2.

2 LANGUAGE INPUT

accountability n ответственность; подотчетность;

отчетность
align v (with) выравнивать(ся), приводить в соот-
ветствие. равняться (на кого-л.);
соглашаться (с кем-л.),
присоединяться (к какому-л.
движению), вступать в союз
(альянс)
alignment n группировка; образование союза;
увязка; слаженность
alleviate v облегчать; смягчать
to alleviate the risk уменьшить риск
approach n подход, метод
business approach деловой подход
team approach командный подход
assess v оценивать; определять
reassess v подвергать переоценке,
пересмотру
avoid v избегать; уклоняться; сторониться
avoidance предотвращение; избежание;
избегание; уклонение
risk avoidance избежание риска
tax avoidance уклонение от уплаты налога,
избежание налогов, уход от
налогообложения (снижение
суммы выплачиваемых налогов
законными средствами, в отличие
от прямого уклонения от уплаты
налогов)
aware adj знающий, осведомлённый,
сведущий, компетентный
awareness n информированность,
осведомлённость
environmental awareness осознание необходимости
охраны окружающей среды
benchmark n критерий; стандарт, ориентир
external benchmarks внешние ориентиры
commit v совершать; обязывать; вверять;
доверять
commitment n обязательство; приверженность;
преданность; заинтересованность
genuine commitment подлинная приверженность
compliance n соответствие; соблюдение;
согласие;
compliance risk риск нормативно-правового
несоответствия (риск
привлечения к юридической
ответственности, применения
мер воздействия, штрафов со
стороны органов
государственного регулирования и
надзора или контроля,
возникновения финансовых
убытков, утраты деловой
репутации в связи с
необеспечением надлежащего
соответствия деятельности
организации требованиям законов,
нормативно-правовых актов,
принятых компетентными
государственными органами,
локальных нормативных актов
организации)
compliance risk management управление риском нормативно-
правового несоответствия
compliance risk mapping картирование рисков
нормативно-правового
несоответствия
consistent adj последовательный; согласующийся;
непротиворечивый; совместимый;
состоятельный; достоверный
disclosure n раскрытие; разглашение; открытие;
разоблачение; обнаружение
corporate disclosure раскрытие корпоративной
информации
ensure v обеспечивать; гарантировать;
ручаться; поручиться; подтвердить;
делать неизбежным); убедиться;
обезопасить себя (от чего-либо)

1
 проследить (за тем, чтобы)
ensure overall alignment обеспечить расстановку сил/
слаженность
environment n внешняя среда; окружающая
обстановка; окружение;
конъюнктура; сфера; реалии
business environment экономическая обстановка;
деловая среда; условия пред-
принимательской деятельности;
конъюнктура рынка
evaluation n оценка, оценивание, аттестация
Syn: rating, testing (определение качества, количества,
значимости, состояния и т. п. чего-либо)
self-evaluation самооценка
evaluate v оценивать; вычислять; определять
стоимость
expose v подвергать; обнажать; разоблачать;
выставлять; раскрывать; экспониро-
вать; подвергать действию
exposure n риск; подвергание (финансовому)
риску; покрытие, охват; появление на
публике (на экране телевизора и т. п.)
business operation exposure подверженность риску по
деловым операциям
economic exposure подверженность экономическому
риску
market exposure подверженность финансовому
риску; демонстрация рынку
guide v направлять; руководить; вести;
управлять
facilitate v облегчать; способствовать;
содействовать
facilitator n помощник, посредник (лицо,
способствующее прогрессу, развитию);
фасилитатор (профессионал,
приглашаемый для наиболее
эффективного проведения переговоров,
встреч, принятия коллективного
решения или внедрения проекта)
guideline n ориентир; директива;
установка; критерий
2
management n управление; заведование,
руководство, менеджмент
strategic management стратегическое
управление/менеджмент
(деятельность высшего руководст-
ва организации по определению
долгосрочных целей организации и
разработке общих принципов
достижения этих целей)
crisis management антикризисное управление
(действия компании по поддержа-
нию своей кредитоспособности и
репутации после возникновения
неблагоприятной ситуации)
milestone n веха; стадия; этап, промежуточный
этап; запланированный показатель
milestones for control контрольные отметки
milestone schedule поэтапный график
mitigate v смягчать; уменьшать; облегчать
mitigation n смягчение; уменьшение
outcome n результат; итог; исход;
последствие; выход; выпуск;
порождение
outline n схема; план контур; очертание;
набросок;
outline v намечать; обрисовывать; очерчивать
performance n выполнение, исполнение,
совершение; интенсивность труда
bank performance деятельность банка
performance management организация хозяйственной
деятельности; контроль
эффективности; управление
производительностью труда;
управление эффективностью;
управление технико-
экономическими показателями
performance measure показатель работоспособности;
рабочая характеристика
regulate v регулировать; регламентировать;
упорядочивать; выверять
3
 regulator n регулятор; регламентирующий
орган; контролирующий орган;
контрольно-надзорный орган; орган
контроля, надзора и регулирования
regulatory adj регулирующий; распорядительный
strategy n стратегия; линия поведения
strategic adj стратегический
strategic business unit (SBU) стратегическая бизнес-единица,
стратегическое бизнес-
подразделение (направление дея-
тельности компании или ее продукт,
которые имеют отдельную миссию
и задачи, в отношении которых
можно составлять независимые от
других направлений или продуктов
планы и для которых можно вести
отдель-ную рекламную кампанию;
единица делового портфеля
компании)
SWOT (strength, weakness, СВОТ (четыре момента, которые
opportunity, and threat) analysis необходимо проанализировать для
оценки текущего состояния компании и
выра-ботки ее стратегии: strengths -
сильные стороны компании, weakness -
слабые стороны компании, opportunities
– благо-приятные возможности, threats
– потен-циальные источники
неприятностей)
vision n мировоззренческая концепция,
вѝдение
shared vision общее / eдиное вѝдение; общая
концепция

2.2 DEVELOPING VOCABULARY

2.2.1 Consult a dictionary and practise the pronunciation of the follo-

wing words and word combinations, quote the sentences in which they
are used in the text or submit the examples of your own:

. alignment

4
 . authority
. awareness
. collusion
. compete
. competitive
. competition
. compliance
. concurrent
. consequence
. contingencies
. controversy
. differentiation
. evaluate
. exposure
. facilitator
. feasible
. forfeiture
. governance
. guide
. in excess
. material procurement
. monitoring
. nondiversified character
. occurrence
. precarious
. proprietary
. segment
. strengthen
. strategic
. thorough knowledge
. threat
. turf-driven
2.2.2 Match the English word combinations in the left-hand column
with the Russian equivalents in the right-hand column:
1. u turf-driven viewpoint A выдвинуть стратегический план
2. o to challenge premises B деловая среда
3. m predictable as well as C достижение/осуществление
unfeasible contingencies знаковых/контрольных этапов
4. w sustainable competitive D достоверность предоставляемой

5
 advantage информации
5. k to set objective concurrent E использовать возникающие
with the assessment возможности
6. f an ongoing process F непрерывный процесс
7. h to evaluate and control G основные корпоративные цели
smth.
8. t to build a shared vision H оценивать и контролировать что-
либо
9. l to meet changed I отображать / сопоставлять
circumstances результаты
10. n to meet competitors / J определить цель, перспективы и
competition задачи организации
11. j to specify the K поставить цель, основываясь на
organization's mission, оценке
vision and objectives
12. g overall corporate L поступать в соответствии с
objectives изменившимися
обстоятельствами
13. r strategic business unit M предсказуемые и
(SBU) непредсказуемые случайности
14. a to put forward a strategic N противостоять конкурентам /
plan выдерживать конкуренцию
15. i to map outcomes O рискнуть высказать
предположения
16. c the achievement of P руководящие и контрольно-
milestone надзорные органы
17. e to make use of arising Q совпадать с чем-либо;
opportunities соответствовать чему-либо
18. b business environment R стратегическое бизнес-
подразделение
19. s performance management S структура/модель организации
architecture хозяйственной деятельности
20. d consistent communication T сформировать общее видение /
концепцию
21. q to be aligned with U точка зрения, продиктованная
something желанием защитить свою зону
влияния
22. p policy makers and V конкурентное преимущество за
regulators счет экономии на издержках о
23 v cost leadership W устойчивое конкурентное
преимуществ

2.3 BACKGROUND INFORMATION

6
 Strategic Management
According to Robert Boyden Lamb, “strategic management is an
ongoing process that evaluates and controls the business and the
industries in which the company is involved; assesses its competitors and
sets goals and strategies to meet all existing and potential competitors;
and then reassesses each strategy annually or quarterly (i.e. regularly) to
determine how it has been implemented and whether it has succeeded or
needs replacement by a new strategy to meet changed circumstances,
new technology, new competitors, a new economic environment, or a new
social, financial, or political environment.”1
По словам Роберта Бойдена Лэмба, “стратегическое управление-
это непрерывный процесс, который оценивает и контролирует бизнес
и отрасли, в которых участвует компания; оценивает своих
конкурентов и устанавливает цели и стратегии для удовлетворения
всех существующих и потенциальных конкурентов; а затем
пересматривает каждую стратегию ежегодно или ежеквартально (т. е.
регулярно) определить, как она была реализована и была ли она
успешной или нуждается в замене новой стратегией с учетом
изменившихся обстоятельств, новых технологий, новых конкурентов,
новой экономической среды или новой социальной, финансовой или
политической среды.”
Strategic management entails specifying the organization's mission,
vision and objectives, developing policies and plans, often in terms of
projects and programs, which are designed to achieve these objectives, and
then allocating resources to implement the policies and plans, projects and
programs. It means complete management of the business, including
strategic goals such as expansion of the business, increasing the market
share, access to new markets etc. It includes financial control with long
term cash flow agreements with the owners of the business and is a
combination of three main processes:
Стратегическое управление предполагает определение миссии,
видения и целей организации, разработку политики и планов, часто в
терминах проектов и программ, которые предназначены для
достижения этих целей, а затем распределение ресурсов для
реализации политики и планов, проектов и программ. Это означает
полное управление бизнесом, включая стратегические цели, такие как
расширение бизнеса, увеличение доли рынка, выход на новые рынки
и т. д. Она включает в себя финансовый контроль с долгосрочными

1
Lamb, Robert, Boyden - Clinical Professor of Finance and Management at New York University. (Competitive
strategic management. NJ, 1984)

7
 соглашениями о движении денежных средств с владельцами бизнеса
и представляет собой комбинацию трех основных процессов:
 Strategy formulation encompasses a situation analysis, self-evaluation
and competitor analysis: both internal and external; both micro-
environmental and macro-environmental. Concurrent with this
assessment, objectives are set.
 Setting objectives involves generating vision statements (long term view
of a possible future), mission statements (the role that the organization
gives itself in society), overall corporate objectives (both financial and
strategic), strategic business unit objectives (both financial and
strategic), and tactical objectives.
 Putting forward a strategic plan provides the details of how to achieve
these objectives in the light of the situation analysis.
 Разработка стратегии включает в себя анализ ситуации,
самооценку и анализ конкурентов: как внутренних, так и внешних;
как микро -, так и макроэкологических. Одновременно с этой
оценкой ставятся цели.
 • Постановка целей включает в себя формирование заявлений о
видении (долгосрочное видение возможного будущего), заявлений
о миссии (роль, которую организация отводит себе в обществе),
общих корпоративных целей (как финансовых, так и
стратегических), стратегических целей бизнес-единицы (как
финансовых, так и стратегических) и тактических целей.
 • Выдвижение стратегического плана дает подробную
информацию о том, как достичь этих целей в свете анализа
ситуации.
This three-step strategy formulation process is sometimes referred to as
determining where you are now, where you want to go, and how to get
there. These three questions are the essence of strategic planning.
Этот трехэтапный процесс формулирования стратегии иногда
называют определением того, где вы находитесь сейчас, куда вы
хотите пойти и как туда добраться. Эти три вопроса составляют суть
стратегического планирования.
Strategic management is nothing but planning for predictable as well
as unfeasible contingencies. It is applicable to small as well as large
organizations as even the smallest organizations face competition and, by
formulating and implementing appropriate strategies, they can attain
sustainable competitive advantage.
Strategic management, therefore, is the highest level of managerial
activity, usually formulated by the Board of Directors and performed by
the organization's Chief Executive Officer (CEO) and executive team.
8
 Стратегическое управление-это не что иное, как планирование как
предсказуемых, так и неосуществимых непредвиденных
обстоятельств. Она применима как к малым, так и к крупным
организациям, поскольку даже самые мелкие организации
сталкиваются с конкуренцией и, формулируя и реализуя
соответствующие стратегии, могут достичь устойчивого
конкурентного преимущества.
Таким образом, стратегическое управление-это высший уровень
управленческой деятельности, обычно формулируемый Советом
директоров и осуществляемый главным исполнительным директором
(CEO) организации и исполнительной командой.
A key role of a CEO's is to communicate a vision and to guide
strategic planning. Those who have successfully implemented strategic
plans have often reported that involving teams at all levels in strategic
planning helps to build a shared vision, and increases each individual's
motivation to see plans succeed.
Clarity and consistent communication, from mapping desired
outcomes to designing performance measures, seem to be essential to
success. Successful leaders have often engaged their teams by simply
telling the story of their shared vision, and publicly celebrating large and
small wins, such as the achievement of milestones. To ensure that the
vision is shared, teams need to know that they can test the theory, voice
opinions, challenge premises, and suggest alternatives without fear of
reprimand.
Ключевая роль генерального директора заключается в передаче
видения и руководстве стратегическим планированием. Те, кто
успешно реализовал стратегические планы, часто сообщали, что
вовлечение команд на всех уровнях в стратегическое планирование
помогает сформировать общее видение и повышает мотивацию
каждого человека к успеху планов.
Ясность и последовательная коммуникация, начиная от
определения желаемых результатов и заканчивая разработкой
показателей эффективности, по-видимому, необходимы для успеха.
Успешные лидеры часто вовлекают свои команды, просто
рассказывая историю своего общего видения и публично празднуя
большие и малые победы, такие как достижение вех. Чтобы
обеспечить общее видение, команды должны знать, что они могут
проверить теорию, высказать свое мнение, оспорить предпосылки и
предложить альтернативы, не опасаясь выговора.
Implementing strategic plans may require leaders who lead through
inspiration and coaching rather than command and control. Recognizing

9
and rewarding success, inspiring, and modeling behaviors is more likely to
result in true commitment than use of authority, which can lead to passive
resistance and hidden rebellion.
The senior management team must come together to review, discuss,
challenge, and finally agree on the strategic direction and key components
of the plan. Without genuine commitment from the senior team,
successful implementation is unlikely.
Реализация стратегических планов может потребовать лидеров,
которые ведут через вдохновение и коучинг, а не через командование
и контроль. Признание и поощрение успеха, вдохновение и
моделирование поведения с большей вероятностью приведут к
истинной приверженности, чем использование авторитета, что может
привести к пассивному сопротивлению и скрытому бунту.
Команда высшего руководства должна собраться вместе, чтобы
рассмотреть, обсудить, оспорить и, наконец, согласовать
стратегическое направление и ключевые компоненты плана. Без
подлинной приверженности со стороны старших сотрудников
успешная реализация маловероятна.
Strategic group members must challenge themselves to be clear in their
purpose and intent, and to push for consistent operational definitions that
each member of the team agrees to. This prevents differing perceptions or
turf-driven viewpoints later on. A carefully chosen, neutral facilitator
can be essential in helping the team to overcome process, group A
carefully chosen, neutral facilitator dynamics, and interpersonal issues.
Члены стратегической группы должны поставить перед собой
задачу быть ясными в своих целях и намерениях и добиваться
последовательных оперативных определений, с которыми согласен
каждый член группы. Это предотвращает различные восприятия или
точки зрения, основанные на дерне, позже. Тщательно подобранный
нейтральный фасилитатор может иметь важное значение для того,
чтобы помочь команде преодолеть процесс, сгруппировать тщательно
подобранную нейтральную динамику фасилитатора и
межличностные проблемы.
The manager must have a thorough knowledge and analysis of the
general and competitive organizational environment so as to take right
decisions. They should conduct a SWOT Analysis (Strengths,
Weaknesses, Opportunities, and Threats), i.e., they should make best
possible utilization of strengths, minimize the organizational weaknesses,
make use of arising opportunities from the business environment and
shouldn’t ignore the threats. The identification of threats to an organization
and its stakeholders, and the methods used by the organization to deal with

10
these threats is defined as crisis management. Crisis management often
requires decisions to be made within a short time frame, and often after an
event has already taken place. In order to reduce uncertainty in the event of
a crisis, organizations often create a crisis management plan.
Менеджер должен обладать глубокими знаниями и анализом
общей и конкурентной организационной среды, чтобы принимать
правильные решения. Они должны проводить SWOT-анализ
(Сильные и слабые стороны, Возможности и угрозы), то есть
максимально эффективно использовать сильные стороны,
минимизировать слабые стороны организации, использовать
возникающие возможности из бизнес-среды и не игнорировать
угрозы. Определение угроз для организации и ее заинтересованных
сторон, а также методов, используемых организацией для борьбы с
этими угрозами, определяется как антикризисное управление.
Антикризисное управление часто требует принятия решений в
короткие сроки и часто после того, как событие уже произошло.
Чтобы уменьшить неопределенность в случае кризиса, организации
часто создают план антикризисного управления.
As the strategic plan and performance measures are being created, the
organization must make sure that they are aligned with the systems,
structure, culture, and performance management architecture. The best
plans may fail because the reward systems motivate different behaviors
than those called for in the strategy map and measurement design. For
example, if a team approach to business development is outlined in the
plan, but sales commission remains individual, organizations will be hard
pressed to see a team focus.
The career development, performance management and reward
systems must be reviewed to ensure linkage to and support of the strategic
intent. Many organizations have found they needed to link their strategic
plan to their internal systems and structures to ensure overall alignment
and to avoid confusion.
По мере разработки стратегического плана и показателей
эффективности организация должна убедиться, что они согласуются с
системами, структурой, культурой и архитектурой управления
эффективностью. Лучшие планы могут потерпеть неудачу, потому
что системы вознаграждения мотивируют поведение, отличное от
того, которое предусмотрено в стратегической карте и измерении.
Например, если командный подход к развитию бизнеса изложен в
плане, но комиссия по продажам остается индивидуальной,
организациям будет трудно увидеть командный фокус.

11
 Системы карьерного роста, управления служебной деятельностью
и вознаграждения должны быть пересмотрены для обеспечения
увязки и поддержки стратегического намерения. Многие организации
обнаружили, что им необходимо увязать свой стратегический план со
своими внутренними системами и структурами, чтобы обеспечить
общую согласованность и избежать путаницы.
These days, it is not enough for a company to merely be profitable; it
also needs to demonstrate good corporate citizenship through
environmental awareness, ethical behavior and sound corporate
governance practices. Naturally, most companies strive to have a high
level of corporate governance. Corporate governance is a very broad
topic that encapsulates most, if not all, of the influences on business
decisions. The academic definition of corporate governance includes all
influences that affect the institutional processes of a corporation, including
those for the appointing of controllers, regulators and outside consultants.
Extended a little further, corporate governance includes all types of firms.
В наши дни компании недостаточно просто быть прибыльной; она
также должна демонстрировать хорошую корпоративную
гражданскую позицию через экологическую осведомленность,
этическое поведение и разумную практику корпоративного
управления. Естественно, большинство компаний стремятся к
высокому уровню корпоративного управления. Корпоративное
управление-это очень широкая тема, которая включает в себя
большую часть, если не все, влияния на бизнес-решения.
Академическое определение корпоративного управления включает в
себя все факторы, влияющие на институциональные процессы
корпорации, в том числе на назначение контролеров, регуляторов и
внешних консультантов. Далее, корпоративное управление включает
в себя все типы фирм.
Corporate governance essentially involves balancing the interests of
the many stakeholders in a company - these include its shareholders,
management, customers, suppliers, financiers, government and the
community. Since corporate governance also provides the framework for
attaining a company's objectives, it encompasses practically every sphere
of management, from action plans and internal controls to performance
measurement and corporate disclosure. An effective system of corporate
governance should increase an organization’s transparency and
accountability both internally and externally.
Корпоративное управление, по сути, предполагает баланс
интересов многих заинтересованных сторон в компании - к ним
относятся ее акционеры, руководство, клиенты, поставщики,

12
финансисты, правительство и общество. Поскольку корпоративное
управление также обеспечивает основу для достижения целей
компании, оно охватывает практически все сферы управления, от
планов действий и внутреннего контроля до оценки эффективности и
раскрытия корпоративной информации. Эффективная система
корпоративного управления должна повысить прозрачность и
подотчетность организации как внутри, так и за ее пределами.
During the last decade, corporate governance rules and practices have
improved in many countries and companies. But much remains to be done.
And today, policy makers and regulators are faced with the important
challenge to adapt corporate governance frameworks to rapid changes in
both the corporate and financial landscape.
За последнее десятилетие правила и практика корпоративного
управления улучшились во многих странах и компаниях. Но многое
еще предстоит сделать. И сегодня перед политиками и
регулирующими органами стоит важная задача-адаптировать систему
корпоративного управления к быстрым изменениям как в
корпоративном, так и в финансовом ландшафте.

2.4 COMPREHENSION
Understanding the reading
2.4.1 Give extensive answers to the questions. Use the following
expressions to present your answers:

 I think that the underlying reason is that …  To put it briefly, … .

 It stands to reason that …  To speak plainly,
….
 To get back to the point, … .  I daresay, … .
1. What are the main functions of strategic management?
2. Why does strategic management mean complete management of the
business?
3. What processes are essential for strategic management?
4. In what way can organizations attain sustainable competitive
advantage?
5. How can the role of organization's Chief Executive Officer (CEO)
and executive team be defined?

13
 6. How can strategic management help management teams gain
success?
7. What makes implementation successful?
8. What is SWOT and in what way does it relate to crisis management?
9. In what way can the efficiency of corporate governance be achieved?
10. What new phenomena do policy makers and regulators face today?
1. Каковы основные функции стратегического менеджмента?
2. Почему стратегическое управление означает полное
управление бизнесом?
3. Какие процессы необходимы для стратегического
управления?
4. Каким образом организации могут достичь устойчивого
конкурентного преимущества?
5. Как можно определить роль Главного исполнительного
директора организации (CEO) и исполнительной команды?
6. Как стратегическое управление может помочь руководящим
командам добиться успеха?
7. Что делает внедрение успешным?
8. Что такое SWOT и как он связан с антикризисным
управлением?
9. Каким образом может быть достигнута эффективность
корпоративного управления?
10. С какими новыми явлениями сталкиваются сегодня
политики и регулирующие органы?
Scanning
2.4.2 Scan the text to determine whether these statements are true (T)
or false (F). With a partner, discuss why.
e.g. In my opinion it is true that … .
I’m afraid it is false that ...,
because ... .

1. Strategic management can hardly be applied to small organizations as

only corporations formulate and implement appropriate strategies.
2. To be a success leaders should work out shared vision, and make
their teams know that their opinions are valued, that they dare openly
say what they suppose is true.
3. It’s important for strategic group members to be clear in their

14
 purpose and intent, and to agree on consistent operational definitions.
It’ll help avoid the conflict of interests.
4. Crisis managers do not hurry to make decisions because they act after
an event has already taken place.
5. Leaders who lead through inspiration and coaching rather than
command and control can ruin the business.
6. Corporate governance is concerned with not only the company itself,
but also to its shareholders, management, customers, suppliers,
financiers, government and the community.
1. Стратегическое управление вряд ли может быть применено к
малым организациям, поскольку только корпорации
формулируют и реализуют соответствующие стратегии.
2. Чтобы добиться успеха, лидеры должны выработать общее
видение и дать своим командам понять, что их мнение ценится,
что они осмеливаются открыто говорить то, что считают
правдой.
3. Важно, чтобы члены стратегической группы четко определяли
свои цели и намерения, а также согласовывали
последовательные оперативные определения. Это поможет
избежать конфликта интересов.
4. Кризисные менеджеры не спешат принимать решения, потому
что они действуют после того, как событие уже произошло.
5. Лидеры, которые ведут через вдохновение и коучинг, а не
через командование и контроль, могут разрушить бизнес.
6. Корпоративное управление относится не только к самой
компании, но и к ее акционерам, менеджменту, клиентам,
поставщикам, финансистам, правительству и обществу.
2.4.3 Scan the text and find the information to complete the following
lists:
1. Strategic management involves … .
A ______________________________________________________
B _______________________________________________________________________
C_______________________________________________________
D _______________________________________________________
E_________________________________________________________________________
2. Strategic planning means answering to the following questions … .

15
A ________________________________________________________
B ________________________________________________________
C ________________________________________________________
3. Successful management means … .
A_____________________________________________________
B ________________________________________________________
C ________________________________________________________
D ________________________________________________________
E ________________________________________________________
F ________________________________________________________
G ________________________________________________________
4. To be efficient a manager should … .
A ________________________________________________________
B ________________________________________________________
C ________________________________________________________
D ________________________________________________________
E ________________________________________________________

2.4.4 Scan the text again and find the English equivalents for the
following:
1. давать оценку и контролировать работу бизнеса непрерывный
процесс
2. стратегическое бизнес-подразделение
3. конкурентное преимущество за счет экономии на издержках
4. оценивать конкурентов
5. противостоять конкурентам
6. определить цель, перспективы и задачи организации
7. выделить ресурсы для осуществления политики
8. долгосрочное соглашение о движении наличности
9. цели устанавливаются исходя из оценки ситуации.
10. планирование на случай обстоятельств/расходов/доходов, о
возможности получения/возникновения которых известно на
момент составления финансовой отчетности, но точный
16
 размер которых будет известен только после того, как
произойдет или не произойдет определенное событие; либо
непредсказуемых обстоятельств/расходов/доходов
11. достигнуть устойчивого конкурентного преимущества
12. сформировать общее видение/концепцию
13. ясность и достоверность информации
14. обозначить желаемые результаты
15. разработать показатели эффективности
16. достижение запланированных показателей
17. рискнуть высказать предположения/допущения
18. пассивное сопротивление и скрытое противодействие
19. обеспечить общую расстановку сил/ слаженность
20. проявлять корпоративную социальную ответственность,
посредством экологически грамотного поведения
21. раскрытие корпоративной информации
22. адаптировать механизмы корпоративного управления к
стремительным изменениям
2.4.5 Develop the following ideas. Make use of the active vocabulary
given in brackets:

1. Inspiration and coaching very often prove to be more efficient in

management than command and control.
(to result in true commitment; the use of authority; to lead to passive
resistance and hidden rebellion; to review, discuss, challenge, agree on the
strategic direction; genuine commitment from the senior team, successful
implementation; to be clear in purpose and intent; to prevent differing
perceptions or turf-driven viewpoints; neutral facilitator)
2. The SWOT analysis provides information that is helpful in matching
the firm's resources and capabilities to the competitive environment in
which it operates.
(to have a thorough knowledge and analysis of the general and competitive
organizational environment; conduct a SWOT Analysis; to make best
possible utilization of strengths: to minimize the organizational
weaknesses; to make use of arising opportunities; not to ignore the threats)
17
3. In contrast to risk management, which involves assessing potential
threats and finding the best ways to avoid those threats, crisis
management involves dealing with threats before, during, and after they
have occurred.
(the identification of threats to an organization and its stakeholders; crisis
management; to make decisions within a short time frame; to reduce
uncertainty; to create a crisis management plan; performance measures;
to be aligned with the systems, structure, culture; performance
management architecture; the reward systems)
4. Most companies strive to have a high level of corporate governance.
(to be profitable; to demonstrate good corporate citizenship;
environmental awareness, ethical behavior; corporate governance; to
affect the institutional processes of a corporation; to appoint
controllers, regulators and outside consultants; to balance the interests
of the stakeholders; to provides the framework for attaining a
company's objectives; performance measurement; corporate disclosure;
an organization’s transparency and accountability; policy makers and
regulators)

2.4.5 Развивайте следующие идеи. Используйте активную лексику,

приведенную в скобках:
1. Вдохновение и коучинг очень часто оказываются более
эффективными в управлении, чем командование и контроль.
(привести к истинной приверженности; использование авторитета;
привести к пассивному сопротивлению и скрытому восстанию;
рассмотреть, обсудить, оспорить, согласовать стратегическое
направление; подлинная приверженность со стороны старшего
звена, успешная реализация; быть ясным в цели и намерениях;
предотвратить различные восприятия или точки зрения,
основанные на дерне; нейтральный фасилитатор)
2. SWOT-анализ предоставляет информацию, которая помогает
сопоставить ресурсы и возможности фирмы с конкурентной
средой, в которой она работает.
(иметь глубокие знания и анализ общей и конкурентной
организационной среды; проводить SWOT-анализ; наилучшим
образом использовать сильные стороны: минимизировать слабые

18
 стороны организации; использовать возникающие возможности; не
игнорировать угрозы)
3. В отличие от управления рисками, которое включает в себя
оценку потенциальных угроз и поиск наилучших способов их
предотвращения, кризисное управление включает в себя борьбу с
угрозами до, во время и после их возникновения.
(выявление угроз для организации и ее заинтересованных сторон;
антикризисное управление; принятие решений в короткие сроки;
снижение неопределенности; создание плана антикризисного
управления; показатели эффективности; приведение в соответствие
с системами, структурой, культурой; архитектура управления
эффективностью; системы вознаграждения)
4. Большинство компаний стремятся к высокому уровню
корпоративного управления.
(быть прибыльным; демонстрировать хорошую корпоративную
гражданскую позицию; экологическую осведомленность,
этическое поведение; корпоративное управление; влиять на
институциональные процессы корпорации; назначать контролеров,
регуляторов и внешних консультантов; балансировать интересы
заинтересованных сторон; обеспечивать основу для достижения
целей компании; измерение эффективности; корпоративное
раскрытие информации; прозрачность и подотчетность
организации; директивные органы и регулирующие органы.)

2.5 SPEAKING & WRITING

Language focus
Word-Combination Building
2.5.1 All the words below can be combined with strategic or strategy in
a two-word partnership, e.g. strategic plan. Add the word
strategic or strategy either before or after each of the words
below: Все приведенные ниже слова могут быть объединены
со стратегией или стратегией в двухсловном партнерстве,
например, стратегический план. Добавьте слово strategic

19
 или strategy перед или после каждого из приведенных ниже
слов:

1. ................. alliance .................... 10. ............ long-range …….......

2. ................ decision ...................
3. ................. business ..................
4. ................... global ………........
5. ................. planning ...................
6. ................. political ...................
7. ................. decision ...................
8. ................ investment …….......
9. .............. management …...........
11. ............... interest ..................
12. ........... advertising ………...
13. ................. plan ....................
14. .............. marketing .............
15. ............ segmentation …......
16. .............. corporate …….......
17. ………. budgeting ……....
18. ............... reserves ................

Skills focus

2.5.2 a. Read the extract and fill in prepositions wherever necessary.

b. Discuss the text.
c. Give the text the appropriate heading.
а) Прочитайте выписку и заполните предлоги там, где
это необходимо.
б. Обсудите текст.
в. Дайте тексту соответствующий заголовок.
_________________________________
Corporate governance refers … the formally established guidelines that
determine how a company is run. The company’s board … directors
approves and periodically reviews the guidelines, which must align … the
company’s direction, performance and regulatory practices.
Corporate governance specifies … the rights and responsibilities …
company stakeholders, with particular emphasis … three groups:
• Shareholders who own the company
• The board of directors who oversee … the managers
• Management which runs the daily operations
A more actionable definition of participants … corporate governance is
limited … those who directly influence … how a firm is directed … the
interest … shareholders and other stakeholders. These principle groups can
be separated … three categories: shareholders, the board of directors and
senior executives. Corporate governance may also specify the rights of
other stakeholders, such … employees, customers, creditors and suppliers.

20
 The three groups identified have two defining characteristics. The first
is that they must have a very real, enforceable and conscious influence …
the actions taken … a firm. The second is that they all have a real financial
interest … the success … the firm.
The groups involved … corporate governance are charged …
identifying a method … aligning the incentives and rewards of business
success in a mutually attractive way.
Корпоративное управление относится ... к формально
установленным руководящим принципам, которые определяют, как
работает компания. Совет директоров компании ... утверждает и
периодически пересматривает руководящие принципы, которые
должны согласовывать ... направление деятельности компании, ее
эффективность и нормативную практику.
Корпоративное управление определяет ... права и обязанности ...
заинтересованных сторон компании, с особым акцентом ... три
группы:
• Акционеры, владеющие компанией
• Совет директоров, который курирует ... менеджеров
• Управление, которое управляет ежедневными операциями
Более действенное определение участников ... корпоративное
управление ограничено ... теми, кто непосредственно влияет … как
фирма направляется ... интерес ... акционеры и другие
заинтересованные стороны. Эти основные группы можно разделить ...
на три категории: акционеры, совет директоров и руководители
высшего звена. Корпоративное управление может также определять
права других заинтересованных сторон, таких как сотрудники,
клиенты, кредиторы и поставщики.
Выделенные три группы имеют две определяющие
характеристики. Во-первых, они должны иметь очень реальное,
осуществимое и сознательное влияние ... на действия ... фирмы. Во-
вторых, все они имеют реальный финансовый интерес ... успех ...
фирмы.
Вовлеченные группы ... корпоративное управление поручено ...
определение метода ... согласование стимулов и вознаграждений за
успех бизнеса взаимно привлекательным образом.

21
2.5.3 a. Complete the text by using the following word combinations
from the box and fill in the grid.

b. Discuss the text.

A shareholder G sustainable growth
B perform H mitigate risks
C governance I stakeholders
D access J a competitive advantage
E awareness K private sector
F support L liabilities
If firms include all social and economic institutions that affect the
production and sale of goods and services, then corporate governance
includes nearly all public and private sector organizations. Even if
technically correct, this broad scope limits the degree of specificity that
business analysis can achieve. This breakdown of corporate governance is
analogous to the separation of powers in the U.S. federal government.
Each group serves to support and check the actions of the other groups.
Companies that best find this balance tend to perform better and generate
greater shareholder value. Good corporate governance is not an end in
itself. It is a means to support economic efficiency, sustainable growth and
financial stability. It facilitates companies' …(7)… to capital for long-term
investment and helps ensure that shareholders and other …(8)…
stakeholders who contribute to the success of the corporation are treated
fairly. Both investors and end users of products and services provided by
corporations have experienced increased …(9)… of social and
environmental concerns. Acting in an unethical matter can result in
substantial …(10)… for a company in the form of lawsuits, penalties from
authorities and a damaged reputation. Proper corporate governance is an
effective tool to mitigate risks. Internal management and external
stakeholders of companies – particularly those exposed to sensitive
industries – have developed increased focus on mitigating the risk of doing
business in an effort to gain …(12)… . Reduced risk translates into
reduced costs, enhancing a company's ability to compete in the
marketplace.

1 2 3 4 5 6 7 8 9 10 11 12
K

22
2.5.4 a. Read the text, ignoring the missing parts.
Businesses are constantly seeking competitive advantages in the
marketplace. There are many different ways in which this can be done, but
many will focus on a few tried and true methods of gaining a leg up on the
competition. 1-B These methods can generally be classified into about four
different primary categories. Both Stanford University and the University
of Cambridge cite Michael Porter's broad and narrow categories of
competitive strategies as the basis for understanding how businesses try to
compete.
Cost leadership is the first competitive advantage businesses often
attempt to gain. 2-A Cost leadership may be classified as an offensive
strategy, but at a lower price. Cost leadership can occur when a company
finds ways to produce goods at a lower cost through the perfection of
production methods or by the utilization of resources in a more efficient
manner than competitors. Other factors, such as proprietary technology,
can also factor into this type of advantage. 3-G Cost leadership as an
advantage occurs when a business is able to offer the same quality product
as its competitors, whereby businesses attempt to drive competitors out of
the market by consistently using price strategies designed to win over
consumers.
Differentiation is a second strategy that businesses often use to set
themselves apart from competitors. In a differentiation strategy, low cost is
only one of many possible factors that may set aside a business from
others. 4-H Business that differentiate themselves typically look for one or
more marketable attributes that they have that can set them apart from their
competitors. They then find the segment of the market that finds those
attributes important and market to them. The process can also work in the
other direction with businesses conducting research to determine which
things consumers find most important and then developing a niche market
for those products or characteristics.
Another way for a business to gain a competitive advantage is to utilize
a defensive strategy. 5-D The advantage gained by this type of strategy is
that it allows the business to further distance itself from its competition by,
in some sense, maintaining a competitive advantage it has gained.
Therefore, this strategy is closely related to differentiation and cost

23
leadership because it is a method used by businesses to keep those
advantages in place once they have been attained. 6-E Whereas the other
two strategies are more offensive in nature, this strategy becomes an actual
advantage as it becomes increasingly difficult for so-called competitors to
offer any real opposition to the business.
Competitive advantages can also be gained by businesses that seek
strategic alliances with other businesses in related industries or within the
same industry. 7-C Businesses have to be careful not to cross the line
between alliances and collusion, though. Collusion occurs when businesses
within the same industry work together to artificially control prices.
Strategic alliances, on the other hand, are more along the lines of joint
ventures that businesses use to pool resources and gain themselves
exposure at the expense of other competitors not in the alliance.

2.5.4 а. Прочитайте текст, не обращая внимания на недостающие

части.
Бизнес постоянно ищет конкурентные преимущества на рынке.
Есть много различных способов, с помощью которых это можно
сделать, но многие будут сосредоточены на нескольких проверенных
и верных методах завоевания позиции на соревнованиях. 1-B Эти
методы, как правило, можно разделить примерно на четыре основные
категории. И Стэнфордский университет, и Кембриджский
университет ссылаются на широкие и узкие категории конкурентных
стратегий Майкла Портера как на основу для понимания того, как
бизнес пытается конкурировать.
Лидерство в издержках-это первое конкурентное преимущество,
которое часто пытаются получить компании. 2. Лидерство в
издержках может быть классифицировано как наступательная
стратегия, но по более низкой цене. Лидерство в издержках может
иметь место, когда компания находит способы производить товары с
меньшими затратами за счет совершенствования методов
производства или более эффективного использования ресурсов, чем
конкуренты. Другие факторы, такие как запатентованная технология,
также могут влиять на этот тип преимущества. 3-G Лидерство в
издержках как преимущество возникает, когда бизнес способен
предложить тот же качественный продукт, что и его конкуренты, в
24
результате чего компании пытаются вытеснить конкурентов с рынка,
последовательно используя ценовые стратегии, предназначенные для
завоевания потребителей.
Дифференциация-это вторая стратегия, которую бизнес часто
использует, чтобы отделить себя от конкурентов. В стратегии
дифференциации низкая стоимость является лишь одним из многих
возможных факторов, которые могут выделить бизнес из других. 4-H
Бизнес, который дифференцирует себя, как правило, ищет один или
несколько рыночных атрибутов, которые у них есть, которые могут
отличить их от конкурентов. Затем они находят сегмент рынка,
который считает эти атрибуты важными, и рынок для них. Этот
процесс также может работать в другом направлении, когда
компании проводят исследования, чтобы определить, какие вещи
потребители считают наиболее важными, а затем развивают нишевый
рынок для этих продуктов или характеристик.
Еще один способ для бизнеса получить конкурентное
преимущество-использовать оборонительную стратегию. 5-D
Преимущество такого типа стратегии заключается в том, что она
позволяет бизнесу еще больше дистанцироваться от конкурентов, в
некотором смысле сохраняя полученное конкурентное
преимущество. Таким образом, эта стратегия тесно связана с
дифференциацией и лидерством в издержках, поскольку это метод,
используемый предприятиями для сохранения этих преимуществ
после их достижения. В то время как две другие стратегии являются
более агрессивными по своей природе, эта стратегия становится
реальным преимуществом, поскольку так называемым конкурентам
становится все труднее предложить какую-либо реальную оппозицию
бизнесу.
Конкурентные преимущества также могут быть получены
предприятиями, стремящимися к стратегическим альянсам с другими
предприятиями в смежных отраслях или в рамках одной отрасли.
Однако компании 7-С должны быть осторожны, чтобы не пересекать
границу между альянсами и сговорами. Сговор возникает, когда
предприятия одной отрасли работают вместе, чтобы искусственно
контролировать цены. Стратегические альянсы, с другой стороны,
больше похожи на совместные предприятия, которые предприятия
25
используют для объединения ресурсов и получения прибыли за счет
других конкурентов, не входящих в альянс.

b. Look at the missing parts A-H and fit them in the gaps. There is one extra
you don’t need.

A Cost leadership may be classified as an offensive strategy,

B These methods can generally be classified into about four different
primary categories.
C Businesses have to be careful not to cross the line between alliances
and collusion, though.
D The advantage gained by this type of strategy is that it allows the
business to further distance itself from its competition
E Whereas the other two strategies are more offensive in nature, this
strategy becomes an actual advantage
F Therefore, it must be realized that each component interacts with the
other components and that this interaction often happens in chorus.
G Cost leadership as an advantage occurs when a business is able to
offer the same quality product as its competitors,
H Business that differentiate themselves typically look for one or more
marketable attributes

1 2 3 4 5 6 7
B
c. Find words or word combinations in the text that mean the following.
… a business concept describing attributes that allow an
organization to outperform its competitors
… a way to establish the competitive advantage, the lowest
cost of operation in the industry
… development from the one to the many, the simple to the
complex, or the homogeneous to the heterogeneous, the
action or process of differentiating
… an organization or country engaged in commercial or
economic competition with others
… union or association relating to the identification of long-
term or overall aims and interests and the means of
26
 achieving them and formed for mutual benefit, especially
between countries or organizations
… secret or illegal co-operation, especially between
countries or organizations
… receive publicity
… if you achieve something like that, you do it in a way
which might cause somebody harm or disadvantage
… receive help against rivals
… to go beyond the limits of something by doing something
unacceptable
d. Scan 2.5.1-4 and find the English equivalents for the following:
1. направление деятельности фирмы, ее результативность и
методы контроля и регулирования
2. стороны, заинтересованные в деятельности компании
3. руководитель высшего ранга/звена
4. стратегия выпуска продукта, который имеет уникальное
качество, принципиально отличающееся от качества продуктов
конкурентов
5. отвечать за
6. согласовать стимулы и вознаграждения за успех в бизнесе
7. схема корпоративного управления
8. работать лучше и производить больше прибыли для акционеров
9. поддерживать экономическую эффективность, устойчивый рост
и финансовую стабильность
10. упростить доступ компаний к капиталам для долгосрочных
инвестиций
11. способствовать успеху корпорации
12. осознание социальных и экологических проблем
13. судебные иски, штрафы от властей и испорченная репутация
14. контролировать/уменьшать риск
15. заинтересованные стороны, подверженные воздействию
чувствительно реагирующих отраслей
16. получить конкурентное преимущество
17. снижение риска приводит к сокращению расходов
18. получить поддержку в конкурентной борьбе
19. отличать альянс от сговора
20. объединить ресурсы и получить популярность за счет других
конкурентов

27
WATCH OUT: translator's "false friends"
assess evaluate rate measure estimate value
2.5.5 a. Look up the dictionary to find the difference between the
words assess, evaluate, rate, measure, estimate, value. Match the
words with their meanings. Fill in the grade.
1 assess A to regulate by a standard; to estimate or appraise by a
criterion
2 evaluate B to succeed in finding or obtaining the property
3 rate C to determine the significance, worth, or condition of,
usually by careful appraisal and study
4 measure D to determine the importance, size, or value of; to make an
official valuation of (property) for the purposes of
taxation / to determine the rate or amount of (as a tax)
5 estimate E to consider or rate highly; to rate or scale in usefulness,
importance, or general worth; to estimate or assign the
monetary worth
6 value F to determine or assign the relative rank or class of / to
grade; to estimate the normal capacity or power of
7 G to judge tentatively or approximately the value, worth,
or significance; to determine roughly the size, extent, or
nature; to produce a statement of the approximate cost

1 2 3 4 5 6
D
b. Fill in the blanks with assess, evaluate, rate, measure, estimate,
value in the grammatically and lexically appropriate form.
1. When you … a person, thing, or situation, you consider them in order
to make a judgement about them.
2. Black is … very high this season.
3. When you … the amount of money that something is worth or should
be paid, you calculate or estimate it.
4. The room … 15 feet wide by 30 feet long.
5. Ask them to send you information on how to … the value of your
belongings.
6. After the hurricane, officials … the town's need for aid.
28
7. They … the distance at about three miles.
8. The company was … $12 million in fines for polluting the river.
9. We need to … how much paint we'll need for the job.
10. The cost of the project has been … at about 10 million dollars.
11. He … that current oil reserves are 20 percent lower than they were a
year ago.
12. He was … an excellent pianist
13. She … the time she spends with her family.
14. Damage to the boat was … at $5,000.
15. These antique coins are highly … by collectors.
16. After executing the environmental analysis process, management
should … it on a continuous basis.
17. If you … the quality, value, or effect of something, you discover or
judge how great it is.
Presenting information
2.5.6
A. Search for keywords crisis management, corporate governance,
social corporate responsibility, risk management in the Internet to
find further information about one of these items. Report on your
findings in a presentation using the following points and helpful
phrases from the chart:
Introduction: We make general remarks about the subject.
Main Part: We present our viewpoints and justify them with
examples.
Conclusion: We give the gist of the presentation again briefly in a
different way.

Greetings Introduction Main Part Conclusion

(preparing the (delivering the (winding-up)
audience) message)
Good morning I’m going to dwell To begin with … . In conclusion I’d
/ afternoon, upon ... . like to … .
colleagues!

29
 Dear I realize that time My intention is to I hope I managed
listeners! is short and will do make 2 (3,4, …) to dot the “i”s and
my best to be brief points. cross the “t”s.
and to the point.

Honoured Firstly, (secondly That’s about all

guests! …) there is to it.
Moreover, … . Thank you for
listening.

I’d like to get Now if there are

back to my any questions, I’ll
original be happy to answer
contention … . them.

B. Comment on the presentation given by your colleague. Make use of

the following points and helpful phrases. Do your best so as not to
offend the speaker and to show the positive sides of the presentation
rather than criticize it:
- The timing
 (not) to follow the time-limit
 to have a suitable timing (about the presentation)
- The lay-out of the presentation
 to be well (badly, appropriately, ... etc.) - thought-out, - designed
 to be (in)coherent
 the parts (barely) go well with each other
 to be clearly organized into meaningful parts
- The manner of presentation
 to have a good/poor/(in)sufficient eye-to-eye contact with target listeners
 to speak distinctly and clearly
 to adopt good posture
 to be (quite/hardly/more or less) confident and in control of his/her
emotions
- General language ability
 to boast of a good ( adequate, appropriate) language ability
30
 to use helpful phrases (active vocabulary) in a full range
 to be (not) of the required standard
 to impede understanding(about mispronouncings and grammatical
errors)
- The contents of the presentation
 to know the subject up and down and sideways
 to be clear and sensible
 to be straightforward / uncomplicated and easy to understand
- The use of visuals and slide structure
 to exemplify the main points of the presentation
 to help the audience concentrate on what the lecturer is saying
 the chosen fonts (colour, background, graphs) are in concord with the
contents

2.6 DIALOGUE
Read and translate the following dialogue:
Risk management
A. You won’t deny the fact that, in contrast to crisis management that
involves dealing with threats before, during, and after they have
occurred, risk management involves assessing potential threats.
Moreover, it aims at controlling threats to an organization's capital and
earnings and finding the best ways to avoid them.
B. What kind of risks do you keep in mind?
A. Actually, risks could stem from a wide variety of sources, including
financial uncertainty, legal liabilities, strategic management errors,
accidents and natural disasters
B. Definitely. I know for sure that in an increasing number of industries,
boards of directors are required to review and report on the adequacy
of enterprise risk management processes. As a result, such means of
risk assessment as risk analysis, internal audits have become major
components of business strategy.
A. It is worth mentioning that since the early 2000s, several industry and
government bodies have expanded regulatory compliance rules that
scrutinize companies' risk management plans, policies and procedures.
B. By the way, are there any techniques designed to help organizations
identify specific threats, assess unique vulnerabilities to determine
their risk, identify ways to reduce these risks and then implement risk
31
 reduction efforts according to organizational strategy.
A. Do you mean risk management standards? All risk management plans
follow the same steps that combine to make up the overall risk
management process To begin with, the company identifies and
defines potential risks that may negatively influence a specific
company process or project. Once specific types of risk are identified,
the company then determines the odds of it occurring, as well as its
consequences.
B. What for is it done?
A. The goal of the analysis is to further understand each specific instance
of risk, and how it could influence the company's projects and
objectives.
B. Is it enough for a company to launch decision making processes?
A. No,it is not as simple as that. The risk is then further evaluated after
determining the risk's overall likelihood of occurrence combined
with its overall consequence. The company can then make decisions
on whether the risk is acceptable and whether the company is willing
to take it on based on its risk appetite.
B. Unfortunately, I’m not quite at subject. Am I right to take it that
during this step, companies assess their highest-ranked risks and
develop a plan to alleviate them using specific risk controls.
A. Exactly. These plans include risk mitigation processes, risk
prevention tactics and contingency plans in the event the risk comes
to fruition. Part of the mitigation plan includes following up on both
the risks and the overall plan to continuously monitor and track new
and existing risks. The overall risk management process should also
be reviewed and updated accordingly.
B. What external benchmarks and standards are the most beneficial to
companies' risk management strategies?
A. To begin with, I’d mention risk avoidance. While the complete
elimination of all risk is rarely possible, a risk avoidance strategy is
designed to deflect as many threats as possible in order to avoid the
costly and disruptive consequences of a damaging event.
B. You see, companies are sometimes able to reduce the amount of effect
certain risks can have on company processes.
A. You are right. This is achieved by adjusting certain aspects of an
overall project plan or company process, or by reducing its scope.
B. I know that sometimes the consequences of a risk are shared, or
distributed among several of the project's participants or business

32
 departments.
A. Indeed. Moreover, the risk could also be shared with a third party,
such as a vendor or business partner.
B. Sometimes, companies decide a risk is worth it from a business
standpoint, and decide to retain the risk and deal with any potential
fallout.
A. I see what you mean. Companies will often retain a certain level of
risk when a project's anticipated profit is greater than the costs of its
potential risk.
B. I gather it’s important for a company to strike the proper balance
between alleviating the biggest risks and meeting compliance
guidelines unique to its industry. With limited budgets and resources,
this is no easy task.
A. I’d call it “a blessing in disguise” 2. For many people in management,
if the business is compliant with this law or that regulation, then all is
well. Managing information risk in your enterprise is more than just
“compliance” as we know it. It’s extremely easy to fall into the mind-
set of “we’re compliant, therefore we’re secure.”
B. No doubt, there are many good reasons for developing a solid risk
management and compliance program, but one incentive stands out: it
simply makes good business sense.
Task 1. Report the dialogue. Use the following reporting verbs:
 to suggest doing something  to try to find out whether
 to answer in the positive (negative)  to add
 to regret that  to emphasize
 to conclude  to remark
 to agree  (not) to doubt
Task 2. Work with a partner. Look at the dialogue and discuss what
A. and B. say about the following subjects.
a. Risk identification.
b. Risk analysis.
c. Risk assessment and evaluation.
d. Risk mitigation.
e. Risk monitoring.
f. Risk avoidance.
g. Risk reduction.
h. Risk sharing.
2
Неприятность, оказавшаяся благом; не было бы счастья, да не-счастье помогло; нет худа без добра

33
 i. Risk retaining.
Task 3. Say it in English:
1. финансовая неопределенность
2. правовые обязательства
3. аварии/несчастные случаи и стихийные бедствия
4. стратегии управления для уменьшения рисков
5. средства оценки риска
6. правила соответствия нормативным требованиям
7. уменьшение риска
8. уменьшить вероятность наиболее часто встречающихся рисков
9. план на случай непредвиденных обстоятельств, резервный план
10. вероятность возникновения риска в сочетании с его
последствиями
11. в случае, если риск начинает сбываться
12. внешние ориентиры
13. уклонение от риска, отказ от риска, избежание риска
14. пойти на риск
15. любые потенциальные последствия
16. уменьшить риск
17. риск нормативно-правового несоответствия
Task 4. Produce your own dialogue about different types of risk.
Search the Internet for the word combinations compliance risk,
operational risk, governance, risk and compliance (GRC) rules.
Make a full use of the underlined helpful phrases from Dialogue
2.6 and Supporting Materials:
Supporting materials
Compliance & Operational Risk Management
Compliance risk management is part of the collective governance, risk
management and compliance (GRC) discipline. The three fields frequently
overlap in the areas of incident management, internal auditing, operational
risk assessment, and compliance with regulations such as the Sarbanes-
Oxley Act. Penalties for compliance violations include payments for
damages, fines and voided contracts, which can lead to the organization's
loss of reputation and business opportunities, as well as the devaluation of
its franchises. Compliance risk is defined as the risk of legal sanctions,
material financial loss, or loss to reputation the Bank may suffer as a result
of its failure to comply with laws, its own regulations, code of conduct,
and standards of best/good practice. Compliance risk is exposure to legal
34
penalties, financial forfeiture and material loss an organization faces when
it fails to act in accordance with industry laws and regulations, internal
policies or prescribed best practices. Compliance risk is also sometimes
known as integrity risk. Many compliance regulations are enacted to
ensure that organizations operate fairly and ethically. For that reason,
compliance risk is also known as integrity risk, because a Bank’s
reputation is closely connected with its adherence to principles of integrity
and fair dealing.
Operational risk is defined as the risk of loss resulting from inadequate
or failed internal processes, people and systems or from external events.
The definition includes legal risk but excludes strategic and reputational
risk.
Operational risk can be created by a wide range of different external
events ranging from power failures to floods or earthquakes to terrorist
attacks. Similarly, operational risk can arise due to internal events such as
the potential for failures or inadequacies in any of the Bank’s processes
and systems (e.g. its IT, risk management or human resources management
processes and systems), or those of its outsourced service providers.
Operational risk arising from human resources management may refer to a
range of issues such as mismanaged or poorly trained employees; the
potential of employees for negligence, willful misconduct; conflict of
interests; fraud; and so on. Therefore the emergence of mistrust, failure to
communicate, low morale and cynicism among staff members, as well as
increased turnover of staff, should be regarded as indicative for potential
increase in operational risk.
Outsourcing arrangements require careful management if they are to
yield benefits, and where they are not managed adequately the degree of
operational risk faced by the Bank may increase, as is also the case of
excessive use and dependency upon the use of consultants for activities
that may be more effectively developed internally. In particular, an issue
for concern is the loss of control over processes. This could create a
serious threat to the continuity of its operations if these providers were to
fail.
With governance, risk and compliance (GRC) rules and regulations
constantly evolving, organizations cannot afford to focus on simply
economic stability, according to experts - there must be a GRC culture in
place. The growing complexity and breadth of the regulatory landscape
requires processes to deal with risk management and compliance. These
processes need to be flexible, yet avoid a one-size-fits-all approach.
Sustainability is fast becoming a catchall phrase, and the basis for a
cottage industry populated with well-meaning but misguided advisors and

35
activists. The term has been weakened to the point where it means
something different to everyone who encounters it. It’s time we focus on
clarifying meaning when referring to sustainability, and making sure our
actions are consistent with these definitions and goals. There are several
key factors to consider to minimize the effect that the reintegration will
have on your organization in the short and long term.
As Bill Ford of Ford Motor Co. observed in the McKinsey Quarterly,
"For us, sustainability in its broadest sense is about economic
sustainability. It’s not just about sustainability for environmental reasons -
if you don’t have a sustainable business model, none of the rest matters.”
In other words, going green while putting your company in the red is
not sustainable.
2.7 CASE STUDY & ROLE PLAY
Case
Diversification versus centralization
The Nakamura & Son Company is a large general contractor from
Yokohama noted for its excellence in the design and construction of office,
commercial, and public buildings, multi-family housing, schools, and
hotels. The family-owned company has grown rapidly since its founding in
the 1930s, attaining a position as one of the top construction firms in
Japan, with 2002 sales in excess of US$2.3 billion. This success, in the
opinion of the Nakamura family, was attributable to one main factor: the
nondiversified character of the company.
This strategy of specialization proved quite effective during the 1970s,
1980s, and 1990s. The company easily gained building contracts, both
domestically and internationally, and won numerous awards for its high
quality of construction. In the 2000s, however, with the worldwide decline
in building construction, Nakamura was finding itself for the first time in a
rather precarious position.
It was clear that the old course of specialization was no longer as
tenable as it had been. What direction Nakamura should pursue, though,
was a matter of controversy within the company. The chairman of the
board, Mr. Yamato Nakamura, and his son, the president, Mr. Akira
Nakamura, resisted expanding the Nakamura firm into other areas of
construction. They had serious doubts as to whether Nakamura & Son
could actually compete with more established firms and feared that a move
toward diversification would harm the reputation of excellence and
dedication to building for which Nakamura was known. Some of the

36
directors, however, felt that Nakamura & Son should expand its civil
engineering capacity, which presently accounted for less than 4 percent of
its total sales. The Nakamuras resisted this idea, however, feeling that it
would drain too many resources away from the main business activity and
possibly even affect Nakamura’s reputation as a dedicated general
constructor. After months of discussion, but with no resolution of the
dilemma, the position of these directors was strengthened by a new
development: an offer was received from a former U.S. construction
partner, Biggs Development Corp. from Boston, to form a joint venture
company for the purpose of international civil engineering and building
construction.

Case Analysis
2.7.1 Analyse the case.
1. Summarise the situation at Nakamura & Son Company. Dwell
upon the following points.
 Nakamura’s reputation as a general contractor.
 The decrease in contracts awarded to Nakamura without
negotiation.
 The growth rates of both Nakamura and Biggs.
 The division in Nakamura regarding diversification.
 The merits/demerits of Biggs’ proposal
 The resource required for a joint venture.
2. Write a brief summary of the status of the projects undertaken by
Nakamura & Son Company. Use Charts 1-4.
3. Write a brief summary of the status of the projects undertaken by
Biggs Development Corp. Use Charts 5, 6.
Chart 1. Ten-Year Growth Summary of Nakamura & Son Company.

37
 1991 `1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Chart 2. Status of Projects Undertaken by Nakamura & Son Company.

Pending Contracted Completed

2000 2.416 2.352 2.320
2001 2.452 2.592 2.368
Net actual change, 2000-2001 .036 .24 .048
Percent change. 2000-2001 .015 .102 .0207
Chart 3. Breakdown of the Types of Construction Undertaken by
Nakamura & Son Company (Percentage by Sales)
1999 2000
Offices 22.7 20.3
Stores 13.1 6.4
Hotels 4.8 7.5
Theaters 0.5 0.6
Factories 12.2 14.1
Housing 13.4 14.6
Schools 9.6 10.6
Hospitals 5.6 3.6
Government buildings 1.6 1.4
Transportation facilities 2.3 2.2
Other 14.2 18.7

Chart 4. Contracts Awarded by Nakamura & Son Company Directly and

Through Negotiation
1999 2000
No negotiation 75.7 72.6
38
 Negotiation 24.3 27.4

Chart 5. Financial and Statistical Summary of Biggs Development Corp.

(In Millions of US$ Except Per Share Information)

1997 1998 1999 2000 2001

Consolidated worldwide sales 742 754 1,051 1,274 1,889
Earnings after tax 24 28 38 44 45
Earnings per share 2.17 2.50 3.30 3.37 3.40
Overseas sales 298 301 337 371 378
Percent of total sales 40.2 39.9 32.1 29.1 27.2

Chart 6. Breakdown of the Types of Construction Undertaken by Biggs

Development Corp. (Percentage by Sales)

1999 2000
Dams 13.7 11.8
Bridges 23.5 26.4
Highways 4.0 5.4
Energy plants 8.7 6.2
Runways 25.6 28.7
Harbor facilities 7.4 9.3
Offshore platforms 5.7 6.1
Other 11.4 6.1

Critical Thinking Tasks

2.7.2. a. Study Biggs proposal to Nakamura & Son Company below

and summarize its main points.
Proposal
Main activities of the joint venture company: To obtain contracts
internationally for projects involving both civil engineering and
building construction, e.g., the design and construction of
transportation facilities, rural factories requiring road and rail
extensions, urban and regional planning and development, harbor
facilities. In addition, the joint venture company would engage in
activities related to these projects, such as material procurement,
construction design and engineering (both civil and building), structural
engineering, and land-use planning.

39
 Purpose of the Joint Venture: To consolidate civil engineering and
building construction capabilities in one single corporation. The
immediate advantages of such a consolidation are:
1. Elimination of separate bid submission, thus reducing the cost factor
involved in international feasibility study preparation.
2. Assurance to the client of integrated design, engineering,
construction, and quality control.
3. Reduction in overall costs to the client.
4. Placement of Nakamura & Son Company and Biggs Development
Corp. in a competitive position in relation to other consolidated
engineering and construction firms.
Investment Capital: Subject to negotiation and eventual scope of
business. Probable minimum investment is US$ 500,000 each.
Equity: Equal participation, hence equal equity.
Distribution of Profit and Loss: Subject to negotiation and eventual
structure of the company. On most projects, however, equal sharing is
desirable. On some projects requiring additional resources provided by
the respective parent companies, a percentage of invested capital,
materials, and manpower resources will be returned/borne by the
parent company.
b. Search for information and make a mini-presentation on
diversification and centralization.
Role-Play
Situation
The main issue in this case is whether the Nakamura & Son Company
should diversify or not. The company gets a proposal to set up an
international joint venture company. The decision-makers of the company
are torn between diversification and non-diversification.
Cast
Roger Biggs, President, Biggs Development Corp.
John Wilson, Overseas Sales Manager, Biggs Development Corp.
Akira Nakamura, President, Nakamura & Son Company
Yamato Nakamura, Chairman of the Board, Nakamura & Son Company
Takeshi Kimura, Managing Director, Nakamura & Son Company

40
Isami Yamamoto, Director, International Division, Nakamura & Son
Company
Situation
In the Yokohama head office of Nakamura & Son Company the American
and Japanese executives are discussing the possibilities of forming a joint
venture company.
Task
Act out a policy discussion between American and Japanese executives
where a possibility of forming a joint venture company is discussed.
Akira Nakamura, President, Nakamura & Son Company. The basic
concern for you revolves around your primary commitment to a single
industry and hence your reputation. You agree that there certainly are
some positive aspects to Biggs’ proposal. However, there are some items
that worry you. Your main concern has little to do with the proposal itself.
You find the proposal sensible enough. But Nakamura & Son Company
has built its reputation on its commitment to design and building
construction. The company pride themselves on this. It is what makes the
company different from its competitors. You agree that the joint venture
would definitely make it easier to bid on the projects and to find
prospective clients. But your company’s image is at hazard.
Make use of the helpful phrases:
 We still have some concerns though.
 That's why it's a good idea to… .
 You may be surprised at … .
 To be perfectly honest, … .
 In fact, we find it rather sound.
 The problem is simply this: … .
 That’s a good point.
 The problem, though is with … .
Roger Biggs, President, Biggs Development Corp. – You sent some
documents from Boston and are sure that a joint venture for the purpose of
obtaining worldwide contracts involving both civil and building
engineering is a definite advantage for both companies. A number of
details need to be ironed out, even explored further. Moreover, you
understand your interlocutors’ concern. But you are confident that by
combining your respective strengths the companies are not diminishing

41
their own primary commitment either to building or civil engineering. You
do not take any image problems seriously, it only takes a little public
relations work. You assure your interlocutors that, since you will not do
any joint venture work in Japan, Nakamura’s domestic clients will not be
affected. You need each other if you are to start increasing your growth.
There is a lot of opportunity and revenue internationally.
Make use of the helpful phrases:
 By now, I’m sure you’ve had a chance to … .
 I think it should be fairly clear that … .
 No doubt … .
 What is your main concern?
 I understand your point of view. The fact of the matter, though, is this:
….
 I don’t see any problem.
 Let’s face it, … .
Yamato Nakamura, Chairman of the Board, Nakamura & Son Company –
Diversification has been an issue well before Biggs Development Corp.
submitted its proposal. You are sure that if there is nothing much to be
gained, there is also not a lot to be lost, at least in real terms. Your main
objection also has to do with tradition and reputation not with proposal per
se. Having studied Biggs proposal you consider that the points in “Purpose
of the joint venture” are somewhat redundant, particularly, points 2, 3, and
4. The major rationale also seems to be not very distinct. You share your
son’s anxiety about the image of your company. Will your existing clients
support the changes or will they feel that Nakamura has gone the way of
all major contractors?
Make use of the helpful phrases:
 Unfortunately, … seems to be less than clear.
 I can’t help but … .
 I really don’t see that there is much advantage to … .
 I am aware that …, but … .
 Obviously, … .
John Wilson, Overseas Sales Manager, Biggs Development Corp. – you
remind your partner that when you and Nakamura & Son Company
worked together in the Emirates, with them building the terminal and
Biggs Development Corp. the runways. You are certain that both
companies managed to work well together in the past and your proposal
42
really seeks only to formalize the arrangement. You don’t see that
Nakamura & Son Company will be changing its emphasis at all. They will
still be in charge of design and building construction, Biggs in charge of
civil engineering. What your joint venture company would do is simply
make it easier to bid your projects. With your collective experience and
reputations, you think you can turn the joint venture into a very profitable
partnership.
Make use of the helpful phrases:
 As I see it,… .
 There is no denying the fact that … .
 Let me just say that … .
 The reason I think our proposal is sound is that … .
Takeshi Kimura, Managing Director, Nakamura & Son Company – you
point out that commitment to design and building construction is the core
of Nakamura & Son Company’s business philosophy. By forming a
separate company, your company maintains your primary enterprise as is.
On the other hand, a major resource commitment, both in capital and in
manpower, cannot but affect Nakamura & Son Company as a general
contractor. Also point out major types of your company’s construction
activity and the exceedingly high percentage of contracts awarded without
negotiation. The latter factor is probably directly due to Nakamura’s
excellent reputation (Chart 4).
Make use of the helpful phrases:
 In one way, that’s true. In another, it isn’t.
 There are good arguments to support both positions.
 I understand your position.
 That brings up the whole matter of …. .
 Well? I don’t think that’s true.
Isami Yamamoto, Director, International Division, Nakamura & Son
Company – you are in favour of accepting Biggs proposal. You point out
the very small amount of change (growth) over the two-year period as well
as the increase in projects pending in 2001 (Chart 2) and the gradual
levelling off of gross sales in recent years (Chart 1). In your opinion
there’s obviously a lot to gain from a joint venture. You assume that a new
joint venture would be separate from Nakamura and would not require it to
expand its own tiny civil engineering capacity. You believe that it would
be a partial solution to the problem of diversification within the company.

43
Make use of the helpful phrases:
 Simply put,… .
 I don’t doubt that … ..
 It definitely requires consideration.
 As I see it , … .
 I happen to think … .
Making a Decision
In coming to a decision about this case, consider the following points:
 Nakamura has bucked the “modern trend” toward diversification,
concentrating instead on building and maintaining the vast majority of
its business activity in a single industry. While this strategy has so far
been effective, is it a policy that can withstand the multinational and
diversified climate of today?
 Indeed, Nakamura’s growth rate over the past few years, although
steady, has not been great. Does the company stand to gain from a joint
venture with Biggs?
 A new joint venture would require substantial investment capital,
manpower, and other resources that would have to be diverted, at least
initially from Nakamura’s business line. Is the past and present
direction a viable one for Nakamura in the years ahead?
What other factors should be discussed?

Your decision:

2.9 GRAMMAR BACK UP

PRACTICE
WITH REAL PRESENT OR FUTURE CONDITIONALS

Ask yourself these questions when checking real present or future

conditionals:

1. When do we use this structure?

Basic form:
if + present simple + will + infinitive without to
(This structure is often called the ’first conditional’.)

44
 We use this structure to talk about possible present or future situations.
If you read this section, you will learn about the role of corporate
strategy and strategic management.
The students will learn to differentiate between strategic and tactical
decisions if they study the textbook.
If it is extended a little further, corporate governance will include all
types of firms.

2. Can we use modal verbs instead of will?

We can use modal verbs can, may instead of will in the main clause.
If we work out the appropriate strategy, we can achieve better results.
If old Wentworth tries to make things go his way, H.G. may want to
strengthen his position.

3. Can we use the imperative in the main clause?

Yes, we can use the imperative in the main clause.
If it is necessary, select a different objective and repeat the process.
If you are the chairperson, read out the questions and direct the panel.

4. Can we use other tenses instead of the present simple in the if-clause?
We can use the present perfect or present continuous instead of present
simple in the if-clause.
I’ll come back later if you’re working at the proposal now.
If H.G. has bought 250 shares in the company, he will postpone the
possibility of a takeover.
5. Can we use other words instead of if in conditional clauses?

a. We can use unless to mean ‘if...not’.

I won’t attend the Board meeting unless you go to. (= if you do not go
to)
We often use unless in threats and warnings.
Unless you draft suitable minutes about these Components of Strategic
Management Process, I won’t agree.

b. We can use ‘should’ instead of ‘if’ when we are less sure about a
possibility. Compare:

45
 If we have enough time, we’ll Should we have enough time,
discuss the outline of your we’ll discuss the outline of your
proposals. proposals.

(Perhaps we will have enough (I am less sure that we will have

time) enough time)

We can also use should after if with this meaning.

If we should have enough time, we’ll discuss the outline of your
proposals.
c. We use as / so long as and provided / providing (that) to mean
‘if but only if’.

The banks can take advantage of profitable lending opportunities as

long as they allow increasing their cash reserves. (=...if but only if it
allows increasing their cash reserves)
H.G. will support the idea provided William Buckhurst supports it too.
(=...if but only if William Buckhurst supports it too)
Exercise 2.9.1
Put the verbs in brackets into the correct form: will / won’t or the
present simple.

Model: If you read (to read) this section, you will learn (to learn) about
the role and meaning of corporate strategy and strategic
management.
1. If the managers … (to want) to provide the details of how to achieve
these objectives in the light of the situation analysis, they … (to put
forward) a strategic plan.
2. If businesses within the same industry … (to work) together to
artificially control prices, collusion … (to occur).
3. If both small and large organizations … (to formulate) and … (to
implement) appropriate strategies, they can … (to attain) sustainable
competitive advantage.
4. If John Martin … (to be made) a director, his advice at Board
Meetings … (to be invaluable).
5. If a team approach to business development … (to be outlined) in the
plan, but sales commission … (to remain) individual, organizations …
(to be hard pressed) to see a team focus.
46
 6. If the banks … (not to maintain) accounts with each other, they … (to
communicate) via a third correspondent bank.
7. John Martin … (to be) a useful counter to Wentworth, provided he …
(to be asked) to join the Board.
8. We … (to speak) about the terms of payment as long as you … (not to
agree) with the prices.
9. If a business … (to utilize) a defensive strategy, then it … (to gain) a
competitive advantage.
10. If the quality of the model … (not to meet) our requirements, we …
(not to place) an order with you.
11. We … (to appreciate) your urgent assistance highly, if you … (to
investigate) this matter promptly.
12. You … (to raise) the large amount of money needed, if you … (to
combine) the resources of a number of people and … (to form) a
corporation.
13. If payment … (not to effect) yet, the customer … (to require) to do so
immediately taking all care to avoid duplication.
14. If businesses … (to use) differentiation as a second strategy, they …
(can set) themselves apart from competitors.
Exercise 2.9.2
If the underlined word or words are used incorrectly, make correction.
1. If it is necessary to ensure that the vision is shared, teams will need to
know that they can test the theory, voice opinions, challenge premises,
and suggest alternatives without fear of reprimand.
2. If H.G. will buy 250 more shares in Harper & Grant Ltd., he will
postpone the possibility of a takeover.
3. If there will be no genuine commitment from the senior team, successful
implementation will be unlikely.
4. If the company introduces monthly accounting by cost centers, the
Board will have information about the company’s trading position more
accurately and more often than at present.
5. If the manager have a thorough knowledge and analysis of the general
and competitive organizational environment, he can be able to take right
decisions.
6. I’d like to stress that it is our trial order with your company and if we’ll
be satisfied with our transaction you can expect repeat orders from us.
7. If you are a CEO, your key role would be to communicate a vision and
to guide strategic planning.

47
8. I’m sorry to say it is not acceptable to us. You have quoted a very high
price. If you couldn’t offer a more reasonable price, we’ll have to find
another partner.
9. If you give us a discount of 2% off the value of the contract, we would
make a larger order.
10. If the aim will be to reduce uncertainty in the event of a crisis,
organizations will create a crisis management plan.
11. If the reward systems will motivate other types of behavior than those
called for in the strategy map, the best plans might fail.
12. If the corporation will make a profit, shareholders will receive a
dividend, i.e. a share of the profit paid on the stock.
13. If it is impossible to predict global events, organizations will must
cope with the potential for drastic changes to the way they conduct
business.
14. If the risk further is evaluated after determining the risk's overall
likelihood of occurrence combined with its overall consequence, the
company will be able make decisions on whether the risk is acceptable
and whether the company is willing to take it.
15. If people will work in management, they will consider that if the
business will be compliant with this law or that regulation, then all will
be well in IT land.
Exercise 2.9.3
Find a mistake if any and give the right variant.
1. If the groups are involved in corporate governance, they will be charged
A B
with identifying a method of aligning the incentives and rewards
C
of business success in a mutual attractive way.
D
2. Alfred Wentworth will have got to be asked to join the Board provided
A B
he owns such a large proportion of the shares.
C D
3. Managers will engage their teams by simply telling a story of
A B C
their shared vision, and publicly celebrating large and small wins, provided

they are successful leaders.

D
4. Such an ambitious young man like John Martin will easily be tempted
48
 A B
away by another firm if Harper & Grant Ltd. do not make it worth his
C
while to stay.
D
21. Cost leadership as an advantage will occur provided a business is able
A B C
to offer the same quality product as it’s competitors, but at a lower price.
D
22. If a business utilizes a defensive strategy, it will allow the business
A
distancing itself from its competition by maintaining a competitive
B C D
advantage it has gained.
23. As long as a particular insurance company will consider that the risk
A
it has assumed responsibility for is much too big, it may share the business
B C D
with other companies, by way of reinsurance.

8. If people begin to lose confidence in the banking system, they may

A
decide to withdrew deposits and hold more currency. When this
B
happens, the banking system loses reserves.
C D
9. Should you are unable to send the beneficiary an official receipt, kindly
A B C
send to him a copy of the account statement.
D
10. The more money households will deposit, the more reserves banks can
A B C
have, and the more money the banking system can create.
D
11. If firms include all social and economic institutions that affects the
A B
production and sale of goods and services, then corporate governance

includes nearly all public and private sector organizations.

C D
12. If companies’ memoranda is passed over to the registrar of companies,

49
 A B
then the public may inspect the document thoroughly.
C D
13. If Mike Smith, a reputable and well-followed analyst plans to earn
A
some extra money for himself, he will decide to enter into a profit-sharing
B
agreement with one of his friend who is a hedge fund trader.
C D
14. When money are deposited in a bank, it creates more money only
A B C
when the bank lends it out.
D
15. You will understand how businesses try to compete if you study
A B
Michael Porter's broad and narrow categories of competitive strategies

cited by both Stanford University and University of Cambridge.

C D

Exercise 2.9.4
Translate into English.
1. Если мы будем говорить о работе в условиях современной
экономики, необходимо будет подчеркнуть, что продуманное
стратегическое управление будет являться важнейшим и
основополагающим условием успеха любого предприятия. 
2. Если корпорация получит прибыль, Совет Директоров сможет
принять решение о реинвестировании части этой прибыли в
корпорацию с целью расширения, модернизации, исследовательской
работы и дальнейшего развития.
3. Если бизнес-организации в рамках одной отрасли промышленности
будут работать вместе, чтобы искусственно осуществлять контроль
за ценами, тогда будет иметь место сговор или тайное соглашение.
4. Если вы закажете более 100 тыс. штук этого товара, мы снизим цену
на 50%. Если Вы согласитесь на эти условия, мы подпишем контракт.
5. Если вашей целью будет осуществить стратегические планы
успешно, вам придется создать общую мировоззренческую
концепцию и повысить мотивацию каждого, чтобы достичь цели.

50
6. Если фирмы будут включать в себя все социальные и экономические
институты, которые оказывают влияние на производство и продажу
товаров и услуг, тогда корпоративное управление будет охватывать
почти все организации, имеющие государственные и частные
сектора.
7. Если определенные группы будут вовлечены в корпоративное
управление, они должны будут разработать метод приведения в
соответствие средств поощрения и наград за деловые успехи.
8. Если будет необходимо определить угрозы для нашей организации и
её акционеров, а также методы, используемые организацией, чтобы
справиться с этими угрозами, нам придется использовать
антикризисное управление.
9. Если компания неожиданно понесет крупные убытки, мы должны
будем действовать быстро.
10. Если вашей сферой деятельности будет антикризисное управление,
вам придется принимать решения в течение короткого промежутка
времени и часто после того, как событие произошло.

Exercise 2.9.5
CONTEXT
Read the text below. In most of the lines 1-29 there is one wrong word or
word combination. Some lines, however, are correct.
 If a line is correct, put a tick () in the space in the right-hand column.
 If there is a mistake in the line, write the correct word in the right-hand
column.

1 Originally developed by the OECD in 1999, then updating in ...............

2 2004, the 2015 revision of the Principles of Corporate ...............
3 Governance addresses these and other immerging issues that ...............
4 are increased relevant. Building on the expertise and ...............
5 experience of policy makers, regulators, business and ...............
6 another stakeholders from around the world, the Principles ...............
7 provide indispensable and globally recognised benchmark ...............
8 for assessment and improving corporate governance. The ...............
9 Principles have been adopted as one of the Financial ...............

51
10 Stability Board’s key standard for sound financial systems, ...............
11 and were used by the World Bank Group in more then 60 ...............
12 country reviews worldwide. They serve also as the basis for ...............
13 the guidelines on corporate governance of banks issued by ...............
14 the Basel Committee on Banking Supervision. The growing ...............
15 burden of regulations from governments and self-regulatory ...............
16 bodies have been intensified the importance of implementing ...............
17 robust corporate governance. For example, regulatory ...............
18 requirements from legislation like Sarbanes-Oxley (2002) or ...............
19 Dodd-frank (2010) have placed stringent requirements at ……......
20 companies and financial institutions to increase transparency ………..
21 to external stakeholders and general public. The high degree ………..
22 of perceived systemic risk that these regulations seek ………..
23 minimizing demands a rigorous system of corporate ………..
24 governance. As emphasis on responsibility have grown, the ………..
25 need for improved corporate governance developed ………..
26 significantly in recent years. Examples of such challenges ………..
27 include the increase complexity of the investment chain, the ………..
28 change role of stock exchanges and the emergence of new ………..
29 investors, investment strategies and trading practices. ………..

PRACTICE WITH UNREAL PRESENT

OR
FUTURE CONDITIONALS
Ask yourself these questions when checking unreal present or future
conditionals:
Basic form:
if + past simple + would + infinitive without to

(This structure is often called the ‘second conditional’)

1. When do we use this structure?

We use this structure to talk about unreal or improbable present or

future situation - things that will probably not happen, situations that are

52
untrue or imaginary. We use a past tense in the if-clause and would +
infinitive in the other part of the sentence (even though the meaning is
present or future) to ’distance’ our language from reality.

If I knew the company’s address, I would contact them.

(but I don’t know)
If I had all the necessary information, I would take the risk.
(but I don’t have it)
If I earned a lot of money, I’d start my own business.
(it is an imaginary situation)
The past form e.g. earned, knew does not have a past meaning in
sentences like these; it has a hypothetical present or future meaning.

2. Can we use were instead of was after if?

a. We often use were instead of was after if especially in a more formal

style.
If I were at the Board of Directors, I would formulate strategic goals.
I’d investigate a defensive strategy without any delay, if I weren’t so busy.

b. We often use if I were you to give advice and if you were me to ask for
advice.
What would you undertake, if you were me?
If I were you, I’d implement strategic plans.
3. Can we use the modal verbs might or could instead of would in the
main clause?

Yes, we can use these modal verbs instead of would.

If I had a thorough knowledge of the competitive organizational
environment, I could take the right decision.
If I earned a lot of money, I might start my own business.

4. Can we use should instead of would?

After “I” and “we” should can be used in British English with the
same meaning as would.
If I created a crisis management plan,
I should tell you.

53
Exercise 2.9.6
Put the words in brackets into the correct form.
1. If strategic management ______ (to be) applicable to both small and
large organizations by formulating and implementing appropriate
strategies, they ______ (can) attain sustainable competitive advantage.
2. If organizations _____ (to intend) to reduce uncertainty in the event of a
crisis, managers _____ (to create) a crisis management plan.
3. If the commercial bank_________ (to open) branches in major towns, its
customer base would increase considerably.
4. If corporate governance _____ (to provide) the framework for attaining a
company's objectives, it _____ (to encompass) practically every sphere
of management, from action plans and internal controls to performance
measurement and corporate disclosure.
5. You _____ (to have to consider) the need for strategic management and
evaluate the importance of business strategy if you planned to
determine competitive advantage in an increasingly competitive world.
6. If the Board of Directors made a positive decision, they (to
summon) me.
7. If John Martin (to have) two shares, he could become a director.
8. If the actual income or expenditure ______ (to vary) greatly from any
budgeted figure, the manager would have to explain why his actual
figures differed from his forecast.
9. If specific types of risk were identified, the company _____ (to
determine) the odds of its occurring, as well as its consequences.
10. If profitability (to go down), it would be necessary to increase
prices, cut costs and so on.
11. If old Wentworth ______ (to try) to make things go his way, H.G.
would want to strengthen his position.
12. If H.G. _____ (to agree), Peter would want John Martin on the Board
as an added support for himself.
13. If you studied the section titled Strategic and Crisis Management.
Corporate Governance, you _____ (to learn) to differentiate between
strategic decisions and tactical decisions, between strategy and
organisational structure.
14. If you _____ (to understand) that strategic management was an ongoing
process, you _____ (can realize) that each component interacts with
the other components and that interaction often happened in chorus.

54
15. If you _____ (to want) to balance your risk management and
compliance strategies, you _____ (must study) this tutorial in which
we’d gathered best practices for it.
16. If you _____ (to learn) how risk management and compliance could be
tied together and new ways to look at the delicate relationship between
the two, you _____ (can get) the maximum positive impact for your
organization.
Exercise 2.9.7
If the underlined word or words are used incorrectly, make correction.
1. In addition to conducting a SWOT analysis and candid performance
review, the executive team would use several other tools if it wanted to
acquire a better understanding of its current situation. 
2. We could investigate a crisis management plan further if you supply us
with a complete description of each item.
3. If the Board of Directors will appoint a Chief Executive Officer (CEO)
and executive team, they would be directly responsible to them for
strategic planning.
4. If our CEO looked into the matter once again and inform us of the
present situation, we could be able to formulate a strategic plan.
5. If you opened a current account, it will not offer a high rate of interest
and will not be the best way to save large sums of money for any long
period of time.
6. If the managers successfully implemented strategic plans, then
involving teams at all levels in strategic planning will help to build a
shared vision and increased each individual's motivation to see plans
succeed.
7. If a customer of a bank opened a deposit account, he also can have a
current account and this also will make the transfer of money from
one account to the other an easy matter.
8. If H & G Ltd didn’t act quickly, it would be too late to prevent the loss
from getting larger still.
9. If the activities of the company would break down into cost centers,
each manager would be responsible for at least one cost center.
10. If the manager were responsible for his cost center, he will be required
to forecast the income and expenditure of this very center.
11. If in an increasing number of industries, boards of directors are
required to review and report on the adequacy of enterprise risk
management processes, as a result, such means of risk assessment as

55
 risk analysis, internal audits would become major components of
business strategy.
12. If the company's specific risks were identified and the risk
management process is implemented, there will be several different
strategies companies can take in regard to different types of risk.

Exercise 2.9.8
Translate into English.

1. Если бы фактический доход или расход значительно отличался

от запланированного в бюджете, менеджеру пришлось бы
объяснять, почему это произошло.
2. Если бы вы изучили раздел, озаглавленный Стратегическое и
антикризисное управление. Корпоративное управление
тщательно, вы бы научились различать стратегические и
тактические решения.
3. В дополнение к проведению СВОТ анализа и беспристрастной,
объективной оценки результатов деятельности исполнительная
команда также использовала бы и другие инструменты, если бы
хотела получить более полное понимание существующего
положения вещей.
4. Если бы менеджеры планировали минимизировать высокую
степень осознаваемого системного риска, тогда им бы
понадобилась точная система корпоративного управления.
5. Если бы представители государства Абрака заключили договор
на поставку офисного оборудования сегодня, то им была бы
предоставлена большая скидка.
6. Если бы Гектор Грант купил 250 акций компании Харпер и
Грант, он мог бы отсрочить возможность захвата компании.
7. Если бы Джон Мартин вошел в состав Совета Директоров, его
советы на заседаниях были бы бесценны.
8. Если бы мы обсуждали корпоративное управление, мы бы
говорили об оперативной практике, управленческих протоколах
и других главных правилах и принципах, при помощи которых
управлялась бы компания.
9. Если бы продажи снизились, мы бы сократили запасы, а если
было бы необходимо, сократили бы и персонал.

56
10. Если бы менеджер нес ответственность за свой центр по
контролю за издержками, от него требовалось бы
прогнозировать доходы и расходы этого самого центра.
11. Если бы бизнес использовал оборонную стратегию, это
позволило бы бизнесу дистанцироваться от своих конкурентов,
поддерживая конкурентное преимущество, которое он получил.
12. Если бы корпорации могли мобилизовать крупные суммы денег,
они использовали бы их для того, чтобы модернизировать
выпускаемые модели, заменить устаревшее оборудование,
построить новые заводы.
13. Если бы во всё возрастающем числе отраслей промышленности
от советов директоров компаний требовалось проверить и
отчитаться о соответствии (достаточности) процессов
антикризисного управления на предприятии, то в результате
этого такие средства оценки рисков как анализ рисков и
внутренний аудит стали бы основными компонентами бизнес
стратегии.
14. Мы смогли бы изучить (исследовать) план антикризисного
управления вашей компании дальше, если бы вы предоставили
нам полное описание каждого пункта.

Exercise 2.9.9
CONTEXT
Read the text below. In most of the lines 1-26 there is one wrong word or
word combination. Some lines, however, are correct.
 If a line is correct, put a tick () in the space in the right-hand column.
 If there is a mistake in the line, write the correct word in the right-hand
column.
1 Corporate governance has become a very important issue in ....................
2 2002, with the passing of the Sarbanes Oxley Act. It sought ....................
3 restoring public confidence in corporate governance ....................
4 following the collapse of several major companies, due on ....................
5 accounting fraud, like Enron and WorldCom. Corporate ....................
6 governance continues to be a hot topic today with the rising ....................
7 interest in corporate ethics. For example, one of such issue is ....................
8 whether corporations should take responsibility beyond its ....................
9 direct shareholder interests, to include the communities they ....................
10 serve and environmental issues. To identify the particular ....................
57
11 groups involving in corporate governance, the scope of ....................
12 corporate governance needs being established and the term ....................
13 "involving" must be defined. ....................
14 Corporate governance refers with operational practices, ..............
15 management protocols, and other governing rules or ……..
16 principles by which a company is being controlled. It …………...
17 describes the structure in place that governs the relationships …………...
18 and behaviors of the various stakeholders in an organization, ....................
19 such as shareholders, lenders, management and the board of ....................
20 directors. Recent developments in regulatory burdens, risk ....................
21 mitigation concerns and stakeholder pressure had brought ....................
22 about additional focus at the important role of corporate ....................
23 governance. There is no any large financial operation that ....................
24 can be undertaken without the owners' agreement. The ....................
25 amounts required the owners' agreement are determined by ....................
26 the owners themself and embodied in the Agreement. ..........

PRACTICE WITH UNREAL PAST CONDITIONALS

Ask yourself these questions when checking unreal past conditionals:
Basic form:
if + past perfect + would have + past participle
This structure is often called the ‘third conditional’

1. When do we use this structure?

We use this structure to talk about unreal past situations - past events that
did not happen. We use a past perfect tense in the if-clause, and would
have + past participle in the other part of sentence.
If performance measures had been approved by the Board of Directors
last quarter, all the threats would have been discovered.
(But they were not approved.)
If I had studied the strategic plan thoroughly, I would have noticed a
mistake. (But I didn’t study them carefully.)

58
2. Can we use the modal verbs might and could instead of would in the
main clause?
We can use the modal verbs might and could instead of would.
If the general and competitive organizational environment had been
analysed last year, all the right decisions could have been taken.
If I’d studied the crisis management plan carefully, I might have
noticed a mistake.

Exercise 2.9.10
Put the verbs in brackets into the correct form. Mind that talking is about
unreal situations in the past.

Model:
- If Donald Kennet (not to undertake) a dishonest action a week ago, he ______
(not to be dismissed).
- If Donald Kennet hadn’t undertaken a dishonest action a week ago, he wouldn’t
have been dismissed.
1. If threats to an organization and its stakeholders … (to identify) the
previous quarter, the organization … (to find) some methods to deal with
these threats.
2. If the manager … (to have) a thorough knowledge and analysis of the
general and competitive organizational environment last year, he … (can,
to take) right decisions.
3. It … (to make) a bad impression yesterday, if the accounts department
… (not to supply) all the books and records for the period in question
immediately.
4. If William Buckhurst … (to put) paint in the right column last week, the
anomaly … (not to happen).
5. If Mr. Brent … (to check) the bank statement yesterday, he … (to
notice) that the amount paid in was less than the amount drawn out.
6. If the managers … (to conduct) a SWOT Analysis (Strengths,
Weaknesses, Opportunities, and Threats) before the crisis, they … (to
create) the best strategic plans.
7. If a SWOT Analysis … (to conduct) at least two weeks ago, it … (to
help) the organization to make best possible utilization of strengths,
minimize the organizational weaknesses, make use of arising
opportunities from the business environment and cope with the threats.
8. If Donald Kennet … (to ask) the Personnel Manager to draw his pay in
advance a week ago, he … (not to have to steal) the money.
59
9. If Donald Kennet … (to pay) money back before William Buckhurst’s
investigation, he … (not to dismiss).
10. If I … (to know) the basic rights of the stockholders last year, I
… (not to make a mistake) then.
11. If our organization … (to create) a crisis management plan a month
ago, it … (can reduce) uncertainty in the event of a crisis.
12. If our principal … (to enclose) a duplicate copy of account in advance,
we … (not to look into) the matter promptly.
13. If the reward systems … (to motivate) other different types of behavior
than those called for in the strategy map and measurement design, then
best plans … (may fail).
14. If everything that goes into making up the Profit Statement, the Balance
Sheet and the Directors’ Report … (to be correct) last quarter, the
auditors … (to be satisfied).
15. If all other calls on a company’s profit … (to be satisfied) last year, a
return … (not to receive).

Exercise 2.9.11
If the underlined word or words are used incorrectly, make correction.
1. If corporate governance rules and practices hadn’t been improved in
many countries and companies during the last decade, much will have
remained to be done.
2. If specific types of risk have been identified, the company then could
have determined the odds of its occurring, as well as its consequences.
3. If the members of the Board of Directors took prompt actions earlier,
they would have prevented a temptation of a fiddle.
4. If the proportion of long-term debt has been greater, the company would
have been more exposed in times of economic difficulty.
5. If reduced risk had been translated into reduced costs, then it would
enhance a company's ability to compete in the marketplace.
6. If you had mentioned that since the early 2000s several industry and
government bodies have expanded regulatory compliance rules that
scrutinize companies' risk management plans, policies and procedures,
we would have obtained some information about it.
7. If corporate governance rules and practices hadn’t improved in many
countries and companies during the last decade, policy makers and
regulators can face the important challenge to adapt corporate
governance frameworks to rapid changes in both the corporate and
financial landscape.

60
8. If companies had assessed their highest-ranked risks, they would be able
to develop a plan to alleviate them using specific risk controls.
9. If the company’s trading had slowed down, then the high interest
charges associated with gearing will have increased the rate of slow-
down.
10. If your shipping documents had arrived duly, the terms and conditions
of the documents would be complied with.
11. Cost leadership could have occured if a company found ways to
produce goods at a lower cost through the perfection of production
methods or by the utilization of resources in a more efficient manner
than competitors.
12. These plans would have included risk mitigation processes, risk
prevention tactics and contingency plans if the risk went to fruition.
13. If the complete elimination of all risk had rarely been possible, a risk
avoidance strategy would be designed to deflect as many threats as
possible in order to avoid the costly and disruptive consequences of a
damaging event.
14. Companies would sometimes be able reduce the amount of the effect
certain risks could have on company processes if certain aspects of an
overall project plan or company process had been adjusted, or its
scope had being reduced.
15. If companies had decided a risk was worth it from a business
standpoint, then they can decide to retain the risk and deal with any
potential fallout.

Exercise 2.9.12
Translate into English.

1. Команде верхнего эшелона управления пришлось бы собраться

вместе в прошлом квартале, если бы они намеревались проверить,
обсудить, поставить под сомнение и, наконец, согласиться со
стратегическим направлением и ключевыми компонентами плана.
2. Если бы Вильям Бакхерст не предоставил бухгалтерские книги и
записи за отчетный период немедленно, это произвело бы
неблагоприятное впечатление на аудиторов.
3. Если бы стоимость товаров (например, меди) не подвергалась
колебаниям так часто, оценка запасов товаров, имеющихся в
наличии для продажи, не была бы одной из самых сложных задач.

61
4. Стоимостное превосходство могло бы иметь место (могло бы
произойти), если бы компания нашла способы производить товары
по более низкой цене посредством совершенствования (улучшения,
усовершенствования) методов производства или использования
ресурсов эффективнее, чем конкуренты.
5. Если бы главный аудитор не обнаружил расхождений между
внесенной в банк суммой и снятой со счета, Вильям Бакхерст не
начал бы расследование в отношении Дональда Кеннета.
6. Если бы Дональд Кеннет обратился к Управляющему по кадрам,
была бы найдена возможность выплатить ему зарплату авансом.
7. Если бы не Кеннет нес ответственность за мошенничество с двумя
ваучерами, он не был бы уволен.
8. Если бы наше предприятие (создало) разработало план
антикризисного управления месяц назад, оно смогло бы уменьшить
неопределенность в случае кризиса.
9. Если бы компания обанкротилась, то собственник получил бы свой
капитал только после того как наемным работникам, кредиторам и
банкам было бы выплачено то, что им должны.
10. Иногда компании смогли бы уменьшить степень влияния, которое
определённые риски могли бы иметь на компанию, если бы
определённые аспекты общего проектного плана или процесс в
компании были скорректированы.
11. Если бы компании оценили их риски самого высокого уровня
(ранга) неделю назад, они смогли бы разработать план, чтобы
смягчить их, используя средства контроля за несистематическим
(диверсифицируемым, остаточным, уникальным, специфическим)
риском.
12. Если бы компании решили, что с точки зрения бизнеса стоит
рисковать, тогда они могли бы решить сохранить рискованную
ситуацию и заниматься любыми потенциальными негативными
последствиями.
13. Если бы менеджеры успешно осуществили (внедрили)
стратегические планы, тогда вовлечение команд на всех уровнях в
стратегическое планирование помогло бы создать общее видение
или мировоззренческую концепцию и повысить мотивацию
каждого, чтобы увидеть, что планы удались (достигли цели).
14. Если бы правила и действия корпоративного управления не были
улучшены во многих странах и компаниях в последней декаде,
многое оставалось бы, что ещё нужно сделать.

62
Exercise 2.9.13
Below are some flashes of conversation in which two people speak
about crisis management. Tick () the correct words or word
combinations.
Mr.A:
Every organization is vulnerable to crises. If you hadn’t prepared / won’t
prepare / don’t prepare / didn’t prepare, you will incur more damage.
When I look at existed / existing crisis management-related plans while
conducting a vulnerability audit (the first step in crisis preparedness), what
I often find is a failure to address the many communications issues related
with / related to / related on crisis or disaster response. Experience
demonstrates that if organizational leadership does not understand that in
the absence of adequate internal and external communications, then
operational response would break down / would have broken down /
will break down and the impact to the financial and reputational bottom
line would have been / will be / would be more severe.
Mr. B:
I should add that the basic steps of effective crisis communications are not
difficult, but they require advance work in order to minimize damage. So if
you were serious / are serious / had been serious about crisis
preparedness and response, you will read about and implement 10 steps of
crisis communications, the first seven of which can and should be
undertaken before any crisis occur / occurs / occured / will occur.
Mr.A:
Firstly, let’s say a few words about pre-crisis situation. I think that you
should anticipate crises. If you are proactively and prepare / are
proactive and prepare / were proactive and prepared for crises, you
would gather your Crisis Communications Team for intensive
brainstorming sessions on all the potential crises that can occur / can be
able to occur / could occur at your organization.
Mr. B:
I see your point. I know that there are at least two immediate benefits to
this exercise: you may realize that some of the situations are preventable,
even if you modify simply / simply modified / will simply modify /
simply will modify existing methods of operation.
Mr.A:
Also you can begin to think about possible responses, about best-case /
worst-case scenarios, etc. Better now than when under the pressure of an
63
actual crisis / an actual crises. In some cases, of course, you know a
crisis would had occurred / would occur / would have occurred / will
have occurred in case you had planned to create it, e.g. to lay off
employees, or to make a major acquisition.

Review of Conditionals
Exercise 2.9.14
Put the verbs in brackets into the correct tenses:
1. If emphasis on responsibility had grown last year, then the need for
improved corporate governance … (to develop) significantly.
2. If you … (to read) the tutorial attentively, you will learn about the role
and meaning of corporate strategy and strategic management.
3. Only if you got a thorough knowledge of strategic and crises
management as well as corporate governance, you … (can, to
differentiate) between strategic decisions and tactical decisions, between
strategy and organisational structure.
4. You … (to consider) the need for strategic management and evaluate the
importance of business strategy, if you had planned to determine
competitive advantage in an increasingly competitive world.
5. Cost leadership … (can, to occur) if a company found ways to produce
goods at a lower cost through the perfection of production methods or by
the utilization of resources in a more efficient manner than competitors.
6. Competitive advantages … (to gain) by businesses if they seek strategic
alliances with other businesses in related industries or within the same
industry.
7. The auditors … (to check) the profit Statement, the Balance Sheet and
the Directors’ Report if the books and records for the period under
consideration are supplied by the accounts department.
8. Cost leadership as an advantage will occur if a business … (to be able) to
offer the same quality product as its competitors, but at a lower price.
9. If the Wentworth Mattress Company owned shares in Harper & Grant
Ltd., this … (to show) as a trade investment in their Balance Sheet.
10. You would have saved the company from an even bigger loss if you
… (to discover) a fiddle earlier.
11. If the staff of H & G Ltd. … (to need) some paint, they will buy the
latter on a sale or return basis and pay for it each quarter.
12. If you … (to ask) me, I would have helped you.
13. The cashier … (to total up) the value of the checks, (to come) to the
Company Secretary, William Buckhurst, for a company cheque for the
64
 same sum and then … (to go) to the bank if we cash cheques for staff
as a service.
14. If your function … (to be) to implement strategic plans last quarter,
you … (to require) leaders who led through inspiration and coaching
rather than command and control.
15. If executives … (to implement) successfully strategic plans, then they
could have reported that involving teams at all levels in strategic
planning … (to help) to build a shared vision, and … (to increase)
each individual's motivation to see plans succeed.
16. If the manager has a thorough knowledge and analysis of the general
and competitive organizational environment, he … (to take) right
decisions.
Exercise 2.9.15
Finish these sentences, using the correct tenses:

1. If firms include all social and economic institutions that affect the
production and sale of goods and services, … .
2. If organizations want to reduce uncertainty in the event of a crisis, … .
3. If our firm had created a crisis management plan a month ago, … .
4. If the managers had conducted a SWOT Analysis (Strengths,
Weaknesses, Opportunities, and Threats) before the crisis, ... .
5. If you investigate the matter as soon as possible, ... .
6. He would become the member of the Board of Directors if ... .
7. You would have to consider the need for strategic management and
evaluate the importance of business strategy if ... .
8. If you had not withdrawn all the money from your account last week, ... .
9. We could investigate a crisis management plan further if ... .
10. If you are a CEO, ... .
11. If threats to an organization and its stakeholders had been identified
the previous quarter, ... .
12. If William Buckhurst hadn’t been Company Secretary, ... .
Exercise 2.9.16
Translate into English. Use the first, second or third conditional.
1. Мы бы рассмотрели необходимость в стратегическом управлении
и оценили важность бизнес стратегии на завтрашнем заседании
совета директоров, если бы вы запланировали определить
конкурентное преимущество во все возрастающем конкурентном
мире по крайней мере несколько дней назад.
65
2. Если бы ваши отгрузочные документы прибыли в должное время,
сроки и условия соответствовали бы документам.
3. Если бы коммерческие банки не покупали правительственные
облигации в 90е года, многие из них сумели бы избежать
банкротства.
4. Если бы члены совета директоров предприняли срочные меры
раньше, они бы предотвратили попытку мошенничества.
5. Если компании, работающие в одной и той же отрасли, решат
искусственно контролировать цены, такое действие будет
называться сговор или тайное соглашение.
6. Если бы Ваши первоначальные инструкции были получены десять
дней тому назад, товар был бы отгружен вчера в соответствии с
отгрузочными документами.
7. Если менеджер будет иметь глубокие, основательные знания и
анализ общей и конкурентной организационной окружающей
среды, он примет правильные решения.
8. Если бы я знал, что он завтра зайдёт в наш банк, чтобы получить
средства, я бы не поехал к нему в офис сегодня.
9. Если предприятия будут использовать дифференциацию
(специализацию), тогда низкая стоимость будет только одним из
многих возможных факторов, который поможет бизнесу
отличаться от конкурентов.
10.Если бы ты не снял свои деньги со срочного счета за несколько
недель до окончания срока вклада, ты не потерял бы проценты.
11.Если новый президент осуществит радикальные перемены в
организации компании, он сможет восстановить финансовую
надежность отделения в Тайване.
12.Главный аудитор закончил бы проверку сегодня вечером, если бы
Вильям Бакхерст смог объяснить разницу в 15 фунтов между
внесенной суммой и снятой, которую мистер Брент заметил в
банковской выписке по счету.
Exercise 2.9.17
Analyse and translate these sentences into Russian paying attention to
the conditionals:
1. Cost leadership will have occured if a company had found ways to
produce goods at a lower cost through the perfection of production
methods or by the utilization of resources in a more efficient manner
than competitors.

66
2. If a business plans to gain a competitive advantage, it should utilize a
defensive strategy.
3. Collusion would have occurred if businesses within the same
industry had worked together to artificially control prices.
4. Competitive advantages can also be gained by businesses if they seek
strategic alliances with other businesses in related industries or
within the same industry.
5. Cost leadership would have been classified as an offensive strategy,
if businesses had attempted to drive competitors out of the market by
consistently using price strategies designed to win over consumers.
6. If the strategic plan and performance measures are created, the
organization will have to make sure that they will be aligned with the
systems, structure, culture, and performance management
architecture.
7. Try to find out how the deal will work and what would happen if you
are unable to sell the shoes.
8. Both the importer’s and exporter’s banks will be involved in
arranging payments if a letter of credit or a bill of exchange is used.
9. Frazer fears that if some restraint is not put on the Japanese, the flood
of imports will increase until the Japanese have exhausted their
capacity to export cars.
10. If a team approach to business development is outlined in the plan,
but sales commission remains individual, organizations will be hard
pressed to see a team focus.
11. The career development, performance management and reward
systems will have to be reviewed if it is necessary to ensure linkage
to and support of the strategic intent.
12. Many organizations would have found they needed to link their
strategic plan to their internal systems and structures if they had
intended to ensure overall alignment and to avoid confusion.
13. If you behave properly, I promise that as soon as they are finished
being photographed I’ll give all these devices to you.
14. These days a company will also need to demonstrate good corporate
citizenship through environmental awareness, ethical behavior and
sound corporate governance practices if it plans to be highly
evaluated.
15. Once the audit department has worked with management on a
project, auditors have an understanding of the unique characteristics
of your unit's operations.

67
16. If MIE-Taiwan were to lower their prices substantially, they too
could compete in this current price war.
17. These services may also be carried out by the supplier’s own export
department, if they have the expertise.
18. If the certificate is lost, the registrar will issue a duplicate, upon
payment of a fee. The duplicate may be used for all the same
purposes as the original.
19. If such measures were not successful, Frazer would support tariffs or
quotas.
20. Even while taking advantage of international expansion opportunities,
Gannett's sights in 1999 remained focused on credibility and dedicated to
local news and their communities.
21. According to Mr Whitman, even with today's complexity, company
accounts will tell seasoned analysts most of what they need to know.
This may have been true even of Enron, if only people had cared to
look.
22. If a write-off turns out to have been too large - which may have been
the intention all along - some of it can be reimbursed later, directly
adding to profits.
Exercise 2.9.18
CONTEXT
Read the text below. In most of the lines 1-27 there is one wrong word
or word combination. Some lines, however, are correct.
 If a line is correct, put a tick () in the space in the right-hand
column.
 If there is a mistake in the line, write the correct word in the right-
hand column.
1 Strategic management process has four following steps: .....
2 1. Environmental Scanning - Environmental scanning …........ ......
3 refers at a process of collecting, scrutinizing and providing ...................
4 information for strategic purposes. It helps in analyzing the ...................
5 internal and external factors influenced an organization. ...................
6 After executing the environmental analyses process, ...................
7 management should evaluate it on a continuous bases and ...................
8 strive to improve it. ...................
9 2. Strategy Formulation- Strategy formulation is the ...................
10 process of deciding best course of action for accomplishing ...................
11 organizational objectives and hence to achieve ...................
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12 organizational purpose. After conducting environment ...................
13 scanning, managers formulate corporate, business and .............
14 functional strategies. …………...
15 3. Strategy Implementation- Strategy implementation …………..
16 implies to make the strategy work as intended or putting the ……….….
17 organization’s chose strategy into action. Strategy ……….….
18 implementation includes designing the organizations ……….….
19 structure, distributing resources, developing decision ……….
20 making process, and managed human resources. ………….
21 4. Strategy Evaluation- Strategy evaluation is final step ………….
22 of strategy management process. The key strategy ………….
23 evaluation activities are: appraising internal and external ………….
24 factors that is the root of present strategies, measuring ………….
25 performance, and taking remedial / corrective actions. ………….
26 Evaluation makes sure that both the organizational strategy …
27 as well as it’s implementation meets the organizational ………….
objectives. …………
………….

Topics for the Power Point presentations

1. Steps of strategic management process
2. Crisis management
3. Corporate governance
4. Social corporate responsibility
5. Cost leadership
6. Risk management
7. Compliance
8. Operational Risk
Writing Essays
Write a 200-word opinion essay according to the following plan.
 make an introduction (state the problem)
 express your personal opinion and give 2-3 reasons for your opinion

69
 express an opposing opinion and give 1-2 reasons for this opposing
opinion
 explain why you don’t agree with the opposing opinion
 make a conclusion restating your position
Topics for Opinion Essays
 Each SBU strategic business unit should be responsible for developing
its business strategies
 Strategic management affects the entire organization
 People are encouraged to see the “whole picture” together
 Lack of vision on the relationships between processes, technology
and organization causes strategic plans fail
 The need for improved corporate governance has developed
significantly in recent years
 Strategic management is an ongoing process
 Organizations should increasingly adopt the use of compliance
controls.

70
 Management Accounting
3

AGENDA

3.1 Lead-in Prereading

3.2 Language input Developing vocabulary
3.3 Background Information Management Accounting
3.4 Comprehension Understanding the reading
Scanning
3.5 Speaking & Writing Fill-in exercises
Writing reports & presenting
information
Language focus Word-building
Word-Combination Building
Translator’s False Friends
Skills Focus Financial Statements
Presenting information
3.6 Dialogue Jobs in Accounting
Tax Accounting
Supporting materials

3.7 Case study & Role play A Difficult time for

Microcomtec Corporation
3.8 Grammar Back Up Revision: Verbals. Conditionals
Topics for the Power Point Presentations
Topics for Writing Essays

71
 3.1 LEAD-IN

Section Overview
In this section you will learn about a process that measures and reports
financial information about businesses to interested parties, about jobs in
finance related areas and skills required to stay ahead of the competition
on the labour market.

3.2 LANGUAGE INPUT

account n счет бухгалтерского учета; финансовый
отчет, доклад, запись финансовой
операции, регистр
cost account счет издержек; калькуляция
syn expenses account себестоимости, смета; счет расходов
(затрат) (статья бухгалтерского
баланса, отражающая расходы
предприятия)
accounts n, pl счета, расходы, расчеты; бюджет
предприятия
accounts payable счета к оплате, кредиторская
syn payables, creditors (Br) задолженность
 accounts receivable счета к получению; дебиторская
 syn receivables, debtors (Br) задолженность
account v for объяснять, являться причиной;
составлять долю; отвечать, нести
ответственность
accountancy n бухгалтерия; бухгалтерская теория,
практика и профессия
accountant n бухгалтерский служащий
accounting n бухгалтерский учет; cчетоводство;
метод учета
accrual accounting учет методом начисления
accrual basis of accounting метод начисления
cost accounting учет издержек
financial accounting финансовый учет
forensic accounting судебно-бухгалтерская экспертиза
fund accounting отчетность фонда (система учета в
государственных и некоммерческих
организациях)

72
 management accounting управленческий учет
Syn. managerial accounting
accounting period учетный период
appraisal n оценка, экспертиза, определение
ценности, определение стоимости
assets n активы (баланса), авуары, средства,
фонды
current assets оборотные активы
fixed assets внеоборотные активы, основные
средства
intangible assets нематериальные активы
net assets чистые активы
tangible assets реальные или осязаемые активы
total assets общая стоимость имущества, сумма
активов
balance sheet бухгалтерский баланс, балансовый
Syn. statement of the financial отчет
position
budget n бюджет, детальный план доходов и
расходов на новый финансовый год
cash budget наличный бюджет
cost budget смета расходов компании
master budget главный бюджет
sales budget бюджет продаж
budget v предусматривать в бюджете,
ассигновать; составлять бюджет
budgeting составление бюджета, составление
сметы доходов и расходов
capital budgeting планирование долгосрочных
вложений, составление смет
капиталовложений и их окупаемости
cash n денежные средства, наличность
cash flow движение денежных средств
cash inflow поступление денежных средств
cash outflow выбытие денежных средств
cash payment денежные платежи
cash proceeds поступление денег
charge v назначать плату; взимать плату
сharge smb.'s account записать на чей-либо счет, дебетовать
charge n цена, плата
conform v (to ) соответствовать
73
consolidated financial консолидированная финансовая
statements отчетность
cost n стоимость, цена
costs n,pl расходы, издержки, траты
cost accounting учет издержек (затрат
cost control контроль за уровнем издержек
cost method метод учета по себестоимости
cost of goods sold себестоимость продаж
costs and revenues расходы и доходы
credit n кредит (правая сторона бухгалтерского
счета или учетной книги; в активных
счетах – расход; в пассивных – поступление
(привлечение дополнительного капитала)
allocate (syn. allot, allow, give, выделять (предоставлять) кредит
grant, supply, provide, extend)
a credit
debit n дебет (бухгалтерская запись, отражающая
платеж, расход в левой части)
depreciation n амортизация
dual aspect двойной аспект
equation n равенство
accounting equation бухгалтерское тождество
equity n акционерный капитал
owners’ equity собственный капитал
shareholders’ equity акционерный капитал
fairness n честность, законность, справедливость
fraud n мошенничество
historical cost первоначальная стоимость, стоимость
приобретения
inventory n запасы; стоимость запасов товаров,
syn. stock сырья, продукции компании
liability n обязательство, задолженность, пассив
accrued liabilities накопленные (начисленные) обязательства
current liability текущее обязательство (пассивы)
fixed (non-current, long-term) долгосрочное обязательство
liability
margin n маржа, разница между ценами,
курсами, ставками
gross profit margin валовая рентабельность продаж
(выраженное в процентах отношение
валовой прибыли к выручке от продаж)

74
 net profit margin чистая рентабельность продаж,
чистый размер прибыли (выраженное
в процентах отношение чистой
прибыли к выручке от продаж)
rate of return норма прибыли
retain v удерживать (прибыль от
распределения)
retained earnings нераспределенная прибыль
statement of retained earnings отчет о нераспределенной прибыли
ratio n коэффициент, соотношение двух
переменных
acid-test ratio коэффициент лакмусовой бумажки
(отношение текущих активов минус
запасы и незавершенное производство к
текущим пассивам)
current ratio отношение текущих оборотных
активов к текущим пассивам
liquidity ratio коэффициент ликвидности
(финансовый показатель, определяющий
использование пассивов для увеличения
кредитов или способности компании
выполнять текущие обязательства)
profitability ratio коэффициент прибыльности
(показатель прибыльности компании)
share n акция, участие в капитале
компании
share capital акционерный капитал
share premium премия акции (разница между
номинальной и фактической ценой)
solvency n платежеспособность
turnover n товарооборот

75
3.2.1 Consult a dictionary and practise the pronunciation of the follo-
wing words and word combinations, quote the sentences in which they
are used in the text or submit the examples of your own.

budgeted figure
capital expenditures
cash equivalents
charge price
collection of principal on loans
common stock repurchase
comparison of actual vs. budget
disposition of assets
economic value
file with the appropriate governing agencies
franchises
governing agencies
guidelines
high net profit margins
issuance of debt securities
monetary investments
patents
redemption of long-term debt
share premium
strategic decisions
subsidiaries
to audit
to control
to evaluate
to facilitate
to generate
to identify
to illustrate
to implement
to manufacture
to measure
to process
to record
to verify
variance
vital role

76
3.2.2 Match the English word combinations in the left-hand column with the Russian equivalents in
the right-hand column.

1. gross margin A. планирование прибыли

2. strategic achievements B. динамика издержек
3. breakeven point C. спад
4. cost behaviour D. учет издержек
5. profit planning E. валовая прибыль
6. downturn F. стратегические достижения
7. activity based costing G. Международные стандарты
финансовой отчетности
8. performance measurement H. отложенные платежи
9. сost accounting I. доход от продаж
10. facilitate day-to-day activities J. Российские стандарты
бухгалтерского учета (РСБУ)
11. International Financial K. способствовать улучшению
Reporting Standards (IFRS) повседневной деятельности
12. monetary concept L. причитающиеся платежи от
клиентов
13. cater the entire organisation M. точка безубыточности
14. record revenues and expenses N. положительный денежный поток
15. Russian Accounting Standards O. учет затрат по видам деятельности
(RAS)
16. drive economic value P. способствовать росту предприятия

17. sales revenue Q. Общепринятые принципы

бухгалтерского учета
18. net positive cash flow R. учитывать доходы и расходы
19. deferred charges S. обратный выкуп акций
20. Generally Accepted Accounting T. принцип (концепция) денежного
Principles (GAAP) измерения
21. payments due from customers U. удовлетворять потребности всей
организации
22. buy back stock V. измерение результатов
деятельности
23. facilitate the growth of W. способствовать созданию
business экономической ценности
24. performance measurement X. чистый размер прибыли
25. acid test Y. коэффициент лакмусовой бумажки
26. net profit margin Z. измерение результатов
деятельности

77
3.3 BACKGROUND INFORMATION

Management Accounting

Accounting plays a vital role in facilitating all forms of economic

activity in the private, public and nonprofit sectors. Accounting is a
systematic process of identifying, recording, measuring, verifying,
summarising, interpreting and communicating financial information. The
present and future economic stability of an organisation can only be
explained through accounting, which is the language of business. There are
several branches of accounting: management, tax, fund, financial, forensic
accounting and auditing. Two of the most important types of accounting
are management and financial accounting.
Management accounting is the type of accounting that provides
quick information to managers and decision-makers within a company or
organisation. According to the Institute of Management Accountants,
management accounting is defined as designing and evaluating business
processes, budgeting and forecasting, implementing and monitoring
internal controls to help drive economic value. It is the process of
identifying, recording and presenting financial information for internal
management with the purpose of making plans, decisions and better
control of a company’s performance, therefore some accountants call it
controlling. Management accounting is involved in preparing data to
support decision makers in their daily and strategic decisions. For this
reason non-financial information is included in management accounting
reports, where it is used in combination with financial data to construct a
picture that can illustrate the contribution that each division, function,
activity and process make to the strategic achievements of a firm. The
major areas covered by management accounting is а breakeven point, cost
behaviours, capital budgeting, profit planning, relevant cost of decision
making and activity based costing. The cost calculated in the management
accounting process is later used in financial statement under the rules of
financial accounting.
Three steps are identified in management accounting. The first step is
budgeting. A budget is a formal written statement of management’s plans
for a specified future time period, expressed in financial terms. The act of
preparing a budget is called budgeting. Budgets are used to determine what
to sell, how much of it to sell and what price should be charged in order to
cover all costs laid out in the budget and make a margin.

78
 The second step - performance measurement - is used to compare
the actual results of operations with what was budgeted in the planning and
budgeting phase. The comparison of actual vs. budget often shows a
difference, or "variance," that can be either favourable or unfavourable.
For example, in a cost budget, a lower actual number than the budgeted
figure would be considered favourable, while in a sales budget, a higher
actual number than the budgeted figure would be seen as favourable. The
purpose of comparing actual vs. budget is to add value to the business
through better planning, monitoring, evaluating and controlling. 
The third step is decision making. Managers use management
accounting reports to weigh the costs and benefits of undertaking a
particular project. Management accounting is the process of using all of
the accounting data available to make better business decisions - solid
decisions based on trends, facts and projects. These decisions are critical to
the future of any company. Effective management accounting takes much
of the risk out of decision making and bases it more on fact. However,
there is always financial risk in doing business. Analysing past trends can
create a clear picture of the future.
Management accounting relies heavily on forecasts, trends and other
future considerations and usually does not allow for exact figures to be
generated. Managers use these figures to facilitate the day-to-day activities
of an organisation and to make operational decisions. Because markets and
business activities constantly change, leaders must use management
accounting to estimate an organisation's current position and make sound
decisions. There often is little time for managers to consider exact
numbers. Reports generated from management accounting activities may
not follow formal principles or guidelines, and they can be used however
an organisation desires.
As far as financial accounting is concerned, it makes use of exact
figures during a specific period of time. Reports generated from this type
of accounting must be in line with International Financial Reporting
System (IFRS) or national systems of accounting - Russian Accounting
Standards (RAS) in Russia or Generally Accepted Accounting Principles
(GAAP) in the USA. Leaders use these reports to present the overall
financial health of an organization to outside sources such as stakeholders,
potential investors, financial institutions, its board of directors, and more.
Financial accounting reports also must be filed with the appropriate
governing agencies each year. Management accounting can focus on
specific areas of the organisation and aid them in the decision making

79
process, financial accounting caters the entire organisation, summarises all
the costs and revenues and gives the whole picture by the end of a specific
financial period. Management accounting deals with financial and non-
financial information such as sales volume, productivity, etc., financial
accounting is based purely on monetary concept. Financial accounting
presents historic data of the business performance, management
accounting analyses historic performance but takes into consideration
business trends and forecasts.
Thus, managerial and financial accounting are both necessary for the
organisation to function. Without understanding the past, managers are not
able to look to the future because accounting is the backbone of the
financial world. 

3.4 COMPREHENSION

Understanding the reading

3.4.1 Give extensive answers to the questions. Use the following expressions to present your
answers:

According to the text … I am well aware of the fact that …

It’s beyond doubt that … If I am not mistaken …
I strongly believe that… I want to press the point that…

1. What is accounting? Why is it considered the language of business?

2. What are the branches of accounting? Name the most important ones.
3. How is it possible to define management accounting?
4. What is the purpose of management accounting?
5. How many steps are identified in management accounting? What is the
role of budgeting?
6. What is performance measurement and decision making aimed at?
7. Why does management accounting operate both past and future
economic trends?
8. What is the difference between management accounting and financial
accounting?

Scanning
80
3.4.2 Scan the text to determine whether these statements are true (T)
or false (F), and if they are false say why.

e.g. I presume it is true that … .

I’m afraid it is false that ...,
because ... .

1. Being the language of business accounting is used to communicate

the results of economic performance to company management.
2. There are several branches of accounting: management, tax, profit,
financial, forensic accounting and auditing.
3. Management accounting is the process of identifying, recording and
presenting financial information for internal management aimed at
making plans, reports and better control of a company’s performance.
4. Non-financial information is included in management accounting
reports to illustrate the contribution that each division, function,
activity and process make to the strategic achievements of a firm.
5. Budgeting which is the act of preparing a budget is used to determine
what to buy, how much of it to buy and what price should be charged
in order to cover all costs laid out in the budget and make a margin.
6. Performance measurement used to compare the actual results of
operations with what was budgeted in the planning and budgeting
phase shows a difference or "variance" which should preferably be
favourable.
7. Effective management accounting takes much of the risk out of
decision making because it is the process of using all of the
accounting data available to make solid decisions based on trends,
facts and projects.
8. Management accounting deals with financial and non-financial
information such as sales volume, productivity, etc. while financial
accounting can focus on specific areas of the organisation and aid
them in the decision making process.

3.4.3 Scan the text and find the information to complete the following
lists.
1. Management accounting is the type of accounting that provides quick
information to managers and decision-makers within a company with
the purpose of making plans, decisions and better control of a
company’s performance.
81
A______________________________________________________
B ______________________________________________________
C_____________________________________________________
D______________________________________________________

Three steps are identified in management accounting, the first of which is

budgeting.
A ______________________________________________________
B ______________________________________________________
C ______________________________________________________
D______________________________________________________

The second step - performance measurement - is used to compare the

actual results of operations with what was budgeted in the planning and
budgeting phase.
A______________________________________________________
B______________________________________________________
C______________________________________________________
D______________________________________________________

The third step of management accounting is the process of using all of the
accounting data available to make better business decisions based on
trends, facts and projects.
A ______________________________________________________
B ______________________________________________________
C______________________________________________________
D______________________________________________________

Financial accounting makes use of exact figures during a specific period of

time to generate financial reports both for internal and external parties.
A ______________________________________________________
B ______________________________________________________
C_______________________________________________________
D ______________________________________________________

3.4.4 Scan the text and find the English equivalents for the following:

82
1. принятие решений
2. управленческий учет
3.сравнивать полученные результаты с данными, предусмотренными
в бюджете
4. оценка деятельности компании
5. сверять, суммировать и передавать финансовую информацию
6. осуществлять внутренний контроль
7. составлять финансовые отчеты
8. финансовый учет
9. цифры, предусмотренные в бюджете
10.составление бюджета
11.(не)благоприятное отклонение от данных, заложенных в бюджете
12.способствовать улучшению деятельности предприятия на
ежедневной основе
13. устанавливать цену
14. планирование прибыли
15. создавать четкую картину деятельности предприятия в будущем
16. снижать риски на стадии планирования
17. оценить состояние компании в текущий момент
18.управленческий учет в значительной степени полагается на
прогнозировании, направлениях в развитии и других данных,
относящихся к будущему
19.финансовый учет оперирует данными, полученными в прошлом
20.деловая активность всегда связана с риском

3.4.5 Develop the following ideas. Make use of the active vocabulary,
given in brackets:
1. Management accounting is the practice of identifying, collecting,
sorting, estimating and analysing cost and performance to make timely
decisions and to plan and control the future through budgets, forecasts, and
estimates.
(to provide quick information to managers and decision-makers, designing
and evaluating business processes, budgeting and forecasting,
implementing and monitoring internal controls, to help drive economic
value, to identify, record, present financial information for internal
management, to make plans, decisions and better control of a company’s
performance, to include non-financial information, a breakeven point, cost
behaviours, capital budgeting, profit planning, relevant cost of decision

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making, activity based costing, the cost calculated in the management
accounting process, to be used in financial statement)
2. Budgeting is a tool that helps managers in planning and controlling.
(a formal written statement of management’s plans, to express in financial
terms, to determine what to sell, how much to sell, what price to charge, to
cover all costs laid out in the budget, to make a margin)
3. Comparing actual result with budgeted helps managers evaluate and
measure the performance of individuals, departments or entire
companies, which might provide a good incentive to perform well.
(performance measurement, to compare the actual results of operations
with what was budgeted in the planning and budgeting phase, to show a
difference or "variance," favourable or unfavourable figures, a cost budget,
a lower actual number than the budgeted figure, a higher actual number, a
sales budget, to add value to the business through better planning,
monitoring, evaluating and controlling)
4. Weighing the costs and benefits of undertaking a particular project
with the purpose of making better business decisions is one of the
central functions of management accounting.
(solid decisions based on trends, facts and projects, the process of using all
of the accounting data available, decisions critical to the future of any
company, to take much of the risk out of decision making, to base
decisions more on fact, financial risk in doing business, analysing past
trends, to create a clear picture of the future)
5. Financial accounting presents historic data of the business performance
according to certain standards, management accounting does not only
analyse historic performance but takes into consideration business trends
and forecasts.
(to be in line with IFRS, RNS, GAAP, to present the financial health of an
organisation, outside sources, stakeholders, potential investors, financial
institutions, to be filed with the appropriate governing agencies, to focus
on specific areas, to aid in the decision-making process, to cater the entire
organisation, to summarise all the costs and revenues, to give the whole
picture, takes into consideration business trends and forecasts, to deal with
financial and non-financial information, to be based on monetary concept)

3. 5 SPEAKING & WRITING

84
Skills focus
Financial Statements
3.5.1 Read the text, underline the definitions of the following technical
words and abbreviations: income statement, sales revenue, gross
income, operating income, net income, COGS, EBITDA, EBIT.
Find the definitions of the same words in a business dictionary
and put them down into your copy-book for comparison and
memorizing.
Income Statement
The income statement is a financial document measuring a company's
financial performance over a specific accounting period. It records the
revenue, costs and profit (or loss) over a given period of time and shows
how well the company's business is performing.
The first step in producing an income statement is subtracting from
sales revenue cost of sales or cost of goods sold (COGS). COGS includes
all the direct costs that are related to the product or service sold and
recorded during the accounting period. The received figure is the
company’s gross income or gross margin.
The second step is deducting from gross income selling, general and
administrative expenses (SGA), research and development expenses
(R&D) and others which do not refer to direct costs. The income the
company receives at this stage may be referred to as EBITDA – earnings
before interest, tax, depreciation and amortization.
The figure received after subtracting depreciation and amortization is
operating profit or earnings before interest and tax (EBIT), as some
economists call it.
The next stage is deducting interest from EBIT if the company
borrowed money from a bank, tax expenses and dividends if this is the
decision of the Board of Directors. The received figure represents the
company's profit or Net income. It is often called the bottom line.
A detailed income statement is usually produced for internal use
because managers need as much information as possible. It may be
generated as frequently as managers need the information – perhaps once a
month.
The income statement is also referred to as a profit and loss account
(the title used before IFRS were adopted), revenue statement, statement of
financial performance, earnings statement, operating statement or
statement of operation.
3.5.2 Match the terms in the left-hand column with their explanation
in the right-hand column.
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1. interest expense A the decline in the estimated value of a non-
current asset over time
2. dividends and B income from investments unrelated to
interest business operations
3. operating profit C interest paid on bank loans and other debt
4. general and D income after subtracting the costs of
administrative production and operation
costs
5. sales revenue E the profit retained after all deductions,
(sales turnover) including dividends, have been made, this is
‘ ploughed back’ into the company as a
source of finance
6. overheads F cash coming into the business as a result of
operations
7. extraordinary G operating profit minus interest costs and
gains or losses corporation tax
8. depreciation H costs incurred by the company other than
production or sales, including staff, staff
equipment and staff supplies
9. selling costs I it is equal to sales revenue less cost of sales
10. gross profit J costs related to sales operations
(income)
11. profit after tax K gains or losses associated with nonroutine
events, such as selling an asset or an
operation, receiving a large settlement, or
natural disaster damage
12. retained profit L all costs related to manufacturing or
production process, including plant,
equipment, supplies, depreciation, and
utilities

3.5.3 Analyse the income statement of The Robinson Company, Inc. In

pairs discuss the stages of turning sales into net income and all
the figures the company obtains.

INCOME STATEMENT
The Robinson Company, Inc.

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 Period January 1, 2015 through June 30, 2015
Sales Gross $ 291,025
Less: Returns and 7,688
Allowances
Net Sales 283,337
Cost of Goods Sold 196,708
Gross Profit 86,629
Operating Expenses
Selling and Promotion 45,013
General and Administration 22,275
Total Operating Expenses 67,288
Operating Profit 19, 341
Other Income and Expense
Interest and Dividend 908
Income
less: Interest Expense 2, 293
1,385
Income before Taxes 17,956
Taxes on Income 7, 650
Net Income 10, 306

3.5.4 Read the case study below and tackle the exercise that follows.

Calculating profits

Rodrigues Traders Ltd buys second-hand computers, updates

and cleans them and then sells them in his small shop. He has
many customers who are keen to buy computers at prices
below those charged for new machines. Rodrigues took out a
bank loan to buy his shop – he has since repaid half of this
loan. He employs three electricians to help him with the
computer work. He is the main shareholder in the business –
three of his friends also invested in the company when it was
first set up.

Rodrigues Traders Ltd

Profit and Loss Account
For the year ended 31 October 2015

$
Sales revenues (4000 items - $ 3 each) 12,000
Cost of goods sold ($1 per item) 4,000

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 Gross profit U
Overhead expenses 3,000
Operating profit V
Interest 1,000
Profit before tax X
Corporation tax – 20% 800
Profit after tax Y
Dividends paid 1,200
Retained profit Z

1. Calculate the missing values U-Z for the different types of profit for
Rodrigues Traders.
2. State three stakeholders in this business who would be interested in
these profit figures.
3. For each stakeholder group identified, explain why the profits of this
business are important
3.5.5. Say it in English.
1. Отчет о прибылях и убытках используется для оценки
эффективности деятельности предприятия.
2. Отчет о финансовых результатах должен составляться на основе
метода начисления.
3. Отчет раскрывает структуру доходов и расходов предприятия за
отчетный период.
4. В отчете приводится общая сумма операционной прибыли,
доходы (расходы) по другим видам деятельности, а также
величина чистой прибыли (убытка), полученной предприятием в
течение отчетного периода.
5. Анализ отчета о прибылях и убытках организации позволяет
определить то, насколько эффективно менеджмент управляет
компанией.
6. Выручка организации представляет собой сумму доходов,
возникших вследствие продажи товаров, предоставления сервисов
или выполнения работ фирмой, составляющей отчет.
7. Валовая прибыль (или убыток) подсчитывается как разница между
выручкой и себестоимостью товаров или услуг
8. Следующий этап - вычет из валовой прибыли коммерческих
издержек, управленческих и общих расходов для определения
суммы выручки до выплаты процентов, налогов и амортизации
(EBITDA).

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9. Показатель прибыльности предприятия EBIT (Earnings before
interest and tax) или операционная прибыль – аналитический
показатель, равный объёму прибыли до вычета процентов по
заёмным средствам и уплаты налогов.
10. Коэффициент EBIT, как и показатель EBIDTA не отражен в
финансовой отчетности по российским стандартам.
11. Чистая прибыль — это прибыль, которая осталась после уплаты
всех налогов.
12. Дивиденды выплачивают владельцам акций по решению Совета
директоров из выручки до налогообложения.

3.5.6 Read the text.

a) Fill in the gaps with the required prepositions.
b) Identify the main parts of the balance sheet and present them in the
form of a spidergram.
The Balance Sheet
A balance sheet, also known as a "statement of financial position,"
reveals a company's assets, liabilities and owners' equity (net worth). The
balance sheet is a snapshot …. the company's financial position at a single
point in time. The balance sheet is divided …. two parts that must equal
each other, or balance each other out. The main formula behind the
balance sheet is: Assets = Liabilities + Shareholders' Equity. Accrual
accounting requires companies to record revenues and expenses when
transactions occur, not when cash is exchanged.
Assets are things used to produce goods or services. They fall …..
current and non-current assets. Current assets have a lifespan of one year
or less. They consist …. cash and cash equivalents, accounts receivable
and inventory. Cash also includes bank accounts and checks. Cash
equivalents are very safe assets that can be readily converted …. cash.
Accounts receivable consist of the short-term obligations owed …. the
company by its clients. Inventory(stock) represents the raw materials,
work-in-progress goods and the company's finished goods. Non-current
assets are all items that are not included in current assets, they are also
called long-term assets. They can fall …. two large groups - tangible and
intangible. Tangible assets are fixed assets which are used repeatedly in
the processes of production and manufacturing, and are not intended ….
sale in the long run, for example, the total machinery, equipment and
furniture used in the company's operations; buildings or plants that the
company uses for its operations; the land owned by the company ….
which the company's buildings or plants are sitting on; investments that
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management does not expect to sell within the year. They can also include
bonds, common stock, long-term notes, investments in tangible fixed
assets not currently used …. operations. Intangible assets are assets that
lack physical substance but provide economic rights and advantages:
patents, franchises, copyrights, goodwill, trademarks, brand names, etc.
Other assets is a special classification for unusual items that cannot be
included … one of the other asset categories. Examples include deferred
charges (long-term prepaid expenses), advances to subsidiaries, etc.
… the right side of the balance sheet are the liabilities which are the
financial obligations a company owes …. outside parties, company’s
debts. They can be both current and non-current (long-term, fixed).
Current liabilities are obligations that need to be paid off …. the coming
financial year. They are accounts payable - the amount owed to suppliers
for products and services that are delivered but not paid ….; notes payable
- an amount that the company owes to a creditor; wages payable
(salaries), rent, tax and utilities, dividends payable. Long-term liabilities
are debts that are expected to be paid at some date beyond one year or one
operating cycle. Usually included are long-term loans from banks
(mortgages), long-term debt (bonds payable), deferred income tax liability
- taxes due …. the future … income that has already been recognized for
the books.
Shareholders' Equity
Owners' equity, referred … as shareholders' equity in a publicly
traded company, is the amount of money initially invested …. the
company plus retained earnings. It includes the original share capital, share
premium, retained earnings, reserves.
There are two formats of the balance sheet: horizontal (assets are ….
the left side, liabilities – …. the right) and vertical (assets – at the top,
liabilities – lower, equity – below liabilities).

3.5.7 Study the simplified version of the Balance Sheet of Mauritius

Telecom. Answer the questions below.

Balance Sheet
Mauritius Telecom
as at 31/12/2015 (000 Mauritian rupees)

2015 2014

Non-current assets 7,520,978 5,818,817

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 Current assets

Inventories 92,726 75,943

Accounts receivable 2,220,290 1,388,358

Cash and cash equivalents 2,484,847 1,968,550

Total current assets 4,807,863 3,432,851

TOTAL ASSETS 12,328,841 9,251,668

Total non-current liabilities 1,763,981 1,582,358

Total current liabilities 3,553,079 2,356,887

Shareholders’ capital and reserves 7,011,781 5,312,423

(shareholders’ equity)

TOTAL EQUITY AND LIABILITIES 12,328,841 9,251,668

1. What is meant by the following terms?

accounts receivable
inventories
current assets
non-current liabilities
2. Explain why it is important to stakeholders of Mauritius Telecom to be
provided with two years of balance sheet values in the published accounts.

3.5.8 Study the table, indicate in which category the following items
would appear on a company balance sheet.

Non- Non- Current Current Non- Sharehold

current current assets liabili- current ers’
(fixed) (fixed) in ties liabili- equity
tangible tangible ties
assets assets
Company car
Work in
progress
Four-year bank
loan
Money owed
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to suppliers
Issued share
capital
Dividends
owed to
shareholders
Value of
patents
Payments due
from
customers
Retained
earnings
Cash in a bank

3.5.9 Read the text. a) Put down the Infinitives in the correct form. b)
Identify the main parts of the text. c) For each part make a list of key-
words to help you speak on the topic.
The Cash Flow Statement
Cash flow statements reveal how a company (to spend) its money
and where that money (to come) from. This statement is critical to
understanding a company’s solvency and creditworthiness as well as to
predicting future cash flow, which (to help) with matters in budgeting.
The cash flow statement (to divide) into three sections: cash flows
from operations, financing and investing. Basically, the sections on
operations and financing show how the company (to get) its cash, while
the investing section shows how the company (to spend) its cash.
Cash Flow Statement
Blacksmith Company
Financial Year Ended 31 December 2015
All figures in USD
Cash Flow from Operations
Net Earnings 2,000,000
Additions to Cash
Depreciation 10,000
Decrease in Accounts Receivable 15,000
Increase in Accounts Payable 15,000
Increase in Taxes Payable 2,000
Subtractions from Cash
Increase in Inventory (30,000)
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 Net Cash from Operations 2,012,000
Cash Flow from Investing
Equipment (500,000)
Cash Flow from Financing
Notes Payable 10,000
Cash Flow ended December 31, 2015 1,522,000

Cash Flows from Operating Activities

This section states how much cash (to come) from sales of the
company's goods and services and how much cash (to need) to make and
sell the produce. Cash inflow from operations (to include) revenue from
sale of goods and services, interest (from debt instruments of other
entities), dividends (from equities of other entities). Cash outflow from
operations (to consist) of payments to suppliers, employees, government,
lenders, payments for other expenses.
Cash Flows from Investing Activities
Cash inflow from investing activities includes cash from sale of
property, plant and equipment, sale of debt or equity securities (of other
entities), collection of principal on loans to other entities. Cash outflow (to
appear) as a result of purchase of property, plant and equipment, purchase
of debt or equity securities (of other entities), lending to other entities.
Cash Flow from Financing Activities
This section describes the goings-on of cash (to associate) with
outside financing activities. Typical sources of cash inflow would be cash
(to raise) by selling stock and bonds or by bank borrowings. Likewise,
paying back a bank loan, dividend payments, common stock repurchases
are cash outflow, i.e. a result of redemption of long-term debt, paying out
dividends to shareholders, redemption of capital stock.
When (to analyse) a cash flow statement, the first thing to look at is
the bottom line item that says something like "net increase/decrease in
cash and cash equivalents". Savvy investors (to attract) to companies that
produce plenty of free cash flow which is the excess cash produced by the
company. Free cash flow signals a company's ability to pay debt and
dividends, buy back stock and facilitate the growth of business.
3.5.10 Test your knowledge by answering the questions to the text.
1. What information does the cash flow statement contain?
2. Why is the cash flow statement divided into three sections?
3. What do cash flows from operating activities show?

93
4. What activities do cash inflow and cash outflow from operations
consist of?
5. What do cash inflow and cash outflow from investing activities
include?
6. What are the sources of cash inflow from financing activities?
7. What operations result in cash outflow from financing activities?
8. What is the reason for attracting investors to companies which
produce plenty of free cash flow?
3.5.11 Read the text. a) Fill in the gaps with the words and phrases from the box. b) Find the
answer to the question why the retained earnings are an essential figure for investors.

company growth, evaluating a company, steady growth, a company's

bottom line, the formula, referred to, in dividends, to invest back
The Statement of Retained Earnings
The statement of retained earnings is one of the financial statements
that any publicly traded company is required to publish on an annual basis.
Retained earnings are essentially…, net profit. They represent the
company's remainder of earnings that are not paid out …. but are retained
by the company to pay off existing debt or to be reinvested into …..
Sometimes …. as retained surplus, the calculation of retained
earnings adds net income to beginning retained earnings and then subtracts
all dividends that must be paid out to shareholders. …. for retained
earnings is as follows:
Retained earnings =
beginning retained earnings + net income – dividends
If a company has a net loss for the accounting period, a company's retained
earnings statement shows a negative balance or deficit.
Retained earnings are an essential figure for investors and analysts in
….. Typically, companies use retained earnings …. into specific areas
where growth opportunities appear most promising. Investors prefer to see
consistent, year-to-year growth in a company's retained earnings. Most
impressive to investors is a company that is able to steadily
increase dividend payouts and still show …. in its retained earnings figure.

3.5.12 Read the text.

a) Identify the groups of ratios and the names of specific ratios as
given in the text.
b) Present them in the form of a spidergram.
Financial Ratios
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 There are several ways to evaluate the performance of the firm, hence,
the performance of the management team. One approach is to analyse its
financial statements. You can accomplish this in three ways:
1. study the contents of the income statement and the balance sheet.
2. analyse the statement of cash flows.
3. examine the relationship between income statement and the balance
sheet by engaging in ratio analysis.
The ultimate purpose of analysing financial statements by these three
procedures is to help managers achieve sound planning. By studying
income and balance sheet statements, managers can spot areas of weakness
in financial operations and take appropriate remedial actions.
Profitability ratios are of primary importance for managers, their aim
is to measure the performance of a company. Profit margin analyses assess
how well a company is using its resources to generate profits. Generally,
higher numbers show strength.
The best way to understand how ratios work is to compare two companies, e.g. Nairobi Press
Ltd and Port Louis Press Ltd.

Gross profit margin = x 100

All figures as at 31/12/15 ($ 000)
Gross profit Sales revenue Gross profit margin
$000 $000
Nairobi 125 250
Press Ltd x 100 = 50%
Port Louis 800 3,200
Press Ltd 100 = 25%

It is clear from the table, Port Louis Press’s gross profit margin
(GMP) is lower: it is either adopting a low price strategy to increase sales
or have higher cost of sales. This could be the result of higher material
costs or higher direct labour costs compared with Nairobi Press. Thus, the
management of Nairobi Press may be more effective in controlling costs
than that at Port Louis. A high GMP indicates that a business can make a
reasonable profit on sales, as long as it keeps overhead costs in control.
Net profit margin (NPM) is one of the key performance indicators.
The higher the net profit margin, the more effectively the company is
converting revenue into profit. The NPM measures the profits available to
shareholders after deducting interest and taxes.

Net profit margin = x 100

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 Net profit Sales revenue Net profit margin
$000 $000

Nairobi 50 250
Press Ltd x 100 = 20%

Port Louis 500 3,200

Press Ltd

The profitability gap between the two companies has narrowed. This
suggests that Nairobi has relatively high overheads compared with sales
than Port Louis. Port Louis could narrow the gap further by reducing
overhead expenses while maintaining sales or by increasing sales without
increasing overhead expenses. As with all ratios, a comparison of results
with those of previous years would indicate whether the performance and
profitability of a company were improving or worsening. This would give
a more complete analysis of management performance.
The second group of ratios, liquidity ratios, are used to assess the
ability of the firm to pay its short-term debts. They are concerned with the
working capital of the business. If there is too little working capital, the
business could become illiquid and be unable to settle short-term debts. If
there is too much money tied up in the working capital, this could be used
more effectively and profitably by investing in other assets. Current ratio
compares the current assets with the current liabilities of the business.
Many accountants recommend a result of around 1.5-2, but much depends
on the industry the firm operates in and the recent trend in the current
ratio.

Current ratio =
From the example given below it is clear that Nairobi Press is in a
more liquid position that Port Louis Press. Nairobi Press has twice as
many current assets as current liabilities.

Current Current Current ratio

assets liabilities
Nairobi 60 30
Press Ltd
Port Louis 240 240
Press Ltd

The current ratio of Port Louis is more worrying. It only has $1 of

current assets to pay for each $1 of short-term debt. It could be in trouble

96
in the event that all of its short-term creditors demanded repayment at the
same time. For this reason, a stricter test, the acid test, also known as the
quick ratio, is often widely used. It ignores the least liquid of the firm’s
current assets – inventories (stocks). Inventories have not yet been sold
and can be no certainty that they will be sold in the short term. By
eliminating the value of inventories from the acid-test ratio, the users of
accounts are given a clearer picture of the firm’s ability to pay short-term
debts.
Acid-test ratio:

Liquid assets: current assets –inventories (stocks)

Liquid Current Acid-test

assets liabilities ratio
Nairobi Press 30 30 1
Ltd
Port Louis 180 240 0,75
Press Ltd
Results less than ‘1’ are often viewed with caution by accountants as
they mean that the business has less than $1 of liquid assets to pay each $1
of short-term debt. Therefore, Port Louis Press may well have a liquidity
problem although the full picture needs to be gained by looking at previous
years’ results. Firms with very high inventory levels will record very
different current and acid-test ratios. It might be a cause for concern for
such types of businesses where stocks lose value rapidly due to
technological changes such as computer manufacturers.
To measure how successful the management has been financial
analysts make use of a great number of ratios since different financial
ratios quantify different aspects of a business.
3.5.13 Search for information about other types of financial ratios and
get ready to report on your findings in class. Supply examples.

3.5.14 Match the terms on the left with their definitions on the right.

1. Gross profit margin A. measures the percentage of debt

tied up in the owner’s equity.
2. Debt-to-equity ratio B. show how much the company uses
debt financing, lower numbers

97
 show strength.
3. Net working capital C. measures the ability of the firm to
pay its current bills.
4. Liquidity ratios D. measure how well the firm
generates profits, higher numbers
show strength.
5. Acid-test ratio E. is current assets minus current
liabilities
6. Leverage ratios F. measure short-term solvency,
higher numbers show strength.
7. The current ratio G. are one of the best and simplest
ways to set an objective
performance standard.
8. Profitability ratios H. is similar to the current ratio, but it
is a tougher measure of liquidity
than the current ratio.
9. Financial ratios I. is computed by dividing the gross
profit figure by net sales.

3.5.15 Explain the difference between the terms in each of these pairs.
liquidity ratio – debt ratio
current ratio – quick acid test
gross profit margin – net profit margin
3.5.16 Analyse the table ‘Methods to increase profit margins’. In pairs
discuss the ways how managers can increase profit margins, pay
special attention to analysing possible disadvantages which might
follow.

Methods to Examples Evaluation of method

increase profit
margins
Increase gross 1.Using cheaper materials 1.Consumers’ perception of
and net profit quality may be damaged, which
margin by could hit the product’s reputation.
reducing direct 2. Cutting labour costs, e.g. 2. Purchasing machinery will
costs relocating production to low- increase overhead costs (gross
labour-cost countries or by profit could rise but net profit

98
 increasing productivity
through automation in
production.
3. Cutting wage costs by
reducing workers’ pay.
Increase gross 1. Raising the price of the
and net profit product with no significant
margin by increase in variable costs.
increasing price 2. Petrol companies increasing 2. Consumers may consider this to
prices by more than the price
of oil risen.
Increase net Cutting overhead costs, such
profit margin by as rent, promotion or
reducing management costs but
overhead costs maintaining sales levels, e.g.:
1. moving to a cheaper head
office location
2.reducing promotion costs
3.delayering the organisation
fall), remaining staff will need
retraining – short-term profits may
be cut due to these costs.
3. Motivation levels might fall,
which reduce productivity and
quality.
1. Total profit could fall if too
many consumers switch to
competitors.
be a ‘profiteering’ decision and
the long-term image of the
business may be damaged.
1. Lower rental costs could mean
moving to a cheaper area, which
could damage image, e.g. for a
restaurant.
2. Cutting promotion costs could
lead to sales falling by more than
fixed costs.
3. Fewer managers – or lower
salaries – could reduce the
efficient operation of the business.

3.5.17 Using the information below calculate current ratio and acid-
test ratio of company N.
Current assets: inventories 26,554; trade receivable (debtors)
38,020; cash 3,562.
Current liabilities: trade payables (creditors) 43,152; short-term
loans 15,394. Comment on N’s liquidity.
3.5.18 Look at some company’s financial statements. Write a passage
and report on its degree of solvency, profitability and leverage, its
earnings and dividends using financial ratios.

3.6 DIALOGUE

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DIALOGUE 1

Read and translate the following dialogue.

Jobs in Accounting

A. Excuse me, can you help me, please? I’ve got a bit of a problem.
Today is the deadline to submit my home assignment in accounting
but I have no idea how to calculate the return on equity.
B. No problem, it’s as easy as ABC. You need to know two figures: how
big a company’s net profit is and shareholders’ equity and then divide
profit by equity.
A. Thanks a lot, it appears really fairly simple. Frankly speaking, I have
to admit I am not keen on accounting, it is not my cup of tea. I am a
student of the Management Faculty, I am a future business manager,
that’s why I do not intend to waste time on learning accounting.
B. I am afraid, I can’t agree with you. You can certainly have your own
priorities, likes and dislikes in terms of your majors. However, if you
dream of becoming a high flier in a prosperous company and do not
want to shuffle up the career ladder, you are obliged to know the
basics of accounting. It's not just accountancy specialists who deal
with financial statements, figures and the financial side of business.
It's highly likely that, as a line manager or department head, you need
to possess key skills of using spreadsheets or deal with some form of
financial recording.
A I think this should be done by accountants.
B I feel there is a bit of misunderstanding on your part here. In fact,
accountants generate financial statements for the management. In
their turn, managers should analyse this information and make
decisions on future actions based on the figures presented by
accountants.
A. Right, one of my job responsibilities will be making decisions, which
is exciting, challenging and above all, rewarding.
B. But how can you make right decisions if you do not know how to
measure profitability of a business and can’t tell the difference, say,
between gross and net profit? Please remember these wise words:
“Accounting is the language of business every manager should
understand”.
A. That sounds reasonable, I have to take your point. Evidently, I will
have to fill in a gap in my knowledge of accounting. By the way, what
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 is the area of your interests?
B. I presume it might be management accounting.
A. You mean, you will be a future bean-counter with no prospects of
exciting job and promotion?
B. Sorry, you are on the wrong side here. Management accountants find
employment opportunities in a variety of work settings and industries.
Professionals in this field are in demand in public and private
companies, nonprofit organizations and government offices.
Nowadays management accountants are key figures in determining the
status and success of a company.
A. Interestingly! Could you put me in the picture what knowledge and
skills are needed to be employed?
B. As far as I know, someone entering the managerial accounting field
should be skilled in risk management, budget planning, strategic
planning and financial data analysis. These accountants should also
have a detailed knowledge of national and international accounting
standards, strong communication skills and a forward thinking
approach to their work
A. What about job responsibilities?
B. They can range widely. Depending on the company, level of
experience, the time of year and the type of industry, one could be
involved in doing any of the following tasks: budgeting, handling
taxes, aiding in strategic planning. Moreover, some choose to become
a Certified Management Accountant (CMA), a similar credential to
CPA, but with a greater focus on cost accounting, financial planning,
and management issues.
B. Many thanks for such a fascinating talk. What I came to understand is
a qualified management accountant is a member of the management
team who monitors company’s performance, supervises the budgets
for various projects and controls their costs, produces reports and
supplies managerial information to all levels within the organization
from local management to the board of directors.
A. To crown it all, there is something in common between our future
jobs: both of us will be dealing with management, which is considered
by many both art and science.
B. Absolutely right! It is the art of making people more effective than
they would have been without us.

Task 1. a. Scan the text and find the words to match the definitions in
the exercise below.
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1. difficult and demanding
2. a basic essential skill
3. get promotion slowly
4. to do things within the correct time
5. state of producing earnings, being financially rewarding
6. someone who has a lot of ability and a strong wish to be successful
7. giving personal satisfaction or yielding material gain or profit;
8. an organization’s process of defining its direction
9. the most important subject that a college or university student is
studying
10. someone who takes care of a company's financial affairs, especially
one who does not like to allow employees to spend money
b. Combine the verbs with the nouns to make collocations used in the
text.
1. fill in A. financial statements
2. submit B. the career ladder
3. meet C. spreadsheets
4. shuffle up D. taxes
5. use E. assignment
6. generate F. the deadline
7. to be G. in strategic planning
8. aid H. in high demand
9. handle I. a company’s performance
10. monitor J. gap in one’s knowledge
c. Use the above collocations to complete sentences.
1. How ….. when you earn money in different ways might appear to be a
problem even for a qualified accountant.
2. Our training programme aims to teach young professionals such key
skills as …..
3. Over the recent years the firm has made a significant contribution by
...... in the Russian legislation.
4. Failure to ….. may damage the image of the company and shatter
confidence of the customers.
5. All students must …… before the end of the term to be allowed to sit an
exam in their major.

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6. Many corporate CEOs have spent their entire careers at one company
slowly ……
7. Accurate financial statements are a critical component to managing any
business, besides, software “QuickBooks” makes it easy to.…in just a
few clicks.
8. SWOT analysis which involves the study of organizational Strengths,
Weaknesses, Opportunities and Threats can ……and accomplishing the
primary objectives of a company.
9. Professionals who possess both hard and soft skills have always been
…. on the labour market.
10. The goal of …… is to improve the efficiency and effectiveness
through constantly keeping track on the actual overall activities of the
business.
Task 2.
a. Work in pairs. Discuss differences and similarities between the job
of a business manager and that of a management accountant. Add
your own ideas on the jobs.
b. Work in small groups. Discuss the questions below.
1. What are the most demanded jobs in economic industry now in our
country and abroad?
2. What are the job prospects like for finance professionals in Russia and
internationally?
3. What kind of company would you like to work for on the completion
of your bachelor’s degree?
 small or large
 local or international
 general or specialist
4. What made you choose a career in finance?
 the chances to make a lot of money
 an interest in figures and finance
 good opportunities and security
 challenging work
Task 3.
Report back to the class interesting pieces of information you learned
about the people you spoke to.
Task 4.

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a. Do you think hard skills are sufficient to stay ahead of the
competition on the labour market? Read the text about the skills
that can really help you stand out from the crowd.

Top Ten Skills to Achieve Career Success

Undoubtedly, degrees and credentials are important for promotion but
soft skills—skills that are more social than technical—are a crucial part of
fostering a dynamic workforce and are always in high demand.
The top ten skills graduate recruiters want when they look for a
competitive candidate:
1. Commercial awareness (or business acumen): This is about
knowing how a business or industry works and what makes a company
tick. Showing that you have an understanding of what the organisation
wants to achieve through its products and services, and how it competes in
its marketplace.
2. Communication: This covers verbal and written communication,
and listening. It's about being clear, concise and focused; being able to
tailor your message for the audience and listening to the views of others.
3. Teamwork: You'll need to prove that you're a team player but also
have the ability to manage and delegate to others and take on
responsibility. It's about building positive working relationships that help
everyone to achieve goals and business objectives.
4. Negotiation and persuasion: This is about being able to put forward
your way, but also being able to understand where the other person is
coming from so that you can both get what you want or need and feel
positive about it.
5. Problem solving: You need to display an ability to take a logical
and analytical approach to solving problems and resolving issues. It's also
good to show that you can approach problems from different angles.
6. Leadership: You may not be a manager straight away, but graduates
need to show potential to motivate teams and other colleagues that may
work for them. It's about assigning and delegating tasks well, setting
deadlines and leading by good example.

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 7. Organisation: This is about showing that you can prioritise, work
efficiently and productively, and manage your time well. It's also good to
be able to show employers how you decide what is important to focus on
and get done, and how you go about meeting deadlines.
8. Perseverance and motivation: Employers want people to have a bit
of get-up-and-go. Working life presents many challenges and you need to
show employers that you're the kind of person who will find a way
through, even when the going gets tough... and stay cheerfulish.
9. Ability to work under pressure: This is about keeping calm in a
crisis and not becoming too overwhelmed or stressed.
10. Confidence: In the workplace you need to strike the balance of
being confident in yourself but not arrogant, but also have confidence in
your colleagues and the company you work for.

b. Make your own comments on the skills and qualities required for a
competitive candidate to get a job listed in the text.

c. In small groups make your own list of skills and qualities which can
help you gain a competitive edge on the labour market. Identify
skills and qualities you need to acquire and boost. Compare your
list with that of another group.

DIALOGUE 2
Read and translate the following dialogue about tax accounting.
Tax Accounting
A. Well, Mr. Bawson, I believe we may proceed with our conversation.
B. With great pleasure! Could you put me in the picture about tax
accounting? What does tax accounting deal with?
A. In the first place I should remind you that almost all individuals and
organizations in the United States are required to pay the taxes due.
Creative legislators at both the federal and state levels sought new
ways to raise money. The number and kind of taxes exploded. The
types of taxes affecting business are now taxes on income,
employment, transactions, property, environmental, and excise, to

105
 name the major categories.
B. That sounds quite as bad as the situation described by Beatle George
Harrison in “Taxman”—“If you take a walk, I’ll tax your feet”—
managers in any business know the impact of taxes.
A. It may not be quite as bad as that. Let’s start from the very start. Tax
accounting is the branch of accounting that involves determining the
correct tax liability, and preparing the necessary tax-return forms.
B. As far as I remember the U.S. has a largely voluntary tax system. The
taxpayers calculate and pay their own taxes. While not unique among
nations, such voluntary compliance frees up government resources for
other activities. The Internal Revenue Service’s reputation for
enforcing tax collection actions against several notable scofflaws
doubtlessly encourages such compliance.
A. Absolutely true. But to work properly a tax system should be effective.
Adam Smith named four criteria to evaluate the effectiveness of a tax
structure. Is the tax borne equally? Is it convenient to collect? Is it a
certainty that the tax must be paid? Does the tax harm the overall
economy?
B. Clearly the first consideration is the tax base, the pool of money from
which buckets of tax will be collected. Will it be an entire population,
businesses in certain industries, or anyone whose name starts with
“T”? The next question is to determine the tax rate, that is, how big a
bucket will you use? Will the tax be progressive, like an income tax
with graduated rates rising higher with incomes, or regressive, like a
sales tax, where all pay the same rate, regardless of income and ability
to pay?
A. I must say that you are very knowledgeable in this sphere. Getting
taxation rates right is like tending a golden goose laying golden eggs.
If you take one egg, the goose isn’t too disturbed. If you take too
much, you run out of golden goslings.
B. I like the way you put this. Although incorporated businesses are
legally treated as individuals, they cannot vote. Therefore, they are a
frequent tax target. Managers cannot afford to ignore the political
process when talk turns to taxation and regulation.
A. That’s fair enough. Periodically, scams arise claiming the 16th
Amendment was not legally ratified or some other fantastical loophole
exists. Therefore, advocates claim, you are not legally bound to pay

106
 income taxes and invite you to learn the procedures to follow to avoid
paying income tax. Eventually, their most aggressive followers wind
up in jail and/or paying heavy fines.
B. I’d like to interrupt you here because you can still so arrange your
affairs to pay the legal minimum tax. Depending on the nature and
complexity of your activities and investments, it can take some
planning to execute. While you should exercise due care in legal
issues, the tax court often resolves issues of dispute between taxpayers
and the IRS in favor of the taxpayer. Frivolous or nuisance claims, on
the other hand, draw a stern response. Finally, a line exists between
legal tax minimization and criminal tax evasion. The difference is
about five to ten years.
A. I see what you mean. There is one more reason why tax matters.
Recall the income statement equation balancing debits and credits.
The last number subtracted before arriving at net income was the
expense item, taxes. If your net profit margin is 5%, it takes $20 in
sales to net $1 in profit. Therefore, every dollar in tax expense you can
save is the equivalent of $20 in sales. With careful planning, you can
have some control over your tax destiny. This is why businesses pay
top dollar for good tax advice. A properly planned and executed tax
plan can have a large impact on your bottom line.
B. Exactly. Under current tax law, the most profitable areas for most
businesses to look for tax savings are in the type of business structure
chosen, depreciation strategies, and managing accruals and tax credits.
That these areas also see a large amount of fraud should caution you to
make sure you understand the legal basis for your tax strategy.
A. The thing is that wrong tax strategies may result in losing your
business. A sure way to it is to not pay income withholding tax. This
money is withheld from paychecks to pay the employees’ federal and
state income tax liability. The legal view is that the employer is
holding the employees’ money in trust to forward to the federal and
state governments. Violating that trust can draw a sharper reaction
than tax fraud. This way to run afoul of tax authorities is often
combined with failure to pay the FICA tax. For a manager, the
warning signs are when a business is operating too close to the edge of
its cash flow needs. Management is tempted to dip into these “trust”

107
 funds to get the business through a temporary financing problem. One
month rolls into another and soon the warning letters from the tax
people turn into summonses.
B. Right you are. Another way to lose the business is to fudge on the
sales tax collection. State authorities conduct regular sales tax audits.
Since sales taxes are a major revenue source, the state tax people are
especially anxious to collect them. The first couple of missed
payments will only result in some fines, interest, and penalties. Tax
authorities prefer that businesses continue to operate and pay off their
tax liabilities. Repeat offenses can draw a sterner response. Read the
local bankruptcy filings. Some are for failure to pay sales taxes.
B. My personal experience shows that income taxes are a major concern
to businesses as well as individual citizens. Unfortunately,
businessmen themselves often do not understand the tax laws.
A. Given that taxes are complicated you may want to consider a tax
advisor. For most W-2 wage earners grossing less than $100,000 a
year, with no stock or real estate investments, any of the inexpensive
tax software packages should be adequate. For business owners and
higher wage earners, some tax advice will likely pay for itself several
times over. Having a knowledgeable person guide you through the
thickets of tax code prose to help point out deductions to take or
pitfalls to avoid can be valuable.
B. To finalize the matter I’d like to say that for businesses tax matters
need close attention. When you weigh the dollar saved in taxes against
the multiples of effort to earn a dollar in sales, managing affairs so as
to pay the legal minimum tax makes good business sense.
A. So, every manager should understand that close attention to tax issues
can have a large bottom-line payoff. I’m very obliged to you.
B. I’m always at your service.
Task 1. Report what speakers A and B say about
 the variety and increased number of taxes
 what tax accounting deals with
 peculiarities of the American tax system
 Adam Smith’s principles of taxation and their interpreting
 why it is important to set reasonable tax rates
 consequences of not paying taxes
 positive effect of good tax planning
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 areas to look for tax savings
 consequences of wrong tax strategies
 reasons and advantages of hiring a tax advisor
Use the following reporting verbs:
 to suggest doing something  to try to find out whether
 to answer in the positive (negative)  to add
 to regret that  to emphasize
 to conclude  to remark
 to agree  to offer
 to apologize for something  (not) to doubt

Task 2. Search the Internet for the following word combinations.

Translate these terms and explain what they mean:

FICA taxes, taxes on income, employment, transactions, property,

environmental, excise, tax credit, progressive, regressive and flat rate
taxation, legal tax minimization, criminal tax evasion, depreciation
strategies, managing accruals.

Task 3. Make up your own dialogue on tax accounting using technical

words you have been empowered with.

3.7 CASE STUDY& ROLE PLAY

Case

At the beginning of 2001, particularly in January, Microcomtec

Corporation, a small manufacturer of industrial microcomputers and
application - specific software was having a difficult time competing in
both the domestic and international markets. Actually, sales of its primary
product, the Microcomtec 100 Microcomputer, were slow, and the
company’s profit was practically nonexistent. It was obvious that
Microcomtec was facing a serious financial crisis. In an attempt to save
Microcomtec, its president, Mr. David Robinson, hired an outside
consultant, Ms. Pauline Stanley, a seasoned professional with years of
high-tech marketing experience. After scrutinizing the situation for a

109
couple of weeks, Ms. Stanley made three recommendations. The first
called for closing down the European sales office in Rotterdam and
concentrating on the U.S. market. The second recommendation was for
Microcomtec to shift from a hardware to software emphasis. Specifically,
Ms. Stanley advised the company to begin manufacturing IBM-compatible
software for general-purpose laboratory/technical uses. The third
recommendation called for Microcomtec to shift its advertising and sales
promotion from heavy reliance on journal advertising and press releases to
direct mail advertising and trade show exhibits. All three conclusions,
though not explicitly critical of the vice-president for sales and
marketing, Mr. Henry Dixon, were implicitly so since Mr. Dixon had
been instrumental in implementing the present marketing strategy. It
was now up to the company to decide whether to risk its remaining
capital on an entirely new direction or stay with the present course,
namely, continuing Mr. Dixon's strategy of industry-specific
hardware/software production.

Case Analysis
Step 1. Clarify the Issue

Discussion questions:
1. What does Microcomtec Corporation do?
a) What is its major product?
b) For what market does it manufacture?
c) What are Stanley’s major recommendations?
2. In the background a number of problems with Microcomtec are
mentioned, either directly or indirectly by way of proposed changes.
a) Make a list of these problems.
b) Then write a one-sentence statement describing each
problem.
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 Step 2. Consider exhibits
Exhibit 1

Sales of the Microcomtec 100

Third and Fourth Quarter, 20XX (in US$)

July Augus Septembe Octobe Novembe Decembe Total

t r r r r

Domestic 38,900 48,600 61,642 54,282 42,623 43,624 289,671

International 31,090 21,438 37,583 21,438 21,438 - 132,987

422,658

Exhibit 2

Microcomtec’s Balance Sheet

as of December 20XX
(Actual US$)
ASSETS
Cash 44,190
Accounts receivable:
Trade 209,540
Other 41,800
Inventories:
raw materials 98,070
packaging 24,504
work in progress 3,230
finished goods 107,440
Prepaid expenses 10,756
TOTAL CURRENT ASSETS 539,530
Fixed assets 12,462
less depreciation (4,790)
Net fixed assets 7,672
Other noncurrent 190
TOTAL ASSETS 547,392
LIABILITIES
Notes payable 54,182
Accounts payable:
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trade 269,904
current intercompany 82,591
accrued expenses 23,693
accrued taxes 97,330
TOTAL CURRENT LIABILITIES 527,700
Reserves 1,561
Share capital (privately held) 18,131
TOTAL LIABILITIES 547,392

Discussion questions:
1. Exhibits 1 and 2 show Microcomtec’s financial situation. Judging
from these figures, is Corporation in serious trouble? Support your
answer with specific references to the exhibits.
2. Does exhibit 2 suggest that Stanley’s recommendations will be
adopted by Dixon? Why or why not?
3. Create a graph using Exhibit 1, expressing the domestic and
international sales trends for the third and fourth quarters of 2000.
4. Write a brief summary of the balance sheet using Exhibit 2. Your
analyses should include a comparison between assets and liabilities.
Note that while the total assets and total liabilities are exactly the
same (and must be if a balance sheet is to “balance”), there are a
number of points to compare: total current assets versus total current
liabilities, accounts receivable versus accounts payable, cash versus
notes payable, etc. From your comparison, how would you rate the
financial position in the company?

Step 3
a) Consider the memo from H. Dixon to D. Robinson:
Interoffice Memorandum
To: D. Robinson
Fm: H. Dixon
Re: Direct Mail
Date: Jan. 22, 20XX

With underwritten be advised that I contacted the people at Industrial

Collaborative today in an effort to purchase direct mail lists. They claim to
have very vertical lists of primary purchases both in the U.S. and abroad
for materials-testing automation. They are going to sell one list for $1,200
or two for $2,100 (over 1,000 names in each). Names and titles are

112
included into the lists. I strongly suggest that we should obtain the lists, as
it was recommended by Ms. Stanley. We should also create a direct mail
piece to accompany existing product leaflets. Harvey, from International
Communications Department, promises he can have design and copy in a
matter of some days for a three-page brochure describing our automation
packages. Harvey will phone back later to confirm. Let’s discuss the
matter this afternoon.

b) Create a dialogue between Robinson and Dixon regarding the

above Memo:
R. Henry, it seems as if you’re missing the basic points of Ms.
Stanley’s recommendations.
D. ____________________________________________________
R. I say that because her report explicitly states that we should
abandon these markets and change our direction.
D. ____________________________________________________
R. I know you believe we should give it more time. But, evidently, we
don’t have more time.
D. ____________________________________________________
R. Well, maybe I am making a mistake. But we have to try to get a
product that actually sells.
D. ____________________________________________________
Step 4. Prepare a report on the case. Use the instructions in Unit 1.
Include in your report a passage and report on its degree of solvency,
profitability of Microcomtec.

Role Play

Some Points to Keep in Mind

You should keep in mind that business strategies, by their very

nature, are permanently subject to change. Regardless of a company’s
previous performance, innovative ideas are absolutely essential if the
company is eager to increase or just maintain its market share. As business
isn’t a science, it’s impossible to determine exactly how long a particular
strategy should be employed before it’s changed. Premature shifts in
marketing strategy often have negative results. At the same time, in order
to minimize losses, it’s vital to recognize when a strategy isn’t a success
so that it may be altered.

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Situation
In case of Microcomtec, the problem is precisely that described above.
Microcomtec’s strategy initially was to produce microcomputers for
general industrial use. When it wasn’t successful, Microcomtec targeted
two specific areas: material-testing automation and chromatography
automation. But that strategy seems to be failing. Is it the case, as Mr.
Dixon believes, that simply more time is needed to penetrate these special
targets, both domestically and overseas? Or is an absolutely new direction
needed? Finally, is the sweeping reform proposed by Ms. Stanley the right
direction if Microcomtec make a decision to alter its strategy?
Cast
Mr. David Robinson, President, Microcomtec Corporation
Mr. Henry Dixon, Vice-President, Microcomtec Corporation
Ms. Pauline Stanley, Computer Industry Consultant

The three are discussing Ms. Stanley’s report in Mr. Robinson’s office at
Microcomtec. (Make use of the information given in Case Study, Some
Points to Keep in Mind, Situation).
P. Stanley realizes that her recommendations may seem very bold, but
given the present financial situation at Microcomtec she thinks bold
measures are needed. She tells Mr. Dixon she understands their position,
but she doesn’t feel that they’ve received enough inquiries to warrant
optimism. She considers that an order isn’t an order until they get a P.O.
(purchase order) number. As for the European sales office Ms. Stanley
can’t see that it’s worth keeping. She reminds that it doesn’t even pay for
itself. Ms. Stanley finalizes the matter: she was hired by them to do a study
and make some recommendations. She did that. It’s their choice whether
to accept the recommendations or not. She happens to think her
recommendations are sound, but it’s up to them to decide. She says that
the reasons she thinks they are sound are detailed in the report. She
mentions some facts in her speech. First, in three months of active effort
the company have only six orders. Second, the competition, particularly in
chromatography, is keen. Third, the European sales office is costing more
than it’s producing. Fourth, their microcomputer is too expensive, given
the fact that an IBM PC costs one-fourth as much as the Microcomtec and
is an industry standard. Granted, it may not do as much, but it is basically
all most researches need, given the right software. She supposes if they
convert their software so that it will run on the IBM PC, they’ll be in a
114
position to do just that. She also tries to assure Mr. Robinson and Mr.
Dixon that if they are more horizontal than vertical in their approach to the
market, they’ll have a larger target. Fifth, she is sure that their advertising
and sales promotion measures are not getting to the right people. She
recommends them to buy some lists and then do a direct mail shot. She
advises going to every trade show they can and demonstrate their product.
She explains that the audience they are trying to reach doesn’t take journal
advertising seriously. The audience wants more information than it can get
in an ad. She is sure that direct mail can give that to the interested party. In
Ms. Stanley’s opinion a demo can do even more.
Make use of the helpful phrases:
 Let me just say at the beginning …
 In the circumstances …
 I want to press the point …
 As far as I can gather …
 What with one thing and another …
 Gentlemen, let me make a couple of things clear …
 But let me just reiterate a few facts here …
 In the first place …
 If you ask me …
 I suppose …
 I take it for granted that …
 What do you think of … ?
 I’ll tell you what.
 Make the best of it.
 The long and the short of it is …

H. Dixon agrees and wants to know whether these are the right measures.
He says that his feeling is simply that they haven’t been aggressive enough
in their marketing. Also, he considers that the new targeted fields -
materials-testing automation and chromatography automation - are not
quick sells. It takes some time to build up orders. He adds they launched
their new campaign in the early fall. It’s just January now. He thinks that
Ms. Stanley is premature in her assessment that this is not the right market.
He has to admit that orders aren’t coming in in the necessary quantity, but
they are getting more and more inquiries, and with proper action they
should be able to turn them into orders. He isn’t that optimistic at all about
it. But he feels they have to give this market, this product, some chance.
Their sales manager in Rotterdam, Nick Govern, is right now working on
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an order for ten Microcomtecs, plus software. That amounts to $200,000.
Henry tries to assure Ms. Stanley that Nick feels confident he’ll get an
order for ten Microcomtecs. At the same time he accepts Ms. Stanley’s
arguments concerning the European sales office. He reminds that it hasn’t
paid for itself in four months. But he still doesn’t feel that means they
should shut it down. He believes the potential is there. Nick is a good sales
rep, and things are beginning to turn.
Make use of the helpful phrases:
 Right on both counts …
 The question is …
 I dare say …
 I am inclined to think …
 The way things are …
 Looks like that …
 I won’t deny …
 In a way yes …
 I don’t mind telling you … but …
 Primarily …
 As far as … is concerned …
 On the surface (of it) …
 What matters is …
D. Robinson thinks that Henry is right to some extent. But the orders just
aren’t coming in fast enough. David understands that they can’t play a
long-term waiting game. They don’t have the capital to last. D. Robinson
wants to know what Henry is basing his sales projections on. Robinson
supposes that they should consider the problem concerning the European
sales office. D. Robinson expresses his disagreement with Ms. Stanley’s
opinion that it isn’t worth keeping the European Sales office. But he has to
agree that it barely pays for itself.
Make use of the helpful phrases:
 I mean to say …
 Actually …
 But the truth is …
 In the circumstances …
 As far as I can see …
 Could you possibly …, please?
 That brings up the whole matter of …
 I disagree with you (on that point) …
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  I differ from you …
 There’s something in what you say, but …
 I must admit …
Making a Decision
In coming to a decision about this case, consider the following points:
 Stanley’s recommendations
 Dixon’s original marketing strategy
 The significance of the European office
 The poor financial position of Microcomtec
 Dixon’s revised strategy
 The risks involved in radically changing the nature of the company
What other factors should be discussed?
Your decision:
3.8 GRAMMAR BACK UP

3.9.1. Which of the five verbs or verb phrases in each of the following
sentences belongs there grammatically?
Change each sentence in as many ways as necessary to use each of the
four other three verbs in the grammatical construction.

1 used to concentrate on
The financial enjoys meeting the needs
director is used of external parties.
would rather
had better
2 let him to show
Financial are thinking performance trends
analysts had better using financial
made him accounting ratio
have decided analysis.
3 The were made paying attention to
management expect you key elements of
accountant are trying management
trainees don’t mind accounting.
persuaded him
4 stopped our company to
have interest in present

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 The outside hoped management’s
parties let financial
ask information in
prescribed formats.
5 remember him not to stray from
The CFO succeeded the laws which
is looking forward require corporations
reminded him to collect, process
objected and report the
financial
information.
6 The avoided disclosing
management managed information about
accountant happened investment and
helped him lending decisions.
taught
7 can’t help to check if the
The cost stopped break-even
accountant don’t feel like calculations on the
saw him slide were correct.
missed

3.9.2. Familiarize yourself with the information below. Tick () the
correct words or word combinations.

A. Cost Accounting
Management accounting is often calling / called / being called cost
accounting and you will find the terms use / to use / used interchangeably.
Cost accounting is generally considered the major subset of management
accounting. The field of cost accounting has most of the analytical theories
and approaches to cost behavior. Making/ Make/ To make a distinction,
management accounting looks to the tasks of decision-making, policy
setting, and communicating/ communicated/ communicate information,
while cost accounting collects and analyses costing, pricing and
performance details for internal management and, crossing into financial
accounting, for external reporting. Management accounting system can
report information in any way that is useful to management. The system
does not have conformed/ conform/to conform to GAAP.

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B. Management Accounting and Competition
Sometimes a management accounting system can create a huge
competitive advantage. Consider SABRE (Semi-Automated Business
Research Environment), the reservation system was developed /
developed / which developed by American Airlines. This was a
management accounting system that let AA manage / managing/ to
manage its yield and pricing to crushing / crushed / crush competitive
advantage. SABRE was so effective that competitors had to mount a series
of lawsuits to slow / having slowed / slow AA while they built their own
systems. AA was still able grown / growth / to grow and then maintain / to
maintain / maintaining its status as one of the two dominant U.S. domestic
airlines. As the SABRE innovation became more widespread /
widespreaded / widesprown throughout the industry, AA was able to spin
off SABRE at a handsome profit while relied on / relying on / relying at
new initiatives to maintain its competitive position.

3.9.3. Analyse and translate the sentences into Russian paying

attention to the infinitives, past participles and the ing-forms.

1. The conference over, he returned to the office.

2. Up to now, our focus has been on what is termed financial
accounting.
3. The best patterns of management accounting are hard to find. Once
found they may vanish into thin air.
4. Unfortunately, once the data is in the system, it is often unused or
misused .
5. Choosing an inappropriate cost or management accounting system
can quickly lead to financial or competitive ruin. Pick a middle-of-the
pack approach and you will get middling results.
6. I was abashed at having made so great a mistake, and was glad to
change the subject.
7. I’m much obliged to you for being so definite and business-like.
8. The former President pleased everybody in the company for years
while driving it to the point of bankruptcy.
9. There is no accounting for tastes, but after a long period of writing ,
editing and patching up, we agreed on a final draft.
10. The man behind the counter picked the crossed cheque up and
examined it carefully without saying a word.
11. This being done, they set off with light hearts.
12. We finally succeeded in obtaining her signature on our annual report.

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13. Cost accounting is free form compared with financial. Many
managers never make the transition to understanding it and so fall
into the trap of looking only at revenues, expenses, and financial
statements.
14. Once you understand that tiny point, you are on your way to
becoming a master.

3.9.4. Do it in English.

1. Меня очень удивляет, что он выбрал именно этот метод

калькуляционного учета.
2. Данные нуждаются в корректировке. Вам лучше бы привести в
соответствие с последними требованиями.
3. Так как статья была трудная, я не могла перевести ее без вашей
помощи. (Use the participial construction).
4. Пусть вам забронируют номер в гостинице. Подсчет голосов не
займет много времени.
5. Я полагаюсь на то, что эта задолженность будет вами погашена
вовремя.
6. О вкусах не спорят. Какой смысл волноваться? От вас ничего не
зависит.
7. Мягко выражаясь, не похоже, что он ответственен за то, чтобы
отчетность содержалась в порядке.
8. Имеется несколько вопросов, которые следует обсудить.
9. Простите, что я вас прерываю, но мне срочно нужна ваша
помощь.
10. Он сказал это таким тоном, что даже группа независимых
экспертов* не могла не рассмеяться.
11. Я ничего не имею против того, чтобы вы пользовались моими
данными.
12. Короче говоря, вот счет, который нужно оплатить немедленно.
13. Что заставило вас изменить решение? Оказывается, отчет уже
сформирован, а данные, докладывают, не проверены.
14. Предполагают, что новые стандарты отчетности будут
опубликованы в мае.
15. Честно говоря, этот факт не стоит того, чтобы о нем упоминать.

3.9.5. Complete the text using each verb in the appropriate form. If
necessary, add a preposition and/or object before the verb.

*
impartial panel

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 be have sack steal talk

I think it’s fair to say Jim Thompson wasn’t liked in our company and
when he was made sales manager, many of us objected to (1) his being
….. promoted. Over the next few weeks, things just got worse. When we
walked past his office, we often heard (2) ………….. to his friends on the
phone. Then one of my colleagues caught (3) …………..some money
from the cash box. Eventually, a group of us went to the managing director
of the company and demanded (4) ……….Thompson dismissed. But
despite our objections, the MD said that he wasn’t prepared (5) ………….
his own son!

3.9.6. Use the correct form of the verb in brackets to complete the
extract.
It could be that there is no crisis of faith in managers. It may simply
be that suddenly everyone wants ( be) ……. a management consultant
or, (fail) ……. that, an investment banker. If all those MBAs really do
mean (work) …… for McKinsey, Boston Consulting Group, Goldman
Sachs and all the rest, good luck to them. But if they believe that (be)
……. a consultant or investment banker will mean (have) ……… a
balanced life with plenty of time for family and friends, they may be in for
a rude shock.

3.9.7. Choose the correct answer. Sometimes more than one option is
possible.
1. The Chairman of the Board has urged people vote/has urged to
vote/has urged people to vote ‘Yes’ at tomorrow’s General meeting on
accepting takeover bid.
2. After John’s company was about to go bankrupt last year, a number of
specialists advised him to give up/advised giving up/ advised him
giving up business, but he is still trading.
3. As we entered the bank we were not asked to use/ were asked to not
use/ were asked not to use our mobile phones.
4. Despite the likely opposition from minority shareholders, the Board
has suggested increasing / has suggested to increase / has suggested
increase the auditors’ fee.
5. A video recording from a security camera at the bank was used in
Thomas’s trial. It clearly showed pointing/ showed him pointing/
showed him to point a gun at the cashier.
6. If you have any questions, please write to me at the above address. I
can’t guarantee you to reply/ guarantee to reply / guarantee you
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 replying immediately, but I will certainly write back before the end of
the month.
7. We really appreciate your help/ appreciate you helping/ appreciate
your helping us prepare the annual reports.
8. I’ve decided to look for a new job as I enjoy not sitting/ don’t enjoy to
sit/ don’t enjoy sitting in front of the computer all day crunching
numbers.

3.9.8. Correct the errors in these sentences.

1. I find impossible to compile all the necessary reports.

2. They made us to work extremely hard during business seasons.
3. She never let me to take any managerial decisions.
4. Could you have Mr. Jones to prepare some statistics?
5. I feel is necessary to delegate more of the work.
3.9.9.
Match the sentence halves.
1. I’m looking forward to A. signing anything like that.
2. I don’t remember B. seeing you in Milan soon.
3. Borrowing any more money C. working at nights for health
would involve reasons.
4. He’s decided to give up D. increasing our debt-equity ratio.
5. The investors have called for E. the company to increase its
share capital.
6. The conference organizer has F. the break-even analysis to be
arranged for completed.
7. The production manager has G. the CEO to resign.
been waiting for
8. The shareholders voted for H. her to get this position.
9. Her father paid for I. the Chief accountant to stay in a
four-star hotel.

3.9.10. Using the verbs in brackets, complete the second sentence so that
is has a similar meaning to the first.
1. In my job I have to meet many people. (involve)
My job ……………………………………………………………….. .
2. There’s a danger we will lose our business to our competitors. (risk)
We ……………………………………………………………………. .

122
3. I think it would be a good idea to get in touch with some government
agency (suggest).
She …………………………………………………………………….. .
4. We fully expect to double our turnover in the next two years.
(anticipate)
We ……………………………………………………………………… .
5. Why on earth did you spend so much on entertainment? (justify)
How can you ……………………………………………………….. .
6. Send them the templates they requested – don’t forget, will you?
(rememeber)
Please ………………………………………………………………… .
7. We will provide a 24 hour-a-day hot line (undertake).
We …………………………………………………………………….. .
8. She should have told them of the potential problem. (neglected)
She …………………………………………………………………… .
9. She says she has the necessary authority. (claims)
She …………………………………………………………………. .
3.9.11. CONTEXT.
Read the text below. In most of the lines 2-27 there is one wrong word or
word combination. Some lines, however, are correct.
 If a line is correct, put a tick () in the space in the right-hand column.
 If there is a mistake in the line, write the correct word in the right-hand
column.

1 Do you understand what your current financial position 

2 really is? If you have recently taking over a team then there
3 is a high probability than you do not understand the current
4 position, and it is also quite like that the previous team
5 leader didn’t understand it too. Even if you have been
6 run your team for a while it is possible that you do not
7 have an adequate understooding of your current position.
8 You should consider, at the very least, the followed issues.
9- What are the revenue streams that generating the team’s
10 income? What do you know about the properties of those
11 revenue streams; are they likely to be continued into the future,
12 are they likely to grown or to decline, how predictable are
13 they, what margin do they generate, etc.?
14- What is your cost base? How is it structuring? Which
15 costs are fixed and which are varied? What services do you

123
16 pay for from your parent organization?
17- How much profit did you team make the last year? How
18 much profit are you predicted for this year and are you on
19 target to achieve this profit? Is cash flow a majors issue, and
20 if so, do you understand your cash flow?
21- Do you know how much profit/loss each of your
22 offerings are making? Loss- made offerings will need
23 urgently attention.
24- What revenue do you expect getting from your customers
25 and how does this compare to revenue in past years?
26 Do not be surprised if your organization’s accountancy
27 system does not provide you with much information that is
28 helpful for establishing your current financial position; it will
29 have been set up to answer different questions. Most managers/
30 leaders have keep their own accounts.

Annex.
The Infinitive, Past Participle and the “-ing” form
(Revision)
Verbs followed Modal verbs The to- The bare Verbs and Verbs
directly by the followed by infinitive after infinitive after expressions followed
to-Infinitive the to- object+verb object+verb followed by by the ing-
Infinitive (Complex (Complex the bare form
object) object) infinitive
agree be bribe make can admit
aim have command let may anticipate
appear ought compel help* must appreciate
arrange used enable see* need* avoid
ask going entitle hear* have* consider
attempt feel watch shall defer
bother force observe will delay
care hear notice could deny
choose implore feel* should detest
claim induce would dislike
decide instruct had better dread
decline invite would rather enjoy
demand oblige can’t but escape
determine order excuse
fail persuade fancy
forget remind finish
guarantee request forgive
happen see imagine
hesitate show how involve
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 hope teach keep
learn tell mean
manage tempt mind
neglect train miss
offer urge pardon
plan warn postpone
prepare watch practise
pretend prevent
proceed propose
promise resent
prove resist
refuse risk
resolve suggest
seem understan
d
tend
threaten
trouble
try
undertake

Infinitive or the ing-form

(continued)
The ing-form The to-infinitive The to- The to- Expressions and Phrasal verbs+
after the verb after certain infinitive infinitive prepositions ing-form
or nouns or ing-form or ing-form followed
The to- after the verb after the verb by the ing-form
infinitive after (no change (meaning
object+verb of meaning) different)
allow ability begin remember be accused approve of
permit ambition start stop be accustomed be for/against
to
advise anxiety continue go on be used to care for
recommend attempt cease regret be worth give up
encourage decision can’t sorry for good at insist on
bear
forbid demand intent try have interest in keep on
desire intention of leave off
determination it’s no look forward
good/use to
eagerness possess/have object to
an advantage
in/of
effort possibility of put off
/for

125
 failure responsible for see about
offer save smb the take to
trouble of
plan succeed in
promise there’s no
point in
refusal
request
responsibility
(for)
scheme
willingness
wish

without
by
for
in
at
before

Topics for the Power Point presentations

1. Management accounting as a special branch of accounting
2. The three steps in management accounting
3. Uses of accounting information in management
4. Financial statements managerial accountants use
5. Generally Accepted Accounting Principles (GAAP) and International
Financial Reporting Standards (IFRS)
6. Profit and Loss Accounts
7. Financial ratios.
8. Methods to increase profit margin.
9. Cost accounting
10. Break-even analysis
11. How to understand the current financial position of a division?
12. Why tax matters?

126
 13. Fraud in management accounting (How can managers influence a
company’s financial statements)
14. Microcomtec’s Financial Position and Marketing Policy
15. Risks Involved in Running a Company

Writing Essays
Write a 200-word opinion essay according to the following plan.
 make an introduction (state the problem)
 express your personal opinion and give 2-3 reasons for your opinion
 express an opposing opinion and give 1-2 reasons for this opposing
opinion
 explain why you don’t agree with the opposing opinion
 make a conclusion restating your position

Topics for Writing Essays

1. Management accounting, cost accounting and controlling are one and
the same thing.
1. Management accounting is able to help a company gain competitive
advantage.
2. Managerial accountants should be aware of all intricacies of
accounting systems.
3. A good management accountant can’t be created overnight.
4. There is no difference between Financial and Managerial
Accounting.
5. Fraud – here, there, everywhere. If you know the kinds of fraud
people try you are less likely to be affected.
6. Internal fraud threatens the life of business.
7. To be meaningful, financial ratios must be viewed in comparison
with the ratios of other entities with similar characteristics.
8. Profitability ratios measure how well the firm generates profits,
higher numbers show strength
9. Financial ratios are one of the best and simplest ways to set an
objective performance standard.

127
10. Classifying costs correctly and separating fixed from variable ones
are necessary for valid analysis.
11. Overhead analysis gives you an opportunity to affect your financial
statements.
12. After breakeven, inventory and overhead are the most important cost
accounting concepts to master.
13. Understanding budgeting techniques is a fundamental management
skill.
14. Nowadays employers demand a combination of knowledge, skills
and behaviour, the ability to perform a specific role.
15. To impress a future employer I need to boost transferable skills,
leadership qualities being on top of these.
16. Academic qualifications are only a part of what is needed to gain a
competitive edge on the labour market.

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 Заключение

Дорогие друзья!
Окончив изучение учебного пособия «Английский язык в
профессиональной сфере», предназначенного для студентов,
обучающихся по направлению «Менеджмент», вы получили
возможность обсудить на английском языке следующие сферы,
ситуации и темы общения будущих специалистов в этой области:
 общий менеджмент

 корпоративное управление

 стратегический и антикризисный менеджмент

 управление рисками

 управленческий учет

Структура пособия предполагает использование таких технологий

обучения иностранному языку, как кейс-анализ, ролевые игры,
мультимедийные презентации, Интернет-поиск.
Вы ознакомились с непростыми явлениями, относящимися к
морфологии и синтаксису английского языка. Обширный грамма-
тический материал в пособии совмещен с упражнениями, направ-
ленными на проверку и закрепление изученных профессионально
ориентированных материалов.
Особое внимание в учебниках уделено кейс-анализу и ролевым
играм, призванным развивать самостоятельность студентов и их
умение применять на практике полученные знания, что поможет
выпускникам не испытывать затруднений при иноязычном
профессиональном общении.
Желаем успехов!
Авторы

129
 Contents

Предисловие .................................................................................... 3
Unit 1 MANAGEMENT FUNCTIONS .................................... 4
Dialogue: Motivation......................................................…27
Case Study & Role-play: Personnel Management......... 32
GRAMMAR BACK UP ............................................... 39
Practice withInfinitives ................................................ 40
Topics for the Power Point presentations ........................................... 57
Topics for Writing Essays ……………………………………………. 58
Unit 2 SRTATEGIC &CRISIS MANAGEMENT. CORPORATE
GOVERNANCE ................................................................ 59
Dialogue: Risk Management ……………….…........... 83
Case Study & Role-play: Diversification versus
Centralization ………………………………….…....….. 88
GRAMMAR BACK UP ……………………….…...... 96
Practice with conditionals .............................................
Unit 3 MANAGEMENT ACCOUNTING ................................. 122
Dialogue 1: Jobs in Accounting ……………….…..... 151
Dialogue 2: Tax Accounting …………………………. 157
Case Study & Role-play A Difficult Time for Microcomtec
Corporation …………………………………………...... 161

Заключение .........................................................................................244

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