Talpa Calin Maket

ENGLISH FOR ECONOMIC PURPOSES
CONTENTS
INTRODUCTION………………………………………………………………………. 000
….
1. MARKET
ECONOMY…………………………………………………………………..
1.1 Business…………………………………………………………………………
1.2 The Economics of Business…………………………………………………….
1.2.1 Planned Economies…………………………………………………………
1.3 Supply, Demand, Price and Competition………………………………………
2. THE FORMS OF BUSINESS

OWNERSHIP……………………………………………
2.1 Sole Proprietorships…………………………………………………………….
2.2 Partnerships…………………………………………………………………….
2.3 Corporations……………………………………………………………………
3. MONEY AND
BANKING………………………………………………………………
3.1 What is Money?
3.2 The Supply of Money
3.3 The Banking Industry
3.3.1 Other Financial Institutions………………………………………………….
3.3.2 Services Provided by the Financial Institutions………………………………
4. SECURITIES
MARKETS……………………………………………………………….
4.1 How Securities Are Bought and Sold………………………………………..…
4.2 The Role of the Stockbroker…………………………………………………….
5. FINANCIAL
MANAGEMENT………………………………………………………….
5.1 What is Financial Management?……………………………………………….
5.2 Sources of Unsecured Short-Term Financing………………………………….
5.3 Sources of Secured Short-Term Financing…………………………………….
5.4 Sources of Long-Term Financing………………………………………………
6. ACCOUNTING
6.1 Accounting and Accountants………………………………………………….
6.2 The Accounting Equation, The Balance Sheet and the Income Statement…..
7. MANAGEMENT
7.1 Management Resources………………………………………………………..
7.2 Basic Management Functions………………………………………………….
7.3 Levels and Areas of Management………………………………………………
7.4 Key Management Skills…………………………………………………………
8.
MARKETING…………………………………………………………………………..
8.1 The Value Added by Marketing…………………………………………………
8.2 The Marketing Concept. Its Evolution and Implementation………………….
–3–
A. Talpă, O. Calina
8.3 Markets and Their Classifications………………………………………………

8.4 Developing Marketing Strategies………………………………………………
BIBLIOGRAPHY……………………………………………………………………….
–4–
INTRODUCTION
The study of business, a major component of our economy, is increasingly important to all.
Everyone in our economy interacts with business – through the products we buy, the
advertisements we hear, the jobs we hold and the money we invest. From many perspectives, it is
important that young people understand the role of business in our society and begin to
comprehend what their relationship is to business and the economy in which they live.
The fundamental objectives of this book focus on introducing students to the world of
business and helping prepare them for a more meaningful and beneficial interaction with
businesses and our economy.
A basic understanding of the business world and the knowledge of economics are needed
by everyone who plans a career in business. The materials presented are designed to facilitate the
accomplishment of the following main goals:
- Aid students in acquiring a vocabulary of business and economic terms;
- Provide students with an understanding of the many activities, problems and decisions
involved in operating a business successfully under the present economic conditions;
- Help students enrich their economic culture.
This book comprises eight basic chapters (1 - 4 chapters are written by Olga Calina, 5 - 8
chapters – by Adela Talpă) and each chapter is accompanied by many other sub-chapters. Each
new theme contains the explanation of business and economic terms in English, their translation
into Romanian and Russian. The texts are followed by many activities such as pair-work, group-
work, individual work, and by such communicative instructive methods as simulation, role-play,
problematization, case study, etc.
This book is intended primarily for the students of cycle I who study English for economic
purposes and for all the others who are interested to study business in English and such aspects of
economic realities as management, marketing, accounting, finance, etc. This book also presents
some historical data on the money and banking industry development, the accounting origin and
others.
As this is a language course we can give only a general view of the economic sectors, we
do recommend those ones interested in enhancing the sectorial knowledge to consult the books on
the reference list.
We wish to express a great deal of appreciation to all the teachers at the Chair of Applied
Modern Languages who have supported us in publishing this book.
The Authors
–5–
1. MARKET ECONOMY
“Every man, as long as he does not violate the laws

of justice, is left perfectly free to pursue his own self-
interest”
Adam Smith
Learning objectives:
1. Distinguish the main economic systems
2. Understand the definition of business, its risks and rewards
3. Evaluate the chances of starting and operating a business
in the Republic of Moldova
Study and Learn the Words:

English English equivalents Romanian Russian
acţiuni, titluri de
shares (n) акции
valoare
частное
free enterprise iniţiativă liberă
предпринимательство
a large park where people
go to enjoy themselves and
where much of the
theme park parc de distracţie
entertainment is connected
with one subject: e.g. A
western-style theme park
shareholder (n) acţionar акционер
competition (n) concurenţă конкуренция
a thing that happens as a
by-product (n) produs secundar побочный продукт
result of sth else
raw materials materie primă сырьё
to furnish a aproviziona предоставлять
to process a prelucra перерабатывать
tangible goods bunuri materiale материальные товары
юридическая
legal advice consultaţie juridică
консультация
automatic автоматическая коробка
cutie de viteză automată
transmission передач
seats whose position can be
power seats
changed automatically
дистанционное
remote-control telecomandă
управление
side mirror oglinda laterală боковое зеркало
stick shift cutie de viteză manuală ручная коробка передач
not to go well (about
to go rough
business)
sales revenue venit din vânzări доход от продаж
to deduct a scădea вычитать
challenge (n) sarcina grea трудная задача
to retail a vinde cu amănuntul продавать в розницу
a vinde angro, a vinde
to wholesale продавать оптом
cu ridicata
income (n) venit доход
outright (adv) immediately
proprietate, drept de собственность, право
ownership (n)
proprietate собственности
to rent a închiria, a da cu арендoвать, давать в
–6–
chirie, a arenda аренду
There are four types of economic systems:

1) Traditional economy is one in which economic behaviour is based primarily on
tradition, custom and habit.
2) Command/planned economy is one in which some central authority or state
determines economic behaviour.
3) Market economy is one in which markets play a dominant role in taking economic
decisions process.
4) Mixed economy is one in which both free markets and governments have significant
effects on the allocation of resources and the distribution of income.
Perhaps the most important characteristic of American business is the freedom of individuals
to start a business, to work for a business, to buy or sell ownership shares in a business, and to sell
a business outright. Within certain limits imposed mainly to ensure public safety, the owners of a
business can produce any legal product or service they choose and sell it at any price they set.
This system of business, in which individuals decide what to produce, how to produce it, and at
what price to sell it, is called free enterprise. It is rooted in the traditional and constitutional right
to own property.
The American system of free enterprise ensures, for example, the right of Walt Disney to
start an entertainment company, to hire an assortment of artists, and to experiment in developing
theme parks. Their system gives the current executives at Disney and its shareholders the right to
make a profit from the company's success, it gives Disney's management the right to compete
with 20th Century Fox, and it gives movie-goers the right to choose between films produced by
the two companies and many others. Competition like that between Disney and 20th Century Fox
is a necessary and extremely important by-product of free enterprise. Because many individuals
and groups can open businesses, there are sure to be a number of firms offering similar products.
But a potential customer may want only one such product—say, a Jeep Cherokee or a Chevrolet
S-10 Blazer—and not be interested in purchasing both. Each of the firms offering similar products
must therefore try to convince the potential customer to buy its product rather than a similar item
made by someone else. In other words, these firms must compete with each other for sales.
Business competition, then, is essentially a rivalry among businesses for sales to potential
customers. In free enterprise, competition works to ensure the efficient and effective operation of
American business. Competition also ensures that a firm will survive only if it serves its
customers well. Several airlines, for example, have failed because they were unable to serve
customers as efficiently and effectively as their competitors did.
1.1. Business
Business is the organized effort of individuals to produce and sell, for a profit, the goods and
services that satisfy society's needs. The general term business refers to all such efforts within a
society (as in "American business") or within an industry (as in "the steel business"). However, a
business is a particular organization, such as American Airlines, Inc., or Sunnyside Country Store
& Gas Pumps, Inc.
No person or group of persons actually organized American business as we know it today.
Rather, over the years individuals have organized their own particular businesses for their own
particular reasons. All these individual businesses, and all the interactions between these
businesses and their customers, have given rise to what we call American business.
A person who risks his or her time, effort, and money to start and operate a business is called
an entrepreneur. To organize a business, an entrepreneur must combine four kinds of resources:
material, human, financial, and informational. Material resources include the raw materials used
in manufacturing processes, as well as buildings and machinery. Human resources are the people
–7–
who furnish their labour to the business in return for wages. The financial resource is the money
required to pay employees, purchase materials, and generally keep the business operating. And
information is the resource that tells the managers of the business how effectively the other
resources are being combined and utilized.
Businesses are generally of three types. Manufacturing businesses (or manufacturers) are
organized to process various materials into tangible goods, such as delivery trucks or towels.
Service businesses produce services, such as haircuts or legal advice. And some firms—called
middlemen—are organized to buy the goods produced by manufacturers and then resell them.
For example, the General Electric Company is a manufacturer that produces clock radios. These
products may be sold to a retailing middleman, which then resells them to consumers in its retail
stores. Consumers are individuals who purchase goods or services for their own personal use
rather than to resell them.
All three types of businesses may sell either to other firms or to consumers. In both cases,
the ultimate objective of every firm must be to satisfy the needs of its customers. People generally
don't buy goods and services simply to own them; they buy products to satisfy particular needs.
People rarely buy an automobile solely to store it in a garage; they do, however, buy automobiles
to satisfy their need for transportation. Some of us may feel that this need is best satisfied by an
air-conditioned BMW with stereo cassette player, automatic transmission, power seats and
windows, and remote-control side mirrors. Others may believe that a Ford Taurus with a stick
shift and an AM radio will do just fine. Both products are available to those who want them, along
with a wide variety of other products that satisfy the need for transportation.
When firms lose sight of their customers' needs, they are likely to find the going rough. But
when the businesses that produce and sell goods and services understand their customers' needs
and work to satisfy those needs, they are usually successful.
In the course of normal operations, a business receives money (sales revenue) from its
customers in exchange for goods or services. It must also pay out money to cover the various
expenses involved in doing business. If the firm's sales revenue is greater than its expenses, it has
earned a profit. So profit is what remains after all business expenses have been deducted from
sales revenue. A negative profit, which results when a firm's expenses are greater than its sales
revenue, is called a loss.
The profit earned by a business becomes the property of its owners. So in one sense profit is
the return, or reward, that business owners receive for producing goods and services that
consumers want.
Profit is also the payment that business owners receive for assuming the considerable risks of
ownership. One of these is the risk of not being paid. Everyone else—employees, suppliers, and
lenders—must be paid before the owners. And if there is nothing left over (if there is no profit),
there can be no payments to owners. A second risk that owners run is the risk of losing whatever
they have put into the business. A business that cannot earn a profit is very likely to fail, in which
case the owners lose whatever money, effort, and time they have invested. For business owners, the
challenge of business is to earn a profit in spite of these risks.
Verb collocations:
To run a business = to be in charge of a business (e.g. to run a hotel, to run a store)
To run a newspaper = to be the chief editor of a newspaper
To run a test = to do a test
To run a risk = to risk
To run a temperature = to have a temperature that is higher than normal.
Use the above phrases of words in your own sentences.
–8–
WORD STUDY
The word BUSINESS has several meanings. Depending on the meaning this word can be
countable or uncountable.
It is uncountable when it refers to:

- the activity of making, buying, selling or supplying goods or services for money.
Syn.: trade, commerce.
E.g. big business, small business, to do business, to go into business
- the work that is part of your job.
E.g. to be away on business.
- something that concerns a particular person or organization, their responsibility.
E.g. It is my business to organize the exhibition.
- a matter, an event, a situation
E.g. the business of the day.
It is countable when it refers to:

- a commercial organization such as a company, shop or factory.
E.g. to have several businesses.
I. VOCABULARY PRACTICE
A) Find the words in the text that are the synonyms of:
1. to buy = 6. intermediary=
2. to persuade= 7. fundamental goal=
3. to employ= 8. businessman=
4. to go bankrupt= 9. to provide sb with sth=
5. to produce= 10. merchandise=
B) Find in the text the English equivalents for the following words and phrases:
1. Economie de piaţă/ рыночная экономика
2. Economie mixtă/ смешаная экономика
3. Economie planificată/ плановая экономика
4. A vinde la un preţ/ продавать по цене
5. Furnizor/ поставщик
6. Creditor/ кредитор
7. A nu avea success, a merge prost (despre afaceri)/ не иметь успеха, идти плохо (о
делах)
8. A satisface necesităţile clienţilor săi/ удовлетворять нужды своих клиентов
9. A-şi asuma un risc/ взять на себя риск
10. A fi disponibil pentru cineva/ быть в наличии для кого-либо
11. A fi interesat în cumpărare/ быть заинтересованным в покупке
12. Venit din vânzări/ доход от продаж.
II. COMPREHENSION
Give answers to the following questions:
1. What economic system is characteristic of the Republic of Moldova?
2. What is the most important characteristic of American business?
3. What is the important by-product of free enterprise?
4. What is business and who organized the modern American business?
5. What resources must be combined in order to start a business? What do you think,
what kind of resources is of greatest importance nowadays? Give your reasons.
6. What types of businesses do you know? To your mind, what type is widespread in our
Republic and why?
–9–
7. What is the ultimate objective of every firm? Do you agree with it?
8. What is profit and what is a loss? In your opinion, if the firm’s expenses are equal to
its sales revenue, can such firm still function or not?
9. What risks are assumed by businessmen?
10. Do you agree or disagree with the statement: “Life in general is a risky business”?
III. What is the usual antonym in the following pairs?

1) to sell 7) to fire
2) producer 8) intangible goods
3) to wholesale 9) to prosper
4) profit 10) to gain
5) borrower 11) to add(e.g. 2+5)
6) employer 12) failure
IV. DISCUSSION
1. Is it easy or difficult to start and operate a business in our Republic?
2. What does one need in order to start his/her own business and to be a successful
entrepreneur?
Choose out of these 3 most important things and give your reasons:
- business knowledge
- courage
- leadership
- financial support
- tremendous drive (= a very strong desire to do sth)
- impertinence
- true entrepreneurial spirit
- brilliant ideas
- communication skills
- patience
3. If you had a chance to start a business, in what sphere would you like to work?
1.2. The Economics of Business
1. Grasp the economics and economy concepts
2. Analyze Adam Smith’s view about self-interest pursued by private individuals
3. Recognize the four main features of laissez-faire capitalism
4. Comprehend how the 3 basic economic questions are answered in the free-
market economy

to decide on sth to choose
to stem from a izvorî din происходить
to argue to prove
to pursue a urmări преследовать
to endeavor to try, to make efforts
to employ one’s capital to use one’s capital
to promote an end to achieve a goal
capital goods mijloace de средства
producţie производства
to derive sth from to get sth from sth
– 10 –
crucial (adj) important

umpire (n) arbitrator arbitru третейский судья
conflicting interpretare противоречивое
interpretations contradictorie толкование
to intent on one’s to give all your attention to sth that
interest interests you
orderly economic organized economic system
system
to cast “dollar votes” to make one’s choice by paying dollars
going price present, current price
to ease off on to reduce production
production
interest (n) dobândă, процент
procent
supply of sth (n) offer ofertă; предложение;
aprovizionare снабжение
demand for sth (n) cerere спрос
conversely (adv) invers наоборот
hence as a result
Economics is the study of how wealth is created and distributed. By wealth we mean
anything of value, including the products produced and sold by business. "How wealth is
distributed" simply means "who gets what."
According to economic theory, every society must decide on the answers to three questions:
1. What goods and services—and how much of each—will be produced?
2. How will these goods and services be produced? (That is, who will
produce them and which resources will be used to do so?)
3. For whom will these goods and services be produced? (This is the
question "Who gets what?")
The way in which a society answers these questions determines the kind of economic
system, or economy, that society has chosen. In the United States, their particular answers have
provided them with a mixed economy, which is based on laissez-faire capitalism, or private
enterprise. Their free enterprise business system is the practical application of this economic
system.
Laissez-Faire Capitalism
Laissez-faire capitalism stems from the theories of Adam Smith, a Scot. In 1776, in his
book The Wealth of Nations, Smith argued that a society's interests are best served when the
individuals within that society are allowed to pursue their own self-interest.
Every individual endeavors to employ his capital so that its produce may be of greatest
value… And he is in this led by an INVISIBLE HAND to promote an end which was no part of
his intention. By pursuing his own interest he frequently promotes that of Society more effectually
than when he really intends to promote it.
In other words, Smith believed that each person should be allowed to work toward his or
her own economic gain, without interference from government. In doing so, each person would
unintentionally be working for the good of society as a whole. And society would benefit most
when there was the least interference with this pursuit of economic self-interest. Government
should therefore leave the economy to its citizens. The French term laissez faire implies that there
shall be no interference in the economy; loosely translated, it means "let them do" (as they see fit).
The features of laissez-faire capitalism are:
– 11 –
Private Ownership of Property Smith argued that the creation of wealth (including
products) is properly the concern of private individuals, not of government. Hence the resources
that are used to create wealth must be owned by private individuals. Economists recognize three
categories of resources: land, labor, and capital, also known as the factors of production. Land
includes the land and the natural resources on and in the land. Labour is the work performed by
people. Capital includes financial resources, buildings, machinery, tools, and equipment that are
used in an organization's operations. We have referred to these resources as material, human, and
financial resources, and we shall continue to do so. Today, business people use the term capital to
mean both capital goods and the money needed to purchase them. The private ownership and use
of both kinds of capital give us the names capitalism and private enterprise for our economic
system.
Smith argued further that the owners of the factors of production should be free to determine
how these resources are used. They should also be free to enjoy the income and other benefits that
they might derive from the ownership of these resources.
Economic Freedom Smith's economic freedom extends to all those involved in the
economy. For the owners of land and capital, this freedom includes the right to rent, sell, or invest
their resources and the right to use their resources to produce any product and offer it for sale at
the price they choose. For workers, this economic freedom means the right to accept or reject any
job they are offered. For all individuals, economic freedom includes the right to purchase any
good or service that is offered for sale by producers. These rights, however, do not include a
guarantee of economic success. Nor do they include the right to harm others during the pursuit of
one's own self-interest.
Competitive Markets A crucial part of Smith's theory is the competitive market composed
of large numbers of buyers and sellers. Economic freedom ensures the existence of competitive
markets, because sellers and buyers can enter markets as they choose. Sellers enter a market to
earn profit, rent, or wages; buyers enter a market to purchase resources and want-satisfying
products. Then, in a free market, sellers compete for sales and buyers compete for available
goods, services, and resources.
This freedom to enter or leave a market at will has given rise to the name free-market
economy for the capitalism that Smith described.
Limited Role of Government In Smith's view, the role, of government should be limited to
providing defense against foreign enemies, ensuring internal order, and furnishing public works
and education. With regard to the economy, government should act only as rule maker and
umpire. As rule maker, government should provide laws that ensure economic freedom and
promote competition. As umpire, it should act to settle disputes arising from conflicting
interpretations of its laws. Government, according to Adam Smith, should have no major
economic responsibilities beyond these.
What, How and for Whom in the Free-Market Economy
Smith's laissez-faire capitalism sounds as though it should lead to chaos, not to answers to
the three basic economic questions. How can millions of individuals and firms, all intent only on
their own self-interest, produce an orderly economic system? One response might be simply,
“They can and they do." Most of the industrialized nations of the world exhibit some form of
modified capitalist economy, and these economies do work. A better response, however, is that
these millions of individuals and firms actually provide very concrete and detailed answers to the
three basic questions.
What to Produce? This question is answered continually by consumers as they spend their
dollars in the various markets for goods and services. When consumers buy specific products,
they are casting "dollar votes" for these products. These actions tell resource owners to produce
more of this product and more of the capital goods with which the product is manu factured.
Conversely, when consumers refuse to buy a product at its going price, they are voting against the
– 12 –
product, telling producers to either reduce the price or ease off on production. In each case,
consumers are giving a very specific answer concerning a very specific product.
How to Produce? The two parts of this question are answered by producers as they enter
various markets and compete for sales and profits. Those who produce for a particular market
answer the question "Who will produce?" simply by being in that market. Their answer, of course,
is "We will.”
Competition within various markets determines which resources will be used. To compete
as effectively as possible in the product markets, producers try to use the most efficient (least-
cost) combination of resources. When a particular resource can be used to produce two or more
different products, then producers must also compete with each other in the market for that
resource. And, if the price of one needed resource becomes too high, producers will look for
substitute resources—say, plastics in place of metals. The resources that will be used to produce
are those that best perform their function at the least cost.
For Whom to Produce? In a market economy, goods are distributed to those who have the
money to purchase them. This money is earned by individuals as wages, rents, profit, and interest
—that is, as payment for the use of economic resources. Money is therefore a medium of
exchange, an artificial device that aids in the exchange of resources for goods and services. The
distribution of goods and services ("who gets what") therefore depends on the current prices of
economic resources and of the various goods and services. And prices, in their turn, are
determined by the balance of supply and demand.
Find antonyms (1-7), synonyms (8-14) in the text to the following words and phrases:
1. public (adj) 8. to try
2. to prohibit 9. profit
3. rarely 10. at wish
4. to accept a job 11. to secure
5. to do good 12. to resolve conflicts
6. to spend money 13. to replace
7. exactly translated 14. to help
II. COMPREHENSION
A) Give words to the following definitions:
1. The system through which a society answers the 3 economic questions.
2. The study of how wealth is created and distributed.
3. An economic system characterized by private ownership of property, free entry into
markets, and absence of government interference.
4. Capital goods and the money needed to purchase them.
5. The right to buy any good or service that is offered for sale by producers.
6. A place in which buyers and sellers of a good or service meet.
7. Land, labour and capital.
8. An economic system in which individuals and firms are free to enter and leave
markets at will.
9. A person who settles disputes arising from conflicting interpretations of some official
acts.
10. An artificial device that aids in the exchange of resources for goods and services.
B) Answer the following questions:

1. What economic system is there in the USA?
2. Speak about the history of Laissez-faire capitalism. What are its features?
3. What does the right of private property entitle the owner to do?
4. What is land, labour and capital?
– 13 –
5. What is economic freedom? What does it mean for the owners of land and capital, for
workers and for all individuals?
6. What are competitive markets?
7. What is the role of government in this economic system?
8. What are the 3 economic questions that every society must answer in order to set up
an economic system?
9. What economy do most of the industrialized nations of the world exhibit?
10. Who answers the questions “What to produce?’ ‘How to produce?’, and “For whom to
produce?”?
C) Finish the sentences:

1. The 3 basic economic questions are…
2. By pursuing his own interest every individual….
3. For workers economic freedom means…
4. The question “What to produce?” is answered by…
5. If the price of one needed resource becomes too high, the producer….
6. Prices are determined by…
III. DEBATE
Which of the 2 points of view concerning Adam Smith’s famous statements about self-
interest do you adhere to? Form two teams. Each team should set forth as many arguments as
possible to defend their statements.
Team A Team B
Adam Smith’s statements Smith did not feel self-interest and
regarding self-interest are actually selfishness were the same, and
statements about greed. The people are wrong to believe that
capitalist economic system is they are. Smith meant that it is
effective only because of the only natural that every person tries
greedy behaviour of individuals to better his own condition. Also,
who are concerned with their own one person’s gain is not
“self-interest”. necessarily obtained at the other
person’s expense.
IV. FOCUS ON GRAMMAR

Fill in prepositions where necessary:
1. According ____ economic theory, every society must decide ____ the answers ____ 3
questions.
2. The American particular answers have provided them _____ a mixed economy based
____ private enterprise.
3. Government should leave the economy ____ its citizens.
4. Entrepreneurs can produce any product and offer it ____ sale ____ the price they
choose.
5. Buyers and sellers can enter ____ a market and leave it ____ will.
6. When consumers refuse to buy a product ____ its going price, they are voting _____
the product.
7. The distribution of goods and services depends ____ the current prices of economic
resources.
8. If a product is sold ___ high price, the demand ____ this product decreases.
– 14 –
1.2.1. Planned Economies
1. Comprehend how the 3 basic economic questions are answered
in planned economies
2. Differentiate between market economy and planned economies
3. Understand what every operating economy represents in reality

at least cel puţin по крайней мере
to some degree în oarecare măsură в той или иной
степени
utilities (n) servicii publice коммунальные услуги
real property proprietate imobiliară недвижимость
projected needs planned needs
professed aims aims that have been publicly
made known
waste (n) devastare разорение
to advocate to propagate, to sustain
to set prices to establish prices
to fare a o duce поживать
to outweigh a depăşi перевешивать
static (adj) not changing or developing
to attain a atinge, a ajunge la достичь
subsidy (n) subvenţie, subsidiu субсидия
to wind up (wound, to stop running a company
wound) and close it completely
to resort to a recurge la прибегнуть к
staff (n) personnel
unemployment (n) şomaj безработица
debt (n) datorie долг
on behalf of sb din partea cuiva от имени кого-л.
As we have briefly discussed the workings of supply and demand in a market economy, let
us look quickly at two other economic systems that contrast sharply with the capitalism of Adam
Smith. These systems are sometimes called planned economies, because the answers to the three
basic economic questions are determined, at least to some degree, through centralized government
planning.
Socialism In a socialist economy, the key industries are owned and controlled by the
government. Such industries usually include transportation, public utilities, communications, and
those producing important materials such as steel. (In France, the major banks are nationalized, or
transferred to government control. Banking, too, is considered extremely important to a nation's
economy.) Land and raw materials may also be the property of the state in a socialist economy.
Depending on the country, private ownership of real property (such as land and buildings) and
smaller or less vital businesses is permitted to varying degrees. People usually, may choose their
own occupations, but many work in state-owned industries.
What to produce and how to produce it are determined in accordance with national goals,
which are based on projected needs, and the availability of resources—at least for government-
owned industries. The distribution of goods and services is also controlled by the state to the
extent that it controls rents and wages. Among the professed aims of socialist countries are the
equitable distribution of income, the elimination of poverty and the distribution of social services
such as medical care to all who need them, smooth economic growth, and elimination of the waste
that supposedly accompanies capitalist competition.
– 15 –
Britain, France, Sweden, and India are democratic countries whose mixed economies
include a very visible degree of socialism. Other, more authoritarian countries may actually have
socialist economies; however, we tend to think of them as communist because of their almost total
lack of freedom.
Communism If Adam Smith was the father of capitalism, Karl Marx was the father of
communism. In his writings (during the mid-nineteenth century), Marx advocated a classless
society whose citizens together owned all economic resources. He believed that such a society
would come about as the result of a class struggle between the owners of capital and the workers
they had exploited. All workers would then contribute to this communist society according to their
ability and would receive benefits according to their need.
The People's Republic of China, Cuba, and North Vietnam are generally considered to have
communist economies. Almost all economic resources are owned by the government in these
countries. The basic economic questions are answered through centralized state planning, which
sets prices and wages as well. In this planning, the needs of the state generally outweigh the needs
of its citizens. Emphasis is placed on the production of capital goods (such as heavy machinery)
rather than on the products that consumers might want, so there are frequent shortages of
consumer goods. Workers have little choice of jobs, but special skills or talents seem to be
rewarded with special privileges. Various groups of professionals (bureaucrats, university
professors, and athletes, for example) fare much better than, say, factory workers.
The so-called communist economies thus seem to be far from Marx's vision of communism,
but rather to practice a strictly controlled kind of socialism. There is also a bit of free enterprise
here and there. For example, in the former Soviet Union, the farmers' markets (rinki in Russian)
not only were allowed but were also essential to the nation's food supply. However, like all real
economies, these economies are neither pure nor static. Every operating economy is a constantly
changing mixture of various idealized economic systems. Some evolve slowly; others change
more quickly, through either evolution or revolution. And, over many years, a nation, such as
Great Britain, may move first in one direction—say, toward capitalism—and then in the opposite
direction. It is impossible to say whether any real economy will ever closely resemble Marx's
communism.
A) Explain the meaning of the following phrases:
1. to contrast sharply
2. the key industries
3. public utilities
4. banks are nationalized
5. smooth economic growth
6. to change through either evolution or revolution
B) Find English equivalents:

1. În dependenţă de ţară/в зависимости от страны
2. Avere imobiliară/недвижимость
3. Într-o măsură oarecare/в той или иной степени
4. Ramurile industriei care aparţin statului/отрасли промышленности, принадлежащие
государству
5. În concordanţă cu scopurile statului/в соответствии с целями государства
6. Printre scopurile proclamate/среди провозглашённых целей
7. Distribuirea echitabilă a venitului/справедливое распределение дохода
8. Lichidarea devastării, care ipotetic însoţeşte concurenţa capitalistă/ликвидация
разорения, которое предположительно сопровождает капиталистическую
конкуренцию
9. Practic lipsa totală a libertăţii/практически полное отсутствие свободы
– 16 –
10. Deficitul frecvent al mărfurilor de larg consum/частый дефицит товаров широкого

потребления.
II. COMPREHENSION
A) Answer the following questions:
1. Why are socialism and communism sometimes called planned economies?
2. Who owns the key industries in a socialist economy?
3. Does private ownership of property exist in a socialist economy?
4. Where can people work in socialist countries?
5. Who controls the distribution of goods and services in a socialist society?
6. What economies do Britain, France, Sweden and India have?
7. Who was the father of communism and what did he advocate?
8. What countries are considered to have communist economies?
9. Who answers the 3 economic questions in a communist society?
10. Do the so-called communist economies correspond to Marx’s vision of communism?
11. What does every operating economy represent in reality?
B) Read the text more carefully and mark the statements with TRUE or FALSE:
1. Planned economy is an ecomomy in which the answers to the 3 basic economic
questions are given by private individuals.
2. The key industries of any country are transportation, utilities, communications, and
banking.
3. What to produce and how to produce it in a socialist economy depends on the
availability of resources.
4. One of the professed aims of socialist countries is the distribution of social services to
all who have money to pay for them.
5. India is a social democratic country.
6. In a communist society there is a slogan „Everybody will contribute according to
their ability and will receive according to their need”.
7. In a communist society prices and wages are set by the state.
8. Workers in a communist economy can choose any job they like.
9. Land and raw materials may belong to the state in a socialist economy.
10. There is no free enterprise in planned economies.
11. In a communist economy capital goods are produced in larger quantities than
consumer goods.
12. In the real world no economy attains „theoretical perfection”.
III. Match the words in column A with their definitions in column B:

A B
1. subsidy a) The state of a company which is unable to pay its debts and has to be
wound up.
2. overstaffing b) Inability to find a job
3. unemployment c) A component of the market forces which when it prevails makes prices of
goods rise.
4. supply d) A payment by a government to producers of certain goods to enable them
to survive in a difficult economic situation.
5. demand e) Rights over property
6. ownership f) Employment of personnel in excess of the real necessities
7. bankruptcy g) A component of the market forces which when it prevails makes prices of
goods fall
– 17 –
IV. Fill in the gaps with the words from the list at the end of the text:
A market economy is based on private ...(1) in contrast to planned economy where ...(2)
ownership prevails. In a free market economy efficiency is the key word, while on the other hand
planned economy most likely leads to ...(3). In a free market economy inefficient businesses go ...
(4), whereas in a planned economy businesses are ... (5), thus allowing them to survive in spite of
their non-satisfactory economic performance. This enables the latter type of economy to resort
to ...(6), that is employing more personnel than actually required. Market economy leads to
high ... (7) of goods and services, while on the other hand planned economy will not focus on
offering high quality goods and services to ... (8). This is due to the fact that in the latter type of
economy there is actually no ... (9), as there are ...(10) monopolies and therefore the options of
customers are severely restricted. On the other hand in a market economy companies freely ...(11)
for a larger ...(12) share, and are thus forced to be efficient and ...(13) staff according to real
necessities and ... (14) their resources with utmost care.
Bankrupt; compete; competition; customers; inefficiency; manage; state; overstaffing;

ownership; quality; market; employ; government; subsidized.
V. On the basis of the above text complete the table giving the characteristic features of
2 types of economic systems, the first one has already been done for you:
Market economy Planned economy

- private ownership - state ownership
- -
- -
- -
- -
VI. Match the following 3 defintions with the words: Capitalism, Socialism,
Communism.
1. An economic system in which everyone has an equal right to a share of a country’s
wealth and the government owns and controls the main industries.
__________________
2. An economic system in which the state controls the means of producing everything on
behalf of people. __________________
3. An economic system in which a country’s businesses and industry are controlled and
run for a profit by private owners rather than by government.
_____________________
VII. DISCUSSION
Give extensive answers to the following questions:
1. What are the professed aims of a socialist economy?
2. Do you know the countries in which poverty does not exist?
3. Is it ever possible to eliminate poverty completely or it is something unreal?
VIII. DEBATE
Work in groups. Do you agree or disagree with the following statements? Give your
reasons:
1. The rich cannot exist without the poor.
2. The state has an obligation to take care of homeless and poor people.
3. The only thing that can remove poverty is sharing.
4. Poverty is not just being without food. It is the absence of affection.
– 18 –
1.3. Supply, Demand, Price and Competition
1. Comprehend how supply and demand determine the price
2. Characterize the four forms of competition
3. Analyze the possible advantages and disadvantages of competition both for the
customers and for the sellers

to affect to influence
bushel a unit for measuring grain, fruit
shift (n) change
inflation (n) a general rise in the prices of goods
and services
generic product not using the name of the company
that made it
brand name the name given to a product by the
company that produces it
Bayer the name of a famous
pharmaceutical company
warranty (n) guarantee
recession (n) recesiune, criză экономический спад
to follow suit to follow an example
wariness (n) precauţiune, prudenţă осмотрительность,
осторожность
scrutiny (n) cercetare, verificare внимательный
meticuloasă осмотр; наблюдение,
исследование
loan (n) împrumut, credit заём, ссуда
WORD STUDY
to rise, to raise, to arise
The verb to rise (rose, risen) is used without object. It means to move from a lower to a
higher position:
E.g. She rose from the chair.
Gas rose in price.
Unemployment is rising.
The verb to raise must have an object and it means to lift sth to a higher position or to
increase it:
E.g. She raised her eyes from her work.
Government has raised taxes.
to raise money = to collect money
The verb to arise (arose, arisen) means to happen, to occur, to start to exist.
E.g. A new crisis has arisen.
Now complete the following sentences with the 3 studied verbs. Use them in the
appropriate tenses.
1. Our supplier ___________ the price of electric equipment.
2. If any misunderstandings ___________ I’ll let you know.
3. The prices of raw materials ________________ recently.
– 19 –
4. The management of the company decided _______________ the salaries.

5. It will be necessary ____________ money if we want to extend the business.
6. We keep them informed of any changes as they ______________ .
7. This book _____________ many important questions.
8. Several new industries _____________ in the town.
9. Those who agree are asked ___________ a hand.
10. Profits _____________ last year by 25%.
The supply of a particular product is the quantity of the product that producers are willing to
sell at each of various prices. Supply is thus a relationship between prices and the quantities
offered by producers, who are usually rational people, so we would expect them to offer more of a
product for sale at higher prices and to offer less of the product at lower prices.
The demand for a particular product is the quantity that buyers are willing to purchase at
each of various prices. Demand is thus a relationship between prices and the quantities purchased
by buyers, who are rational people too, so we would expect them to buy more of a product when
its price is low and to buy less of the product when its price is high. This is exactly what happens
when the price of fresh strawberries rises dramatically. People buy other fruit or do without and
reduce their purchases of strawberries. They begin to buy more strawberries only when prices
drop.
Forms of Competition
A free-market system implies competition among sellers of products and resources.

Economists recognize four different degrees of competition, ranging from ideal competition to no
competition at all. These are pure competition, monopolistic competition, oligopoly, and
monopoly.
Pure (or perfect) competition is the complete form of competition. It is the market situation
in which there are many buyers and sellers of a product, and no single buyer or seller is powerful
enough to affect the price of that product. The above definition includes several important ideas:
- there is a demand for a single product;
- all sellers offer the same product for sale;
- all buyers and sellers know everything there is to know about the market;
- the market is not affected by the actions of any one buyer or seller.
In pure competition the sellers and buyers must accept the going price. But who or what
determines the price? Actually, everyone does. The price of each product is determined by the
actions of all buyers and all sellers together, through the forces of supply and demand. It is this
interaction of buyers and sellers, working for their best interest that Adam Smith referred to as the
“invisible hand” of competition.
Neither sellers nor buyers exist in a vacuum. What they do is interact within a market. And
there is always one certain price at which the quantity of a product that is demanded is exactly
equal to the quantity of that product that is produced. Suppose producers are willing to supply 2
million bushels of wheat at a price of $5 per bushel and that buyers are willing to purchase 2
million bushels at a price of $5 per bushel. In other words, supply and demand are in balance, or
in equilibrium, at the price of $5. This is the "going price" at which producers should sell their 2
million bushels of wheat. Economists call this price the equilibrium price or market price. Under
pure competition, the market price of any product is the price at which the quantity demanded is
exactly equal to the quantity supplied.
In theory and in the real world, market prices are affected by anything that affects supply
and demand. The demand for wheat, for example, might change if researchers suddenly
discovered that it had very beneficial effects on users' health. Then more wheat would be
demanded at every price. The supply of wheat might change if new technology permitted the
production of greater quantities of wheat from the same amount of acreage. In that case, producers
– 20 –
would be willing to supply more wheat at each price. Either of these changes would result in a
new market price. Other changes that can affect competitive prices are shifts in buyer tastes, the
development of new products that satisfy old needs, and fluctuations in income due to inflation or
recession. For example, generic or "no-name" products are now available in supermarkets.
Consumers can satisfy their needs for products ranging from food to drugs to paper products at a
lower cost, with quality comparable to brand name items. Bayer was recently forced to lower the
price of its very popular aspirin because of competition from generic products.
Pure competition is only a theoretical concept. Some specific markets may come close, but
no real market totally exhibits perfect competition. Many real markets, however, are examples of
monopolistic competition. Monopolistic competition is a market situation in which there are
many buyers along with relatively many sellers who differentiate their products from the
products of competitors and it is very easy to enter into this market. The various products
available in a monopolistically competitive market are very similar in nature, and they are all
intended to satisfy the same need. However, each seller attempts to make its product somewhat
different from the others by providing unique product features — an attention-getting brand name,
unique packaging, or services such as free delivery or a "lifetime" warranty.
Product differentiation is a fact of life for the producers of many consumer goods, from
soaps to clothing to personal computers. Actually, monopolistic competition is char acterized by
fewer sellers than pure competition, but there are enough sellers to ensure a highly competitive
market. By differentiating its product from all similar products, the producer obtains some limited
control over the market price of its product.
An oligopoly is a market situation (or industry) in which there are few sellers (2-8).
Generally these sellers are quite large, and sizable investments are required to enter into their
market. For this reason, oligopolistic industries tend to remain oligopolistic. Examples of
oligopolies are the American automobile, industrial chemicals, and oil refining industries.
Because there are few sellers in an oligopoly, each seller has considerable control over price.
At the same time, the market actions of each seller can have a strong effect on competitors' sales.
If one firm reduces its price, the other firms in the industry usually do the same to retain their
market shares. If one firm raises its price, the others may wait and watch the market for a while, to
see whether their lower price tag gives them a competitive advantage, and then eventually follow
suit. All this wariness usually results in similar prices for similar products. In the absence of much
price competition, product differentiation becomes the major competitive weapon.
A monopoly is a market (or industry) with only one seller. Because only one firm is the
supplier of a product, it has complete control over price. However, no firm can set its price at
some astronomical figure just because there is no competition; the firm would soon find that it
had no sales revenue, either. Instead, the firm in a monopoly position must consider the demand
for its product and set the price at the most profitable level.
The few monopolies in American business don't have even that much leeway in setting
prices because they are all carefully regulated by government.
Most monopolies in America are public utilities, such as we find in electric power
distribution. They are permitted to exist because the public interest is best served by their
existence, but they operate under the scrutiny and control of various state and federal agencies.
A) Match the words with their definitions:
1. to range from A to B a) the act of taking goods to the people who have ordered them
2. beneficial b) the amount of freedom you have in order to do sth in the way you want to
3. recession c) to continue to have sth
4. packaging d) to vary from one thing to another
5. warranty e) a person or company that provides goods or services
6. to retain f) having a helpful or useful effect
7. supplier g) a written agreement in which a company selling sth promises to repair or
replace it if there is a problem with it within a particular period of time
– 21 –
8. leeway h) a difficult time for the economy of a country when there is less trade and
more people are unemployed.
9. scrutiny i) materials used to wrap goods that are sold in shops
10 delivery j) careful and thorough examination
B) Find in the text the antonyms to the following words:

1. supply
2. generic product
3. customer
4. to be reluctant to do sth
5. deflation
6. to reduce the price
7. to ban
II. COMPREHENSION
A) Mark the statements with TRUE or FALSE:
1. Monopoly is a form of competition.
2. There is no product differentiation in pure competition.
3. All sellers offer the same product for sale in monopolistic competition.
4. American automobile industry is an example of pure competition.
5. Product differentiation is a fact of life for the consumers of many goods.
6. A monopolist can set any price he/she wants.
7. In oligopoly there can be 6 sellers.
8. There are more sellers in monopolistic competition than in pure competition.
9. Because of competition from generic products many famous companies are forced to
lower the prices of their brand-name products.
10. Oligopolists usually offer similar prices for similar products.
B) Choose the best variant (sometimes 2 variants are possible):

1. Competition offers consumers choices in
a) price c) style
b) quality d) all of the above
2. In order for competition to exist there must be
a) many products
b) 2 or more companies in the same business
c) 2 or more companies in different businesses
d) profits
3. An oligopoly exists when the control of the goods and services is in the hands of
a) 1 large company c) 2 big companies in the same business
b) several small companies d) 10 sizable companies
4. Many real markets are examples of
a) monopoly c) monopolistic competition
b) oligopoly d) pure competition
5. By differentiating his product the producer obtains
a) many consumers c) profit
b) control over price d) monopoly
6. Product differentiation is characteristic of
7. Barriers to enter the market are characteristic of
– 22 –
III. DISCUSSION
1. Comment on the statement: „Business competition encourages efficiency of
production and leads to improved product quality”.
2. List the possible advantages and disadvantages of competition.
3. What kind of competition is there in the market of mobile communication in our
country?
4. Give examples of monopolies in our country. Why are monopolies prohibited in some
countries?
IV. CASE STUDY

Read the following text and answer the questions:
Business Philosophy at the J.M. Smucker Company
„With a name like Smucker’s, it has to be good”. Based on Smucker’s recent success and
growth in the jam, jelly, preserves and marmalade industry, it would be hard for anyone to doubt
that statement. The total jam and jelly sales for Smucker’s is over $1billion a year. By first
chasing and then surpassing jelly giants Kraft, Inc. and Welch’s, Smucker’s now has a 37 percent
share of the total jam and jelly market and is the leading manufacturer in the industry.
The J.M.Smucker Company, based in Orrville, Ohio, is a family-run operation. In 1897
Jerome Monroe Smucker decided to bring in extra income by making apple cider and apple butter
from old family recipes. On the same property where today’s modern factory now stands, Jerome
carefully monitored the quality of his products, personally signing the paper tied over each
container of apple butter. Now, at all of Smucker’s ten plants around the country, a devotion to
quality remains a key element of Smucker’s business.
Soon after Jerome began his business, other members of the Smucker family became
involved. They took most of their earnings and poured them back into the company. In 1969 the
Smucker family decided to take their company public. They retained 30% of the stock, selling
25% to institutions and pension funds and the rest to individual investors.
Paul Smucker (the chief executive and grandson of the founder) and his sons are not taking
their number-one position in the jam and jelly market for granted. They know they must fend off
foreign jam companies, as well as variety of domestic competitors. Smucker’s must also respond
to the new waves of health awareness and calorie consciousness in the USA, as well as changes in
consumers’ tastes.
Part of the Smucker’s strategy for keeping on top is the introduction of new products.
Recently, Smucker’s has had a number of successful new entries into the market. „Simply Fruit”,
a fruit with no preservatives or artificial flavours and no extra sugar added, has been well
received. Smucker’s is also happy with the sales of its Fresh Pack Strawberry Preserves, available
for only a few weeks each year.
The Smuckers pride themselves on innovations of all kinds. Smucker’s, sensing the coming
of a trend, was the first company in the jam amd jelly industry to print nutritional information on
individual product label. It was the first company to use re-sealable lids on its jars. Smucker’ even
has a special „invention group” that gets together to discuss ideas. All ideas, no matter how
outrageous, are encouraged. All negative comments in these meetings are prohibited.
Quality, integrity, and customer relations make up the foundation of Smucker’s company
philosophy. Quality comes first, earnings and sales growth come after. Paul Smucker personally
writes thank-you notes to all new shareholders. He also suggests that they tell a friend to try
Smucker’s products.
Smucker’s refuses to purchase advertising time during any television show that contains
violence or sex scenes. It wants to mantain its wholesome, old-fashioned image. Smucker’s also
– 23 –
pays for full-time federal government inspectors to monitor the entire jam and jelly manufacturing
process. Because of this, Smucker’s is the only company to carry the Agricultural Department’s
top U.S. Grade A designation on all its products.
COMMENTARY:
Preserve (n) = a type of jam made by boilig fruit with a large amount of sugar
To chase = to catch up with sb
To surpass = to become better than sb else
Apple cider = a drink made from the juice of apples that does not contain alcohol
Plant = factory
Earnings = the profit the company makes
To pour sth into sth = to provide a large amount of money for sth
To take the company public = to start selling shares of the company on the stock
exchange
To fend off = to defend or protect yourself from competitors who are attacking you
Preservative (n) = a substance used to prevent food from decaying
Outragious (adj) = very unusual and slightly shocking
Integrity = the quality of being honest
Wholesome (adj) = good for your health
Grade A designation = having the status of offering the best quality
Questions:
1. What is the business that the J.M. Smucker Company is in? Can such business be
profitable in our country?
2. How many plants of this company function and where are they situated?
3. How much percent of shares did this company sell to individual investors?
4. Economists recognize 4 different degrees of competition. In which type of competitive
situation does Smucker’s participate?
5. What is the Smucker’s strategy for mantainig the leading position in the industry?
6. What are the major components of Smucker’s business philosophy that have helped
this organization survive for over 90 years?
7. Why has Smucker’s been able to compete against jelly giants such as Kraft and
Welch’s?
– 24 –
2. THE FORMS OF BUSINESS OWNERSHIP
„That business does not prosper which you

transact with the eyes of others”
Sir Roger L’Estrange
1. Define the three most common forms of business ownership:
sole proprietorship, partnership, and corporation
2. Be aware of the advantages and disadvantages of sole proprietorships
3. Grasp the unlimited liability concept
4. Analyze how the sole proprietorships function both in the USA and in the
Republic of Moldova

întreprindere индивидуальное
sole proprietorship
individuală предприятие
партнёрство,
partnership (n) parteneriat, asociere
товарищество
акционерное
corporation (n) societate pe acţiuni
общество
instance (n) particular example, case
a constitui, a
to account for (ph.v) reprezenta, a se cifra составлять
la
a small shop that sells food and
corner grocery other things, esp. the one situated
near people’s houses
the work of providing food and
catering services
drinks for meetings or social events
magazin de магазин бытовой
appliance store
electrocasnice техники
to seek sth to ask sb for sth
income tax impozit pe venit подоходный налог
to get one’s hands on
to find or get sth
sth
răspundere неограниченная
unlimited liability
nelimitată ответственность
assets (n) active, avere активы, имущество
to seize to take sth using force
continuitate,
continuity (n) преемственность
succesiune
a credit for which only real estate is
mortgage loan credit ipotecar ипотечный кредит
pledged
to be unable to live or work
to be incapacitated
normally
on occasion sometimes
– 25 –
janitor (n) caretaker

cunoştinţe, знание дела,
expertise (n)
îndemânare компетенция
to quit to leave one’s job
The three most commmon forms of business ownership in the United States are the sole
proprietorship, partnership, and corporation. In terms of ownership, corporations are
generally the most complex, and sole proprietorships are the simplest. In terms of organization,
however, all three usually start small and simple. Some, like IBM, grow and grow.
2.1. Sole Proprietorships
A sole proprietorship is a business that is owned (and usually operated) by one person.
Sole proprietorship is the oldest and simplest form of business ownership, and it is the easiest to
start. In most instances, the owner (the sole proprietor) simply decides that he or she is in business
and begins operations. Some of the largest of today's corporations, including Ford Motor
Company, H.J. Heinz Company, and J.C. Penney Company, started out as tiny sole
proprietorships.
There are more than twelve million sole proprietorships in the United States. They account
for more than two-thirds of the country’s business firms. Sole proprietorships are most common
in the retailing, agriculture, and service industries. Thus the specialty clothing shop, corner
grocery, and television repair shop down the street are likely to be sole proprietorships.
Most of the advantages and disadvantages of sole proprietorships arise from the two main
characteristics of this form of ownership: simplicity and individual control.
Advantages of Sole Proprietorships
Ease and Low Cost of Formation and Dissolution No contracts, agreements, or other legal
documents are required to start a sole proprietorship. Most are established without even an
attorney. A state or city license may be required for certain types of businesses, such as
restaurants or catering services, that are regulated in the interest of public safety. But beyond that,
a sole proprietor does not pay any special start-up fees or taxes. Nor are there any minimum
capital requirements.
If the enterprise does not succeed, or the owner decides to enter another line of business, the
firm can be closed as easily as it was opened. Creditors must be paid, of course. But the owner
does not have to go through any legal procedure before hanging up an "Out of Business" sign.
Retention of All Profits All profits earned by a sole proprietorship become the personal
earnings of its owner. This provides the owner with a strong incentive to succeed—perhaps the
strongest incentive—and a great deal of satisfaction when the business does succeed. It is this
direct financial reward that attracts many entrepreneurs to the sole proprietorship form of
business.
Flexibility The sole owner of a business is completely free to make decisions about the
firm's operations. Without asking or waiting for anyone's approval, a sole proprietor can switch
from retailing to wholesaling, move a shop's location, or open a new store and close an old one. A
sole owner can also respond to changes in market conditions much more quickly than the
operators of other forms of business. Suppose the sole owner of an appliance store finds that many
customers now prefer to shop on Sunday afternoons. He or she can make an immediate change in
business hours to take advantage of that information (provided that state laws allow such stores to
open on Sunday). The manager of one store in a large corporate chain may have to seek the
approval of numerous managers before making such a change. Furthermore, a sole proprietor can
– 26 –
quickly switch suppliers to take advantage of a lower price, whereas such a switch could take
weeks in a more complex business.
Possible Tax Advantages The sole proprietorship's profits are taxed as personal income of
the owner. Thus a sole proprietorship does not pay the special state and federal income taxes that
corporations pay. (As you will see later, the result of these special taxes is that a corporation's
profits are taxed twice. A sole proprietorship's profits are taxed only once.) Also, recent changes
in federal tax laws have resulted in higher tax rates for corporations than for individuals at certain
income levels.
Secrecy Sole proprietors are not required by federal or state governments to publicly reveal their
business plans, profits, or other vital facts. Therefore, competitors cannot get their hands on this
information. Of course, sole proprietorships must report certain financial information on their personal
tax forms, but that information is kept secret by taxing authorities.
Disadvantages of Sole Proprietorships
Unlimited Liability Unlimited liability is a legal concept that holds a sole proprietor
personally responsible for all the debts of his or her business. This means there is no legal
difference between the debts of the business and the debts of the proprietor. If the business fails,
the owner's personal property—including house, savings, and other assets—can be seized (and
sold if necessary) to pay creditors.
Unlimited liability is thus the other side of the owner-keeps-the-profits coin. It is perhaps the
major factor that tends to discourage would-be entrepreneurs from using this form of business
organization.
Lack of Continuity Legally, the sole proprietor is the business. If the owner dies or is
declared legally incompetent, the business essentially ceases to exist. In many cases, however, the
owner's heirs take over the business and continue to operate it, especially if it is a profitable
enterprise.
Limited Ability to Borrow Banks and other lenders are usually unwilling to lend large sums
to sole proprietorships. Only one person—the sole proprietor—can be held responsible for
repaying such loans, and the assets of most sole proprietors are fairly limited. Moreover, these
assets may already have been used as the basis for personal borrowing (a mortgage loan or car
loan) or for short-term credit from suppliers. Lenders also worry about the lack of continuity of
sole proprietorships: Who will repay a loan if the sole proprietor is incapacitated?
The limited ability to borrow can keep a sole proprietorship from growing. It is the main
reason why many business owners change from the sole proprietorship to some other ownership
form when they need relatively large amounts of capital.
Limited Business Skills and Knowledge Managers perform a variety of functions
(including planning, organizing, and controlling) in such areas as finance, marketing, human
resources management, and operations. Often the sole proprietor is also the sole manager—in
addition to being a salesperson, buyer, accountant, and, on occasion, janitor.
Even the most experienced business owner is unlikely to have expertise in all these areas.
Consequently, the business can suffer in the areas in which the owner is less knowledgeable,
unless he or she obtains the necessary expertise by hiring assistants or consultants.
Lack of Opportunity for Employees The sole proprietor may find it hard to attract and keep
competent help. Potential employees may feel that there is no room for advancement in a firm
whose owner assumes all managerial responsibilities. And when those who are hired are ready to
take on added responsibility, they may find that the only way to do so is to quit the sole
proprietorship and either work for a larger firm or start up their own business.
A) Find in the text the words that are synonyms of:
1. very small 6. to lure
– 27 –
2. lawyer 7. to change from sth to sth

3. proprietor 8. to stop
4. promotion 9. very important, essential
5. stimulus 10. responsibility
B) Match the words on the left with their definitions on the right:
1. contract a) the ability to change very quickly in order to suit new conditions
2. license b) money that is lent to sb by a bank or another financial organization
3. tax on sth c) a person who helps or supports sb in their work
4. start-up fee d) money that you have saved, especially in a bank
5. flexibility e) an official written agreement between two parties
6. business hours f) money that you pay in order to set up a new business
7. dissolution g) the profit that a company makes
8. heir h) an official document that shows that permission has been given to do, own or
use sth
9. assistant i) the act of officially ending a business
10. savings j) the hours in a day that a shop or company is open
11. loan k) money that you have to pay to the government
12. earnings l) a person who has the legal right to receive sb’s property and continue the
work after their death
C) Find in the text the English equivalents for the following phrases of words:
1. atelierul pentru reparaţia televizoarelor/мастерская по ремонту телевизоров
2. a lua decizii/принимать решения
3. a cere aprobarea managerului/спрашивать разрешения менеджера
4. a achita un împrumut/выплатить заём
5. a reacţiona la schimbările în condiţiile de piaţă/реагировать на изменения в
рыночных условиях
6. viitor antreprenor/будущий предприниматель
7. un credit pe termen scurt/краткосрочный кредит
8. magazin de electrocasnice/магазин бытовой техники
9. a se folosi de informaţia/воспользоваться информацией
10. a-şi asuma răspunderea adăugătoare /взять на себя дополнительную
ответственность
II. COMPREHENSION
A) What do these numbers in the text refer to?
3; 1; 2/3; 12; 2; 5.
B) Choose the item that best completes each sentence:

1. Most United States businesses are
a) corporations
b) partnerships
c) sole proprietorships
2. Unlimited liability means that the owner
a) has unlimited ability to borrow
b) must be liable for his/her company debts
c) cannot be held responsible for his/her company debts
3. All the following are advantages of a sole proprietorship EXCEPT
a) the owner is only answerable to himself/herself
b) there is no requirement to submit profit accounts
c) the possibility to have competent employees
– 28 –
4. If a sum of money was lent to a sole proprietorship, the responsibility to repay the
loan is assumed
a) by the owner himself/herself
b) by the owner’s family members
c) by the owner’s staff
5. The major factor that discourages from starting up a sole proprietorship is
a) limited ability to borrow
b) unlimited liability
c) limited business knowledge
6. Employees don’t want to work for a single owner because
a) they are given too many responsibilities
b) they are not paid as they deserve
c) they don’t have the chance to be promoted.
III. Fill in the gaps with the appropriate words whose parts of speech are given in
brackets in order to facilitate your task:
1. There are _________ advantages of sole proprietorships. (Numeral)

2. It is _________ and relatively _________ to start and end such form of business.
(Adjectives)
3. All the ___________ go to the owner of business. (Noun)
4. The sole proprietor is free _____________ ______________ about everything what
refers to his/her firm. (Verb + noun)
5. The sole proprietor pays __________ the tax on his personal income. (Adverb)
6. The single owner is sure that competitors ____________ nothing about his/her
business plans, profits or other vital facts. (Verb)
IV. Now describe the disadvantages of a sole proprietorship using just one sentence for
each of them.
V. DISCUSSION
1. What is a start-up fee for a would-be entrepreneur in our country?
2. Try to analyze the advantages and disadvantages of a sole proprietorship by putting
them on the scales. To your mind, what pan outweighs – the one with advantages or
another one with disadvantages? Give your reasons.
VI. FOCUS ON GRAMMAR

Comparative and Superlative Degrees:
A) Complete the sentences using a comparative form; the first one has been done for
you:
1. It’s too noisy here. Can we go somewhere quiter?
2. This coffee is very strong. I like it a bit ____________
3. The hotel was very cheap. I expected it to be ________________
4. I was surprised how easy it was to get a loan. I thought it would be _______________
5. You are standing too near the camera. Can you move a bit __________________
away?
B) Use the superlative degree and underline the correct variant:

1. (large) company in the world is (IBM, General Motors, Chrysler).
2. (rich) country in the world is (Russia, USA, Luxembourg).
3. (tall) building in Europe is in (Germany, France, Great Britain).
– 29 –
4. (USA, India, China) has (large) population.

5. (high) waterfall in the world is in (South Africa, USA, Venezuela).
2.2 Partnerships
1. Define the word partnership
2. Know different types of partners within a partnership and distinguish between a
general and a limited partner
3. Comprehend the importance of the articles of partnership
4. Be aware of the advantages and disadvantages of a partnership
to translate to change sth into a
different form
receipt (n) intrare, venit приход
to pool a uni, a pune în comun объединять
real estate avere imobiliară недвижимое имущество
personal estate avere mobilă движимое имущество
to incur debts a face datorii влезть в долги
prospective partner would-be partner
to file a depune, a prezenta предоставить
to draw up a întocmi составлять
Secretary of State Secretar de stat Государственный
секретарь
the terms of the condiţiile parteneriatului условия партнёрства
partnership
to list a face o listă предоставить список
to spell out to explain sth in a clear
way
to maintain accounts a ţine contabilitatea вести бухгалтерию
to extend credit to lend money
concerned (adj) preocupat, interesat обеспокоенный,
зaинтересованный
franchise (n) a formal permission
given by the government
to sb who wants to
operate a business
deceased partner dead partner
The major disadvantages of a sole proprietorship stem from its one-person control—and the
limited amount that one person can do in a workday. One way to reduce the effect of these
disadvantages is to have more than one owner. Multiple ownership translates into more time
devoted to managing, more management expertise, and more capital and borrowing ability.
The Uniform Partnership Act, which has been adopted by many states, defines a
partnership as an association of two or more persons to act as co-owners of a business for
profit.
There are approximately 2 million partnerships in the United States. They account for about
$370 billion in receipts. However, this form of ownership is much less common than the sole
proprietorship or the corporation. In fact, partnerships represent only about 10 percent of all
American businesses.
Although there is no legal maximum, most partnerships have only two partners. (However,
most of the largest partnerships in accounting, law, and advertising have many more than two
partners.) Often a partnership represents a pooling of special talents, particularly in such fields as
– 30 –
law, accounting, advertising, real estate, and retailing. Also, a partnership may result from a sole
proprietor taking on a partner for the purpose of obtaining more capital.
Types of Partners
All partners need not be equal. Some may be fully active in running the business, whereas
others may have a much more limited role.
General Partners A general partner is one who assumes full or shared operational
responsibility of a business. Like sole proprietors, general partners are responsible for operating
the business. They also assume unlimited liability for its debts, including debts that have been
incurred by any other general partner without their knowledge or consent. The Uniform
Partnership Act requires that every partnership have at least one general partner. This is to ensure
that the liabilities of the business are legally assumed by at least one person. General partners are
active in day-to-day business operations, and each partner can enter into contracts on behalf of all
the others. Each partner is taxed on his or her share of the profit—in the same way a sole
proprietor is taxed. (The partnership itself pays no income tax.) If one general partner withdraws
from the partnership, he or she must give notice to creditors, customers, and suppliers to avoid
future liability.
Limited Partners A limited partner is a person who contributes capital to a business but is
not active in managing it; his or her liability is limited to the amount that he or she has invested. In
return for their investment, limited partners share in the profits of the firm.
Not all states allow limited partnerships. In those that do, the prospective partners must file
formal articles of partnership. They must publish a notice regarding the limitation in at least one
newspaper. And they must ensure that at least one partner is a general partner. The goal of these
requirements is to protect the customers and creditors of the limited partnership. Partners can also
be nominal, ostensible, active, secret, dormant, or silent. What type of partner individuals choose
to be depends a great deal on how much involvement they want in a particular business or what
special abilities they bring to a firm. The six different types of partners have the following
characteristics:
1 Nominal partner: not a party to the partnership agreement or a true
partner in any sense; by adding his or her name to the partnership, becomes liable as if
he or she were a partner if persons have given credit to the firm because of such
representation
2. Ostensible partner: active and known to the public as a partner
3. Active partner: active in management but may or may not be known to the public
4. Secret partner: active, but not known to the public as a partner
5. Dormant partner: inactive and not known as a partner
6. Silent partner: inactive, but may be known to the public as a partner
The Partnership Agreement
Some states require that partners draw up articles of partnership and file them with the
secretary of state. Articles of partnership are a written agreement listing and explaining the terms
of the partnership. Even when it is not required, an oral or written agreement among partners is
legal and can be enforced in the courts. A written agreement is obviously preferred because it is
not subject to lapses of memory.
The articles generally describe each partner's contribution to, share of, and duties in the
business. They may outline each partner's responsibility—who will maintain the accounts, who
will manage sales, and so forth. They may also spell out how disputes will be settled and how one
partner can buy the interests of another.
Advantages of Partnerships
– 31 –
Ease and Low Cost of Formation Like sole proprietorships, partnerships are relatively
easy to form. The legal requirements are often limited to registering the name of the business and
purchasing whatever licenses are needed. It may not even be necessary to consult an attorney,
except in states that require written articles of partnership. However, it is generally a good idea to
get the advice and assistance of an attorney when forming a partnership.
Availability of Capital and Credit Partners can pool their funds so that their business has
more capital than would be available to a sole proprietorship. This additional capital, coupled with
the general partners' unlimited liability, can form the basis for a good credit rating. Banks and
suppliers may be more willing to extend credit or grant sizable loans to such a partnership than to
an individual owner.
This does not mean that partnerships can easily borrow all the money they need. Many
partnerships have found it hard to get long-term financing simply because lenders worry about
enterprises that take years to earn a profit. But, in general, partnerships have greater assets and so
stand a better chance of obtaining the loans they need.
Retention of Profits As in a sole proprietorship, all profits belong to the owners of the
partnership. The partners share directly in the financial rewards. Thus they are highly motivated to
do their best to make the firm succeed.
Personal Interest General partners are very much concerned with the operation of the firm
—perhaps even more so than sole proprietors. After all, they are responsible for the actions of all
other general partners, as well as for their own.
Combined Business Skills and Knowledge Partners often have complementary skills. If one
partner is weak in, say, finances, another may be stronger in that area. Moreover, the ability to
discuss important decisions with another concerned individual often takes some of the pressure
off everyone and leads to more effective decision making.
Possible Tax Advantages Like sole proprietors, partners are taxed only on their individual
income from the business. The special taxes such as the state franchise tax that corporations must
pay are not imposed on partnerships. Also, at certain levels of income, the new federal tax rates
are lower for individuals than for corporations.
Disadvantages of Partnerships
Unlimited Liability As we have noted, each general partner is personally responsible for all
debts of the business, whether or not that particular partner incurred those debts. General partners
thus run the risk of having to use their personal assets to pay creditors. Limited partners, however,
risk only their original investment.
Lack of Continuity Partnerships are terminated in the event of the death, withdrawal, or
legally declared incompetence of any one of the general partners. However, that partner's
ownership share can be purchased by the remaining partners. In other words, the law does not
automatically provide that the business shall continue, but the articles of partnership may do so.
For example, the partnership agreement may permit surviving partners to continue the business
after buying a deceased partner's interest from his or her estate. However, if the partnership loses
an owner whose specific skills cannot be replaced, it is not likely to survive.
Effects of Management Disagreements The division of responsibilities among several
partners means the partners must work together as a team. They must have great trust in each
other. If partners begin to disagree about decisions, policies, or ethics, distrust may cloud the
horizon. Such a mood tends to get worse as time passes – often to the point where it is impossible
to operate the business successfully. To reduce disagreements, a number of issues can be settled
when forming the partnership.
Frozen Investment It is easy to invest money in a partnership, but it is sometimes quite difficult
to get it out. This is the case, for example, when remaining partners are unwilling to buy the share of
the business that belongs to the partner who is leaving. To prevent such difficulties, the procedure for
buying out a partner should be included in the articles of partnership.
– 32 –
In some cases, a partner must find someone outside the firm to buy his or her share. How
easy or difficult it is to find an outsider depends on how successful the business is.
A) Explain the meaning of the following phrases of words:
1. to incur debts
2. partnerships find it hard to get long-term financing
3. to stand a better chance of doing sth
4. to be highly motivated to do one’s best
5. distrust may cloud the horizon
6. to have a good credit rating
7. to have complimentary skills
8. frozen investment
B) Find in the text synonymous phrases to the following:

1. to conclude a contract
2. to give big loans
3. to be reluctant to purchase sth
4. to inform lenders
5. to leave a partnership
C) In each horizontal group underline the odd word (which does not belong to the
group of synonyms):
1. partner sole proprietor owner master
2. heir successor legatee legator
3. profit income revenue receipt
4. dispute difference discharge disagreement
5. capital investment fund mortgage
6. to found to establish to form up to put up
7. liable answerable languorous responsible
8. dissolution cancellation disjunction termination
9. extension property estate ownership
10. expertise explanation experience competence
II. COMPREHENSION
1. What is a partnership?
2. What is the legal maximum of co-owners in a partnership?
3. What are the two main types of partners and what is the difference between them?
4. How is each partner taxed?
5. What must the general partner do if he wants to withdraw from a partnership?
6. What are the articles of partnership and what do they describe?
7. What are the similarities and the differences between advantages and disadvantages of
a sole proprietorship and partnership?
8. Why is it sometimes difficult to get your money out of business when you want to
withdraw from a partnership?
B) Mark the statements with TRUE or FALSE:

1. A partnership can consist only of limited partners.
2. Partnerships are the least popular form of business ownership.
3. Partnerships are taxed twice.
4. The status of a general partner is equal to the status of a limited partner.
– 33 –
5. A partnership can comprise no more than 4 partners.

6. The share in the profit of a partner depends on the size of his/her capital investment.
7. The problem sharing in a partnership leads to more effective decision making.
8. If a partnership fails, the debts are paid with the personal assets of both general and
limited partner.
C) Underline the correct variant to complete the definition:

1. This partner doesn’t exist in reality, his name is added to the partnership in order to
obtain a loan from a bank – (dormant, limited, nominal).
2. This partner is active and everybody knows him as a partner – (active, ostensible,
general).
3. This partner is not active and risks only the original investment – ( silent, limited,
secret).
III. DISCUSSION
1. If you had a chance to start a business, would you like to be a sole proprietor or to
work in a partnership?
2. When forming a partnership what kind of partner would you like to be – a general or a
limited one? Give your reasons.
3. What do you think about family business when all the partners are family members?
Would you form a partnership with your spouse or any other close relative? What
conflicts may arise in such a partnership?
4. To your mind, compatibility between partners – is it important or not so much?
IV. FOCUS ON LANGUAGE
The word ACCOUNT

Match the meaning of the words in bold with their definition in the right:
1. The consulting company has won 2 new accounts in Singapore a) represents

2. On no account should these products be released before they are checked. b) on credit
3. Labour accounts for 45% of the manufacturing costs. c) because of
4. Mrs Baker is our regular customer and she may buy on account. d) for themselves
5. By all accounts, we will benefit greatly if we are going to expand next year. e) big customers
6. Agents buy and sell on their own account. f) explain
7. I cannot account for this unexpected decrease in sales. g) consider
8. Our development project has to be adjusted on account of the shortage of h) under no
personnel. circumstances
9. Our solicitor has received a detailed account of all our new customers’ i) report
business deals.
10. A good manager should take the good performance of his employees into j) people say
account.
V. CASE STUDY
Imagine that you have a partnership with your best friend. A serious conflict arose between
you due to his/her dishonest behaviour towards you. Right now you don’t have the money to buy
his/her share of business and you don’t want to sell your share to him/her because your business is
rather profitable. What would you do in this situation?
VI. TRANSLATION
1. Asociatul meu a făcut datorii fără ştirea mea şi acum eu trebuie să le achit.
Мой партнёр влез в долги без моего ведома и теперь мне придется их
выплачивать.
– 34 –
2. Înainte de a forma parteneriatul eu m-am consultat cu avocatul meu.

Прежде чем создать партнёрство, я проконсультировался со своим адвокатом.
3. Uneori este destul de dificil să te retragi din parteneriat.
Иногда бывает очень трудно выйти из партнёрства.
4. Eu şi asociatul meu am hotărât să punem în comun capitaluri pentru a primi un credit
mai mare de la bancă.
Мой партнёр и я решили объединить наш капитал, чтобы получить более
весомый кредит в банке.
VII. ROLEPLAY
Work in pairs. Imagine that you are a sole proprietor and you own a restaurant. You want to
offer 30 percent partnership to your chef. Discuss with him the terms on which you are going to
start a mutually profitable business. Use the following questions:
 How will the profits be divided between partners?
 Who will approve payments and sign checks?
 Will profits be poured back into business or distributed to partners?
 Which employees will report to which partners?
 How will the responsibilities be divided between partners?
 What happens if one partner is dissatisfied with the way another partner handles a
particular responsibility?
 How much time will each partner be required to devote to business?
 If the business goes rough, how will the partners decide whether to give up or to try to
turn it around?
 How will the conflicts be settled? Will they be ended by deferring to the partner with
the most expertise in the matter or by a neutral expert third party?
2.3. CORPORATIONS
1. Define such form of business ownership as corporation
2. Comprehend how a corporation is formed, who owns it, and who is responsible
for its operation
3. Be aware of stockholders’ rights
4. Recognize the basic structure of a corporation

to derive from sth to come or develop
from sth
to plague to create problems
restraint (n) restricţie, limită ограничение
to hinder a împiedica мешать, препятствовать
to despose of property a dispune de proprietate распоряжаться
собственностью
binding (adj) on sb care angajează din punct обязательный с
de vedere juridic юридической точки
зрения
to issue stock a emite acţiuni выпускать акции
return (n) income
the nation (n) the USA
lenient (adj) îndulgent, îngăduitor снисходительный
– 35 –
headquarters (n) sediu principal штаб-квартира, главный

офис
to entitle sb to sth to give sb the right to
do sth
common stock acţiuni obişnuite, простые акции
ordinare
preferred stock acţiuni privilegiate привилегированные
акции
claim on sth pretenţie, drept претензия, право
issue (n) question, matter
proxy (n) procură доверенность
Board of directors Consiliu de administraţie Совет директоров
to set a goal a stabili un scop поставить цель
to develop a plan a elabora un plan разработать план
to trade a comercializa торговать
corporate officer a person who is in a funcţionar al corporaţiei служащий корпорации
position of authority in
a corporation
chairman (n) preşedinte председатель правления
treasurer (n) financial manager
to carry out a strategy a realiza o strategie реализовать стратегию
to report to sb a fi în subordinea cuiva подчиняться кому-л,
давать отчёт
stockbroker (n) agent de schimb (pentru биржевой маклер, брокер
acţiuni)
to raise capital to collect money
legal person persoană juridică юридическое лицо
natural person persoană fizică физическое лицо
unless if not
to recruit to find new employees
for a company
in effect de fapt в сущности, в
действительности
perpetual (adj) eternal, interminable
to take sth over to gain control of a
company by buying its
shares
The advantages of a partnership over a sole proprietorship derive mainly from the added
capital and expertise of the partners. However, some of the basic disadvantages of the sole
proprietorship also plague the general partnership. Unlimited liability and restraints on capital
resources and borrowing, for example, can hinder a partnership's growth. A third form of business
ownership, the corporation, succeeds in overcoming some of these disadvantages.
Corporation is an artificial person created by law, with most of the legal rights of a real
person. These include the right to start and operate a business, to own or dispose of property, to
borrow money, to sue or be sued, and to enter into binding contracts. Unlike a real person,
however, a corporation exists only on paper.
There are more than 3.2 million corporations in the United States. They comprise only about
one-fifth of all businesses, but they account for more than nine-tenths of all sales revenues and
more than three-quarters of all business profits.
Corporate ownership: The shares of ownership of a corporation are called its stock. The
people who own a corporation's stock—and thus own part of the corporation— are called its
stockholders, or sometimes its shareholders. Once a corporation has been formed, it may sell its
stock to individuals. It may also issue stock as a reward to key employees in return for certain
services, or as a return to investors (in place of cash payments).
– 36 –
A close corporation is a corporation whose stock is owned by relatively few people and is
not traded openly (that is, in stock markets). A person who wishes to sell the stock of such a
corporation generally arranges to sell it privately, to another stockholder or a close acquaintance.
An open corporation is one whose stock is traded openly in stock markets and can be
purchased by any individual. General Motors, the largest industrial company in the USA, is an
example. Most large firms are open corporations, and their stockholders may number in the
millions. For example, AT&T is owned by more than 3 million shareholders.
Forming a corporation
The process of forming a corporation is called incorporation. The people who actually start
the corporation are its incorporators. They must make several decisions about the corporation
before and during the incorporation process.
Where to Incorporate A business is allowed to incorporate in any state it chooses. Most
small and medium-sized businesses are incorporated in the state where they do the most business.
However, the founders of larger corporations, or of those that will do business nationwide, may
compare the benefits provided to corporations by various states. Some states are more hospitable
than others, and some offer low taxes and other benefits to attract new firms. Delaware is
acknowledged as offering the most lenient tax structure. A huge number of firms (more than
75,000) have incorporated in that state, even though their corporate headquarters may be located
in another state.
An incorporated business is called a domestic corporation in the state in which it is
incorporated. In all other states where it does business, it is called a foreign corporation. Scars,
Roebuck, for example, is incorporated in New York, where it is a domestic corporation. In the
remaining forty-nine states, it is a foreign corporation. A corporation chartered by a foreign
government and conducting business in the United States is an alien corporation. Volkswagen,
Sony, and Toyota are examples of alien corporations.
The Corporate Charter Once a "home state" has been chosen, the incorporators submit
articles of incorporation to the secretary of state. If the articles of incorporation are approved,
they become the firm's corporate charter. A corporate charter is a contract between the
corporation and the state, in which the state recognizes the formation of the artificial person that is
the corporation. Usually the charter (and thus the articles of incorporation) includes the following
information:
- Firm's name and address
- The incorporators' names and addresses
- The purpose of the corporation
- The maximum amount of stock and the types of stock to be issued
- The rights and privileges of shareholders
- How long the corporation is to exist (usually without limit)
Each of these key details is the result of decisions that the incorporators must make as they
organize the firm—before the articles of incorporation are submitted. Let us look at one area in
particular: stockholders’ rights.
Stockholders' Rights There are two basic kinds of stock. Each type entitles the owner to a
different set of rights and privileges. The owners of common stock may vote on corporate matters,
but their claims on profit and assets are subordinate to the claims of others. Generally, an owner of
common stock has one vote for each share owned. All common stock owners receive dividends but
the amount of these dividends depends on the profitability of the company. The owners of
preferred stock usually do not have voting rights, but their claims on profit and assets take
precedence over those of common-stock owners. Preferred stock often pays a lower profit return
than common stock dividends but that return is fixed and guaranteed.
Perhaps the most important right of owners of both common and preferred stock is to share
in the profit earned by the corporation. Other rights include being offered additional stock in
– 37 –
advance of a public offering (pre-emptive rights); examining corporate records; voting on the
corporate charter; and attending the corporation's annual stockholders' meeting, where they may
exercise their right to vote.
Because common stockholders usually live all over the nation, very few actually attend the
annual meeting. Instead, they vote by proxy. A proxy is a legal form that lists issues to be decided
and requests that stockholders transfer their voting rights to some other individual or individuals.
The stockholder registers his or her vote and transfers his or her voting rights simply by signing
and returning the form.
Organizational Meeting As the last step in forming a corporation, the original stockholders
meet to elect their first board of directors. (Later, directors will be elected or re-elected at the
corporation's annual meetings.) The board members are directly responsible to the stockholders
for the way they operate the firm.
Corporate structure
Board of Directors The board of directors is the top governing body of a corporation, and,
as we noted, directors are elected by the shareholders. A corporation is an artificial person. Thus it
can act only through its directors, who represent the corporation’s owners. Board members can be
chosen from within the corporation or from outside it.
Directors who are elected from within the corporation are usually its top managers—the
president and executive vice presidents, for example. Those who are elected from outside the
corporation are generally experienced managers with proven leadership ability and/or specific
talents that the organization seems to need. In smaller corporations, majority stockholders may
also serve as board members.
The major responsibilities of the board of directors are to set company goals and develop
general plans (or strategies) for meeting those goals. They are also responsible for the overall
operation of the firm.
Corporate Officers A corporate officer is appointed by the board of directors. The
chairman of the board, president, executive vice presidents, and corporate secretary and treasurer
are all corporate officers. They help the board make plans, carry out the strategies established by
the board, and manage day-to-day business activities. Periodically (usually each month), they
report to the board of directors. And once each year, at an annual meeting, the directors report to
the stockholders. In theory, then, the stockholders are able to control the activities of the entire
corporation through its directors.
A) Find in the text synonyms (1-6) and antonyms (7-12) to the following:
1. restriction 7. natural
2. to possess 8. to lend
3. aim 9. from within (the company)
4. power of attorney 10. publicly
5. to achieve a goal 11. tiny (adj)
6. whole (adj) 12. to forbid
B) Choose the correct meaning of the following words:

1. to hinder means:
a) to be very common at a particular time;
b) to make it difficult for sth to happen;
c) to understand the core of the situation.
2. to sue means:
a) to bring an action against sb;
b) to bring sth into force;
– 38 –
c) to bring the matter forward.

3. lenient means:
a) generous and friendly;
b) using strong pressure;
c) not as strict as expected.
4. to submit means:
a) to draw up a document;
b) to present a document;
c) to sign a document.
5. to attend means:
a) to be present at an event;
b) to guess sth from an available information;
c) to send sb a message.
II. COMPREHESION
A) Give words to the following definitions:
1. A large business company .......................................
2. A person who owns shares of a company ……………………………..
3. The process of forming a corporation ……………………………..
4. A contract between the state and the corporation which gives to the latter the legal
status ……………………………….
5. A group of people who have power to make decisions and control a corporation
………………………….
6. A legal document through which a shareholder gives the authority to some other
individual to vote instead of him …………………………….
B) Answer the following questions:

1. What is the difference between a close and an open corporation?
2. Who are incorporators?
3. Why have most American companies incorporated in Delaware? What do you know
about this state?
4. What is the difference between domestic, foreign and alien corporations?
5. What information does the corporate charter include?
6. What rights do stockholders have?
7. In your opinion, what type of stock – common or preferred do the stockholders prefer
to buy and why?
8. What does it mean to vote by proxy?
9. Arrange the following persons according to the hierarchy of corporate structure:
a) corporate officers
b) stockholders
c) workers
d) board of directors.
To your mind, can a corporation be effectively controlled under such a system of
levels?
10. What are the primary responsibilities of a corporation’s board of directors?
C) Mark the statements with TRUE or FALSE:

1. The incorporators are the primary shareholders of the corporation.
2. A corporation chartered by a foreign government in the USA is called a foreign
corporation.
3. All stockholders of a corporation have the right to vote at the company’s Annual
Meeting.
– 39 –
4. The chairman of the board is a corporate officer.

5. Most large firms in the USA are close corporations.
6. Stockholders may also serve as members of the board of directors.
7. A corporation may comprise no more than 1 million shareholders.
8. Board members are chosen only from within the corporation.
Advantages of Corporations
1. Know advantages and disadvantages of a corporation
2. Grasp the limited liability concept
Limited Liability One of the most attractive features of corporate ownership is limited
liability. Each owner’s financial liability is limited to the amount of money she or he has paid for
the corporation’s stock. This feature arises from the fact that the corporation is itself a legal being,
separate from its owners. If a corporation should fail, creditors have a claim only on the assets of
the corporation, not on the personal assets of its owners.
Ease of Transfer of Ownership Let us say that a shareholder of a public corporation wishes
to sell his or her stock. A telephone call to a stockbroker is all that is required to put the stock up
for sale. There are usually willing buyers available for most stocks, at the market price.
Ownership is transferred automatically when the sale is made, and practically no restrictions
apply to the sale and purchase of stock.
Ease of Raising Capital The corporation is by far the most effective form of business
ownership for raising capital. Like sole proprietorships and partnerships, corporations can borrow
from lending institutions. However, they can also sell stock to raise additional sums of money.
Individuals are more willing to invest in corporations than in other forms of business because of
the limited liability that investors enjoy and because of the ease with which they can sell their
stock.
Perpetual Life Because a corporation is essentially a legal “person,” it exists independently
of its owners and survives them. Unless its charter specifies otherwise, a corporation has perpetual
life. The withdrawal, death, or incompetence of a key executive or owner is not cause for the
corporation to be terminated. Sears, Roebuck, incorporated almost a century ago, is one of the
nation’s largest retailing corporations, even though its original owners, Richard Sears and Alvah
Roebuck, have been dead for decades.
Specialized Management Typically, corporations are able to recruit more skilled and
knowledgeable managers than proprietorships and partnerships. This is because they have more
available capital and are large enough to offer considerable opportunity for advancement. Within
the corporate structure, administration, human resources, finance, sales, and operations are placed
in the charge of experts in these fields. For instance, the Bechtel Group hired Caspar Weinberger,
former Secretary of Defense.
Disadvantages of Corporations
Difficulty and Expense of Formation Forming a corporation can be a relatively complex

and costly process. The use of an attorney may be necessary to complete the legal forms and
apply to the state for a charter. Charter fees, attorney’s fees, the costs of stock certificates and
required record keeping, and other organizational costs all add up. These payments can amount to
thousands of dollars for even a medium-sized corporation. The costs of incorporating, in both
time and money, discourage many owners of smaller businesses from forming corporations.
Government Regulation Most government regulation of business is directed at corporations.
A corporation must meet various government standards before it can sell its stock to the public.
– 40 –
Then it must file many reports on its business operations and finances with local, state, and
federal governments. In addition, the corporation must make periodic reports to its stockholders
about various aspects of the business. Also, its activities are restricted by law to those spelled out
in its charter.
Double Taxation Unlike sole proprietorships and partnerships, corporations must pay a tax
on their profits. Then stockholders must pay a personal income tax on profits received as
dividends. As a result, corporate profits are taxed twice—once as corporate income and again as
the personal income of stockholders.
Lack of Secrecy Because open corporations are required to submit detailed reports to
government agencies and to stockholders, they cannot keep their operations confidential.
Competitors can study these required corporate reports and then use the information to compete
more effectively. In effect, every public corporation has to share some of its secrets with its
competitors.
Find in the text the English equivalents for the following phrases of words:
1. A revendica proprietatea corporaţiei/претендовать на собственность корпорации;
2. A expune acţiunile pentru vînzare/выставить акции на продажу;
3. Doar dacă în carta corporaţiei nu este prevăzut altceva/если только в уставе
корпорации не предусмотрено иное;
4. A corespunde standartelor de stat/соответствовать государственным стандартам;
5. Activităţile stipulate în carta corporaţiei /деятельность, оговоренная в уставе
корпорации;
6. Fostul Ministru al Apărării/бывший министр обороны.
II. COMPREHENSION
Match the words with their definitions:
1. limited liability a) the effective management committee of a corporation

2. lending institutions b) if the company fails, creditors have a claim on the personal assets of its
owners
3. stockbroker c) the highest position on a company’s board of directors
4. unlimited liability d) if the company goes bankrupt, the shareholders cannot be asked to pay
more than the nominal value of their shares
5. dividend e) banks, insurance companies, building societies
6. management f) a person who buys and sells stocks for other people
7. chairman g) an amount of the profits that a company pays to its shareholders
8. board of directors h) the people who run and control an organization
III. Complete the table with the appropriate words describing the pluses and minuses
of the corporation status. (Figures denote the number of words):
Advantages Disadvantages
1. Limited (1) 1. Its profits are (2)
2. Unlimited (1) 2. Difficult and (2)
3. Unlimited ability (1) 3. Its activities are controlled by (1)
4. Ability to recruit (2) 4. Impossibility to keep its (2)
5. Lack of difficulty in (2)

Complete the sentences using an adjective from box A and a preposition from box B:
A B
similar of
interested with
– 41 –
critical for
good about
responsible from
serious at
satisfied to
binding in
different on
1. Could you tell me who is _____________________________ customer complaints?

2. My current job is very _________________________________ my previous one.
3. Last month the company’s sales dropped dramatically. This is only
___________________ a slump registered 5 years ago.
4. Our shareholders are greatly ________________ the profit and loss account we
publish twice a year.
5. The chairman opened the meeting by saying he was ____________________ the
progress made.
6. The press were _________________________ the company because staff training
had not improved.
7. My manager is _______________________ firing 2 people.
8. Tom was appointed as president of our corporation because he is very
_______________ leading and motivating people.
9. The contract comes into force on the day of its signature and is _________________
both parties.
– 42 –
REVISION
1. Understand the basic differences among the 3 forms of business ownership
2. Give arguments for their choice of the most advantageous form of business
ownership
I. Fill in the gaps with the necessary words:

Businesses are organized in different ways. When there is one owner, the company is called
a …(1) proprietorship. If two or more people associate to form a company they make up a …(2).
In both these organizations the …(3) supply the capital and as a rule they assume the management
of the organization. They also have …(4) liability and are entitled to take possession of all the
profits the company makes and all … (5) are borne by them.
On the other hand there are limited …(6) companies. Such types of companies are either …
(7) or public. The former type involves that the public has not …(8) to the company, the shares
are sold to a restricted number of people. …(9) are the parts into which the assets of a company
are divided. The owners of the company are …(10) and they hold shares in proportion with the …
(11) they invested in the company. The management of limited liability company is entrusted to a
…(12) of directors elected by the …(13) at the Annual Meeting. A shareholder who cannot attend
the meeting may vote by …(14).
The shareholders are entitled to the …(15) made by the company and therefore receive …
(16). When a stockholder is offered additional stock in advance of public it means that he has a …
(17) right.
II. What is the usual antonym in the following pairs?

1. general partner and
2. common stock and
3. private corporation and
4. short-term financing and
5. formation and
6. to borrow and
7. employer and
8. profit and
III. Complete the following chart:
Characteristics Sole proprietorship Partnership Corporation

1. The number of owners
2. Organizational documents
3. Taxes paid
4. Liability
5. Ability to borrow
6. Government control
7. The most widespread form of

doing business
8. The most profitable form of doing
business
– 43 –
IV. DISCUSSION
1. What kind of organization would you like to work for (as an employee) in the future?
2. What do you think your first position will be?
3. Do you expect to have one immediate boss, to work for more than one superior, or to
be part of a team?
4. Would you like to work for an organization where managers and workers are treated
as equals or in a company in which there are status symbols such as big offices and
company cars for senior staff? Give your reasons.
5. In American corporations employees are offered a considerable opportunity for
promotion. What are the chances to advance in our Moldavian corporations, say from
a simple worker to a member of the board?
6. If you were to start a business, which ownership form would you use? What factors
might affect your choice of ownership form?
V. CASE STUDY
Imagine finding yourself in the following situation: you are an executive vice president in a
corporation A, which is not very successful. Another big corporation-competitor B wants to take
over the corporation you work in. They propose you to give away all the secret financial
information and for this they promise you the position of the chairman of the board in the new big
corporation. Besides you will be offered 3% of corporation’s shares. What would you do in this
situation?
VI. READING
Arrange the following paragraphs into a coherent text and entitle it:
(1) An individual like Henry Ford might want to begin a small enterprise and personally
retain total responsibility, but once it starts to grow, a partnership or a corporation
would need to be formed. The key factor in owning any company is the guarantee
called limited liability: the owners of a company never have to pay more than they
have invested in the company. Their liabilities are limited. When a company goes
bankrupt, the owners can never be required to pay its unpaid bills.
(2) Many countries make a clear distinction between public and private companies, with
separate designations such as AG and GmbH in Germany, or Plc and Ltd in Britain.
Public companies are those large enough to have their shares traded on stock
exchanges. The shares of privately owned companies are not available to the general
public. In the USA the distinction between public and private companies is not so
great, that is why most companies simply bear the title Inc or “Incorporated”.
(3) The heart of capitalism is private ownership and a Limited Liability Company allows
people to own almost anything – from skyscrapers to television stations – without
risking their personal assets should the company go bankrupt.
(4) The names of companies around the world reflect this guarantee of limited liability.
The abbreviations “GmbH” in Germany, “Inc” in the USA, or “Ltd.” in most other
English-speaking countries, “SRL” in Moldova and Romania indicate that the firm is
limited liability company and investors have nothing more to lose than the money
invested in their shares. The “S.A.” in French and Spanish-speaking countries also
refers to limited liability by defining shareholders as “anonymous”. Since the identity
of shareholders can be kept secret, the creditors of a bankrupt company have no right
to pursue them for the company’s unpaid debts.
– 44 –
(5) The worst that can happen to investors in a limited liability company is losing their
initial investment if the company fails. By limiting the downside risk for shareholders,
companies are able to attract investors and raise large amounts of funds through sales
of shares rather than by borrowing money at potentially high interest rates.
VII. FOCUS ON LANGUAGE

Fill in to run or to do in the following sentences:
1. I ………. freelance work in my spare time.
2. I ……….. my own company from home.
3. My friend ………….. an agency for computer programs.
4. What do you …………… for a living?
5. Who ………… the business when you are away?
6. I have been …………….. business with this French firm for 2 years.
7. The business doesn’t…………. itself, you know!
8. The college ……… language courses for foreign students.
9. Our van ……… on diesel.
10. The car was …………….. 90 miles an hour.
– 45 –
3. MONEY AND BANKING

“ Money represents the sixth sense that makes
it possible for us to enjoy the other five”
1. Define the money concept
2. Enumerate the demands for money
3. Know the functions and important characteristics of money

to trade sth for sth to exchange sth that you
have for sth that sb else
has
to go on the spree a petrece, a avea chef кутить
provided that cu condiţia că при условии
necessities (n) articole de primă предметы первой
necesitate необходимости
commodity money banii-marfă товарные деньги
currency (n) valuta, monedă валюта, деньги
lifeblood (n) sursă, putere de viaţă источник
shelter (n) casă, adăpost кров
transaction (n) transacţie, afacere сделка, дело
for a “rainy day” pentru zile negre на чёрный день
bank account cont bancar банковский счёт
precaution (n) prevedere, precauţie предосторожность,
предусмотрительность
demand (n) necesitate, trebuinţă потребность
yardstick (n) standard, criterion
to assign value to sth to price sth
in terms of money exprimaţi în bani в денежном выражении
yard unit for measuring iard ярд
length, equal to 0,9144
of a meter
pound (abbr. lb) unit for measuring livră фунт
weight, equal to a 0,454
of a kilogram
to hold on to sth to keep sth
savings account cont de economii сберегательный счёт
to accommodate to make purchases
purchases
odd amounts sume impare нечётные суммы
even amounts sume cu soţ чётные суммы
denomination (n) valoare достоинство (монеты)
multiples multiplu кратные
handled (adj) folosit, uzat использованный,
изношенный
to counterfeit a falsifica, a contraface подделывать
to be uneasy about sth to be unsure about sth
genuine (adj) authentic, real, not a
copy
The word money is uncountable and is used with the verb in singular:
E.g. How much money is there in my account?
– 46 –
Idioms with Money: match the meaning of the words in bold with their definition in the
right.
1. For my money, he is one of the best financiers in our company. a) very rich
2. People in our Republic pay good money to visit Paris. b) accurate
3. His prediction was right on the money. c) in my opinion
4. He will win the competition for the contract, I’d put money on it. d) I’m sure about it
5. There is no such thing that he can’t afford, because he is made of money. e) a lot of money
Here are some sayings about money. Comment on them in pairs:

- Money makes the world go round
- Money is the root of all evil
- Time is money
- The only way to double your money is to fold the banknotes and put them into your
pocket
- Money talks
- Easy come, easy go
3.1. What is Money?
Money is considered to be one of the greatest inventions of humanity along with the
alphabet and wheel. Its role in a society’s life is still very important. As Shakespeare wrote: “Gold
makes white out of black and a hero out of a coward”. So what is money?
Money is anything used by a society to purchase goods and services or resources. The
members of the society receive money for their products or resources; then they either hold that
money or use it to purchase other products or resources, when and how they see fit.
Before money was in general use, people traded goods and services for other goods and
services. This system of the exchange of goods and services without the use of money is called
barter system. For example, one family may raise vegetables and herbs on a plot of land; and
another may weave cloth. To obtain food, the family of weavers trades cloth for vegetables,
provided that the farming family is in need of cloth.
The trouble with barter is that the two parties in an exchange must need each other’s
product at the same time, and the two products must be roughly equal in value. It may work
well when few products, primarily the necessities of life, are available. But even very primitive
societies soon developed some sort of money to eliminate the inconvenience of trading by
barter.
Over the years, different groups of people have used all sorts of objects as money – whale’s
teeth, stones, beads, seashells, salt, furs, tobacco, copper crosses, and such metals as gold and
silver. Such items are known as commodity money.
The first coins made of gold and silver appeared in China in the IXth century BC.
Alexander the Great (356-323BC) was the first emperor who engraved his image on the coin
of his empire. Later almost all the other monarchs followed suit.
The use of paper money began in the early XVIIth century. Today, the most commonly used
objects are metal coins and paper bills, which together are called currency.
Money has been called "the root of all evil." It has also been described as the "lifeblood of
commerce." But however you may look upon it, money remains in great demand. Many
economists give three main reasons, or demands, for money:
1. The need for money for payment of wages, rents, debts, and the costs of food, clothing,
and shelter. This type of need is called a transaction demand. The money is needed
for transactions of daily life. The transaction demand is the strongest among lower
– 47 –
income people. They need almost all their money for the necessities of life. People
with higher incomes can set aside part of their income for investments and savings.
2. The need for money for expenses that may arise in the future. The money is set aside
for a “rainy day,” usually in a bank account; it is not usually invested in long-term or
risky projects since the money must be at hand when needed. The demand for this
“rainy day” money is called a precautionary demand. It is held as a precaution in the
event of future needs.
3. The need for money for investment purposes. People may want to invest money in
business, land, buildings, or antiques. These investments are risky. But people who
invest in them are using their money to earn money. The demand for this money is
called investments demand. There is always a chance of losing money in such
investments. When the demand for money is for very risky projects, it is called a
speculative demand.
The Functions of Money
We have already noted that money aids in the exchange of goods and services for resources.
And it does. But that’s a rather general way of stating money’s function. Let us look at three
specific functions of money in any society:
1. Money Serves as a Medium of Exchange A medium of exchange is anything that is
accepted as payment for products and resources. This definition looks very much like
the definition of money. And it is meant to, because the primary function of money is
to serve as a medium of exchange. The key word here is accepted. As long as the
owners of products and resources accept money in an exchange, it is performing this
function. Of course, these owners accept it because they know it is acceptable to the
owners of other products and resources, which they may wish to purchase. For
example, the family in our earlier example can sell their vegetables and use the money
to purchase cloth from the weavers. This eliminates the problems associated with the
barter system.
2. Money Serves as a Measure of Value A measure of value is a single standard or
“yardstick” that is used to assign values to, and compare the values of, products and
resources. Money serves as a measure of value because the prices of all products and
resources are stated in terms of money. It is thus the “common denominator” that we
use to compare products and decide which we shall buy. Imagine the difficulty you
would have in deciding whether you could afford, say, a pair of shoes if it were priced
in terms of yards of cloth or pounds of vegetables—especially if your employer
happened to pay you in toothbrushes.
3. Money Represents a Store of Value Money that is received by an individual or firm
need not be used immediately. It may be held and spent later. Hence money serves as
a store of value, or a means for retaining and accumulating wealth. This function of
money comes into play whenever we hold on to money—in a pocket, a cookie jar, a
savings account, or whatever. Value that is stored as money is affected by fluctuations
in the economy. One of the major problems caused by inflation is a loss of stored
value: as prices go up in an inflationary period, money loses value. Suppose you can
buy a Sony stereo system for $1,000. Then we may say that your $1,000 now has a
value equal to the value of that system. But let us suppose that you wait a while and
don’t buy the stereo immediately. If the price goes up to $1,100 in the meantime
because of inflation, you can no longer buy the stereo with your $1,000. Your money
has lost value because it is now worth less than the stereo.
Important Characteristics of Money
– 48 –
To be acceptable as a medium of exchange, money must be fairly easy to use, it must be

trusted, and it must be capable of performing its functions. Together, these requirements give rise
to five essential characteristics:
Divisibility The standard unit of money must be divisible into smaller units to accommodate
small purchases as well as large ones. American standard is the dollar, and it is divided into one-
hundredths, one-twentieths, one-tenths, one-fourths, and one-halfs through the issuance of coins
(pennies, nickels, dimes, quarters, and half-dollars, respectively). These allow people to make
purchases of less than a dollar and of odd amounts greater than a dollar.
Portability Money must be small enough and light enough to be carried easily. For this
reason, paper currency, is issued in larger denominations— multiples of the standard unit. Five-,
ten-, twenty-, fifty-, and hundred-dollar bills make our money convenient for almost any
purchase.
Stability Money should retain its value over time. When it does not (during periods of high
inflation), people tend lo lose faith in their money. They may then turn to other means of storing
value (such as gold and jewels, works of art, and real estate). In extreme cases, they may use such
items as a medium of exchange as well. They may even resort to barter.
Durability The objects that serve as money should be strong enough to last through
reasonable usage. No one would appreciate (or use) dollar bills that disintegrated as they were
handled or coins that melted in the sun.
Difficulty of Counterfeiting If a nation’s currency were easy to counterfeit—that is, to
imitate or fake—its citizens would be uneasy about accepting it as payment. Even genuine
currency would soon lose its value, because no one would want it. Thus the countries that issue
currency do their best to ensure that it is very hard to reproduce.
A) Find in the text the words that are the synonyms of:
1. on condition that= 6. to rise=
2. problem= 7. worn-out (adj)=
3. necessity= 8. to forge=
4. to help= 9. difficult=
5. outright (adv)= 10. banknote=
B) Explain the meaning of the following phrases of words:

1. to be roughly equal in value
2. to come into play
3. to be in great demand
4. to be at hand
5. to follow suit
6. to be fairly easy to use sth
7. to last through reasonable usage
C) Give English equivalents:

1. mijloc de schimb/средство обмена
2. măsurare a valorii/мера стоимости
3. numitor comun/общий знаменатель
4. lot de pămînt/участок земли
5. conservarea valorii/сохранение стоимости
6. banknotele se emit în valoarea mai mare/денежные купюры выпускаются большим
достоинством
7. a-şi pierde încrederea/потерять веру
8. proprietatea imobiliară/недвижимость
9. moneda veritabilă/подлинные деньги
– 49 –
10. oamenii cu un venit mai scăzut/люди с более низким доходом.
II. COMPREHENSION
A) Give answers to the following questions:
1. What is money and what do you know about its history?
2. What is barter and what is the trouble with it?
3. What is commodity money and who used this money?
4. Why do people need money?
5. Name the functions of money and characterize them.
6. Enumerate the characteristics of money. Which one seems the most appealing to you
and why?
7. Why should the standard unit of money be divided into smaller units? Associate the
following coins with the Moldavian ones:
a) a penny – d) a quarter -
b) a nickel – e) a dime -
c) a half-dollar -
8. Why is paper money issued in larger denominations?
9. When do people tend to lose faith in their money? What do they do in this case?
10. What do people usually do with handled or deteriorated bills or coins?
11. Why do issuers of currency make it very hard to be reproduced?
12. Money counterfeiting – is it a criminal or a civil case? What happens to counterfeiters
according to the appropriate articles of law in our country? Do you agree with the
punishment stipulated in these articles?
B) Find in the text the words to the following definitions:

1. coins and paper money ________________
2. the means of exchanging sth for sth without using money ________________
3. the necessity to save money for a time when you will really need it _________
4. anything that is accepted as payment for products and resources __________
5. the quality of being steady and not changing in any way _________________
6. a means for retaining and accumulating wealth _______________________
III. DISCUSSION
1. What role does money play in your life?
For instance, you have been offered 2 jobs:
I) a part-time, attractive, low-paid job
II) a full-time, dirty (from the ethical point of view), rather well-paid job
What would you choose and why?
2. If you possessed a large amount of money, what would the advantages and
disadvantages of the following be?
 putting it under the mattress
 buying a lottery ticket
 visiting a casino
 depositing it in a bank
 buying gold
 investing it in your own business
 buying a Van Gogh painting
 buying shares of a corporation
 investing it in real estate
 going on a spending spree
– 50 –
Choose out of these 3 items that would characterize your actions concerning your money.
Give your reasons. Use the following structure:
If I possessed a large amount of money I would …
3. How much money do you need to consider yourself to be a rich person? Is it possible
to earn this sum of money in an honest way in our Republic?
4. When you see a person for the first time, can you detect whether the person is rich,
with average income, or poor. If yes, than how?
5. Can everything be bought with money?
6. What would be the consequences of a world without money? Would there be no
poverty? Could we use a barter system instead?
– 51 –

Fill in prepositions:
1. Our company decided to trade our services ______ the products of our commercial
partners.
2. The trouble ______ wax is that it melts _____ the sun.
3. Money eliminates the problems associated ______ the barter system.
4. I bought his share of business ______ $20000.
5. When people lose faith ____ their money, they may resort _____ barter.
3.2 The Supply of Money: M1, M2, M3
1. Grasp the money supply concept
2. Differentiate between a demand deposit and time deposit
3. Study the lexicon of public and personal finance

money supply ofertă monetară предложение денег
demand deposit deposit la vedere вклад до востребования,
бессрочный вклад
checking account cont curent текущий счёт
on demand la cerere по требованию
to withdraw money from a retrage bani de pe cont снимать деньги со счёта
an account
automated teller machine cash dispenser bancomat банкомат
(ATM)
time deposit deposit la termen срочный вклад
near-monies aproape bani почти деньги
securities (n) hîrtii de valoare ценные бумаги
government bonds obligaţiuni de stat государственные
облигации
surrender value suma de bani care se сумма, возвращаемая
înapoiază persoanei în caz лицу, отказавшемуся от
dacă ea a renunţat la poliţa страхового полиса
de asigurare
measure (M) agregat monetar денежный агрегат
interest-bearing (adj) which brings
interest
How much money is there in the United States? Before we can answer that question, we
need to redefine a couple of concepts:
A demand deposit is an amount that is on deposit in a checking account. It is called a
demand deposit because it can be claimed immediately—on demand—by presenting a properly
made-out check, withdrawing cash from an automated teller machine, or by transferring money
between accounts.
A time deposit is an amount that is on deposit in an interest-bearing savings account.
Savings institutions generally permit immediate withdrawal of money from savings accounts.
However, they can require written notice prior to withdrawal. The time between notice and
withdrawal is what leads to the name time deposits.
Time deposits are not immediately available to their owners, but they can be converted to
cash easily. For this reason, they are called near-monies. Other near-monies include short-term
government securities, government bonds, and the cash surrender values of insurance policies.
– 52 –
Money Supply is the total amount of money that exists in the economy of a country at a
particular time.
The M1 supply of money consists only of currency and demand deposits. (It is thus based on
a narrow definition of money.) By law, currency must be accepted as payment for products and
resources. Checks are accepted as payment because they are convenient, convertible to cash, and
generally safe.
The M2 supply of money consists of M1 (currency and demand deposits) plus certain
specific securities and small-denomination time deposits. Another common definition of money
— M3 — consists of M1 and M2 plus large time deposits of $100,000 or more. The definitions of
money that include the M2 and M3 supplies are based on the assumption that time deposits are
easily converted to cash for spending.
So, there are at least three measures of the supply of money. (Actually, there are other
measures as well, which may be broader or narrower than M1, M2, and M3.) So the answer to our
original question is that the amount of money in the United States depends very much on how we
measure it.
I. COMPREHENSION
A) Mark the statements with TRUE or FALSE:
1. The amount of money that exists in the economy of a country depends on how the
money is measured.
2. A time deposit is an amount that is on deposit in a checking account.
3. Demand deposit is money that you have on your credit card.
4. Time deposits are also called near-monies because they can be easily converted into
cash.
5. There are only 3 measures of the supply of money.
6. The interest on money in a checking account is lower than the interest on money in a
savings account.
B) Complete the following formulae:

M1 =
M2 =
M3 =
II. Study the text and be ready to comment on it:
PERSONAL FINANCE: Employees may receive the money they have earned as weekly
wages in cash (if they are blue-collars), or as monthly salary in a current account (if they are
professionals). In the latter case, the current account (U.S. checking account) is where they pay
in their earnings and from where they withdraw money to pay their everyday bills. Holders can
withdraw their money with no restrictions, but they receive little interest. The bank sends them a
bank statement telling them how much money is in their account. They can also give an
instruction to the bank to pay fixed sums of money to certain people at stated times by a standing
order. Generally, people avoid having an overdraft because in the end they will pay a lot of
interest.
People may also save up money. They open a savings account where they deposit any extra
money that they have and only take it out when they intend to spend it on something special.
When they invest money in a deposit account (U.S. time or notice account), the customers
receive a high rate of interest but withdrawals require 90 days’ notice. If they want to buy their
own house, which is a big investment, they may take a bank loan for which they must leave a
pledge. If the bank grants them this loan, they have a mortgage.
When you purchase in a shop, you may pay in cash or by credit card. In some shops it is
possible not to pay outright, but on credit. If you buy in bulk you may be offered a discount.
– 53 –
With such goods as cars, refrigerators or furniture, you may pay the full amount or you may pay
in installments.
PUBLIC FINANCE: People, the disadvantaged ones in particular, may receive some
money from the government as well, as a form of social security. For instance, the government
pays out pensions, unemployment benefits, disability allowances, child allowance, and grants
and scholarships to help students pay for studying.
In order to be able to redistribute some money, the government has to form the budget first
and cover its expenses according to its fiscal policy. The government levies the money it needs
from citizens through various taxes. Income tax is the tax collected on individuals’ wages and
salaries. Inheritance tax is levied on what people inherit from others as a legacy.
III. Which words in the text given in bold are defined below? Give their translation:
1. money which is in the form of coins and banknotes _________________
2. an amount of money you receive weekly in return for labour _______________
3. extra percentage paid on a loan _______________________
4. a fixed amount which is paid monthly to workers of higher rank
_____________________
5. the amount of money borrowed from a bank greater than that which is in your account
_________________________
6. loan to purchase property, used as security for this loan ______________________
7. a piece of paper that shows how much you owe sb for goods and services
_____________
8. a guarantee for a loan ____________________________________________
9. an account with a higher rate of interest but requiring notification in advance for
withdrawing the funds ________________________
10. an account with low interest but with no restrictions for withdrawal
________________
11. money paid by the state to a person when he/she retires _____________________
12. money given for education ______________________
13. money paid to people that are made redundant ______________________
14. money paid to people with a handicap ________________________
15. money received from someone in his/her will ___________________________
IV. Find in the text from exercise II the English equivalents for the following:
1. extras de cont/выписка со счёта;
2. dispoziţie de plată/инструкция об уплате;
3. suma trasă din cont fără acoperire/превышение кредита;
4. a plăti în numerar/платить наличными;
5. a plăti în rate/платить в рассрочку;
6. a vinde pe credit/продавать в кредит;
7. a plăti pe loc/оплатить сразу;
8. a cumpăra în vrac/покупать в большом количестве.
V. Group the following words under the headings:

Salary, bill, mortgage, debt, tax, fare, fine, bonus, fee, dividend, instalment, legacy, rent,
premium, subsidy, deposit, royalties
.
MONEY TO RECEIVE MONEY TO PAY
– 54 –
VI. Fill in the blanks with some of the words from the left column:
1. All the workers in our firm get a Christmas _____________ of $200.
2. Farmers are waiting for the new _________________ to help them grow cereals.
3. As her book was a best-seller, she got substancial ______________________.
4. After their uncle’s death they each received a _______________ of $25000.
5. The _________________ the shareholders received were quite significant since their
company fared well last year.
VII. Fill in the blanks with some words from the right column:
1. He paid a high ______________ for his insurance policy against the loss of his voice.
2. We made a ______________ of 25% to be sure that the shop will not sell the furniture
we liked so much.
3. How much is the ______________ from the airport to the Hilton Hotel?
4. You have to pay a ______________ for breaking the speed limit.
5. I bought a fridge, which I have to pay back in six monthly ________________ of
$100 each.
VIII. WORD STUDY
The word cash is uncountable: How much cash do you have on you?
Choose the correct definition for the following vocabulary items that are formed with the
word cash.
1. cash flow is
a) the conversion rate between currencies;
b) money which is immediately available;
c) movement of money into and out of business.
2. petty cash is
a) small denomination coins;
b) money held in a business to cover small expenses;
c) pocket money given to children.
3. cash dispenser is
a) someone who spends money;
b) machine in or outside a bank from which you can get money with a card;
c) device used to sort out money.
4. cash register is
a) machine used in shops to record the money;
b) a special book where you keep the record of money coming in and getting out;
c) person who records money in a bank.
5. cash-and-carry is
a) method to pay for the transport of goods;
b) large shop where goods are paid at cheaper prices and removed by customers;
c) money you receive for delivering the goods.
6. cash cow is
a) animal bred to be sold;
b) part of business that brings enough profits;
c) someone you can cheat to get undue money.
– 55 –
7. cash discount is
a) reduction in a price if you pay immediately;
b) reduction of the sum of money you owe;
c) reduction in a price if you buy goods in bulk.
8. cash desk is
a) a table in which you keep money;
b) a television company office that deals with monetary issues;
c) place in a shop where you pay for goods that you have bought.
– 56 –
3.3. The Banking Industry
1. Describe the modern banking system
2. Understand the differences between commercial banks and other financial
institutions in the banking industry

Federal Reserve sistemul băncilor federale Федеральная резервная
System de rezerve система
to render services to offer services
financially sound reliable from the financial
(adj) point of view
input (n) sth that you put into work to
make it succeed
output (n) the result of the performed
work
to charge interest a cere procente назначать проценты
comptroller (n) controller
to outnumber a depăşi numeric превосходить численно
Savings and Loan asociaţia de economii şi сберегательно-заёмная
association (S&L) împrumut ассоциация
to become effective a intra în vigoare вступать в силу
to stand for a însemna означать
conservative investiţii moderate умеренные инвестиции
investments
In the USA, in every locality no matter how small it is, there is a church and a bank.
Americans who are considered to be rather religious persons go to church to maintain and
accumulate their “spiritual wealth”. And they go to the bank to keep and accumulate their material
wealth.
The modern banking system includes three groups of financial institutions:
 the central bank;
 commercial banks;
 other specialized financial institutions that include both banking and non-banking
organizations.
The central bank, which depending on the country may be called the State Bank or the
National bank (as in our country), bears the name of the Federal Reserve System in the USA. As a
rule, this is a government institution and in a way it is the bank for all the other banks in a
country. It controls the monetary policy of a state and it is responsible for the national currency
stability.
The name „commercial” appeared in the XVIIth century when banks generally served the
commerce. The first banks were founded in the Italian republics, then in Amsterdam and London.
They appeared as simple merchants that traded money. Nowadays the banks have a universal
character. Very often they are called financial „department stores” rendering services to the
industrial, agricultural, commercial and other enterprises.
The Federal Reserve System (or simply "the Fed") is the government agency responsible
for regulating the United States banking industry. It was created by Congress on December 23,
1913. Its mission is to maintain an economically healthy and financially sound business
environment in which banks can operate. The Federal Reserve System is controlled by the seven
members of its Board of Governors, who meet in Washington, D.C. Each governor is appointed
by the president and confirmed by the Senate for a fourteen-year term. The president also selects
– 57 –
the chairman and vice chairman of the board from among the board members for four-year terms.
These terms may be renewed. .
The Federal Reserve System includes twelve Federal Reserve District Banks, which are
located throughout the United States, as well as twenty-five branch-territory banks. Each Federal
Reserve District Bank is actually owned—but not controlled—by the commercial banks that are
members of the Federal Reserve System. All national banks must be members of the Fed. State
banks may join if they choose to and if they meet membership requirements.
A commercial bank is a profit-making organization that accepts deposits, makes loans, and
provides related services to its customers. Like other businesses, the bank's primary goal—its
purpose—is to earn a profit. Its inputs are money in the form of deposits, for which it pays
interest. Its primary output is loans, for which it charges interest. If the bank is successful, its
income is greater than the sum of its expenses, and it will show a profit.
Because banks deal with money belonging to individuals and other firms, they are carefully
regulated. They must also meet certain requirements before they are chartered, or granted
permission to operate, by federal or state banking authorities. A national bank is a commercial
bank that is chartered by the U.S. Comptroller of the Currency, There are approximately 5,500
national banks, accounting for about 53 percent of all bank deposits. These banks must conform to
federal banking regulations and are subject to unannounced inspections by federal auditors.
A state bank is a commercial bank that is chartered by the banking authorities in the state in
which it operates. State banks outnumber national banks by about two to one, but they tend to be
smaller than national banks. They are subject to unannounced inspections by both state and
federal auditors.
3.3.1 Other Financial Institutions
Savings and Loan Associations A savings and loan association (S&L) is a financial
institution that primarily accepts savings deposits and provides home-mortgage loans. Originally,
they were permitted to offer their depositors only savings accounts. But since Congress passed the
Depository Institutions Deregulation and Monetary Control Act, which became effective on
January 1, 1981, they have been able to offer interest-paying checking accounts (NOW accounts)
to attract depositors. A NOW account is an interest-bearing checking account. (NOW stands for
Negotiable Order of Withdrawal.)
Credit Unions A credit union is a financial institution that accepts deposits from, and lends
money to, only those people who are its members. Usually the membership is composed of
employees of a particular firm, people in a particular profession, or those who live in a
community served by a local credit union. Some credit unions require that members purchase at
least one share of ownership, at a cost of about $5 to $10. Credit unions generally pay higher
interest than commercial banks and S&Ls, and they may provide loans at lower cost. Credit
unions are regulated by the Federal Credit Union Administration.
Mutual Savings Banks A mutual savings bank is a bank that is owned by its depositors.
Located primarily in the northeastern part of the United States, mutual savings banks accept
deposits and lend money for home mortgages. The approximately 375 mutual savings banks in
this country have no stockholders. Their profits are distributed to depositors. They operate much
like S&Ls and are controlled by state banking authorities.
Organizations That Perform Banking Functions There are three types of financial
institutions that are not actually banks but that are nevertheless involved in various banking
activities to a limited extent.
Insurance companies provide long-term financing for office buildings, shopping centers,
and other commercial real estate projects throughout the United States. They also invest in
corporate and government bonds. The funds used for this type of financing are obtained from
policyholders' insurance premiums.
– 58 –
Pension funds are established by employers to guarantee their employees a regular monthly
income upon retirement. Contributions to the fund may come either from the employer alone or
from both the employer and the employee. Pension funds earn additional income through
generally conservative investments in certain corporate stocks,
corporate bonds, government securities, and real estate developments.
Brokerage firms offer combination savings and checking accounts that pay higher-than-
usual interest rates (so-called money-market rates). Many people switched to these accounts when
their existence became widely recognized to get the higher rates. In the last few years, however,
banks have instituted similar types of accounts, hoping to
lure their depositors back.
Find the English equivalents for the following:
1. a corespunde cerinţelor apartenenţei/соответствовать требованиям членства;
2. a da autorizaţie/давать разрешение;
3. prima de asigurare/страховая премия;
4. la ieşire la pensie/при выходе на пенсию;
5. hîrtii de valoare de stat/государственные ценные бумаги;
6. credit ipotecar/ипотечный кредит;
7. stabilitatea monedei naţionale/стабильность национальной валюты;
8. a fi supus unei inspectări neanunţate/подвергаться неожиданной инспе-кционной
проверке;
9. deţinător de poliţă/держатель полиса;
10. comercianţi care vindeau şi cumpărau bani/торговцы, которые продавали и
покупали деньги.
II. COMPREHENSION
1. What is the name for the central bank in the USA? Describe it. What is its mission?
2. Give the definitions of a commercial, national and state banks. How do banks earn
most of their profit?
3. What is a Savings and Loan Association? What did they offer to their depositors
originally and what do they offer now?
4. What is a NOW account?
5. What is a Credit Union? Who can become its member? What do some credit unions
require?
6. What is a mutual savings bank? What are the similarities and differences between a
mutual savings bank and S&L?
7. What other financial institutions do you know?
8. How do insurance companies obtain their funds? Give examples of insurance
companies in our country. What are their functions?
9. What are pension funds established for? How do they get the money to be paid out to
pensioners?
10. What accounts are offered by brokerage firms?

1. In the USA there are more national banks than state banks.
2. State banks must be members of the Fed.
3. Commercial banks own Federal Reserve District Banks, which are not under their
control.
4. If you want to buy a flat but you don’t have money, you can apply to S&L.
5. Credit Unions are more advantageous than commercial banks.
– 59 –
6. There are approximately 375 mutual savings banks in the USA and they have
stockholders.
7. Insurance companies, pension funds and brokerage firms are non-banking
organizations.
8. Brokerage firms offer lower-than-usual interest rates.
III. FOCUS ON GRAMMAR

A) Fill in prepositions:
1. I want to open an account ______ your bank.
2. You have only $100 _______ your account.
3. Don’t borrow money _______ this bank. They charge very high interest ____ a loan.
4. When you paid the hotel bill, did you pay _____ cash or _____ credit card?
5. Banks also make their profits ______ the fees and commisions they charge ______
their services.
6. Yesterday the Dresdner Bank announced an interest rate increase ______ 0,5%.
7. As soon as we receive your cheque _____ 2500$ we will despatch the goods which
will reach you within a few days.
8. Because some customers can’t afford to pay ____ cash, businesses sell goods and
services _____ credit.
B) Choose the correct form of the verb:

1. She ... the bank to check her account.
a) has just phoned; b) just phoned; c) just has phoned; d) phones just.
2. When the secretary entered Mr.Black ... to foreign businessmen.
a) spoke; b) was speaking; c) has spoken; d) had spoken.
3. Our director ... the prices now.
a) are discussing; b) was discussing; c) discussies; d) is discussing.
4. This firm ... Model A-5 for 4 years before they started producing Model A-6.
a) produced; b) had been producing; c) has been producing; d) was producing.
5. He ... $100000 in Swiss bank account last spring.
a) deposited; b) had deposited; c) has deposited; d) was depositing.
6. I am awfully tired because I ... all day.
a) was working; b) had been working; c) have been working; d) have worked.
Choose the correct word for each sentence:

1. She works for an advertisement/advertising agency.
2. How will the increase in interest rates affect/effect your sales?
3. My bank manager has agreed to borrow/lend me another $2000.
4. We’ve had to cancel/postpone the meeting until next Monday.
5. My plane was delayed/postponed by an hour due to computer failure.
6. Before coming here, I studied economics/economy at university.
7. I am interested/interesting in your buildings projects in the Middle East.
8. She applied for a job/work as a personnel officer.
9. The cost of life/living has gone up again.
10. Please send precise measurements/measures when ordering.
11. We expect prices to raise/rise by at least 5%.
12. We only exchange goods if you produce a receipt/recipe.
13. I must remember/remind the boss about that meeting this afternoon.
14. Can you say/tell the difference between these two products?
15. The company is extremely sensible/sensitive to any criticism.
– 60 –
16. There’s some more paper in the stationery/stationary cupboard.
– 61 –
3.3.2 Services Provided by the Financial Institutions
1. Be able to identify the primary services provided by commercial banks and other
financial institutions
2. Evaluate the importance of banks to the economy of a community
Study and Learn the words:

array (n) mulţime множество
payroll (n) a list of people employed by a stat de plată платёжная ведомость
company showing the amount of
money to be paid to each of them
balance (n) sold сальдо, остаток
savings passbook carnet de depuneri сберегательная книжка
to shop for a loan to compete for a loan
collateral (n) pledge cauţiune, garanţie, залоговое обеспечение
gaj
credit card a small plastic card that you can cartea de credit кредитная карта
use to buy goods and services and
pay for them later
debit card a plastic card that can be used to cartea de debit дебитовая карта
take money directly from your
bank account when you pay for
sth
cash card ATM card
teller (n) cashier casier de bancă кассир (в банке)
spread (n) the difference between the rates of
interest
If it seems to you that banks and other financial institutions are competing for your business,
you're right. That is exactly what is happening. Never before have so many different financial
institutions offered such a tempting array of services to attract customers. The financial services
provided by the banking industry are the following:
1. Demand deposits
2. Time deposits
3. Loans
4. Electronic transfer of funds
5. Financial advice
6. Trust services
7. Certified checks
8. Safe-deposit boxes
The three most important banking services are accepting deposits, making loans, and
providing electronic funds transfers.
The Deposit Side of Banking Firms and individuals deposit money in checking accounts
(demand deposits) so that they can write checks to pay for purchases. A check is a written order
for a bank or other financial institution to pay a stated dollar amount to the business or person
indicated on the face of the check. Today, most goods and services are paid for by check. Most
financial institutions charge an activity fee (or service charge) for checking accounts. It is
generally somewhere between $5 and $10 per month for individuals. For businesses, monthly
charges are based on the average daily balance in the checking account and on the number of
checks written.
Savings accounts (time deposits) provide a safe place to store money and a very
conservative means of investing. The usual passbook savings account earns about 5.5 percent in
– 62 –
commercial banks and S&Ls, and slightly more in credit unions. Depositors can usually withdraw
money from passbook accounts whenever they wish to.
A depositor who is willing to leave money with a bank for a set period of time can earn a
higher rate of interest. To do so, the depositor buys a certificate of deposit (CD). A certificate of
deposit is a document stating that the bank will pay the depositor a guaranteed interest rate for
money left on deposit for a specified period of time. The interest rate paid on CD depends on how
much is invested and for how long. Depositors are penalized for early withdrawal of funds
invested in CDs.
The Lending Side of Banking Commercial banks, savings and loan associations, credit
unions, and other financial institutions provide short- and long-term loans to both individuals and
businesses. Short-term loans are those that are to be repaid within one year. For businesses, short-
term loans are generally used to provide working capital that will be repaid with sales revenues.
Long-term business loans have a longer repayment period—generally three to seven years
but sometimes as long as fifteen years. They are most often used to finance the growth of a firm
or its product mix.
Most lenders prefer some type of collateral for both business and personal long-term loans.
Collateral is real or personal property (stocks, bonds, land, equipment, or any other asset of
value) that the firm or individual owns and that is pledged as security for a loan. For example,
when an individual obtains a loan to pay for a new automobile, the automobile is the collateral for
the loan. If the borrower fails to repay the loan according to the terms specified in the loan
agreement, the lender can repossess the collateral pledged as security for that loan.
Repayment terms and interest rates for both short- and long-term loans are arranged between
the lender and the borrower. For businesses, repayment terms may include monthly, quarterly,
semiannual, or annual payments. Repayment terms (and interest rates) for personal loans vary,
depending on how the money will be used and what type of collateral, if any, is pledged.
Borrowers should always "shop" for a loan, comparing the repayment terms and interest rates
offered by competing financial institutions.
Electronic Transfer of Funds The newest service provided by financial institutions is
electronic banking. An electronic funds transfer (EFT) system is a means for performing financial
transactions through a computer terminal. Present EFT systems can be used in several ways:
1. Automated teller machines (ATMs): An ATM is an electronic bank teller—a machine
that provides almost any service a human teller can provide. Once the customer is
properly identified, the machine can dispense cash from the customer's checking or
savings account or can make a cash advance charged to a credit card. Most ATMs can
also accept deposits and provide information about current account balances. ATMs
are located in bank parking lots, supermarkets, drugstores, and even filling stations.
Customers have access to them at all times of the day or night.
2. Point-of-sale (POS) terminals: A POS terminal is a computerized cash register that is
located in a retail store and connected to a bank's computer. Here's how it works. You
select your merchandise. At the cash register, you pull your debit card through a
magnetic card reader and enter your four-to-seven-digit personal identification
number (“PIN code”). A central processing center notifies a computer at your bank
that you want to make a purchase. Next, the bank's computer immediately deducts the
amount of the purchase from your checking account. Then, the amount of the
purchase is added to the store's account. Finally, the store is notified that the
transaction is complete, and the cash register prints out your receipt. Notice the
difference between a debit card and a credit card. With a debit card, money is
deducted immediately from your account. A credit card transaction, on the other hand,
involves a short-term loan made to you by the bank or credit card company. The use
of POS terminals has two advantages. First, you don't have to write a check to pay for
your merchandise. Second, the retailer doesn't have to worry about nonpayment
because the money is withdrawn from your account immediately.
– 63 –
Our Moldavian banks offer such cards as Maestro and Visa card. The usage of cards is one
of the most modern and convenient non-cash payment means. All our payment cards are designed
to be convenient for us. The Maestro card is a valid payment card issued to private customers
only. One can use it for the non-cash settlement of services or goods. It is also used for
withdrawing cash at bank counters and at ATMs. The Visa card can be used worldwide for
transactions at electronic devices only.
A) Find the English equivalents for the following:
1. safeurile bancare/банковские ячейки;
2. pe suprafaţa cecului/на лицевой стороне чека;
3. proprietate mobilă/движимое имущество;
4. a lăsa în gaj/отдавать в залог;
5. locul parcării/место стоянки автотранспорта;
6. staţiune de alimentare a maşinilor/заправка;
7. registru de casă imprimă cecul/кассовый аппарат выбивает чек.
8. achitarea serviciilor sau mărfurilor prin virament/оплата услуг или товаров по
безналичному расчёту.
B) Match the verbs with their definitions:

1. to repossess a) to make sth valid for a further period of time
2. to penalize b) to give out sth to people
3. to renew c) to provide money for a project
4. to lure d) to introduce a system
5. to institute e) to give information about sth
6. to withdraw f) to take back property or goods from sb who cannot pay for them.
7. to repay g) to make sb pay a fine for breaking a rule
8. to finance h) to make sb be interested in sth
9. to dispense i) to take money out of a bank account
10. to notify j) to pay back the money you have borrowed from sb
II. COMPREHENSION
1. What are the 3 most important banking services?
2. What is a check? Do we have something like this in our country?
3. What is a cerificate of deposit? What does the interest rate paid on CD depend on?
4. What kinds of loans are provided by the financial institutions? What is the difference
between these loans?
5. What is a collateral?
6. How are the repayment terms and interest rates for loans arranged?
7. What is an EFT and how it can be used?
8. Have you ever used an ATM and a POS terminal? Did you have any problems or not?
What do you think about EFT system?
9. What is the difference between a debit card and a credit card?
10. What are the types of plastic cards that our citizens can use?

1. In order to be able to write a check one must deposit his/her money in a checking
account.
2. Banks don’t charge fees for their services.
3. Depositors can freely withdraw funds invested in CDs whenever they wish to.
4. If you want to take a long-term loan you must present a collateral to the bank.
5. You can use the services of the POS terminal with a credit card.
– 64 –
6. ATMs work round the clock.
III. Match the column A with the column B:
A Banking services B Definitions

1. trust services a) a company pays salaries to its employees through the bank that transfers
people’s money on their ATM cards.
2. safe-deposit boxes b) the bank gives you money to use for different purposes, on which you
pay interest.
3. financial advice c) an arrangement by which a bank has legal control of money or property
that has been given to a person until he/she reaches a particular age.
4. demand deposit d) the bank keeps your valuables, securities or important documents in its
vault.
5. loans e) the bank keeps your money, pays you a little interest on it, and you can
withdraw this money whenever you need it.
6. payroll service f) bank managers consult you about different issues connected with
investing money, concluding financial transactions and others.
IV. Match each statement of potencial customers to the financial service needed:
ATM card, insurance policy, personal loan, overdraft facilities, standing order,
mortgage, high-interest deposit accounts, foreign currency, business loan, SWIFT transfer.
1. „I want my bills to be paid monthly” ________________________________

2. „How can I get money when the bank is closed?” _______________________
3. „I need some cash when I arrive in Cairo” _____________________________
4. „I’d like to buy a new house” ____________________________________
5. „I may be in debt next month” _________________________________
6. „I want to save and get a good return on my money” __________________
7. „I want to guard my house against damage” _________________________
8. „I want to send $5000 to my son in Tokyo as quickly as possible” _________
9. „I want to renovate my house” ________________________________
10. „I am going to buy equipment for our new office” _________________
V. With a partner think of different ways of completing the following sentences:

1. If I want to save up my money, I can ..................................................................
2. The best way to invest money ...........................................................................
3. I can borrow money from.....................................................................................
4. I can’t afford to...............................................................................................
5. I like to spend my money on ..............................................................................
VI. Join correctly the words in column A with the words in column B:
A B
1. commercial a) firm
2. certificate b) deposit
3. demand c) advice
4. cash d) bank
5. credit e) card
6. brokerage f) rate
7. financial g) of deposit
8. bank h) register
9. interest i) union
10.debit j) loan
– 65 –
VII. INDIVIDUAL WORK

Use the additional sources on banking system in the Republic of Moldova to answer the
following questions:
1. What do you know about the National Bank of Moldova?
2. What commercial banks are there in our country? What services do they offer to their
clients?
3. Is banking a profitable activity in our country? What proves it?
4. Are banks important to the economy of a country or people can do without them?
VIII. FOCUS ON LANGUAGE
Make and do collocations

Make is used for constructive and creative actions.
Do is used with unspecified actions and to talk about work.
A) Group the following words under the headings do or make:

Business, suggestions, progress, a job, mistakes, the accounts, a duty, the typing, an
appointment, efforts, damage, a service, a complaint, trade, an apology, a trip, a profit, research, a
loss, a decision, favour, shopping, a speech, a choice, a test, money, a report, friends/enemies, an
investment, harm, good, right/wrong, one’s best, exercises, a promise, a good impression, an
experiment, a will.
B) Complete the sentences using one of the expressions in Exercise A in the correct
form:
1. He __________________________ by introducing the new rules to see how
employees are going to follow them.
2. She decided to ____________________________ in cherity projects.
3. The customer ___________________________ to the hotel manager about the bad
service.
4. Some women are forced to ____________________________ between family and
career.
5. Could you ___________________________ , please? Could you give me a lift to the
airport?
6. My uncle died without __________________________ and it was very difficult for
our family to sort out his money.
7. I like to keep fit, so I __________________________ every day.
8. An accountant is a person who ________________________________ .
9. He ____________________________ on economic situation in our country and
presented it at the conference.
10. A research scientist is a person who _____________________________ .
IX. DISCUSSION
Discuss in groups the following questions:
1. Do you often go to the bank? What banking services do you use?
2. If you had a pretty sum of money, would you deposit it in a bank? If yes, then in what
currency (in the national or in the foreign one) and in what bank (in the savings bank
or in a commercial one)? Give your reasons.
3. For instance, you would like to buy a house or anything else which is also a big
investment, but you don’t have the money for it, would you apply to a bank for a
loan? Substantiate your answer.
– 66 –
4. Is it easy or difficult to obtain a bank loan in our Republic? Is it possible to get a bank
loan without a collateral?
X. Complete the dialogue:

A bank manager and his client are talking about opening an account with the bank.
Complete the client’s part in the following dialogue. The first remark has been done for you:
Client: Good afternoon!
Bank Manager: Good afternoon! What can I do for you?
C.: .............................................................................................................................................
BM.:What kind of account would you like to open – a checking or a savings one?
C.: .............................................................................................................................................
BM.: Well, you know that time deposits are not immediately available to their owners. For
what period would you like to deposit your money?
C.: .............................................................................................................................................
BM.: For this period the interest rate is lower than for one-year term.
C.: .............................................................................................................................................
BM.: It depends on how much you are going to deposit and in what currency.
C.:. ..............................................................................................................................
BM.: For this we give an annual interest rate of 8%. If it suits you, you have to buy the
certificate of deposit.
C.: ................................................................................................................................
XI. ROLEPLAY
Work in pairs. Imagine that your partner is a bank manager and you are a client who
wants to take a personal long-term loan. Make up a dialogue using the studied vocabulary.
XII. Match the words with their definitions:

1. deposit a) a written order for a bank to pay out the money
2. credit union b) a computerized cash register that is located in a store and connected to a
bank’s computer
3. S&L c) an amount paid for the use of money
4. NOW account d) money that is placed in a bank account by a customer
5. certificate of deposit e) a guarantee for a loan
6. check f) a financial institution that mainly handles savings accounts and makes
loans to home buyers
7. interest g) difference between interest rate paid by a bank to its depositors and the
rate it charges from its borrowers
8. POS terminal h) a document which insures that the depositor will be paid a guaranteed
interest rate for the deposited money
9. collateral i) a financial institution formed by workers in the same organization that
serves only its members
10. spread j) a checking account that earns interest
XIII. Fill in the gaps with the words given at the end of the text:
Banks fall mainly into two categories: ... (1) and wholesale banks. Retail banking refers to
banks which offer services to ... (2) customers, while wholesale banks deal mainly with
corporations.
The most obvious type of retail bank is the commercial bank. Commercial banks receive
money on deposit, pay money according to customers’ ... (3), negotiate loans, buy and sell foreign
exchange. They make a ... (4) from the ... (5), i.e. the difference between the interest rate paid to
account holders and the interest rate charged to borrowers.
– 67 –
There are different types of accounts opened with comercial banks. ... (6) accounts have no
restrictions as concerns the withdrawal of funds. However, the rate of interest is rather ... (7). On
the other hand ... (8) accounts offer a higher rate of interest, but withdrawals are restricted by the
fact that the ... (9) has to keep the funds for a specified period in the bank account or must ... (10)
his withdrawal decision some time in advance.
... (11) are offered to customers in need of funds and are conditional upon the supplying
of ... (12) by borrowers. Besides loans banks offer ... (13) to their customers, which means that
people who have an account with the bank are allowed to draw more money from their account
than there actually is in it.
The customers can use certain banking products. Thus banks can pay regular bills for their
clients, according to the instructions of the latter, this instrument being called ... (14) order.
Irregular payments can be made by ... (15) from cheque books the banks make available to their
customers. When a customer needs cash he can withdraw it from an automatic cash ... (16) by
means of a cash ... (17).
In Britain a merchant bank is a wholesale bank. It offers services to ... (18) such as the
raising of ... (19) on various financial markets, the financing of international trade, the issuing
of ... (20), investment advice. In the USA similar services are made available by investment
banks, which, however, do not offer loans.
Companies, standing, low, spread, overdrafts, retail, depositor, securities, cheque,

collateral, individual, funds, time, dispenser, notify, card, checking, profit, instructions, loans.
XIV. TRANSLATION
Translate into English:
Certificatul bancar de depozit.
Certificatul bancar de depozit este un document, care atestă că D-ră aţi depus o anumită
sumă de bani pe depozit, şi pe care o puteţi schimba pe bani după expirarea unei perioade anumite
de timp. Puteţi sa dispuneţi de certificatul bancar de depozit la dorinţa D-ră. De exemplu, să-l
dăruiţi cuiva la ziua lui de naştere. Acesta va fi întradevăr un cadou reuşit. Cu siguranţă, des vă
aflaţi în situaţia, cînd trebuie să felicitaţi pe cineva din rude sau prieteni, dar aveţi o problemă cu
alegerea cadoului. Certificatul bancar de depozit în această situaţie este indispensabil.
Pe lîngă aceasta, certificatul bancar de depozit poate fi vîndut şi în schimb puteţi să primiţi
banii înainte de termen fără pierderea dobînzii.
Deci, certificatul bancar de depozit este o hîrtie de valoare emisă de către bancă şi se
prezintă în calitate de o alternativă a depozitului bancar. Certificatul bancar de depozit poate fi
transferat de la o persoană la alta spre deosebire de contul bancar obişnuit.
Депозитный сертификат.
Депозитный сертификат – это документ, который свидетельствует о том, что вы
положили определённую сумму денег на депозит, и которую по истечении определённого
срока можно обменять на деньги. Банковским сертификатом вы можете распоряжаться по
своему усмотрению. Например, подарить на день рождения. Это будет действительно
удачный подарок. Наверняка, вы нередко сталкиваетесь с ситуацией, когда нужно
поздравить кого-нибудь из родных или друзей, а с выбором подарка у вас проблема.
Банковский сертификат в этой ситуации незаменим.
Кроме того, банковский сертификат можно продать и получить вложенные деньги
досрочно, без потери процентов.
Таким образом, банковский сертификат – это ценная бумага, которая выпускается
банком и выступает в качестве альтернативы банковскому депозиту. Банковский
сертификат может передаваться от одного человека другому, в отличие от привычного нам
счёта в банке.
– 68 –
4. SECURITIES MARKETS
„Emotions are your worst enemy in the stock market”

Don Hays
4.1. How Securities Are Bought and Sold
1. Understand how securities are bought and sold in the primary and secondary
markets
2. Distinguish between a securities exchange and an over-the-counter market
3. Be aware of how the New York Stock Exchange functions

stock (n) pachet de acţiuni пакет акций
bond (n) bon (de tezaur), облигации, боны
obligaţiune
stockbroker (n) agent de bursă брокер
primary market piaţa primară первичный рынок
secondary market piaţa secundară вторичный рынок
securities (n) hîrtii de valoare ценные бумаги
to be satisfied that… to be convinced that…
mutual fund societate de investiţii инвестиционная компания
cu capital variabil открытого типа
gross proceeds venit brut валовый доход
commission (n) comision, remiză комиссионное
вознаграждение
securities exchange bursa de valori, piaţa a фондовая биржа
efectelor de schimb
to handle to trade in sth
over-the-counter market piaţa neoficială a рынок
efectelor de schimb, незарегистрированных
piaţa extrabursieră ценных бумаг
to be listed to be quoted=to be given a fi cotat котироваться (на бирже)
a market price
tangible assets active materiale материальные активы
earnings (n) the profit that a company
makes
to subscribe to apply to buy shares in a a subscrie pentru un подписаться на покупку
company număr de acţiuni акций
subscriber (n) abonat абонент, подписчик
perception (n) the ability to understand
sth
stringent (adj) strict and that must be
obeyed
to sell off a vinde totul cu распродавать со скидкой
reducere
to precipitate to make sth, esp. sth bad,
happen sooner that it
should
to redeem a răscumpăra выкупать
CEO (Chief Executive top manager of a
Officer) company
– 69 –
To purchase a sweater, you simply walk into a store that sells sweaters, choose one, and pay
for it. To purchase stocks, bonds, and many other investments, you have to work through a
representative— your stockbroker. In turn, your broker must buy or sell for you in either the
primary or secondary market.
The Primary Market
The primary market is a market in which an investor purchases financial securities (via an
investment bank or other representative) from the issuer of those securities. An investment
banking firm is an organization that assists corporations in raising funds, usually by helping sell
new security issues.
For a large corporation, the decision to sell securities is often complicated, time-
consuming, and expensive. There are basically two methods. First, a large corporation may use an
investment banking firm to sell and distribute the new security issue. This method is used by most
large corporations that need a lot of financing. If this method is used, analysts for the investment
bank examine the corporation's financial condition to determine whether the new issue is
financially sound and how difficult it will be to sell the issue. If the analysts for the investment
banking firm are satisfied that the new security issue is a good risk, the bank will buy the
securities and then resell them to the bank's customers—commercial banks, insurance companies,
pension funds, mutual funds, and the general public. The investment banking firm generally
charges 2 to 12 percent of the gross proceeds received by the corporation issuing the securities.
The size of the commission depends on the quality and financial health of the corporation issuing
the new securities and the size of the new security issue. The commission allows the investment
bank to make a profit while guaranteeing that the corporation will receive the needed financing.
The second method used by a corporation trying to obtain financing through the primary
market is to sell directly to current stockholders. Usually, promotional materials describing the
new security issue are mailed to current stockholders. These stockholders may then purchase
securities directly from the corporation. Why would a corporation try to sell its own securities?
The most obvious reason for doing so is to avoid the investment bank's commission. Of course, a
corporation's ability to sell a new security issue without the aid of an investment banking firm is
tied directly to the public's perception of the corporation's financial health.
The Secondary Market
After securities are originally sold through the primary market, they are traded through a
secondary market. The secondary market is a market for existing financial securities that are
currently traded between investors. Usually, secondary-market transactions are completed through
a securities exchange or the over-the-counter market.
Securities Exchanges A securities exchange is a marketplace where member brokers meet
to buy and sell securities. The securities sold at a particular exchange must first be listed, or
accepted for trading, at that exchange. Generally, securities issued by nationwide corporations are
traded at either the New York Stock Exchange or the American Stock Exchange. The securities of
regional corporations are traded at smaller regional exchanges. These are located in Chicago, San
Francisco, Philadelphia, Boston, and several other cities. The securities of very large corporations
may be traded at more than one of these exchanges. Securities of American firms that do business
abroad may also be listed on foreign securities exchanges—in Tokyo, London, or Paris, for
example.
The largest and best-known securities exchange in the United States is the New York Stock
Exchange (NYSE). It handles about 70 percent of all stock bought and sold through organized
exchanges in the United States. The NYSE lists approximately 2,250 securities issued by more
than 1,500 corporations, with a total market value of $3 trillion. The actual trading floor of the
NYSE, where listed securities are bought and sold, is approximately the size of a football field. A
– 70 –
glass-enclosed visitors' gallery enables people to watch the proceedings below, and on a busy day
the floor of the NYSE can best be described as organized confusion. Yet, the system does work
and enables brokers to trade an average of more than 160 million shares per day.
The origin of the NYSE can be traced to May 17, 1792 when the Buttonwood Agreement
was signed by 24 stockbrokers outside of 68 Wall Street in New York. On March 8, 1817 the
organization drafted a constitution and renamed itself the “New York Stock & Exchange Board”.
This name was shortened to its current form in 1863.
The Exchange was closed after the beginning of World War I (July 1914), but it was re-
opened on November 28 of that year in order to help the war effort by trading bonds.
On September 16, 1920 a bomb exploded outside the NYSE building on Wall Street in a
terrorist attack, killing 33 people and injuring more than 400. The perpetrators were never found.
The NYSE building and some buildings nearby still have marks in the façade caused by the
bombing.
The Black Thursday crash of the Exchange on October 24, 1929 and the sell-off panic which
started on Black Tuesday, October 29, precipitated the Great Depression.
On October 1, 1934 the exchange was registered as a national securities exchange with the
US Securities and Exchange Commission, with a president and a 33 member board.
The frequently seen electronic display boards mounted on the walls of the exchange were
first installed in 1966 along with radio pagers. A highly technical wireless data system increasing
the speed in which trades were executed was introduced in 1996. This allows for trading to be
done with hand-held laptop – these are computers carried by the floor traders.
Today the exchange opens at 9:30 AM and closes at 4:00 PM.
Before a corporation's stock is approved for listing on the New York Stock Exchange, the
firm must meet five criteria:
1) annual earnings before taxes are $2.5 million
2) shares of stock held publicly – 1 million
3) market value of publicly held stock - $9 million
4) number of stockholders owning at least 100 shares is 2.000
5) value of tangible assets - $18.000.000
When companies first list on the NYSE, often the company’s CEO or other official is invited
to ring the opening bell in the Trading Floor. Ringing the bell, which signals the start and close of
the trading day, is part of the NYSE’s rich heritage and is considered an honour.
The American Stock Exchange handles about 10 percent of U.S. stock transactions, and
regional exchanges account for the remainder. These exchanges have generally less stringent
listing requirements than the NYSE.
The Over-the-Counter Market The over-the-counter (OTC) market is a network of
stockbrokers who buy and sell the securities of corporations that are not listed on a securities
exchange. Usually each broker specializes, or makes a market, in the securities of one or more
specific firms. The securities of these firms are traded through its specialists, who are generally
aware of their prices and of investors who are willing to buy or sell them. Most OTC trading is
conducted by telephone. Currently, more than 5,300 stocks are traded over the counter. Since
1971, the brokers and dealers operating in the OTC market have used a computerized quotation
system call NASDAQ—the letters stand for the National Association of Securities Dealers
Automated Quotation system. NASDAQ displays current price quotations on terminals in
subscribers’ offices.
A) Find synonyms (1-6) and antonyms (7-12) in the text to the following words and
phrases:
1. shares 7. simple
2. to help 8. to forbid
3. profit 9. to purchase
– 71 –
4. to collect money 10. time-saving

5. to be connected with sth 11. to delay
6. notebook 12. cheap
B) Find in the text the English equivalents for the following:

1. piaţa primară a hîrtiilor de valoare/первичный рынок ценных бумаг;
2. emisiunea a noilor acţiuni/эмиссия новых акций;
3. a fi sigur din punct de vedere financiar/быть надежным с финансовой точки зрения;
4. a face un profit/получать прибыль;
5. materialele publicitare sunt trimise prin poştă acţionarilor/рекламные материалы
посылаются акционерам по почте;
6. a urmări desfăşurarea evenimentelor ce au loc jos/наблюдать за происходящим внизу;
7. a corespunde criteriilor/соответствовать критериям;
8. a fi la curent cu preţurile lor/быть в курсе их цен.
C) Match the words with their definitions:

1. bonds a) a person or an organization that applies to buy shares in a company
2. securities b) a person whose business is buying and selling a particular product
3. analyst c) a statement of the current value of stocks
4. broker d) a company that offers a service to people by investing their money in various
different businesses
5. mutual fund e) a type of security – issued either by a company or by government – bearing a
fixed interest every year, which is redeemed after a stated period
6. commission f) a person who can advise investors and buy and sell shares for them
7. investor g) the general term for all stocks, shares and bonds
8. subscriber h) an amount of money that is charged for providing a particular service
9. quotation i) a person whose job involves examining facts in order to give an opinion of them
and to forecast the possible result
10. dealer j) a person who buys shares in a company in the hope of making a profit
II. COMPREHENSION
1. Whose services must one use in order to buy securities?
2. What types of securities markets do you know? Give the definition of a primary
market.
3. What is an investment banking firm?
4. What are the two methods used by large corporations when they decide to sell a new
security issue? Why do some corporations choose the second method?
5. What is a secondary market?
6. What is a securities exchange? What is the necessary condition for the securities to be
sold at a particular exchange?
7. What is the largest and best-known securities exchange in the USA? Describe it. What
do you know about its history?
8. What are the criteria that a corporation must meet in order to sell its stock on the NYSE?
9. Indicate how much percent of U.S. stock transactions do the following exchanges
handle?
the NYSE _______
the American Stock Exchange _______
regional exchanges ________
10. What is an over-the-counter market?

1. One can purchase securities without using the services of a stockbroker.
– 72 –
2. A new security issue can be sold only in the primary market.

3. Most large corporations that need a lot of financing sell their securities directly to
current stockholders in order to avoid commission.
4. The customers of the investment banking firm are mutual funds, commercial banks,
insurance companies, pension funds and different natural persons.
5. The investment banking firm buys the corporation’s securities only if they are
financially sound.
6. The investment banking firm charges 2 to 20% of the corporation’s gross proceeds.
7. The securities of regional corporations are traded at either the NYSE or the American
Stock Exchange.
8. An American company that does business in France can trade its securities both at the
NYSE and at the securities exchange in Paris.
9. Brokers trade an average of more than 160 million shares per day at the American
Stock Exchange.
10. Today more shares are traded “over the counter” than at a securities exchange.
III. DISCUSSION
Discuss the following questions:
1. It is thought that the best way to invest your money is to buy securities. Do you agree
or disagree with it?
2. The job of a financial analyst is to evaluate the financial standing of a corporation and
to forecast whether its shares are a good risk or not. To your mind, is it easy or
difficult to do this job? What qualities must a good analyst possess?
3. Your corporation has issued new securities. In what market are you going to sell
them? What decision would you take: to sell these securities through an investment
banking firm or directly to your current shareholders? Substantiate your answer.
4. You are a shareholder and you want to sell your shares. In what market are you going
to sell them?
5. In your opinion, what do the Americans prefer: to buy shares at a securities exchange
or in the over-the-counter market? Give your reasons.

Business idioms
Fill in the gaps with a suitable prepositional phrase from the list below:
On closer inspection, on order, on holiday, on approval, on condition, on paper, on

schedule, on behalf of, on display, on the phone, on the spot, on business, on loan, on request.
1. You will find our new product ________________ at our showroom.

2. We have a sales engineer __________________ who can fix the fault this week.
3. The goods arrived ____________________.
4. We have had the goods ________________ for 3 months, but they haven’t arrived
yet.
5. We accepted delivery of the goods as undamaged, but _____________________ we
found that 5 of the components are unusable.
6. I spoke to him ______________ last week about this.
7. We can have the goods for 4 weeks ____________________. We can return them or
pay for them.
8. He traveled to England _______________ but managed to do a little sightseeing while
he was there.
– 73 –
9. I’m afraid Mr Smith is _________________ till the end of the month – can I help
you?
10. We can offer you the job ________________ that you start work on the first of the
next month.
11. The candidate doesn’t look very good _____________________ but she is very
impressive in person.
12. You can’t keep it permanently, but you may have it __________________ till the end
of the month.
13. She signed the letter _____________________ her boss.
14. Let us not waste time and act __________________.
4.2 The Role of the Stockbroker
1. Analyze the role of the stockbroker and how they fulfill their goals
2. Comprehend the mechanics of a stock transaction
3. Differentiate between a full-service broker and a discount broker
4. Understand how commission is charged for trading stocks
5. Recognize different types of shares

discretionary order instrucţiune discreţionară поручение, согласно
(de a cumpăra orice titlu de которому брокер может
valoare) действовать по своему
усмотрению
to relay to receive and send on
booth (n) a small enclosed place
where you can do sth
privately, for ex. to
vote
ticker (n) teleimprimator automat care биржевой телеграфный
înregistrează cotaţiile la аппарат
bursă
charge (n) cost, preţ цена
fee (n) onorariu гонорар
commodity (n) goods
option (n) the right to buy shares opţiune опцион, сделка с премией
in a company on some
future date at a pre-
arranged price
blue chip acţiune cu capitalizare акция с наименьшим
bursieră foarte mare инвестиционным риском
floating (n) lansarea pentru prima dată a первоначальный выпуск
acţiunilor unei firme акций
equities (n) acţiuni obişnuite простые акции
rights issue acordarea către acţionari a предоставление акционерам
dreptului de a cumpăra noi права покупать акции по
acţiuni la un preţ avantajos более выгодной цене
bonus issue acţiuni distribuite акции, полученные
acţionarilor în locul акционерами вместо
dividendului cuvenit дивидендов
par value=face the value that a share in
value, nominal a company had
value originally
merger (n) fuziune слияние
– 74 –
donation (n) sth that is given to a

person or an
organization as a
charity, in order to help
them
to rule sth out to exclude, to say that
sth is not suitable
nuclear energy energie atomică атомная энергия
An account executive (or stockbroker) is an individual who buys or sells securities for
clients. (Actually, account executive is the more descriptive title because account executives
handle all securities—not only stocks. Most also provide securities information and advise their
clients regarding investments.) Account executives are employed by stock brokerage firms, such
as Merrill Lynch, Dean Witter Reynolds, and Prudential-Bache Securities. To trade at a particular
exchange, a brokerage firm must be a member of that exchange. For example, the NYSE has a
limited membership of 1,366 members, or "seats," as they are often called. Membership on the
NYSE is called a “seat” because until 1871 members sat in assigned chairs during the calls of
stocks. In the early 1800s, a seat cost $25. Today the price of membership is more than $2
million. Seats are sold or leased by their current owners rather than being bought directly from the
NYSE.
The Mechanics of a Transaction Once an investor and his or her account executive have
decided on a particular transaction, the investor gives the account executive an order for that
transaction. A market order is a request that a stock be purchased or sold at the current market
price. The broker's representative on the exchange's trading floor will try to get the best possible
price, and the trade will be completed as soon as possible.
A limit order is a request that a stock be bought or sold at the price that is equal to or better
(lower for buying, higher for selling) than some specified price. Suppose you place a limit order
to sell General Dynamics common stock at $49 per share. Then the broker's representative sells
the stock only if the price is $49 per share or more. If you place a limit order to buy General
Dynamics at $49, the representative buys it only if the price is $49 per share or less. Limit orders
may or may not be transacted quickly, depending on how close the limit price is to the current
market price. Usually, a limit order is good for one day, one week, one month, or good until
canceled (GTC).
Finally, it is possible for investors to place a discretionary order. A discretionary order is
an order to buy or sell a security that lets the broker decide when to execute the transaction and at
what price. Financial planners advise against using a discretionary order for two reasons. First, a
discretionary order gives the account executive a great deal of authority. If the account executive
makes a mistake, it is the investor who suffers the loss. Second, financial planners argue that only
investors (with the help of their account executive) should make investment decisions.
A typical stock transaction includes five steps:
1. Account executive receives customer’s order to sell stock and relays order to stock-
exchange representative.
2. Firm’s clerk signals transaction from booth to partner on stock-exchange floor.
3. Floor partner goes to trading post where stock is traded with a stock-exchange
member with an order to buy.
4. Floor partner signals transaction back to clerk in booth. Sale is recorded on card
inserted into card reader and transmitted to ticker.
5. Sale appears on ticker, and confirmation is phoned to account executive, who notifies
customer.
The entire process, from receipt of the selling order to confirmation of the completed
transaction, takes about twenty minutes.
Commissions Brokerage firms are free to set their own commission charges. Like other
businesses, however, they must be concerned with the fees charged by competing firms. Full-
– 75 –
service brokers—those that provide information and advice as well as securities-trading services
—generally charge higher fees than discount brokers, which buy and sell but may offer less
advice and information to their clients.
On the trading floor, stocks are traded in round lots. A round lot is a unit of 100 shares of a
particular stock. An odd lot is fewer than 100 shares of a particular stock. Brokerage firms
generally charge higher per-share fees for trading in odd lots, primarily because several odd lots
must be combined into round lots before they can actually be traded.
Commissions for trading bonds, commodities, and options are usually lower than those for
trading stocks. The charge for buying or selling a $1,000 corporate bond is typically $10. No
matter what kind of security is traded, the investor generally pays a commission when buying and
when selling. Payment for the securities and for commissions is generally required within five
business days of each transaction.
It is important to remember that a broker has two goals: to help investors achieve their
financial objectives and to promote his or her own interests and those of the brokerage firm,
(These goals do not necessarily conflict with one another, but the fact that the broker and
brokerage house receive a commission on every trade may sometimes lead to recommendations to
trade more frequently than necessary.) With this fact in mind, it is obvious that investors should
be involved in planning their investment programs.
A) Choose the correct meaning of the following words according to the context:
1. to cancel means:
a) to stop paying attention to sth:
b) to say that you no longer want to continue with an agreement that has been legally
arranged;
c) to change from one thing to another.
2. to decide on a transaction means:
a) to choose the best possible transaction;
b) to form an opinion about the transaction;
c) to publicly tell people about the transaction.
3. to trade means:
a) to buy and sell things;
b) to rent things;
c) to resell things.
4. primarily means:
a) shortly;
b) particularly;
c) mainly.
5. option means:
a) the freedom to choose what you want to do;
b) the right to buy shares on some future date;
c) the instruction what to do.
B) Fill in the table with nouns, verbs and adjectives from the same word family:
Noun Verb Adjective
1. receipt
2. discretionary
3. cancel
4. investor
5. advise
6. reason
7. complete
8. compete
– 76 –
9. financial
10. charge
II. COMPREHENSION
Answer the following questions:
1. Who is a stockbroker and what services does he provide? What is the difference
between an account executive and a stockbroker?
2. Where does an account executive work?
3. Describe the mechanics of a stock transaction. What orders can an investor give to his
account executive?
4. List the advantages and disadvantages of each order both for the investor and for the
broker.
5. How many steps are included in a typical stock transaction? How much time is needed
to effect such a transaction?
6. What is a commission and who charges it?
7. What is the difference between a full-service broker and a discount broker?
8. How are stocks traded on the trading floor? Why do brokerage firms charge higher
per-share fees for trading in odd lots?
9. When is the payment for the securities and for commissions due?
10. What goals does the broker have?
III. Fill in the blanks with the words given at the end of the exercise:
In order to … (1) capital companies …(2) shares or stocks and offer them for …(3) to the
public. When it is the first time that a company does it, this is called … (4) a company.
Shares of important companies are … (5) on the Stock Exchange. A stock exchange is a …
(6) where stocks and shares are … (7). It performs an important economic function in a country’s
economy by … (8) buyers and sellers together. A company that cannot meet all the … (9) for
being admitted on the stock exchange has to transact its shares on the … (10) market.
The value of a share as written on the share certificate is its … (11) value. This could be
significantly different from the market … (12) at a given moment, which is influenced by supply
and … (13) for the shares under consideration.
There are different types of shares. … (14) are common shares. Those shares whose holders
are paid a fixed dividend before any other type of shares are called … (15). Shares of very secure
companies with a minimal risk are … (16). Sometimes companies want to raise extra capital and
issue new shares offering them to their shareholders at a lower price than their market value. This
is known as a … (17) issue. If companies resort to offering new shares to shareholders instead of
payment of dividends this is called … (18) issue.
Value, market, bringing, blue chips, rights, sale, traded, equities, requirements, raise,
listed, preferred, bonus, issue, par, over-the-counter, floating, demand.

Fill in prepositions where necessary:
1. To purchase securities one must act ……. a stockbroker.
2. An investment banking firm assists ……. corporations ……. raising funds.
3. The size ….. the commission depends …… the financial health …… the corporation.
4. The most obvious reason ……. selling its own securities is to avoid the investment
bank’s commission.
5. The securities sold ……. a particular exchange must first be accepted ……. trading
……. that exchange.
6. Brokers advise …….. their clients regarding investments.
– 77 –
7. Once the investor has decided …….. a particular transaction he gives ……. the broker
an order … that transaction.
8. Brokerage firms must be concerned …the fees charged …….competing firms.
9. Usually the stockbroker acts entirely ….. his own interest.
– 78 –
V. DISCUSSION
Discuss the following questions:
1. If you were an account executive would you take discretionary orders from your
clients? Give your reasons.
2. In your opinion, what order do most investors prefer to give to their brokers?
3. If you were an investor would you give a discretionary order to your account
executive? Substantiate your answer.
4. To your mind, a stockbroker – is it a well-paid job or not?
VI. INDIVIDUAL WORK

Make a report on the securities exchange in our Republic and identify the role of the
stockbroker.
VII. FOCUS ON LANGUAGE

Rather than endlessly repeating the words rose and fell, financial journalists use a large
number of verbs and phrases to describe the movements of security prices.
Classify the following sentences, according to whether you think the underlined verb or
expression means:
A to rise after previously falling

B to rise a little
C to rise a lot
D to fall a little
E to fall a lot
1. Boeing stocks rocketed after rumours of a forthcoming merger with another leading
aircraft manufacturer.
2. The Dow-Jones index crashed after continuing rumours about the President’s health.
3. Exxon stocks shot up after a new deal to pump Siberian natural gas was announced.
4. The Footsie rallied in London in the afternoon, gaining 30 points in late trading.
5. In Paris, the CAC-40 plummeted, after the unions called for a three-day general strike
next week.
6. Leading shares were slightly weaker in Tokyo, the Nikkei losing 6 points.
7. Most shares were a little stronger in Milan this morning, when the exchange reopened
after yesterday’s public holiday.
8. Procter&Gamble stocks plunged after it was revealed that the company had lost over
$100 million as a result of a derivative deal.
VIII. CASE STUDY

Imagine that you have $100.000 and you want to invest it in a company in a most profitable
way. You have to choose one of the companies that perform the following activities: (only you
have to bear in mind that your money will help the company to extend its operations)
 emitting a large quantity of carbonic acid (CO2) into atmosphere
 making donations to political parties
 manufacturing weapons
 producing nuclear energy
 selling alcohol
 selling tobacco
 testing cosmetic products on animals
 relocating production to countries with lower labour costs
Are you going to listen to your broker’s advice or you can take the decision yourself?
– 79 –
Which of the following activities would cause you to rule out a company as a possible
investment?
IX. Underline the correct word:

1. Being a doctor is very demanding. Furthermore/However, it is a job in which there is
no room for mistakes.
2. Exercising helps us keep feet. Nevertheless/Moreover, it can be lots of fun.
3. Driving to work can be convenient. On the other hand/Similarly, finding a place to
park can be a problem.
4. Living in a foreign country can be very difficult. In contrast/Furthermore one can
often feel lonely and homesick.
5. Going on holiday is a great way to relax. Similarly/Nevertheless, taking short trips at
the weekend can also be enjoyable.
6. Cities are noisy. Also/In contrast, the countryside is quiet.
7. Living on your own teaches you to be independent. Also/However, it helps you to
become more responsible.
– 80 –
5. FINANCIAL MANAGEMENT
“Finance is an art that makes money go from
person to person until it disappears”
French proverb
5.1 What is Financial Management?
1. Define “financial management”
2. Appreciate the need for financing
3. Compare short-term financing needs and long-term financing needs
4. Speak on the evolution of financial management

peak period period during which the perioada de vârf ale период наиболее
maximum of production vânzărilor интенсивной продажи
is sold
cash flow flux de numerar движение платежей
promotional campaign companie de reclamă рекламная компания
evenly (adv) exactly, precisely cu precizie с точностью
over the long run a period during which în perioada de activitate в период деятельности
something flows
to get smth under way moving, advancing, a merge înante, a avansa, прогрессировать
making progress a progresa
to raise money to collect money a aduna bani собирать деньги
merger (n) a combining of two or contopire, fuziune слияние, обьединение
more companies,
corporations
outmoded (adj) no longer in fashion or învechit, demodad вышедший из моды,
accepted, obsolete устаревший
fund (v) to provide money for a furniza mijloace băneşţi финансировать
pentru
facility (n) building, special room, clădire, echipament оборудование,
equipment, аппаратное обеспечение,
производственные
помещения
supplies (n,pl) materials, provisions for resurse ресурсы
supplying a business
The field of financial management is an exciting and challenging one. Students who
choose to major in finance will find a wide range of rewarding job opportunities in the fields of
corporate financial management, investment analysis and management, banking, real estate,
insurance and the public sector. Any business – whether large or small, profit seeking or not for
profit – is a financial concern and its success or failure depends in a large part on the quality of its
financial decisions. Managers daily face questions like the following:
- Will a particular investment be profitable?
- Where will the funds come from to finance the investment?
- Does the firm have adequate cash or access to cash – through bank borrowing
agreements, for example to meet its daily operating needs?
- What kind of credit should be granted the firm’s customers, and which customers
should be given credit privileges?
- How much inventory should be held?
- How should profits be used or distributed?
– 81 –
The Need for Financial Management
Without financing there would be very little business. Financing gets a business started in
the first place then it supports the firm’s production and marketing activities. Many firms have
failed because their managers did not pay enough attention to finances. Proper financial
management can ensure that:
- Financial priorities are established in accordance with organizational objectives
- Spending is planned and controlled
- Sufficient financing is available when is needed, both now and in the future
- Excess cash is invested in certificates of deposit (CDs), government securities, or
conservative marketable securities
A financial plan is a plan for obtaining and using the money that is needed to implement an
organization’s goals. Financial planning begins with the establishment of a set of valid objectives.
An objective as you know is a specific statement detailing what the organization intends to
accomplish within a certain period of time. Next, planners must assign costs to these objectives.
That is, they must determine how much money is needed to accomplish each one and what
revenues they will get. A budget is a statement that projects income and/or expenditures over a
specified period of time. Usually, the budgeting process begins with the construction of
individual budgets for sales and for each of the various types of expenses: production, human
resources, administration and so on. Finally, financial planners must identify available sources of
financing and decide which to use. The four primary sources of funds are: sales revenue, equity
capital, debt capital, and proceeds from the sale of assets. Sales generally provide the greatest part
of a firm’s financing. Equity capital is money received from the sale of shares of ownership in
the business. It is used almost exclusively for long-term financing. Debt capital is money
obtained through loans of various types. Selling assets is a drastic step. However, it may be a
reasonable last resort when neither equity capital nor debt capital can be found.
The Need for Financing
Money is needed both to start a business and to keep it going. The original investment of the
owners, along with money they may have borrowed, should be enough to get operations under
way. Then, it would seem that income from sales could be used to finance the firm's continuing
operations and to provide a profit as well.
This is exactly what happens in a successful firm—over the long run. But sales revenue does
not generally flow evenly. Both income and expenses may vary from season to season or from
year to year. Temporary funding may be needed when expenses are high or income is low. Then,
too, special situations, such as the opportunity to purchase a new facility or expand an existing
facility, may require more money than is available within a firm. In either case, the firm looks to
outside sources of financing.
Short-Term Financing Needs Short-term financing is money that will be used for a period
of one year or less and then repaid. A firm might need short-term financing to pay for a new
promotional campaign that is expected to increase sales revenue. Or the purchase of a computer-
based inventory-control system, which will "pay for itself" within a year, might be funded with
short-term money.
Although there are many short-term financing needs, two deserve special attention. First,
certain necessary business practices may affect a firm's cash flow and create a need for short-term
financing. Cash flow is the movement of money into and out of an organization. The ideal is
having sufficient money coming into the firm, in any period, to cover the firm's expenses during
that period. But the ideal is not always achieved. For example; a firm that offers credit to its
customers may find an imbalance in its cash flow. Such credit purchases are generally not paid
until thirty or sixty days (or more) after the transaction. Short-term financing is then needed to pay
– 82 –
the firm's bills until customers have paid theirs. An unexpectedly slow selling season or
unanticipated expenses may also cause a cash-flow problem.
A second major need for short-term financing that is related to a firm's cash-flow problem is
inventory. Inventory requires considerable investment for most manufacturers, wholesalers, and
retailers. Moreover, most goods are manufactured four to nine months before they are actually
sold to the ultimate customer. As a result, manufacturers that engage in this type of speculative
production often need short-term financing. The borrowed money is used to buy materials and
supplies, to pay wages and rent, and to cover inventory costs until the goods are sold. Then, the
money is repaid out of sales revenue. Wholesalers and retailers may need short-term financing to
build up their inventories before peak selling periods. Again the money is repaid when the
merchandise is sold.
Long-Term Financing Needs Long-term financing is money that will be used for longer
than one year. Long-term financing is obviously needed to start a new business. It is also needed
for executing business expansions and mergers, for developing and marketing new products, and
for replacing equipment that becomes outmoded or inefficient.
I. COMPREHENSION
A) Enlarge on:
1. What job opportunities does financial management open for the students who want to
advance in this field?
2. What questions do financial managers face daily?
3. What is the role of financial management? Define: financial plan, objective, budget,
equity capital.
4. Define the word “financial management” and describe the liabilities of the financial
manager within a business organization.
5. Outline the uses of money in an entity.
6. When does a firm look to outside sources of financing?
7. Define the word “short-term financing”.
8. Name five short-term financing needs and explain their reason.
9. Define the word “long-term financing needs” and explain what they are.
B) Read about the evolution of financial management and be ready to speak on it:
Prior to 1930s the field of financial management was confined to descriptive discussions of
various financial markets and the securities traded in those markets. Thus, finance as a field of
study traditionally focused on the liabilities and stockholders’ equity side of the balance sheet and
on fund raising.
The field underwent a number of significant changes during the Great depression, when it
became more involved with legal matters of bankruptcy, reorganization, and government
regulation.
Through the 1940s and into the 1950s the teaching of financial management continued to be
basically qualitative and descriptive. During the 1950s financial management was expanded to
include the asset side of the balance sheet, or the uses of a firm’s funds, in addition, the
application of discounted cash flow techniques to the problems of capital expenditure analysis
was being refined and perfected. Also, financial researchers were making significant
breakthroughs in developing techniques for measuring the cost of capital and valuing financial
assets. Progress in both the capital budgeting and the cost of capital areas has continued to the
present days.
During the 1960s mathematical models using statistical and optimization techniques were
applied to the allocation of current assets such as cash, accounts receivable and inventories, and
fixed assets. During the decade of the 1980s there will be an increasing emphasis on applying
computer technology to assist in financial decision-making. Financial management consists of all
those activities that are concerned with obtaining money and using it effectively. Within a
– 83 –
business organization, the financial manager must not only determine the best way (or ways) to
raise money. She or he must also ensure that projected uses are in keeping with the organization’s
goals. Effective financial management thus involves careful planning. It begins with
determination of the firm’s financing needs.
– 84 –
C) Specify the needs for financing. The first one has been done for you:
Short-Term Financing Long-Term Financing
To get operations under way To start a new business
II. FOCUS ON GRAMMAR

A) Insert prepositions:
1.Wholesalers and retailers may need short-term financing to build …. their inventories
before peak selling periods. 2.Then, the money is repaid ….. of sales revenue. 3. As a result,
manufacturers that engage ….. this type of speculative production often need short-term
financing. 4. Or the purchase of a computer-based inventory-control system, which will "pay for
itself" within a year, might be funded …… short-term money. 5. Financial management consists
…. all those activities that are concerned ….. obtaining money and using it effectively. 6.Cash
flow is the movement of money ….. and out of an organization.
B) Business Vocabulary
In English, nouns and verbs frequently share the same base (root). Many verbs may add the
ending –ion (or often – tion, or – ation) to form a noun. Ex: create-creation
Notice that the final – e of the verb disappears in the noun form. In every case, the ending –
ion means “process,” “act,” or “state of being.” Creation is the act of creating, or it is what has
been created.
a) Make nouns from the following verbs. Use your dictionaries:
a. to protect =
b. to intend =
c. to promote =
d. to violate =
e. to deprive =
f. to commend =
g. to tempt =
h. to perceive =
b) Write the verb form of the word beside its meaning in the list below:
1. ____________ to gain understanding, to realize
2. ____________ to keep something from someone
3. ____________ to guard, to keep from danger
4. ____________ to raise to a more important job or rank
5. ____________ to have a purpose in mind
6. ____________ to praise, to approve of
7. ____________ to break a rule or law
8. ____________ to create a desire
c) Now write the noun form next to its meaning:
9. ____________ the act of approving, praising
10. ____________ the act of breaking a law or rule
11. ____________ the result or process of gaining understanding
12. ____________ the fact of having a purpose in mind
13. ____________ the act of keeping something from someone
14. ____________ an advancement in job or rank
15. ____________ the act of keeping from danger
16. ____________ the creation of a desire
– 85 –
d) From among the sixteen forms you have written, choose the one which is
appropriate for each blank in the following memo.
MEMORANDUM
Date: November 23, 2006
To: Robert Ellison
From: Deborah Weaver
Subject: Age Bias
I have just read a recent magazine article in Business Week which discusses age bias in
business. The article comments on the fact that many businesses ____________ the rights of
many older managers in business by not giving them a ____________ as they approach sixty-five
years of age and by cutting their pensions. Companies are frequently ____________ to fire older
executives or to force them to retire early.
However, many of the affected businessmen are seeking the ____________ of the 1998 Age
Discrimination in Employment Act (ADEA). Under this law, any business which has
____________ a person of his/her job and pension benefits may be in ____________ of the law
and can be sued by the person affected. The Equal Employment Opportunity Commission
____________ to reinforce the law whenever possible.
Robert, please check the personnel files on all our departments’ older employees. Find out if
any have been given a written ____________for good work within the last three years or if any
have been given ____________ to a higher position within the last two years. It is not the
____________ of this department to ____________ older managers of any legal rights.
Please report your findings within the week. Thanks.
III. VOCABULARY PRACTICE

Long-term financing, budget, debt capital, short-term financing, equity capital, cash flow,
financial management
1. All those activities that are concerned with obtaining money and using it effectively.
2. The movement of money into and out of an organization.
3. Money that will be used for longer than one year.
4. Money that will be used for a period of one year or less and then repaid.
5. A statement that projects income and/or expenditures over a specified period of time.
6. Money received from the sale of shares of ownership in the business.
7. Money obtained through loans of various types.
B) Insert nouns, verbs, adjectives:
NOUN VERB ADJECTIVE

expansion
speculative
to finance
practice
continuing
to spend
promotional
rise
to fund
merger
C) Find English Equivalents in the text:
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finanţare pe termen scurt/ краткосрочное финансирование _____________________

finanţare pe termen lung/ долгосрочное финансирование ______________________
în cadrul unei organizaţii/ в рамках организации______________________
sursă de finanţare din exterior/ внешний источник финансирования__________
a folosi banii efectiv/ рационально использовать деньги ________________
a continua o afacere/ продолжить дело_______________________________
cheltuieli neanticipate/ непредвиденные затраты _________________
banii sunt achitaţi din/ деньги выплачиваются из _____________________
client final/ конечный покупатель _____________________________
D) Find the synonyms (a-e) and antonyms (f-j) in the text:

a. final customer = f. to be in vogue =
b. tempting profession = g. efficient =
c. last step = h. balance =
d. risky step = i. expectedly =
e. unsuccess of a business = j. profit seeking =
IV. DISCUSSION
Your company is undergoing hard times. This year expenses have been higher and income -
very low. If you do not take corrective actions it is expected to fail. As a chief executive officer
organize a meeting with the marketing manager, financial manager, operations manager and
discuss the advantages and disadvantages of obtaining financing. Use the following expressions:
- I think we should .......
- One way to ..........
- My viewpoint is ..........
- We are absolutely convinced that ..........
- The advantage of ........... is .............
5.2 Sources of Unsecured Short-Term Financing
1. Define “unsecured financing”
2. Characterize each device of short-term capital

collateral (n) pledge
commercial paper securities such as: drafts, capital circulant sau легкореализуемые
promissory notes de rulaj ценные бумаги
reluctant (adj) unwilling

prospects of possibility of repayment perspectivă de plată, перспективы оплаты
repayment posibilitatea
efectuării plăţii
to back up to help, to support a susţine поддерживать,
финансировать
to pledge collateral to leave smth as security for the a amaneta, a zălogi закладывать
loan
draft (n) bill of exchange cambie вексель
invoice (n) a document listing the goods factură фактура
and services and the price for
them
at maturity when the time falls due la scadenţă наступление срока
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drawer (n) the person who makes out the tragator трассант
draft
drawee (n) a person who is requested to tras трассат
pay the draft
to discount a draft to calculate the real value of the a sconta o cambie вычитать вексель
draft according to the formula:
Actual value = Face value -
Discount
Unsecured financing is financing that is not backed by collateral. A company seeking

unsecured short-term capital has several options; they include trade credit, promissory notes, bank
loans, commercial papers and commercial drafts.
Trade Credit We know that wholesalers might provide financial aid to retailers by allowing
them thirty to sixty days (or more in which to pay for merchandise. This delayed payment, which
may also be granted by manufacturers, is a form of credit known as trade credit. More
specifically, trade credit is a payment delay that a supplier grants to its customers. Between 80
and 90 percent of all transactions between businesses involve some trade credit. Typically, the
purchased goods are delivered along with a bill (or invoice) that states the credit terms.
Promissory Notes Issued to Suppliers A promissory note is a written pledge by a borrower
to pay a certain sum of money to a creditor at specified future date. Suppliers that are uneasy
about extending trade credit may be less reluctant to offer credit to customers that sign promissory
notes. Unlike trade credit, however, promissory notes usually provide that the borrower pay
interest.
Unsecured Bank Loans Commercial banks offer unsecured short-term loans to their
customers at interest rates that vary with each borrower’s credit rating. The prime interest rate
(sometimes called the reference rate) is the lowest rate charged by a bank for a short-term loan.
This lowest rate is generally reserved for large corporations with excellent credit ratings.
Banks generally offer loans through promissory notes, a line of credit, or a revolving credit
agreement. Most promissory notes specify repayment periods of 60 to 180 days.
The line of credit – in essence, is a prearranged short-term loan. A bank that offers a line of
credit may require that a compensating balance be kept on deposit at the bank. This balance may
be as much as 20% of the line-of-credit amount. The bank may also require that every commercial
borrower clean up (pay off completely) its line of credit at least once each year and not use it
again for a period of 30 to 60 days. This second requirement ensures that the line of credit is used
only to meet short-term needs and that it doesn’t gradually become a source of long-term
financing.
Even with a line of credit, a firm may not be able to borrow on short notice if the bank does
not have sufficient funds available. For this reason, some firms prefer a revolving credit
agreement, which is a guaranteed line of credit. Under this type of agreement, the bank guarantees
that the money will be available when the borrower needs it. In return for the guarantee, the bank
charges a commitment fee ranging from 0.25 to 1.0 percent of the unused portion of the revolving
credit. The usual interest is charged for the portion that is borrowed.
Commercial Paper is short-term promissory notes issued by large corporations. Commercial
paper is secured only by the reputation of the issuing firm; no collateral is involved. It is usually
issued in large denominations, ranging from $5,000 to $100,000. Corporations issuing
commercial paper pay interest rates slightly below those charged by commercial banks. Thus,
issuing commercial paper is cheaper than getting short-term financing from a bank.
Commercial Drafts A commercial draft is a written order requiring a customer (the
drawee) to pay a specified sum of money to a supplier (the drawer) for goods or services. It is
often used when the supplier is unsure about the customer's credit standing. The draft would be
completed as follows:
1. The draft form is filled out by the drawer. The draft contains the purchase price,
interest rate, if any and maturity date.
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2. The draft is sent by the drawer to the drawee.

3. If the information contained in the draft is correct and the merchandise has been
received, the drawee marks the draft "Accepted" and signs it.
4. The customer returns the draft to the drawer. Now the drawer may (a) hold the draft
until maturity, (b) discount the draft at its bank (c) use the draft as collateral for a loan.
In this case, the draft is similar to an ordinary check with one exception: The draft is filled
out by the seller and not the buyer. A sight draft is a commercial draft that is payable on demand
—whenever the drawer wishes to collect. A time draft is a commercial draft on which a payment
date is specified. Like promissory notes, drafts are negotiable instruments that may be discounted
or used as collateral for a loan. They are legally enforceable.
I. COMPREHENSION
1. Short-term financing is easier to obtain. Why?
2. When do most lenders require collateral for short-term financing?
4. Define the word: “trade credit”. What document states the credit terms?
6. Define the word: “promissory note”.
7. What are the two advantages of a promissory note?
8. Define the word: “unsecured bank loans”.
9. Explain what the line of credit is. Give examples.
10. What are the revolving credit agreement, commercial papers and commercial drafts?
11. What collateral can be used for short-term financing?
B) True or False?
1. The shorter repayment period means there is risk of nonpayment.
2. Unsecured financing is financing that is not backed by collateral.
3. Between 70 and 100% of all transactions between businesses involve trade credit.
4. Suppliers that are uneasy about extending credit may be more reluctant to offer credit
to customers that sign promissory notes.
5. Commercial paper is a short-term promissory note issued by sole proprietorships.
6. The customer returns the draft to the drawer. Now the drawer may: (a) hold the draft
until maturity (b) discount the draft at its bank or (c) use the draft as collateral for a
loan.
7. Most promissory notes specify repayment periods of 60 to 180 days.
8. The purchased goods are delivered along with a contract that states the credit terms.
9. The draft is filled out by the buyer and not the seller.

Insert prepositions:
Typically, the purchased goods are delivered (1)………. (2) …….. a bill that states the credit
terms. The terms (3) ……… a cash discount are specified (4) ………. the invoice. The customer
buying (5) ……….. credit is called the maker. Commercial banks offer unsecured short-term loans
(6) ……….. their customers (7) ……… interest rates that vary (8) ….. each borrower’s credit
rating. The draft is filled (9) ……… by the seller and not by the buyer. They arise primarily (10)
…… trade credit and are usually due (11) ….. less than 60 days. In addition, (12) …….. the interest
(13) ……. the loan, the borrower must also pay (15) ….. storage (16) …. a warehouse.

A) Finish the sentences:
1. Commercial paper is secured only by …..……………………
2. A sight draft is ………………….……………………………..
3. Even with a line of credit ………………………………………
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4. Organizations with good to high ratings may ……………………

5. Most lenders do ………………………………………………….
B) Supply:
Synonyms Аntonyms
1. supplier – 6. short-term loan -
2. questionable – 7. secured loans -
3. interest – 8. borrower -
4. drawer – 9. favourable -
5. collateral - 10. partial -
Unsecured financing, trade credit, promissory note, prime interest rate, revolving credit
agreement, commercial paper, commercial draft.
1. A guaranteed line of credit.
2. A written order requiring the customer to pay a specified sum of money to the
supplier.
3. Short-term promissory notes issued by large corporations.
4. The lowest rate charged by a bank for a short-term loan.
5. Financing that is not backed by collateral.
6. A written pledge by a borrower to pay a certain sum of money to a creditor at a
specified future date.
7. A payment delay that a supplier grants to its customers.
IV. DISCUSSION
1. Have you ever bought goods on credit? When do people decide to buy goods in this
way? What shops offer such services? What is the usual interest rate charged by them?
2. List the advantages and disadvantages of buying a computer on credit? The first one
has been done for you:
Advantages Disadvantages
1. You do not pay the total sum of money 1. Interst is $10 paid dayly
immediately
3. Are commercial drafts largely used in our country? Make an investigation and be
ready to speak on it.
5.3 Sources of Secured Short-Term Financing
1. Define the modes of secured-short- term financing
2. Describe the relative advantages and disadvantages of different modes of
secured short-term financing.

storage (n) the cost of keeping goods plată pentru depozitare плата за хранение
stored
– 90 –
release (v) to free from a elibera освобождать

floor planning method of financing
where the title to
merchandise is given to
lenders in return for
short-term financing
appliance dealer sellers of devices or vînzător de aparate, торговец приборов
machines performing dispozitive
specific esp. those that are
worked mechanically or
by electricity
notification plan to notify the borrower's plan de avizare план сообщения
credit customers to make
their payments directly to
the lender
to be due a fi achitat подлежать выплате
to turn over to hand over, to transfer a înmâna, a transfera перепоручать
factor (n) a firm that specializes in factor агент, комиссионер
buying other firms'
accounts receivable/
agent of sale
face value the value printed or valoare nominală номинальная стоимость
stamped on a bill
shift (v) manage, move a menaja управлять
salable (adj) marketable, that can be comerciale, care pot fi ходовой, пользующийся
sold vândute спросом
secure (adj) firm, strong, stable ferm, stabil крепкий, стабильный
Financially secure firms prefer to save collateral for long-term borrowing needs. Yet, if a
business cannot obtain enough capital via unsecured short-term financing, it must put up collateral
to obtain the additional financing it needs. Almost any asset can serve as collateral. However,
inventories and accounts receivable are the assets that are most commonly used for short-term
financing.
Loans Secured by Inventory Normally, marketing intermediaries and producers have large
amounts of money invested in finished goods or merchandise inventories. In addition, producers
carry raw materials and work in-process inventories. All three types of inventory may be pledged
as collateral for short-term loans. However, lenders prefer the much more salable finished goods
to the other inventories.
A lender may insist that inventory used as collateral be stored in a public warehouse. In such
a case, the receipt issued by the warehouse is retained by the lender. Without this receipt, the
public warehouse will not release the merchandise. The lender releases the warehouse receipt—
and the merchandise—to the borrower when the borrowed money is repaid. In addition to the
interest on the loan, the borrower must also pay for storage in the public warehouse. As a result,
this type of loan is more expensive than an unsecured loan.
A special type of secured financing called floor planning is used by automobile, furniture,
and appliance dealers. Floor planning is a method of financing where the title to merchandise is
given to lenders in return for short-term financing. The major difference between floor planning
and other types of secured short-term financing is that the borrower maintains control of the
inventory. As merchandise is sold, the borrower repays the lender a portion of the loan. To ensure
that the lender is repaid a portion of the loan when the merchandise is sold, the lender will
occasionally check to ensure that the collateral is still in the borrower's possession.
Loans Secured by Receivables Accounts receivable are amounts that are owed to a firm by
its customers. They arise primarily from trade credit and are usually due in less than sixty days. It
is possible for a firm to pledge its accounts receivable as collateral to obtain short-term financing.
A lender may advance 70 to 80 percent of the dollar amount of the receivables. First, however, it
– 91 –
conducts a thorough investigation to determine the quality of the receivables. (The quality of the
receivables is the credit standing of the firm's customers.) If a favorable determination is made,
the loan is approved. Then whenever the borrowing firm collects from a customer whose account
has been pledged as collateral, the money must be turned over to the lender as partial repayment
of the loan. An alternative approach is to notify the borrower's credit customers to make their
payments directly to the lender. This approach, often called the notification plan, may raise
questions about the borrowing firm's financial health and cause customers to take their business
elsewhere.
Factoring Accounts Receivable
Accounts receivable may be used in one or another way to help raise short-term capital:
They can be sold to a factoring company (or factor). A factor is a firm that specializes in buying
other firms' accounts receivable. The factor buys the accounts receivable for less than their face
value, but it collects the full dollar amount when each account is due. The factor's profit is thus
the difference between the face value of the accounts receivable and what the factor has paid for
them.
Even though the selling firm gets less than face value for its accounts receivable, it does
receive needed cash immediately. Moreover, it has shifted both the task of collecting and the risk
of nonpayment to the factor, which now owns the receivables. Generally, customers whose
accounts receivable have been factored are given instructions to make their payments directly to
the Factor.
I. COMPREHENSION
A) Enlarge on:
1. Identify the assets that are most commonly used for short-term financing.
2. Specify the advantages and disadvantages of loans secured by inventory.
3. Explain the difference between floor planning and other types of secured short-term
financing.
4. Explain the procedure of using loans secured by receivables.
5. What is the importance of the operation called “Factoring Accounts Receivable”?
B) Say if the statements are true or false:

1. The factor's profit is thus the difference between the actual value of the accounts
receivable and what the factor has paid for them.
2. The major difference between floor planning and other types of secured short-term
financing is that the borrower does not maintain control of the inventory.
3. However, inventories and accounts receivable are the assets that are most commonly
used for short-term financing.
4. All three types of inventory may be pledged as collateral for long-term-term loans.
5. Generally, customers whose accounts receivable have been factored are given
instructions to make their payments directly to the Factor.
6. To ensure that the lender is repaid a portion of the loan when the merchandise is sold,
the borrower will occasionally check to ensure that the collateral is still in the
borrower's possession.
7. Without this receipt, the public warehouse will not release the merchandise.

Insert prepositions:
1. They arise primarily ….. trade credit and are usually due … less than sixty days. 2.
Then whenever the borrowing firm collects ….. a customer whose account has been
pledged as collateral, the money must be turned over ….. the lender as partial
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repayment of the loan. 3. In addition ….. the interest …. the loan, the borrower must
also pay for storage in the public warehouse. 4. Yet, if a business cannot obtain
enough capital via unsecured short-term financing, it must put ….. collateral to obtain
the additional financing it needs. 5. However, lenders prefer the much more salable
finished goods ….. the other inventories. 6. Moreover, it has shifted both the task …..
collecting and the risk of nonpayment … the factor, which now owns the receivables.

1. A firm that specializes in buying other firms' accounts receivable.
2. Amounts that are owed to a firm by its customers.
3. An alternative approach to notify the borrower's credit customers to make their
payments directly to the lender.
4. A method of financing where the title to merchandise is given to lenders in return for
short-term financing.
Accounts receivable, floor planning, factor, and notification plan
B) Find English Equivalents in the text:

cel mai des întrebuinţate/ используемые чаще всего
firmele asigurate financiar/ финансово-стабильные фирмы
a ridica o întrebare/ поднять вопрос
într-un mod sau altul/ по-разному
creanţe/ счета к получению
datorii/ долги
comerciant de dispozitive/ продавец бытовой техники
valoare nominală/ номинальная стоимость
drept de retenţie asupra mărfii/ право собственности на товар
termenul de valabilitate a contului expiră/ срок действия счёта заканчивается
C) Supply synonyms (a-e) and antonyms (f-j):

a) agents = f) full amount of =
b) sound (financially) (adj) = g) unfinished goods =
c) through smth.= h) accounts payable =
d) marketable (adj) = i) payment =
e) to transfer = j) from time to time =
5.4 Sources of Long-Term Financing
1. Define “equity financing” and “debt financing”
2. Evaluate the advantages and disadvantages of “equity financing” and “debt
financing” from the corporation’s standpoint

equity capital net worth capital propriu собственный капитал
standpoint opinion punct de vedere точка зрения
drawback disadvantage dezavantaj недостаток
сlaim (n) request cerere, pretenţie требование, претензия
– 93 –
сoncession a special right or concesiune уступка, скидка

privilege that is given to
someone
to redeem to repay a răscumpăra выкупать, погашать
pool of gathering of adunătura пул, объединение
bylaw a law made by a local lege locală уставные нормы,
authority and which правила
applies only in their area.
amendment a change of law amendament поправка
cumulative keeps increasing cumulativ кумулятивный
steadily in quantity or
degree
par value face value valoare la paritate, preţ номинальная стоимость
nominal
retained earnings earnings which are not profituri nerepartizate нераспределенная
distributed прибыль
working capital the part of a company’s capital de rulment оборотный капитал
capital readily
convertible into cash and
available for paying
bills, wages
installments (n) any of the parts of a debt plată parţială, în rate часть, партия
or other sum of money to
be paid at regular times
over a specified period
Sources of long-term financing vary with the size and type of business. If the business is a
sole proprietorship or partnership, equity capital is acquired by the business when the owner or
owners invest money in the business. For corporations, equity-financing options include the sale
of stock and the use of profits not distributed to owners. The available debt-financing options are
the sale of corporate bonds and long-term loans.
Equity Financing
Some equity capital is used to start every business—sole proprietorship, partnership, or

corporation. In the case of corporations, equity capital is provided by stockholders who buy
shares in the company. There are at least two reasons why equity financing is attractive to
large corporations. First, the corporation need not repay money obtained from the sale of
stock, and it need not repurchase the shares of stock at a later date. Thus equity financing does
not have to be repaid. Occasionally a corporation buys its own stock, but only because such
an investment is in its own best interest. In 1989 Mapco, Inc.—a large oil, gas, and energy
company—purchased thousands of shares of its own stock with uninvested profits. The firm's
top management believed the purchase was the best investment available at that particular
time.
A second advantage of equity financing is that a corporation is under no legal obligation to
pay dividends to stockholders. A dividend is a distribution of earnings to the stockholders of a
corporation. Investors purchase the shares of stock of many corporations primarily for the
dividends they pay, However, for any reason (if a company has a bad year, for example), the
board of directors can vote to omit dividend payments. Earnings are then retained for use in
funding business operations. Thus a corporation need not even pay for the use of equity capital.
Of course, the corporate management may hear from unhappy stockholders if expected dividends
are omitted too frequently.
There are two types of stock: common and preferred.
Common Stock A share of common stock represents the most basic form of corporate
ownership. Owners may vote on corporate matters, but their claims on profits and assets are
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subordinate to those of preferred-stock owners. In return for the financing provided by selling
"common stock, management must make certain concessions to stockholders that may restrict or
change corporate policies. By law, every corporation must hold an annual meeting, at which the
holders of common stock may vote for directors and approve (or disapprove) major corporate
actions. Among such actions are (1) amendments to the corporate charter or bylaws, the sale of
certain assets, (3) mergers, (4) the issuing of preferred stock or bonds, and (5) changes in the
amount of common stock issued.
Many states require that a provision for pre-emptive rights be included in the charter of
every corporation. Pre-emptive rights are the rights of current stockholders to purchase any new
stock that the corporation issues before it is sold to the general public. By exercising their pre-
emptive rights, stockholders are able to maintain their current proportion of ownership of the
corporation. This may be important when the corporation is a small one and management control
is a matter of concern to stockholders.
Money that is acquired through the sale of common stock is thus essentially cost-free, but
few investors will buy common stock if they cannot foresee some return on their investment.
Preferred Stock The owners of preferred stock usually do not have voting rights, but their
claims on profit and assets precede those of common-stock owners. Thus holders of preferred
stock must receive their dividends before holders of common stock are paid, provided dividends
are distributed at all. Moreover, they have first claim (after creditors) on corporate assets if the
firm is dissolved or declares bankruptcy. Even so, like common stock, preferred stock does not
represent a debt that must be legally repaid.
The dividend to be paid on a share of preferred stock is known before the stock is purchased.
It is stated, on the stock certificate, either as a percentage of the par value of the stock or as an
amount of money. The par value of a stock is an assigned (and often arbitrary) dollar value that is
printed on the stock certificate.
When the corporation exercises a call provision, the investor usually receives a call
premium. A call premium is a dollar amount over value that the corporation has to pay an
investor for redeeming cither preferred stock or a corporate bond. When considering the two
options, management will naturally obtain the preferred stock in the less costly way.
Added Features for Preferred-Stock Issues To make their preferred stock particularly
attractive to investors, some corporations include cumulative, participating and convertible
features in various issues.
Cumulative preferred stock is preferred stock on which any unpaid dividends
accumulate and must be paid before any cash dividend is paid to the holders of common stock.
Participating preferred stock is preferred stock whose owners share in the corporation's
earnings, along with the owners of common stock. Here's how it works: First, the required
dividend is paid to holders of the preferred stock. Then a stated dividend, usually equal to the
dividend amount paid to preferred stockholders, is paid to the common stockholders. Finally, any
remaining earnings that are available for distribution are shared by both preferred and common
stockholders.
Convertible preferred stock is preferred stock that can be exchanged at the stockholder's
option for a specified number of shares of common stock. This conversion feature provides the
investor with the safety of preferred stock and the hope of greater speculative gain through
conversion to common stock.
Retained Earnings Most large corporations distribute only a portion of their after-tax
earnings to shareholders. The remainder, the portion of a corporation's profits that is not
distributed to stockholders, is called retained earnings. Retained earnings are reinvested in the
business. Because they are undistributed profits, they are considered a form of
equity financing.
Retained earnings represent a large pool of potential equity financing that does not have to
be repaid. The amount of a firm's earnings that is to be retained in any year is determined by
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corporate management and approved by the board of directors. For a large corporation, retained
earnings can amount to a hefty bit of financing.
Most small and growing corporations pay no cash dividend—or a very small dividend—to
their shareholders. All or most earnings are reinvested in the business. Stockholders don't actually
lose because of this. Reinvestment tends to increase the value of their stock while it provides
essentially cost-free financing. More mature corporations may distribute 40 to 60 percent of their
after-tax profits as dividends. Utility companies and other corporations with very stable earnings
often pay out as much as 80 to 90 percent of what they earn.
Debt Financing
For a small business, long-term debt financing is generally limited to loans. Large
corporations have the additional option of issuing corporate bonds.
Corporate Bonds A corporate bond is a corporation’s written pledge that it will repay a
specific amount of money, with interest. It includes the interest rate and the maturity date. The
maturity date is the date on which the corporation is to repay the borrowed money. It also has
spaces for the amount of the bond and the bond owner’s name.
Large corporations issue bonds in denominations of from $1,000 to $50,000. The total face
value of all the bonds in an issue usually runs into the millions of dollars. An individual or firm
buys a bond generally through a securities broker. Between the time of purchase and the
maturity date, the corporation pays interest to the bond owner—usually every six months—at
the stated rate. The method used to pay bondholders their interest depends on whether they own
registered or coupon bonds. A registered bond is a bond that is registered in the owner's name
by the issuing company. Interest checks for registered bonds are mailed directly to the
bondholder of record. When a registered bond is sold, it must be endorsed by the seller before
ownership can be transferred on the company books. A coupon bond, sometimes called a bearer
bond, is a bond whose ownership is not registered by the issuing company. To collect interest
on a coupon bond, bondholders must clip a coupon and then redeem it by following procedures
outlined by the issuer. At the maturity date, the bond owner returns the bond to the corporation
and receives cash equaling its face value. Coupon bonds are less secure than registered bonds. If
coupon bonds are lost or stolen, interest may be collected and the bond may be redeemed by
anyone who finds it. For this reason, most corporate bonds are registered.
Maturity dates for bonds generally range from fifteen to forty years after the date of issue. In
the event that the interest is not paid or the firm becomes insolvent, bond owners’ claims on the
assets of the corporation take precedence over stockholders'. Some bonds are callable before the
maturity date. For these bonds, the corporation usually pays the bond owner a call premium. The
amount of the premium is specified, along with other provisions, in the bond indenture. The bond
indenture is a legal document that details all the conditions relating to a bond issue.
From the corporation's standpoint, financing through a bond issue differs considerably from
equity financing. Interest must be paid periodically and in the eyes of the Internal Revenue
Service; interest is a tax-deductible business expense. Furthermore, bonds must be redeemed for
their face value at maturity. If the corporation defaults on (does not pay) either of these payments,
owners of bonds could force it into bankruptcy.
A corporation may use one of three methods to ensure that it has sufficient funds
available to redeem a bond issue. First, it can issue the bonds as serial bonds, which arc
bonds of a single issue that mature on different dates. For example, Seaside Productions used
a twenty-five-year $50-million bond issue to finance its expansion. None of the bonds matures
during the first fifteen years. Thereafter, 10 percent of the bonds mature each year, until all
the bonds are retired at the end of the twenty-fifth year. Second, the corporation can establish
a sinking fund. A sinking fund is a sum of money to which deposits are made each year for
the purpose of redeeming a bond issue. Third, a corporation can pay off an old bond issue by
– 96 –
selling new bonds. Although this may appear to perpetuate the corporation's long-term debt, a
number of utility companies and railroads have used this repayment method.
A corporation that issues bonds must also appoint a trustee, which is an independent firm or
individual that acts as the bond owners' representative. A trustee's duties are most often handled
by a commercial bank or other large financial institution. The corporation must report to the
trustee periodically regarding its ability to make interest payments and eventually redeem the
bonds. In turn, the trustee transmits this information to the bond owners, along with its own
evaluation of the corporation's ability to pay.
Most corporate bonds arc debenture bonds. A debenture bond is a bond that is backed only
by the reputation of the issuing corporation. To make its bonds more appealing to investors,
however, a corporation may issue mortgage bonds. A mortgage bond is a corporate bond that is
secured by various assets of the issuing firm. Or the corporation can issue convertible bonds. A
convertible bond can be exchanged, at the owner's option, for a specified number of shares of the
corporation's common stock. The corporation can gain in two ways by issuing convertible bonds.
They usually carry a lower interest rate than nonconvertible bonds. And once a bond owner
converts a bond to common stock, the corporation no longer has to redeem it.
Long-Term Loans Many businesses finance their long-range activities with loans from
commercial banks, insurance companies, pension funds, and other financial institutions.
Manufacturers and suppliers of heavy equipment and machinery may also provide long-term
financing by granting extended credit terms to their customers.
When the loan repayment period is longer than one year, the borrower must sign a term-loan
agreement. A term-loan agreement is a promissory note that requires a borrower to repay a loan
in monthly, quarterly, semiannual, or annual installments.
Long-term business loans are normally repaid in three to seven years. Although they may
occasionally be unsecured, in most cases the lender requires some type of collateral. Acceptable
collateral includes real estate, machinery, and equipment. Lenders may also require that borrowers
maintain a minimum amount of working capital. The interest rate and other specific terms are
often based on such factors as the reasons for borrowing, the borrowing firm's credit rating, and
the collateral.
I. COMPREHENSION
Answer the following questions:
1. What do the sources of long-term financing depend on? In what way is equity capital
acquired by a business?
2. Who provides equity capital in the case of corporations?
3. Why is equity financing attractive to large corporations?
4. Define the word “dividend”. What happens if a company has a bad year?
5. What kinds of stock do you know?
6. Describe the advantages and disadvantages of common stocks and preferred stocks.
7. What do some corporations include to make their preferred stock attractive to
investors?
8. Compare the cumulative preferred stock and the participating preferred. What do they
have in common?
9. What is “returned earnings”? Give examples.
10. Explain the terms: corporate bonds, coupon bonds and bond indenture.

Long-term business loans are normally repaid (1) .. there (2) … seven years. To make its
bonds more appealing (3) …. Investors, however, a corporation may issue mortgage bonds. Serial
bonds are bonds (4) … a single issue that mature (6) … different dates. Maturity dates (7) …
bonds generally range (8) … fifteen (9) … fifty years after the date (10) … issue. The amount
– 97 –
(11) … the premium is specified (12)… (13) …. Other provisions in the bond indenture. (14) ….
the eyes (15) … the International Revenue Service, interest is a tax-deductible business expense.
Sources of long-term financing vary (16) … the size and type of business. (17) …. Law, every
corporation must hold an annual meeting, (18) …. Which the holders of common stock may vote
(19) … directors.
B) COMPLEX VERBS
Choose one suitable verb to fill in the gaps so as to form complex verbs with the
adverbial particle out.
to carry; come; get; give; go; set; take; turn; wear; wipe; work;
1. This year’s loses have … out last year’s profits. 2. Fixed assets gradually …. out. 3. The
factory …. out 5, 000 pairs of shoes a week. 4. He is not at home, he has …. out. 5. One of the
plane’s engines … out. 6. I’ll … out some money from my current account. 7. It has … out that
you were right. 8. She … out first in the competition. 9. We will …. the new textbook out by
October Ist. 10. he will … out early in the morning. 11. Our customer’s order has been … out .
12. I have … out your share at the expenses of our company at $50.

A) Finish the sentences:
1. The owners of preferred stock usually ……………………
2. The remainder, the portion of a corporation profits …………………..
3. Large corporations …………………………….
4. Maturity dates for bonds generally ……………………………
5. Many businesses finance their long-range activities with ……………………..
B) Supply:
Synonyms Antonyms
1. standpoint - 6. short-range activities -
2. to default - 7. extended credit –
3. trustee - 8. common stock –
4. earnings - 9. loss –
5. to occur - 10. subordinate (adj) -
Dividend, common stock, pre-emptive rights, preferred stock, par value, call premium,
cumulative preferred stock, participating preferred stock, convertible preferred stock, retained
earnings, corporate bond, maturity date, registered bond, coupon bond, bond indenture, serial
bonds, sinking fund, sinking fund, trustee, debenture bond, mortgage bond, convertible bond,
term-loan agreement.
1. Bonds of a single issue that mature on different dates.

2. A bond whose ownership is not registered by the issuing company.
3. The portion of a business profits that is not distributed to stockholders.
4. Preferred stock that may be exchanged at the stockholder’s option for a specified
number of shares of common stock.
5. An assigned dollar value printed on the face of a stock certificate.
6. Stock whose owners may vote on corporate matters but whose claims on profit and
assets are subordinate to the claims of others.
– 98 –
7. The dollar amount over par value that the corporation has to pay an investor for
redeeming either preferred stock or a corporate bond.
8. A distribution of earnings to the stockholders of a corporation.
9. A bond that is registered in the owner’s name by the issuing company.
10. A corporate bond that is secured by various assets of the issuing firm.
11. A legal document that details all the conditions relating to a bond issue.
12. A bond that can be exchanged for a specified number of shares of the corporation’s
common stock.
13. A corporation’s written pledge that it will repay a specified amount of money with
interest.
14. Preferred stock on which any unpaid dividends accumulate and must be paid before
any cash dividend is paid to the holders of common stock.
15. The rights of current stockholders to purchase any new stock that the corporation
issues before it is sold to the general public.
16. Preferred stock whose owners share in the car’s earnings, along with the owners of
common stock.
17. A sum of money to which deposits are made each year for the purpose of redeeming a
bond issue.
18. Stock whose owners usually do not have voting rights but whose claims on profits and
assets have precedence over those of common stock owners.
19. An independent firm or individual that acts as the bond owner’s representative.
20. A bond backed only by the reputation of the issuing corporation.
21. A corporation bond that is secured by various assets of the issuing firm.
IV. DISCUSSION
1. Drexel Burnham Lambert helped finance many of the corporate takeovers during the
1980s. By 1986 it was the most profitable firm on Wall Street. Then in 1990 the firm
filed for bankruptcy. What factors led to the decline of Drexel Burnham Lambert?
2. What does a financial manager do? How can he monitor a firm’s financial success?
3. Why would a supplier offer both trade credit and cash discounts to its customers?
4. You want to borrow funds to finance next year’s college expenses. Set up a budget
showing your expected income and expenses, and determine how much money you
will need to borrow. Then outline a plan for repaying the borrowing funds. Provide
enough detail to convince your financing source to advance you the money.
– 99 –
6. ACCOUNTING
6.1 Accounting and Accountants
“Accounting is the language of business”
1. Know what accounting is and what accountants do
2. Make the difference between accounting and bookkeeping
3. Be able to understand the categories of accountants
4. Identify the users of accounting information

English English Equivalents Romanian Russian
to trace back to describe how it a-şi lua originea, a se развиваться
developed dezvolta
to be concerned with to give attention to a se ocupa de заботиться
accurate (adj) precise cu precizie точный
up-to-date latest, the newest modern, original современный
to chalk up to gain
rigorous (adj) strict riguros строгий,
неукоснительный
accounts receivable debts owed to our creanţe счета к получению,
organization дебиторская
задолженность
to commit to you decide definitely that a se angaja взять на себя
you will do it обязательства
payroll (n) a list of people employed stat de plată платежная ведомость
by a company showing
the amount of money to
be paid to each of them
pertaining (adj) connected to legat de связанный
auditing verification of audit аудит
authenticity of financial
statements by an
independent professional
accountant
scholar (n) a learned or erudite cărturar учёный
person esp. one who has
profound knowledge of a
particular subject
double-entry accounting simultaneous production contabilitatea dublei система бухгалтерского
of a debit and a credit înregistrări учета по методу
from processing a двойной записи
transaction
clay tablets tabliţe din lut глиняные таблички
treatise a formal and systematic tratat ştiinţific научный трактат
exposion in writing of
the principles of a
subject
handicraft handmade things lucru manual ремесло
overheads indirect costs cheltuieli indirecte накладные расходы
Accounting is the process of systematically collecting, analyzing, and reporting

financial information.
– 100 –
The Evolution of Accounting
“To understand accounting today and

predict it tomorrow, one must know the history of
accounting”
Fra Luca Paciolli
The history of accounting is as old as civilization, key to important phases of history, among
the most important professions in economics and business. Accountants participated in the
development of cities, trade and the concept of wealth and numbers. They invented writing and
took part in the development of money and banking, invented double-entry bookkeeping, helped
develop capital markets and are central to the information revolution that is transforming the
global economy. It can be argued that as a profession accounting is very young; however, as a
service activity it dates back several thousand years. Among the earliest records are those of
Egyptians and Babylonians (from approx. 3000 B.C.), who recorded on clay tablets such
transactions as the payment of wages and taxes. As early as 1494, a famous Italian Franciscan
monk, Fra Luca Paciolli, mathematician, scholar and philosopher published a treatise containing
the essential elements of double-entry accounting system that is still in use today. His important
work was entitled “Summa de Aritmetica, Geometrica, Proportioni et Proportionalita”, which
contained a detailed description of accounting as practiced at that age. This book became the most
widely read book on mathematics in Italy and firmly established Paciolli “the Father of
Accounting”.
During the Industrial revolution technological advances not only provided new machinery
but required new types of expenditures as well. Cost accounting systems had to be developed to
analyse and control the financial operations of those manufacturing processes.
Modern accounting in the United States can be traced back to the establishment of the
American Institute of Certified Public Accountants (AICPA) in 1887. By the early 1900s,
accounting instruction was offered (but was optional) at many colleges and universities. Today,
accounting courses are required for virtually every type of business degree.
Accounting or Bookkeeping
Many people confuse accounting with bookkeeping, but there are important differences
between the two. Accounting deals with the entire system for providing accurate and up-to-date
financial information—from design of the system through its operation to interpretation of
information that is obtained. To become an accountant, an individual must undergo years of
training and chalk up a great deal of practical experience.
Bookkeeping, on the other hand, is the routine, day-to-day record keeping that is a necessary
part of accounting. Bookkeepers are responsible for obtaining the financial data that the
accounting system processes. Accounting system cannot operate without good, accurate
bookkeeping but a bookkeeper can generally be trained within a year or so.
Classification of Accountants
Accountants are people who are trained and experienced in the methods and systems of
accounting. They are generally classified as private accountants or public accountants.
A private (or nonpublic) accountant is an accountant who is employed by a specific
organization. A medium-sized or large firm may employ one or several private accountants to
design its accounting system, manage its accounting department, and prepare the variety of
reports required by management or by law, and provide managers with advice and assistance.
Private accountants provide their services only to their employers.
– 101 –
Smaller and medium-sized firms that don't require full-time accountants can hire the
services of public accountants. A public accountant is an accountant whose services may be hired
on a fee basis by individuals or firms. Public accountants may be self-employed, or they may
work for accounting firms. Accounting firms range in size from one-person operations to huge
international firms with hundreds of accounting partners and thousands of
employees.
Most accounting firms include on their staffs at least one certified public accountant
(CPA), an individual who has met state requirements for accounting education and experience
and has passed a rigorous three day accounting examination. The examination is prepared by the
American Institute of Certified Public Accountants and covers accounting practice accounting
theory, auditing, and business law. State requirements usually include a college accounting degree
and from one to three years of on the-job experience. Details regarding specific requirements for
practice as a CPA in a particular state can be obtained by contacting the respective State Board of
Accountancy. Certification as a CPA brings both status and responsibility. Only an independent
CPA can officially verify the financial contents of a corporation's annual report and express an
opinion regarding the acceptability of the corporation's accounting practices.
Users of Accounting Information
The primary users of accounting information are managers. The firm's accounting system
provides a range of information dealing with revenues, costs, accounts receivable, amounts
borrowed and owed, profits, return on investment, and the like. This information can be compiled
for the entire firm; for each product; for each sales territory store, or individual salesperson; for
each division or department; and. generally in any way that will help those who manage the
organization.
Much of this accounting information is proprietary; it is not divulged to anyone outside the
firm. However, certain financial information is demanded by individuals and organizations that
the firm must deal with.
Lenders require at least the information that is contained in the firm’s financial statements
before they will commit themselves to short- or long-term loans. Suppliers generally ask for
this information before they will extend trade credit to a firm.
Stockholders must, by law, be provided with a summary of the firm’s financial position in
each annual report. In addition, potential investors must be provided with financial statements in
the prospectus for each securities issue.
Government agencies require a variety of information pertaining to the firm's tax liabilities,
payroll deductions for employees, and new issues of stocks and bonds.
The firm's accounting system must be able to provide all this information in the required
form. An important function of accountants is to ensure that such information is accurate and
thorough enough to satisfy outside groups. Accounting can be viewed as a system for
transforming raw financial data into useful financial information.
I. COMPREHENSION
1. Define the word “accounting”.
2. What do you know about the history of accounting? When did the first book of
accounting principles appear? Who wrote it?
3. What do you know about modern accounting in the USA?
4. What is the difference between accounting and bookkeeping?
5. Who are accountants? How are they classified?
6. Who is a private accountant? What are his liabilities?
7. Who is a public accountant?
8. Who is a CPA? What examination should he pass? What does it cover?
– 102 –
9. Who are the primary users of accounting information? What does this information
include?
10. What other users of accounting information do you know? Characterize them.
B) True or False?
1. The firm’s accounting system must be able to provide information about bank
activities in the required form.
2. Much of the accounting information is revealed publicly.
3. Most accounting firms include on their staffs at least one CPA.
4. The primary users of accounting information are lenders.
5. A bookkeeper can generally be trained within a year or so.
6. Accounting and Bookkeeping deal with the same systems.
7. Private accountants provide their services only to their employees.
8. It can be argued that as a profession accounting dates for about several years ago.
9. Cost accounting systems had to be developed to analyse and control the financial
operations of the manufacturing processes during the Industrial Revolution.
10. Suppliers generally ask for this information before they will commit themselves to
short- or long-term loans.
C) List the differences between accounting and bookkeeping

ACCOUNTING BOOKKEEPING
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
D) Here is a list of accountant’s characteristics. Put a tick next to the one which
corresponds to the category of accountants.
Characteristics Private accountants Public accountants CPAs
They have passed a rigorous three-
day accounting examination
Their services may be hired on a fee
basis by individuals or firms
They are employed by specific
organizations
They may be self-employed or may
work for accounting firms
The examination they pass covers:
accounting practice, theory, auditing
and business law
They design accounting systems,
manage accounting departments,
prepare the variety of reports
They must have a college accounting
degree and from 1 to 3 years of on-
the-job experience
II. VOCABULARY PRACTICE

A) Find the synonyms in the text:
a. practically = g. money to be received =
b. friar = h. explanation =
c. exact = i. information=
d. to gain experience = j. to offer credit =
– 103 –
e. very big = k. detailed =

f. to gather information = l. linked to =
B) Match the words with their definitions:

1. American Institute of a) Gives the owner the executive right to publish, use and sell a
Certified Public Accountants literary, musical, or artistic piece of work for a period not to
exceed 50 years after the author’s death
2. Auditing b) Simultaneous production of a debit and a credit from processing a
transaction
3. Capital market c) A place where securities with a maturity greater than one year are
traded
4. Double-entry-accounting d) Governing body of accounting practices, which limits its
membership to only those individuals who pass the CPA
examination
5. Copyright e) Verification of authenticity of financial statements by an
independent professional accountant
C) Match the words with their synonyms:

1. Scholar (n) a) Made by hands
2. To argue b) Friar
3. Liabilities (n.pl.) c) Potential, future
4. Handicraft (n) d) Erudite person
5. Monk (n) e) To prove
6. Ongoing (adj) f) Debts
7. Assets (n.pl.) g) Lasting
8. Conservatism (n) h)Wealth
9. Would-be (adj) i) Prudence
D) Match the words with the definitions:
Overheads, to post, book of prime entry, double-entry bookkeeping, tax return, voucher.
a. a record in which certain types of transaction are recorded before becoming part of a
double-entry bookkeeping system;
b. a form to be filled in every year by every citizen stating incomes and personal
circumstances that will be used to assess the amount of tax payable;
c. a method of book keeping in which each transaction is recorded twice in two different
accounts that are balanced: the debit and the credit sides of an account;
d. to make a bookkeeping entry in an account book from a book of prime entry;
e. any document that supports an entry in a book of account;
f. indirect costs.
E) Fill in the gaps with suitable words from the list given at the end of the exercise:
Accounting is a ……(1) of economics whose purpose is to …(2) information in financial
terms on the …..(3) of an organization, on how past …..(4) decisions have influenced these
resources and consequently it can be a useful instrument for decision-making concerning the ….
(5) of resources for the future. As we see accounting looks both into the past and into the future of
the resources of a company. The historical aspects are the concern of ….(6) accounting, whereas
the …..(7) useful for future decision-making are the province of ……(8) accounting. The former
type of approach is useful for the creditors and ….(9) of a company, the latter is required by the
managers.
Accountancy is the name of the profession and used only in U.K.
Accountants are the professionals in the field of ….(10). They usually belong to specialized
bodies. Thus ….(11) accountants are members of the Association of Certified Accountants (U.K.).
– 104 –
They are recognized by the Department of Trade as qualified to ….(12) the accounts of limited
companies. …. (13) accountants are members of one of the Institutes of Chartered Accountants
(in England and Wales, Scotland, Ireland). In the U.S.A. the correspondent is the certified …(14)
accountant, a member of the American Institute of Certified Public Accountants. Accountants
produce …(15) statements, draw up cash flow forecasts, audit accounts of organizations, prepare
…(16) returns, and calculate production costs as well as …(17).
To be able to produce such financial documents they must rely on the recording of
transactions in account ….(18). Bookkeeping is a branch of accounting whose task is to record
transactions. There are books of prime entry in which transactions are recorded in the order in
which they are made. They are …(19)-books, daybooks, and journals. Later the transactions are
…(20) to the ledger. This is a book in which all the accounts of a business using ….(21)-entry
bookkeeping are contained. It is the ultimate record book, showing all transactions of the business
and their result. Nowadays many companies use computer-…(22) information instead of the
classical ledger.
Double-entry bookkeeping means that in this system each transaction is entered …(23).
An asset that is bought is recorded with its value. On the other hand the money paid for it is
recorded in a separate account. The ….(24) side of an account should balance the debit side of
it.
Each entry is based on …(25). These can be invoices and ….(26). The latter is confirmation
of a payment made. The former is a document stating the amount due for some goods or services
supplied. It gives a description of the goods, states delivery and shipment details, alongside of unit
price and ….(27) price.
Accounting; allocation; audit; books; branch; cash; certified; chartered; credit; double;
financial (2 times); forecasts; management; managerial; overheads; posted; public; receipts;
resources; shareholders; stored; supply; tax; total; twice; vouchers.

Lenders require (1) …. least the information that is contained in the firm’s financial
statements before they will commit themselves (2) …… either short or long-term loans.
Stockholders must (3) …. law, be provided (4) …. a summary (5) …. the firm’s financial position
(6) …. each annual report. The information can be compiled (7) …. the entire firm. Public
accountants may be self-employed, or they may work (8) … accounting firms. Because (9) … its
great value business owners have been concerned (10) … financial information (11) …. hundreds
of years.
B) WORD FORMATION
a)Make compound words (adjectives) by using the pattern Credit+
Worthy=Creditworthy. Use the following nouns to combine with “worthy”: praise; blame;
note; sea; air; road; trust. Which of these correspond to the Romanian words listed below:
1. care are bonitate/платежеспособный
2. demn de laudă/заслуживающий похвалы
3. remarcabil, demn de luat in consideraţie/стоящий внимания
4. în stare bună de navigabilitate/мореходный
5. demn de încredere/заслуживающий доверия
6. apt pentru a circula pe drumurile publice/пригодный к поездке
7. condamnabil/заслуживающий порицания
8. apt de zbor/годный к полёту
b) From these compounds, nouns can be formed on the pattern:
”creditworthy+ness”=creditworthiness.
Mind the replacement of “y” by “i”.
– 105 –
Now combine the adjectives you obtained in exercise to create nouns. Which of them
means?
1. credibilitate (bonitate)/платежеспособность
2. stare de navigabilitate/мореходность
3. caracter reprobabil/порицание
4. caracter laudabil/похвальность
5. caracter demn de remarcat/достопримечательность
IV. COLLOCATIONS
Fill in the table and put “+” in the square where the combination of the two elements is
possible:
a sense data goods transactions a
decision requirement
Make
Meet
Record
Provide
Supply
V. DISCUSSION POINT
A) Comment on the following statements:
4. There is no accounting for tastes.
5. Accounting has been surprisingly interconnected with technology.
6. History does not repeat itself. But it rhymes. (M.Twain)
7. A successful merchant needs three things: sufficient cash or credit, an accounting
system that can tell him how he’s doing and a good bookkeeper to operate it.
B) Accounting jokes
Read them and find out what characteristics accountants have:

1. An accountant is having a hard time sleeping and goes to see his doctor: “Doctor, I
just can’t get to sleep at night”.
“Have you tried counting sheep?”
“That’s the problem – I make a mistake and then spend three hours trying to find it”.
2. An accountant visited the National History Museum. While standing near the dinosaur
he said to his neighbour:
“This dinosaur is two billion years and ten months old”.
“Where did you get this exact information?”
“I was there ten months ago and the guy told me that the dinosaur is two billion years
old”.
3. - When does a guy decide to become an accountant?

- When he realizes he doesn’t have the charisma to succeed as an undertaker.
4. - What do you call an accountant who is seen talking to someone?

- Popular.
5. - What’s an extroverted accountant?

- One who looks at your shoes while he’s talking to you instead of his own.
VI.WRITING
– 106 –
Dezvoltarea contabilităţii şi a funcţiei acesteia
Contabilitatea a apărut în stadiul timpuriu al dezvoltării umane în scopul reflectării

cantitative a mijloacelor unor producători. Obiectul, scopul şi funcţiile contabilităţii
caracterizează particularităţile acelui nivel al dezvoltării sociale, procesele căruia aceasta le
reflectă.
Rolul contabilităţii a crescut, mai ales, în legătură cu crearea centrelor comerciale mari.
Treptat contabilitatea a început să se transforme în ştiinţă, având obiectul şi metoda de
cunoaştere proprii. Contabilitatea s-a dezvoltat mai pe larg în Roma Antică. Primii care au expus
regulile dublei înregistrări au fost Benedict Cotrulli şi Luca Paciolo (sec.XV). Autorul operei „Cu
privire la comerţ şi comerciantul onest”, în care, în special, sunt expuse regulile înregistrărilor în
registrele contabile este Benedict Cotrulli.
Fondatorul contabilităţii se consideră Luca Paciolo (1445 – 1515) care este cunoscut ca
autorul primei cărţi de contabilitate. El a fost profesor de matematică, însă numele lui a intrat în
istorie datorită tratatului consacrat utilizării conturilor şi înregistrărilor contabile.
Dezvoltarea contabilităţii a dus la apariţia profesiei de contabil sau socotitor. Cuvântul
„contabil” (omul care ţine registrele) a apărut de asemenea în sec. XV. În anul 1448 împăratul
Imperiului Roman Maximilian I l-a numit în calitate de primul contabil pe Christofer Stechter.
Începând de la acest moment contabilitatea se consideră profesie. Însă abia în sec. XIX
contabilitatea a devenit o ştiinţă veritabilă. În mijlocul sec. XX în Italia, Franţa, Elveţia şi
Germania au apărut multe opere despre obiectul, scopul şi metoda contabilităţii.
6.2 The Accounting Equation, the Balance Sheet,

and the Income Statement
“A person should not go to sleep at night

until the debits equal credits ”
(Fra Luca Paciolli)
1. Understand the accounting equation
2. Know how to read and interpret a balance sheet
3. Explain what an income statement is

balance sheet (n) financial statement summarizing the assets, bilanţ contabil балансовый отчет
liabilities and net worth of an individual or a
business at a given date: so called because the
sum of the assets equals the total of the
liabilities plus the net worth
inventory (n) an itemized list or catalogue of goods, inventar инвентарь
property
assets (n,pl.) every possession an organization has active активы
liabilities (n,pl.) the debts of a person or business pasive пассивы
owners’equity (n) capital propriu собственный капитал
raw data not processed, edited, interpreted information date neprelucrate необработанные
данные
double-entry a system of bookkeeping in which every contabilitatea dublei система
bookkeeping transaction is entered as both a debit and a înregistrări бухгалтерского учета
credit in conformity with the underlying по методу двойной
accounting equation which states that assets записи
– 107 –
equal liabilities plus net worth

marketable securities that can be sold easily capital de rulaj sau легкореализуемые
securities circulant ценные бумаги
receivables or accounts suitable for acceptance conturi de încasat, счета к получению,
accounts creanţe дебиторская
receivable, debtors задолженность
insurance the amount payable or paid, in one sum or primă de asigurare страховой взнос
premium periodically, for an insurance policy
depreciation (n) a decrease in value of property through wear, depreciere, обесценивание,
deterioration, or obsolescence devalorizare, амортизация
amortizare
notes receivable cambii spre векселя к получению
recepţionare
to apportion the to divide and distribute costs a distribui, a împărţi распределять
cost costurile расходы
intangible assets assets that have no real existence active nemateriale нематериальные
активы
patent (n) a document granting the exclusive right to patent патент
produce, sell, or get profit from an invention,
process, for a specific number of years
copyright (n) the exclusive right to the publication, drept de autor авторское право
production, or sale of the right to the literary,
dramatic, or artistic work
trademark (n) a symbol, design, word, letter used by a marcă comercială коммерческая марка
manufacturer or dealer to distinguish a
product or products from those of
competitors
promissory note a written promise to pay a certain sum of ordin de plată долговое
(n) money to a certain person or bearer on обязательство,
demand or on a specified date вексель
accounts payable, debts that must be paid to an organization datorii spre plată, счета к оплате,
creditors conturi de creditor кредиторская
задолженность
to incur expenses a avea cheltuieli нести затраты
allowance for corecţii la creanţe поправка на
doubtful accounts dubioase сомнительные счета
The accounting equation is a simple statement that forms the basis for the accounting
process. It shows the relationship among the firm’s assets, liabilities, and owners' equity.
Assets are the things of value that a firm owns. They include cash, inventories, land,
equipment, buildings, patents, and the like.
Liabilities are the firm's debts and obligations—what it owes to others.
Owners' equity is the difference between a firm's asset and its liabilities—what would be
left over for the firm's owners if its assets were used to pay off its liabilities.
The relationship among these three terms is almost self-evident: Owners’ equity = assets -
liabilities. By moving terms algebrically, we obtain the standard form of the accounting
equation:
Assets = liabilities + owners' equity
Implementation of this equation begins with the recording of raw data that is, the firm's day-
to-day financial transactions. It is accomplished: through the double-entry system of bookkeeping.
The concept of Balance Sheet is very old. No one knows exactly when and who invented
this accounting device. Like accounting the balance sheet is an anonymous opera and generations
of authors, theoreticians have contrinuted to its development since the civilization appeared. It is
prepared and presented on a specified date: 31 st March, 30th June, 30th September, and 31st
December. Also it can be prepared quarterly, annually, and semiannually.
– 108 –
The word “balance sheet” corresponds to the notion of “weighing machine” with two scales
that must always be in balance and it derives from the word “bi” – two and “lanx” – scale of the
balance.
The specifics of the balance sheet in the Republic of Moldova is that it is composed of two
parts: the left side is called assets and the right side is called liabilities.
In the USA the BS has only one section and the assets, liabilities and owners’equity follow
this order.
The Balance Sheet
A balance sheet (or statement of financial position) is a summary of a firm's assets,

liabilities, and owners' equity accounts at a particular time, showing the various dollar amounts
that enter into the accounting equation. The balance sheet must demonstrate that the accounting
equation does indeed balance. That is, it must show that the firm's assets are equal to its liabilities
plus its owners' equity. As previously noted, the balance sheet is prepared at the end of the
accounting period, which usually covers one year. Most firms also have balance sheets prepared
semiannually, quarterly, or monthly.
Assets
In the USA on a balance sheet, assets are listed in order, from the most liquid to the least
liquid. The liquidity of an asset is the ease with which it can be converted into cash.
Current Assets Current assets are cash and other assets that can be quickly converted into
cash or that will be used within one year. Because cash is the most liquid asset, it is listed first.
Following that are marketable securities—stocks, bonds, and so on—that can be converted into
cash in a matter of days.
Next are the firm's receivables. Its accounts receivable, which result from the issuance
of trade credit to customers, are generally due within sixty days. However, the firm expects
that some of these debts will not be collected. Thus it has reduced its accounts receivable by a
5 percent allowance for doubtful accounts. The firm's notes receivable are receivables for
which customers have signed promissory notes. They are generally repaid over a longer
period of time.
Merchandise inventory represents the value of goods that are on hand for sale to customers.
These goods are listed as current assets because they will be sold within the year. For a
manufacturing firm, merchandise inventory can also represent raw materials that will become part
of a finished product or work in process that has been partially completed but requires further
processing.
Prepaid expenses are assets that have been paid for in advance but not yet used. An
example is insurance premiums. They are usually paid at the beginning of the policy year for the
whole year. The unused portion (say, for the last four months of the policy year) is a prepaid
expense—a current asset.
Fixed Assets Fixed assets are assets that will be held or used for a period longer than one
year. They generally include land, buildings, and equipment.
The values of fixed assets are decreased by their accumulated depreciation. Depreciation is
the process of apportioning the cost of a fixed asset over the period during which it will be used.
The amount that is allotted to each year is an expense for that year, and the value of the asset must
be reduced by that expense.
Intangible Assets Intangible assets are assets that do not exist physically but have a value
based on legal rights or advantages that they confer on a firm. They include patents, copyrights,
trademarks, and goodwill. By their nature, intangible assets are long-term assets. They are of
value to the firm for a number of years.
Goodwill is the value of a firm's reputation, location, earning capacity, and other intangibles
that make the business a profitable concern. Goodwill is not normally listed on a balance sheet
unless the firm has been purchased from previous owners.
– 109 –
Liabilities and Owners’ Equity
The firms' liabilities are separated into two groups—current and long-term—on the balance
sheet. These liability accounts and the owners’ equity accounts complete the balance sheet.
Current Liabilities A firm’s current liabilities are debts that will be repaid within one year.
Accounts payable are short-term obligations that arise as a result of making credit purchases.
Notes payable are obligations that have been secured with promissory notes. They are
usually short-term obligations, but they may extend beyond one year. Only those that must be
paid within the year are under current liabilities. Many companies also list salaries payable and
taxes payable as current liabilities. These are both expenses that have been incurred during the
current accounting period but will be paid in the next accounting period. Such expenses must be
shown as debts for the accounting period in which they were incurred.
Long-Term Liabilities Long-term liabilities are debts that need not be repaid for at least one
year.
Owners' Equity For a sole proprietorship or partnership, the owners’ equity is shown as the
difference between assets and liabilities. In. partnership, each partner's share of the ownership is
reported separately by each owner's name. For a corporation, the owners' equity (sometimes
referred to as shareholders' equity) is shown as the total value of its stock plus retained earnings
that have accumulated to date.
The Income Statement
An income statement is a summary of a firm's revenues and expenses during a specified

accounting period. The income statement is sometimes called the earnings statement or the
statement of income and expenses. It may be prepared monthly, quarterly, semiannually, or
annually. The main elements of an income statement are: revenues cost of goods sold, operating
expenses, and net income.
Assets, liabilities, owners’ equity, balance sheet, liquidity, current assets, marketable
securities, notes receivable, prepaid expenses, fixed assets, depreciation, intangible assets,
accounts payable, promissory notes.
1. The ease with which an asset can be converted into cash.

2. Assets that have been paid for in advance but not yet used.
3. Receivables for which customers have signed promissory notes.
4. Stocks, bonds, and so on—that can be converted into cash in a matter of days.
5. The things of value that a firm owns. They include cash, inventories, land, equipment,
buildings, patents, and the like.
6. Cash and other assets that can be quickly converted into cash or that will be used
within one year.
7. A summary of a firm’s assets, liabilities, and owners’ equity accounts at a particular
time, showing the various dollar amounts that enter into the accounting equation
8. The difference between a firm’s asset and its liabilities—what would be left over for
the firm’s owners if its assets were used to pay off its liabilities.
9. The firm’s debts and obligations—what it owes to others.
10. Assets that will be held or used for a period longer than one year.
11. Sort-term obligations that may extend beyond one year.
12. Short-term obligations that arise as a result of making credit purchases.
– 110 –
13. Assets that do not exist physically but have a value based on legal rights or advantages
that they confer on a firm.
14. Process of apportioning the cost of a fixed asset over the period during which it will
be used.
B) Complete the text about balance sheets with the following words. The first one has
been done for you:
assets, balance sheet (2 times), cash, cash held at bank, creditors, debtors, depreciation,
draw up, liabilities, lists, owes, owns, statement, valuation
Every year a company will 1) draw up a 2) ________ to see how it stands financially. This
document consists of two 3) _______ and is called a 4) _______ . One list will contain all the
things the company 5) _______ . These are its 6) _______ . The other list consists of the things
the company 7) _______ and these are its 8) _______ .
Every item has to be valued. One item will be the amount of 9) _______ the company has on
its premises and another will be the amount standing on the bank account. This is called 10)
_______ . Some items can be valued exactly, but others can only be given an approximate 11)
_______ . Machinery or equipment, for instance, suffers from „wear-and-tear” and gradually loses
its value. This process of losing value is assumed over a period of time and it is called 12)
_______ . Other assets include 13) _______ . This item is the total amount owed by customers.
Among liabilities there are 14) _______ , that is the total amount owed to suppliers. When the 15)
_______ is drawn, the company will be able to see how things are going.
C) Match the words with their translations:
1. venit pe acţiune/ прибыль на акцию
2. dobândă/ процент
3. profit nedistribuit/ нераспределённая прибыль
4. acţiune ordinară/ простая акция
5. costuri sociale/ социальные затраты
6. salarii/ зарплаты
7. acţionari/ акционеры
8. obligaţiune/ облигация
9. cont de profituri şi pierderi/ статья прибыли и убытков
10. costuri de exploatare/ эксплуатационные расходы
11. profit înaintea impozitării/ прибыль до налогообложения
12. dividend preferenţial/ дивиденд с привелигированной акции
13. cifră de afaceri/ общий торговый оборот
14. pensie/ пенсия
14. impozit pe firmă/ корпоративный налог
a. Shareholders i. earnings per share
b. corporation tax j. ordinary share
c. operating costs k. wages and salaries
d. debenture l. interest
e. turnover m. retained profit
f. pension n. social security costs
g. profit before tax o. profit and loss account
h. preference dividend
D) Match the words or phrases with their definitions:

1. consolidated statement 7. fixed assets
2. assets 8. treasury bill
– 111 –
3. liabilities 9. liquid assets

4. entity 10. current assets
5. equity 11. intangible assets
6. current liabilities 12. inventory
a. an organization for which separate accounts are kept;
b. what a company owes to people/ corporations from outside the entity;
c. debts to be paid within a year from the issuing of the financial statement;
d. what a company owns;
e. the claims of creditors and owners against the assets of an entity;
f. combination of accounting statements of different entities having the same
shareholders, as if they formed a single entity;
g. anything owned by a company that can be readily turned into cash;
h. a short term bond sold by government to cover cash requirements, usually
redeemable in three months;
i. amount of goods stored ready for sale (U.S.A.);
j. items belonging to a business that cannot be sold or turned into cash, being
necessary for the operation of the company;
k. something a company ownes which cannot easily be computed and turned into
cash;
l. something a company owns and will be turned into cash in the regular course
of business (usually within one year).
E) Fill in the gaps with suitable words selected from the list given at the end of the text:
In accounting a set of accounts is kept for each company, corporation or store, each of them
representing a separate ...(1), distinct for accounting purposes from its owners. An entity is
therefore what may be called any organization for which separate accounts are kept.
If a group of companies is treated as a single entity because the shareholders are the same,
the accounting statements issued are called ...(2) statement.
Assets are the economic ...(3) of an entity or we may say that assets are what the
company ....(4). The claims of different parties against the assets of a company/entity are called ...
(5). They are subdivided into liabilities and owners’equity. ...(6) are the claims of the creditors of
a company, people from outside the organization.
In a double- ...(7) bookkeeping system of accounting, the basic accounting ....(8) is Assets =
Equity, as the two parts of an account must be balanced. An extended formulation of the equation
will be Assets = Liabilities + owners’Equity. Assets are subdivided into two broad categories: ...
(9) assets and fixed assets.
Current assets are those that are part of the operating cycle of a business and are likely to be
turned into ...(10) within one year. Here we include what is sometimes called ...(11) assets, that is
funds readily available such as cash deposited in ...(12) accounts in banks, Treasury ...(13), that
can be redeemed in three months, certificates of deposit, marketable securities, debtors (U.K.), or
accounts ...(14) (U.S.A.) should also be included here. Insurance policies expiring within one year
can be added to the category of current assets.
...(15) assets include tangible assets such as plants, buildings, factories, land, that is those
assets that cannot be ...(16) into cash as they are required for the operation of the entity. Some ...
(17) assets, that cannot be readily computed and turned into cash, can be added to the category of
fixed assets. Examples in this respect are patents, trademarks, copyrights.
Liabilities are what the company ...(18) to people/corporations outside the entity. Here we
include obligations of the company to supply money, goods or services to other parties.
Current liabilities are those ....(19) due for payment within one year. They refer to creditors
(U.K.) or accounts ...(20) (U.S.A.), taxation payable, and other debts due for payment in the near
future.
– 112 –
Long-term liabilities are to be ...(21) at some distant time. Examples are long-term
borrowings or mortgages.
Bills; consolidated; cash; current (2 times); entity; entry; equation; equities; fixed;
falling; intangible; liabilities; liquid; owes; owns; paid; payble; receivable; resources;
turned.

Merchandise inventory represents the value of goods that are ……. hand for sale to
customers. 2. It must show that the firm's assets are equal ……. its liabilities plus its owners'
equity. 3. The firms' liabilities are separated ……. two groups—current and long-term—on the
balance sheet. 4. Long-term liabilities are debts that need not be repaid for ….. least one year. 5.
These are both expenses that have been incurred during the current accounting period but will be
paid ….. the next accounting period. 6. The amount that is allotted …. each year is an expense for
that year, and the value of the asset must be reduced …. that expense. 7. Following that are
marketable securities—stocks, bonds, and so on—that can be converted ……. cash …… a matter
of days. 8. The balance sheet is prepared …… the end of the accounting period, which usually
covers one year.
B) COMPLEX VERBS
Put the suitable verb in each gap to form a complex verb with the adverbial particle
off:
to cut; give; go; keep; pay; run; see; switch; take; turn; write.
1. As the debtor has gone under, the creditor will have to … off the debt. 2. The plane ….
off at 10 and two hours later it landed. 3. The bombs … off. 4. The fire has …. off a tremendous
heat. 5. While speaking on the phone with an important client I …. off. 6. Her father … her off
without a penny. 7. … off the grass! 8. Could you … me off three copies of the document? 9. …
off the radio, please, I can’t concentrate on my work if it is on. 10. Don’t …off the light yet. 11.
My friends came to the airport to …. me off. 12. The ship’s crew has been … off.
IV. Group the following under the appropriate headings:
property (US estate), patents, stocks and shares, Treasury bills, goodwill, creditors,
equipment, taxation payable, copyright, bills receivable, mortgages, debtors, trade marks,
buildings, certificates of deposit, franchise, production plants, vehicles, debts due to trade, loan
capital
ASSETS LIABILITIES
debtors creditors
IV. Consider your own capital, or personal wealth. Make a list of all your main capital
possessions, add up the values to get your net capital asset worth.
– 113 –
-
house/flat (= market value – value of mortgage) ......................
-
car/vehicle (= current value – value of any loans on it) .....................
-
market price (current saleable value) of: .....................
electrical equipment (TV, hi-fi, etc.) ......................
musical instruments ......................
computer ......................
books ......................
- cash at bank (minus any debts) .....................
- investments (any shares you own) ......................
- other possessions (jewellery, clothes, etc.) ......................
Total capital worth
......................
Total value:
V. DISCUSSION POINT
Discuss in groups of three:
1. Bankers usually insist that prospective borrowers submit audited financial statements
along with a loan application. Why should financial statements be audited by a CPA?
2. What can be said about a firm whose owners’ equity is a negative amount? How could
such a situation come about?
3. Why is it so important to compare a firm’s financial statements with those of previous
years, those of competitors, and the average of all firms in the industry in which the
firm operates.
4. Do the balance sheet and the income statement contain all the information you might
want as a potential lender or stockholder? What other information would you like to
have?
VI. CASE STUDY

The case method of the study of business is commonly used in graduate and under-graduate
business training. It requires study of one specific example of a business problem which typifies a
wider business problem of concern to the students. After considering the case (problem)
presented, the student should be able to apply knowledge gained to his own business needs.
The aim of the case study is to propose the best possible solution and to defend that solution
as strongly as possible. Typically, the solution is written in a special report form, which includes
consideration of the following:
1. Background – a short summary of the most important information found in the case.
This acts as an introduction to the next section.
2. Statement of the Problem – a concise statement of the major problem.
3. Discussion of the Problem – a lengthy discussion of all information related to the main
problem; discuss here, also, the point of view from which you are going to be studying
the problem (i.e., are you taking the position of a manager, consultant, employee).
4. Alternative Solutions – a list of all possible solutions to the problem.
5. Analysis of the Alternatives – an analysis of each of the alternative solutions stated
above. Note the advantages and disadvantages of each.
6. Selection of the Best Alternative – an explanation of which alternative you have
selected and why it was chosen.
7. Implementation – an explanation of how the solution is to be put into effect.
– 114 –
Study the situation below and think about the questions given at the end, as a group, write a
formal solution to the case.
A Classic Case of Accounting Fraud
In 1967, Equity Funding Life Insurance Company reported sales of $54 million and
insurance in force totaling $109 million. By 1972, sales had grown to $1.32 and insurance in force
had jumped to $6.5 billion. In the same five-year period, corporate profits increased nearly
eightfold. For at least the first nine months of 1972, Equity Funding was ranked among the top ten
American life insurance companies. It was the fastest-growing life insurance company in the
USA.
In early March 1973, acting on a tip from a former employee, investigators began to look
into the company’s activities. By March 27, trading in Equity’s stock was suspended by the New
York Stock Exchange. The price of the stock had dropped almost ten points in a week, to less than
$15 a share. Shortly, after that, the stock was declared to be of “no value”. Equity’s 7,000
stockholders had lost at least $114 million.
The investigators found that, of the 97,000 policies listed on the books of an Equity Funding
subsidiary, approximately 58 percent were nonexistent. Moreover, other insurance companies that
had bought these policies as reinsurers had paid millions of dollars for nothing.
Reinsurance or the practice of a company’s issuing an insurance policy to a customer and
then selling the policy to another insurance company to acquire cash, is not unusual in the
insurance business. What was unusual in the Equity case was that there were no policyholders
behind most of the policies. Nearly two-thirds of what the company claimed as its insurance
business was based on bogus policies!
The chairman and the president of Equity Funding received an annual salary of $100,000. In
addition, in 1972 he was given a stock bonus then worth more than $150,000. He was a respected
Los Angeles business leader, who until January 1972 had served as chairman of the business
conduct committee of the Los Angeles branch of the National Association of Securities Dealers.
He had a home with a gymnasium and tennis courts, a Rolls Royce, and a 35-foot yacht. On
November 1, 1973, he and eighteen other executives of Equity Funding were indicted on 105
criminal counts. They were charged with committing felonies that included securities fraud, mail
fraud, bank fraud, electronic eavesdropping, and filing false documents with the Securities and
Exchange Commission.
At the time, Equity Funding had a highly computerized accounting system that facilitated
the mixing of phony policies with genuine policies. However, the hoax could easily have been
discovered if the policies on the books had been verified with their supposed owners.
Unfortunately, not one auditor for an outside accounting firm ever confirmed a policy directly
with a policyholder until after the rumors of fraud began to circulate.
It is not surprising that traditional auditing techniques failed to detect the phony policies.
The company’s policies looked valid, and auditors generally tend to believe the computer. In the
wake of the Equity Funding scandal, the American Institute of Certified Public Accountants
formed a committee to study the techniques used in auditing insurance companies and to
determine how they should be changed. One change was to require that auditors obtain policy
information directly from policyholders.
Questions
1. Can strict accounting requirements stop fraudulent business practices? What group or
groups should develop such requirements? Who should implement them?
2. How might an employee at Equity Funding have discovered the fraud? What would
you have done if you were that employee?
– 115 –
7. MANAGEMENT
“Good management is better than good income”

Portuguese proverb
1. Become aware of what management is
2. Understand the four basic management resources
7.1 Management Resources

tangible (adj) that can be touched, material, real, palpabil ощутительный,
having real existence, осязаемый, реальный
fiber-glass (n) glass made of plastic sticlă organică стекловолокно
assembly line (wc) production line linie de producţie линия производствa
house (v) to provide or serve as a a găzdui, a adăposti, a поселять, помещать
house for, to store in a depozita
house
day-care center a medical institution that centru de ingrijire a центр здоровья
can provide services for sănătăţii
protecting the health
incentive (n) stimulus stimulent побудительная причина
perk (n) thing used to recover facilitate, înlesnire льгота
one’s spirit, benefit
wholesaler (n) person who sells in bulk angrosist оптовый торговец
check-out counter (n) cash desk casă de achitare касса
tuition (n) money paid for plată pntru învătămînt плата за обучение
education
endowment (n) money given to a college investiţie, dotare вклад, пожертвование
or another institution to
provide it with an
income
utility bills bills used to pay for gas, bonuri de plată pentru счета за коммунальные
water, electricity serviciile comunale услуги
prop-fan (short for avion de pasageri авиалайнер
propeller) airliner
Management is the process of coordinating the resources of an organization to achieve

the primary goals of the organization. Most organizations make use of four kinds of
resources: material, human, financial, and informational.
Material resources are the tangible, physical resources that an organization uses. For example,
General Motoros uses steel, glass, and fiber-glass to produce cars and trucks on complex machine-
driven assembly lines. Both the assembly lines and the buildings that house them are material
resources, as are the actual materials from which vehicles are built. A college or university uses books,
classroom buildings, desks and computers to educate students. And the Mayo Clinic uses beds,
operating room equipment, and diagnostic machines to provide health care.
Perhaps the most important resources of any organization are its human resources – people.
In fact, some firms live by the philosophy that their employees are their most important assets. To
keep people happy, a variety of incentives or perks are used, including higher- than-average pay,
– 116 –
flexible working hours, recreational facilities, day-care centers, lengthy paid vacations, cafeterias
offering inexpensive meals, and generous benefit programs.
Financial resources are the funds that the organization uses to meat its obligations to various
creditors. A Safeway store obtains money from customers at the check-out counters and uses a portion
of that money to pay the wholesalers from which it buys food. Citicorp, a large New York bank,
borrows and lends money. A college obtains money in the form of tuition, income from its
endowment, and state and federal grants. It uses the money to pay utility bills, insurance premiums,
and professors’ salaries. Each of these transactions involves financial resources.
Finally, many organizations are increasingly finding that they cannot afford to ignore
information. External environmental conditions – including the economy, consumer markets,
technology, politics, and cultural forces – are all changing so rapidly that an organization that
does not adapt will probably not survive. And, to adapt to change, the organization must know
what is changing and how it is changing. Companies are finding it increasingly important to
gather information about their competitors in today’s business environment. Companies such as
Ford Motor Company and General Electric are known to collect information about their
competitors. McDonnell Douglas used competitive intelligence to beat Boeing in the development
of a new prop-fan airliner.
I. COMPREHENSION
1. Define the term management and name the kinds of resources it uses.
2. Identify the resources the Academy of Economic Studies of Moldova uses, the
National Bank of Moldova and the Central Hospital.
3. How do these institutions strive to attract employees and keep them happy?

A) Insert prepositions, where necessary:
1. …… fact, some firms live by the philosophy that their employees are their most important
assets. 2. And, to adapt …… change, the organization must know what is changing and how it is
changing. 3. A college obtains money ……. the form of tuition, income …… its endowment, and
state and federal grants. 4. Most organizations make use ….. four kinds of resources: material,
human, financial, and informational. 5. A Safeway store obtains money …… customers ….. the
check-out counters and uses a portion of that money to pay the wholesalers from which it buys
food.
B) Write verbs, nouns and adjectives:

NOUN ADJECTIVE VERB
achievable
information
to produce
educational
diagnosis
to change
various
to philosophize
to recreate
C) Complete the following passages about leadership styles. Fill in the blanks with a,
an, the or 0:
___(1) role of ___(2) leadership in ___(3)management is largely determined by ___(4),
organizational culture of ___(5) company. It has been argued that ___(6) manager’s beliefs,
assumptions and values are of ___(7) critical importance to ___(8) overall style of ___(9)
leadership they adopt.
– 117 –
There are several different leadership styles that can be identified within each of ___(10)
following management techniques: ___(11) Autocrat ___(12) LAISSEZ-FAIRE Manager
___(13) Democrat ___(14) autocratic leader dominates ___(15) team-members, using
___(16) unilateralism to achieve ___(17) singular objective. Generally, ___(18) authoritarian
approach is not ___(19) good way to get ___(20) best performance from ___(21) team.
___(22) Laisser-Faire manager exercises ____(23) little control over his group. ___(24)
Laissez-faire technique is usually only appropriate when leading ___(25) team of motivated and
skilled people, who have produced ___(26) excellent work in ___(27) past. ___(28) democratic
leader makes ___(29) decisions by consulting ___(30) team, whilst still maintaining ___(31)
control of ___(32) group. ___(33) good democratic leader encourages ___(34) participation and
delegates wisely, but never loses ___(35) sight of ___(36) fact that he bears _____(37) crucial
responsibility of ___(38) leadership.
D) Discuss in groups of four what style you would adopt in your future business or
relationship with your collegues, husband/wife, children etc.
III. CASE STUDY
“Trust the technology”
Determined to regain his position at the top of the computer industry, Steven Jobs is betting
his tarnished reputation and a substantial amount of cash on his new brainchild –the NeXT
computer. Jobs is trying to prove that he really can build and manage a successful computer
company, although some business analysts maintain that his triumphs as cofounder of Apple
Computer, Inc. were mostly a fluke. After losing a power struggle at Apple to his one-time friend
John Sculley, Jobs started a company called NeXT, Inc., and, with five formal Apple employees,
attempted to build a revolutionary computer. Because of Jobs’ abilities and personality, and some
impressive engineers feats, he achieved his objectives.
During the three years it took to develop the NeXT computer, Jobs followed a simple
managerial strategy: He demanded devotion, sacrifice, and, most importantly, perfection from his
employees. Leaving Apple with a damaged ego and a reputation for throwing tantrums, Jobs used
his charm and infectious enthusiasm to recruit the best personnel he could. Despite being
extremely demanding at times, Jobs is able to keep morale high at NeXT by providing a work
atmosphere teeming with competency and style. One of the first people Jobs hired after he set up
headquarters in California was an interior designer. NeXT corporate headquarters and high-tech,
automated computer-manufacturing plant are as slick as the NeXT computer itself. From the
headquarters’ polished wood floors, white furniture, and exotic juice-stocked refrigerator to the
stylish gray and black robots, NeXT employees are surrounded by testimonials to their elite (at
least in the eyes of Jobs) standing.
Jobs, a college dropout at 19 and a multimillionaire by 26, claims he is a better manager now
then when he was at Apple. Today, in his thirties, he is proud of his new management style. “I
think to myself as a pretty good operations person, ” says Jobs. “I am concerned about how things
are going to work at NeXT and how to avoid too many layers of management. I don’t sit around
in a dark room with a crystal ball. A lot of macro insights come after you’ve spent time on
microscopic detail.”
Jobs designed the NeXT computer especially for the academic community. Before product
development began, he surveyed faculty members of thirty universities to determine what
professors and students wanted in a personal computer. Some computer experts have expressed
surprise and skepticism about Jobs’ pursuit of the academic market. The competition from other
firms to supply colleges and universities with computers is fierce, and college students might have
a difficult time paying the $ 6,500 price (a NeXT laser printer costs an additional $ 2,200).
– 118 –
Nevertheless, Jobs is as confident as he ever was. He firmly believes in a slogan he often quotes
to his employees: “Trust the technology”.
Questions
1. How would you characterize Steven Jobs’ leadership style?
2. Would you like to work for Jobs? Why or why not?
– 119 –
V. READING
A brief history of management
“The end justifies the means” N. Machiavelli
Ancient records in China and Greece already indicate the importance of organization and
administration. Outstanding scholars have referred to management activities in the running of cities,
states and empires. The Roman also effectively used many basic management ideas, e.g. the scalar
principle and the delegation of authority. In the period 1400 to 1450, merchants in Venice, Italy,
operated various types of business organizations, such as partnerships, trusts and holding companies.
Concepts of the ideal state were considered by many 16th century writers and philosophers. In Thomas
More’s Utopia, for example, his comments upon the reform of the management of Britain were
radical. In his best known work The Prince, Niccolo Machiavelli of Florence puts forth ideas which
are still relevant today. The management of change states today that if you want your plans to be
carried out you need to rely on the consent of the majority of people – exactly what Machiavelli was
teaching his student a few centuries before. The object of writing the Prince was to assist a young
prince in acquiring techniques of leadership. Machiavelli suggested that the leader should inspire
people to greater achievements, offer rewards and incentives, and take advantage of all opportunities.
He considered that survival was the main objectives of any organization and no matter what measures
were taken to achieve this end, they should be taken. Scientific management was developed in 19th
century. Frederic W.Taylor (1856-1917), an American engineer, was one of the main people to be
associated with this movement. In 1911 he published his book Principles of Scientific Management
in which he argued that work should be studied and analyzed in a systematic and throughout way. The
foundations of the administrative management were laid by a French engineer Henry Fayol (1841-
1925) in his book “Administration industrielle et generale”. Max Weber (1864-1920) was a German
academic with a university training in law and some years of experience as a civil servant. He became
a professor of economics and one of the founders of German sociology. In his own design for an
organization, Weber describes the bureaucracy. The word was originally a joke and nowadays it has a
distinctly negative connotation, but to Weber it represented the ideal type for any large organization.
In his conception the real authority is in the rules and the power of the officials. We are looking at a
model of the organization as a well-oiled machine, which runs according to the rules.
Present a short overview of how basic management ideas appeared in various moments
of history.
V. DISCUSSION
1. Is management an art or a science? An instinct or a set of skills and techniques that
can be taught?
2. What do you think makes a good manager? Which four of the following qualities
taken from job advertisements for managerial positions do you think are the most
important?
a. being a good communicator and team-builder
b. being a committed, innovative self-starter
c. having excellent organizational, planning and analytical skills
d. demonstrating problem solving skills
e. being able to direct and delegate work
f. being a strategic thinker with the ability to follow through
g. being able to prioritize effectively
h. being result-oriented
i. having leadership skills: being able to motivate, inspire and lead people
j. being decisive: able to make quick decisions
– 120 –
k. being friendly and sociable

l. being authoritative: able to give orders
m. being persuasive: able to convince people to do things
n. having good ideas
VI. VOCABULARY PRACTICE

A) Complete the following sentences with these words:
Achieved, board of directors, communicate, innovation, supervise, manageable,

performance, resources, setting
1. Managers have to decide how best to allocate the human, physical and capital
_________ available to them.
2. Managers, logically, have to make sure that the jobs and tasks given to their
subordinates are _______.
3. There is no point in _______ objectives if you do not _________ them to your staff.
4. Managers have to _________ their subordinates, and to measure, and try to improve
their _______.
5. Managers have to check whether objectives and targets are being _______.
6. A top manager whose performance is unsatisfactory can be dismissed by the
company’s _______.
7. Top managers are responsible for the _______ that will allow a company to adapt to a
changing world.
B) Choose the best alternative to complete each sentence:

1. You must keep staff _______, especially when things get difficult.
a. generated b. motivated c. frustrated d. electrified
2. Weigh up the _______ of each alternative before deciding.
a. checks and balances b. assets c. pros and cons d. profits
3. A good manager must be able to handle _______ situations.
a. sensible b. impressive c. touching d. touchy
4. He decided to let things _______, so he dropped the subject until later.
a. freeze b. ice over c. cool down d. flare up
5. It’s always difficult when a team is working _______ a deadline.
a. in b. at c. to d. opposite
6. Try to ensure that each employee’s _______ is not too great.
a. workload b. working place c. work-to-rule d. working part
7. Those who can’t manage their time efficiently always have high stress _______.
a. grades b. standards c. performances d. levels
8. I hope the project continues to run as _______ as it has so far.
a. calmly b. confidently c. smoothly d. wisely
9. After _______ many unforeseen obstacles they just managed to meet their deadline.
a. overtaking b. overcoming c. overwhelming d. overriding
10. What can we do to improve _______ in this department?
a. morale b. morality c. moral d. temperament
7.2 Basic Management Functions
1. Define the key words: goal, purpose, mission, objective, plan, optimization,
strategy
– 121 –
2. Understand the four basic management functions: goal setting and planning,
organizing, leading and motivating, and controlling

English English equivqlents Romanian Russian
end state result
means (n) methods, way mijloc, cale средства
go about (ph.v) come about a reieşi исходить
morale (n) the amount of stare morală моральное состояние
enthuasism that a person
has
retailer (n) person who sells by vânzător cu amănuntul розничный торговец
pieces
to span time to take time a lua timp брать время
be consistent with in accord, compatible a corespunde cu быть согласованным с
frills (n.pl.) superfluous thing added adăugări ненужные украшения
for smth
insight (n) a clear understanding of înţelegere, perspicacitate проницательность
the inner nature
versus (prep) in contrast with contra против
to be sought-after to be in great demand a se bucura de success пользоваться успехом
outline (n) a general plan without schiţă план
details
threaten (v) to be a menacing a ameninţa угрожать
indication of (danger,
harm, distress)
promote (v) to advertise
occur (v) to happen a surveni случаться
bookkeeper (n) person who keeps a socotitor счетовод
systematic record of
business transactions
to assist with to give help to a ajuta содействовать,
помогать
to be spurred on to be motivated a fi motivat быть мотивированным
ongoing (adj) that is going on, actually care continuă продолжительный
in process, continuing
standing plan set plan plan stabilit установленный план
policy linie de conduită, politică линия поведения,
политика
A number of management functions must be performed if any organization is to succeed.

Some seem to be most important when a new enterprise is first formed or when something is
obviously wrong. Others seem to be essentially day-to-day activities. In truth, however, all are
part of the ongoing process of management.
I. Goal Setting and Planning

A goal is an end state that the organization is expected to achieve. Goal setting, then, is the
process of developing a set of goals. Every organization has goals of several types.
The most fundamental type of goal is the organization’s purpose, which is the reason for the
organization’s existence. Texaco Inc.’s purpose is to earn a profit for its owners. Houston
Community College System’s purpose is to provide an education for local citizens. The purpose
of the Secret Service is to protect the life of the president. The organization’s mission is the
means by which it is to fulfill its purpose. Apple Computer attempts to fulfill its purpose by
manufacturing computers, whereas Ford Motor Company fulfills the same purpose (making a
profit) by manufacturing cars. Finally, an objective is a specific statement detailing what the
– 122 –
organization intends to accomplish as its goes about its mission. For McDonald’s, one objective
might be that all customers will be served within two minutes of their arrival.
Goals can deal with a variety of factors, such as sales, company growth, costs, customer
satisfaction, and employee morale. They can also span various periods of time. The goals
developed for these different levels must be consistent with one another. However, it is likely that
some conflict will arise. A production department, for example, may have a goal of minimizing
costs. One way to do this is to produce only one type of product and offer no “frills”. Marketing,
on the other hand, may have a goal of maximizing sales. And one way to implement this goal is to
offer prospective customers a wide range of products with many options available. As part of his
or her own goal setting, the manager who is ultimately responsible for both departments must
achieve some sort of balance between such competing or conflicting goals. This balancing process
is called optimization. The optimization of conflicting goals requires insight and ability.
Once goals have been set for the organization, managers must develop plans for achieving
them. A plan is an outline of the actions by which the organization intends to accomplish its
goals. The processes involved in developing plans are referred as planning. Just as it has several
goals, the organization should develop several types of plans.
An organization’s strategy is its broadest set of plans and is developed as a guide for major
policy setting and decision making. A firm’s strategy defines what business the company is in or
wants to be in and the kind of company it is or wants to be. When the Surgeon General issued a
report linking smoking and cancer in the 1950s, top management at Philip Morris Companies
recognized that the company’s very survival was threatened. Action was needed to broaden the
company’s operations. Major elements in the overall Philip Morris strategy were first to purchase
several non-tobacco-related companies and then to aggressively promote the company’s products.
As a result of its strategy, Philip Morris seems to have attained the goal of being less dependent
on tobacco sales.
Most organizations also employ several narrower kinds of plans. A tactical plan is a
smaller-scale (of smaller size) plan developed to implement a strategy. If a strategic plan will take
five years to complete, the firm may develop five tactical plans, one covering each year. Tactical
plans may need to be updated periodically as conditions and experience dictate. Their narrower
scope permits them to be changed more easily than strategies.
Another category of plans is referred to as standing plans. These result from – and
implement – decisions that have previously been made by management. A policy is a general
guide for action in a situation that occurs repeatedly. A standard operating procedure (SOP) is a
plan that outlines the steps to be taken in a situation that arises again and again. A SOP is thus
more specific than a policy. For example, a Sears, Roebuck department store may have a policy of
accepting deliveries only between 9 a.m. and 4 p.m. Standard operating procedure might then
require that each accepted delivery be checked, sorted, and stored before closing time on the day
of the delivery.
II. Organizing the Enterprise

After goal setting and planning, the second major function of the manager is organization.
Organizing is the grouping of resources and activities to accomplish some end result in an
efficient and effective manner. Consider the case of an inventor who creates a new product and
goes into business to sell it. At first, he will probably do everything himself – purchase raw
materials, make the product, advertise it, sell it, and keep his business records up to date.
Eventually, as his business grows, he will find that he needs help. To begin with, he might hire
a professional sales representative and a part-time bookkeeper. Later he might need to hire full-
time sales personnel, other people to assist with production, and an accountant. As he hires each
new person, he must decide what that person will do, to whom that person will report, and
generally how that person can best take part in the organization’s activities.
III. Leading and Motivating
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The leading and motivating functions are concerned with the human resources within the
organization. Leading is the process of influencing people to work toward a common goal.
Motivating is the process of providing reasons for people to work in the best interests of the
organization. Together, leading and motivating are often referred to as directing.
We have already noted the importance of an organization’s human resources. Because of
this importance, leading and motivating are critical activities. Obviously, different people do
things for different reasons – that is, they have different motivations. Some are primarily
interested in earning as much money as they can. Others may be spurred on by opportunities to
get ahead in an organization. Part of the manager’s job, then, is to determine what things motivate
subordinates and to try to provide those things in a way that encourages effective performance.
IV. Controlling Ongoing Activities

Controlling is the process of evaluating and regulating ongoing activities to ensure that goals
are achieved. Managerial control involves both close monitoring of the progress of the
organization as it works towards its goals, and the regulating and adjusting required to keep it on
course.
The control function includes three steps. The first is setting standards, or specific goals to
which performance can be compared. The second step is measuring actual performance and
comparing it with the standard. And the third step is taking corrective action as necessary. The
results of this third step may affect the setting of standards.
I. COMPREHENSION
1. What are the purpose and the mission of a neighborhood restaurant? Of the Academy
of Economic Studies of Moldova? What might be reasonable objectives for these
organizations?
2. How do a strategy, a tactical plan, and a policy differ? What do they all have in
common?
3. What exactly does a manager organize, and for what reason?
4. Why are leadership and motivation necessary in a business where people are paid for
their work?
5. What is controlling and what does it involve?
B) Say if the statements are True or False:

1. Together, leading and motivating are often referred to as planning.
2. Controlling is the process of evaluating and regulating ongoing activities to ensure
that goals are achieved.
3. If a strategic plan will take five years to complete, the firm may develop five tactical
plans, one covering each year.
4. The most fundamental type of goal is the organization’s mission, which is the reason
for the organization’s existence.
5. The objective of the Secret Service is to protect the life of the president.
6. An organization’s strategy is its broadest set of plans and is developed as a guide for
major policy setting and decision-making.
7. Obviously, different people do things for the same reasons – that is, they have the
same motivations.
8. Part of the manager’s job, then, is to determine what things motivate subordinates and
to try to provide those things in a way that encourages effective performance.
9. The leading and motivating functions are concerned with the material resources within
the organization.
10. Optimization is a difficult process.
– 124 –

A) Insert the following prepositions into the gaps:
1. The leading and motivating functions are concerned …. the human resources within the
organization. 2. However, if profit has increased by only 1 percent after three months, some
corrective action would be needed to get the firm …… track. 3. Some are primarily interested …..
earning as much money as they can. 4. Later he might need to hire full-time sales personnel, other
people to assist ……. production, and an accountant. 5. Finally, an objective is a specific
statement detailing what the organization intends to accomplish as its goes ……. its mission. 6.
When faced …… the marketing-versus-production conflict we have just described, most
managers would probably not adopt either viewpoint completely. 7. The goals developed for these
different levels must be consistent …… one another. 8. A firm’s strategy defines what business
the company is …. or wants to be in and the kind of company it is or wants to be. 9. Others may
be spurred ….. by opportunities to get ahead in an organization. 10. The particular action that is
required depends … the reason for the low increase in profit.
III. DISCUSSION
Work in pairs and discuss the following issues:
You are the owner and only employee of a firm that you started this morning. Your firm is
to produce and sell hand-sewn canvas pants to clothing stores. (You, of course are an expert
tailor).
a) Write out your firm’s purpose, its mission, and at least two of its objectives.
b) Write out your firm’s sales strategy and a tactical plan that follows from the sales
strategy. Make sure the strategy is in keeping with your goals.
c) Write out one sales policy to be followed by your firm, and one SOP that implements
the policy.
IV. VOCABULARY PRACTICE

Goal, goal setting, purpose, mission, objective, plan, planning, strategy, tactical plan,
policy, standard operating procedure, organizing, leading, motivating, directing, controlling.
1. the processes involved in developing plans

2. a general guide for action in a situation that occurs repeatedly
3. the process of evaluating and regulating ongoing activities to ensure that goals are
achieved
4. the means by which an organization is to fulfill its purpose
5. a specific statement detailing what the organization intends to accomplish as its goes
about its mission
6. the combined processes of leading and motivating
7. an end state that the organization is expected to achieve
8. the broadest set of plans and is developed as a guide for major policy setting and
decision-making
9. the process of influencing people to work toward a common goal
10. the process of developing a set of goals
11. a plan that outlines the steps to be taken in a situation that arises again and again
12. the grouping of resources and activities to accomplish some end result in an efficient
and effective manner
13. a smaller-scale plan developed to implement a strategy
14. the process of providing reasons for people to work in the best interests of the
organization
15. an outline of the actions by which the organization intends to accomplish its goals
– 125 –
16. the reason for the organization’s existence
V. WRITING
A) Translate into English:
Planul de afaceri – itinerarul succesului
Este mult mai uşor să ajungi într-un loc necunoscut, dacă ai informaţii precise şi o hartă
bună. La fel stau lucrurile şi în cazul înfiinţării unei firme. Ştiţi deja că doriţi să fiţi propriul dvs.
şef. Poate că ştiţi şi ce fel de firmă doriţi să deschideţi. Dar puteţi atinge acest ţel?
Itinerarul pe care îl urmează întreprinzătorii se numeşte „plan de afaceri”. Planul de afaceri
este alcătuit din răspunsuri sistematice la o serie de întrebări bine cumpătate, vitale pentru
iniţierea unei afaceri viabile.
Cînd vorbesc despre un plan de afaceri, oamenii se referă, de obicei, la un document scris.
Dar planul de afaceri nu este numai un document. El este procesul de definire şi evaluare a
viitoarei companii. Alcătuirea acestui plan este prima ocazie de a vă organiza firma. În ciuda
importanţei sale, perspectiva cercetărilor necesare elaborării unui plan de afaceri îi agasează pe
mulţi viitori proprietari de mici firme. Aceştia vor să deschidă firma acum, nu să stea să răspundă
la întrebări referitoare la o idee despre care sunt siguri că le va aduce bani. Ei nu văd rostul
analizării unei firme care nici măcar nu există încă.
Rostul este următorul: un plan de afaceri este esenţial, pentru că va scoate în evidenţă
eventualele probleme, încă înainte ca acestea să se ivească, şi va sugera soluţii, făcîndu-vă să
economisiţi timp, bani şi dureri de cap.
B) Business Communications
When one applies for a position with an American company, the letter of application cannot
and should not contain all the information a prospective employer wants to know about you. The
resume will accompany your letter of application, and this is where most of the details about you
will appear. The letter of application should serve as a suplement to the resume.
You may begin your letter of application by stating exactly what work you are seeking. Be
very specific about this. If you know of a job opening within the company, refer specifically to
that position. Also, if some person from that company told you of the job opening, you may want
to begin your first paragraph by mentioning this person by name. At any rate, you should begin
your letter by mentioning the job you are seeking and perhaps by mentioning your source of
information about the job.
The second paragraph is important becuse this is where you tell more about yourself than the
resume can tell. In this paragraph you should try to distinguish your application from all the
others. Here you may elaborate on some job experience or training which does not stand out on
the resume but which may particularly qualify you for the job. Be careful not to make this
paragraph too long. Like all good business communications, the letter of application must be
concise and to the point.
To help you write the second paragraph, find out all you can about the company and the job
opening before writing the letter. If you can make specific references to the company’s needs and
how you can fulfill them, your chances of getting a job interview will be much better.
Close the letter with a request for an interview. Be careful to clearly state your desire for an
interview and your willingness to accomodate their schedule in arranging the interview.
The overall tone of the letter should be pleasant and honest. You do not want to attempt to
over-impress the employer with your talent or knowledge.
Review the sample letter of application given below. After studying its sections and tone,
write your own. In writing this letter, assume you are writing to some specific company for a
specific position. You may want to write to one of the utility companies explaining how you may
– 126 –
be of service to them (some of the utilities needed managers while others needed investment
bankers).
January 23, 19-

2987 E. Peach St.
Dallas, TX 74639
Ms. Joan B. Willis
Personnel Department
Diamond Oil Company
New York, NY 10003
Dear Ms. Willis:
I have spoken to your Dallas representative, Mr. James Schultz, and he informed me that
your company is in need of someone having an FCC Communication Technician license.
As my resume indicates, while working for the Magnolia Oil Company, I have used my
FCC technical skills for eight years. In fact, I was among the first technicians to receive this
training. Not only did I use my training in performing my work duties, I also served as an in-
house trainer for those technicians planning to apply for FCC licensing. In the course of these
eight years with Magnolia Oil, I have gained experience with most of the electronic testing and
maintenance equipment used in the oil industry.
Please refer to the enclosed data sheet for details on both my education and work experience.
There you will also find the names of persons willing and able to comment on my ability and
character.
Because of the extreme distance between Dallas and New York, I will be glad to interview
with your dallas representative or with you by telephone. I can arrange either at your company’s
convenience.
Respectfully,
Mark T. Riley
Enclosure: Resume
VI. Match the characteristics of „great managers” with their explanations.

How to be a great manager
Great managers accept blame Weak managers feel threatened by other people’s strength. Great
managers see strength as things to be built on, and weakness as
something to be accomodated, worked around, if possible,
eliminated.
Great managers give praise Not as drastic as it sounds! What great managers do is learn new
skills and acquire useful information from the outside world, and
then immediately pass them on, to ensure that if they were to be run
down by a bus, the team would still have the benefit of new
information. No one in an organisation should be doing that work
that could be accomplished equally effectively by someone less paid
than themselves.
Great managers make blue sky This is probably the most under-used management tool. Great
managers are forever trying to catch their people doing something
right, and congratulating them on it. Managers who regularly give
praise are in a much stronger position to criticise or reprimand poor
performance. If you simply comment when you are dissatisfied with
performance, it is all too common for your words to be taken as a
straightforward expression of personal dislike.
Great managers put themselves about The old-fashioned approach to management was rather like the old-
fashioned approach to child rearing: „Go and see what the children
are doing and tell them to stop it!” Great managers have confidence
that their people will be working in their intersts and do everything
they can to create an environment in which people feel free to
– 127 –
express themselves.
Great managers judge on merit When the big wheel from head office visits and expresses
displeasure, the great manager immediately accepts full
responsibility. In everyday working life, the best managers are
constantly aware that they selected and should have developed their
people. Errors made by team members are in a very real sense their
responsibility.
Great managers exploit strengths, not A great more difficult than it sounds. It’s virtually impossible to
weaknesses, in themselves and in divorce your feelings about someone – whether you like or dislike
their people them – from your view your actions. But suspicion of discrimination
and favouritism are fatal to the smooth running of any team, so the
great manager accept this as an aspect of the game that really needs
to be worked on.
Great managers make things happen Very few people are comfortable with the idea that they will be doing
exactly what they are doing today in 10 years’time. Great managers
anticipate people’s dissatisfaction.
Great managers make themselves Most managers now accept the need to find out not merely what their
redundant team is thinking, but what the rest of the world, including their
customers is saying. So MBWA (management by walking about) is
an excellent thing, though it has to be distinguished from MBWAWP
(management by walking about – without purpose), where senior
management wander aimlessly, annoying customers, worrying staff
and generally making a nuisance of themselves.
7.3 Levels and Areas of Management
1. Distinguish among the various kinds of managers, in terms of both level and area
of management
2. Identify common titles for top managers, middle managers and lower-level
managers

overall (adj) general general общий
fortunes (n. pl.) money, or possessions, bogăţii, averi богатства
riches, wealth
to reach the rank of to attain the rank of a ajunge la rang de достичь положения
chief executive officer president of the company preşedinte al companiei, президент компании
(n) director executiv
chief operating officer chief responsible for director operativ, главный операционный
(n) production director principal директор компании
operaţional al corporaţiei
chief administrative principal administrator administrator, şef главный администратор
officer
chief financial officer chief responsible for the trezorier главный финансовый
financial situation of the директор компании
company
hand down (ph.v) to transmit a împuternici приказать
plant (n) enterprise, factory, întreprindere, uzină, завод
works fabrică
former (adj) ex fost бывший
foreman (n) a person in charge of a şef, supravighetor, мастер, бригадир,
department or a group of conducător de lucrări, şef прораб
persons, supervisor, de brigadă
convert into transform into a transforma în превращать
– 128 –
advertising (n) publicity publicitate реклама

appraise (v) evaluate (v) a aprecia, a evalua оценивать
passage of time movement of time cu trecerea timpului течение времени
guidance (n) leadership conducere, dirijare руководство
in many respects as regards în multe privinţe во многих отношениях
Levels of Management:
Top Managers A top manager is an upper-level executive who guides and controls the
overall fortunes of the organization. Top managers constitute a small group. In terms of planning,
they are generally responsible for interpreting the organization’s purpose and developing its
mission. They also determine the firm’s strategy and define its major policies. It takes years of
hard work and determination, as well as talent and no small share of good luck, to reach the ranks
of top management in large companies. Common titles associated with top managers are
president, vice president, chief executive officer (CEO), and chief operating officer (COO).
Middle Managers A middle manager is a manager who implements the strategy and major
policies handed down from the top level of the organization. Middle managers develop tactical
plans and standard operating procedures, and they coordinate and supervise the activities of
lower-level managers. Titles at the middle-management level include division manager,
department head, plant manager, and operations manager.
Lower-Level Managers A lower-level manager is a manager who coordinates and
supervises the activities of operating employees. Lower-level managers spend most of their time
working with and motivating employees, answering questions, and solving day-to-day problems.
Most lower-level managers are former operating employees who, owing to their hard work and
potential, were promoted into management. Many of today’s middle and top managers began their
careers on this lowest management level. Common titles for lower-level managers include office
manager, supervisor, and foreman.
Areas of Management:
The most common areas of management are: finance, operations, marketing, human
resources, and administration.
Financial Managers A financial manager is a manager whose primary responsibility is
the organization’s financial resources. Accounting and investment are specialized areas within
financial management. Because financing affects the operation of the entire firm, many of the
presidents of this country’s largest companies are people who got their “basic training” as
financial managers.
Operations Managers An operations manager is a manager who creates and manages the
systems that convert resources into goods and services. Traditionally, operations management has
been equated with manufacturing – the production of goods. However, in recent years many of the
techniques and procedures of operations management have been applied to the production of
services and to a variety of nonbusiness activities. Like financial management, operations
management has produced a good percentage of today’s company presidents.
Marketing Managers A marketing manager is a manager responsible for facilitating the
exchange of products between the organization and its customers or clients. Specific areas within
marketing are marketing research, advertising, promotion, sales and distribution.
Human Resources Managers A human resources manager is a person charged with
managing the organization’s formal human resources programs. He or she engages in human
resources planning; designs systems for hiring, training, and appraising the performance of
employees; and ensures that the organization follows government regulations concerning
employment practices. Because human resources management is a relatively new area of
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specialization in many organizations, there are not many top managers with this kind of
background. However, this situation should change with the passage of time.
Administrative managers An administrative manager (also called a general manager) is
a manager who is not associated with any specific functional area but who provides overall
administrative guidance and leadership. A hospital administrator is a good example of an
administrative manager. He or she does not specialize in operations, finance, marketing or
personnel management but instead coordinates the activities of specialized managers in all these
areas. In many respects, many top managers are really administrative managers.
I. COMPREHENSION
A) Review Questions
1. How are the two perspectives on kinds of managers – that is, level and area – different
from each other?
2. Compare the three kinds of managers: top, middle, and lower-level managers.
3. What are the liabilities of other kinds of managers according to the areas of
management?

A) Insert the following prepositions into the gaps:
1. …. many respects, many top managers are really administrative managers. 2. A human
resources manager is a person charged …… managing the organization’s formal human
resources programs. 3. Traditionally, operations management has been equated …..
manufacturing – the production of goods. 5. Common titles associated …….. top managers are
president, vice president, chief executive officer (CEO), and chief operating officer (COO). 6. A
middle manager is a manager who implements the strategy and major policies handed …….
……. the top level of the organization. 7. Many of today’s middle and top managers began their
careers ….. this lowest management level.
B) Write nouns, verbs or adjectives:

NOUN VERB ADJECTIVE
to manage
operation
financial
to administer
control
organizational
promotion
to exchange
specialized
regulations

top manager, middle manager, lower-level manager, financial manager, operations

manager, marketing manager, human resources manager, administrative manager
1 a manager who creates and manages the systems that convert resources into goods and
services.
2. a manager responsible for facilitating the exchange of products between the
organization and its customers or clients.
3. a manager who coordinates and supervises the activities of operating employees.
4. a person charged with managing the organization’s formal human resources programs.
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5. an upper-level executive who guides and controls the overall fortunes of the
organization.
6. a manager who implements the strategy and major policies handed down from the top
level of the organization.
7. a manager whose primary responsibility is the organization’s financial resources.
8. a manager who is not associated with any specific functional area but who provides
overall administrative guidance and leadership.
B) Find the definitions of the following terms. Put the letter of the term next to the
definition.
a. Executive vice president
b. Division management
c. Group vice president
d. Senior vice president
e. CEO (chief executive officer)
f. Corporate planning
g. Operations management
__________ 1. Person with total responsibility for all decision making in the
corporation.
__________ 2. High executive officer with a title sometimes felt to have special
prestige.
__________ 3. Administration of a company branch or section.
__________ 4. Aspect of management including systematic consideration of planning,
problem solving, forecasting, and decision-making.
__________ 5. Vice president in charge of one part of the company.
__________ 6. A vice president with general decision-making responsibility directly
under the president.
__________ 7. The systematic work of forecasting and taking into account corporate
responsibilities.
IV. DISCUSSION
In small groups discuss which of the following qualities are more likely to characterize
today’s top manager:
- Charismatic/efficient
- Thrilling/disciplined/business like
- Visionary/pragmatic
- Glamorous looks/business looks
- Intelligent/genius/good organizer
V. Focus on Language
Un- is the most common negative prefix followed closely by in (ex: intelligent-
unintelligent)
Im – usually precedes a word beginning with a “p”(ex: partial – impartial)
Ir – usually precedes a word beginning with an “r” (ex: regular-irregular)
A) The following adjectives are generally used to describe some of the qualities of
managers. Change each adjective into its opposite by adding un, in, im, ir, or dis: Use
dictionaries:
1. approachable 13. intelligent
2. articulate 14. loyal
3. assertive 15. patient
4. committed 16. practical
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5. communicative 17. rational

6. consistent 18. reliable
7. cooperative 19. responsible
8. competitive 20. sensitive
9. creative 21. sincere
10. decisive 22. skilled
11. discreet 23. supportive
12. honest
VI. Business Communications
Oral presentations
In speaking, unlike writing, the listener cannot go back to what has already been said to hear
it a second time. When you speak to a group, you should make your audience understand
everything you say. This means your pronunciation must be clear, your speaking must not be too
fast, and your information must be well organized.
First of all, you must speak as clearly as possible. Since you speak English as a second
language, it is your responsibility to make sure that what you say is clearly pronounced. Avoid too
much informality and too many contractions. For example, do not say, “gonna” for “going to”
when speaking to a group. Also, if your pronunciation is not clear, the listener may confuse your
words.
Be sure to keep your speech fast enough that your audience remains interested, but do
not speak so quickly that your listeners cannot keep up with what you are saying. For
example, it is very easy to go too fast if you read directly from your notes. Reading will
probably bore your audience, anyway. Always use brief notes when giving an oral
presentation. It is often convenient to use three-by-five-inch notecards. Using only notes, and
not the full text of your presentation, will help you remember the main things you want to say
while at the same time allowing you to look at your audience as you speak. By looking at your
audience, you can determine whether or not they are understanding. Remember to use simple
language, speak slowly, and use notes to help you remember what to say, and look at your
audience.
Finally, be certain that your information is well organized. You should give a very clear
introduction, which states (1) what your main topic is going to be and (2) what your main
points will be in the course of the presentation. Then, discuss each main point in a logical,
organized, step-by-step manner. Finally, state your conclusions. Look at the exercise VII.
VII. SCENARIO: Management decision-making

Divide the class into teams of three “managers” each. All the teams have the following
problem: you manage a shirt factory which has declining output per worker, a rising number of
defects per 100 units of production, and, as a result, rising per unit costs.
Among the three managers of each team, discuss the problem and make a tentative plan for
correcting the problem. Consider the following in making your plans: hiring quality control
specialists, tracing the defects to their source, employee retraining, showing an interest in the
workers’ work, redesigning the product, and buying newer and better equipment. When each
group has finished its plans, they should be presented to the class as a whole. Then the class may
consider the best ideas from each group and form one comprehensive plan of action to get
production back to efficiency.
VIII. DEBATE
Form two teams to debate the qualifications needed for executives:
Team A: Modern candidates for a corporate presidency should have a corporate degree in
business or a related field (preferably an MBA), should have a wide variety of professional
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experiences with several corporations, and should not be over 50 years of age. Education,
mobility (and thus flexibility), diversity of experience, and youthfulness are necessary qualities.
These qualities reflect the needs of modern business.
Team B: Modern business is no different than business has always been. Sound
executive-level judgment still requires that a person have many years of professional
experience within his industry and within his corporation. Years of experience are more
important than a graduate degree in business. Having mobility and diversity of experience are
not, then, as important as having lengthy experience within the industry and corporation. At
the presidential level, the lack of experience and understanding of the young are undesirable.
– 133 –
7.4 Key Management Skills
Learning Objectives:
1. Know the key management skills
2. Identify the management roles in which these skills are used

lawyer (n) barrister avocat адвокат
machinist (n) person who makes or mecanic, maşinist, машинист, механик,
repairs machinery muncitor calificat, слесарь
inginer, constructor de
maşini
to a lesser extent to a lesser degree, level într-o măsură mai mică в меньшей степени
to fit together to correspond to a conveni, a se asorta подходить
put up with (ph.v.) accommodate with a se acomoda мириться с чем-л.
shabby (adj) disgraceful, shameful indecent, obraznic позорный
genuine (adj) authentic nefalsificat подлинный, истинный
arrogant (adj) full of pride and self- arogant высокомерный,
importance самонадеянный
brash (adj) pushing, presumptuous, arogant, încrezut, fără высокомерный,
impudent, immodest, ruşine самонадеянный
shameless
pinpoint (v) to stress a evidenţia, a indica cu выделять
precizie
physician (n) doctor medic врач, доктор
The skills that typify effective managers tend to fall into five general categories: technical,
conceptual, interpersonal, diagnostic, and analytic.
Technical Skills A technical skill is a specific skill needed to accomplish a specialized
activity. For example, the skills that engineers, lawyers, and machinists need to do their jobs are
technical skills. Lower – level managers (and, to a lesser extent, middle managers) need the
technical skills that are relevant to the activities they manage. Although these managers may not
have to perform the technical skills themselves, they must be able to train subordinates, answer
questions, and otherwise provide guidance and direction.
Conceptual Skills Conceptual skill is the ability to think in abstract terms. Conceptual
skill allows the manager to see “the big picture” and to understand how the various parts of an
organization or an idea can fit together. In 1951 a man named Charles Wilson decided to take his
family on a cross - country vacation. All along the way, the family was forced to put up with high-
priced but shabby hotel accommodations. Wilson reasoned that most travelers would welcome a
chain of moderately priced, good-quality roadside hotels. You are no doubt familiar with what he
conceived: Holiday Inns. Wilson was able to identify a number of isolated factors (existing
accommodation patterns, the need for a different kind of hotel, and his own investment interests)
to “dream up” the new business opportunity and to carry it through completion.
Interpersonal Skills An interpersonal skill is the ability to deal effectively with other
people, both inside and outside the organization. Examples of interpersonal skills are the ability to
relate to people, understand their needs and motives, and show genuine compassion. When all
other things are equal, the manager who is able to exhibit these skills will be more successful than
the manager who is arrogant and brash and who doesn’t care about others. They appear, however,
to be more crucial for top managers than for middle or lower-level managers.
Diagnostic Skills Diagnostic skill is the ability to assess a particular situation and identify
its causes. The diagnostic skills of the successful manager parallel those of the physician, who
assesses the patient’s symptoms to pinpoint the underlying medical problem. In management as in
medicine, correct diagnosis is often critical in determining the appropriate action to take. All
– 134 –
managers need to make use of diagnostic skills, but these skills are probably used most by top
managers.
Analytic Skills Analytic skill is used to identify the relevant issues (or variables) in a
situation, to determine how they are related, and to assess their relative importance. All managers,
regardless of level or area, need analytic skills. Analytic skills often come into play along with
diagnostic skills. For example, a manager assigned to a new position may be confronted with a
wide variety of problems that all need attention. Diagnostic skills will be needed to identify the
causes of each problem. But first the manager must analyze the problem of “too many problems”
to determine which problems need immediate attention and which ones can wait.
I. COMPREHENSION
A) Answer the following questions;
1. Name the skills that managers need to possess and characterize each of them.
2. In what way are management skills related to the status managers have? Provide a
specific example to support your answer.

A) Study the text and insert the following prepositions into the gaps:
1. All managers need to make use ….. diagnostic skills, but these skills are probably used
most by top managers. 2. All along the way, the family was forced to put up …. high-priced but
shabby hotel accommodations. 3. An interpersonal skill is the ability to deal effectively …..
other people, both inside and outside the organization. 4. Lower – level managers (and, ….. a
lesser extent, middle managers) need the technical skills that are relevant ….. the activities they
manage. 5. You are no doubt familiar …… what he conceived: Holiday Inns. 6. For example, a
manager assigned …. a new position may be confronted ….. a wide variety of problems that all
need attention. 7. Analytic skills often come …… play along with diagnostic skills.
B) Verbs plus prepositions

Certain verbs are customarily followed by certain prepositions. It is often impossible to
guess which preposition is mostly common used. The following is a list of examples of such
verbs. When you learn a verb you should make an attempt to learn the prepositions that ordinarily
follow it, if any.
To collaborate with someone on something
To consult with someone on something
To haggle with someone over something
To negotiate with someone for something
To deprive someone of something
To dispose of something
To protect someone/something from something/someone
To profit from someone/something
To enroll someone in something
To invest something in something/someone
To entitle someone to something
To rely on someone/something for
C) Complete the sentences with the proper preposition or prepositions:
1. In any case, protect yourself _______ precipitous action.
2. Is it really safe to rely entirely _______ hunches ________ correct decisions?
3. In fact, too much reliance on hunches may deprive you _______ much helpful input.
4. It is a good idea not to be too hasty; consult _________ your peers about the problem.
5. Collaborate _______ them in determining the primary objectives to be achieved.
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6. Give yourself time to consider; haggle ______ the prices or spend time negotiating
____ a prospective buyer or seller before playing hunch.
7. Whereas you must not dispose ________ a problem without the greatest possible
deliberation, playing a hunch may save you considerable time for other problems.
8. You will profit _______ a delicate balance between data gathering and hunches, and
your careful work will entitle you _______ well-deserved recognition.
III. DISCUSSION
Work in pairs and discuss the following issues:
Rate yourself on each of the five key management skills and on your proven ability to
perform each of the four management functions. (Use the scale of 1 to 5, with 5 being the
highest.) Based on your ratings, explain why you would or wouldn’t hire yourself for a lower-
level management position.
Technical skills Conceptual Skills Interpersonal Skills Diagnostic Skills Analytic Skills
IV. VOCABULARY PRACTICE

analytic skill, conceptual skill, technical skill, interpersonal skill, diagnostic skill
1. the ability to deal effectively with other people, both inside and outside the
organization.
2. the ability to assess a particular situation and identify its causes.
3. the ability to think in abstract terms.
4. a specific skill needed to accomplish a specialized activity.
5. the ability to identify the relevant issues (or variables) in a situation, to determine how
they are related, and to assess their relative importance.
B) Fill in the blanks with an appropriate form of one of the following words:
foreman indebtedness
academicians mutual fund
ingenious intuitive
fair employment practices associates
safeguards computer software
Scientists and ___________ are helping business understand its __________ to hunches and
__________ knowledge. Howard Stein, chairman of Dreyfus Corp., successfully launched a
special ______________ made up of computers which complied with environmental __________
and _____________. Also, Edgar Mitchell and his __________ use intuitive information along
with ________. They interview managers, ________, and workers in the process of creating
_____________ “fault trees”.
VI. CASE STUDY
Management Practices at CBS
In the past, Laurence Tisch, CEO at Columbia Broadcasting System (CBS), proved himself
to be a first-rate accountant and financial wizard. So it is no surprise that this confident and
articulate man has been hurt because many observers have openly questioned his ability to run
CBS. CBS’s current board of directors, network affiliates, and investors have harshly criticized
Tishch’s strategy at CBS or, more precisely, his lack of a concrete company strategy. However,
– 136 –
others claim that Tisch’ decisions at CBS have been excellent and have brought financial stability
to the firm.
Before Tisch came along, CBS was a diverse entertainment giant. CBS/Records group was
the world’s largest company. Tisch sold CBS records to Sony Corp. (for $2 billion), just when the
compact-disc revolution began to breathe a strong rush of air into the music industry. Tisch sold
CBS,s publishing holdings to Harcourt Brace Jovanovich, Inc., and its magazine division to
Diamandis Communications, Inc. And, while ABC is expanding its commitment to cable
programming – by investing in such networks as ESPN, Lifetime, and Arts & Entertainment
Network-and NBC (which has been trying to increase its involvement in cable for years) is now
leasing the Tempo Television Network, Tisch sold off CBS’s interests in Rainbow Services (a
cable programming venture) and several regional SportsChannelnetworks.
Tisch argues that he wants to concentrate on broadcasting, even though the evening viewing
audience for CBS programs has diminished by two million households since Tisch took
command. Tisch says that CBS will regain its lead in the broadcast industry with improved
programming, aggressive promotion to attract new viewers, and marketing innovations that appeal
to advertisers. Some television analysts expect Tisch’s plans to fail; they think that CBS must
diversify to grow at a time when network television is shrinking so dramatically.
Tisch’s management style irritates many people. He hates memos, meetings, and traditional
channels of communication. Though decisions at CBS are now made more rapidly, the
bureaucratic culture of the company has been upset. Over a two-year period after Tisch became
CEO, CBS reduced its work force from 16,000 to 6,800 employees. Its revenues also shrank, from
about $5, billion to $2.8 billion a year, and it slipped to last place in the crucial A.C. Nielsen Co.
television ratings. In contrast, when Capital Cities took over ABC and made cuts as deep as
CBS’s in the work force, ABC ratings improved.
One of CBS’s directors said in a recent Business Week interview: “We are not happy. Tisch
has dismantled the company in a piecemeal fashion, and it’s too late to stop him. We’ve asked for
a plan or a strategy. But it’s not in his nature to lay out a strategy”. Tisch’s credit, CBS did land
the 1992 Winter Olympic Games, and the company has more than $3 billion in the bank. Stock
analysts, however, are still predicting a dull future for CBS. But, since Tisch controls nearly 25
percent of CBS’s stock, Tisch’s critics and dissatisfied colleagues will probably have to accept
this way of doing business for a long time.
Questions
1. Does the fact that Tisch does not like memos, meetings and traditional channels of
communication indicate that he is not an effective manager?
2. Given that several groups, such as the board of directors, network affiliates, and
investors, have been critical of Tisch’s actions, should he take corrective measures?
Explain.
VI. DEBATE
Form two teams to debate the value of hunches (definite feelings that something may be
true).
Team A: Hunches, or intuitive feelings, should not be given serious consideration in
managerial decision-making. Note that precisely how the mind puts the things together has never
been adequately charted; therefore, we cannot define the hunch nor can we assess its reliability.
Team B: Hunches should be given serious consideration when making managerial
decisions. Note that some Gestalt psychologists say that sudden ideas come from the information
processed unconsciously and that in many cases such ideas are very reliable and more creative
than those reached in the normal way.
Allow each team five to seven minutes of group preparation followed by a three-minute
presentation (timed by a watch). Allow time for a rebuttal of three minutes by each team.
– 137 –
VII. Managing yourself

When a customer comes into your shop with a complaint, you can deal with it in a number
of different ways. You can:
- give cash refund
- give a voucher for the value of the returned goods
- exchange the goods for something of the same value
- give a straight exchange
- persuade the customer to wait while you contact the supplier
When a customer complains, it can be difficult not to take the complaint personally. This
can make you behave aggressively, which can then make the customer feel angry. If this happens,
a good strategy is to count to ten. This allows you to get your anger under control before you
speak.
There are three different approaches to dealing with possible conflict with customers:
1. You want to get your customer to accept your point of view
2. You want the customer to be happy
3. You want to find a solution, which satisfies both you and the customer.
The third approach is obviously the most adult and professional, but it doesn’t always come
naturally. For most people, it requires practice!
VII. ROLE-PLAY
Role – play the following situation using the third approach in the text.
Student A
You bought a pair of jeans last week. But when you washed them, they lost colour and
shrank. They were good quality jeans and you didn’t expect to have problems with them.
However, you bought them in a sale at a reduced price.
Student B
You are the manager of the shop. The jeans were reduced in your end of season sale. They
were regular stock and were not bought in especially for the sale. Your shop has a policy of
exchanging faulty goods but not those bought in the sales.
Useful language
I’m afraid it’s not our policy to ………
But I’m telling you ……………………
I bought these in your shop two weeks ago………..
I washed them once and ……………
I’m sorry. We usually …….
Would you like to exchange it for ……..
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8. MARKETING
“Marketing is the creation and delivery of a standard of living”
8.1 Utility: The Value Added by Marketing
1. Define Marketing
2. Explain how it creates utility for purchasers of product
3. Trace the evolution of marketing

utility (n) usefulness avantaj, folos полезность
form utility usefulness appeared after utilitate apărută în urma полезность, которая
processing the product prelucrării produsului появляется после
обработки продукта
inn (n) hotel or motel
place utility utility which appears utilitate apărută în urma полезность, которая
after bringing the aducerii produsului în появляется после
product at the place of locul cererii приношения продукта
demand на место спроса
time utility utility caused by offering utilitate cauzată de oferta полезность, вызванная
the goods in time mărfii la timp предложением товара
вовремя
possession utility utility which appears utilitate apărută în urma полезность, которая
after purchasing the achiziţiei produsului sau появляется после
product or service a serviciului приобретения продукта
или услуги
title of a product right to ownership of a drept de proprietate право на продукт
product asupra produsului
sales slip bill issued by the seller, cec de casă eliberat de кассовый чек,
receipt vînzator выписываемый
продавцом
along with together with concomitent cu совместно с
conception (n) general notion, concept concepţie, idee, noţiune идея, понятие,
концепция
promotion (n) futherance of the publicitate, reclamă реклама, рекламный
popularity, sales,by pentru un produs материал
publicizing and
advertising
The history of marketing may be nearly as long as the history of man on earth. In its earliest
form, the market may have consisted of only two people. Each knew that the other had something
he wanted at that time: some grain, an animal, or a tool. The two people simply exchanged their
goods. In order to have a fair exchange, they both had to agree on the value or utility of what they
were offering for trade. But barter had its problems. If one man exchanged a cow for 200 fish, he
might not be able to use all 200 fish, and so he would lose both his cow and the value of the fish he
could not use. People then began to accept certain objects in exchange for any product. They had to
agree on the value of these objects, which became the first money. Some people began to specialize
in the production of goods for other people, and others began to offer services. An increasingly
complex marketing system was born.
As a society’s total economy becomes more complex, so does the function of marketing.
Production becomes more highly specialized. Producers and consumers become more widely
separated, and so do the centers of production and consumption. A huge distribution network is
– 139 –
necessary to move goods to consumers. Marketing which has been defined as “the performance of
business activities that direct the flow of goods and services from producer to consumer or user,”
thus is crucial to all phases of business.
Today, the buyer or consumer’s desires must be satisfied. The entire concept of marketing
has changed in recent years. The following chart contrasts the old and the new concepts
The old concept of marketing emphasized The new concept of marketing emphasizes
technological research market research
creating a market identifying a market
the product the consumer
a narrow line of products a broad range of products
product performance customer needs and desires
selling as the major activity seeing all marketing activities as parts of one system
sales profits customer satisfaction
goods as products goods, services, and ideas as products
Marketing is today everywhere. The producer, or the consumer, may be a person, a group, a
firm, an institution, an organization, a government. The product can be a consumer good: a head
of lettuce, a pencil, a washing machine – anything bought by the ultimate consumer for his own
use. It may be an industrial good, bought by a government or institution; to be resold; or to be
used in the production of other goods. The product could be a service, such as cutting hair,
performing a marriage, providing insurance or a hotel room. It may be an idea: “Don’t drive after
drinking”, “Protect wildlife”.
The marketing environment is the same for all. For all, it is necessary to gather market
information, choose target markets, study consumer behavior, and develop strategies for
production, channeling, promotion, and pricing.
The American Marketing Association defines marketing as “the process of planning and
executing the conception, pricing, promotion, and distribution of ideas, goods and services to
create exchanges that satisfy individual and organizational objectives. ”
Utility is the power of a good or service to satisfy a human need. For a housewife, a can
opener has utility. A lunch at a Pizza Hut, an overnight stay at a Holiday Inn, and a Mercedes 420
SEL all satisfy human needs. Each possesses utility.
Form utility is utility that is created by converting production inputs. Marketing efforts may
indirectly influence form utility because the data gathered as part of marketing research are
frequently used to determine the size, shape and features of a product.
The three kinds of utility that are directly created by marketing are place, time, and
possession utility. Place utility is utility that is created by making a product available at a location
where customers wish to purchase it. A pair of shoes is given place utility when it is shipped from
a factory to a department store.
Time utility is utility that is created by making a product available when customers wish to
purchase it. For example, tennis shoes might be manufactured in December but not displayed until
April, when customers in a northern city start thinking about summer sports. By storing the shoes
until they are wanted, the manufacturer or retailer provides time utility.
Possession utility is utility that is created by transferring title (or ownership) of a product to
the buyer. For a product as simple as a pair of shoes, ownership is simply transferred by means of
a sales slip or receipt. For such products as automobiles and homes, the transfer of title is a more
complex process. Along with the title to its product, the seller transfers the right to use that
product to satisfy a need.
Time, place, and possession utility have real value in terms of both money and convenience.
This value is created and added to goods and services through a wide variety of marketing
activities-from research indicating what customers want to product warranties ensuring that
customers get what they pay for. Overall, these marketing activities account for about half of
– 140 –
every dollar spent by consumers. When they are part of an integrated marketing program that
delivers maximum utility to the customer, most of us would agree that they are worth the cost.
Place, time, and possession utility are only the most fundamental applications of marketing
activities. In recent years, marketing activities have resulted from a broad business philosophy
known as the marketing concept.
I. COMPREHENSION
A) Comment on:
1. Who can be the producer or the consumer? What can be a product?
2. Define the terms “marketing” and “utility”.
3. Identify the differences between the four kinds of utility and give examples of it.
4. How is value created and added to the goods?
B) Read the following definitions of marketing and use them as a basis to formulate
your own definition of marketing:
1. “Marketing is too important to be left to the marketing department” (David Packard).
2. “In a truly great marketing organization, you can’t tell who’s in the marketing
department. Everyone in the organization has to make decisions based on the impact
on the consumer”. (Stephen Burnett).
3. “Most people mistakenly think of marketing only as selling and promotion ….. This
does not mean that selling and promotion are unimportant, but rather that they are part
of a larger marketing mix, a set of marketing tools but work together to affect the
marketplace.” (Philip Kotler)
4. “The aim of marketing is to make selling superfluous. The aim is to know and
understand the customers so well that the product or service fits him and sells itself.”
(Peter Drucker)
5. “Marketing is the performance of business activities that direct the flow of goods and
services from producer to consumer.”
6. “Marketing is getting the right goods and services to the right place, at the right time,
at the right price with the right communication and promotion.”

1. …….. a product as simple as a pair of shoes, ownership is simply transferred by means
….. a sales slip or receipt. 2. For such products as automobiles and homes, the transfer ….. title is
a more complex process. 3. Time, place, and possession utility have real value ….. terms of both
money and convenience. 4. Overall, these marketing activities account …… about half of every
dollar spent by consumers. 5. A lunch ….. a Pizza Hut, an overnight stay ….. a Holiday Inn, and a
Mercedes 420 SEL all satisfy human needs.
B) Language Note (Sentence linkers)

Look at these ways of linking the different parts of sentences.
Gert decided to run Columbia herself because she needed money to repay her husband’s
loan; but she didn’t have any management experience, and the company accountant resigned, so
she had a lot of problems at first.
1. We use because and so when we want to give the reason for an action or decision.
These words can appear in a different position in the sentence.
She decided to run the company because she needed money.
Because she needed money, she decided to run the company.
She needed money, so she decided to run the company.
– 141 –
2. We use but for contrast, when an action or decision is different from what we would
normally expect.
She decided to run the company, but she didn’t have any management experience.
3. Normally, we don’t begin a sentence with so, but, or and.
C) Fill in the spaces in the sentences with because, so, or but. The first one is done
for you.
1. The company is recruiting 100 new employees this year so it is moving to larger
offices.
2. We’re sending her to the Madrid office ….. she speaks good Spanish.
3. The flight was delayed ….. he was late for the meeting.
4. The rooms in the hotel were very comfortable ….. the food in the hotel restaurant
wasn’t good.
5. He can’t be our new Financial Director ….. he isn’t a qualified accountant.
6. Last year, sales increased by eight per cent ….. profits fell by two per cent.

A) Insert the words into the gaps. A synonym is given in parentheses before each
blank.
value characteristics firm
system primitive brief
network appropriate principles
crucial concept behavior
broad
1. A company should offer a (wide) _________ range of products.

2. The (company’s) _________’s (way of acting) __________ was contrary to (guiding
ideas) ___________ of good management.
3. It’s (absolutely vital) ____________ for a marketer to have a (whole idea) _________
of the (worth, importance) ____________ of developing marketing strategy.
4. Goods follow a (complex path) ___________ or _________ from producer to
consumer.
5. (Qualities) ___________ of a (beginning, undeveloped) ___________ economy
include the use of barter.
6. The manager’s (short) ______________ statement to his salesmen was (apt, suitable)
_____________; it helped them correct their mistakes.
B) Using a dictionary, fill in missing word family members.
verb noun adjective

competition
produce
consumer
industrial
promotion
lose
technological
govern
economy
satisfactory
decide
emphasis
different
– 142 –
C) List the opposites:

excluding __________________ more expensive _____________
primary ___________________ up to date __________________
slower ____________________ organized __________________
bought ____________________ youth ______________________
failure ____________________ the same ____________________
within _____________________ single product ________________
worst ______________________ domestic trade _________________
decline _____________________ weak _______________________
IV. DISCUSSION
A) Work in pairs
You and your partner are managers in the same company. You have a number of problems.
1. One solution is suggested for each problem. Think of some more.
Problem Suggested solution Other solutions

A new competitor, BRP, took 5% Reduce your prices.
of your market share last year.
Your main supplier, TED West, Find a new supplier.
often delivers late (but their prices
are the lowest in the town).
The best candidate for the post of Employ her.
Personnel Manager is a woman,
but she is expecting a baby in four
month’s time.
Not enough staff are using the Close the canteen.
company canteen; many of them
are buying sandwiches in Pret a
Manger.
B) Now discuss each problem, following these guidelines:

Managing Director Financial Director
What do you think we should do? I think we should ….. because …..
I don’t think we should ….. because ….. I agree…../I don’t agree ….. because …..
Why don’t we …../ How about …..?
8.2 The Marketing Concept.

Its Evolution and Implementation
Learning Objectives:
1. Trace the development of the marketing concept
2. Understand how it is implemented

potential (adj) would-be potenţial, posibil возможный
assess (v) appreciate a aprecia, a evalua оценивать
bank on (v) rely on a se bizui pe полагаться на
output (n) production producţie продукция, выпуск
catch up with (ph.v) to attain a ajunge, a se apropia de догнать
un nivel oarecare
consistently (adv) consecutiv, logic, логично, совместимо,
– 143 –
corespunzător последовательно
approach (n) means of attaining a goal abordare подход
to fill the needs to satisfy the needs a satisface necesităţile удовлетворять нужды
to meet expectations a atinge aşteptările соответствовать
ожиданиям
to pinpoint to point out a evidenţia выделять
The process that leads any business to success seems simple. First, the firm must talk to its
potential customers to assess their needs for its products or services. Then the firm must develop a
product or service to satisfy those needs. Finally, the firm must continue to seek ways to provide
customer satisfaction. This process is an application of the marketing concept, or marketing
orientation. As simple as it seems, American business took about a hundred years to accept it.
From the start of Industrial Revolution until the early twentieth century, business effort was
directed mainly toward the production of goods. Consumer demand for manufactured products
was so great that manufacturers could almost bank on selling everything they produced. Business
had a strong production orientation, in which emphasis was placed on increased output and
production efficiency. Marketing was limited to taking orders and distributing finished goods.
In the 1920s, production began to catch up with demand. Now producers had to direct their
efforts toward selling goods to consumers whose basic wants were already satisfied. This new
sales orientation was characterized by increased advertising, enlarged sales forces, and
occasionally high-pressure selling techniques. Manufacturers produced the goods they expected
consumers to want, and marketing consisted primarily of taking orders and delivering goods,
along with personal selling and advertising.
During the 1950s, however, business people started to realize that even enormous
advertising expenditures and the most thoroughly proven sales techniques were not enough.
Something else was needed if products were to sell as well as expected. It was then that business
managers recognized that they were not primarily producers or sellers but rather were in the
business of satisfying customers’ wants. As Philip E. Benton, Jr., president of Ford Automotive
Group, states, “What our customers define as quality is what we must deliver. We have re-learned
in recent years that the successful automakers consistently provide customers with what they need
and want, at a price they feel offers good value, in a product that meets their expectations of
safety and quality. Our challenge is to go beyond that – to exceed customer expectations, and,
indeed, to generate customer enthusiasm.” Marketers realized that the best approach was to adopt
a customer orientation – in other words, the organization had to first determine what customers
need and then develop goods and services to fill those particular needs. (see Figure 1.1)
This marketing concept is a business philosophy that involves the entire organization in the
process of satisfying customers’ needs while achieving the organization’s goals. All functional
areas - from product development through production to finance and, of course, marketing - are
viewed as playing a role in providing customer satisfaction.
Figure 1.1
Production orientation Sales Orientation Customer orientation
- Take orders - Increase advertising - Determine customer needs
- Distribute goods - Enlarge sales force - Develop goods and services
- Develop sales techniques to fill needs
Some firms, such as Ford Motor Company and Apple Computer, have gone through minor
or major reorganizations in the process. Because the marketing concept is essentially a business
philosophy, anyone can say, “I believe in it.” But to make it work, management must fully adopt
and then implement it.
– 144 –
To implement the marketing concept, a firm must first obtain information about its present
and potential customers. The firm must first determine not only what customers’ needs are but
also how well those needs are being satisfied by products currently on the market-both its own
products and those of competitors. It must ascertain how its products might be improved and what
opinions customers have of the firm and its marketing efforts.
The firm must then use this information to pinpoint the specific needs and potential
customers toward which it will direct its marketing activities and resources. (Obviously, no firm
can expect to satisfy all needs. And not every individual or firm can be considered a potential
customer for every product manufactured or sold by a firm.) Next, the firm must mobilize its
marketing resources to (1) provide a product that will satisfy its customers; (2) price the product
at a level that is acceptable to buyers and that will yield a profit; (3) promote the product so that
potential customers will be aware of its existence and its ability to satisfy their needs; and (4)
ensure that the product is distributed so that it is available to customers where and when needed.
Finally, the firm must again obtain marketing information – this time regarding the
effectiveness of its efforts. Can the product be improved? Is it being promoted properly? Is it
being distributed efficiently? Is the price too high? The firm must be ready to modify any or all of
its marketing activities on the basis of this feedback.
I. COMPREHENSION
1. Which are the steps that lead any business to success?
2. What was the orientation of business from the beginning of Industrial Revolution?
3. What happened in 1920s?
4. What did business people start to realize in 1950s?
5. Define the term “marketing concept.”
6. Why is the marketing concept essentially a business philosophy?
7. Which are the steps to implement the marketing concept?
B) Say if the statements are True or False:

1. From the start of Industrial Revolution until the early twentieth century, business
effort was directed mainly toward the selling of goods.
2. In the 1920s, production began to catch up with demand.
3. In 1950s marketers realized that the best approach was to adopt a customer orientation
– in other words, the organization had to first determine what customers need and then
develop goods and services to fill those particular needs.
4. Management must fully adopt the accounting concept and then implement it.
5. To implement the marketing concept, a firm must first determine not only what
customers’ needs are but also how well those needs are being satisfied by products
currently on the market-both its own products and those of competitors.
6. Every individual or firm can be considered a potential customer for every product
manufactured or sold by a firm.

1. Some firms, such as Ford Motor Company and Apple Computer, have gone …… minor
or major reorganizations in the process. 2. All functional areas - …… product development
through production to finance and, of course, marketing - are viewed as playing a role …….
providing customer satisfaction. 3. Business had a strong production orientation, in which
emphasis was placed …. increased output and production efficiency. 4. It was then that business
managers recognized that they were not primarily producers or sellers but rather were ….. the
business of satisfying customers’ wants. 5. We have re-learned in recent years that the successful
– 145 –
automakers consistently provide customers …… what they need and want, …… a price they feel
offers good value, in a product that meets their expectations of safety and quality.
B) Some words are commonly followed by certain prepositions. Add appropriate

prepositions – for, on, upon, by, in, to, with, of, over, at, toward, from, - to complete the
remaining phrases. Use your dictionaries.
take responsibility ____ distinguish ____
according ____ purpose ____
appeal ____ means ____
aimed ____ deal ____
compromise ____ respond ____
be faced ____ search ____
put emphasis ____ rely ____
be subject ____ be consistent ____
be applicable ____ arrange ____
the result ____ be dominant ____
give consideration ____ pay ____
be composed ____ look ____
be committed ____ be aware ____
reaction ____ put pressure ____
submit ____ the demand ____
combination ____
C) Insert verbs, adjectives, nouns, and adverbs:
VERB ADJECTIVE NOUN ADVERB
to satisfy
profitable
implementation
successfully
to produce
safe
finance
consistently
A) From the list of the words provided, fill in the blanks in the following
memorandum.
Each word is to be used only one time.
Transactions, retailing, operating, product returns, retailer, warehouses, expanding,

merchandise mix, market, funds, outlets, assemble, consumers, confident.
MEMORANDUM
Date: January 23, 19 –
To: Deborah Boyles
From: Rod Sprague
Subject: Telecommunications in retailing
Deborah, I want some information on the use of telecommunications in the __________
business. Our job is to sell more merchandise and increase our ___________ share. In the past we
have done this by increasing the number of our store ___________ and by ___________ our
sales volume.
– 146 –
However, in the future, ____________ will be shopping at home with a video display
catalog, which will be provided by a participating ______________. Automated __________ will
_________________ the goods and banks will transfer _______________ to pay for the
merchandise.
I am ___________ that these sorts of ___________ will increase. We must prepare an
effective promotion for our goods and we must keep a broad ___________.
Could you please study any possible problems such as ___________, which might lower our
profit margin? Also investigate all _______________ costs.
B) List opposites:
from Consumer “Decision-Making”
disloyalty _________________ unaware ________________
careless ___________________ illogical _________________
dislike_____________________ irregularly _______________
input ______________________ general _________________
to slow _____________________ minority _______________
early ______________________ right (correct) __________
IV. DISCUSSION
A) Which of these do most people want or need?
Entertainment a regular holiday free time a car a house movies

education better food books household appliances mobile phones a tractor
a computer protection gloves and glasses more fresh air money travel
an estate car software seeds clean water tools to work the land with
expensive clothes stationery products
B) Depending on the type of customers listed below, decide in pairs what would each of
them need or want, and why:
- urban, suburban, rural
- yuppies (young urban professional people), office-workers, factory workers,
unemployed, housewives
- well-paid, badly-paid, average-paid
- well-educated, average-educated, uneducated
C) Match the words in the box with the definitions below:
reliability durability goodwill benchmarking warranty serviceability
1. performance over a long period of time

2. comparing what competitors are doing and adopting the best solutions.
3. accurate, regular performance according to specification.
4. a guarantee or promise that goods will meet a certain specified level, will
be repaired or replaced free of charge in the specified period of time.
5. ease of maintenance and repair
6. customer's satisfaction with and loyalty to a company (hence the
reputation of a company)
8.3 Markets and Their Classification
– 147 –
1. Know what markets are

2. How they are classified
Study and Learn the Words

willingness (n) desire voinţă желание
purchase (n) acquisition achiziţie приобретение
reseller (n) person who buys and recomerciant перекупщик
sells again
broadly (adv) largely pe larg широко
wholesaler (n) person who sells in bulk angrosist оптовый торговец
retailer (n) person who sells by vânzător cu amănuntul розничный торговец
piece
county (n) district of a country regiune округ
highway (n) main road drum principal, şosea шоссе
A market is a group of individuals, organizations, or both who have needs for products in a
given category and who have the ability, willingness and authority to purchase such products. The
people or organizations must require the product. They must be able to purchase the product with
money, goods, or services that can be exchanged for the product. They must be willing to use
their buying power. Finally, they must be socially and legally authorized to purchase the product.
Markets are classified as consumer, industrial, or reseller markets. These classifications are
based on the characteristics of the individuals and organizations within each market. Because
marketing efforts vary depending on the intended market, marketers should understand the
general characteristics of these three groups.
Consumer markets consist of purchasers and/or individual household members who intend
to consume or benefit from the purchased products and who do not buy products to make a profit.
Industrial markets are grouped broadly into producer, governmental, and institutional
categories. These markets purchase specific kinds of products for use either in day-to-day
operations or in making other products for profit. Producer markets consist of individuals and
business organizations that intend to make a profit by buying certain products to use in the
manufacture of other products. Governmental markets comprise federal, state, county, and local
governments. They buy goods and services to maintain internal operations and to provide citizens
with such products as highways, education, water, energy, and national defense. Their purchases
total billions of dollars each year. Institutional markets include churches, private schools and
hospitals, civic clubs, fraternities and sororities, charitable organizations, and foundations. Their
goals are different from such typical business goals as profit, market share, or return on
investment.
Reseller markets consist of intermediaries such as wholesalers and retailers who buy
finished products and sell them for a profit.
After classifying and identifying its market or markets, an organization must develop
marketing strategies to reach this audience.
I. COMPREHENSION
A) Answer the folloing questions:
1. Define the word “market”.
2. Characterize the relationship between people and products.
3. What groups are markets classified in?
4. What criteria guide this classification?
5. Identify the differences and similarities between the kinds of markets.
II. VOCABULARY PRACTICE

– 148 –
Consumer market, governmental market, institutional market, reseller market, industrial

market, producer market
1. A market that consists of intermediaries such as wholesalers and retailers who buy
finished products and sell them for a profit.
2. A market that includes churches, private schools and hospitals, civic clubs, fraternities
and sororities, charitable organizations, and foundations.
3. A market consisting of purchasers and/or individual household members who intend
to consume or benefit from the purchased products and who do not buy products to
make a profit. 4. A market comprising federal, state, county, and local governments.
5. A market that purchases specific kinds of products for use either in day-to-day
operations or in making other products for profit.
6. A market that consists of individuals and business organizations that intend to make a
profit by buying certain products to use in the manufacture of other products.
B) Complete the sentences with appropriate forms of the words in parentheses:

1. (nonprofit, negotiable) Thrift shops are ________________ stores, and sometimes the
prices are _________________.
2. (haggle, defect, merchandise) If the shopper finds __________ in the _____________
she can ________________ over the price.
3. (bin, value) If shoppers look carefully through the __________________ in the stores,
real ______________ can be found.
4. (unload, bear) Department stores use sometimes resale stores to _____________
excess merchandise which may ______________ high-quality labels.
5. (price tag, retail price) The prices on the _____________ are lower than what the
_________ would be.
6. (inventory, go for, deplete) On busy days like Saturdays when shoppers really
_________ low prices, a store’s ______________ may become _______________.
7. (secondhand, consignment) Much of the merchandise in the resale shops is someone’s
_________ clothing which is sold on _____________ .
8. (alter, shrink) Many of the items sold on consignment may not be the same size as is
written on the label because they have _____________ or have been
_______________ .
9. (garment, line) Many of the _______________ found in these stores are from designer
____________ .
10. (wardrobe, apparel) Some people fill their ______________ with secondhand
_______ .

A) Insert propositions:
1. Because marketing efforts vary depending ….. the intended market, marketers should
understand the general characteristics of these three groups. 2. These classifications are based ….
the characteristics of the individuals and organizations ……. each market. 3. They buy goods and
services to maintain internal operations and to provide citizens ….. such products as highways,
education, water, energy, and national defense. 4. Their goals are different ….. such typical
business goals as profit, market share, or return on investment.
B) Complete the missing words in the table:

VERB NOUN
to introduce (a product)
a launch (of a product)
– 149 –
a recall
to withdraw (a product from the market)
to promote
to recover
an increase
to complain
to revise
an image
IV. ROLEPLAY
Interview with a loan officer

Form groups of two or three. One person (or two persons forming a partnership) wants to
begin a business in clothing resale, but does not have enough capital.
Conduct an interview between the loan officer and the person (s) applying for the loan. The
officer must become convinced that the resale clothing business is profitable. Consider the
following points:
Business person (s). Explain that the business is to be a resale shop, not a thrift shop.
Know whether or not the store will handle designer clothing or furs in addition to
regular clothing.
Know what the monthly costs will be, such as rent, merchandise, and salaries.
Have an idea how much money can be made monthly.
Know how much money you want to borrow.
Loan officer. Find out the exact nature of the business.

Find out how other resale shops in the nation are prospering.
Find out whether the business person will get the merchandise.
Find out how quickly the merchandise will sell so that the old merchandise will not
remain in the store for several months.
Find out how large the market is for used clothing.
Find out how prices will be determined.
Find out if the business person will handle ordinary clothing, designer clothing, or
furs.
Find out how quickly the loan can be repaid.
V. DISCUSSION
A) Discuss in pairs:
1. Do resale stores sound like good businesses to go into? Some of the more expensive
garments like designer clothing must be reduced by as much as 75%. Can a profit be
made? Also, isn’t old clothing more difficult to sell than new clothing?
2. Resale stores are a new development. Why have they been created? Is the reason
related to the general strength or weakness of the economy and the rate of inflation?
B) Product and brand

Study the several ways by means of which you could choose a brand name:
• Initials (HBO)
• Numbers (Boeing 77)
• Invented name (Kleenex)
• Personal name (Ford)
• Mythological characters (Samsonite luggage)
• Geographical name (Northwest airlines)
• Foreign word (Lux, Nestle)
– 150 –
• Combination of words, initials, numbers (Head & Shoulders shampoo)
C) Now think of a brand you intend to develop. Discuss in pairs how you would name
your brand and think of other examples.
VI. BUSINESS IDIOMS

Phrasal verbs
Match up the phrasal verbs on the left with the verbs that have a similar meaning on
the right.
1. give up (production) a. accept
2. go along with (the decision) b. decrease, become fewer
3. kill off (a silly project) c. begin to be successful
4. come up with (a new idea) d. continue
5. do without (a pay rise) e. destroy or abandon
6. make room for (further expansion) f. find space to give
7. take off (after performing less well) g. get rid of, discard (because unwanted)
8. throw away (some good ideas) h. have, create ideas
9. weed out (uneconomic departments) i. make up, constitute a figure
10. carry on (in the same old way) j. perform, undertake or do
11. account for (rise in profits) k. produce, launch
12. carry out (a market survey) l. remove (from something larger)
13. (production levels) drop off m. agree to stop or discontinue
14. look ahead to (future) n. survive or live while lacking
15. look for (a new solution) something
o. think about, prepare or plan the
16. bring out (a new product) future
p. try to find
VII.WRITING

1. Dezvoltarea unei game largi de produse permite firmei să acopere о suprafaţă mare
din piaţă şi să delimiteze mai clar principalele segmente de consumatori cărora se
adresează.
2. Procesul de creaţie vizează şi ambalajul noului produs. Acesta trebuie să fie conceput
astfel încât să-i asigure protecţia împotriva agentilor din mediul ambiant, păstrarea
integrităţii formei şi conţinutului în timpul transportului, manipulării şi depozitării.
3. Produsele firmei 3M formeaza о gamă variată, de la dischete la lentile de contact,
flacoane spray pentru aerosoli, echipament medical şi până la bilete adezive pentru
birou.
4. Un sondaj efectuat recent arata că 40 % dintre cumpărători preferă produsele din gama
Palmolive decît Farmec pentru că ambalajul este mai atractiv şi preţul mai scazut.
5. Achiziţionarea unui computer performant a devenit esentială pentru departamentul
nostru acum, când numarul membrilor echipei a scăzut şi volumul de lucrări este în
creştere.
6. Ca urmare a faptului că s-au înregistrat comenzi numeroase în ultima vreme, am
hotărît să folosim noile coduri ale produselor pe care clienţii să le menţioneze pe
formularul de comandă.
– 151 –
8.4 Developing Marketing Strategies
1. Identify the four elements of the marketing mix
2. Become aware of their importance in developing a marketing strategy
3. Comprehend how the marketing environment affects strategic market planning

aimed at directed towards dirijat spre направленный к
market segmentation theory of treating market teoria abordării теория сегментации
approach segmentation segmentării pieţii рынка
target market market that is the object piaţa ţintă
of selling and buying
marketing mix the four elements of complex de marketing, комплекс маркетинга
marketing (product, mix de marketing
price, promotion,
distribution
maintenance (n) keeping menţinere поддержание
promotion (n) advertising promovare, publicitate реклама
be consistent with to correspond to a corespunde соответствовать
total market approach theory of treating the teoria abordării pieţii теория общего рынка
total market totale
undifferentiated theory explaining that in teorie nondiferenţiată недифференцированный
approach the market customers подход
have the same needs
kayak (n) an Eskimo canoe made caiac
of skins completely
covering a wooden
frame except for an
opening in the middle
for the paddler
canoe (n) a narrow light boat with barcă байдарка
its sides meeting in a
sharp edge at each end
market segment a group of individuals or segment al pieţii сегмент рынка
organizations, within a
market, that share one or
more common
characteristics
market segmentation the process of dividing a segmentare a pieţii сегментация рынка
market into segments is
called market
segmentation
apparel (n) clothing, garments îmbrăcăminte, haine, одежда
confecţii
brand name mark name denumirea mărcii название фабричной
марки
package (n) packing ambalaj упаковка
rebate (n) discount reducere скидка
boost (v) to increase, to higher, to a ridica, a face reclamă повышать
advertise
taboos (n, pl) objects, words, actions,
ideas that society does
not permit
– 152 –
To market a product successfully, a marketer must develop a strategy. A marketing

strategy is a plan that will enable an organization to make the best use of its resources and
advantages to meet its objectives. A marketing strategy consists of (1) the selection and analysis
of a target market and (2) the creation and maintenance of an appropriate marketing mix, a
combination of product, price, distribution, and promotion developed to satisfy a particular target
market.
Target Market Selection and Segmentation
A target market is a group of persons for whom a firm develops and maintains a marketing
mix suitable for the specific needs and preferences of that group. In selecting a target market,
marketing managers examine potential markets for their possible effects on the firm's sales, costs,
and profits. The managers attempt to determine whether the organization has the resources to
produce a marketing mix that meets the needs of a particular target market and whether satisfying
those needs is consistent with the firm's overall objectives. They also analyze the strength and
number of competitors already selling in a potential target market. Marketing managers generally
take either the total market approach or the market segmentation approach in choosing a target
market.
Total Market Approach When a company designs a single marketing mix and directs it at
the entire market for a particular product, it is using a total market approach. This approach,
also known as an undifferentiated approach, assumes that individual customers in the target
market for a specific kind of product have similar needs and, therefore, that the organization can
satisfy most customers with a single marketing mix. This single marketing mix consists of one
type of product with little or no variation, one price, one promotional program aimed at everyone,
and one distribution system to reach all customers in the total market. Products that can be
marketed successfully with the total market approach include staple food items such as sugar and
salt, and certain kinds of farm produce. A total market approach is useful only in a limited number
of situations because for most product categories, buyers have different needs. When customers'
needs vary, the market segmentation approach should be used
Market Segmentation Approach The early man who had a cow that he didn’t need would
have had to keep the cow through her old age and death if he had been unable to find someone
else who wanted the cow. He had to identify his market target. That is, from among all the people
he knew, he had to find out first which of them wanted a cow. But it is not the same to want
something and to be able to exchange for it or buy it. He also had to select his market target, to
choose his most likely customers. Then he had to plan and follow his marketing strategy
according to the nature of his best potential market. The process now is called market
segmentation. It recognizes that not everyone needs a certain product, and that a product cannot
be expected to appeal to everyone. The marketing strategy is more efficient if it is aimed at those
people the company can reasonably expect to serve. A firm that is marketing 40-foot yachts
would not direct its marketing effort toward every person in the total boat market. Some might
want a kayak or a canoe. Others might want a speedboat or an outboard-powered fishing boat.
Still others might be looking for something resembling a small ocean liner. Any marketing effort
directed toward such people would be wasted.
Instead the firm would direct its attention toward a particular portion, or segment, of the total
market for boats. A market segment is a group of individuals or organizations, within a market,
that share one or more common characteristics. The process of dividing a market into segments is
called market segmentation. Marketers make use of a wide variety of segmentation bases.
Planning a segmentation strategy involves four steps. The first is to determine the market
segments. Second is to select the appropriate segment as a target market for the prduct. Third is to
develop procedures to serve the selected the segment; and fourth, the program is carried out,
consistently evaluated, and revised if necessary. One method of determining market segments is
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to use demographic data. These are physical attributes of a population. Different groups within a
population have different characteristics.
1. Population. How many people are there all together?
2. Population growth. What is the rate of population growth? How many people will there
be in ten, twenty, or thirty years?
3. Population density. In what areas is the population concentrated. How densely?
4. Mobility. Is the population shifting to or from cities, suburbs, and country?
5. Per capita income. What is the average personal income?
6. Spending patterns. Which group has most often bought which products?
7. Employment. What proportions of the population are working in what occupations?
8. Education. What proportion has had how much schooling?
9. Home ownership. How many people own their own homes? How many rent? How
many live in rooms and apartments?
10. Age. What proportion of the population falls within each group? What are the buying
patterns of each group? (See the table below)
11. Ethnic origin.
Family Life Cycle

This concept identifies potential customers by age, marital status and number and
ages of children.
1.Bachelor stage: young, single individuals
2.Full nest: young married couples with children
a. youngest child under six
b. youngest child six or over
c. older married couples with dependent children
3.Empty nest: older married couples with no children at home
4.Solitary survivors: older single or widowed people
From studying demographic data, the marketing manager might decide to aim his strategy
toward a very specific target, or segment of the population: young mothers of children under six
who live in or near the urban centers of the northeastern part of the country and whose families
have annual income in the low-middle range. This is a strategy of concentration. market
segmentation based upon demographic information is an effective compromise with that
impossible ideal.
Creating a Marketing Mix

A business firm controls four important elements of marketing—elements that it must combine in
such a way as to reach its target market. These are the product itself, the price of the product, the
means chosen for its distribution, and the promotion of the product. When they are combined,
these four elements form a marketing mix.
The firm can vary its marketing mix by changing any one or more of these ingredients. Thus
a firm may use one marketing mix to reach one target market and a second, somewhat different
marketing mix to reach another target market. For example, the Neiman Marcus Group's specialty
retailing businesses—Neiman Marcus, Bergdorf Goodman, and Contempo Casuals—use one
marketing mix for its most affluent and discriminating customers and another mix for younger,
17- to 24-year-old women who are interested in the most fashion-forward apparel available at
moderate prices. Neiman Marcus and Bergdorf Goodman offer the highest possible levels of
customer service to their most affluent customers, while moderate prices are emphasized at
Contempo Casuals. Different products and prices immediately result in different marketing mixes.
The product ingredient of the marketing mix includes decisions about the design of the
product, brand name, packaging, warranties, and the like. Thus, when McDonald's Corp. decides
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on brand names, package designs, sizes of orders, flavors of sauces, and recipes, these are all part
of the product ingredient.
The pricing ingredient is concerned with both base prices and discounts of various kinds.
Pricing decisions are intended to achieve particular goals, such as to maximize profit or even to
make room for new models-The rebates offered by automobile manufacturers are a pricing
strategy developed to boost low auto sales.
The distribution ingredient involves not only transportation and storage but also the
selection of intermediaries. How many levels of intermediaries should be used in the distribution
of a particular product. Should the product be distributed as widely as possible? Or should
distribution be restricted to a few specialized outlets in each area.
The promotion ingredient focuses on providing information to target markets. The major
forms of promotion include advertising, personal selling, sales promotion, and publicity.
The "ingredients" of the marketing mix are controllable elements. The firm can vary each of
them to suit its organizational goals, marketing goals, and target markets. As we extend our
discussion to the firm's overall marketing plan, we will see that the marketing environment also
includes a number of uncontrollable elements.
Marketing Environment
The marketer makes decisions within the framework of that plan that explains how to market
a product. His decisions depend upon many variables, of factors that are constantly changing.
Some variables are internal. The marketer has some control over the variables that affect the
product: its nature, promotion of it, and the path it will follow from producer to consumer, and its
price. But when something is produced, it enters an existing external environment of law,
economy and society or culture. Suppose a company has developed a new kind of light bulb, one
that works better and lasts longer than any other. Laws might exist that regulate its packaging,
labeling, distribution. There could be legal restrictions on safety, advertising, and price. Laws
must discourage or encourage a competitive economy. Even if there are no legal limits, there may
be too much competition from other producers of light bulbs. A company competes not only with
other companies that make similar products, but with all other companies. The marketing mix
consists of elements that the firm controls and uses to reach its target market. In addition, the firm
has control over such organizational resources as finances and information. These resources, too,
may be used to accomplish marketing goals. However, the firm's marketing activities are also
affected by a number of external—and generally uncontrollable—forces.
Economic forces—the effects of economic conditions on customers'
ability and willingness to buy
Legal forces—the laws enacted either to protect consumers or to
preserve a competitive atmosphere in the marketplace
Societal forces—consumers' social and cultural values, the consumer
movement, and environmental concerns
Competitive forces—the actions of competitors, who are in the process
of implementing their own marketing plans
Political forces—government regulations and policies that affect marketing,
whether or not they are directed specifically at marketing
Technological forces—in particular, technological changes that can
cause a product (or an industry) to become obsolete almost overnight
These forces influence decisions about marketing-mix ingredients. Changes in the
environment can have a major impact on existing marketing strategies. In addition, changes in
environmental forces may lead to abrupt shifts in target-market needs. There are some questions
to be answered before trying to enter a foreign market.
Questions about the legal environment
– 155 –
1. To what extent are foreign imports controlled by government regulation? What duties,
tariffs, quotas, and other nontariff barriers are there?
2. Is there a state trading corporation? What is its role? What is its effect on competition?
Questions about the economic environment
1. What is the standard of living? The cost of living? The size of the population relative
to the amount of usable land?
2. What is the extent of economic development?
3. Is there an effective middle class? What is its purchasing power?
Questions about the sociocultural environment
1. Is there a need for the product? Is the attitude toward it the same as it is in this
country?
2. Will people reject the product because of taboos against its name, color, packaging,
unit size, shape?
3. Is the society concerned with the quality of life?
4. How do people dress and act when doing business? Is it appropriate to be casual,
aggressive, punctual, and direct? Is it acceptable to give money to government
officials for their support?
Market segment, marketing strategy, marketing mix, target market, total market approach,
market segmentation
1. A combination of product, price, distribution, and promotion developed to satisfy a

particular target market.
2. The process of dividing a market into segments.
3. A plan that will enable an organization to make the best use of its resources and
advantages to meet its objectives.
4. A group of individuals or organizations, within a market, that share one or more
common characteristics.
5. A group of persons for whom a firm develops and maintains a marketing mix suitable
for the specific needs and preferences of that group.
6. When a company designs a single marketing mix and directs it at the entire market for
a particular product.
B) Find the definitions of the following words. Put the letter of the word next to the
definition.
a. entrepreneur e. conférence i. proposal
b. investment f. policy j. paperwork
c. delegate g. employer k. objective
d. procurement h. agenda l. loan
_____ 1. a person who starts a business and takes a risk for the profit.
_____ 2. a general principle laid down for the guidance of executives in handling their jobs.
_____ 3. a person or business that hires persons for wages or salary.
_____ 4. a list of things to be done.
_____ 5. money spent (capital) in order to gain a profit or interest.
_____ 6. a meeting for consultation or discussion.
_____ 7. work involving reports, letters, forms, etc.
_____ 8. money lent for a period of time.
_____ 9. something purchased.
– 156 –
_____ 10. a plan which is suggested.

_____ 11. one who is authorized to act for or represent others.
_____ 12. a goal or aim.
C) Complete the paragraphs below using the words from the following list:
Segmentation, shown, expenditure, drive agencies, mix, trends, slogans, campaign, costs,
produce, run, leaders.
The total marketing (1) _____ includes service or product range, pricing policy, promotional
methods and distribution channels, but for “world brands” who aim to be market (2) _____, a
large part of marketing (3) _____ goes on (4) _____, a concerted effort is made to promote and
sell more of their products and this will often involve an expensive advertising (5) _____ .
Marketers generally tend to divide markets up into separate groups according to
geographical area, income bracket and so on. This is known as market (6) _____ . But a global
marketing policy will obviously take much less account of local market (7) _____ and concentrate
instead on what different markets have in common.
As global commercials are (8) _____ on TV in many different countries, the advertising (9)
_____ tend to be high and obviously the biggest advertising (10) _____ can (11) _____
commercials on such a global scale. Fortunately, global commercials like those for Malboro
cigarettes and British Airways can be (12) _____ for many years without looking out of date, and
advertising (13) _____ such as “the world’s favourite airline” and “Always Coca Cola”, will
always be universally recognized.
II. COMPREHENSION
Enlarge on:
1. Identify the four elements of marketing that a business firm controls. Give their
definitions and examples.
2. What external and uncontrollable forces affect the firm's marketing activities?
3. In what way can changes in the environment have an impact on existing marketing
strategies?

A) Insert propositions:
1. Different products and prices immediately result …. different marketing mixes. 2. The
promotion ingredient focuses …. providing information …. target markets. 3. A marketing
strategy is a plan that will enable an organization to make the best use ….. its resources and
advantages to meet its objectives. 4. Any marketing effort directed …… such people would be
wasted. 5. Changes ….. the environment can have a major impact ….. existing marketing
strategies. 6.Political forces—government regulations and policies that affect marketing,
whether or not they are directed specifically …… marketing.
VI. DISCUSSION
A) Discuss in groups:
1. Describe how a producer of computer hardware could apply the marketing concept.
2. Is marketing information as important to small firms as it is to larger firms? Explain.
3. How does the marketing environment affect a firm’s marketing strategy?
B) Work in small groups. Your company produces breakfast cereal and you want to
include small gifts in the box to attract young consumers. You need to think of
ideas for gifts that your company can use for market research.
– 157 –
1. First think about your target market. What ages are the children? What interests do
they have?
2. Now brainstorm ideas for as many different gifts and toys as you can.
3. Choose the best idea and work out some details.
- What size is it?
- What colour(s) is it?
- What’s it made of?
- Are you going to pack it? (If so, how?)
4. Draw a picture or diagram of the gift. When you’ve finished, present your idea to the
class. See if they can suggest improvements.
C) Pair-work
Which of the following claims do you agree with?
1. Advertising is essential for business, especially for launching new consumer products.
2. A large reduction of advertising would decrease sales.
3. Advertising often persuades people to buy things they don’t want.
4. Advertising lowers the public’s taste.
5. Advertising raises prices.
6. Advertising often persuades people to buy things they don’t need.
7. Advertising does not present a true picture of products.
8. Advertising has a bad influence on children.
D) In a well-known survey, the Harvard Business Review asked 2,700 top or senior
business managers whether they agreed with these statements. The survey produced some
unexpected results. Which of the following percentages do you think go with which of the
statements above?
41% 49% 51% 60% 72% 85% 57% 90%
F) After matching up these figures and statements, look at the true figures on the next
page. After reading the opinions expressed in the Harvard Business Review survey, do you
want to revise the opinions expressed above?
VII. Match the ideas with the examples of real advertisements, then try to find ten adds
(in newspapers, magazines or TV commercials) that illustrate the ideas below:
1. Ask a question Think IBM
2. Use a two-fold delivery with a twist Never forgets Elephant Memory Systems
3. Show your unique commitment Common sense. Uncommon results David
Ingram and Associates
4. Describe your product in a novel way Liquid jewelry Lorr Laboratories (nail polish)
5. Link company name to product benefit Does she or doesn’t she? Clairol
6. Use an imperative call to action Understanding comes with Time
Time magazine
7. Use a one-word call to action We take the world’s greatest pictures
Nikon
8. Link a well-known phrase with A diamond is forever DeBeers
your product benefit
9. Brag about yourself We try harder Avis
10.Link a product feature
with an abstract need Just do it Nike
– 158 –
VIII. Using the family life cycle, in which stage would people, be most likely to need
these products?
product stage (1, 2a, 2b, 2c, 3, or 4)

fast food _____
a big car _____
a set of encyclopedias _____
expensive wine _____
laundry detergent _____
toys _____
television _____
laxative _____
shoes _____
a small car _____
sheets and blankets _____
a smaller house or apartment _____
a diaper service _____
a divorce counselor _____
sports equipment _____
IX. Written Task

Research proves that the effect of the creativity factor in a campaign is more important than
the money spent. “Only after gaining attention can a commercial help to increase the brand’s
sales”, writes Philip Kotler in his famous book Marketing Management. Use your creativity and
write an advert following one of the tips above.
Referenece to the previous page
Discussion: The numbers of respondents who agreed with the statements were as follows:
1). 90%, 2). 72%, 3). 85%, 4). 51%, 5). 41%, 6). 49%, 7). 60%. 8). 57%
X. These are some of the things the marketer must know about a foreign market. Add
to the lists.
legal environment economic environment sociocultural environment

tariffs standard of living need for the product
restrictions on imports cost of living attitude toward the product
___________ ___________ ___________
___________ ___________ ___________
___________ ___________ ___________
___________ ___________ ___________
___________ ___________ ___________
VI. CASE STUDY
Targeting New Markets
No one has been able to develop a list of superbly managed companies that withstands the
test of time. Levi Strauss, one of the models of excellence in the early 1970s, faced hard times in
the late 1970s and early 1980s. The company struggled in its attempts to appeal to both the youth
and adult markets. The company’s efforts to appeal to both markets through a single advertising
strategy proved unsuccessful. New product lines of jeans came and went.
– 159 –
The company became determined to shine up its tarnished image. Image, sales, and profits
are being improved through product diversification, acceptance of the fact that the preferences of
students of the 1960s and 1970s have evolved, and by the targeting of ethnic groups throughout
the United States.
Today, Levis are again a staple for baby boomers. Different sizes, silhouettes, and fabrics
have helped retain Levi’s appeal. And for the younger market, Levi continues to stress hip, fit,
and image. The company also uses varied commercials to appeal to specific groups and is
planning to target different age and racial groups as demographics continue to change.
Demographics, especially in California, are changing rapidly, and the company is
responding with new lines of casual pants. Economic and population trends in California reveal
that Hispanics, blacks, and Asians will exert increasing economic influence as their numbers
continue to expand. Research by the Center for the Continuing Study of the California economy
predicts that California’s population will expand by 500,000 people a year through 1995; due to
immigration trends, around two-thirds of this increase will be Hispanics and Asians. California
will represent one-fifth of the entire U.S. economic expansion during the same time period. Levi
Strauss is successfully using this demographic information to develop clothing to appeal to
new target markets. However, Levi’s Strauss’s Office of Strategic Research director John Wyek,
who has helped the company utilize demographic information, realizes that change will be a
constant factor: “From now until the year 2,000, there is going to be a steady decline in the total
number of 18-to-24-year-olds…… Hispanic 18-to-24-year-olds will increase by 40 percent. It
changes the wheel of our audience.”
By creating new products with a well-known trademark, new designs and fabrics, and by
improving its advertising and image, Levi Strauss intends to capture emerging markets as well as
better respond to its traditional clientele.
Questions:
1. How is Levi Strauss shining up its tarnished image?
2. In what ways is Levi Strauss implementing the marketing concept? Explain.
3. How have demographic factors influenced Levi Strauss’s marketing strategies?
– 160 –
BIBLIOGRAPHY
1. Bantaş A., Năstăsescu V. Dicţionar economic Englez-Român. - Editura Niculescu SRL,
Bucureşti, 1999.
2. Black, John. Dictionary of Economics. - Oxford University Press, 2002.
3. Brooks, Michael, Horner, David. Business English. - Bucureşti. Teora, 1997.
4. Butler, Brian. A Dictionary of Finance. – Oxford University Press, 1996.
5. Cooley, Philip. Business. Financial Management. – NY, The Dryden Press, 1988.
6. Dayan A. Engleza pentru Marketing şi Publicitate. – Buc., Teora, 1996.
7. Economics, tenth edition. – Oxford University Press, 2004
8. Grant, David, McLarty, Robert. Business Basics. - Oxford University Press, 1996.
9. Hollett, Vicki. Quick Work. - Oxford University Press, 2004.
10. Hollett, Vicky, Carter, Roger, Lyon, Liz, Tanner, Emma. In at the Deep End. - Oxford
University Press, 1996.
11. Hollinger, Alexander. The Language of Accounting. - Editura Milena Press. Bucureşti,
2000.
12. Ionescu, Lucian. English for Banking. – Editura Economică, 1999.
13. Irvine, Mark, Cadman, Marion. Commercially Speaking. - Oxford University Press, 1999.
14. Mackenzie Jan. English for Business Studies. – Cambridge University Press
15. Marchetea M. Business & Economics. – Buc., Teora, 2004.
16. Năstăsescu Violeta. Dicţionar Englez-Romîn, Romîn-Englez economic. – Buc., Editura
Niculescu, 2004.
17. Nicolae, Marian. Commercial Correspondence. – Buc., Editura Universitară, 2005.
18. Pride, M. William. Business. - Houghton Mifflin Company, Boston, 1991.
19. Rein P. David. Marketing. English Teaching Division. - Washington, D.C., 1991.
20. Rusu, Liliana. Commercial English. – Buc., Editura Universitară, 2004.
21. Speegle, Roger, Giesecke, William. Business World. - Oxford University Press, 1983.
22. Ştefan, Rodica, Pricope, Mihaela, Beldea, Elena. Go Ahead. - Editura Fundaţiei România
de mâine, 2001.
23. Англо-русский и русско-английский бизнес-словарь. – Москва, Издательство
ЮНВЕС, 2001.
24. Самуэльян Н. English for Banking. – Москва, МЕНЕДЖМЕНТ, 1999.
– 161 –
Sub redacţia autorilor
Procesare computerizată – Vitalie Spînachi
Semnat pentru tipar 08.02.07

Coli de tipar 18,87. Coli de autor 10,98.
Tiraj ____ ex. Comanda ____.
Tipografia Departamentului Editorial-Poligrafic al ASEM
Str. Bănulescu-Bodoni 59
Tel. 402-986
– 162 –

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ENGLISH FOR ECONOMIC PURPOSES

2. THE FORMS OF BUSINESS

8.3 Markets and Their Classifications………………………………………………

“Every man, as long as he does not violate the laws

Study and Learn the Words:

chirie, a arenda аренду

There are four types of economic systems:

Use the above phrases of words in your own sentences.

It is uncountable when it refers to:

It is countable when it refers to:

III. What is the usual antonym in the following pairs?

1.2. The Economics of Business

Study and Learn the Words:

crucial (adj) important

The features of laissez-faire capitalism are:

What, How and for Whom in the Free-Market Economy

B) Answer the following questions:

C) Finish the sentences:

IV. FOCUS ON GRAMMAR

1.2.1. Planned Economies

Study and Learn the Words:

B) Find English equivalents:

10. Deficitul frecvent al mărfurilor de larg consum/частый дефицит товаров широкого

III. Match the words in column A with their definitions in column B:

Bankrupt; compete; competition; customers; inefficiency; manage; state; overstaffing;

Market economy Planned economy

1.3. Supply, Demand, Price and Competition

Study and Learn the Words:

4. The management of the company decided _______________ the salaries.

A free-market system implies competition among sellers of products and resources.

B) Find in the text the antonyms to the following words:

B) Choose the best variant (sometimes 2 variants are possible):

IV. CASE STUDY

Business Philosophy at the J.M. Smucker Company

2. THE FORMS OF BUSINESS OWNERSHIP

„That business does not prosper which you

Study and Learn the Words:

janitor (n) caretaker

2.1. Sole Proprietorships

Advantages of Sole Proprietorships

Disadvantages of Sole Proprietorships

2. lawyer 7. to change from sth to sth

B) Choose the item that best completes each sentence:

1. There are _________ advantages of sole proprietorships. (Numeral)

VI. FOCUS ON GRAMMAR

B) Use the superlative degree and underline the correct variant:

4. (USA, India, China) has (large) population.

The Partnership Agreement

B) Find in the text synonymous phrases to the following:

B) Mark the statements with TRUE or FALSE:

5. A partnership can comprise no more than 4 partners.

C) Underline the correct variant to complete the definition:

IV. FOCUS ON LANGUAGE

The word ACCOUNT

1. The consulting company has won 2 new accounts in Singapore a) represents

2. Înainte de a forma parteneriatul eu m-am consultat cu avocatul meu.

Study and Learn the Words:

headquarters (n) sediu principal штаб-квартира, главный

B) Choose the correct meaning of the following words:

c) to bring the matter forward.

B) Answer the following questions:

C) Mark the statements with TRUE or FALSE: