Direct assistance

The government provides many kinds of help to businesses and individuals. For example, tariffs permit certain products to remain relatively free from foreign competition; imports are sometimes taxed or limited by volume so that American products can better compete with foreign goods. Government also provides aid to farmers by subsidizing prices they receive for their crops.

In quite a different area, government supports individuals who cannot adequately care for themselves by making grants to low-income parents with dependent children, by providing medical care for the aged and indigent, and through social insurance programs that assist the unemployed and retirees. Government also supplies relief for the poor and help for the disabled. (An Outline of the American Economy. — US Information Agency, 1994).

Vocabulary list:

to mould (= mold — амер.) the economy — строить, формировать экономику;

to provide = to ensure — обеспечивать;

competition — конкуренция;

to raise prices — поднимать цены;

boom and bust — расцвет, подъем и крах, банкротство;

federal budget — федеральный бюджет;

indigent — нуждающийся, бедный.

Text 3. The Definition and the Function of Management

Management could be called the art of getting things done through people and other resources. Management is the process used to accomplish organizational goals through planning, organizing, directing and controlling people and other organizational resources.

The definition spells out four functions of management: (1) planning; (2) organizing; (3) directing, and (4) controlling.

1. Planning includes anticipating future trends and determining the best strategies and tactics to achieve organizational goals and objectives.

2. Organizing includes designing the organizational structure, attracting people to the organization (staffing), and creating conditions and systems that ensure that everyone and everything works together to achieve the goals and objectives of the organizations.

3. Directing is guiding and motivating others to work effectively, to achieve the goals and objectives of the organization.

4. Controlling is checking to determine whether or not an organization is progressing toward its goals and objectives, and taking corrective action if it is not.

Management is much more complex than doing a few tasks. A good manager must know about the industry, the firm he is in and all the technological, political, competitive and social factors, affecting that industry. He or she must understand the kind of people who work in the industry and what motivates them. Finally, a manager must be skilled in performing managerial tasks, especially technical tasks, human relation tasks, and conceptual tasks (M. Falle. How to Set up you Own Small Business. Minneapolles, 1990).

Vocabulary list:

to accomplish goals — достигать целей;

key functions — ключевые функции;

to anticipate — предвидеть;

trend — тенденция;

objective — задача.

Text 4. Learning about Marketing

The marketing concept that emerged in the 1950s and has dominated marketing thought for nearly 40 years has three parts:

1. A consumer orientation, that is, to find out what consumers want and give it to them.

2. The training of employees from all departments in customer service so that everyone in the organization has the same objective — consumer satisfaction.

3. A profit organization, that is, market goods and services that will earn the firm a profit and enable it to survive and expand to serve more consumer wants and needs.

Today's marketing philosophy is market- or consumer-oriented. No longer companies manufacture a product and give it to salespeople to sell without first considering the customer. Firms developed complementary goals of both achieving a profitable sales volume satisfying their customers. Marketing, rather than selling, became the focus of business sales activities.

As business people have come to recognize that marketing is vitally important to the success of the firm, an entirely new way of business thinking — a new philosophy — has evolved. It is called the marketing concept, and is based on three fundamental beliefs. These beliefs are:

• All company planning and operations should be customer-oriented.

• The goal of the firm should be profitable sales volume and not just volume for the sake of volume alone.

• All marketing activities in a firm should be organizationally coordinated.

The marketing concept is a business philosophy, that says, the customers' want-satisfaction is the economic and social justification for a firm's existence. Consequently, all company activities should be devoted to determining customers' wants and then satisfying them, while still making a profit.

Unfortunately, many people, including some business activities, still do not understand the difference between selling and marketing. In fact, many peope think the terms are synonymous.

Under the selling concept, a company makes a product and then uses various selling methods to persuade customers to buy the product. In effect, the company is bending consumer demand to fit the company's supply. Just the opposite occurs under the marketing concept. The company determines what the customer wants and then develops a product to satisfy that want and still yield a profit. Now, the company bends its supply to the will of consumer demand.

For a business enterprise to realize the full benefits of the marketing concept, that philosophy must be translated into action. This means that: (1) marketing activities must be fully coordinated and managed, and (2) the chief marketing executive must be accorded an important role in company planning.

First, the core of marketing is customer want-satisfaction, and that is the basic social and economic justification for the existence of virtually all organizations. Second, while many departments in a company are essential to its growth, it is marketing's responsibility to generate revenues (Ch. Futrell. Fundamentals of Selling. Boston: IRWIN, 1990).

Vocabulary list:

concept — концепция;

to emerge — появляться;

a profit organization — коммерческая организация;

complementary — дополнительный, добавочный;

sales volume — объем продаж;

vitally important — жизненно важный;

to evolve — развиваться, развертываться, развивать (идею, план);

belief — вера, убеждение, мнение;

consequently — в результате, следовательно, поэтому;

justification — оправдание;

virtually — фактически, в сущности.

Text 5. The Marketing Mix

The essentials of a firm's marketing effort include their abilities: (1) to determine the needs of their customers and (2) to create and maintain an effective marketing mix that satisfies customers' needs.

The marketing mix consists of four main elements — product, price, distribution or place, and promotion — used by a marketing manager to market goods and services. These four factors have become known as four P's of marketing. It's the marketing manager's responsibility to determine how best to use each element in the firm's marketing efforts.

A product is a set of tangible and intangible attributes? Including packaging, colour, price, quality, and brand, plus services and reputation of the seller. The definition says that consumers buy more than a set of physical attributes. They buy want-satisfaction in the form of product benefits, such as the brand name or service provided by the seller.

The corporate marketing department also determines each product's initial price. The process involves establishing each product's normal price and possible special discount prices. Since product price is often critical to customers, it is an important part of the marketing mix.

The marketing manager also determines the best method of distributing the product. It is important to have the product available to customers in a convenient and accessible location.

Promotion, as part of the marketing mix, is designed to increase company sales by communicating product information to potential customers. The four basic parts of a firm's promotional effort are (2) personal selling, (2) advertising, (3) publicity, and (4) sales promotion.

The marketing manager determines what proportion of the firm's budget will be allocated to each product and how much emphasis on each of the promotional variables will be given to each product. The American Marketing Association recently defined the role of marketing managers as follows: "Marketing management is the process of planning and executing, the conception, pricing, promotion and distribution (place) of ideas, goods, and services (products) to create exchange that satisfies individual and organizational goals" (Ch. Futrell. Fundamental of Selling. Boston: IRWIN, 1990).

Vocabulary list:

tangible — осязаемый, материальный, ощутимый, реальный;

trademark — торговая марка;

warrant — правомочие, правомерие, свидетельство;

variable (n) — переменная (величина), переменный (фактор), составная часть.

Text 6. What is a small business?

Americans have long advocated a strong small business sector as the backbone of the private enterprise system. Small business provide much of the competitive zeal that keeps the system effective. Numerous actions have been undertaken to encourage the development and continuity of small firms. Antitrust legislation, for example, was designed to maintain the competitive environment in which small companies thrive. A federal agency, the Small Business Administration, was set up in 1953 to assist smaller firms.

Small business is a vital segment of the U.S. economy; 98 percent of all businesses are considered small by federal government. Approximately 14 million small companies provide 47 percent of the total US production and employ about 48 percent of all private workers. Ninety percent of all new jobs are in small business.

The Small Business Administration says that small business is one that is independently owned and operated. It is not dominant in its field, and meets a variety of size standards. These size standards vary. Some standards apply only for loan programs, others for procurement, and still others for various special programs.

A White House conference on small business added another dimension to the definition by setting up different classes of small business according to the number of people employed: class A firms employ 0—9 people; class В — 10—49; С — 249; and class D, — 250—400 persons.

Probably the most workable concept of small business is the one suggested some years ago by the Committee for Economic Development. To qualify as a small firm under its definition, a business must have at least two of the following characteristics: (1) independent management with the managers often owing the firm, (2) capital contribution from a limited number of individuals — perhaps only one, (3) the firm operates in alocal area, and (4) the firm represents a small part of the overall industry.

In general, a small business has the following characteristics:

• Independently owned

• Independently operated and managed

• Only a minor factor in its industry

• Fewer than 400 employees

• Limited capital sources

Small businesses are found in nearly every industry in the United States. They often compete against some of the nation's largest organizations as well as against a multitude of other small companies. Retailing and service establishments are the most common small businesses. Also new technology companies often start as small organizations.

For the most part farming is still small business. The family farm is a classical example of a small business operation.

Small businesses are not simply smaller versions of large corporations. Their legal organization, market position, staff capability, managerial style and organization, and financial resources generally differ from bigger companies which gives them some unique advantages over large-scale competitors. Innovative behaviour, lower costs. And the filling of isolated market niches are some of the most important of these advantages.

Small firms are often the companies who first offer innovations, new concepts, and new products in the marketplace. Genentech, Federal Express, and Apple Computer are examples of success stories. In fact, it is estimated that the formation of small high-technology firms doubled in recent years.

Small firms can often provide a product or service more cheaply than large firms. They usually have fewer overhead costs — those not directly related to providing the goods and services — than to the large firms. Thus, they may be able to earn profit on a lower price than a large company can offer.

Small businesses have organizations with small staffs and fewer support personnel. The lower overhead costs resulting from fewer permanent staff people can provide a distinct advantage to small businesses.

Big businesses are excluded from some commercial activities because of their size. High overhead costs force them to set minimum targets at which to direct their competitive efforts. This situation allows substantial opportunities for smaller publishers with lower overhead costs.

In addition, certain types of businesses lend themselves better to smaller firms. Many services illustrate this point. Finally, economic and organizational factors may dictate that an industry consists of small firms.

Smaller firms have a variety of disadvantages. These include poor management, inadequate financing, and government regulation.

Hundreds of thousands of small businesses are begun each year. Thirty percent fail within the first year, and half within two years. For every 15 small businesses that open their doors, 10 close for voluntary or financial reasons. A great many of these failures can be attributed to poor management. Most people who start small businesses are ill-prepared as managers.

Inadequate financing is generally listed as a leading cause of small business problems. Many businesses start with inadequate capital and soon experience a shortage of funds. They oftenlack theresources to carry them over rough spots or to expand if they are successful.

Small businesspeople complain bitterly of excessive government regulation and red tape. The Small Business Administration estimates that paperwork cost for small firms is about $50 billion annually.

Most small businesses are not equipped to handle the paperwork necessitated by government regulation. Larger firms with substantial staffs can usually cope with blizzard of required forms and reports, for many small business owners it can be force that drives them to lookfor salaried positions. Many experts within and outside government believe that a major effort must be made to reduce the paperwork load for small business (L. T. Boone, D. L. Kurtz. Contemporary Business. — N. Y.: The Dryden Press, 1997).

Vocabulary list:

zeal — рвение, усердие;

to encourage — поощрять;

numerous — многочисленный;

antitrust legislation — антимонопольное законодательство;

innovation — инновация, нововведение;

overhead costs — накладные расходы;

niche — ниша;

procurement — приобретение, поставка (оборудования);

poor management — плохое управление;

leading cause — ведущая причина;

red tape — бюрократия, бумажная волокита;

blizzard — лавина, масса.

Text 7. Developing a Business Plan

Whether you have just thought of starting a business or have been self-employed for years, having a written business plan that is periodically reviewed and updated is vital to the success and longevity of your business. A business plan can provide the owner / manager with a pathway to profit, as the plan unfolds and is implemented.

As change is only constant in this world, unless you know what business you are in, you will not be able to adjust tostay even in this global economy. Four potential benefits ofdrawing up a business plan are:

1. The plan gives you a path to follow and helps make the future you what it to be. The plan will outline goals and steps to allow you toguide your business through tough times and downturns, without drifting aimlessly or becoming panicked by the events that threaten a business.

2. For financial purposes, having a current business plan improves your situation with a lender if money is needed, as he / she can obtain ready insight into your business from a well-done business plan.

3. The business plan can serve as a basis oforientation for new employees (and suppliers) about your operations and business objectives.

4. By doing and periodically reviewing a business plan, you develop practice in thinking about your business in depth — competitive conditions, potential product areas, methods of promotion. This practice, over time, assists in developing you further as an owner / manger and provides you with the insight needed to make judgements about your business, as you operate on a daily basis.

In this age of specialization, computerization and information, the businesses that will survive are those that have a vision, know themselves well, and have a business strategy that fits their style and business expertise.

A good business plan is a written document that states why you are in business, what business you are in, what the product is, what your market is, who the competition is, how the product is priced, where you are to locate or are located and why and how you will attract customers or advertise.

As you usually will have employees working with you, the plan also outlines who the people will be in your organization and what is expected of them. It is a good idea to detail who your advisors are and their responsibilities, what your background is and how you will ran the business.

A business plan should contain all the information you would like to know about a firm before you invested in it yourself — which is really what you do daily with your individual business.

A well-written business plan can be extremely impressive in making a presentation to a lender — if you thoroughly understand your business and what kind of financing you will need in advance.

It does take time to write all this yourself — but who knows your business better than you do? The plan itself does not need to be formal or lengthy. If you are writing it as a guideline for yourself, however, by going through the exercise yourself, you will commit to paper the road map by which your business will reach the goals you have established for it. This can be done in a variety of ways.

Once you have completed your initial business plan, by reviewing the plan annually you can update financial information and change areas as needed, to reflect the current state of the firm; also you can derive a great sense of history firm reading old business plan, remembering what you though at the time and seeing how you have reached the goals set to paper (P. Eddy. Developing a Business Plan // Small Business. November 1991).

Text 8. Central Banking in the United Kingdom

A central bank is that organization which has one prime function — the regulation of money and credit in an economy. Although particular central banks may carry out a variety of different functions, many of them are not necessary functions of a central bank and could well be carried out by other institutions within the economy. For example, the issue of bank notes is usually a central banking function, but it can be fulfilled by privately owned banks (as in Hong Kong) or by a government department (as in the period 1914—28 in the United Kingdom, when the Treasury Issued notes as well as the Bank of England).

However, we shall find that central banks do tend to have many common features and the Bank of England is not atypical in this respect.

One important question regarding central banks concerns their relationship with the government. How independent of the central government is the central bank? To what extent can a central bank carry out policies which may not be consistent with those of the government? In some countries, such as the United States and West Germany, the central bank enjoys a considerable degree of independence and there may be constitutional provisions which ensure the independence of the central bank. At the other extreme, in some centrally-planned economies the central bank often plays a very minor role in the general conduct of economic policy.

In the case of the Bank of England it is clear that, in formal terms, its role is subordinate to the Treasury; this is a relationship which is explicitly set out in the Bank of England Act, 1946. In the final analysis, the Bank must conform to the wishes of the government and carry out the policies which the government lays down.

The Bank of England was nationalized in 1946 and its capital is now owned by the Treasury. Before 1946 it was privately-owned institution but for many years it had been acknowledged as the UK's central bank, the act of nationalization merely confirming in law a situation which already existed in practice. It is run by a Court of Directors, consisting of the Governor, Deputy Governor, four full-time Executive Directors and twelve part-time directors, all the members of the Court being appointed by the Crown (i. e. the government of the day).