)(b) Services marketing: Lastminute.com.
Products can be divided into physical products and services. For many marketers, the difference between services marketing and the marketing of
physical goods is negligible. Why is this so? Firstly, the marketer de� nes a product as a bundle of bene� ts: a person seeking to be cheered up may do this either by going to a good movie (a service) or by buying a new shirt (a physi-cal product). For the marketer, the bene� t is basically the same. Secondly, most physical goods contain a service aspect, and more services contain a physical product. And thirdly, consumer orientation means that we should be looking at what the consumer thinks, needs and wants, not at de� ning our product in terms of its characteristics.
Having said that, there are clearly products where the service element is the major part of the cost of the product; for example, a restaurant meal. Here the cost of the raw materials (ingredients of the food served) is only a tiny part of the overall cost of the meal. From the consumer’s viewpoint, the risk at-tached to buying a service will inevitably be higher than is the risk of buying a physical product. Physical products are easily returned if they fail to satisfy; it is impossible to return a poor haircut. The result of this is that consumers are likely to spend more time on information-gathering, and will rely more heavily on word-of-mouth recommendations than they would when buying a physical product. For example, a consumer looking for a doctor may want to know what experience and quali� cations the doctor has to treat a particular complaint; few car buyers would be interested in the quali� cations and experience of Ford’s chief design engineer.
This is why the decisions of the Lastminute.com, one of the most suc-cessful � rms, are perhaps closest to the product. Or, more precisely to the service, because Lastminute.com sells services such as theatre tickets, hotel rooms, � ights, restaurant booking and even hairdressing appointments over the Internet. The essence of Lastminute.com is that customers can book the service of their choice instantly, right up to the last minute due to the rapid communicating and processing powers of computers and the Internet. Part of the reason for the company’s success is its care over choosing suppliers, for it intends to ensure that the � nal consumers always have a good experience.
3. Prepare a 15-minute presentation on one of the below given topics:(a) Customer support is a service that adds a lot to the value a product has for
the consumer. However, sometimes things go wrong. Can you give at least three rules for handling dif� cult customers? Anticipate questions that may be thrown at you.
(b) Discuss similarities and differences between marketing goods and services.
UNIT 8 INTERNATIONAL MARKETING
INTERNATIONAL MARKETING vs. DOMESTIC MARKETING
As business becomes increasingly global marketers � nd themselves more and more in the position of doing business across cultural divides, and across national boundaries. International marketing differs from domestic marketing in many ways. First, cultural differences mean that communication tools will need to be adapted, and sometimes changed radically. Second, market segmentation issues are likely to be more geographically based. Third, remoteness of the markets makes monitoring and control more dif� cult. And fourth, both physical distribution (logistics) and place decisions will be affected by infrastructure differences in some overseas markets.
THE IMPORTANCE OF INTERNATIONAL MARKETING
International marketing is important because of the economic theory of compara-tive advantage. This theory states that each country has natural advantages over oth-ers in the production of certain goods, and therefore specialisation and the trading of surpluses will bene� t everybody. For example, although it is possible to grow tomato under glass in the Netherlands, they can be grown more easily and cheaply in Spain, so it makes economic sense for the Dutch to buy Spanish tomatoes and sell Spain chemi-cal products that are produced more readily in the Netherlands.
Comparative advantage does not explain all of the thrust behind internationali-sation; Japanese, US and UK multinationals have all made major impacts in overseas markets without having an apparent natural advantage over their overseas competitors. In some cases this can be explained by economies of scale; in others by the develop-ment of expertise within the � rms; in others the reasons are historical.
REASONS FOR INTERNATIONALISATION
Although governments encourage � rms to internationalise (and in particular to ex-port), this is not in itself enough reason to seek markets overseas. In addition to the ration-ale for international marketing, such as small or saturated domestic markets, economies of scale, international production, customer relationships, market diversi� cation and in-ternational competitiveness, there are also some further reasons. One is that the product life cycle will vary from one country to another. What is a mature product in one country
may be at the introduction stage in another, so that the � rm gains all the advantages of introducing new products to the market without the costs of research and development that would result from developing new products for the domestic market.
CULTURAL DIFFERENCES AND POLITICAL ENVIRONMENT
When dealing with foreign markets, marketers will meet barriers that would not be present in domestic markets. One of them refers to culture, which affects more than just communication issues. It is as well for marketers to take the advice of natives of the countries in which they hope to do business, since other people’s cultural differences are not always obvious.
From a marketer’s viewpoint, cultural differences are probably reducing as con-sumers become more globally minded; foreign travel, the widespread globalisation of the entertainment media, and existing availability of foreign products in most econo-mies have all served to erode cultural differences.
The entry decision will also be affected by the political factors of the target coun-try. Some of them are as follows: level of protectionism, degree of instability and rela-tionship between the marketer’s government and the foreign government.
The economic environment of the target country is more than the issue of whether the residents can afford to buy our goods. In some cases the wealth concentration is such that, although the average per capita income of the country is low, there are a large number of millionaires; India is an example of this, as is Brazil. Economic issues also encompass the public prosperity of the country: is there a well-developed road system, for example? Are telecommunications facilities adequate? Is the population suf� ciently well-educated to be able to use the products effectively?
The crucial issue is that of foreign exchange currency availability. If the target country does not have a substantial export market for its own products, it will not be able to import foreign products because potential importers will not be able to pay for the goods in the appropriate currency. This has certainly been the problem in some countries in Eastern Europe since the collapse of communism, and there has as a result been a return to barter and countertrading. Countertrading is the export of goods on the condition that the � rm will import an equal value of other goods from the same market, and in the international context can be complex; for example, a � rm may export mining machinery to China, be paid in coal, and then need to sell the coal on the commodities market to obtain cash (a buy-back deal).
GLOBAL SEGMENTATIONAlthough cultural variance and differences in consumer behaviour are still ma-
jor issues for international marketers, transnational segments are still identi� able. The main bases for segmentation are by country and by individual characteristics (in much the same way as segmentation within one’s own country.
Countries can be grouped according to economic development criteria, by cul-tural variables, or by a combination of factors such as economic, political and R&D factors. Transnational consumer segmentation looks at lifestyle, behaviour and situa-tion-speci� c behaviour. An example of lifestyle segmentation is the transnational teen-age market; there is also evidence of an “elite” market. An example of situation-spe-ci� c segmentation is the attitudes to gift-giving, which seem to be common to many cultures.
Therefore, the main dif� culty with seeking transnational consumer segments lies in generating adequate research within target countries. The basic problem for compa-nies seeking to internationalise is that nothing can be granted in a foreign country. It follows that a � rm’s internationalisation strategy decisions will depend on the follow-ing factors: the size of the � rm in its domestic market; the � rm’s strengths compared with overseas competitors; management experience of dealing in other countries; and the � rm’s objectives for a long-term growth.
INTERNET MARKETINGFor many small � rms, the psychological and organisational barriers to interna-
tionalisation seem too great for the � rm to cope with. Recent research has indicated that use of the Internet can help small � rms overcome these problems. Another research, which was conducted among UK website owners, showed that signi� cant barriers still exist. One of them refers to psychic distance, i.e., the cultural distance between coun-tries involved. This includes lack of ability to speak or understand foreign languages. Practical export problems include shipping goods, handling paperwork, and lack of ex-perience in dealing with overseas customers. Third has to do with resource constraints, i.e., lack of � nance to offer credit, lack of transportation, etc. Next relates to trade re-strictions. Some countries impose restrictions on imports, which can limit trade. Fifth refers to market risk. The credit risks associated with dealing with customers in other countries, and dif� culties of dealing with foreign exchange.
Current thinking is that the effect of increased use of the Net for marketing pur-poses will eventually lead to a new environment for marketing. The spread of infor-mation � ow within � rms, especially those operating globally, will mean greater pos-sibilities for real-time negotiations between � rms. The rapid growth of virtual shopping (accessing catalogues on the Internet) means that consumers may buy goods anywhere
in the world and have them shipped – or, in the case of computer software, simply downloaded – which means that global competition will reach unprecedented levels. A recent development is webcasting; the automatic delivery of items of interest direct to the individual’s PC.
However, there are several mitigating factors that are likely to impede progress towards a virtual marketplace. They include technophobia, cost of connection and use, pressure on the system and cost of hardware.
Globalisation is a business philosophy under which � rms regard the entire planet as their marketplace and source of supply. The truly global � rm identi� es competitors, suppliers, customers, employees, threats and opportunities throughout the world re-gardless of national boundaries.
Obviously, it is not always possible to take a completely global view. Even � rms such as McDonald’s have to adapt their product somewhat for local markets. For ex-ample, in India McDonald’s burgers are made from mutton, since the cow is sacred to Hindus; in Japan the company offers teriyaki burgers; in Russia the main drink offered is tea rather than coffee.
Globalisation is becoming increasingly important for all � rms, even those that are not themselves planning to expand into the international arena; those � rms will still be affected directly or indirectly by foreign competition and by the growing strength of domestic competitors who have themselves expanded overseas.
1. READING FOR COMPREHENSION
Answer the below given questions.
1. State the difference between international marketing and domestic marketing.
2. Explain the advantages of international marketing.
3. Describe the main barriers to doing business across national borders, bearing in mind cultural differences and political environment, as well as economic issues. (Economic issues also encompass the public prosperity of the country: is there a well-developed road system, for example? Are telecommunications facilities adequate? Is the population suf� ciently well-educated to be able to use the products effectively?
4. What are the speci� c problems attaching to internationalising a service industry?
5. Explain the following statement: “The Internet appears to offer cheap and easy access to global markets”.
6. Explain some of the issues surrounding the globalisation of business.
7. What is the importance of international business to a � rm that is not itself plan-ning to internationalise?
2. MATCHING EXERCISES
(a) Match the six reasons for international marketing on the left-hand side with their explanations on the right-hand side.
1. Small or saturated domestic market
(a) For many industries, notably the electronic industry and the chemical industry, the cost of initiating a new product is so huge that it needs to be spread across a very large production run. Automation of production lines is making this more of an issue for more and more � rms; recouping the capital cost of automation almost forces the � rm into world markets.
2. International competitiveness
(b) The capacity to source components and assemble � nished prod-ucts on a global scale means that a � rm can take advantage of the most competitive prices worldwide. Shipping costs are relatively low compared with the savings made.
3. Economies of scale (c) No � rm is immune from competitors coming in from outside. If a � rm is to remain viable in the long run, it may be forced to meet foreign competition on their own ground before having to meet them in the domestic market.
4. Market diversi� cation
(d) Manufacturers who supply multinational � rms must themselves be able to deliver worldwide and price in any currency in order to supply assembly plants in different countries.
5. International production
(e) If the � rm cannot expand any further in its home market, further growth can only occur by internationalising. The USA trades rela-tively little of its production; the home market is large enough so that most � rms do not need to consider exporting.
6. Customer relationships
(f) The broader the markets served, the less likely that the � rm will suffer if one market fails. For example, recessions do not happen in all countries at the same time; a truly multinational company will be able to make up losses in one market with gains in another.
(b) Match political factors in international marketing on the left-hand side with their explanations and implications on the right-hand side.
1. Level of protectionism
(a) Sometimes disputes between governments may result in em-bargoes or other restrictions. Obviously, this is particularly prevalent in the arms trade, but trade restrictions can be ap-plied to unfriendly countries. For example, trade with Iraq is limited following the invasion of Kuwait; the USA still has a trade ban with Cuba for many items; Greece and Turkey have restrictions on travel and trade.
2. Degree of instability
(b) Some governments need to protect their own industries from foreign competition, either because the country is trying to industrialise and the fledgling companies can-not compete (as in some developing nations), or because lack of investment has resulted in a run-down of industry (as in much of Eastern Europe). Sometimes this can be overcome by offering inward investment (to create jobs) or by agreeing to limit exports to the country until the new industries have caught up.
3. Relationship between marketer’s government and the for-eign government
(c) Some countries are less politically stable than others, and may be subject to military takeover or civil war. Usually the exporter’s government diplomatic service can advise on the level of risk attached to doing business in a particular country.
(c) Match the factors limiting growth of the Internet on the left-hand side with their explanations and examples on the right-hand side.
1. Technophobia (a) Most of the predictions of growth have been based on research in the USA and to a lesser extent in Australia. In the USA tel-ephone calls are free, so the connection to the Net costs the subscription fee paid to the Net server. In Australia, local calls are charged at a � at rate irrespective of the time the call takes. In most of the rest of the world, calls to the server are charged by the minute, and thus a lengthy session sur� ng the Net can prove very expensive for the average consumer.
2. Cost of connection and use
(b) Although costs of computer equipment are dropping dramati-cally, and WebTV devices (for accessing Net via an ordinary TV screen) are being developed, the cost is still high enough to deter many potential users in lower socio-economic groupings, and certainly high enough to prevent access by most of the Third World. This means that Net is still likely to be the virtual world of the relatively rich for some considerable time to come.
3. Pressure on the system
(c) Substantial numbers of people have considerable resistance to the technology. Currently use of the Net requires a degree of com-puter literacy that is not present in the majority of population, although voice-operated computers will reduce this problem.
4. Cost of hardware (d) The number of subscribers is growing at a rate far greater than the ability of the technology to keep up. This means that many subscribers are faced with extremely long delays in accessing in-formation (some say that “www” stands for “wait, wait, wait”. This means that it is sometimes quicker and less frustrating to go to the High Street shops and buy the item in a conventional way.
(d) Match the stages in globalisation on the left-hand side with their explanations on the right-hand side.
1. Ethnocentrism (a) The � rm only identi� es the difference in each market. The � rm treats each market as being unique, with its own marketing strat-egies; the products are modi� ed to suit the local market, and tac-tical issues such as price and promotion are decided locally.
2. Polycentrism (b) The firm sees the world as a single market and seeks to iden-tify market segments within that market. This results in devel-oping uniform policies for approaching segments which have been identified, so that promotions and products are similar across globe.
3. Geocentrism (c) Home-country orientation. The foreign country is seen as sec-ondary, perhaps as a place to dispose of excess production. The assumption is that the foreign market is basically the same as the domestic market, so marketing strategies are hardly adapted at all for the overseas market.
(e) Match the names of the six major initiatives undertaken in recent years to encourage world trade on the left-hand side with their descriptions on the right-hand side.
1. General agreement on Tariffs and Trade (GATT)
(a) This is an agreement on world agriculture, production and pric-es; compliance with it has been patchy, but the signatories to the Agreement continue to negotiate.
2. European Union (EU)
(b) A six-member group that has agreed to establish a free trade area in South-East Asia in the early part of the 21st century.
3. North American Free Trade Agreement (NAFTA)
(c) A customs union between the nations of South America, this has already resulted in passports travel throughout the continent (citizens need only carry identity cards) and the in removal of tariff barriers on most items.
4. Mercosur (d) This is a trading group of 15 countries that have virtually elimi-nated customs duties between the member states. This has caused some complications, and will continue to do for some time, but border controls are minimal (and in some cases non-existent). Eventually, the EU is likely to become a federal superstate as more of the economic decision-making is centralised.
5. Cairns Agreement (e) Creating a customs union between the USA, Canada and Mexico, this agreement seeks to cancel all tariffs (customs duties) between the member states by 2010.
6. Association of South-East Asian Nations (ASEAN)
(f) An ongoing set of international negotiations to reduce customs duties, which act as a barrier to trade. Almost 65 nations are in-volved in the talks, which were initiated after the Second World War. Tariffs among industrialised nations fell from an average 40% to approximately 5% in 1990.
Supply the missing prepositions to complete the below given text.
Nobody owns the Net; it is a communications medium spread ……… thousands
(even millions) ……… computers worldwide, which operates independently ………
the telephone companies that supply its cable connections, ……… the governments
……… whose countries it resides, and even ……… the computer owners ………
whose machines data are stored.
The Net therefore operates ……… its own rules; there is little or no international
law to govern its use (or abuse) so Net users have established laws and punishments
……… their own. For example, an early attempt to use the Net ……… marketing
communications was to send out indiscriminate e-mails to large number of subscrib-
ers. This practice, known as spamming, quickly led to retaliation ……… kind, ………
the offended subscribers sending very large messages back ......... the offending � rm.
This is known as mail-bombing; subscribers would send very large � les (manuscripts
of textbooks, complex software programmes, telephone directories) ……… the � rm,
resulting ……… the breakdown of the � rm’s systems, and ……… some cases a break-
down of the � rm’s net server. A further type of response is called � aming – insulting
messages sent ……… e-mail. This type of response means that marketers are now
extremely careful ……… sending unsolicited communications ……… the Net.
Another way ……… which Net subscribes have registered objections ………
what they see as unfair marketing practices is to use bulletin boards to blacklist
companies or to give offensive messages ……… companies. Some of these have
bordered ……… the libellous, but there is no way of � nding out who has put the
notices ……… the board, and since the libeller might be halfway ……… the planet
there is very little prospect ……… successfully suing ……… damages. Most ma-
jor companies’ sites are shadowed ……… anonymous counter-culture sites, such as
McSpotlight site which shadows McDonald’s and which carries derogatory stories
……… McDonald’s products and restaurants. All in all, the consumer has most of
the real power ……… the Web.
Classic examples of errors arising from language differences abound; ……
General Motors Nova brand name translates as “no go” in Spanish. Gerber means “to
throw away” in colloquial French, creating problems for …… baby foods manufac-
turer of …… same name, and Irish Mist liqueur had to be re-named for …… German
market since “mist” means “excrement” in German. Many cultural problems are sub-
tler, and have to do with …… way things are said rather than …… actual words used.
In Japanese, “yes” can mean “yes, I understand” but not necessarily “yes, I agree”.
Portuguese has …… total of seven different words for “you”, depending on …… status
and number of people being addressed.
…… body language is also universal. …… American sign for “OK”, with ……
thumb and fore� nger making …… circle, is …… rude gesture in Brazil (equivalent
to sticking up …… extended middle � nger in …… USA and most of Europe). While
American are usually very happy to hear about …… individual’s personal wealth and
success, Australians are less likely to take kindly to somebody acting like …… “tall
poppy” in this way.
In general, marketers need to be wary of ethnocentrism, which is …… tendency
to believe that one’s own culture is …… “right” one and that everybody else’s is at
…… best …… poor imitation. It can be easier to aim for …… countries where there
is some psychological proximity. For example, English-speaking countries have psy-
chological proximity with each other; Spain has psychological proximity with most of
…… Latin America; and …… former Communist countries of …… Eastern Europe
are close. Increasingly, …… marketers are able to identify distinct subcultures that
transcend national boundaries, for example …… world youth culture fuelled by media
such as MTV.
Fill in the blank spaces in the text with correct verb forms.
The Internet and commercial on-line services
The Internet and commercial on-line services …………… (RELATE). In some
ways they …………… (BECOME) intertwined. But they …………… (BE/NOT)
the same thing.
Consider how you connect to the Internet. You can access the Internet by
…………… (USE) an Internet service provider, or …………… (USE) a commercial
online service, such as America On-line or Prodigy. Internet service providers do one
thing; they …………… (GIVE) you a pipeline to the Internet, but usually ……………
(BE/NOT) in the business of …………… (CREATE) content. You can think of an
Internet service provider as a phone company: They …………… (PROVIDE) a ser-
vice, a gateway to information, but they …………… (CREATE/NOT) much informa-
On the other hand, commercial on-line services may provide their own content.
You can use these services …………… (DO) things that …………… (BE/NOT) neces-
sarily available on the Internet - …………… (SEARCH) an encyclopedia, ……………
(READ) today’s news headlines, and …………… (GET) stock market information.
On-line services also …………… (DO) the job of an Internet service provider,
…………… (GIVE) users access to the Internet. Their customised content is not
available to Internet users who …………………… (SUBSCRIBE/NOT) to that on-
The line between what a commercial on-line service and the Internet can of-
fer rapidly …………… (DIMINISH). Only a few months ago, you …………………
(CAN/NOT FIND) an encyclopedia, today’s news headlines, or reliable stock market
information on the Net. If you …………… (WANT) that information on-line, you
needed to use an on-line service. Today, all of these services …………… (BE) avail-
able on the Internet - sometimes at a price, often for free.
It can be dif� cult for on-line service users to tell when they …………… (USE)
the Internet rather than …………… (USE) features of the service itself, unless the on-
line service …………… (MAKE) the source of the information clear.
On-line services do have advantages. Since they …………… (CONTROL) by a
single company, on-line services generally much better ……………… (ORGANISE)
than the Internet. A single directory can usually provide access to all features of an
What Internet tools commercial on-line services …………… (OFFER)? Each
service …………… (HAVE) its own features, but it …………… (BE) safe to say that
all on-line services now ……………… (OFFER) nearly full access to the Internet’s re-
sources - including e-mail, newsgroups, and the World Wide Web. Differences between
them …………… (BE) primarily the interface and pricing structures.
REVIEW AND DISCUSSION QUESTIONS
Nestlé has � own into another storm concerning its approach to marketing in the Third World.
Bottled water has been one of the success stories of the past 20 years. Always popular in some European countries such as France and Italy, fears about contamina-tion of water supplies coupled with rising af� uence has resulted in exponential growth in the market in countries where previously people were perfectly happy to drink tap water. The growth in the world population, and consequently increasing pressure on freshwater supplies, means that tap water in many countries is either contaminated or (at best) tastes unpleasant owing to residues from the puri� cation systems.
The problem for many of the � rms in the industry has been the cost of purifying and bottling the water; traditional sources of mineral water, such as the Perrier springs, are inadequate to cope with the potential world supply. Nestlé’s answer to the problem is to source the water in China, where bottling costs are low, and rather than use expen-sive spring water, to purify tap water.
After reading through the below given Nestlé Pure Life passage try to answer the below given questions.
1. Nestlé initially entered the Asian market by buying out local brands. The com-pany now owns over 50 local brands in Asia, and is lobbying governments in Pakistan, Ghana and the Philippines to allow to foreign ownership of local com-panies. In some Asian countries, notably Thailand, the market has developed to the point where only the very poorest people would drink tap water; Nestlé hopes to achieve a similar success in countries such as Pakistan, where the company’s Pure Life was launched in 1999.
2. Two months into the launch of the product, Nestlé had won 60% of the Pakistani market for bottled water. Although the current projections for the market are low (Nestlé estimates that Pakistani will drink an average 0.2 litres per annum of bot-tled water, compared with Italy’s average 154 litres per person), the potential for growth is correspondingly huge. In particular, Nestlé has not been slow to notice that the market growth in next-door India was 400% between 1993 and 1997.
3. The company’s publicity campaign emphasizes the purity and safety aspects of the water. Store banners reading “Pure Safety. Pure Trust. The ideal water, from
Nestlé with love” are seen throughout the country, and billboards urge people to “Drink only Nestlé Pure Life”.
4. Nestlé expects that most customers will come from af� uent, urban classes, and this poses a problem from the viewpoint of Third World pressure groups such as Oxfam. Oxfam points out that much of the tap water in Pakistan is of “debatable” quality; about 80% of diseases in the Third World and one-third of the deaths are caused by the contaminated water, and some commentators believe that Nestlé’s action in bottling water will actually worsen the situation, because it might re-duce the political will to act in bringing all drinking water up to safe standards.
5. Nestlé has also been criticized for some of the PR exercises undertaken on their behalf by their advertising agents; seminars were run explaining the health risks attached to drinking tap water, and “health education” campaigns run in the Pakistani press also heightened fears about drinking any other water but Pure Life. Some of these activities were undertaken without Nestlé’s knowledge or approval. The managing director of Lahore Water Supply Company is reported as saying “These foreign companies are misleading people to make money”.
6. Despite these problems, Nestlé is planning to spend up to $250m on bottling and marketing the water in Asia between 2000 and 2004. This includes spending $150m on a new bottling plant in China. In the longer term, if the Asian mar-ket reaches the same levels of consumption as most Western European markets, Nestlé stands to be in the forefront of the world bottled water market.
1. What trends in global market are Nestlé addressing?
2. How might the company overcome the negative publicity surrounding its cam-paign in Pakistan?
3. How does Nestlé’s success in the market relate to globalisation drivers?
4. What future trends would help Nestlé?
5. Bottled water is usually promoted in terms of its purity; why should this be a problem in Pakistan?
Enhancing your communication skills
1. Write an essay on one of the below given topics:
(a) Internet marketing. Bear in mind the characteristics, such as communication style, social presence, consumer control of contact, consumer control of con-tent, etc., of the Internet as a marketing tool.
(b) Marketing ethics. What role does marketing ethics play in business? Consider Coca Cola or McDonald’s, which has been accused of misus-ing children for advertising, unhealthy food promotion, exploitation of its employees, environmental issues, bad treatment of animals, etc. Do these examples show that Machiavelli’s motto ‘The aim justi� es the end’ is more often than not applied in business?
2. Write a summary of one of the below given passages:
(a) The Internet and commercial on-line services (p. 132);
(b) Nestlé Pure Life (p. 134);
3. Prepare a 15-minute presentation on one of the below given topics:
(a) Brands as friends, or, in other words, can people fall in love with products?
(b) Give your suggestions as to what banks might do to improve the relationship they have with their customers.
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Odlukom Senata Univerziteta “Singidunum”, Beogrаd, broj 636/08 od 12.06.2008, ovaj udžbenik je odobren kao osnovno nastavno sredstvo na studijskim programima koji se realizuju na integrisanim studijama Univerziteta “Singidunum”.
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МИТРОВИЋ, Силва, 1955- Fourth Year English / Silva Mitrović. -4th ed. - Beograd : Univerzitet Singidunum,2009 (Loznica : Mladost Grup). - V, 139 str. ; 24 cm
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