KOMPANIJOS KŪRIMAS

Introduction...................... 3
Part 1. Logos and slogans................. 4
Part 2 Company Profile................... 6
Part 3 Recruitment......................... 12
Part 4 Company structures...................... 13
Part 5 Orgamizational chart..................... 15
Part 6 Organizational types...................... 19
Part 7Marketing.......................... 23
Part 8 Outdoor advertising...................... 22
Part 9 Processes.......................... 27
Part 10 Graphs, charts........................ 30
Part 11. Financial documents..................... 34
References........................ 39Introduction
This teaching aid is compiled for students studying business organization and management. In this material the students will find the basic information about the companies that are being created. The aim of the material is to provide the students with knowledge both in business English to create similar problems in founding the company that the sdudents will face in the acctual business environment. The material is divided into separate parts in which they will find the examples of a certain stage of creating or describing a company and according to the given examples they should do self-study tasks and at the end of each unit. There is a variety of real-life example companies that have achieved success by correctly applying management concepts described in this teaching aid. The students will also learn the basic techniques of creating a company’s logo, sllogan, marketing and advertising a certain product.

Special attention in this material is paid to the analyzing and evaluating financial results of companies as this information about the company’s peformance is of utmost importance when managerial decisions are to be made. Ac

ccounting provides an easily learned method for systematically recording and evaluating business activities. This is, perhaps, the most fundamental reason for business managers and students to familiarize themselves with the accounting discipline.Part 1. Logos and slogans
Activit y 1.Match each slogan with its logo.

Coca-Cola

Kodak 1. Rely on the tiger
2. King of beers
3. We bring good things to light
4. The eyes of __
5. Just do it!
6. You asked for it; you got it _
7. The uncola
8. When you care enough to send the very best at____
9. Don’t leave home without it!
10. What you want is what you get at
11. Fly the friendly skies
12. Your true colors
13. It’s the real thing
14. The nation’s innkeeper TOYOTA
UNITED AIRLINES

HALLMARK

McDonald’s

MINOLTA

Holliday Inn

Activity1. Match the slogans with the company names.

1. You are holding at 10 000 feet. And suddenly the city disappears a) Cracker Barrel
2. Even on the top of the Evverest it continues to run in an excellent condition b) British Airways
3. It’s wrought from pure silver and writes like a pure silk c) Parker
4. We are so proud of its fine flavour d) Rolex
5. We’ve gone to the end of the earth to help you to survive a trip to the market

e) KODAK
6. It’s you’ve always wanted – a living room with the air bag
f) Good-year
7. Preserve your world g) FordPart 2 Company Profile
Activity 1. Work in pairs. Look at the following two passages about two companies, of the headlines goes with which passage.
Planning and Building since 18

849
Pioneering Tomorrow’s Electronics

Phillip Holzmann AG has grown from a family into a highly reputable, major international concern. In 1949 a company was established in Spredlingen, near Frankfurt, by Johann Philipp Holznann, primarily for railroad construction. Over the years, the company diversified its activities to all areas of building and civil engineering. As early as 1882, the company completed its first large foreign order – the main railway station in Amsterdam. This proved the starting-point for commissions from all over the world, including the construction of the Anatolian and Baghdad Railroads, and other major rail links in East Africa. Subsidiaries set up by Holzmann in South America have built power stations, underground rail systems, municipal drainage schemes, bridges and large buildings. These companies operated in Argentina, Brazil, Chile, Colombia, Peru and Uruguay. In 1917 Philipp Holzmann Aktiengesellschaft was founded, the same share-issuing corporation which exists today. During the Second World War, Holzmann lost a relatively large proportion of its business premises, operating facilities and construction machinery, as well as its foreign assets. Through great effort, foreign business was restarted by 1950. Since then some impressive construction projects have been carried out, particularly in the Middle East and Africa. These provide ample evidence of the company’s capabilities in

n all areas of construction work, Through the J.A. Jones Construction Company of Charlotte, USA, and Lockwood Greene Engineers Inc. of Spartanburg, USA, Holzmann is once again well represented on the American continent.
Philipp Holzmann AG is today one of the largest German industrial concerns and one of the elite group of leading international construction New ideas are an old tradition at Siemens. The company that grew out of the original Siemens & Halske is today a highly innovative leader in the world electrical and electronics mar¬ket. Composed of Siemens AG and an array of domestic and foreign sub¬sidiaries, the contemporary Siemens organization continues to set mile¬stones on the road of progress. Siemens maintains its own produc¬tion facilities in 35 countries and operates a worldwide sales network. With more than 300,000 employees, it is one of the largest companies in the world electrical/electronics industry, having recorded annual sales of DM 54 billion in the 1986/87 fiscal year. Reliable and farsighted management is united with the youthful dynamism and zest for innovation that typify the company.

Activity 2. Find words in the text which mean:
a) start to produce a range of different products or sevices.
b) the building, etc. that the company uses.
c) the company that is owned and co

ontrolled by other company .
d) eager interest and enjoyment.
Activity 3. Correct the sentences if they are wrong:
1. Phillip Holzmann AG was established primarily for bridge construction.
2. Subsidiaries set up by Holzmann in South America have built power stations, underground rail systems.
3. During the Second World War, Holzmann lost a comparatively large proportion of its business premises,
4. Through great effort, foreign business was restarted by 1960.
5. Philipp Holzmann AG is today one of the largest American industrial concerns.
Activity 4. Complete the missing information.

1. a) The company was established in Spredlingen, near Frankfurt, by Johann PhilippHolznann
2. 1882 b)
3. 1917 c)
4. d) Through great effort, foreign business was restarted

Activity 5. Complete the following sentences:

1. Over the years, the company diversified its activities to all areas of .............
2. Subsidiaries set up by Holzmann in South America have buil...............
3. The company that grew out of the original Siemens & Halske is. today ...........
4. Siemens maintains its own produc¬tion facilities in...........

SONY

Activity 6. Read the text and fill in the missing information into the gaps.

SONY KK has its headquarters in___________1 The company was set up in 1946 by two men: _________2 and _______________3. Their aim was to apply new technology developed during World War II to consumer electronics. Start-up capital was provided by Morita’s father. The company’s original name was _________________4 but later it was changed to Sony. One of the early products was an electrically heated cushion but the first major product which Sony brought to market was an audio tape recorder in 19 _.5 At that time the company headquarters were in a garage. For the prototype Morita Akio had to______________________6 by hand.

In 1963 Sony opened an overseas sales division to sell to the USA. In the 1970s they began to sell _______________________ 7products in Japan,
and later opened a US factory in San Diego, California.
The company has always been a pioneer in its field. They revolutionised the TV market with the first commercial transistorised television set in 19 _____8, and then introduced
a new simplified picture tube in 1969. But Sony’s most famous product is ___________________9 ,
introduced in 1979. When it was introduced Akio Morita said, ‘_____________________

_______________________________________ .10 After 2 years on the market total sales were 1,500,000 units. In 1986 the word ‘Walkman’ appeared as a word in _______________________ .11 Sony is now also a giant in the world of entertainment: in 1991 the company bought the CBS music company.

SONY KK has its headquarters in Tokyo. The company was set up in 19 ____12 by two men: Morita Akio and Ibuka Masaru. Their aim was to apply new technology developed during World War II to consumer electronics. Start-up capital was provided by ____________________________ .13
The company’s original name was Tokyo Telecommunications Engineering Corporation but later it was changed to changed to Sony.
One of the early products was an electrically heated cushion, but the first major product which Sony brought to market was _________________________14 in 1950. At that time company headquarters were in __________________ 15 For the prototype. Morita Akio had to make the magnetic tape by hand.

In 1963 Sony opened __________________________16 to sell to the USA

In the 1970s they began to sell American-made products in Japan, and later opened a US factory in_____________17
The company has always been a pioneer in its field. They revolutionised the TV market with the first commercial transistorised television set in 196O, and then introduced a new simplified picture tube in 19_______18 But Sony’s most famous product is the Walkman, introduced in_______________19

When it was introduced Akio Morita said, ‘If it doesn’t sell well, I’ll resign as chairman. After 2 years on the market total sales were ______20 units. In 1986 the word ‘Walkman’ appealed as a word in the Oxford English Dictionary .
Sony is now also a giant in the world of entertainment: in 1991 the company bought ________________21 company

Activity 7. Fill in the table with the missing information:

1. a) The company was set up.
2. 1950 b)
3. 1963 c)
4. 1970 d)
5. e) The word ‘Walkman’ appealed as a word in the Oxford English Dictionary

Activity 8. Match the words with the definitions:

1. total a) the central building of the company
2. simplify b) beginning
3. pioneer c) complete
4. start-up d) to be the first to do something
5. headdquarters e) make something less complicated

Activity 9. Complete the following company profile with either the present perfect or past simple tense of the verbs in brackets. You should pay particular attention to irregular verbs and to the position of adverbs.

COLGATE-PALMOLIVE
William Colgate 1......... (fou.nd) the Colgate Company in 1806 as a starch, soap and candle Business in New York City. For the first one hundred years, the company2 :...... (do) all its business in the United States. However, in the early 1900s. he company3 ....... (begin) an aggressive expansion programme that4......... (lead) to the establishment of Colgate operations in countries throughout Europe. Latin America and the Far East. Recently it5.......... (set up) operations in ‘Turkey, Pakistan. Saudi Arabia, Eastern Europe and China. Colgate-Palmolive6........ (become) a truly
global consumer products company, worth $6.6 billion and selling in more than 160 countries.
Colgate-Palmolive’s five main sectors of business are: Oral Care, Body Care, Household Surface Care, Fabric Care, Pet Nutrition and Health Care. In the area of Oral Care Colgate-Palmolive is the world leader in toothpaste. Since 1980, the company7........ (increase) its share of this market by more than 12% to over 40% today. Oral care revenues 8 ........ (grow) significantly in recent years and in 1991 they9........: (exceed) $1.3 billion. As a result of the company’s heavy investment in research and technology, it10............ (develop) many successful toothpastes, rinses and toothbrushes. To strengthen its presence in professional products Colgate-Palmolive 11...... (buy) the Ora Pharm

Company of Australia and the dental therapeutics business of Scherer Laboratories USA in 1990. For many years, the company12...... (have) a strong dental education programme in schools throughout the world and13.....(maintain) the international dental community. Recently Colgate-Palmolive 14.........(enlarge) its school education programmes to cover rural areas as well as townships in developing countries. For the last three years, the company of the International Dental Congress, the world’s largest and most prestigious dental meeting.
The company 15............. (always pay) close attention to the environment. It16....... (already make) great progress in the use of recyclable bottles and packaging materials. In 1990 the American Council
on EconomicPriorities17 .......... (choose) Colgate-Palmolive as one of the four most socially responsible companies in the United States.

Activity 10. Answer the following questions:

1. Who and when founded the company?
2. Where did the company operate?
3. When did the company started its expansion?
4. What are the main sectors of Colgate-Palmolive business?
5. What kind of business is Colgate-Palmolive the world leader in?
6. How did Colgate-Palmolive strengthen its presence in professional products.

Activity 11. Match the dates with the activities of the company:

1. 1806 a)
2. 1900 b)
3. c) Oral care revenues exceeded $I.3 billion
4. d) To strengthen its presence in professional products. Colgate-Palmolive bought the Ora Pharm Company of Australia and the dental therapeutics business of Scherer Laboratories USA.

Activity 12. Write your own company profile. Describe general points such as the founder, founding date, location, number of branches or subsidiaries, number of employees, etc.Part 3 Recruitment
KEY VOCABULARY
When a company needs to recruit or employ new people, it may decide to advertise the job or position in the appointments page of a newspaper. People who are interested can then apply for the job by sending in a letter of application and curriculum vitae containing details of their education and experience. The company will then draw up a shortlist of candidates, who are invited to attend an interview.

.

MEDICAL DESK EDITOR
Science graduate required to work on
medical journal.
Editorial experience
desirable but not
essential as full
training given.
Excellent prospects. Subsidised staff
canteen.
Apply in writing to
Jonathan Shepherd,
Editorial Director,
Williams & Faulkner Ltd.,
18 Marry at Rd.
London SW19,
We are a leading firm of Chartered Accountants and are presently seeking a
HUMAN RESOURCES MANAGER
The successful candidate will be educated to degree level with IPM qualifications and a minimum ol 3 years’ experience, Responsibilities will include: « developing policies and procedures
• advising on aspects of employment law
• co-ordinating training programmes
• recruitment selection
In return we offer a competitive salary and generous benefits including a non-contributory pension, 25 days’ holiday, private health insurance, and relocation assistance where appropriate.
Apply with CV and covering letter to: Sally Fraser, Director of Human Resources, Brooks Thornton & Co., Norfolk House, 153 Aldwych, London WC2B 4JY,
OPERATIONS OFFICER
International children’s charily with headquarters m New York and offices throughout the world his an opening for an operations officer lo fill a position in Mali The successful candidate will he responsible for all aspects of the management of (his office. He or she should possess an advanced university degree in business administration or a related qualification and should have at least five years” experience in office management at international level. Fluency in English and French is essential. Willingness to travel and live and work under difficult conditions. Benefits include a competitive international salary and overseas allowances.
Please write your CV and stating current salary to: Box number RL 147, The Guardian, 164 PManchester MAO 2RK

SENIOR PRODUCTION MANAGER
Electronic and Optical Equipment
You are a qualified engineer with several years’ experience of computer assisted technology and design. Your proven managerial skills and commitment to quality will enable this expanding company to reach its full potential. Excellent salary plus sales-related bonus and company car.
Please write with full CV to: John Hart, Redwood Marshall, Thorpe Industrial Estate, Crab tree Rd,
Feltham TW14.
CUSTOMER
SERVICES
ASSISTANT
Are you highly efficient with good communication and inter-personal skills? We are a leading manufacturer of video and audio equipment, and are looking for someone special with good administra¬tive and secretarial abilities to join our very busy Customer ServicesDepart¬ment. Salary dependent on age and experience.
Apply to: Brenda Howarth, Spectro(UK)Ltd., 1S Rothesay Tar-race, Edinburgh EH3 7SE.

Activity 1. Read the following advertisements and according to these examples create your own advertisement for your company.Part 4 Company structures
Activity 1. Look at the organisation chart for Cooper France. Where should the following labels appear?

General manager sales manager sales representative
sales secretary agent

Activity 2. Read the passage and complete the chart to show the positions that Jean Lemadon and his collegues occupy?

My name’s Jean Lamadon, and I’m one of the two sales managers here at Cooper France. Cooper is an International group based in America, which among other things, produces tools and equipment for the professional and consumer markets. The group has subsidiaries in several European countries.

I suppose that I’m going to describe how things are organized here in France I’d better start at the top. That’s where you’ll find Allain Madrange who is everybody’s boss here. He controls all aspects of finance and is in permanent contact with our head office. Both myself and Michael Carnelez, who is the other sales manager, report directly to him.

As I said, there are two sales managers, because we sell two very different categories of product in France. The first is electrical equipment which is used for assembling components for printed circuit boards. That’s my area. The other is what we call tools and hardware which includes a lot o quite different products, mostly sold in Do-It-Yourself shops all over the country. Michef Cornelez is in charge oft that, and he doesn’t have any Cooper employees working under him apart from Sylvie Cieutat, his sole secretary. That means he relies entirely on a national network often sales agents including his Paris agent Daniel Royatte. Michel spends much more time than I do marketing and promoting his products.
The way my department is organised is really quite simple. About 80% of our business is done through distributors, and the rest is direct to major account holders, who are our really big customers. As we sell all over the country this means we need a team of sales people. At the moment there are four, each responsible for one territory; Cyril Jehanne for the north, Jean-Noel Ecbave for the south, Doniel Lorand for the west and Patrick Amat for the east. I also have a customer services assistant, Jocylene Cuisy, and a sales secretary, Marie-Christine Chaussadas. Together they run the sales office and look after most of the administration.

Activity 3. Decide about the best way to organize your company. Draw your company’s organization structure and describe it in terms of both the hierarchy and the specific responsibilities of each person or position.PART 5 Orgamizational chart
Activity 1. Read the text and answer the questions:

1. What is the board of directors responsible for?
2. Who appoints Managing director?
3. What does a managing director do?
4. Who provides the capital?

Most companies are made up of three groups of people: the shareholders (who provide the capital), the management, and the workforce. The management structure of a typical company is shown in the following organizational chart:

At the top of the company hierarchy is the Board of Directors, headed by the Chairperson (or President). The Board is responsible for making policy decisions and for determining the company’s strategy. It will usually appoint a Managing Director (or the Chief Executive Officer) who has overall responsibility for the running of the business. Senior managers head the various departments or functions within the company, which may include the following: Marketing Finance, Public Relations, Production.

Activity 2. Study the 4 kinds of structures and present them in short.

Organization structures

Specialization by grouping of activities can be achieved in several different ways. The most frequent method is that of functional specialization. In this case, tasks are linked together on the basis of common functions. So, all production activities or financial activities are grouped into a single function which undertakes all the required of that function. A typical organization chart of a functional organization would appear as follows.

Functional organizational structure

The main advantages of functional organization are that business-grouping people together on the basis of technical and specialist expertise, the organization can facilitate both thei utilization and their coordination in the service of the whole enterprise. Functional grouping also provides better opportunities for promotion and career development. The disadvantages are primarily the growth of sectional interests which may conflict with the needs of the organization as a whole, and the difficulties of adapting this form of organization can meet issues such as product diversification or geographical dispersement.

Another frequent form of grouping is by product. This is popular with large organizations having a wide range of products or services. In the National Health Sevice, for example, the key groups of employees – medical, nursing-medical and hotel service are provided viz. Maternity, orthopaedic, surgical, psychiatric and many others. By comparison, a large pharmaceutical company could be organized as follows.:

Example of a product- based structure

The advantages of a product organization as shown are that it enables diversification to take place, it can cope better with the problems of technological
by grouping people with expertise and their specialised equipment in one major unit.

The main disadvantage is that each General Manager may promote his own product group in a way that creates problems with other parts of the company. This implies that top management must exercise careful controls, without at the same time robbing the product managers of their motivation to produce results.

Another popular form of an organization is grouped on a geographical basis. This is usually adopted where the realities of a national or international network of activities make some kind of regional structure essential for decision – making and control, in particular. An example of this form of organization is as follows:

Activity 3. Decide about the best way to organize your company. Draw your company’s organization structure and describe it in terms of both the hierarchy and the specific responsibilities of each person or position.Part 6 Organizational types
Organizations are affected differently by the environment according to their products and their structure. Possible organizational structures include: corporations, non profit organizations, small businesses and family owned businesses. Some generalizations may help clarify how each type of structure would relate to the environmental conditions. Corporations are likely to be larger than other organizations and would be most vulnerable to international events. Nonprofit organizations often rely on fund-raising to provide money to keep them going. Their income could fall dramatically in times of recession when businesses and families are tightening their belts. Small businesses, especially start-ups, need to carefully monitor the environment because unseen events could ruin a business without well-developed financial resources. They also tend to rely on a small geographic range for customers, so good community relations are essential. Family owned businesses can be any number of sizes.

Corporations

A corporation is a legal entity different from its ownership. The difference allows the corporation to decide what to do with its profits independent of the immediate views of its owners. It also means that it is responsible for its own liabilities. Creditors cannot go directly to its owners for payment. This contrasts with sole proprietorships and partnerships, in which the owners are responsible for the organization’s liabilities and have direct access to its profits.

Nonprofit organizations

Management is an integral part of nonprofit organizations. Charitable funds are headed by executive directors, hospitals by administrators and the political campaigns by campaign managers. These people are the CEOs of nonprofits.

Similarly, lower levels of management can also be found in nonprofit organizations. A management hierarchy is not the only similarity between corporations and nonprofit organizations.

Activity 1. Answer the questions:

1. What are the organizational structures of the companies?
2. What companies are called corporations?
3. What are the features of nonprofit organizations?
4. What kind of business is called a small business
5. What size is the family owned business?
6. What business is most vulnerable to international events? Why?
7. What business can be most affected by recession? Why?
8. What is the main difference between the corporations and sole proprietorships and partnerships?
9. What is the role of the owner of the corporation, sole proprietorship and partnership?
10. Who are the CEOs for nonprofit organizations?

Activity 2. Match the words with the definitions:

1. clarify a) the amount of debt that should be paid
2. vulnerable b) make something easier to understand
3. liabilities c) that can be hurt, harmed easily
4. access d) something that exists as a single unit
5. charitable e) concerned with giving help to the poor
6. entity f) the right to enter a place, see the documents, etc.

Activity 3. Correct the sentences if they are wrong:

1. Corporations often rely on fun raising.
2. Corporations are likely to be larger and therefore they might be influenced by international events much easier.
3. Nonprofit organizations have stable income in times of recession .
4. Small businesses are not dependent upon the environment because unseen events cannot ruin a business.
5. Community relations are essential for small businesses.

Activity 4. Paraphrase the following sentences without using the underlined word according to the example:

1. Corporations are likely to be larger than other organizations.

Corporations are often larger than other organizations.
2. Nonprofit organizations often rely on fund-raising.
3. Their income could fall dramatically in times of recession when businesses and families are tightening their belts
4. Small businesses, especially start-ups, need to carefully monitor the environment
5. Good community r.elations are essential

Small businesses

According to the U.S. government, a small business is independently owned and operated, it is not dominant in a particular industry, and meets specific standards set by the Small Business Administration. Small businesses are managed by their owners whether they are sole proprietors, general partners or majority stockholders.

Entrepreneurship

The management of a small business is unique, and so are the practises and concepts employed. To better understand this management setting, it is important to look at the mind-set of entrepreneurs. Richard Cantillon, an 18th century French economist, coined the term entrepreneur and it has remained an important ingredient of both the economic and management literature. Entrepreneurs are profit seekers who willingly accept risks in order to reach their financial goals. They tend to be involved in every phase of the business and make most decisions, even relatively minor ones. This direct involvement offers the important advantage of a close attention to details.

Planning for succession in a start-up

Sometimes entrepreneurial success breeds problems. The organization often grows until it exceeds the managerial capacity of an entrepreneur. While sometimes some entrepreneurs can make transition from personal management to a stage of a professional management, others cannot. Columbia University’s Michael Tushman estimates that only about 10 percent of the founders of start-up companies can adjust to the management changes caused by significant growth. In some firms, continued dominance by the original entrepreneur can create severe problems. Henry Ford’s dominance of his firm nearly ruined it until Ford Motor Company was rescued by his grandson, and a professional management team was assembled.

Family owned business

One of the best ways to keep an entrepreneurial orientation in a maturing firm is to bring family members into the plan for succession. Younger family members often have the necessary managerial skills to oversee a transitional period and the commitment to continue the innovative tradition of the founder. The comments of K.A Hoffer upon joining the family real estate development firm are typical: “My butt is on the line. That’s my name of the mortgages”.

Activity 5. Answer the questions:

1. Who operates a small business?
2. How do you understand “entrepreneurship”?
3. What is the main goal for entrepreneurs?
4. What is the main difference in the decision making process in corporations and entrepreneur companies?
5. What are the main problems in the entrepreneurial business?
6. Why can’t all entrepreneur companies adjust in the process of management?
7. Why was Henry Ford’s company nearly ruined?
8. How was it rescued?
9. What is one of the best ways to keep an entrepreneurial orientation in a maturing firm?

Activity 6. Match the words with the definitions:

1. proprietor a) continue to be in the same state or position
2. majority b) cause something to exist
3. coin c) be more than a number or amount of something
4. remain d) the owner of the business
5. relatively e) invent a new term, etc.
6. minor f) not very important
7. breed g) the most of something
8. exceed h) compared with something else

Activity 7.Find the words in the text which mean:

1. difficult (about the problems)
2. damage
3. the action of following one after another, the act of taking over a position.
4. a legal arrangement by which you borrow money from a bank in order to buy a house, etc. and pay back the money over a period of years.

Activity 8. Correct the sentences if they are wrong:

1. The management in small companies is very complicated and there are a lot of levels of management.
2. Entrepreneur is a person who starts a company, arranges business deals and takes risks in order to make a profit.
3. “Entrepreneur” is the term used only in economic literature.
4. Entre.preneurs are profit seekers who willingly accept risks in order to reach their financial goals.
5. Ford Motor Company has always had a professional management.
6. Younger family members very rarely have the necessary managerial skills.

Activity 9. Paraphrase the following sentences without using the underlined word:

1. Cantillon, an 18th century French economist, coined the term entrepreneur.
2. Entrepreneurs are profit seekers who willingly accept risks in order to reach their financial goals.
3. They tend to be involved in every phase of the business.
4. Sometimes entrepreneurial success breeds problems.
5. A professional management team was assembled.
6. Younger family members often have the necessary managerial skills to oversee a transitional period.

Part 7 Marketing

Marketing is the term given to the different activities involved in distributing goods from the manufacturer to the final customer. The combination of the different elements of a company’s marketing plan, such as product conception and development, promotion, pricing and packaging is known as the marketing mix.
Advertising is an important element of the marketing function. It is used to increase sales by making the product or service known to a wider audience, and by emphasizing its superior qualities. A company can advertise in a variety of ways, depending on how much wishes to spend, and the size and type of the target audience. The different media for advertising include television, radio, newspapers, magazines and direct mail, by which advertisers send letters, brochures and leaflets directly to potential customers.
Advertising is a highly developed business. In the UK, for example, approximately £5 billion is spent on advertising each year.

What other methods of advertising can you think of, apart from those listed above? In groups, make a list of the different media that are used lo sell the following well-known products in your country.

SKILLS FOCUS
Describing target markets
Marketing and advertising specialists must carry out research to determine what customer wants and to develop products, which satisfy customer needs. A group of customers which shares a common interest, need or desire is called a market. Companies must determine which market would he most likely to buy a certain product and aim all their marketing activities at this target. Specialists use many different methods to divide markets into precise groups.
1 Working with a partner, choose one of the advertisements below and decide what the target market is. Use the following questions to help you:
1 Where does the target live? (town, suburbs, rural area, etc.)
2 What is the target’s age? sex?
marital status? income? occupation? level of education?
3 What is the target’s social class? (working, middle, upper class, etc.)
4 How would you describe the target’s personality and lifestyle?
5 What benefits do you think the target looks for in the product? (comfort, safety, esteem luxury, etc.)

After four years of school, the backpack’s in better shape than the student

Activity 1. Complete the following passage using a gerund or infinitive. Choose from the verbs in the boxes.

build
setup
run
bring
make
transform
decide reflect appear create
return
change
expand
launch
drink

Coca-Cola and its advertising

John S. Pemberton invented Coca-Cola in 1886. His partner suggested 1........... an advertisement for the drink in the Atlanta Journal that very year. In 1888, Asa Candler bought the Coca-Cola business and decided 2........... the product known through signs, calendars and clocks.
The company began3........... its global network when Robert Woodruffwas elected president of the company in 1923. He succeeded in4...........Coca-Cola into a truly international product by 5............ a foreign department, which exported Coca-Cola to the Olympic Games in Amsterdam in 1928. During World War II, he promised 6.......... Coca-Cola to every soldier in every part of the world.
Coca-Cola’s advertising has always attempted7......... changing contemporary lifestyles. 8.......... an international advertising campaign requires the talents of professionals in many areas, and extensive testing and research are always done before9........... which advertisements will finally be used. Celebrity endorsements have featured heavily – Cary Grant, Ray Charles and Whitney Houston are just three of the big name stars that have agreed 10........... in Coca-Cola commercials.
After11 ........... Diet Coke in 1982, the company saw its sales grow quickly. The drink is now the third most popular in the world. In 1983, the company tried 12.......... the secret formula of Coca-Cola, but realised that Americans were very attached to the original recipe. The company listened to its consumers and quickly responded by 13........... the original formula to the market as ‘Coca-Cola Classic’ Today, people in more than 160 countries around the globe enjoy l4..,........ Coca-Cola. His asked for more than 524 million times a day in more than 80 languages. The company intends15.......... its global presence even further in the twenty-first century, particularly in developing markets.

Activity 1.What do you understand by outdoor advertising? Give examples. Before you read the article below, match these words to their definitions

1. segments a) ) place in a television schedule
2. soaring b) rising quickly
3. mass market c) small open-fronted shop in the street for selling newspapers, etc.
4. TV slot d) concerned with non-luxury goods that sell in large quantities
5. kiosks e) parts of a larger market or category of customers

Activity 2. Complete this statement with four of the words above.

The cost of a prime-time .......1 is .......2 . However,
advertising on ...... ..3 is cheap. Outdoor advertising is one of thefastest growing.......4 in the market.

Activity 3. Read the article. Then answer the questions on the next page.

Outdoor advertising – A breath of fresh air

The world of outdoor advertising billboards, transport and ‘street furniture’ (things like bus shelters and

public toilets) – is worth about $18 billion a year, just 6% 5 of all the world’s spending on advertising.

But it is one of the fastest-growing segments, having doubled its market share in recent years.
Outdoor advertising’s appeal is growing as TV and print are losing theirs. The soaring costs of TV are prompting clients to consider alternatives. Dennis’ Sullivan, boss of Portland Group, a media buyer, calls outdoor advertising the last true mass-market medium. It is also cheap. In Britain, a 30-second prime-time TV slot costs over £60,000 ($100,000) placing an ad on a bus shelter for two weeks works out at about £90.
Adding to its attractions has been a revolution in the quality of outdoor displays. Famous architects such as Britain’s Sir Norman Foster are designing arty bus shelters and kiosks with backlit displays. Backlighting, introduced in Europe by Decaux and More, and plastic poster skins have vastly improved colour and contrast.

Movement is possible too. Smirnoff used new multi-image printing to make a spider, seen through a vodka bottle, appear to crawl up a man’s back. And Disney advertised its ‘101 Dalmatians’ video on bus shelters with the sound of 35 puppies barking.
This sort of innovation has attracted a new class of advertiser. Recent data from Concord, a
poster buyer, shows that in Britain, alcohol and tobacco have been replaced by entertainment, clothing and fin.ancial services as the big outdoor advertisers, like car makers, are using it in new ways. BMW ran a ‘teasers’ campaign in Britain exclusively on bus shelters. Particularly attractive to the new advertisers is street furniture, the fastest growing segment of the outdoor market. It accounts for some 20% in Europe and about 5% in America.

Activity 3. Answer the following questions:

1. Why has outdoor advertising become more popular?
2. What products do you think are suitable for outdoor advertising?
3. What are the advantages and disadvantages of the advertising media below?

television billboards newspapers street furniture
4. What makes a good advertisement? Use some of the words below.
Eye-catching humorous shocking informative
5. Do you think that the advertising practices described below are acceptable? Are there any other types of advertisement that you find offensive?
a) Using children in advertisements
b) Using nudity in advertisements
c) Promoting alcohol on TV
d) Comparing your products to your competitors’ products
e) An image flashed onto a screen very quickly so that people are affected without noticing it (subliminal advertising)
6. Which of the following statements do you agree with?
a) People remember advertisements not products.
b) Advertising raises prices.
c) Advertising has a bad influence on children.
7. Newspapers and TV are two advertising media. Can you think of others?
8. Translate the words used in advertising.

directories

persuade

promote

cinema

run

mail shots

place

free samples

commercials

public transport

launch

leaflets

exhibition

billboards/hoardings

word-of-mouth

radio

point-of-sale

posters

research

sponsor

target

endorsement

slogans

television

press

jingles

sponsorship

publicizePART 9 Processes
Activity 1.The following diagram shows the different stages in the manufacture and recycling of The Body Shop bottle. Use the verbs below to complete each stage with a present simple form of the passive. The first stage has been done for you.

add arrange extract
fit
grind heat label produce
remove return transport use

THE STORY OF THE BODY SHOP BOTTLE

8 Items such as combs
.......... from the
recovered plastic.
7. The bottles and caps.....up into two separate types of plastic.

6 Once empty, bottles ........ to the shops, where the caps ........
3.The bottles..... with different Body Shop products and ......to show what each other one contains.Part 10 Graphs, charts
DESCRIBING TRENDS

Look at some of the nouns and verbs used to describe changes in price, quantity and amount, for example:
Noun Verb
an increase to increase
a rise to rise
a decrease to decrease
a drop to drop
a fall to fall

These can be qualified with an adjective or adverb to describe a change more precisely.
Activity 1 Complete the table.

Adjective Adverb
Used to show a regular movement 1. steady
2. gradual A)
B)
Used to show a small change 3. slight C)
Used to show considerable, sharp striking or unexpected change: 4. sharp
5. dramatic
6. sudden D)
E)
F)

Activity 2. Use an appropriate adjective or adverb to complete the descriptions of the following graphs.
Prices

.
Prices rose1..... from February to October, before falling2 ..... in November

Inflation rose3 ....... In March, before beginning its4 .... decent to today’s figure of 6.5.

1991 saw a 5 ...... drop in production, followed by a 6 ..... recovery in 1992.

Activity 3. Here are some other expressions which are used to describe trends. Which parts of the following graph would you use them to talk about?

Fluctuate to level off to remain stable
to reach a peak to stand at

remain stable reach a peak fall go up increase

decrease go down level off improve

Activity 4. Describe each graph using the verbs above

1.

2.
3.

4.

5.

6.

Activity 5. Complete the table

Verb Noun
Infinitive Past tense
To decrease 1. ......... 2.a .........
3. .......... fell 4. a........
5 . ......... 6. ......... An increase
To rise 7. ......... 8. .a ........
9. ......... 10. ........... An improvement

Activity 6. Which of the words above describe:

a) Dramatic change
b) Regular change
c) Vey small change

Activity 7. Look through the sentences and study prepositions

1. There was a steady increase in sales.
2. There was an increase of $ 5 ........
3. Salaries rose up by 3.5 % ......
4. There was a fall of 3% in salaries ........
5. Inflation remained stable at 2.5% .......
6. Prices rose from $100 to $ 130 ......
7. Prices went uo by $ 20 ........

Activity 8. Insert the correct preposition

1. Production costs rose ... 3% last year.
2. Sales remained stable ..... an average $2000 per month.
3. Inflation went up ... 2.3% ... 2.4% last month.
4. There was a decrease .... 1.5% in unemployment.
5. There was an increase .... prices last year.

Activity 9. Look at the graph. Complete the description.

In 1882, Italy exported 388 million pairs of shoes. Exports ........1 stedily in the next two years, and reached 393 million in 1984. This ......2 continued and exports ..... a ......3 of 411 million in 1986. In the next two years they fell .......4 and there was a further ......5 in 1990, to 360 million. Between 1990 and 1992, they .....6 again, to 338 million of pairs.

Activity 10. Look at the graph. Write a description of the trend in shoe imports to Italy from 1982 to 1992.Part 11. Financial documents
Financial Analysis
The use of specific techniques to analyze a firm’s financial statements in controlling the liquidity, profitability and overall financial health of the organization
Balance sheet statement
of a firm’s financial position on a particular date

Income statement
Financial record summarizing a firm’s financial performance in terms of revenues, expenses, and profits over a given time period

Financial analysis is the use of specific techniques to analyze a firm’s financial documents and control the flow of fluids, goods, and services both in and outside the organization. Financial statements provide the means for the liquidity of the organization—its ability to meet current obligations and needs by converting assets into cash; the profitability of the organization and the general financial condition of the organization.
Two commonly used financial statements are the balance sheet and the income statement. The balance Sheet reflects the financial position of an organization as of a particular date. It is similar to a photograph comparing a firm with its liabilities and owners’ equity a t a specific moment in time.
At the top of the balance sheet are the assets of the firm in descending liquidity (convertibility to cash). These assets represent the items of value owned by the organization; they are uses that management has made of funds. The lower half of the balance sheet is the firm’s financial structure indicating the sources of the firm’s assets. Liabilities reflect the claims of: creditors – financial .institutions that have made long- and short-term loans; suppliers that have provided goods and services on credit, and bondholders among others. Owners’ equity represents the owners’ (stockholders’ in corporations) claims against the firm’s assets, or the excess of all assets liabilities.
The income statement reflects the performance of the organization over a specific time period. Such statements begin with the total sales or revenue generated during a year, quarter, or month and then deduct all the costs related to producing this revenue. Once all costs – costs involved in producing the products; administrative costs, interest and taxes for instance—have been subtracted, the remaining net income available to distribute to the firm’s owners( stockholders, proprietors or partners) may be reinvested in the firm as retained earnings

.

Par 11. Financial Statements

The Income Statement

The income statement normally covers a period of one year, ending on the last day of the firm’s fiscal year. Most firms use the calendar year as their fiscal year, ending on 31 December, but this is not mandatory in the United States, and seasonal fluctuations in the firm’s activity may make a different fiscal year more convenient. The firm’s management needs financial statements for continual monitoring of results and will wish to have them at least monthly. Stockholders of publicly held companies must be provided with financial state¬ments on a quarterly basis.
Table 1 shows a typical income statement for the year ended 31 December 1990. The statement lists sales income and deducts cost of goods sold (direct labor and material) to show a gross profit. The operating expenses are then listed and deducted to show the operating profit, often referred as earnings before interest and taxes (EBIT). After deducting interest expense the statement shows net profits before taxes, and after deducting taxes at the applicable rate we arrive at a net profit after taxes also referred to as earnings after taxes (EAT). In the case of hypothetical
Miller Corporation preferred stock dividends must now be paid something Polish corporations may not need to worry about. Having met this requirement, the income statement finally shows the earnings available for common stockholders, and by dividing this figure by the number of outstanding common shares, we arrive at an earnings per share (EPS) figure. Thi.s last figure is closely watched by stockholders and market analysts. Earnings available for common stockholders may or may not be distributed as dividends. The decision is up to the board of directors of the corporation who at their discretion may withhold all or part of these earnings to finance future operations or expansions, as we shall shortly see.

Table 1

Sales Income $1900
Less: Cost of goods sold $1100
Gross profits $800
Less: Operating expenses
Selling expense $110
General and administrative expense $170
Depreciation expense $140
Total operating expense $420
Operating profits $380
Less: Interest expense $80
Net profits before taxes $300
Less: Taxes (rate = 40%) $120
Net profits after taxes $180
Less: Preferred stock dividends $ 12
Earnings available for common stockholders $168
Earnings per share $1.68

Table 2

December 31
Assets 1990 1989
Current assets
Cash $500 $400
Marketable securities $600 $200
Accounts receivable $300 $600
Inventories $700 $800
Total current assets $2100 $2000
Gross fixed assets (at cost)
Land and buildings $1250 $1160
Machinery and equipment $850 $750
Furniture and fixtures $360 $250
Vehicles $100 $80
Other (includes certain leases) $80 $60
Total gross fixed assets (at cost) $2640 $2300
Less: Accumulated depreciation $1240 $1100
Net fixed assets $1400 $1200
Total assets

$3500 $3200

Liabilities and stockholders’ equity

Current liabilities

Accounts payable $850 $600

Notes payable $650 $800

Accruals $100 $300

Total current liabilities $1600 $1700
Long-term debt $600 $300

Total liabilities $2200 $2000
Stockholders’ equity

Preferred stock $100 $100
Common stock – $1.40 par, 100 000 shares outstanding in 1989 and 1990
140
$140

Paid-in capital in excess of par on common stock 360 $360

Retained earnings $700 $600

Total stockholders’ equity $1300 $1200

Total liabilities and stockholders’ equity $3500 $3200

Profit and loss account

The profit and loss account, also known as income statement, summarises profitability of the company by balancing revenue against expenses.
Revenue (sometimes called turnover) represents any increase in the owner’s equity resulting from the operation of the business. Expenses are costs incurred in connection with the earning of revenue.
In the account below, the direct costs, or cost of sales of $30 million. Deducted from the turnover of $65 million to reach gross profit of 35 million. The operating profit is reached by deducting other operating expenses, sometimes called fixed costs (in this case $15.5 million) to reach a figure of $19.5 million as an operating profit. On some statements, especially consolidated accounts, minority interests will be deducted from this sum. In this case, $5.4 million is due to the minority shareholders in the company’s subsidiaries and associated companies.
The profit figure now reached ($14.1 million) is taxable at whatever rate of corporation tax is applicable. This company pays $1.8 million in tax to end up with $12.3 million in profit after tax. This year, an amount of $450,000 is set aside as an extraordinary item. This represents a sum contributed to a special disaster fund.
The $11.85 million can now be distributed between shareholders and retentions to the reserves. In this case there are a small number of preference shareholders who receive a fixed dividend of $50,000 in total; a further $300,000 is paid out as a dividend to the ordinary shareholders. The company retains earnings of $11.5 million. Of particular interest to investors is the earnings per share, which has risen from 25p last year to 31p this year.

Activity 1. Complete the statement of accounts

Consolidated profit and loss account

Year ended 31 1991

1991 1990

000 000
1. 65.000 60.000
2. 30.000 29.000
3. 35.500 31.000
4. 15.500 14.800
5. 19.500 16.200

5.400 4.800
.6. 14.100 11.400
7. 1.800 1.900
8. 12.300 9.500
9. 450 –

11.850 9.500
10. 50 40
11. 300 190
12 11.500 9.580
13. 31 p 25p

The Balance Sheet
The balance sheet lists in summary form the firm’s financial position at a given time, i.e. at the end of the operational period covered by its matching income statement. The balance sheet is so named because it balances the firm’s assets (what it owns) against its liabilities, which can be either debt (what it owes to creditors or lenders), or equity (monies provided by stockholders). Our hypothetical Miller Corporation’s balance sheet is shown in Table 2. It lists current assets and current liabilities in separate sections, as these are turned over, i.e. eliminated or replaced, within one year or less.
In contrast, other assets and liabilities are considered fixed, i.e. long term, as they can be expected to remain on the company’s books for more than one year. Stockholders’ equity is considered to be fixed, as it is assumed in principle to have an unlimited life. In the assets section it is normal practice to list the assets in order of liquidity. Accordingly, current assets precede fixed assets, and cash has top billing, followed by marketable securities which can be converted into cash without delay. Accounts receivable are next, representing monies owed to the firm by customers who have purchased goods on credit. Finally comes inventories which include finished goods ready for sale and delivery as well as raw materials and work-in-process (goods partially finished). With proper management, both accounts receiva¬ble and inventories should be as good as cash, albeit with some delay in availability. The figure for gross fixed assets is the total of all the fixed (long-term) assets held by the firm, listed at their original cost. After deduction of accumulated depreciation we arrive at a figure for net fixed assets, also called their book value. In the liabilities section we find a listing sequence analogous to the one in the asset section. First come the current liabilities that will be most immediately paid off; accounts payable represent monies currently owed for credit purchases by the firm; notes payable are short-term loans, usually from commercial banks; and accruals represent items such as wages and salaries for which bills are not received, as well as taxes. Long-term debt comprises obligations that will not come due in the current year, and stockholders’ equity can be said to be monies owed by the corporation to its owners. In the case of Miller Corporation, we first have 10,000 shares of 12% preferred stock at S10 per share. We also have 100,000 shares of common stock with a par value of 51.40 per share. This stock was sold at S5.00 per share, and this is indicated on the balance sheet by listing the excess of S3.60 per share separately as paid-in capital. We finally have the item retained earnings. This is the total accumulated earnings retained by the company since it began operating. It is important to bear in mind that these retained earnings do not constitute ready cash, as they have been used to finance the company’s assets over the years.
By listing comparable figures for the previous year, the statements give the reader a basis for comparison with the immediate past. In this case we notice that the firm’s total assets increased from 83,200,000 in 1989 to 53,500,000 at the end of 1990. The increase can be traced to a 5100,000 increase in current assets and a 5200,000 increase in fixed assets

The balance sheet is a statement of what the company owns (its assets) and what it owes (its liabilities) at a particular time. It consists of three main sections: assets, liabilities and equity. In the balance sheet below, the fixed assets are broken into intangibles (such as patents and good will, entered in the books at a value of $1.5 million) and tangible assets (such as freehold property, land and equipment, at a book value of $7.5 million.

The ne.xt heading is current assets and this is split into three: firstly, stocks valued at $3.2 million, then debtors ( in other words outstanding payment for goods sold) at $1.3 million, and thirdly cash at the bank, worth $350.000. The total of current assets is then reduced by the by the total of current liabilities, which in this case is $2.2 million and represents amounts owing to creditors, leaving a net figure of $2.6 million. Thus the total assets less the current liabilities amount to $11.65 million.

To reach the final balance this figure must be reduced by the sum of long-term liabilities such as loans and also any provisions. In this case $2.45 million is set aside for long term loans and there is a $450.000 provision for deferred taxation. So this leaves the final balance of $8.75 million worth of net assets.

The net asset figure is represented by the final section of the balance sheet – capital and reserves. This company has a share capital of 6.5 million. This sum is topped up by a share premium account which represents the difference between the above issued share value and the actual price of the shares. In this case the capital is further increased by $1.4 million. The company has also revalued its fixed assets to give them more realistic market price so that the shareholders’ equity increases by a further $1.15 million and an equivalent amount is charged to depreciation in the profit and loss account. Finally $300.000 is deducted in retained profit.
Activity 2. Fill in the headings in the left-hand column

Balance sheet
December 31 1991 1990
1 1500 1400
2 7500 7200

9000 8600
3 3200 2800
4 1300 1400
5 350 250

4850 4450
6 (2200) (2100)
7 (2650) (2350)

11650 10950
8 (2450) (2850)
9 (450)

8750 8100
10 6500 6500
11 1400 1200
12 1150 800
13 (300) (400)
Shareholders’ funds 8750 8100

References:

1. Management Louis E. Boone, David L. Kurtz, fourth edition, 1987, McGraw-Hill Inc.
2. Insights into business, Michael Lannon, Longman, 1998
3. Economics in the news, Saul Pleeter, Philip K. Way, Addison-Wesley publishing Company 1990
4. Finance and management, Niels A. Skov Warsaw 1994
5. Market Leader, David Cotton, David Falvey, 2001
6. Oxford advanced learners’ dictionary, fifth edition, 1999
7. Longman contemporary English dictionary, 2001
8. Longman on-line dictionary www. longmanwebdict.com

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