BUSINESS AND MANAGEMENT;

WEEK ONE ANSWERS

1. Information Structure: a. Paradigms of management control do not exist in isolation. Each is a construct of people living within a particular social world. These social worlds can be described in terms of national cultures, while legal and educational institutions, regulatory regimes and markets for information are also relevant contextual factors. All these factors need to be considered when examining each paradigm and how it functions. The highlighted phrases connect back to the previous sentence.

2. Given > New

a) Competitive context has always been important to strategy. The availability of skilled and motivated employees; the efficiency of the local infrastructure; the size and situation of the local market, the extent of governmental regulations have always influenced company strategy. Competitive context has always been important to strategy. Company strategy has always been influenced by the availability of skilled and motivated employees; the efficiency of the local infrastructure; the size and situation of the local market, and the extent of governmental regulations.

b) Companies today depend more on local partnerships. They rely on outsourcing and collaboration with local suppliers and institutions; they work more closely with local customers; and they draw more on local universities and research institutes to conduct research and development. Companies today depend more on local partnerships. Such partnerships allow collaboration with local suppliers and institutions, closer work with local customers and research and development with local universities and research institutes.

c) The greater threat facing London's financial-services industry comes from a thousand smaller regulatory hurdles. Financial firms will find it more difficult or

expensive to conduct business or enter new markets because of them. The greater threat facing London's financial-services industry comes from a thousand smaller regulatory hurdles. Because of them, financial firms will find it more difficult or expensive to conduct business or enter new markets.

d) The idea of a legal framework for firms that put profits second is not confined to America. Since 2005, people have been allowed to form "community interest companies" in Britain, for example, The idea of a legal framework for firms that put profits second is not confined to America. For example, in Britain, people have been allowed to form "community interest companies" since 2005. Again, the point is that the sentences changed so that the Given and the New are closer together. 3 ii Parallel structures

1) According to the psychologist Harry Levinson, the five main types of bad boss are the workaholic, the bully, the poor communicator, the jellyfish, and the perfectionist. Parallel noun phrases 2) To get ahead, to keep their self-respect, and simply to survive, wise employees handle problem bosses with a variety of strategies. Parallel infinitives 3) To cope with a bad-tempered employer, workers can both stand up for themselves and reason with a bullying boss. parallel infinitives 4) Often, bad bosses communicate poorly or fail to calculate the impact of their personality on others; listening carefully and being sensitive to others responses are qualities that good bosses possess. Parallel gerunds 5) Employees who take the trouble to understand what makes their boss tick, engage in some self-analysis, and stay flexible are better prepared to cope with a difficult job environment than those who suffer in silence. Parallel infinitives
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Exact enumerators: DISADVANTAGES: a. According to the psychologist Harry Levinson, the five main types of bad boss are firstly, the workaholic, secondly, the bully, thirdly, the bad communicator, fourthly, the jellyfish type, and finally, the perfectionist.

In this case, enumerating the short noun phrases makes it seem fragmented.

b. You could change this to exact enumerators, but you also have exact enumerators in the second half of the text.

B. ACADEMIC READING THE MONSTER CHOMP COOKIES CASE

Pre-reading b:

a. Where do you think this text comes from? From a teaching text book on
Business Case studies because the material is arranged and laid out easily and accessibly.

b. What sort of graphical information does it contain? Market shares and

Income.

c. Who might the text have been written for originally? Why? Business and

Management students because of a. above; the accessibility of the materials.

d. How is it organized?
1. A general introduction to problems that might exist when entering a market. 2. A particular study of Beatrice Companies and problems with selling a particular product in Brazil. 3. Measures taken to solve the problems: different cookies; new package 4. Results in Brazil

Reading: General understanding:

1. Why have some companies had difficulties in selling products which are
successful in their home countries in other national markets? See ll 1 40: Consumer tastes e.g. Campbells in Europe; packaging needs altering e.g. EMU airlines in Australia, etc; distribution channels e.g. food markets in Latin America; pricing structures; promotional strategies; What problem did Pepsi-Cola encounter in Germany with its advertisement? Translation of its slogan Come alive with Pepsi to Come back from the grave with Pepsi. How has the food-buying pattern in Brazil changed recently? A move from local markets to supermarket shopping. How did Beatrice companies enter the Brazilian food-processing market? Acquisition of 80% stake in local company Ailiram. Describe the cookies that Ailiram produced before Beatrice assumed ownership. very similar to those sold by dozens of other Brazilian firms plain, fairly undifferentiated, round cookies and biscuits made of wheat flour and sugar. How does Beatrice propose to change the cookies? a hard, flat cookie that looked as if a monster had taken a bite out of it. The flavors were initially chosen to be chocolate, vanilla and coconut Describe the new package for the Monster Chomp cookies. The package depicts a friendly monster taking a chomp out of a cookie on the

2.

3. 4. 5.

6.

front; on the back, some childrens game is shown and a lesson about safety or other instructive message is presented. Thus, the package provides both an appealing, funny advertisement and an educational lesson.

2. Interpreting Financial Reports Business Abbreviations: Table 4 2 Cr$ Exch. Rate P&L Grs Cruzeiros/dollars_____ Exchange Rate Profit and Loss Grams mio millions of cruzeiros exp Expenditure marktg Marketing merchand merchandise

3.Table 4-1: Cookie Market Shares Report. Answer these questions:

a. What do the figures in this report represent? Market share of cookies by

company in two Brazilian cities. b. What do the names in the left-hand column refer to? Companies that sell into these households. c. Which two areas of Brazil does the market share information in the report come from? Sao Paolo and Rio de Janiero. From what year? 1984

4.Table 4-2 product launch report to answer these questions .

a. What is the title of the report? Monster Chomp Cookies 3-year sales and
P + L Forecast

b. What information does it provide? Costs and possible profits for three
year period. c. What was the Cruzeiro/US dollar exchange rate in 1984? 1600/US$ d. What was the retail price for a 200gr packet of Monster Chomps in May 1984? 600 Cruzeiros e. What percentage of profit contribution did the company forecast for the product in 1984, 1985 and 1986? 1984 3.2%; 1985 13.0%; 1986 15%

5. Vocabulary A survey revealed that cookie sales to supermarkets are very competitive in Brazil, with at least ten companies selling Maria type cookies to leading stores. Breaking into this highly competitive market would require displacing the competition by producing a differentiated product.
Ailirams strategy to gain access to supermarkets was to sell at the top end of the market, where there were only three brands competing, with a high quality, innovative product. Ailiram decided to model the new product on the Monster Chomp cookies already sold in the US, and produced a hard, flat cookie in a choice of three different flavours, in an unusual shape as though a monster had taken a bite out of it. Additionally, a new package; design would appeal to children up to the

age of 12, who constitute about half the market for cookie consumption in Brazil.

1. Describing Aims & Means

In these two sentences, what is the aim and what is the means, or method to achieve the aim?
AIM MEANS

a. By successfully selling Monstrinho Creck Cookies , Ailiram would establish an image of high quality products and gain access to supermarkets.

b. Beatrice intended to use Ailiram as a base for entering the national market in Brazil, by first pursuing supermarket sales in Sao Paolo, then by expanding product lines and distribution throughout the whole country.

Example:

By redesigning the packaging, Ailiram hoped to appeal to Brazilian children the largest consumer group for cookies. Redesigning the packaging would allow Ailiram to appeal to Brazilian children the largest consumer group for cookies.

MEANS

AIMS

2. Changing the flavour of its soups allowed Campbells to attract European customers. Changing the flavour of its soups meant that Campbells could attract European customers. 3. Persisting with its dried soups enabled Knorr to develop a large enough market segment to justify operating in the US Persisting with its dried soups meant Knorr could develop a large enough market segment to justify operating in the US 4. Checking the translation of product names and promotional materials allowed companies to avoid problems when entering other national markets. Checking the translation of product names and promotional materials enabled companies to avoid problems when entering other national markets. 5. Acquiring 80% ownership in an existing local firm allowed Beatrice to enter the Brazilian markets. Acquiring 80% ownership in an existing local firm allowed Beatrice 8

to enter the Brazilian markets.

Cause & Effect / Reason & Result Result (ER.) 1. Beatrice entered the Brazilian market through Effect/ Result (ER.) 2. She felt that this product had good potential for sales in Brazil since. Effect/ Result (ER.) 3. Biscuits are probably the most widely distributed product in Brazil, as . Effect/ Result (ER.) 4. Ailirams managers felt that cookies had to be hard and flat in order to meet Brazilian childrens tastes, but the shape could be unusual. Thus, .. Cause/Reason (CR) 5. A package design was chosen to appeal to children between the ages of 5 and 12 years because Effect/ Result (ER.) 6. There was very little profit for the first year of sales because of .. Effect/ Result (ER.)

Cause/Reason (CR) or Effect/

d. acquisition of 80% ownership in an existing local firm. Cause/Reason (CR

c. such unusual cookies were not available there. Cause/Reason (CR)

e. they are often the only thing eaten for breakfast. Cause/Reason (CR) f. it was decided to produce a hard, flat cookie that looked as if a monster had taken a bite out of it. Effect/ Result (ER.) a. survey results showed that almost 50% of cookie consumption in Brazil is among children up to 10 years of age. Cause/Reason (CR) b. the expense of the advertising campaign to introduce Monstrinho Creck in the Sao Paolo area. Cause/Reason (CR)

2 : Complete the following sentences with a suitable linker and correct punctuation. E.g. Beatrice acquired 80% ownership in an existing local firm. Consequently, the company was able to enter the Brazilian market. 1. Such unusual cookies were not available in Brazil. As a result, she felt that this product had good potential for sales there. 2. Since biscuits are often the only thing eaten for breakfast, they are probably the most widely distributed product in Brazil. 3. The reason for the decision to produce a hard, flat cookie that looked as if a monster had taken a bite out of it was the feeling of the Ailiram managers that

while cookies had to be hard and flat in order to meet Brazilian childrens tastes, the shape could be unusual. WHAT EVER YOU DO, NEVER, EVER WRITE A SENTENCE AS BAD AS THIS ONE!!! 4. Survey results showed that almost 50% of cookie consumption in Brazil is among children up to 10 years of age. Therefore, a package design was chosen to appeal to children between the ages of 5 and 12. 5. The consequence of the expense of the advertising campaign to introduce Monstrinho Creck in the Sao Paolo area, was that there was very little profit for the first years sales. AND ANOTHER APPALLING SENTENCE!!! LISTENING: Sheena Iyengar : Choosing what to choose http://www.ted.com/talks/sheena_iyengar_choosing_what_to_choose.html 1. This is the advertisement which TED gives for the talk.

a.

b.

c.

d.

Why does the first sentence use the second person plural we? To pull the reader into the text Is that a good idea? It isnt really academically objective. List the adverbs and adjectives which appear in the first paragraph? What is their job? Are they good adjectives or bad adjectives? Deeply; surprising; famous; ingenious; rich; much broader; (and other nouns, too). These words are too unqualified for real academic writing/discourse! Do you know who Malcolm Gladwell is? Why do you think he is mentioned? Hes a popular and very famous writer on statistics and their effect on the human condition. Iyengars work is now associated here with this famous man. What is the job of the final sentence? (ll.15 17). This sells Iyengar even more as a famous and accessible writer.

We all think we're good at making choices; many of us even enjoy making them. Sheena Iyengar looks deeply at choosing and has discovered many surprising things about it. For instance, her famous "jam study," done while she was a grad student, quantified a 5 counterintuitive truth about decision making -- that when we're presented with too many choices, like 24 varieties of jam, we tend not to choose anything at all. (This and subsequent, equally ingenious experiments have provided rich material for Malcolm Gladwell and other pop chroniclers of business and the human psyche.) 1 0 Iyengar's research has been informing business and consumer-goods marketing since the 1990s. But she and her team at the Columbia Business School throw a much broader net. Her analysis touches, for example, on the medical decision making that might lead up to choosing physician-assisted suicide, on the drawbacks of providing too 10

1 many choices and options in social-welfare programs, and on the 5 cultural and geographical underpinning of choice. Her book The Art of Choosing shares her research in an accessible and charming story that draws examples from her own life.
1. Now make three predictions about what you are going to hear. a. b. c. 2. What problems might there be with the material in this presentation? Its very short and this might lead to major over-simplification; particularly of statistical information. 3. What strengths might the material have? Iyengar works at a very reputable academic institution. It is suggested that she is a reputable researcher whose work has been influential. 2. Pre-listening: What do these words and phrases mean? A very upscale grocery store; mustard; vinegar; mayonnaise; a little tasting booth; procrastinate; concretization; vivid; hitting the default button; 3. You will now hear the first segment of the talk. Fill in the table Day Typical Number American of decisions 70 Week CEO Number of Ave Time Longest time decisions 50% of 139 decisions 1 hour or 9 mins more

4. Second segment of the talk. Draegers store a. Fill in the table with the food types and numbers that you hear: Food types a. Mustards No. of varieties & Vinegars 250 500 < 24 75 348

b. Fruits and Vegetables c. Bottled Water d. e. Olive Oil Jam

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b. Fill in the table with details of the experiment that Iyengar carried out in the store: Numbers of jams % people stopping % people buying 24 60% 3% 6 40% 30%

i. What does the speaker say these figures prove? That too much choice results in confused customers which leads to fewer purchases. Do you agree? ii. Are there any problems with these figures? These are percentages of percentages so we lose the objectivity they might provide. 5. Listen to the third segment of the talk; Fund Offerings available in retirement savings plans. Complete the table : 1,000,000 Americans One plan (401k) Participation rates: 2 funds 60 funds

650 retirement plans 657 plans from 2 to 59 offerings

c 75% c 60% More choices avoided stocks or equities; put money in pure money market accounts

6. Now listen to the fourth segment of the talk: Negative consequences; What are the three main negative consequences of choice? a. Delay in choice b. Make worse choices c. Make less satisfactory choices 7. Now listen to the fifth segment of the talk: The four solutions: What are the four solutions, Iyengar proposes, for the negative consequences of too much choice? a. Solution one: Cut Examples: i. Proctor and Gamble 26 Head & Shoulder > 15 < 10% profits ii. Golden Cat Corp. > 10 products < 87% increased profits iii. Average Grocery store: 45,000 products Walmart: 100,000 iv. Aldi 1,400 v. Harvard: 300+ > 20 financial savings lifecycle fund

12

b. Solution two: Concretization: i. - Why does Iyengar show the picture of the road? The picture makes the road seem dangerous when the words didnt. - Is this a good example? Its a good example of a road, but is it a good example of a financial decision. Why might it be a bad example? Financial decisions are abstract and difficult to visualize. ii. ATM/credit card 15/30% more money spent iii. ING : visualization 20% greater enrolment c. Solution three: Categorization: i. Wegmans grocery stores: a. Magazines: 331 664 magazines 600 magazines 10 seems less choice than 400 20 categories b. Jewelry: Categories need to be real d. Solution four: Condition for complexity: Move from simpler to more complicated decisions.

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WEEK TWO SUGGESTED ANSWERS 1. Issue Point

1 0

Finance--the funnelling of savings to their best use--is a vital industry. Britain is very good at it, leading the world in various financial markets, including foreign exchange and over-the-counter derivatives. The City's comparative advantage is clear from Britain's trade balance. The export surplus in financial services and insurance was 2.6% of GDP in the first three quarters of 2011. Add in the exports of related services, such as law, accountancy and consulting, and the trade surplus rises above 3% of GDP. An industrial cluster that can generate foreign earnings on such a scale is enviable. No other country, not even America, comes close to matching Britain's trade balance in finance. And with its domestic economy problems, Britain needs all the exporting power it can muster.

Issue: Words such as vital very good at it give values which can be discussed in the middle section of the paragraph i.e. comparative advantage, No other country Point: problems; needs show the point the writer is making.
TASK: What are the differences between these two paragraphs: a. The British government's own policies on tax and immigration are also doing a lot of damage. The 50% tax rate, introduced by the previous Labour government in 2010, brings in little money and has made London the most taxed out of ten financial centres for high net-worth individuals. The present generation of financial bosses, who live in and like London, may tolerate it for a while, but younger ones are feeling the pull of Switzerland, Hong Kong or Dubai. As for immigration policy, the best way to win Asian business is to lure the young Asian financiers to London. Tight limits on talented immigrants damage the City's prospects--and indeed the prospects of every bit of British business.

A paragraph can have both Given-New sentences AND have the three parts: issue/ discussion / point.
a. b. The British government's own policies on tax and immigration are also doing a lot of damage. London is the most taxed out of ten financial Blue areas show how the sentences link, conceptually.

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centres for high net-worth individuals, and the 50% tax rate, introduced by the previous Labour government in 2010, brings in little money. Younger bosses are feeling the pull of Switzerland, Hong Kong or Dubai, although the present generation of financial bosses, who live in and like London, may tolerate the high tax rate for a while. As for immigration policy, the best way to win Asian business is to lure the young Asian financiers to London. The City's prospects--and indeed the prospects of every bit of British business are damaged by the tight limits on talented immigrants.

b.

There are few of these conceptual links between sentences

a) While you read the text answer the questions in the right-hand
column:

1 0

FOR a decade now California, the worlds ninthlargest economy, has run budget deficits. Its constitution says it must technically balance its books every year, but it has done so with accounting tricks that have only pushed the underlying problem into the next accounting period. It may do the same again this year. The deficit amounts to $15.7 billion if the governor, Jerry Brown, is to be believed; about a billion more if other analysts are right. State lawmakers have until June 15th to find a solution before the new fiscal year starts on July 1st. If they miss this deadline, as they have often done in previous years, their pay will be suspended until they can solve the problem. The familiarity of the drama may explain why Californians who worry about their state preferred to contemplate last weeks other event, their presidential candidate election on June 5th. The Republican presidential nomination was a non-event, since Mitt Romney was already chosen, and voter turnout was very low, at about 25%. But Californians experienced two new things about this election. It was the first in which state and congressional candidates ran in districts created by an independent commission instead of by politicians. It was also the first for many years in which all votersRepublican, Democratic or otherreceived the same ballot papers, and the top two vote-winners advanced to the general election, even if they were from the same party.

What does so mean here? Balanced its books What is the same here? Balance its books Solve which problem? Running budget deficits Which drama? Solving budget deficits

1 5

2 0

It was the first what? Election It was also the first what? Election

2 5

What is they 15

3 0

3 5

The links between these two difficult subjectsthe recurrent fiscal crises and the mysteries of electoral reformare complex. But they explain what has gone wrong with California in the past generation, and whether it has a chance of saving itself. Californias problems are not like, say, those of Greece. It is not nearly as indebted and not at risk of getting excluded from the eurozone. Instead, California is in a slow relative decline because it allocates its public resources badly. And the ultimate reason is the poor performance of its political institutions. Californias budget problems begin with a tax system that is out of date. For most of the last century, sales taxes, which are relatively stable, were the states main source of revenue, while more volatile income taxes were less important. But that was when Californias economy was still based on making things. Today it is a service economy, and services are exempt from sales tax. So, over the past generation, income taxes, and especially capitalgains taxes, have grown in importance. This makes Californias revenues unusually jumpy, with peaks during booms (in dotcoms or housing, say) and big falls during busts (again, in dotcoms or housing).

here? Fiscal crises and electoral reform

The reason for what? allocating public resources badly

4 0

4 5

What is that here? Stable sales taxes/volatile income taxes What is this here? Growth in importance of taxes

Adapted from: Economist; 6/16/2012, Vol. 403 Issue 8789, p36-38,

2. Look at the following text in terms of Issue, Discussion and point :

1 0

FOR a decade now California, the worlds ninth-largest economy, has run budget deficits. Its constitution says it must technically balance its books every year, but it has done so with accounting tricks that have only pushed the underlying problem into the next accounting period. It may do the same again this year. The hole to be plugged amounts to $15.7 billion if the governor, Jerry Brown, is to be believed; about a billion more if the non-partisan legislative analyst is right. State lawmakers have until June 15th to come up with a solution before the new fiscal year starts on July 1st. If they miss this deadline, as they have often done in previous years, their pay will be suspended until they can get their act together. The familiarity of the drama may explain why Californians who
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1 5

2 0

worry about their state preferred to contemplate last weeks other event, their primary election on June 5th. The Republican presidential nomination was a non-event, since Mitt Romney is already chosen, and voter turnout was abysmal, at about 25%. But Californians savoured two things about this primary. It was the first in which state and congressional candidates ran in districts drawn by an independent commission instead of incumbent politicians; and it was also the first for many years in which all votersRepublican, Democratic or otherreceived the same ballot papers, and the top two vote-getters advanced to the general election, even if they were from the same party. The links between these two knotty subjectsthe recurrent fiscal crises and the arcana of electoral reformare complex. But they explain what has gone wrong with California in the past generation, and whether it has a chance of saving itself. Californias problems are not like, say, those of Greece. It is not nearly as indebted and not at risk of getting booted out of its currency area. Instead, California is in a slow relative decline because it allocates its public resources badly. And the ultimate reason is the poor performance of its political institutions. Californias budget problems begin with a tax system that is out of date. For most of the last century, sales taxes, which are relatively stable, were the states main source of revenue, while more volatile income taxes were less important. But that was when Californias economy was still based on making things. Today it is a service economy, and services are exempt from sales tax. So, over the past generation, income taxes, and especially capital-gains taxes, have grown in importance. This makes Californias revenues unusually jumpy, with peaks during booms (in dotcoms or housing, say) and big falls during busts (again, in dotcoms or housing).

2 5

3 0

3 5

Paragraph 1: ll. 1 9

Issue: Note the words which give the sentence drive and value: FOR a decade now California, the worlds ninth-largest economy, has run budget deficits. Discussion: Note the words which discuss the deficits of California: Its constitution says it must technically balance its books every year, but it has done so with accounting tricks that have only pushed the underlying problem into the next accounting period. It may do the same again this year. The hole to be plugged amounts to $15.7 billion
17

if the governor, Jerry Brown, is to be believed; about a billion more if the non-partisan legislative analyst is right. Point: These words and phrases sum up the paragraph: State lawmakers have until June 15th to come up with a solution before the new fiscal year starts on July 1st. If they miss this deadline, as they have often done in previous years, their pay will be suspended until they can get their act together.

Paragraph 2: ll. 11 20

Issue: Note the words and phrases that give the sentence drive and value: The familiarity of the drama may explain why Californians who worry about their state preferred to contemplate last weeks other event, their primary election on June 5th. The Republican presidential nomination was a non-event, since Mitt Romney is already chosen, and voter turnout was abysmal, at about 25%. Point: The writer believes at the there were things about the election which Californians liked! But Californians savoured two things about this primary. Discussion: These sentences with their parallelisms state the things that Californians did value about the election: It was the first in which state and congressional candidates ran in districts drawn by an independent commission instead of incumbent politicians; and it was also the first for many years in which all voters Republican, Democratic or otherreceived the same ballot papers, and the top two vote-getters advanced to the general election, even if they were from the same party.

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Paragraph 3: ll. 22 28

Issue: Note the words and phrases that give the sentence drive and value: The links between these two knotty subjectsthe recurrent fiscal crises and the arcana of electoral reformare complex. Discussion: Note the negative descriptions of Californias economic situation. But they explain what has gone wrong with California in the past generation, and whether it has a chance of saving itself. Californias problems are not like, say, those of Greece. It is not nearly as indebted and not at risk of getting booted out of its currency area. Instead, California is in a slow relative decline because it allocates its public resources badly. Point: Contrast of discussion (economics) and point (politics) And the ultimate reason is the poor performance of its political institutions.

Paragraph 4: ll. 29 37

Issue: Note the words problem and out of date. Californias budget problems begin with a tax system that is out of date. Discussion: Note discussion of changes in tax base from sales to income For most of the last century, sales taxes, which are relatively stable, were the states main source of revenue, while more volatile income taxes were less important. But that was when Californias economy was still based on making things. Today it is a service economy, and services are exempt from sales tax. So, over the past generation, income taxes, and especially capital-gains taxes, have grown in importance. Point: Note this at the start of the sentence gathering the information of the previous part. Then note the words jumpy, booms and busts which comment on that previous information. This makes Californias revenues unusually jumpy, with peaks during booms (in dotcoms or housing, say) and big falls during busts (again, in dotcoms or housing).

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Cohesion 1.

ii. The University of the Thai Chamber of Commerce (UTCC) has estimated that the cost of the flood damage to Thailand could be as high as 150 billion baht ($4.8 billion). As a result, many economists are predicting that the disaster could shave 1% or so off the country's GDP growth rate this year. UTCC, for example, is revising its forecast down from 4.4% to 3.6%. A fall on that scale could begin to affect badly the government's ambitious policies. Proposals such as a new form of rice subsidy, a doubling of the salaries of new civil servants, and free tablet computers to all children starting school will cost a lot of money. All these schemes would probably have led to higher inflation and a growth in public debt, even at the best of times. But these could now be the worst of times, particularly if the world economy slows a lot more.
As a result of what? of the cost of flood damage (Cause) = (Consequence) 1% off Thailands growth rate for example (of economists making predictions) on that scale - meaning a very large scale from 4.4% to 3.6%. N.B. use of that to point back to previous figures. Proposal links to policies at the end of the previous sentence All these schemes also links to proposals and policies. N.B. these points back to those previous plurals. these (schemes) [ellipsis] again points back to previous sentence. Cohesion 2:

The new Egypt faces a fiscal crunch as well as an urgent need to overhaul its economic model. The first requirement is reform of subsidies, so that government handouts are confined to the needy. Next comes a set of measures needed to foster private enterprise: 5 breaking up monopolies, reducing the size of the state and rewriting regulations so that they support rather than suffocate competition. That sounds like a slimmed-down version of the postcommunist transition in Europe, where privatisation and the creation of competitive markets were also priorities. Unfortunately, the Middle 1 East faces two big problems that eastern Europe didn't. First, 0 eastern Europe's transition had a clear aim: membership of the European Union. Second, the appetite for reform is far feebler. In the Middle East popular anger at corruption and high joblessness have not translated into demands for wholesale economic reform. On the contrary, in Egypt the transitional government has expanded subsidies and increased employment in state firms.
The first requirement requirement to overhaul the Egyptian economic model. An enumerator that predicts other requirements. Next second requirement

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 breaking up; reducing; rewriting : note the parallelisms of these gerunds That refers back to the set of measures referred to in previous sentence. two big problems enumerative predictor of elements in rest of paragraphs First first predicted problem Second second predicted problem On the contrary, - introduces contrast between demands for wholesale reform and the efforts of the transitional Egyptian govt. 3. Cohesion: This + summary word.
i. Tesco stores in America, branded Fresh and Easy, saw there was a problem with the low quality of processed fresh food in American supermarkets. This was addressed by inviting two trusted British firms to supply them. a) issue b) food c) need d) process e) factor ii. One way of working out what Henry Fords assembly line process was worth to people is to calculate how much they would have had to pay for cars, at the price prior to Fords innovation. This measure is known as social savings. a) factor b) measure c) issue d) process e) situation

iii.

12 percent of all high-growth firms were established by a serial entrepreneur. This situation contrasts with only three per cent of nonhigh-growth firms. a) factor b) need c) situation d) measure e) issue

4. This + summary word

a. An environmental scan will highlight all important aspects that affect an

organization, whether external or sector/industry-based. This scan/investigation will also uncover areas to capitalise on, in addition to areas in which expansion may be unwise. These areas, in turn, once identified, have to be vetted and screened by an organization. b) When we measure the effectiveness of the organizational strategy, it is extremely important to conduct a SWOT analysis to figure out the internal strengths and weaknesses, and external opportunities and threats of the entity in business. This analysis may result in taking certain precautionary measures or even changing the entire strategy. Subscriptions and students' fees were not adequate to provide a properly staffed establishment. Thus, the choice of these means/ways of financing the College, in preference to direct government funding, were to hamper the growth of the University well into the present century. In recent years, the number of students applying to PhD programmes has increased steadily, while the number of places available has remained

c)

d)

21

constant. This disparity/difference has resulted in intense competition for admission.

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5. Linking words and expressions

1 0

1 5

2 0

Corporate Philanthropy mirrors individual philanthropy except for the fact that a corporation, not an individual, is donating funds, time, or talent. a) Although it is done on a larger scale, corporate philanthropy is still done without any expectation of direct corporate gain (such as, increases in revenue). b) However, it usually involves indirect gains (such as, enhancing a companys brand, engaging employees, recognition). Corporate Philanthropy usually has the following attributes. c) Like standard philanthropy, corporate philanthropy focuses on the treating the cause of a problem or issue instead of the symptom. d) Unlike standard philanthropy, corporate philanthropy must be done through a corporation directly or a corporations own non-profit entity. e) Such philanthropy mainly comes from the companys contributions and are usually treated as a business expense. f)In addition, funding can also consist of individual donations if, g)for example, someone wanted to donate to a corporations non-profit. Companies are allowed to deduct up to ten percent of pre-tax income for direct charitable contributions (this includes giving to the companys foundation). Most companies deduct closer to one percent.1 The h) two main kinds of corporate philanthropy are: i) firstly , cash donations, which include grants, donations, sponsorships whenever money exchanges hands. j)Secondly, in-kind donations, k) for instance donating products, access to employee volunteer groups, the use of a companys facilities, property, or services whenever non-monetary support is given.

Text adapted from: http://dowelldogood.net/?p=531 [accessed 12:ii:12] 3. Punctuation 1 . , : ; Write the names of the following punctuation marks: Full stop Comma Colon Semi-colon ? ! Question mark Exclamation mark Single inverted comma Double inverted comma ( ) [ ] Brackets/parent hesis Square brackets Ditto Ellipsis [words missing sometimes used with square brackets]

Punctuate the following passage so that it makes sense and flows:

23

If economists ruled the world , there would be no need for a world trade organisation. The economists case for free trade is essentially a unilateral case. A country serves its own interests by pursuing free trade regardless of what other countries may do. Or as Frederic Bastiat put it , it makes no more sense to be protectionist because other countries have tariffs , than it would to block up our harbours because other countries have rocky coasts. So, if our theories really held sway, there would be no need for trade treaties; global free trade would emerge spontaneously from the unrestricted pursuit of national interest N.B. there may be a case for a semi-colon between case; a country 3 Look at the extracts below and identify how punctuation is used to link together information. How else is cohesion achieved?

A management innovation creates long-lasting advantage when it meets one or more of three conditions: the innovation is based on a novel principle that challenges management orthodoxy; it is systematic, encouraging a range of processes and methods; and it is part of an ongoing program of invention, where progress compounds over time.
From: Hamel, G. (2006) The Why, What and How of Management Innovation Harvard Business Review Vol. 84 Issue 2, p72-84.

SUGGESTED ANSWER: The colon introduces the list: the semi-colons join the parts of the list. The commas link phrases and clauses that develop noun phrases. Management was originally invented to solve two problems: the first -- getting semiskilled employees to perform repetitive activities competently, diligently, and efficiently; the second -- coordinating those efforts in ways that enabled complex goods and services to be produced in large quantities. In a nutshell, the problems were efficiency and scale, and the solution was bureaucracy, with its hierarchical structure, cascading goals, precise role definitions, and elaborate rules and procedures.
from : Hamel, G. (2009) Moonshots for Management Harvard Business Review Vol. 87 Issue 2, p91-98

SUGGESTED ANSWER: First sentence: The colon introduces a list; the hyphens introduce the items in the list; the commas break up adverbs; the semi-colons link items in the list. Second sentence: the commas break the ideas in the sentence into little bunches or areas which help understanding. 4 Parallel structures

Discuss the use of lists and parallel structures in the extracts below.
a. The North contains some of the richest and poorest areas of the country, with all of 24

the 10 most-deprived neighbourhoods being located in the North of England and three of the 10 least-deprived also located in the North. REMEMBER: Repetition IS emphasis!!! Parallel noun phrase structures.

b. Three broad trajectories of local labour markets can be identified: those whose labour market never properly recovered after the onset of the 2008/09 recession (trajectory A); those whose labour market did recover but have now experienced a double-dip (trajectory B) and those that did recover and have not been affected by the double-dip (trajectory C). L Parallel noun phrase structures: those whose labour market + recover(ed) . Please NOTE that the after the onset of the 2008/09 recession IS present in phrases two and three but is elided; i.e., those whose labour market did recover (after the onset of the 2008/09 recession) but have now those that did recover (after the onset of the 2008/09 recession) c. There should be a commitment made to boosting growth in the North of England by investing in the Northern Hub. This would reduce travel times between Liverpool, Manchester, Leeds, Sheffield and Newcastle and would increase capacity at Manchester Piccadilly.
a,b & c adapted from: Cook, W. (2012) Northern Economic Summary: June 2012 : Institute for Public Policy Research http://www.ippr.org/articles/56/9239/northern-economicsummary-june-2012 [accessed 15th June, 2012]

Parallel verb phrases: would + reduce/increase (gradable opposites) d. There are two main ways that societies make collective decisions: through the buying and selling activities of individuals in the marketplace, and through having individuals vote in elections.
adapted from: http://www.johnduggan.net/syllabi/411sched-2.pdf [accessed 15th June, 2012]

Parallel adverbial phrases: through + noun phrases containing gerunds buying, selling & having e. Two types of frictions may restrict commodity transfers across countries. The first friction arises from limited enforcement, where contracts are enforced by the threat of default penalties. The second friction arises from the assumption that transfers of goods across countries are subject to trade costs.
adapted from: http://personal.lse.ac.uk/guibaud/research.htm [accessed 15th June, 2012]

Parallel: The first/second + arises from + Noun Phrase 5. Parallel sentences: SUGGESTED ANSWERS

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a. Corporate philanthropy three uses improve a companys competitive context/ improve education and local quality of life/expand the local market and reduce corruption.
Corporate philanthropy has three uses: firstly, to improve a companys competitive context; secondly, to improve education and the local quality of life, and thirdly, to expand the local market and reduce corruption. b) Price setting three main ways - cost-based pricing (determined by adding a profit element on top of the cost of making the product) - customer-based pricing (determined by what a firm believes customers will be prepared to pay) - competitor-based pricing (competitor prices are the main influence on the price set) Price setting works in three main ways: through cost-based pricing which is determined by adding a profit element on top of the cost of making the product; through customer-based pricing which is determined by what a firm believes customers will be prepared to pay; and by competitor-based pricing, whereby competitor prices are the main influence on the price set) c) Foreign direct investment originally - company from one country making a physical investment into building a factory in another country - the direct investment in buildings, machinery and equipment recently - acquisition of a lasting management interest in a company or enterprise outside the investing firms home country - in contrast with making a portfolio investment considered an indirect investment. Foreign direct investment (FDI), originally meant a company from one country making a physical investment into building a factory in another country with the direct investment in buildings, machinery and equipment. Recently, however, FDI has come to mean the acquisition of a lasting management interest in a company or enterprise outside the investing firms home country; in contrast with making a portfolio investment, which is considered an indirect investment. d) Electronic commerce - such technologies - electronic funds transfer - supply chain management - Internet marketing - online transaction processing electronic data interchange (EDI) - inventory management systems automated data collection systems.

26

Electronic commerce refers to such technologies as: electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems and automated data collection systems.

27

B. ACADEMIC READING

Human Resource Management:

1. Defining the topic

Resource: a supply of something that a country, an organization or a person has and can use, especially to increase their wealth
Taken from Oxford Advanced Learners Dictionary online:

2.Expanding definitions 1. Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers. 2. Human Resource Management is the organizational function that deals with issues related to people, such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training. 1 3. Managing human resources refers to the functions that a manager performs relative to the organization's employees. Managing human resources includes but is not limited to: planning and allocating resources providing direction, vision and goals supplying or asking for the metrics that tell people how successfully they are performing offering opportunities for both formal and informal development setting an example in work ethics, treatment of people, and empowerment worthy of being emulated by others leading organization efforts to listen to and serve customers managing the performance management systems challenging the employees to maintain momentum removing obstacles that impede the employee's progress

1 , Source: Heathfield. S. M. (2011). What is human resource management7 About.com.

Retrieved July 9.2011, from http://humanresources.about.com/od/glossaryh/f/hr_management. htm

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2.2 Identifying and highlighting key words: SUGGESTED ANSWERS 1. Human resource management (HRM) is the strategic and coherent approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business. en .wikipedia .org/wiki/Human_resource_management 2. All methods and functions concerning the mobilization and development of personnel as human resources, with the objective of efficiency and greater productivity in a company, government administration, or other organization. enwiktionary.org/wiki/ Human_ Resource_Management 3. Human resource management (HRM) is the understanding and application of the policy and procedures that directly affect the people working within the project team and working group. These policies include recruitment, retention, reward, personal development, training and career development. www.apm.org.uk/Definitions.asp 4. Human resource management is the effective use of human resources in order to enhance organizational performance. wps.prenhall.com/wps/media/ objects/213/218150/glossary. html 5. The management of the workforce of a business to ensure sufficient staff levels with the right skills, properly rewarded and motivated. www.business2000.ie/resources/ Glossary_H.html 6. Staffing function of the organization. It includes the activities of human resources planning, recruitment, selection, orientation, training, performance appraisal, compensation, and safety. www.crfonline.org/orc/glossary/h.html 7. Human Resource Management ('HRM') is a way of management that links people related activities to the strategy of a business or organization. HRM is often referred to as 'strategic HRM'. It has several goals: To meet the needs of the business and management (rather than just serve the interests of employees) To link human resource strategies/policies to the business goals and objectives To find ways for human resources to 'add value' to a business To help a business gain the commitment of employees to its values, goals and objectives. http://tutor2u.net/business/people/hrmjntrod uction. htm Rewriting definitions: 1. Human Resource Management can be defined as the methods and functions which concern the mobilization and development of

29

personnel as human resources, with the objective of efficiency and greater productivity in a company, government administration, or other organization. 2. Human Resource Management is defined as the Staffing function of the organization, which includes the activities of human resources planning, recruitment, selection, orientation, training, performance appraisal, compensation, and safety. Writing Task : page 16 SUGGESTED MODEL ANSWER Human resource management (HRM) is the strategic and coherent mobilization and development of the people working there as an organization's most valued asset. This may have the objective of efficiency and greater productivity. In addition, HRM should understand and apply the policy and procedures that directly affect the people working within the project team and working group. Such policies may include: meeting the needs of the business and management; linking human resource strategies and policies to the business goals and objectives; finding ways for human resources to 'add value' to a business, and helping a business gain the commitment of employees to its values, goals and objectives.

B. ACADEMIC READING : Background and origins of people management 2. While reading questions; as you read the passage below answer these questions:

a. How were managers chosen in the past; name two ways? i. Jobs allocated to traditional castes e.g., Brahmins in India ii. Chosen from amongst the power elite particularly true in UK. iii. Restricted to those with inherited or specialist knowledge, e.g., the medicine man. b. Why are/were workers supervised? i. To get the job done properly. c. George Cadbury is an example of what? i. A paternalistic, business hero
d. What is Fordism, and how did it evolve? i. Techniques of mass-production which were first outlined by Taylor in Shop management.

30

2.Matching summary headings with section in the text: Summary headings 1. The development of HRM systems 2. A hierarchical system of management 3. Applying a scientific method of managing the workforce 4. How ancient man organized tasks 5. Books about human resource management 6. The control of huge workforces in the past 7. Managing large workforces in the Industrial Age Sections 4 3 6 1

3. Definition of division of labour: SUGGESTED ANSWER

The division of labour may be defined as the dividing of work and tasks so that they are given to people who are considered the most suitable for the job or task

4. Factors that have determined allocation of roles and responsibilities: 1. Skill 2. experience 3. cultural tradition 4. Social group 5. inherited 6. age, 7. Best people for job 8. Specialist knowledge 9. strength, 10. health

2. Use information from Section 2 to complete the list of examples from the

ancient world (where huge groups of people had to be organized). Situations that needed organization in the ancient world:

1. 2. 3. 4. 5.

Building the pyramids Fortresses irrigation systems plantations mines

31

3 Use information from Section 3 to complete the table. Use no more than five words for each heading: Individual System of management Niccolo Machiavelli Fear rather than love Adam Smith Division of labour George Cadbury Family controlled, paternalism 4. Use information from Sections 4, 5 and 6 to complete the following flow charts.

a. Flow chart illustrating the McCallum system of management: Manageable divisions Superintendents were responsible for each division and reported to headquarters Headquarters coordinated the whole operation b. Flow chart showing the development of scientific management:

Division of labour Splitting of tasks Coordination of tasks into different roles Management is allowed to concentrate on exceptions

5.

Summary of passage: SUGGESTED ANSWER The division of labour may be defined as the dividing of work and tasks so that they are given to people who are considered the most suitable for the job or task. There are a range of factors which affect the allocation of roles. These factors include: the level of skill, experience or specialist knowledge a person has or is required for the job; whether that job, or role is traditionally inherited by a particular family or social grouping; and whether a job requires a particular level of health or age for its performance. In the ancient world, large numbers of workers were required, in particular, for certain building projects such as, the pyramids, fortresses, irrigation systems, plantations or mines. The division of labour has evolved with the evolution of society. For Niccolo Machiavelli, leaders needed to rule by fear rather than love. Adam Smith felt that economic development was best achieved through Division of labour. And, in practical terms, George Cadbury was one of a number of company principals who developed family controlled, paternalistic systems of management. Other systems of management were developed by David McCullum who organised the Eric Railroad into manageable divisions with superintendents who were responsible for each division and reported to headquarters. Headquarters then coordinated the whole operation. With the coming of high volume industries, the division of labour required the splitting of tasks, with the

10

15

20

32

coordination of those tasks into different roles. management to concentrate on exceptions 247 rds

This, in turn, lead

33

C. ACADEMIC LISTENING 1. http://www.economist.com/multimedia/businesseconomics

Stephen King: When the Money Runs Out: the End of Western Affluence 1035
Interlocutor : Philip Coggan of the Economist 0.00 1.55 a. Why did King choose this at the title? The turn of phrase i.e. it just sounded a good title!! Expectations: Sustainable economic growth are beginning to fade Promises: we made which havent been met Growth: Growth was slowing before 2008 1st four decades of Kings life, incomes tripled, 5th decade incomes increased by 4%. US was definitely slowing b. Why are economies not growing? 1. Problem of financial crisis - which might be temporary 2. Post second world war tremendous gains 3. Technological change 4. Opening up of world trade, more efficient use of resources 5. Women in the workplace 6. Opening up in consumer credit; exploitation of economies of scale All these are one-offs c. Changes in growth patterns: Boosts from China. 50s/60s growth in OECD countries. 80/90s EastWest trade integration. 21st century the Southern Silk Road South-South trade. d. Commodities and resources - prices and redistribution: Move from the west setting prices to west being told the prices. i. redistributions : increase in commodity prices because of demand from China/India; downward pressure on wages in the West because capital is moving from the West to China and India: top 1% have done extraordinarily well, over last 50 years, particularly last 20 years Labour has had wages squeezed. ii. access to credit Before crisis Labouring classes had access to credit to buy houses. But without credit + economic stagnation = political and social discontent. 5.10 7.40 e. Dystopia: a dystopia is an imagined place or state in which everything is unpleasant or bad, typically a totalitarian or environmentally degraded state. Debt levels are very high, and people are having real difficulty paying debts back Devaluation: US can devalue against the Chinese currency and this reduces debt In the eurozone, southern European currencies cant devalue against northern European currencies, because they all use the euro.

1.55 3.10

3.10 3.50 3.50 5.10

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 Innocent workers in southern Europe are baring the cost of the crisis.
Austerity and the disappointment of expectations - results: Reversal of globalisation; demonization of foreigners. Revolutions dont deliver what they promise, and there are battles over the reduced spoils i.e., people fight over what is left from the revolution. 7.40 8.50 f. Solutions: Immigration: Ageing populations need more immigration rather than less. Countries which need immigration may be hostile towards that; countries that can supply immigrants may not want that either. Capital mobility: Rich countries, e.g., Germany invest in poorer countries, e.g., Spain or Italy. Fiscal transfer: Richer parts of countries need to spend money on poorer parts, e.g, Southern England invests more in northern England. g. Will King be wrong? He is pessimistic because changing things involves sacrifices Creditor/Debtor nations: creditor nations have to recognise their own responsibility in distorting asset prices. Stagnation ; likely to persist with a battle over the spoils. Scarce resources : After the financial crisis, cooperation has lessened and there will be a continued battle over scarce resources.

8.50 end

3.

Global Youth Unemployment : 3:29

You are going to watch and listen to a short video on youth unemployment Before you watch: 1. What do you think are the short and long-term effects of unemployment on young people?

2.

Vocabulary: Look up the following words and phrases: A new twist; bloated public sector; Dysfunctional; Forging closer relations; glut; In limbo; Labour-hungry; Poached; Reignite; rekindle; Revamping; To put off; youthquake

Now read the following text. As you read it answer the questions
in the right hand column.

YOUNG people ought not to be idle. It is very bad for them, said Margaret Thatcher in 1984. She was right: there are few worse things that society can do to its young than to leave them in limbo. Those who start their careers on the dole are 5 more likely to have lower wages and more spells of

What is it here? Idleness right about what?about idleness

35

joblessness later in life, because they lose out on the chance to acquire skills and self-confidence in their formative years. 1 Yet more young people are idle than ever. OECD figures 0 suggest that 26m 15- to 24-year-olds in developed countries are not in employment, education or training; the number of young people without a job has risen by 30% since 2007. The International Labour Organisation reports that 75m young people globally are looking for a job. World Bank surveys 1 suggest that 262m young people in emerging markets are 5 economically inactive. Depending on how you measure them, the number of young people without a job is nearly as large as the population of America (311m). Two factors play a big part. First, the long slowdown in the West has reduced demand for labour, and it is easier to put 2 off hiring young people than it is to fire older workers. 0 Second, in emerging economies population growth is fastest in countries with dysfunctional labour markets, such as India and Egypt. The result is an arc of unemployment, from southern Europe through north Africa and the Middle East to South 2 Asia, where the rich worlds recession meets the poor worlds 5 youthquake. The anger of the young jobless has already burst onto the streets in the Middle East. Violent crime, generally in decline in the rich world, is rising in Spain, Italy and Portugal countries with startlingly high youth unemployment. 3 Will growth give them a job? 0 The most obvious way to tackle this problem is to reignite growth. That is easier said than done in a world plagued by debt, and is anyway only a partial answer. The countries where the problem is worst (such as Spain and Egypt) suffered from high youth unemployment even when their 3 economies were growing. Throughout the recession 5 companies have continued to complain that they cannot find young people with the right skills. This underlines the importance of two other solutions: reforming labour markets and improving education. These are familiar prescriptions, but ones that need to be delivered with both a new vigour 4 and a new twist. 0 Youth unemployment is often at its worst in countries with rigid labour markets. Cartelised industries, high taxes on hiring, strict rules about firing, high minimum wages: all these help condemn young people to the street corner. South Africa has some of the highest unemployment south of 4 the Sahara, in part because it has powerful trade unions and

play a big part in what?Youth joblessness

The result of what? dysfunctional labour markets

Which problem? Youth unemployment What is that here? Reigniting growth An answer to what? Youth

36

5 rigid rules about hiring and firing. Many countries in the arc of youth unemployment have high minimum wages and heavy taxes on labour. India has around 200 laws on work and pay. Deregulating labour markets is thus central to tackling youth unemployment. But it will not be enough on its own. Britain has a flexible labour market and high youth unemployment. In countries with better records, governments tend to take a more active role in finding jobs for those who are struggling. Germany, which has the second-lowest level of youth unemployment in the rich world, pays a proportion of the wages of the long-term unemployed for the first two years. The Nordic countries provide young people with personalised plans to get them into employment or training. But these policies are too expensive to reproduce in southern Europe, with their millions of unemployed, let alone the emerging world. A cheaper approach is to reform labour-hungry bits of the economyfor example, by making it easier for small businesses to get licences, or construction companies to get approval for projects, or shops to stay open in the evening. The graduate glut Across the OECD, people who left school at the earliest 6 opportunity are twice as likely to be unemployed as 5 university graduates. But it is unwise to conclude that governments should simply continue with the established policy of boosting the number of people who graduate from university. In both Britain and the United States many people with expensive liberal-arts degrees are finding it impossible 7 to get decent jobs. In north Africa university graduates are 0 twice as likely to be unemployed as non-graduates. What matters is not just number of years of education people get, but its content. This means expanding the study of science and technology and closing the gap between the world of education and the world of workfor example by upgrading vocational and technical education and by forging closer relations between companies and schools. Germanys long-established system of vocational schooling and apprenticeships does just that. Other countries are following suit: South Korea has introduced meister schools, Singapore has boosted technical colleges, and Britain is expanding apprenticeships and trying to improve technical education. Closing the gap will also require a change of attitude from business. Some companies, ranging from IBM and Rolls-Royce

unemploment This what? Finding young people with the right skills. These what? The two previous solutions These what? Problems with rigid labour markets.

5 0

5 5

6 0

A cheaper approach to what? Solving youth unemployment

7 5

8 0

37

to McDonalds and Premier Inn, are revamping their training 8 programmes, but the fear that employees will be poached 5 discourages firms from investing in the young. There are ways of getting around the problem: groups of employers can co-operate with colleges to design training courses, for example. Technology is also reducing the cost of training: programmes designed around computer games can give 9 youngsters some virtual experience, and online courses can 0 help apprentices combine on-the-job training with academic instruction. The problem of youth unemployment has been getting worse for several years. But there are at last some reasons for hope. 9 Governments are trying to address the mismatch between 5 education and the labour market. Companies are beginning to take more responsibility for investing in the young. And technology is helping democratise education and training. The world has a real chance of introducing an education-andtraining revolution worthy of the scale of the problem. Economist print edition April 2013

This what? Expansion of content

Which problem? investing in the young

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b. Now watch and listen to the video. As you do so, fill in the table.
0.00 1.10 a. Definitions: Unemployed: people who are out of work and actively looking for a job. NEETS: not in education, employment or training. b. Statistics: billion young people; 75million unemployed 290 million young people not actively in the labour force almost as large as Americas population Joblessness at the start of a career can lower wages for the next twenty years. OECD: 26 million NEETS among its 34 members. 1.10 1.30 c. Southern Europe Spain 20.6million; Greece 16million Rigid labour laws mean that new hires i.e., young people are fired before older workers. 2012: 1.2% of Europes GDP was lost because of economically inactive young population. d. Asia: 262 million young people economically inactive. Young women of all the worlds unemployed youth South Asia, Middle East and Africa have highest proportion of unemployed youth Because: working conditions poor, little investment in training; high minimum wages; Bloated public sector; high taxation on wages and labour. e. Solutions? rekindle growth but austerity and little public sector spending close gap between world of education and world of work Unemployment 2 x national rate among graduates in Tunisia. Germany; vocational training has long been the norm. Other governments must do the same.

1.30 -2.7 0

2.70

c. Now write a 100 word summary of the problem of Global Youth Unemployment using information from the text and the video.

39

WEEK THREE ANSWERS

A.
Women may still find difficulty in getting places on the boards of companies. Company boards tend to be appointed from amongst men who may have met at school or university, such as Eton or Oxford. Such institutional connections, research suggests, are likely to be reinforced by membership of mens private members clubs, such as the Reform Club or Whites. Social connections through these clubs, as well as networks of contacts established through existing boardroom positions, tend to play an important role in shaping who gains a seat on a company board. In 2011, Lord Davies Review of Women on Boards, reported that: The informal networks tendency to influence many board appointments, the seeming lack of transparency around selection criteria and the way in which executive search firms may operate, could be considered to make up a significant barrier to women reaching boards.

a) Large-scale, long-term job creation is essential for Africas future. However, while diagnosing the continents wide range of economic ills may be easy, what can be really challenging is implementing solutions.

a) In pioneering work for the International Growth Centre (IGC), Professor John
Sutton of the London School of Economic suggests the need to find and fix a small number of big, fixable problems.

b) The best way to do this, he believes, may be the construction of

enterprise maps of national economies complete descriptions of their industrial structure and the existing capabilities of major firms.

c) These can provide the low-level background knowledge for governments,

local companies and overseas companies looking of some opportunities for foreign direct investment.

d) Having worked on enterprise maps for a number of sub-Saharan African

countries, Professor Sutton points to a number of big, fixable problems. These tend to include difficulties with transferring land rights; illegal exporting of to get round protection of infant industries; and a seeming absence of mid-level finance for mid-sized companies.

40

e) Professor Sutton mentions industries that are seen almost everywhere in

Africa beer, cement, sugar and the capabilities they tend to require selling to a safe local market, high transport costs and the possible absence of other firms whose quality standards domestic firms may meet.

41

1. When we write formal English, we may prefer to be approximate rather than exact. Reorder the following approximators according to magnitude.

+ all e.g. almost all the vast majority of (C) most of (C/Unc)

a few (C) /a small number of (C)

very few (C) - none e.g. almost none

2. Verb phrases can be used to introduce degrees of certainty or uncertainty. Reorder the following modal phrases according degree of certainty.

+ certain is almost certain to will very probably ) is expected to ) little/no difference likely to ) might possibly - uncertain 5. Sometimes we wish to protect the statements that we make. Reorder the following shields according to degree of certainly of the speaker/writer.

+ certain There s no doubt that (subjective!) There is now widespread agreement that Research has shown that New evidence suggests that 42

It has been claimed that - uncertain

6.

1. Cyprus may/ is likely to need a loan from the European Central Bank. 2. The actions of the bankers tended to/could have caused the world economic 3. 4. 5. 6. 7. 8. 9.
crisis. Bob Diamond, the chief executive of Barclays Bank, may/ could/ is likely to follow Marcus Agius, the chairman, in resigning. It seems that companies may be preparing for worse economic conditions to come. Some researchers have suggested that economies in the BRICs countries may be slowing down. The Occupy movement may have a range of solutions to the ills in the world economy. It has been suggested that there is a link between bankers pay and bonuses, and general public dissatisfaction with the banks. The aging population in many countries could cause their economies to become dependent on the labour of fewer and fewer people. People tend to behave foolishly when they fall in love.

TASK: Finding an academic tone. Newspaper reporting of business activity

a. Look at the following items of informal vocabulary from the text. 1. Brit 2.
Match them with the more formal definition on the right: b. An informal word for a British person. put in (l.1) e. to spend a particular amount of time doing something, or to make a keep on top of things (l.13) particular amount of effort in always on (l.20) order to do something. on the move (l.25) c. in control of what is to get things done (l.25) happening a. 24-hour society f. whilst travelling d. to achieve what it is necessary to achieve.

3. 4. 5. 6.

c. Now read the text. As you read it answer the questions in the
column on the right. The average Brit now puts in more than three weeks of overtime a year - by answering calls and emails at home, a study revealed yesterday.

43

Researchers found nine out of ten of us continue working when we have left the office - typically for a total of three hours and 31 minutes each week. Thats a total of 15 hours a month or 183 hours a year - the equivalent of 23 extra working days a year. But while one in two do it simply to stay organised, one in five do it because they want to impress the boss. More than one in three reply to work emails in bed to keep on top of things. Yesterday Andy Jacques, general manager of mobile security software company Good Technology, which commissioned the research, said: There was a time when it was difficult to continue working outside of the office without carrying a laptop to access the corporate email system. But with todays always on society, Brits are pretty much working, or at least thinking about work, from the moment they wake up until the moment they fall asleep at the end of the day.

1 0

1 5

2 0

One in two who employee s? do what put in overtime ? One in three who? employee s

2 5

Mobile phones, especially smartphones and tablets, have made it much easier to be able to work on the move, and its helping people choose when and where to get things done. At the school gate, on the train or in the queue at the coffee shop, this new wave of connected technology is enabling people to be more productive than ever before, and stay on top of things with greater ease and less time. The study of 1,000 UK workers, also found 66% of people check their work emails before 7am.

3 0

What is it here? Working on the move

Adapted from: http://www.mirror.co.uk/money/jobs/british-workers-spend-an-extra-three-1111390 [accessed 2:vi:12]

d. Divide the text into three sections: ll 1 13; ll 15- 30; ll 31 33.
Which sections and contents would you use for an academic essay, and why? Section one ll 1 13; and Section three ll 31 33 These contain statistical and empirical information. Which section and contents could you leave out of the essay, and why? Section two ll 15 30 Conversations like this would not normally be used in academic

44

writing; although, if the research was qualitative, interviews might be used selectively.

e. In small groups, use the box to summarise the text in a more

academic way. Use your own words wherever possible, but do not attempt to change any technical language. Introduction: (including general topic; what is importance of topic; what question is the research trying to answer; what gap in our knowledge is the research attempting to fill [where is the knowledge gap here?]) The extent that workers carry on working outside the office has been the subject of some anecdotal speculation. However, little current research has been carried out. Research commissioned by the technology company, Good Technology has looked into how current technology is used by employees to help them continue work outside the office. Researchers found nine out of ten of British workers in their survey continued working after office hours.

a.

b. Methodology: (What kind of methodology is indicated here? What extra

information might you need to discover to make this complete and academically strong?)

The study sampled 1,000 UK workers. You would need to know where the workers were sampled from, gender, age, etc.

c. Results: (What are the results here? What other results would you include in
an academic report?) The total duration of such work averaged three hours and 31 minutes per week. The survey also found 66% of employees surveyed checked their work emails before 7am. If this were averaged out over the year, such overtime would amount to more than three weeks of overtime a year. d. Discussion: (What things would you wish to discuss/write about in the final part of your essay?) The reasons for such overtime working are varied but about 20% of workers surveyed suggested that the reason for such work was to impress the boss. Other suggested that modern technology allowed flexibility in the time and location of working.

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ACADEMIC READING b. Introduction: Jigsaw exercise Correct Order c . Understanding international differences in perceptions of management control is important to the management of risk within multinational companies (MNCs). The effectiveness of the control of risks is a matter of opinion at least until control has been shown to have failed. Different perceptions of what constitutes risk, and of how risks can be managed, lead to differences of opinion about the effectiveness of control. These can hinder the international transfer of corporate control systems. Different perceptions lead to misunderstandings, which can lead to the failure of management control. Differences in perceptions of management control are also potentially important to the regulation of management control and risk management. A variety of national and international regulations affect MNCs in their control of worldwide operational risks, and there are growing demands for further management controls and for best practice, often of an Anglo-Saxon provenance, across the world. The findings reported in this article are part of the conclusions of a wider study that compared perceptions of management control between Chinese and British managers. This was a comparison between very different cultures and economies. A three-way comparison was then sought in order to avoid the pitfalls of bi-polar comparison, such as attributing differences to oriental and western culture, or to developing and developed economies. The Czech Republic was chosen as both a European location that could be compared with mainland China and a transitional economy that could be compared with the UK. The fieldwork was done between August 1997 and January 1998 in the UK, Prague and Beijing in two western-based MNCs with operations in all three locations. The MNCs have asked to remain anonymous. The findings reported here are based on views of 55 managers, all but two of whom worked for the two MNCs. Much of the data was gathered from 30 managers, who were asked what gave them control assurance. Discussions focused initially on credit control, which was selected as an area of management control that practising managers could explain. A diagram of their views on gaining credit control assurance was drawn and confirmed with each interviewee. One interviewee commented that the research approach of mapping control perceptions in a diagram reflected a typical western process view of management control, but that Chinese people tend not to think in terms of processes. This stimulated a re-examination of field notes and pursuit of a new angle of inquiry into perceptions of control. This article is based on findings from this re-examination. In carrying out the research, 46

a .

5 e .

1 0 d .

5 b .

1 0

the researcher drew on his own practical experience as an external and internal auditor, management accountant and financial controller, working in the UK, other western European countries and several Asian locations, including Beijing. He has a knowledge of Mandarin and has a wife from Beijing and two bilingual daughters, which gives him experience of the challenge of communicating across cultures. i. ii.
Hedging or Caution: See Yellow Highlights Given / New : See Green Highlights

f. Cultural and Social Context:

As you read, answer these questions; i. What are the three factors of Chinese culture? a) Respect for age and hierarchy. Respect for received wisdom b) Group orientation, particularly in the family c) Importance of maintained relationships. Paraphrase:

a. Rewrite this sentence: The traditional Chinese social unit is the

extended family which was included by Confucius in his hierarchy of society. Begin: Confucius included the traditional Chinese social unit of the extended family in his hierarchy of society.

b. Rewrite this sentence: Consequently, trust, reciprocity and scope

for renegotiation, as opposed to the formality, certainty and transparency of contracts, count for more in Chinese than in western business dealings (Child, 1994; Carver, 1996; Lu, 1996; Chng, 1997). Begin: Western business dealings ... count formality, certainty and transparency more than in Chinese business dealings where trust, reciprocity and scope for renegotiation count for more.

ii.

As you read, answer this question, what are the three factors of Czech culture? Strong individualism Individual ethical responsibility Concern for truth.

iii.

As you read this passage, answer this question, what two factors are present in British culture? Respect for hierarchy but also challenge to authority Individual conscience

iv.

What are a specific culture and a diffuse culture? Write definitions of these two types of culture in the way we looked at last week:

47

a. A specific culture can be defined as a culture in which its members are

expected to engage with another in a specific task or area of life.

b. A diffuse culture can be defined as a culture in which its members may

have a wide range of interests and relationships which may be relevant for any task or role. N. B Please note how cautious these definitions can/should be when defining a very large concept such as culture.

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ii. Paraphrase: a. Rewrite this sentence: Concern for opportunities, rather than with plans for realising them, is related to the finding of a Chinese tendency to look for pragmatic solutions within the particular context, rather than conceptual thinking in terms of universal principles. SUGGESTED PARAPHRASE Begin: Chinese managers tend to look for opportunities for pragmatic solutions within the particular context rather than realising plans conceived in terms of universal principles.

What does this mean to you? Westerners believe in a system, Chinese

believe in human beings: a good system cannot replace the intelligence of a good guy. How does this statement relate to the rest of this section? The suggested sense that Chinese managers are more interested in people than process. f. Czech and British views: What are the differences between Czech and British views of process? Czech and British views are quite similar in that both see threats and opportunities relate to process and objectives. Time and planning seen as sequential rather than concurrent, with a view to assuring final objectives will be achieved. Czechs different in emphasising understanding and knowledge, and individual integrity and truth. ii. What are the differences between Czech and British views of control? Czechs instruct staff in understanding principles. Need for legal certainty reflecting need for universal rules. British emphasis on mix of control elements, and checks and balances; need for control framework of multiple systems and elements. g. Conclusions: As you read the text, answer these questions: i. How is the first paragraph of the conclusion academically cautious? l.1 a tendency among; l.2 tended to be; l.3 A tendency was also; l.8 They seemed to seek; l.10 may be described; l.12 some Chinese managers; ii. What are the two paradigms of control? Chinese: opportunities and resilience British: process control

i.

iii.

What contextual factors need to be considered here?

49

 National cultures meaning: legal and educational institutions;

legal regimes; markets for information.

iv.

What are the implications of the findings of the paper? Broadening of our understanding of what controls are effective in different cultures and countries. Transfer of control techniques between locations Regulation of management e.g. adaptation of corporate controls to local situations. Embracing of national variety.

50

TED Talk Sheryl Sandberg: Why we have too few women leaders.
0.0 0

1.2 5 1.4 5

a. Statistics for women's participation i. Heads of State 9 out of 190 ii. Women in parliaments 13% iii. Women on company boards 15/16% iv. NGOs 20% Married senior managers: Men with children? 2/3rds Women with children? 1/3rd b. Why, do you think, Sandbergs tells the story about the bathroom/toilet break? It shows how few women ever get to take part in these high level negotiations.
Listen to the extract again, and fill in the blanks: A couple of years ago, I was in New York, and I was pitching a deal, and I was in one of those (1) fancy New York private equity offices you can picture. And I'm in the meeting -- it's about a three-hour meeting -- and two hours in, there kind of needs to be that bio break, and everyone stands up, and the partner running the meeting (2) starts looking really embarrassed. And I realized he doesn't know where the women's room is in his office. So I start looking around for moving boxes, figuring they just moved in, but I don't see any. And so I said, "Did you just move into this office?" And he said, "No, we've (3) been here about a year." And I said, "Are you telling me that I am the only woman to have pitched a deal in this office in a year?" And he looked at me, and he said, "Yeah. Or maybe you're the only one who had (4) to go to the bathroom."

1.4 5

2.5 0

c. What, does she say, she wants to focus on? What women can do as individuals, and what do they need to tell themselves, the women they work with and their daughters. d. Why does Sandberg tell the audience the following, do you think? I left San Francisco, where I live, on Monday, and I was getting on the plane for this conference. And my daughter, who's three, when I dropped her off at preschool, did that whole hugging-the-leg, crying, "Mommy, don't get on the plane" thing. That she also has problems with, and guilt about work/family obligations. e. What are the three messages, Sandberg suggests, that women need to heed if they are to stay in the workforce? i. sit at the table i.e. engage with the problem ii. make your partner a real partner i.e., make your home partner part of the whole of your work/life balance iii. dont leave before you leave i.e., dont start thinking about the effect having a family will have on your career, before you need to.

3.3 0

4.0 0

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4.2 0 4.5 0

f. The first message: Sit at the table i. What is Sandbergs her anecdote (story) about her university days, and why does she tell it? That men have confidence in their abilities and will always back themselves to do well (Is that always true???) ii.
How do women systematically underestimate their own abilities? In tests, women usually think they have performed worse than they actually do, and men think that they have performed better than they do. Women do not negotiate for themselves in the workforce. 57% men entering their first job negotiate their own salary, but only 7% of women.

6.0 0

iii. If you ask men and women why they do a good job, what different answers do you get? Man attribute their success to themselves; women attribute it to others, e.g., help, luck, hard work.
6.4 0 Listen to the extract again, and fill in the blanks: Women do not negotiate for themselves in the workforce. A study in the last two years of people entering the workforce out of college showed that (1) 57 percent of boys entering, or men, I guess, are negotiating their first salary, and only seven percent of women. And most importantly, men attribute their success to themselves, (2) and women attribute it to other external factors. If you ask men why they did a good job, they'll say, "I'm awesome. Obviously. Why are you even asking?" If you ask women why they did a good job, what they'll say is someone helped them, (3) they got lucky, they worked really hard.

6.2 0

7.4 0

iv. Harvard Business school study: Heidi Roizen. What happened and what does it mean? An academic took the success of Heidi Roizen and turned it into a case study. He changed the name to a male name to test responses. The result was that the male, Howard Roizen was seen as more likeable and competent, whereas the actual woman, Heidi Roizen was seen as pushy, political and self-centred. Male successes are good, but women who are successful are seen as suspicious. v. What does Sandberg tell the audience about the talk she gave at Facebook, and what does this story show? Sandberg is suggesting that, in their own actions, even people like her can be blind to how they, too, discriminate against women. g. Message number two: Make your partner a real partner. i. What is the data on housework? Where men and women work full-time the woman does twice the housework, and three times the amount of childcare. Women will leave work, when it is needed, i.e., if the children are ill. 52

9.0 0

10. 10

ii. What reasons does she give for this? In particular, what does Sandberg say about the pressures on men? There is pressure on men to succeed. Men who do stay at home, are often left out at pre-school groups for parents and children. Where men and women earn equally and share responsibility there is half the divorce rate.

h.
10. 50 i.

Message three: Don't leave before you leave Women start thinking about leaving before they even start planning a family. That affects their ability to have a good career. What, according to Sandberg, is leaning back? Having a child at home means that you pay less attention to your job and your career, and lose opportunities.

11. 45

12. 10

Listen to the extract again, and fill in the blanks: Everyone who's been through this -- and I'm here to tell you, once you have a child at home, your job better be really good to go back, because it's (1) hard to leave that kid at home-- your job needs to be challenging. It needs to be rewarding. You need to feel like you're making a difference. And if two years ago you didn't take a promotion and some guy next to you did, if three years ago you stopped (2) looking for new opportunities, you're going to be bored because you should have kept your foot on the gas pedal. (3) Keep your foot on the gas pedal, until the very day you need to take a break for a child. Stay in. ii. What does Sandberg want in the future? That industry will have 50% women in the top posts. That her son will be able to contribute fully both at home and in the workplace. That her daughter will be able both to succeed, and be liked for her success.

13. 00

14. 00

A lot of her talk is based around anecdotal evidence, i.e., proof from stories, or hearsay. How useful is anecdotal evidence in academic work?

53

Does her use of this anecdotal evidence undermine the strength of Sandbergs talk?

Anecdotal evidence is valid but ONLY where it is introduced as such, i.e. Anecdotal evidence suggests that Sandbergs use of anecdotal evidence is useful here because it is dramatic and forceful. It would not be effective in a piece of formal, academic writing, unless the comments were verbatim (quotations from speech), and introduced as such.

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1. Financial Times: FT Arts: The story of money retold (5m 44sec)

In his new book Money: The Unauthorised Biography, Felix Martin suggests the modern approach to money - what we think it is and how it works - is wrong. He tells the FT's Andrew Hill why the mainstream economic view is misguided and dangerous. TEACHERS You can google Martin The story of Money retold And this is the first item youll find. http://video.ft.com/v/2438012528001/The-story-of-money-retold Martin sees money as based upon a system of credit and clearing from the start. Giving it a suitably modern twist, he says we should view money as a social technology, a set of ideas and practices for organising society. It was created after the collision of Mesopotamian inventions of literacy, numeracy and accounting with Greek notions of equality, and evolved amid struggles for supremacy between sovereigns and their subjects. Ultimately, it was a liberating force for individuals against the state but also something prone to near-ceaseless speculation and financial crises. 100 Felix Martin: What money really is. 1 view: The dominant view a) that, first, it was a physical object usually gold or silver b) that it could be lent and borrowed c) that institutions e.g. banks, could be created that lent and borrowed. 2stnd view: It is the system of credit and clearing that is money, and the tokens i.e. coins, notes, etc. which are NOT money This view is the more important 200 Why is the first view so dangerous? Questions of monetary policy Monetary standard : Macro-economic model: two parts: a) inflation b) lack of focus on financial stability, asset prices and balance sheets. 300The lessons of history: Redistribution of wealth This has been the focus throughout most of history and we shouldnt be afraid of that. Using monetary to move money from creditors to debtors. Inflation: Higher inflation targets as alternative to curing the debt problems that nations have. 410 Will Martins view be accepted? Japan UK: Japans programme, New Governor of the Bank of England sympathy for radical agenda.

2. Second intellectual agenda:

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Modern economics needs to adapt to take a more integrated view of money, finance and macro-economics

WEEK 4: ANSWERS

i. ii.

iii.

iv. v.

vi.

vii.

a. Answer the following questions: Where does the data commentary actually begin? l.4 Table 1 shows What are the purposes of sentences 1 and 2? Sentence 1 defines a computer virus; sentence 2 gives the issue of the paragraph with reasons for growth in concern over virus. What are some of the features of this text that make it an example of written academic English? Formal register e.g. in consequence, such infections; definitions, see ii; use of passives particularly in directive language as can be seen; examples of hedging it may be possible; the absence of references to people (e.g., "concern over" in sentence 2); the uses of the passive; nonfinite -ing clauses; sentence complexity, especially in sentences 4 (ll.5-7and 6(ll. 12-15) Which sentence is the issue/key point in the paragraph? See ii above Which of the five purposes of the data commentary listed above are contained here? a. Highlighting the results: This very high percentage l.7/8 b. Discussing the implications: ll.7 15 The writer only comments on e-mail attachments. Why? Do you think this is enough? If not, what else should be discussed? This seems very reasonable, given the importance of this mode of infection. Email attachments constitute 87% of the total. In line 7, this is expressed as nearly 9 out of 10. What do you think about this and the following: a. about 90%; b. just about 90%; c. as much as 87% of all; d. nearly all. Alternative b looks a bit flat and alternative a possibly a bit enthusiastic (is 87% really "about 90%"?). What is the effect of rounding the numbers here?

a. Locative verbs:
Indicative Informative show provide give present summarize illustrate reveal display demonstrate indicate Suggest y y Y Y Y Y Y Y Y Y n y N N N N Y Y N Y y Y

56

57

B Linking as-Clauses TASK: Fill in the blank with the appropriate preposition: a. As can be seen in Figure 4, earnings have decreased. b. As revealed by Figure 2, the UK had a larger budge deficit than many other developed countries in 2010 c. As described in the previous section, The Office for Budget Responsibilitys long-term forecasts predict that debt will exceed 100% of GDP by 2058 under current policies. d. As defined in section 1, fraud is a form of intention deception resulting in injury. e. As described in in the figure 4, the number of state pension recipients will reach 12.6 million in 2014. f. As can be seen in a comparison of the statistics, spending on pensions is expected to rise from 5.7% of GDP in 201-11, to 7.9% by 2060-61 according to the Office of Budget Responsibility. g. As has been demonstrated previously in surveys of this type, men are more likely to be managers and senior officials than in any other group. h. As shown in the graph, the gender pay gap in the UK in 2008 was the fifth largest in the OECD at 21% of male median earnings.

3. Starting a Data Commentary: WRITING TASK Table 1 summarises the UK Government budget decisions between 2010 and the projected total for 2014-15. As can be seen, the total budget policy decisions show a massive increase from around 8,075million to 40,170 million between 2010 and 2015. Of this increase, capital expenditure shows a much smaller growth from 1,780 million to 2.160 million, which might reflect the governments recession affected spending plans. However, the recession seems not to have affected welfare spending so badly; spending on welfare will increase from 385million per annum to 11,040 million over this period. In addition, debt savings are projected to rise to about 3,020 million over this period.

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Page 7: Correct ordering of sentences: c. Figure 2 shows the general levels 6 of UK government public spending in 2010. a/ As can be seen social protection 4. took the largest amount of spending as a percentage of GDP in 201-11. f/1 Social protection attempts to 0. prevent the most vulnerable in British society from suffering damaging shocks from unforeseen life-events, such as redundancy. j/1 The next largest percentage is the 3. spending on health care at approximately 8%. g/ Such spending is the result of the 10 health care system in the UK . being largely free at point-of-use. e/ However, spending on housing, 8. which might be seen as contributing to the prevention of health care problems, was only 1% of GDP. k/ The third largest amount of 14 government spending was on . education. i/1 The education of the young to 2. become full and mature citizens of the UK is seen as being of paramount importance. d/ General public services, which 7. includes government administration, i.e., the civil service consumes just over four percentage of spending. b/ At the bottom of the general 5. spending was money spent in reciprocal transactions with other countries of the European Union.
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h/ That such spending is so low in 11 comparison to other areas might . come as a surprise to those members of the British population who agitate for British withdrawal from the EU.

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B. ACADEMIC READING: a. What is its job? To provide an executive summary of the whole article. b. Why is it useful to you? Think of five reasons: i. It allows you to predict elements of the rest of the text ii. It allows you to choose whether to read the whole article, because??? iii. It gives you important vocabulary items which are the key terms of the article. iv. It might suggest some of the structure of the whole article. This is particularly true where a particular academic journal has a particular house structure. v. It will give you some flavour of the final opinions of the authors and some implications of their research vi. It allows you to see if their work compares with yours. vii. It gives you a model of how to write an academic article. It gives you small words and phrases that you can legitimately borrow for your own writing. N.B. These are usually NOT phrases which offer opinions!! viii. yes???

1 0

1 5

2 0

Abstract: When it comes to philanthropy, executives increasingly see themselves as caught between critics demanding ever higher levels of "corporate social responsibility" and investors applying pressure to maximize short-term profits. In response, many companies have sought to make their giving more strategic, but what passes for strategic philanthropy is almost never truly strategic, and often isn't particularly effective as philanthropy. Increasingly, philanthropy is used as a form of public relations or advertising, promoting a company's image through high-profile sponsorships. But there is a more truly strategic way to think about philanthropy. Corporations can use their charitable efforts to improve their competitive context-the quality of the business environment in the locations where they operate. Using philanthropy to enhance competitive context aligns social and economic goals and improves a company's long-term business prospects. Addressing context enables a company to not only give money but also leverage its capabilities and relationships in support of charitable causes. That produces social benefits far exceeding those provided by individual donors, foundations, or even governments. Taking this new direction requires fundamental changes in the way companies approach their contribution programs. For example, philanthropic investments can improve education and local quality of life in ways that will benefit the company. Such investments can also improve the company's competitiveness by contributing to expanding the local market and helping to reduce corruption in the 61

local business environment. Adopting a context-focused approach goes against the grain of current philanthropic practice, and it requires a far more disciplined approach than is prevalent today. But it can make a company's philanthropic activities far more effective. Issue: Point: Discussion: Why is this structure used? Do you agree that that is the structure? Paragraph 1: As you read the passage, answer the question in the right-hand column. It is true that economic and social objectives have long been seen as distinct and often competing. But this is a false dichotomy; it represents an increasingly obsolete perspective in a world of open, knowledge-based competition. Companies do not function in isolation from the society around them. In fact, their ability to compete depends heavily on the circumstances of the locations where they operate. Improving education, for example, is generally seen as a social issue, but the educational level of the local workforce substantially affects a company's potential competitiveness. The more a social improvement relates to a company's business, the more it leads to economic benefits as well. In establishing its Networking Academy, for example, Cisco focused not on the educational system overall, but on the training needed to produce network administrators-the particular kind of education that made the most difference to Cisco's competitive context.

What is this here? Distinct and competin g

1 0

1 5

What is it here? Social improvem ent

ISSUE: States the issue at the heart of the paragraph economic v. social objectives is a false dichotomy. POINT: Makes the point that social improvements lead to economic benefits.

Paragraph 2: As you read the passage answer the question in the righthand column.

a. Two pairs of sentences begin in similar ways. Which are they? Why have
the writers used these parallel structures? In the long run, then, social and economic goals are not inherently conflicting but integrally connected. Competitiveness today depends on the productivity with which companies can use labour, capital, and natural resources to produce high-quality 62

1 0

1 5

goods and services. Productivity depends on having workers who are educated, safe, healthy, decently housed, and motivated by a sense of opportunity. Preserving the environment benefits not only society but companies too, because reducing pollution and waste can lead to a more productive use of resources and help produce goods that consumers value. Boosting social and economic conditions in developing countries can create more productive locations for a company's operations as well as new markets for its products. Indeed, we are learning that the most effective method of addressing many of the world's pressing problems is often to mobilize the corporate sector in ways that benefit both society and companies.

What does indeed mean here? Emphasi ses value of boosting s

Parallel structures reinforce idea of intergrally connected in l.2. Paragraphs 3 & 4: As you read the passage answer the question in the right-hand column.

a. What is the issue in this paragraph? What is the point in the paragraph? b. What is the function of For one thing and For another, and
Finally in the paragraph? c. What is the job of the final sentence of the paragraph? That does not mean that every corporate expenditure will bring a social benefit or that every social benefit will improve competitiveness. Most corporate expenditures produce benefits only for the business, and charitable contributions unrelated to the business generate only social benefits. It is only where corporate expenditures produce simultaneous social and economic gains that corporate philanthropy and shareholder interests converge, as illustrated in the exhibit "A Convergence of Interests." The highlighted area shows where corporate philanthropy has an important influence on a company's competitive context. It is here that philanthropy is truly strategic. Competitive context has always been important to strategy. The availability of skilled and motivated employees; the efficiency of the local infrastructure, including roads and telecommunications; the size and sophistication of 63 What does that mean here? Relates to last sentenc e in previous paragra ph

1 0

1 5

2 0

2 5

3 0

the local market; the extent of governmental regulations-such contextual variables have always influenced companies' ability to compete. But competitive context has become even more critical as the basis of competition has moved from cheap inputs to superior productivity. For one thing, modern knowledgeand technology-based competition hinges more and more on worker capabilities. For another, companies today depend more on local partnerships: They rely on outsourcing and collaboration with local suppliers and institutions rather than on vertical integration; they work more closely with customers; and they draw more on local universities and research institutes to conduct research and development. Finally, navigating increasingly complex local regulations and reducing approval times for new projects and products are becoming increasingly important to competition. As a result of these trends, companies' success has become more tightly intertwined with local institutions and other contextual conditions. And the globalization of production and marketing means that context is often important for a company not just in its home market but in multiple countries.

What are these trends?

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a. What is the issue in this paragraph? What is the point in the paragraph?
Paragraph 3:

Issue: Shows that the final comment of the previous paragraph

needs to be qualified and discussed.

Point: Makes the point that corporate philanthropy can have an

effect on a companys competitiveness. Paragraph 4:

Issue : Defines and shows the extent of competitive context Point: Shows that competitive context is not only local but global. b. What is the function of For one thing and For another, and Finally in the paragraph? These structure the discussion of the important elements of competitive context. These phrases also give emphasis to those elements: For one thing hinges on worker capabilities For another thing depends on local partnerships Finally navigating local regulations & reducing approval times for c. What is the job of the final sentence of the paragraph? It broadens the subject out into the global market which is important within the context of globalisation and capitalism. Paragraph 4:

a. How is the paragraph organised, and why? b. Why dont the writers develop the four elements at this point in the essay?
A company's competitive context consists of four interrelated elements of the local business environment that shape potential productivity: factor conditions, or the available inputs of production; demand conditions; the context for strategy and rivalry; and related and supporting industries. This framework is summarized in the exhibit "The Four Elements of Competitive Context" and described in detail in Michael E. Porter's The Competitive Advantage of Nations. Weakness in any part of this context can erode the competitiveness of a nation or region as a business location.

a. How is the paragraph organised, and why?

65

 Introductory sentence: with the enumerator four + elements: then elements outlined. Then giving reader extra reading to develop an understanding of those elements. b. Why dont the writers develop the four elements at this point in the essay? They suggest further reading. Paragraph 5: What are the effects stated in line 2? What is the function of the words crucial, decisive, and prominent in the paragraph? Some aspects of the business environment, such as road systems, corporate tax rates, and corporation laws, have effects that cut across all industries. These general conditions can be crucial to competitiveness in developing countries, and improving them through corporate philanthropy can bring enormous social gains to the world's poorest nations. But often just as decisive, if not more, are aspects of context that are specific to a particular cluster - a geographic concentration of interconnected companies, suppliers, related industries, and specialized institutions in a particular field, such as high-performance cars in Germany or software in India. Clusters arise through the combined influence of all four elements of context. They are often prominent features of a region's economic landscape, and building them is essential to its development, allowing constituent firms to be more productive, making innovation easier, and fostering the formation of new businesses.

1 0

1 5

What are the effects stated in line 2 (sorry!!)?

Need for some speculation here, but: road systems i.e. infrastructure and ease of access into markets; corporate tax rates i.e. does the government take too much money and jeopardise your profits; corporation laws i.e. how easy is it to access local markets or do local companies have too great advantages.

What is the function of the words crucial, decisive, and prominent in

the paragraph? Emphasise how very important these local features of a context are.

Paragraph 6: What is the issue and what is the point in this paragraph?

66

 What is the job of the example in the middle of the paragraph? Is this a
good example? Philanthropic investments by members of a cluster, either individually or collectively, can have a powerful effect on the cluster's competitiveness and the performance of all of its constituent companies. Philanthropy can often be the most cost-effective wayand sometimes the only way-to improve competitive context. It enables companies to leverage not only their own resources but also the existing efforts and infrastructure of nonprofits and other institutions. Contributing to a university, for example, may be a far less expensive way to strengthen a local base of advanced skills in a company's field than developing training in-house. And philanthropy is amenable to collective corporate action, enabling costs to be spread over multiple companies. Finally, because of philanthropy's wide social benefits, companies are often able to forge partnerships with nonprofit organizations and governments that would be wary of collaborating on efforts that solely benefited a particular company.

1 0

1 5

Issue: Note use of powerful effect with regard to corporate philanthropy. Point: makes the point that such philanthropy is vital to improving the competitive context. Note this is followed by discussion, giving examples to support the comment in the point.

What is the job of the example in the middle of the paragraph? Is this a
good example? Suggests that a local university can be a training ground for a particular company. It might be a good example, but do you think that ALL universities will submit to that kind of usage
MODEL SUMMARY OF ARTICLE SECTION It is wrong to think that companies operate in isolation from the society around them. For example, when a company educates local employees it may increase its productivity. This is particularly true in developing countries. Such philanthropy will produce both social and economic gains. This is because developments in technology require more skilled workers. In addition, companies increasingly depend on local partnerships. These partnerships relate to both supply and demand, local strategies and rivalries and other supporting industries. Other aspects of local context need understanding: for example, local

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infrastructure, and local taxes and laws. Particular contexts may also support a group of particular industries. Finally, however, philanthropy may ease a company through such local issues because of its wider social benefits.

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C . ACADEMIC LISTENING: C. LISTENING: WEEK 4 1. Financial Times: Analysis Review: Global output pivots to Asia: (4m 59sec) In 2013, emerging economies will produce the majority of the worlds goods and services, the first time since the UKs industrial revolution. Comment and analysis editor Frederick Studemann, economics editor Chris Giles and leader writer Martin Sandbu discuss. http://video.ft.com/v/2449213900001/Global-output-pivots-to-Asia 0.0 01.4 0 a. Changing Economic Centre of Gravity. = Theoretical Centre of output 1 CE Northern Pakistan 1950 North America 2010 North Russia 2025 Central Asia 2013 Pivotal year for shift from West to East in production. First time that developing economies will : China 33.6% of Global Output India 9.4% of Global Output US 13.9% of Global Output

b. Share of Global Growth (%) China/India 40% of growth 40% of worlds population

1.4 02.3 0

c. Reasons for the shift: China/India 40% of growth 40% of worlds population Industrial revolution took time to spread Communism and Cold war hindered growth This is the normal state of affairs Conflicts in Africa d. More reasons for the shift: The world may no longer need the Advanced economies. OECD forecast - growth advanced growth emerging e. Growth in the Advanced and Emerging countries: Trade between emerging countries. f. Self-sustaining relations between Emerging countries: Close to self-sustaining relations. Rapid trade integration between emerging countries.

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2. Financial Times: FT Business: Are all bankers going to hell? (5m 20sec)
Five years since the financial crisis and not one individual has been prosecuted. But can we really lay all the blame on bankers or were they just the pawns of a system society created? John Authers, FT senior investment columnist, reports on the debate. http://video.ft.com/v/2448327734001/Are-all-bankers-going-to-hell0.0 00.5 0 0.5 02.0 5 a. John Authers: Are bankers still unpopular? Viscerally unpopular Yes, basically!! b. Greg Smith: ex Goldman Sachs: What is the problem? The System Betting against clients without telling them Selling a teachers pension fund a product they dont understand Bankers respond to the systems they are caught up in Systematic regulatory change : regulate derivatives ban proprietary trading Sending bankers to prison suggests that weve solved the problem when we havent Lost the fiduciary element : Customers are seen as tools to extract profits out of. A long term problem. John Authers: The banks were too big to fail. They had to be rescued because not to rescue them would have lead to economic collapse c. Anthony Belchambers: Why are banks better regulated now? Banks are complex Need to be big because they are globally competitive. There is an early-warning mechanism Regulators more intrusive d. Belchambers: Why has no-one gone to jail? Few public prosecustion Most of the CEOs have gone. Difficult to decide where bad/irresponsible behaviour is criminal behaviour Most CEOs have contracts which give them big pay offs. Con Keating: What is the problem with technology, e.g. the ATM? Using an ATM allows you NOT to see your bank manager. Trust is the oil that makes exchange better than anything else. John Authers: What are the remaining problems? 1. Not enough has been done to make the system stronger 2. Trust has not been rebuilt 3. Senior Bankers have spent millions of pound lobbying politicians NOT to

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regulate them, and the politicians have let them get away with it.

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3. OpenSpires: The Global Recession How did it happen?

TEACHERS NOTES: NB This talk is quite difficult, but should be good for better groups

1. 2. 3. 4.

The talk lasts about 40 minutes: Divide the playing up into three parts: A full transcript is given at the end; though its not really necessary. There is also more information given on the web page, with other activities, though they arent all strictly for EFL students.

Part one: ANSWERS: 1.Deregulation

b. The reduction or elimination of government power

2.Demutualisation

3.Knock-on effect 4.Pick up the tab

in a particular industry, usually performed to create more competition within the industry. c. The process by which building societies and mutual insurers convert themselves from mutual organisations (owned by their members/ customers) to profit-making companies which distribute profits to their shareholders. d. Something which indirectly causes other events or situations, a. to pay for something

ii. Match the term on the left with its meaning on the right: 1. a bail-out C. the act of helping a person or organization that is package in difficulty, usually by giving or lending them or it money: 2. liquidity A. in the form of money, rather than investments or property, or able to be changed into money easily: 3. to shore-up D. to support or improve an organization, agreement, or system that is not working effectively or that is likely to fail. 4. a write-down B. reducing the book value of an asset because it is overvalued compared to the market value. iii. Match the term on the left with its meaning on the right: 1. credit crunch B. When creditors become reluctant to lend money to businesses or individuals because of the increased risk of default due to adverse economic or political conditions 2. recapitalisation C. When a company changes its capital structure (the proportion of equity to debt) 3. securitised A. Gathering of assets such as mortgages into

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assets Transcript: A.

securities that are divided up and sold to different types of investor.

a. What does Linda Yueh have to say about:

Northern Rock; the major manifestation of the banking crisis in the UK; the first bank to have a run on it in a century Bear Sterns; the sale of Bear Sterns to JP Morgan Chase marked the start of the banking sector failure Lehman Brothers : the collapse of Lehman Bros bank was another marker in the banking crisis and the credit crunch: Bankers not lending has real implications for the down-turn in the economy.

b.

What does Jonathan Michie have to say about:

systematic deregulation; a bad thing because this enabled banks not to hold proper reserves demutualisation of building societies; a bad thing which lead to the movement of profits within the building societies to individuals outside the building societies.

c. What does Linda Yueh say was the advantage of the Glass-Steagal act? It
separated the retail and investment arms of banks. and what is the effect on the banks of deregulation? Banks became too big, took too many risks and used risky money in money markets.

What are the differences, do you know, between investment banking

and retail banking?

Investment banking acts as - a financial intermediary that performs a variety of services. This includes underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients. Retail Banking is a typical mass-market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).

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d.

Why, does Michie suggest, was it necessary for governments to bail out the banks? Because if they didnt the whole financial system is likely to collapse.

e. Linda Yueh: What are the bail-out packages based on? Recapitalition, liquidity
and guaranteeing that banks can lend. In the US, initially the government was going to buy up the banks bad debts. What are the banks still not putting on their balance sheets? The bad debts. Part one: Transcript:

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Linda: I think 2008 has been a tremendous year in terms of economic developments. One of the things that perhaps we ought to think about is how we got here, in terms of the financial crisis. So we know at some point last year, around last summer, the sub-prime mortgage crisis in the United States really (1)began to take hold. The most obvious manifestation was of course the failure of Northern Rock, which generated the first bank run on a British bank run in about a century. Since then of course, things have only gone from bad to worse. In March of this year we know that the failure of Bear Stearns, which was forcibly sold to JPMorgan Chase, essentially marked the start of the prospect of (2)systemic banking sector failure, and this culminated with the collapse of Lehman Brothers on September 15th. That roughly brings us to where we are today in terms of the financial crisis. And I should probably also say that it is not just the financial crisis in the banking sector, we also know this has generated what has been called (3)'The credit crunch' where there is just not lending coming out of the banking sector, which has real implications for mortgages, for business lending, for keeping individuals and companies going. And that, I am afraid, is the challenge that we face now along with the (4)real economic downturn. Jonathan: Yes I would agree with that. I think the finger of blame for the current crisis though has to be also put at the systematic deregulation, during the 1980's and 1990's, removing the requirements on banks to hold (5)proper levels of reserves and so on. For example, Northern Rock was a successful building society, as with the other building societies in Britain, which were very sensible institutions where people put their money in to save and then drew out money to buy their houses. The demutualisation of the building societies, I think, was totally unjustified by any (6)economic or moral argument having profited the current members of the building societies who managed to cash in the value which had been built up over years and decades, and of course profited the individual banks and consultants who were giving advice. I think if it hadn't been for that deregulation and demutualisation, there wouldn't have been the build-up of such an
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(7)unsustainable, credit fuelled boom which led to this big bust.

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1. Match the phrase on the right with its meaning on the left 1. light touch c. a situation in which only a few people are in charge regulation of something, or something is not controlled very strictly: 2. Debt to GDP a. the amount of national debt of a country as a ratio percentage of its Gross Domestic Product (GDP).

5. Back on
track

d. Returning to a proper or correct course

6. Fiscal
stimulus

b. An increase in public spending or a reduction in the level of taxation that might be performed by a government in order to encourage and support economic growth

ii. Match the phrase on the right with its meaning on the left 1. Tax credits c. An amount of money that a taxpayer is able to subtract from the amount of tax that they owe to the government.

2. Nothing to
write home about

a. mediocre; not as good as you expected. NOTE : Usually but NOT always in the negative.

3. VAT

d. A type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale b. a period of poor performance or inactivity in an economy, market or industry

4. Slump

2. Now listen to the next seven minutes of the discussion, and answer the following questions: a. Jonathan: What was the problem with light touch regulation? it became soft touch regulation which meant that the banking regulator checking on them. b. Linda: What does she want the government to do? to have regulation and to make sure that regulation is enforced What does she say about the National Debt to GDP ratio? Listen for the exact figures. GDP in 2013 will peak at 57% of GDP. At first, she thought was all right, but now she doesnt think its such a good idea.

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What does she say about fiscal stimulus and VAT? It is intended to put money into peoples pockets. But it was criticised for not being enough. Linda thinks that its good that it was lasting one year.

c. Jonathan: What does he think the government should do with its borrowing? Spend it on bridges and roads i.e. infrastructure projects. What does he think about cutting VAT? The 2.5% cut was not enough. A 5% cut would have been better. Part two: transcript

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Jonathan: Yes that's right, I mean Gordon Brown the British Prime Minister famously said that the light touch regulation - that they had been so keen to boast about over the last few years of the boom - the light touch regulation wasn't soft touch regulation. But actually I think now we can see that it precisely was soft touch regulation because, unlike in the (1)previous regulated era where banks and financial institutions were required to hold a (2)certain proportion of assets to back up lending they were doing, the banks and financial institutions were in fact able to just create this new money themselves without the regulator of the financial services authority checking that they really were genuine assets. They were just put on the balance sheets despite the fact that we now see actually they were quite spurious. Linda: Yes, I think as a lawyer I am always slightly sympathetic to (3)regulation being behind markets, but I am not sympathetic to regulators not asking the hard questions. Light touch regulation doesn't mean no regulation. It means that if something looks slightly too good to be true, it probably is. So I think ... I don't think we are through the financial crisis at all, and I think that needs to be dealt with, and I also think that we need to deal with the real economy effects. Because one of the worst things that can happen is to have this kind of (4)asset bubble bursting or financial crisis, and then have the government not deal with the effects in the real economy. That is the lesson of the great depression. By doing policy too late, a (5)financial sector problem becomes a real economy problem. I know that the British government has undertaken now to borrow a record amount of debt to try and get us out of the recession, which is inevitable, and the pre-budget report has the government spending borrowing up to something like a trillion pounds
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over the next few years, with national debt to GDP ratio in 2013 predicted to (6)peak at some 57% of GDP.
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Now I originally didn't think this was too bad, because they always said the average debt to GDP ratio was 60%, but I have decided I have changed my mind a little bit, because it still is ... just because other countries like Italy have debt to GDP ratios of over 100%, it doesn't mean it is a good thing. So I think I am still optimistic they can bring it down because they are nowhere near Japan levels, which is (7)something like 200% of GDP at the moment. But I think what all this borrowing is intended to do of course, is to try to get the real economy back on track.

Linda: I'm Linda Yueh, I am a fellow in economics at St. Edmond Hall, University of Oxford. I am an economist and actually also a lawyer by training, but I teach economics at the University.
5

I have a couple of recent books, one of them is 'Macro Economics', an undergraduate textbook, which will soon need to be updated given the events of the past year. And another book which is coming out next year called 'The law and economics of globalization' to look at the ways in which the economy has been changed, in both economic and legal terms, over the last few years. Jonathan: My name is Jonathan Michie, I am also an economist by training, although I am now director of Oxford University's department for continuing education, which does a range of part-time courses including online courses, and in fact our most popular online course is on the global economy by Doctor Linda Yueh. I am also president of Kellogg College. My most recent book is a handbook on globalisation. Linda: I think 2008 has been a tremendous year in terms of economic developments. One of the things that perhaps we ought to think about is how we got here, in terms of the financial crisis. So we know at some point last year, around last summer, the sub-prime mortgage crisis in the United States really began to take hold. The most obvious manifestation was of course the failure of Northern Rock, which generated the first bank run on a British bank run in about a century. Since then of course, things have only gone from bad to worse. In March of this year we know that the failure of Bear Stearns, which was forcibly sold to JPMorgan Chase, essentially marked the start of the prospect of systemic banking sector failure, and this culminated
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with the collapse of Lehman Brothers on September 15th. That roughly brings us to where we are today in terms of the financial crisis. And I should probably also say that it is not just the financial crisis in the banking sector, we also know this has generated what has been called 'The credit crunch' where there is just not lending coming out of the banking sector, which has real implications for mortgages, for business lending, for keeping individuals and companies going. And that, I am afraid, is the challenge that we face now along with the real economy downturn. Jonathan: Yes I would agree with that. I think the finger of blame for the current crisis though has to be also put at the systematic deregulation, during the 1980's and 1990's, removing the requirements on banks to hold proper levels of reserves and so on. For example, Northern Rock was a successful building society, as with the other building societies in Britain, which were very sensible institutions where people put their money in to save and then drew out money to buy their houses. The demutualisation of the building societies, I think, was totally unjustified by any economic or moral argument having profited the current members of the building societies who managed to cash in the value which had been built up over years and decades, and of course profited the individual banks and consultants who were giving advice. I think if it hadn't been for that deregulation and demutualisation, there wouldn't have been the build-up of such an unsustainable, credit fuelled boom which led to this big bust. Linda: I think it's certainly the end of Wall Street as we know it, and the British equivalent, I'm not quite sure what that is, maybe the City, will not look the same again. I have always found that is a very unusual circle we've drawn between the 1930's and now, because one of the big parallels with this crisis is that this looks like the great depression, banking sector failure followed by economy downturn, global recession. One of the interesting things that came out of the great depression was the Glass-Steagall act. In the United States what this did was it safe-guarded retail deposits away from investment banking functions as essentially separated the two. It was in many ways the birth of Wall Street, in the sense of having investment banks which are fuelled not by deposits, but by overnight lending, short-term lending on overnight markets, the wholesale money market. Of course, with deregulation in the 80's and 90's Wall Street flourished, and again the equivalent in the City, really flourished on the back of this. And one of the things which is really coming about now is that these investment banks no longer exist. The most prominent ones: Goldman Sachs and Morgan Stanley, they have now become normal bank holding companies, and this is because of the crisis, and it is also because in 1999 the Glass-Steagall act was
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abolished essentially by legislation in the United States, meaning that these banks could grow even bigger, including taking on retail banking function. So we have these gigantic banks, and I think what then happened was that when they began to have difficulty we were looking at systemic banking failure which could threaten the entire credit system. That institutional safeguard separating the investment banking's bankers more risky endeavours were now not separated from the entire banking system. So in that sense I suppose, the talk now of trying to do something about the crisis, I think leads us to rethink what has happened to this institutional structure really over the last century. Jonathan: Yes, I think that's right, and I think the point about systemic implications of what has happened is important because that means that the financial sector, the banking system, is quite different from other sectors: high street shops or care sales warehouses, where if one company goes bankrupt it may not matter, others can take up the business. Whereas with the financial sector, if banks go bankrupt it can have an effect on the whole economic system, which is of course why both the British and the American governments have stepped in to save banks. Not so much because that particular company needs to be saved, but if the banks had been allowed to go under and AIG insurance company in America, it would have had knock on effects on the wider system. So the problem is we have had all of this speculation and so-called innovation, invention of new financial products to be traded around the world, where the gains from inventing these new products and selling them on have led to huge increases in the personal bonuses being earned by the speculators. The problem is that in theory one might think well if an individual or a company is successful they can profit from it, if they are unsuccessful they will lose out, the company will go bankrupt and so on. In this case where there is the systematic implications of failure, governments think they are not able to let the companies go bankrupt. So in effect, the gains of being privatised going to individuals and companies privately, but the risks have been socialised basically the tax payer, which is why the tax payer is having to pick up the tab now to the tune of tens of billions or even more. Linda: Very much so. I think quite a lot of the drivers, we know from what the British Government keeps saying, is this crisis came from the United States, but I think there is something also about the way that the British banking financial sector has developed that makes it a much more home grown problem. And I think that by recognising the problem perhaps we might be able to do slightly more in terms of
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resolving the crisis. We know that these massive bail-out packages of banks in the US, and the UK, have been premised on a few principles. One is recapitalisation, the British government came upon this much more quickly than the American government. Two is liquidity. Liquidity is of course the fact that as these banks lose market value, as they write down these toxic debts or troubled assets, they are essentially short of liquidity. And thirdly the government has extended to them guarantees of lending originating now. So this is to try to ensure the credit crunch doesn't end up resulting in lots of corporate bankruptcies and mortgage foreclosures. So these are the steps taken so far by the British government, and the Americans were slightly different. They initially didn't want to recapitalise, they were more intent on buying up the troubled assets, the so-called 'Tarp Plan'. But they famously did a U-turn on this and they decided not to buy up the toxic debts, and that was a bit surprising I think for markets, but I suppose the big question now is: is that something the British and the American governments are going to have to look seriously at. Because despite a 50 billion recapitalisation plan and nearly unlimited liquidity extended to the banking system, the banks say they are not in the position to lend, they are still shoring up their balance sheets. So what that is suggesting is that they still have write downs to come from the troubled assets. What we have seen so far may only be write downs of the so-called 'credit derivatives', so these are the hedging instruments, but there is also collateralised debt obligations. So, in other words, more generally securitised assets, so assets which are traded on the basis of sub-prime mortgages or buy to let mortgages, which then become securitised and traded as debt instruments. Those are still out there off balance sheet, and if those are not written down by the banks or declared, then banks themselves take whatever capital and liquidity there is. They continue to shore up their balance sheets, they refuse to lend, and we are still in a credit crunch despite the billions being poured into the credit system. So the current debate about whether or not the government should give the banks even more money to resolve the credit crunch, I think slightly misses the key point which is; what is going to happen to these troubled assets? We know that keeping them on the books in problematic, that's what Japan essentially did in the early 1990's. They didn't really remove them from the balance sheets of the banks, hoping that the banks could work it through in a kind of rescue plan, but we know that didn't work very well. So I suppose for me that would be the big challenge at the moment is; will the British government now do what TAUP was originally intended to do, force the banks to write down these bad debts. And
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especially if they own majority shares in lots of these banks, like Royal Bank of Scotland, perhaps they are in a position to do that, or perhaps they're not. Jonathan: Yes that's right, I mean Gordon Brown the British Prime Minister famously said that the light touch regulation - that they had been so keen to boast about over the last few years of the boom - the light touch regulation wasn't soft touch regulation. But actually I think now we can see that it precisely was soft touch regulation because, unlike in the previous regulated era where banks and financial institutions were required to hold a certain proportion of assets to back up lending they were doing, the banks and financial institutions were in fact able to just create this new money themselves without the regulator of the financial services authority checking that they really were genuine assets. They were just put on the balance sheets despite the fact that we now see actually they were quite spurious. Linda: Yes, I think as a lawyer I am always slightly sympathetic to regulation being behind markets, but I am not sympathetic to regulators not asking the hard questions. Light touch regulation doesn't mean no regulation. It means that if something looks slightly too good to be true, it probably is. So I think ... I don't think we are through the financial crisis at all, and I think that needs to be dealt with, and I also think that we need to deal with the real economy effects. Because one of the worst things that can happen is to have this kind of asset bubble bursting or financial crisis, and then have the government not deal with the effects in the real economy. That is the lesson of the great depression. By doing policy too late, a financial sector problem becomes a real economy problem. I know that the British government has undertaken now to borrow a record amount of debt to try and get us out of the recession, which is inevitable, and the pre-budget report has the government spending borrowing up to something like a trillion pounds over the next few years, with national debt to GDP ratio in 2013 predicted to peak at some 57% of GDP. Now I originally didn't think this was too bad, because they always said the average debt to GDP ratio was 60%, but I have decided I have changed my mind a little bit, because it still is ... just because other countries like Italy have debt to GDP ratios of over 100%, it doesn't mean it is a good thing. So I think I am still optimistic they can bring it down because they are nowhere near Japan levels, which is something like 200% of GDP at the moment. But I think what all this borrowing is intended to do of course, is to try to get the real economy back on track. The fiscal stimulus part of course is centred on a few things. There is obvious candidates like cutting taxes, or in the case of the PBR tax credits and is given to the very poor and the elderly. There is also of
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course the VAT cutting measure, which is intended to put money into consumer pockets straight away, and the plan for VAT has under quite a bit of criticism, because most people think a 2.5% cut in VAT is really not anything to write home about. What I thought was slightly good about the plan was that it is announced to last for a year, so if you have a major purchase that you were thinking of making, you may want to make it say in 2009 instead of 2010 when VAT goes back up to 17.5%. So that being said, I still think that the VAT cut is slightly on the small side, so I am left to worrying that the stimulus may be less than meets the eye and we are taking in a whole lot of debt to pay for it. Jonathan: Yes and there are a number of important issues there aren't there? The key economic one, going back to economic theory and Keynes's contribution in the 1930's when they were in that last big slump as to what policies should be. The key economic question is: if the government borrows an extra billion, sorry, increases borrowing by a billion to spend, what effect will that have on the economy? Obviously if it has no effect then it is a worthless policy and the level of debt, national income, will rise. However if the economy is in recession, where unemployed resources, idol factories, unemployed works and so on, the government borrows a billion pounds and spends in to build bridges and roads as Barack Obama is talking about, and that boosts the economy by say two billion pounds, then actually the effect is to reduce the debt to national income ratio. So it is very difficult, as the economists or policy analysts all know beforehand what the effect of increasing borrowing will be on the ratio of borrowing to national income, the key question then is to try to target the money that you borrow in ways that will boost the national income and so will reduce the borrowing to national income level. So then we come to the question of whether cutting VAT was the best way of doing that. I think it is a difficult question, but I would agree ironically that probably cutting VAT by 2.5%, from 17.5 to 15% is probably not enough to make a difference, particularly in the current climate. I have just come back from an afternoon of Christmas shopping, where prices have been slashed by 20%, 30%, well obviously 50% in Woolworths, but in other shops, successful shops, prices have been slashed by 20% or so, the 2.5% may not make much of a difference. Plus there are a lot of organisations where the cut doesn't really make any difference because they pass the VAT on anyway. On top of that there is a lot of extra work and effort and costs put on to business, including small businesses, to change all their prices and then they will have to change them all back in a years' time and so on. So I think perhaps if it had been larger, perhaps a 5% cut, then it would have been worth all the hassle of doing it. As it was, perhaps they would have been better using that twelve billion or so on direct
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intervention measures as has been talked about more in the States. But also, as the rest of the package did, they did bring forward winter fuel payments to pensioners and so on, which probably will have a bigger and better impact than the VAT cut itself. Linda: The VAT threshold is quite interesting because the EU requires VAT to not fall below 15%, so I think in a sense it kind of leads us to think about the kind of spill-over to the European level, because it is certainly not just the UK which is concerned about the stimulus. It is also ... efforts have been put forward at the European Union level to try and do is. And I think the economic rationale for it is quite good, and this is something that the UK Prime Minister Gordon Brown has advocated, which is when you boost your own economy, part of that spending goes on to imports, so that actually benefits the country which sells to you. If all countries coordinated their fiscal stimulus and their loose monetary policy, cutting interest rates, boosting their economy, then that spending would also fall into the ... your exports, and so you would get this nice coordinated fiscal monetary policy, boosts to these different countries, which of course has a much larger effect than if countries were to do this in isolation. I think one of the interesting facets about state ownership, of which there are many of the banking system, is it going to effect the banks' lending practices. We are very concerned about that because we don't want the credit crunch to result in bankruptcies, if we can afford it, of good companies. But it looks as if the government is taking an arm's length view on this, so even though they may be a majority shareholder, for instance, in commercial banks, they essentially rely on banks to operate on a commercial basis. That of course meant that even though the government has asked the banks to restore lending to 2007 levels, the actual amount of lending to businesses hasn't really picked up, and that's why the current debate about banks wanting more money in order to do this, and I think the real concern here is really what happens to businesses in short supply, needing liquidity, needing credit. So I think that the real concern here is what happens to businesses which just need that extra bit of credit to get them through certain periods. For instance, I heard that the Queen's tailor has had to declare bankruptcy because of the credit crunch. But I suppose the big headline news item of this time is Woollies, Woolworths shutting down after 98 years, although I suppose I would question whether or not it is a victim of the credit crunch or whether there was something more fundamental with Woolworths brand and shops that has caused it to essentially go under. Jonathan: Yes, there is an argument that economic slumps, even crisis, are a necessary part of capitalist development, and it is good because it can wipe out the inefficient firms and so on, and help subsequent recovery. The problem with that argument is, if you look
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at the companies that do go bankrupt in recessions there are some, maybe it is unfair to pick on Woolworths, there are some that you think, "Well maybe they weren't very successful and dynamic companies," but there are thousands of others that you can see are very successful. Or potentially dynamic companies who had credit withdrawn and collapsed for no good reason, probably would have gone on to be very successful companies. So it is a very costly process, there are plenty of perfectly good firms who are bankrupted because overdraft facilities are withdrawn, or credit which normally would be provided isn't. It is strange that the government spent so much of our taxpayers money buying shares in the banks to the extent they are in effect nationalised, they are majority owned. They complain on television that the banks aren't behaving properly, and yet they are the owners and they are not telling the banks what to do, they are not running the banks in the countries interest. It is not as if the public sector doesn't have experience of running financial institutions and banks as well as other organisations: obviously Universities, local authorities, hospital the NHS is Europe's largest big employer, all very well managed and run in the public sector but also the Bank of England was nationalised in the 1940's and has been run in the public sector since. There are plenty of good examples of public sector banks in Britain and elsewhere providing credit for industry, and I think that is what the government should be doing with the banks that they now do own, making sure that they do keep people on the board to ask difficult questions, which as we know is part of the problem of how we got here in the first place, that the financial services authority, the regulator wasn't asking those difficult questions. There are plenty of people that the government could put in on to the boards at the banks to ask those questions and to ensure that credit is provided to companies for productive use in the UK economy, as opposed to unsustainable speculation which happened over the last few years. Linda: I worry that if they don't, we could see unemployment rise dramatically as the economy goes deeper into recession. The government's projections for its budget and for its spending in the economy is that the UK economy will turn around in the second half of 2009. If their stimulus package turns out to be less than it is, if the global picture is worse than it is, if our major export destinations are also in a worse slump than we thought that they would be, we may well see the economic recovery take longer than the next six months and you could see unemployment beginning to rival the levels that we saw in the early 1990's recession for instance, So at the moment unemployment is under two million, it still looks vaguely cyclical, but if this downturn continues and bankruptcies increase in the public sector, and people get laid off, we could see unemployment rise to say three million, then we are really looking at
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some of the most severe downturns the UK economy has had. There is another avenue for resolving part of the credit crunch, or at least rescuing companies, although this is I suppose slightly tricky. It is probably best explained by an analogy. After the Asian financial crisis in South East Asia, healthy economies underwent tremendous falls in output and the centre of their economies went into free fall. Lots of good companies there had no access to credit and they were just suffering from the downturn. Mergers and acquisitions, M and A activity rose during that period, because Western organisations swooped in and bought the good deals, cheap assets, on sale. Can this work in reverse? Can you get companies from emerging economies to turn around and buy up Western companies. It is an avenue, although I don't see ... I don't think they have the kind of multi-nationals of sufficient scale to buy up the size of the Western companies that we are talking about. But I wouldn't rule out, for instance, companies coming from the developing world like China or the Middle East at least buying equity stakes in Western institutions. We have certainly seen that, and I am not just talking about football clubs like Manchester City. Jonathan: Yes, the danger of being stuck in long-term recession, and unemployment rising and sticking there, would take us back to the 1930's, both in terms of economic history and analysis, because it has been interesting the way Keynes John Maynard Keynes has been rediscovered in the media by politicians, where because of this policy of borrowing to try to stave of recession, which is indeed one of the things that Keynes said you could do. But his more fundamental point was just that the capitalist economic system isn't self-righting. It is just not true what the textbooks of the day said, that interest rates automatically fall to a point at which full-employment will be restored. His argument was that you could indeed get stuck in longterm recession with high unemployment and so I think that does need to be taken seriously. I mean, it is interesting with interest rates, and again this really proves Keynes's point, interest rates now have been cut back to already quite low levels whereas it is not clear they can be cut much further. I think in the States they are already down to 1%. But it is interesting as well that the last few years the UK government has boasted about the great economic policy decision they took to hand over responsibility for interest rates to the Bank of England, rather than government having the responsibility, and that was applauded by the media for all these last decade, or when looking back, actually there was very little to do. It was pretty obvious what should be done to interest rates, we could have done it just as well in this room. The one time it came to a difficult decision about what to do, the bank completely blew it and kept interest rates far too high over the last few months, before finally cutting them now at the last minute, possibly too late. Linda: Yes, I mean I think ... I agree. I mean central bank
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independence and inflation targeting became really the en vogue since actually New Zealand was the first company that adopted it in the early 1990's, then it sort of spread through the developed world. And it was always very difficult to know whether or not the independence of the central bank was responsible for the nice decade of strong growth, low inflation, low interest rates, or whether or not it was just a very benign global environment. And I am afraid But I suspect the main problem with this crisis was that by making a central bank independent, divesting the regulatory role that the central bank usually serves, as well as being the lender of last resort in setting monetary policy, divesting these roles into a triumphant of the FSA, the Financial Services Authority, the uniform regulator in the UK, the treasury and then the Bank of England, nobody was in charge when a crisis erupted and I think that has been quite a painful lesson. I certainly agree with the point of low interest rates and deflation because given we do have a Bank of England, who is now cutting interest rates to try and stave off this recession, dramatic cuts a 1.5% cut, 1.0% cut these are cuts of the like we have not seen in decades. We are now down to interest rates of 2%. This is the 1951 level, this is historically, extremely low. The US is 1% and the ECB is just above the UK, and Japan is down to zero interest rates again. So you are essentially looking at rich countries simultaneously going into recession, and simultaneously suffering from possible deflation. Deflation, believe it or not, before the 1970's wasn't actually a concern and neither was inflation. Because before the 1970's inflation and deflation was just the price cycle: the price rises, the price falls with the economic cycle. But then the shocks of the 1970's changed our model, made us fixated on inflation. But if you look outside of the rich world, say in the Asia financial crisis, East Asia had periods of deflation, trying to have negative prices for two years in 1998 and 1999. It just goes with the decline in the economic cycle. So not every deflation episode ends up in a liquidity trap as outlined by Keynes, which is what japan was in, in the 1990's when interest rates had no effect whatsoever on the economy. So you are essentially ... you were in this trap, liquidity trap. So we don't have to be Japan, we could be more like, say for instance, East Asia during the crisis. But the difficulty for policy makers is traversing that line, cutting interest rates to stimulate the economy, but not cutting them so low without sorting out what is called the 'Monetary transmission mechanism,' the process by which the interest rate translates into commercial banking, and then funding for the corporate sector. If you don't sort that out, which is what Japan didn't do, then cutting interest rates could have no effect, and you end up getting yourself into a deflationary trap. So long as they are aware of that, I am hopeful they can traverse it. And this actually brings us back to the start of the discussion, is one of the reasons why the monetary transmission mechanism is clogged at the moment, is because the
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banks don't lend, probably because they have troubled assets on their books. So I think to get to the heart of the problem would be crucial before using ... just using interest rates and wondering why a 250 basis point cut, over the last two months in the UK, hasn't stimulated lending. Jonathan: Yes, that's right. Having very low interest rates is sometimes described as 'Pushing on a piece of string and wondering why nothing is happening at the other end.' It is argued that having low interest rates is no good if no-one wants to borrow. We have got the additional problem at the moment that although we have got low interest rates, even where companies do want to borrow, the money is not being made available to them at those interest rates. There is no good having low interest rates if the borrowing is not being made available. So that is one problem. Then the other problem is this pushing on a piece of string point, that there is no point having low interest rates, and even availability of credit, if there are no companies out there who are confident enough that the economy is going to pick up and growth restore in order to invest now and start producing more goods and services. If people think that the economy is going to continue in a downward spiral, then that can be self-fulfilling. Which again comes back to the point about the budgetary impetus, the government tried to give the economy, which they might have to repeat again in a couple of months' time. The key thing is to be seen to be doing things which will stimulate the economy, so that other companies will then start increasing their investment in order to produce, to supply, the companies that they think will be demanding more inputs as the economy picks up. That is a sort of Barack Obama point about building bridges and so on, then the companies that provide parts for bridge building will be more confident about investing and keeping in production. Linda: I think the US analogy is quite a good one in many ways, because the US had already done a fiscal stimulus package which was worth just over 1% of US GDP, which is considerable, but is clearly not enough. So the UK has just put forward this fiscal stimulus package of a similar magnitude but is it going to have to Well, one can argue that the US went into recession December 2007, so their recession is already longer than what it is for European countries. But I certainly wouldn't rest my laurels on that point, and instead I think the plans that Barack Obama has put forward to create some 2.5 million jobs, and especially to push green investment. So a green new deals has been described as formulating a low carbon economy. This kind of spending tends to be quite good for employment and as has said, quite good for businesses, if it can be done quickly enough to turn the economy around, and of course secondly, if it is needed. If it is green I would argue that it is probably more likely to be needed.
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Because one of the other problems with Japan is that they tried this but they built infrastructure which wasn't needed. They had a very good infrastructure in Japan. But for the UK, certainly investment in infrastructure and transportation is very much needed, and perhaps there would be more of a push for the next stimulus, to go after an Obama like plan, and begin to modernise some of the very old infrastructure in Britain, which could certainly use that kind of investment. Jonathan: Yes, I think that is absolutely right and extremely important. I would say that it would be worth now the government bringing forward now a major package, but 100% devoted to a green new deal. That is important for a number of reasons. All of the ones that Linda has just said, but also the key point to get out of recession is that consumers, and crucially businesses, really believe that growth will pick up next year, the year after that and the year after that. So they start raising their investments so they won't lose out. Looking at economic history over the long-run, one hundred years or so, there are short booms and slumps every few years, but also there do seem to be quite long periods of economic expansion for twenty, thirty years and then sometimes downturn. Then the long periods of economic expansion, I think it has been argued quite convincingly, tend to cluster around a series of major innovations and products: the motor car and associated goods in the 50's and 60's and so on. And looking over the next ten, 10 or 20 years, it does seem as the global warming climate change seem to be evermore convincing that there really is an extremely serious problem looming very large. A green new deal could be seen as not being something just for a few months, which might then peter out, but actually something which will have to be repeated and stepped up continually over the years, next year, the year after that and the year after that. So if the focus of the recovery could be on that, I think it would give [individuals 0:36:10] and companies confidence to invest in order to establish themselves in that area of the economy, and invest to take part if you like in that creation of green industries.

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