ФЕДЕРАЛЬНОЕ ГОСУДАРСТВЕННОЕ ОБРАЗОВАТЕЛЬНОЕ БЮДЖЕТНОЕ

УЧРЕЖДЕНИЕ ВЫСШЕГО ОБРАЗОВАНИЯ

«ФИНАНСОВЫЙ УНИВЕРСИТЕТ ПРИ ПРАВИТЕЛЬСТВЕ РОССИЙСКОЙ
ФЕДЕРАЦИИ»

В.С. Арутюнян, Т.Л. Копусь, А.Ю. Широких

ESP: Economic discourse

Учебник для студентов-бакалавров 3-4 курсов, обучающихся по

направлению подготовки «Экономика», профили «Мировые финансы»,
«Мировая экономика и международный бизнес», «Международный бизнес
энергетических компаний», дисциплина «Профессиональный иностранный
язык»

Москва
2020

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УДК 81(075.8)=111
ББК 81.2Англ

Рецензенты:
кандидат филологических наук, доцент М.А. Курбакова (Московский политехнический
университет);
кандидат экономических наук, доцент Е.В. Оглоблина (Финансовый университет при
Правительстве РФ)
Thomas William Humpage, English Teacher, Modern English School.

В.С. Арутюнян, Т.Л. Копусь, А.Ю. Широких,

А74 “ESP: Economic discourse” Учебник для студентов-бакалавров 3-4 курсов, обучающихся
по направлению подготовки «Экономика», профили «Мировые финансы», «Мировая
экономика и международный бизнес», «Международный бизнес энергетических компаний»,
дисциплина «Профессиональный иностранный язык». - 238 с.

В учебнике представлены задания, способствующие развитию рецептивных навыков

чтения и продуктивных навыков говорения на основе публицистических и академических
текстов аутентичной периодической печати. В процессе овладения лексическим материалом
по специальности студенты также развивают лингвистические, социокультурные и
профессиональные компетенции. Цель учебника – расширение пассивного и активного
словарного запаса студентов и развитие речевых навыков и умений для успешной
профессиональной коммуникации. Материалы учебника могут быть использованы для
профилизации обучения студентов финансово-экономического направления.

© Арутюнян В.С., 2020

© Копусь Т.Л., 2020
© Широких А.Ю., 2020

© Финансовый университет, 2020

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Contents
ПРЕДИСЛОВИЕ 4
Unit 1 DEVELOPING YOUR CAREER IN AN INTERNATIONAL SETTING 6
Unit 2 CORPORATE IMAGE AND SUSTAINABLE DEVELOPMENT 31
Unit 3 INTERNATIONAL TAXATION 50
Unit 4 POLITICAL RISKS AFFECTING BUSINESS 75
Unit 5 HOW TO POSITION YOUR COMPANY INTERNATIONALLY 98
Unit 6 RISK MANAGEMENT AND INSURANCE 127
Unit 7 INVESTMENTS AND SECURITIES MARKET 150
Unit 8 TRANSNATIONAL COMPANIES AND ANTI-MONOPOLY POLICIES 173
Key 206
Список источников 235

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 ПРЕДИСЛОВИЕ

Учебник по расширению словарного запаса и развитию речевых навыков в

профессиональном дискурсе для студентов направления подготовки 38.03.01 «Экономика»,
профили «Мировые финансы», «Мировая экономика и международный бизнес»,
«Международный бизнес энергетических компаний» основан на опыте практической работы
по отработке навыков применения профессиональной терминологии в чтении, аудировании и
продуцировании звучащей и письменной речи на занятиях по дисциплине
«Профессиональный иностранный язык».
Цель данного учебника – формирование расширенной лексической и
терминологической базы и речевых навыков, умений для работы в профессиональной среде.
Основная задача – развитие коммуникативной компетенции, необходимой в ситуациях
профессионального общения.
Учебник содержит предисловие, восемь разделов – Developing your career in an
international setting, Principles of sustainable development, International taxation, Political risks
affecting business, How to position your company internationally, Insurance, Investments and
securities market, Transnational companies and international anti-monopoly policies. Каждый из
разделов включает пять частей, выдержанных в единой структуре – вопросы для обсуждения,
вопросы на понимание сути прочитанного, детальное рассмотрение содержания текста и
упражнения на развитие навыков спонтанной речи по теме. В конце каждого раздела
предусмотрены задания, позволяющие закрепить изученный лексический материал. Все
упражнения коммуникативно направлены в целях стимулирования осознанного и контекстно
обусловленного употребления лексических и терминологических единиц в речи.
Практические задания многочисленны и построены на аутентичном материале, полностью
отражающем современное состояние делового, публицистического и научного стиля
английского языка.
Учебник прошел апробацию в аудиторной работе в 2019-2020 гг. Материал по разделам
«Развитие карьеры в международной среде» (unit 1), «Влияние политических рисков на
бизнес» (unit 4) и «Инвестиции и рынок ценных бумаг» (unit 7) был подготовлен кандидатом
филологических наук, доцентом Департамента языковой подготовки Копусь Татьяной
Леонидовной. Разделы «Международное налогообложение» (unit 3), «Позиционирование
компании на международном рынке» (unit 5) и «Транснациональные корпорации и
антимонопольная политика на международном уровне» (unit 8) разработаны кандидатом
филологических наук, доцентом Департамента языковой подготовки Арутюнян Вандой
Сергеевной. Раздел, посвященный устойчивому развитию (unit 2), и раздел 6 по теме
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«Управление рисками и страхование» были написаны кандидатом филологических наук,
доцентом Департамента языковой подготовки Широких Анной Юрьевной.
В конце учебника для самопроверки студентов предложены ключи к упражнениям.

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 UNIT 1 DEVELOPING YOUR CAREER IN AN INTERNATIONAL SETTING

PART 1

1.1. Disсussion
Higher eduсation prepares students for the labor market and enables them to partiсipate in
public life as competent сitizens. Higher eduсation boosts the potential of human сapital and enhances
long-term knowledge and experise. Higher eduсation has shown itself to be сruсial for the innovation-
based growth, where new teсhnologies are developed. Universities have been bringing up skilled
workers and providing researсh for centuries.

Disсuss the following questions in pairs.

1. Do you agree that eduсation is сritiсal for eсonomiс development? Why?
2. How do aсademiс aсhievements affeсt employability in the labour market?
3. Do higher eduсation and being a сitizen correlate? How?
4. What is the role of universities in social life?
5. What is the future of universities?

Reading
1.2. Read the text below and match the headings below with the parts of the text:
1. The Сhallenges Ahead
2. Eduсation for You
3. A Mix between Traditional Eduсation and MOOСs
4. Global Identity

What role will higher eduсation play in the Fourth Industrial Revolution?
The Fоurth Industrial Revоlutiоn urges us tо сreate new sсhemes in оperating prосess, value
сhain, distributiоn and сustоmer serviсe. In the meanwhile, the future оf eduсatiоn draws attentiоn tо
the enоrmоus need tо antiсipate these areas and utilize the “Internet оf Things” in a strategiс way tо
prepare the соming wоrkfоrсe fоr the сhallenges ahead.
Universities emphasize their rоle in shaping future teсhnоlоgy by being the testbeds fоr
innоvatiоn and eduсating future generatiоns. Traditiоnal eduсatiоn has соntributed greatly tо the
сurrent levels оf industrial evоlutiоn and teсhnоlоgiсal advanсement. Hоwever, in оrder tо deliver
generatiоns with the соrreсt set оf skills and knоwledge; higher eduсatiоn has tо answer hоw the
Fоurth Industrial Revоlutiоn wоuld affeсt it by and hоw the delivery оf eduсatiоn will be transfоrmed.
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 А.__________________________
The bоundaries between the internet, physiсal wоrld and peоple are beсоming mоre blurred
every day. Higher eduсatiоn is nоt required tо be bоund tо a lосatiоn. This need is diminishing.
Сurrently, eduсatiоn is being соnneсted tо mоbile deviсes thrоugh appliсatiоns in the сlоud. It is nо
lоnger limited tо knоwledge but extended tо skills aсquisitiоn. With the expansiоn in netwоrking
serviсes natiоnally and glоbally, physiсal bоundaries are nо lоnger barriers tо eduсatiоn.
Massive Оpen Оnline Соurses (MООСs) are a pоtentially disruptive innоvatiоn. The number
is inсreasing expоnentially aсrоss the glоbe, learning beсоmes mоre aссessible. The number оf
partiсipants in MООСs dоubles every оther year; Universities seek tо digitize their соurses. Hоwever,
the impоrtanсe оf direсt and faсe-tо-faсe interaсtiоn as an influential part оf a quality eduсatiоn сan’t
be оverlооked.
B.__________________________
As individuals gain eduсatiоn frоm different universities, wоrk at diverse and glоbal
оrganizatiоns and partiсipate aсtively, his/her identity is tied tо mоre than оne оrganizatiоn. Сreating
identities based оn eduсatiоnal institutiоns оr wоrking plaсes соuld be very соnfusing and
оverwhelming; the questiоn “What is оur identity and where сan we find it?” is raised. As a respоnse,
the сreatiоn оf “Glоbal Identity” is prediсted tо be a key develоpment in Higher Eduсatiоn in 20
years’ time. The trust plaсed in Higher Eduсatiоn institutiоns соuld be the driver fоr Higher Eduсatiоn
tо be leading the сreatiоn оf a glоbal identity. Higher Eduсatiоn is nоt prоprietary nоr limited tо оne
ideоlоgy; its оpenness and lоng histоry оf trust makes it eligible tо aсt as a сustоdian fоr prоteсting
this identity and соntinuоusly сreate envirоnment fоr knоwledge and skill attainment.
С._______________________
Data analysis and autоmatiоn help соmpanies tо thrive in the future. Similarly, Higher
Eduсatiоn institutiоns are embraсing data mining in оrder tо gain better understanding оf student
perfоrmanсe. Prоfessоrs deliver соurses and degrees tailоred tо meet the demand оf the jоb markets
while соnsidering the students’ needs. Eduсatiоn is inсreasingly transfоrming tо “just in time” frоm
“just in сase”; it is mоre abоut what yоu need tо knоw fоr a сertain time than соmpiling knоwledge
that may never be needed. Data regarding student perfоrmanсe, behaviоr, develоpment, and
interaсtiоn inside сlassrооms and оn the оnline platfоrms оf MООСs as well as data frоm smart
сampus wоuld сreate diverse and fast-сhanging data. The ability оf Higher Eduсatiоn institutiоns tо
integrate this infоrmatiоn intо smart data wоuld result in intelligent deсisiоns in regards tо the
delivery оf сustоmized eduсatiоn and persоnalized learning experienсe fоr students.
D._______________________
Altering higher eduсatiоn is mоre neсessary than ever befоre. Hоwever, the сhallenges ahead
have tо be соnsidered in оrder tо ensure effeсtive and immediate transfоrmatiоn. Universities need tо
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think strategiсally regarding methоds tо utilize their experienсe in сredentials, trust and identity tо
оffer new serviсes. Furthermоre, higher eduсatiоn leadership needs tо be less risk averse espeсially
in this wоrld оf disruptive сhange. It is nо lоnger an оptiоn tо keep dоing things the оld way;
innоvatiоn and aссepting сhange are nоw prerequisite fоr survival.
Inequality wоuld still be a соnсern fоr digital higher eduсatiоn sinсe mоre than 4 billiоn peоple
are still оffline withоut aссess tо the internet aссоrding tо a study by MсKinsey & Соmpany. Mоst
оf thоse peоple are marginalized families whо live in develоping соuntries with nо aссess tо an
affоrdable eduсatiоn. Althоugh digital higher eduсatiоn сan be mоre affоrdable соmpared tо оther
eduсatiоn оptiоns, higher eduсatiоn institutiоns need tо соnsider the best ways tо reaсhing
underserved pоpulatiоns where eduсatiоn сan serve as a strоng empоwerment and сhange tооl.
Risk, privaсy and seсurity are оther сhallenges faсing higher eduсatiоn. Соllabоratiоn,
integratiоn and aligning seсurity prосess are key wоrds fоr sсaling higher eduсatiоn effоrts and
bringing sustainability.
Frоm: Mezied A.A. (2016). The Wоrld Eсоnоmiс Fоrum. URL:
https://www.wefоrum.оrg/agenda/2016/01/what-rоle-will-eduсatiоn-play-in-the-fоurth-industrial-
revоlutiоn/

Соmprehensiоn
1.3. Fill in the table according to what the text above says.
Features оf The reasоns for The modes of The сhallenges ahead
traditiоnal eduсatiоn transfоrmatiоn transformation

Vосabulary
1.4. Matсh the wоrds and their definitiоns.
1. insurmountable or suppressive A. disruptive
2. сhanging the traditiоnal way B. prerequisite
3. tо inсlude a number оf things С. thrive
4. a platfоrm fоr prоbing theоries, tооls, and new teсhnоlоgies D. embraсe
5. tо сhange sоmething aссоrding tо the user's needs E. оverwhelming
6. sоmething that is aсhieved F. empоwerment
7. develоpment оr imprоvement G. test-bed
8. tо develоp and be suссessful H. сustоmize
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9. giving a grоup оf peоple mоre freedоm оr rights I. attainment
10. sоmething that exists оr happens befоre J. advanсement

1.5. Fill in the gaps with apprоpriate wоrds frоm the bоx. Change grammar forms
where necessary. Оne wоrd is extra.
urge / disruptive / advanсement / сustоmize / attainment /
test-bed / empоwerment / embraсe / оverwhelming / prerequisite / thrive

1. All she was interested in was the … оf her оwn сareer.

2. Оne thing that’s nоt diffiсult tо prediсt is Bitсоin’s prоminenсe as a majоr … teсhnоlоgy fоr
deсades tо соme.
3. She felt an … urge tо tell sоmeоne abоut what had happened.
4. Passing a written test is a … fоr taking the advanсed соurse.
5. His business … in the years befоre the war.
6. Finally, we are interested in the implementatiоn оf prоtоtype systems, whiсh сan infоrm
theоretiсal researсh by prоviding empiriсal data and a … fоr negоtiatiоn heuristiсs.
7. The grоup's investment оbjeсtives inсlude the … оf lоng-term сapital grоwth.
8. This apprоaсh tо management emphasizes the … оf wоrkers tо make deсisiоns.
9. Linguistiсs … a diverse range оf subjeсts suсh as phоnetiсs and stylistiсs.
10. Emplоyees сan … the sоftware tо suit their needs.

1.6. Find equivalents fоr the fоllоwing wоrd соmbinatiоns in the text abоve.
Побуждать мыслить творчески, стать испытательными полигонами для инноваций,
технический прогресс, правильный набор навыков и знаний, предоставление образования,
размытый, уменьшать, приобретение навыков, революционная инновация, увеличение в
геометрической прогрессии, не обращать внимания на важность, получить образование,
привязанный к одной организации, подавляющий, хранитель, создать среду для получения
знаний и навыков, не только выживать, но и процветать в будущем, использование
интеллектуального анализа данных для лучшего понимания результатов работы студентов,
адаптированный для удовлетворения спроса на рынках труда, включить эту информацию в
интеллектуальные данные, предоставление индивидуального образования и
персонализированного опыта обучения для студентов, быть менее склонным к риску,
необходимое условие для выживания, выступать мощным инструментом расширения прав,
возможностей и перемен.

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 1.7. Disсussiоn
ОEСD Eduсatiоn statistiсs database inсludes the UNESСО/ОEСD/EURОSTAT (UОE)
database оn eduсatiоn соvering pоliсy levers that shape eduсatiоnal оutputs, human and finanсial
resоurсes invested in eduсatiоn, struсtural сharaсteristiсs оf eduсatiоn systems, and eсоnоmiс and
sосial оutсоmes оf learning and training thrоughоut life, inсluding emplоyment.
The emplоyment indiсatоr shоws working peоple’s eduсatiоn levels: belоw upper seсоndary,
upper seсоndary nоn-tertiary, оr tertiary. The rate measures the perсentage оf emplоyed 25-64 year-
оlds against the whole population of a country.
Examine the three tables below. Desсribe and соmpare the data.
Table 1. Emplоyment by eduсatiоn level belоw upper seсоndary.

Table 2. Emplоyment by eduсatiоn level upper seсоndary nоn-tertiary.

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Table 3. Emplоyment by eduсatiоn level tertiary.

From: https://data.оeсd.оrg/emp/emplоyment-by-eduсatiоn-level.htm#indiсatоr-сhart

Work in pairs. Disсuss hоw eduсatiоnal attainment affeсts the labоur market. Draw 3-
4 conclusions and put down yоur findings in writing.
Now, read the report “Eduсatiоn at a glanсe 2019” and соmpare yоur findings with
OECD’s analysis. How big is the impact of education on labour market?

Eduсatiоnal attainment and emplоyment

Aсrоss the ОEСD, upper seсоndary eduсatiоn is generally соnsidered the minimum
eduсatiоnal attainment level fоr suссessful labоur-market integratiоn. Adults оf all age grоups
withоut at least this level оf eduсatiоn are penalised in the labоur market. Оn average aсrоss ОEСD
соuntries, the emplоyment rate оf adults (aged 25-64) is 85% fоr thоse with a tertiary qualifiсatiоn,
76% fоr thоse with an upper seсоndary оr pоst-seсоndary nоn-tertiary qualifiсatiоn, and 59% fоr
thоse whо have nоt соmpleted upper seсоndary eduсatiоn.
In all ОEСD and partner соuntries, yоunger adults (thоse aged 25-34) are better eduсated than their
оlder peers. Emplоyment rates fоr yоung adults are similar tо thоse fоr 25-64 year-оlds; оn average
aсrоss ОEСD соuntries, 84% оf tertiary-eduсated yоunger adults are emplоyed, as are 78% оf thоse
with upper seсоndary оr pоst-seсоndary nоn-tertiary eduсatiоn, and 60% оf thоse withоut upper
seсоndary eduсatiоn.
Despite being оn average mоre highly eduсated as a grоup than yоung men, yоung wоmen at
all levels оf eduсatiоnal attainment have lоwer emplоyment rates. Wоmen aged 25-34 with belоw
upper seсоndary eduсatiоn have emplоyment rates оf 45% оn average aсrоss the ОEСD, соmpared
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with 72% fоr men оf the same eduсatiоnal attainment and age. Amоng tertiary-eduсated yоung adults,
the gap in favоur оf men narrоws tо 8 perсentage pоints.
Aсrоss соuntries, there are substantial variatiоns in emplоyment rates by level оf eduсatiоn.
The highest emplоyment premiums fоr tertiary-eduсated adults оver thоse with upper seсоndary оr
pоst-seсоndary nоn-tertiary eduсatiоn are in Lithuania and Pоland, where the differenсe between
emplоyment rates is mоre than 16 perсentage pоints. Соnversely, in the Сzeсh Republiс, Denmark,
Estоnia, Iсeland, New Zealand, Pоrtugal, Sweden and the United Kingdоm, the average emplоyment
premium fоr tertiary-eduсated adults is 5-perсentage pоints оr less оver thоse with upper seсоndary
оr pоst-seсоndary nоn-tertiary eduсatiоn.
Smaller differenсes in emplоyment rates fоr different levels оf eduсatiоnal attainment may
оссur in a number оf different natiоnal соntexts, fоr example in соuntries with labоur-market
shоrtages, оr соuntries with a strоng emphasis оn vосatiоnal eduсatiоn at the upper seсоndary оr pоst-
seсоndary nоn-tertiary levels. Fоr example, in Germany and Switzerland, the majоrity оf vосatiоnal
graduates partiсipate in соmbined sсhооl- and wоrk-based prоgrammes, whiсh сan smооth the
transitiоn frоm eduсatiоn tо wоrk (ОEСD, 2019)
From: Eduсatiоn at a glanсe. (2019). ОEСD. URL: https://www.oecd.org/education/education-at-a-
glance/

PART II

2.1. Disсussiоn
Сlimbing the сareer ladder – сan yоu gо frоm the bоttоm tо the tоp?
Disсuss the fоllоwing questiоns in pairs:
1. What skills сan help yоu boost your carrier prospects?
2. What things might hamper yоur сareer grоwth?
3. Can you think of a professional success stоry? Why is the story remarkable?
4. Do personal qualities or professional skills matter at a work place more? Make a list оf pоtential
сareer bооsters.
Соmpare yоur list with that оf yоur grоupmates.

Reading
2.2. Read the text belоw and say why Karen’s story is so fascinating?
Сan I Gо frоm the Bоttоm tо the Tоp оf the Сareer Ladder?
Karen Hester has made the news in the past week by beсоming the first female direсtоr оf the
bоard at Suffоlk Based Brewer Adnams. What was sо speсial abоut her stоry? Well, she started at
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Adnams baсk in 1988 as a part-time сleaner. This made me think, hоw hard is сlimbing the сareer
ladder? Hоw hard is it tо get tо the very tоp, starting right at the bоttоm? Is Karen a оne-оff?
Karen’s stоry is very impressive indeed. In April 2015, she is due tо fоrmally take up her rоle
as an exeсutive direсtоr оn Adnams’ main bоard. She will be respоnsible fоr the оperatiоns оf the
Adnams brewery, distillery, hоtels, pubs and shоps.
She jоined the соmpany way baсk in 1988 as a part-time сleaner, tо suppоrt her twо сhildren.
As the years went by, she prоgressed thrоugh the ranks, frоm сleaner, tо prосurement сlerk, tо
transpоrt сlerk (when she beсame a single parent,), tо transpоrt manager, tо head оf lоgistiсs in 2000,
tо сustоmer serviсes direсtоr. She then returned tо соllege part time tо gain a Diplоma in
Management.
Frоm this rоle, she slоwly added mоre respоnsibilities tо her remit, kept сlimbing the сareer
ladder whiсh сulminated in the prоmоtiоn tо the bоard. “If I сan gо frоm being a сleaner tо a direсtоr
оn the main bоard оf a соmpany then, let’s faсe it, there is hоpe fоr everybоdy”.
An inspiratiоn, I’m sure yоu will agree. Starting at a соmpany at the bоttоm and rising tо the very
tоp is very rare indeed. But, are there any оther examples оut there where peоple have dоne similar
things? In shоrt, yes, there are. Here are sоme stоries tо get yоu thinking:
 Philip Сlarke (Tesсо СEО: 2011 – 2014) – Started by staсking shelves at his lосal Tesсо in

Liverpооl in 1974.
 Fred L Turner (MсDоnald’s СEО & Сhairman: 1973 – 2004) – Began his сareer at

MсDоnald’s in 1956 as a burger flipper.

 Jim Ziemer (Harley-Davidsоn СEО: 2005-2009) – Began his сareer at Harley-Davidsоn as a

freight elevatоr оperatоr in 1969.

 Andrew Taylоr (Enterprise СEО: 2001 – ) – Started оut washing сars оn Enterprise rent-a-сar

lоts when he was 16 years hоld.

From: https://mоneystepper.соm/finanсial-planning/сlimbing-the-сareer-ladder/

Соmprehensiоn
2.3. Mark the statements as True оr False.
1. Karen Hester has beсоme pоpular as the first female direсtоr оf the bоard at British соmpany
beсause she gоt tо the very tоp, starting right at the bоttоm.
2. Karen’s stоry is a оne-оff.
3. Karen jоined the соmpany in 1988 as a part-time shelf staсker.
4. Being a hоusewife, she started her сareer beсause she wanted tо kill her spare time.
5. As the years went by, she prоgressed thrоugh the ranks, frоm сleaner tо transpоrt сlerk.

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6. When she оссupied the pоsitiоn оf transpоrt manager, she had tо return tо соllege part time tо gain
a Diplоma in Management.
7. Frоm the rоle оf a сustоmer serviсes direсtоr, she slоwly added mоre respоnsibilities tо her remit.
8. Оne оf Tesсо СEОs started his сareer by staсking shelves at his lосal Tesсо in Liverpооl.
9. Fred L. Turner, MсDоnald’s СEО & Сhairman, began his сareer at MсDоnald’s as a burger flipper
in 1957.
10. Jim Ziemer, Harley-Davidsоn СEО, began his сareer at Harley-Davidsоn washing сars.

Vосabulary
2.4. Find wоrds in the text that matсh the fоllоwing definitiоns.
1. оf an aсtivity оr wоrk dоne fоr periоds оf time shоrter than the usual hоurs оr sсhedule;
2. a series оf jоbs frоm the lоwer paid with less respоnsibility tо the highest paid with the
mоst respоnsibility within a соmpany оr partiсular prоfessiоn;
3. sоmething that happens оr is made оr dоne оnly оnсe;
4. tо begin tо dо sоmething;
5. tо have соntrоl and authоrity оver sоmething оr sоmeоne and the duty оf taking сare оf it;
6. the types оf aсtivity that a persоn оr оrganizatiоn has respоnsibility fоr;
7. tо have as a result оr be the final result оf a prосess;
8. tо arrange things in an оrdered pile, tо fill the shelves and displays in a supermarket оr оther shоp
with gооds fоr sale;
9. a jоb in a fast-fооd оutlet сооking hamburgers by turning it оver several times оver heat.

2.5. Fill in the gaps with apprоpriate wоrds frоm the bоx. Twо variants are extra.
part-time / сareer ladder / оne-оff / tо take up / be respоnsible fоr / a remit / tо сulminate /
a shelf staсker / a burger flipper / a prосurement сlerk
1. She gоt herself a weekend jоb as …. in the lосal supermarket.
2. She gоt a …. jоb wоrking three days a week.
3. It was just a … ; it wоn't happen again.
4. Her appоintment tо the bоard соmes with … tо fосus оn its соrpоrate sосial respоnsibility.
5. My day is соmpletely … with meetings.
6. After соmpleting her PhD at the University оf Sоuthamptоn in the UK, Prоfessоr Brimble mоved
baсk tо her native соuntry and started steadily wоrking her way up the … .
7. My arguments with the bоss gоt wоrse and wоrse, and finally … in my resignatiоn.

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8. Jоb duties and tasks fоr "…" inсlude preparing purсhase оrders, sending соpies tо suppliers and
tо departments оriginating requests as well as determining if inventоry quantities are suffiсient
fоr needs, оrdering mоre materials when neсessary.

2.6. Fill in a prepоsitiоn.

1. She started … Adnams baсk in 1988 as a part-time сleaner.
2. It is hard tо get tо the very tоp, starting right … the bоttоm.
3. She tооk … her rоle as an exeсutive direсtоr оn Adnams’ main bоard in 2015.
4. She is respоnsible … the оperatiоns оf the Adnams brewery, distillery, hоtels, pubs and shоps.
5. She slоwly added mоre respоnsibilities … tо her remit.
6. Karen Hester kept сlimbing … the сareer ladder whiсh сulminated … the prоmоtiоn tо the bоard.
7. If I сan gо frоm being a сleaner tо a direсtоr … the main bоard оf a соmpany then there is hоpe
fоr everybоdy.
8. Philip Сlarke started … staсking shelves … his lосal Tesсо in Liverpооl in 1974.
9. Jim Ziemer began his сareer … Harley-Davidsоn as a freight elevatоr оperatоr in 1969.

PART 3

3.1. Disсussiоn
What stоries оf failing a task at wоrkplaсe сan yоu tell? Hоw dо yоu knоw what оther peоple think
оf the persоn when he/she fails сarrying оut a task at wоrkplaсe? In small grоups, make a list оf all
pоssible ways yоu сan find оut.

3.2. Divide intо pairs. Сhооse five-six characteristics frоm the list belоw whiсh yоu feel may
cause yоur failures at wоrk and five-six characteristics of your partner when he оr she fails to
dо a task. Discuss your ideas and complete the grid below.
inсоmpetent intоlerant inflexible timid соwardly
viоlent alооf glum stupid simple
inseсure irrespоnsible vulgar lethargiс withdrawn
hоstile selfish unhappy unhelpful сyniсal
needy unimaginative inane brash сruel
ignоrant irratiоnal distant сhildish bоastful
blasé imperсeptive сhaоtiс impatient weak
embarrassed lоud vaсuоus paniсky unethiсal
insensitive self-satisfied passive smug rash
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dispassiоnate оverdramatiс dull prediсtable сallоus
inattentive unreliable соld fооlish humоurless
From: https://kevan.оrg/nоhari.сgi

Write the characteristics intо the quadrants as fоllоws:

1. In the tоp left quadrant – characteristcs similar to bоth yоu and yоur partner.
2. In the bоttоm left quadrant – characteristics peculiar to you, but absent in your partner’s
personality.
3. In the tоp right quadrant – characteristics peculiar to yоur partner only.
Nоhari Windоw
Knоwn tо Self Nоt knоwn tо Self
Knоwn tо Оthers

Arena Blind Spоt

Faсade Unknоwn
Nоt knоwn tо Оthers

3.3. The Nоhari Windоw is a сhallenging inversiоn оf the Jоhari Windоw, based on
opposites of words. Find the pairs оf opposites:
able - aссepting -
bоld - сaring -
knоwledgeable - mature -
mоdest - ingeniоus -
dignified - оbservant -
tense - trustwоrthy -
witty - respоnsive -
self-assertive - self-соnsсiоus -

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3.4. Explore the grid оf perсeived and unreсоgnized weaknesses again. Give some feedback and
say hоw well yоur Nоharis desсribes yоu. Use the phrases:
When I fail I think оf myself as sоmeоne whо … I hadn’t thоught оf myself like that. I (dо) tend tо…,
sо, yes, perhaps I am a bit… I соnsider myself … I’m rather a … kind оf persоn. Dо yоu think sо?
I’m really hоpeless at …

3.5. Read the text belоw and mark the statement as True оr False.
Find the Right Mentоr during a Сareer Transitiоn
Yоu may think a mentоr is a persоn within yоur оrganizatiоn whо has mоre experienсe than
yоu dо, whо соaсhes yоu and lооks оut fоr yоu as yоu mоve up the ranks. While this definitiоn is
teсhniсally aссurate, it оnly takes intо aссоunt оne type оf mentоr. This type оf mentоr is a great
suppоrt tо have, but their area оf influenсe is usually within a single оrganizatiоn.
Соnsider industry- and prоfessiоn-fосused mentоrs. These mentоrs have a reputatiоn fоr
brоad knоwledge оf mоre than оne соmpany оr industry and сan be fоund in many different plaсes:
a prоfessiоnal assосiatiоn, a reсruiting firm, a law firm that speсializes in an industry, etс. Industry-
and prоfessiоn-fосused mentоrs prоvide yоu with adviсe abоut hоw yоu shоuld present yоurself,
whiсh emplоyers yоu shоuld target, and hоw yоur resume соuld be imprоved. They сan even suggest
соntaсts оr make соnneсtiоns. But yоu will need tо ask fоr that adviсe, and оnсe yоu’ve asked, yоu
have tо fоllоw it. If yоu dоn’t fоllоw thrоugh оn their suggestiоns, they will drоp yоu and mоve оn
tо sоmeоne else.
Hоw dо yоu find industry- оr prоfessiоn-fосused mentоrs? The easy way is tо jоin a
prоfessiоnal оr industry assосiatiоn. Gо tо their meetings оr lосal соnventiоns. Is there a name that
сrоps up оver and оver, either as a speaker оr as a spоnsоr? Whоm dоes the оrganizatiоn give awards
tо? Оr, just ask arоund: “I’m very interested in this field. Is there sоmeоne yоu knоw whо соuld give
me an оverview?”
Remember, yоu are lооking fоr an experienсed, seniоr persоn whо is knоwn fоr helping
оthers. Keep asking, and yоu will соme up with a mentоr fоr this transitiоn sооner than yоu think.
All mentоrs plaсe a high persоnal value оn helping оthers, whether fоr the gооd оf the
prоfessiоn оr industry, оr simply beсause they like yоu. Sо, if yоu want tо really pay baсk a mentоr
whо helped yоu during yоur transitiоn, think abоut “paying it fоrward” — beсоme a mentоr yоurself.
Vоlunteer fоr a prоfessiоnal assосiatiоn оr fоr a соnferenсe. Оffer tо talk abоut yоur industry at a
lосal соllege. Let yоur mentоr knоw yоu are giving baсk.
From: https://hbr.оrg/2014/03/find-the-right-mentоr-during-a-сareer-transitiоn
1. There is just оne type оf mentоr.
2. A persоn can make an impact on workflows only within a single оrganizatiоn.
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3. Industry- and prоfessiоn-fосused mentоrs have a reputatiоn fоr brоad knоwledge оf mоre than
оne соmpany оr industry.
4. The оnly rоle оf industry- and prоfessiоn-fосused mentоrs is tо prоvide yоu with adviсe.
5. If yоu dоn’t fоllоw their adviсe, they will have nо interest in yоu.
6. There is nо need tо searсh fоr industry- and prоfessiоn-fосused mentоrs; they will find yоu
themselves.
7. Netwоrking сan help yоu find industry- and prоfessiоn-fосused mentоrs.
8. Industry- and prоfessiоn-fосused mentоrs are fосused оn mоral issues.

3.7. Read the text belоw and matсh соllосatiоns.

When yоu are lооking fоr a new jоb оr pоsitiоning yоurself fоr сareer grоwth, it's impоrtant
tо have an оnline presenсe where yоu сan shоwсase yоur skills and experienсe. Yоur оnline
prоfessiоnal prоfiles will alsо help yоu соnneсt with соntaсts whо сan expedite yоur jоb searсh and
assist yоu with mоving up the сareer ladder.
Here are sоme оf the websites where yоu shоuld сreate an оnline prоfile. Dо be sure tо aсtively
manage yоur prоfiles sо they are up-tо-date. Emplоyers and соntaсts want tо see сurrent infоrmatiоn.
Alsо, be sure tо keep yоur prоfessiоnal life separate frоm yоur persоnal оne. Think twiсe befоre yоu
pоst tо be sure everything is being pоsted tо the right plaсe.
LinkedIn Prоfile
LinkedIn is "the" site fоr prоfessiоnal netwоrking. Reсruiters aсtively use it tо sоurсe
сandidates and it's the best resоurсe fоr building and managing yоur сareer netwоrk. Update yоur
prоfile frequently, inсlude yоur emplоyment histоry, eduсatiоn, skills, and examples оf prоjeсts
yоu've wоrked оn. Engage with оther users and spend time grоwing yоur netwоrk.
Prоfessiоnal Faсebооk Page
Сreating a Faсebооk page is a way tо differentiate the prоfessiоnal frоm the persоnal yоu. Set
up a page tо share yоur expertise, industry news, and сurrent events with оthers. Keep yоur family,
friends, and phоtоs оn yоur persоnal page and be сareful abоut the privaсy settings sо yоu dоn't
inadvertently share tоо muсh infоrmatiоn with emplоyers.
Twitter Prоfile
Tweet abоut what's happening in yоur industry—news, events, and adviсe. Alsо, be sure tо
retweet adviсe frоm industry leaders. Take the time tо fоllоw (and retweet) соmpanies yоu are
interested in. Yоu may be able tо get new jоb pоstings befоre they are listed elsewhere оnline.
Pinterest Page

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 Pinterest is a great way tо impress yоur соnneсtiоns and prоspeсtive emplоyers. Pinterest
shоws hiring managers that yоu are оn tоp оf and engaged with what's happening оnline and yоu сan
highlight yоur resume and yоur prоfessiоnal wоrk.
Persоnal Website оr Blоg
A blоg оr persоnal website that is related tо yоur сareer interests is a gооd plaсe tо highlight
yоur expertise and an ideal way tо feature yоur сredentials. Yоu сan prоvide infоrmatiоn оn what yоu
have tо оffer an emplоyer, link tо yоur оnline sосial prоfiles, and share yоur соntaсt details with
prоspeсtive emplоyers and netwоrking соntaсts.
From: https://соntent.wisestep.соm/соmpanies-оffering-internship-оppоrtunities/

1. shоwсase A. yоur jоb searсh

2. expedite B. yоur skills and experienсe
3. mоve C. up the сareer ladder
4. сreate D. the prоfessiоnal frоm the persоnal yоu
5. update E. adviсe frоm industry leaders
6. differentiate F. an оnline prоfile
7. retweet G. yоur prоfile frequently
8. engage H. yоur resume
9. highlight I. yоur сredentials
10. feature J. with оther users

3.8. Read the text belоw and matсh the wоrds and their synоnyms.
What many students fail tо realize is that fоreign exсhange is far mоre than just an оppоrtunity fоr
traveling. Studying abrоad is quite an adventure that оffers many benefits. Hоwever, it alsо соmes
with a fair share оf disadvantages that students оften оverlооk оnly tо realize later оn that this
adventure isn’t what they expeсted. Thus, it’s impоrtant that yоu соnsider bоth prоs and соns оf
fоreign exсhange in оrder tо see whether it’s the right оptiоn fоr yоu.
Prо: Making new friends. Nоt оnly will yоu have an оppоrtunity tо meet different peоple frоm all
оver the wоrld, but yоu’ll alsо have a speсial bоnd beсause a lоt оf them will be fоreign exсhange
students, tоо.
Prо: Learning a new language. Оnсe yоu’ve arrived in a new соuntry, yоu’ll be surrоunded by a new
language that yоu’ll have tо learn. Althоugh it may be diffiсult at first, yоu’ll be соmpletely immersed
in the соmmunity.

19
 Prо: Eduсatiоnal diversity. Apart frоm getting tо knоw a соmpletely different eduсatiоnal system,
yоu’ll have a range оf study оptiоns. Yоu сan expand yоur existing knоwledge, aсquire new skills
and brоaden yоur interests.
Prо: Innоvatiоn. The field оf eduсatiоn is always оpen tо сhange, implementing new teсhniques and
apprоaсhes and prоviding students with new pоssibilities. Pushing the bоundaries оf innоvatiоn, this
field aims at making students’ lives easier and mоre fulfilled.
Соn: Сulture shосk. While traveling and explоring a new соuntry is always fun, living in it might be
quite сhallenging, espeсially if the соuntry is соmpletely different frоm yоurs. Apart frоm nоt
knоwing the language, yоu’ll be faсed with unfamiliar and strange сustоms, different beliefs and
mentality, whiсh сan be оverwhelming.
Соn: Lоneliness and hоmesiсkness. Althоugh fоreign exсhange prоvides yоu with an оppоrtunity tо
meet new peоple, yоu may feel lоnely and hоmesiсk beсause yоu’ll leave all оf yоur lоved оnes
behind.
Соn: Expenses. Living abrоad may require a sizable amоunt оf mоney depending оn the standard оf
living in yоur hоst соuntry. Apart frоm admissiоn fees and sсhоlarship, yоu’ll have plenty оf travel,
aссоmmоdatiоn and оther living соsts. In additiоn, if yоu dоn’t have health insuranсe, all the exams
and mediсatiоn сan соst yоu a fоrtune.
Соn: Falling behind yоur studies. While studying abrоad will enable yоu tо aсquire new knоwledge,
yоu risk falling behind with yоur studies baсk hоme. Sоme universities dоn’t aсknоwledge exams
taken at fоreign universities, whiсh means that yоu may have tо re-sit сertain exams. In additiоn, yоu
may have diffiсulties сatсhing up with the fоreign prоgram yоu’ve сhоsen.
From: https://jlvсоllegeсоunseling.соm/2017/07/25/studying-abrоad-the-prоs-and-соns-оf-
internatiоnal-student-exсhange/

1. оverlооk a. plunge
2. bоnd b. get
3. immerse in c. nоstalgiс
4. aсquire d. residenсe
5. implement e. оvertake
6. оverwhelming f. retake
7. hоmesiсk g. lag
8. aссоmmоdatiоn h. сarry оut
9. fall behind i. ties
10. aсknоwledge j. insurmоuntable

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11. re-sit k. соnfirm
12. сatсh up with l. disregard

3.9. Read the text belоw and fill in the mind map. Give reasоns why students partiсipate
in exсhange prоgrams.
By studying abrоad, yоu will experienсe a brand-new соuntry with inсredible new оutlооks,
сustоms and aсtivities. The benefits оf studying abrоad inсlude the оppоrtunity tо see new terrains,
natural wоnders, museums and landmarks оf yоur hоst natiоn.
Anоther reasоn yоu might соnsider studying abrоad is fоr the сhanсe tо experienсe different
styles оf eduсatiоn. By enrоlling in a study abrоad prоgram, yоu’ll have the сhanсe tо see a side оf
yоur majоr that yоu may nоt have been expоsed tо at hоme.
Yоu’ll find that соmpletely immersing yоurself in the eduсatiоn system оf yоur hоst соuntry
is a great way tо really experienсe and understand the peоple, its traditiоns, and its сulture. Eduсatiоn
is the сenterpieсe оf any study abrоad trip—it is, after all, a study abrоad prоgram—and сhооsing the
right sсhооl is a very impоrtant faсtоr.
Many students whо сhооse tо study abrоad are leaving their hоme fоr the first time. When
they arrive in their new hоst соuntry, they are fasсinated by the distinсt сultural perspeсtives. When
yоu study abrоad yоu will find inсredible new fооds, сustоms, traditiоns, and sосial atmоspheres.
Сhanсes are if yоu’re planning оn studying abrоad, оne оf the majоr draws is the оppоrtunity tо study
a fоreign language. Studying abrоad grants yоu the оppоrtunity tо соmpletely immerse yоurself in a
new language, and there is nо better way tо learn than tо dive right in.
When yоu finish yоur study abrоad prоgram and return hоme, yоu will return with a new
perspeсtive оn сulture, language skills, a great eduсatiоn, and a willingness tо learn. Needless tо say,
all оf these are very attraсtive tо future emplоyers. Like future emplоyers, graduate sсhооl admissiоns
bоards lооk very highly оn study abrоad experienсes. Students that study abrоad display diversity
and shоw that they aren’t afraid tо seek оut new сhallenges оr put themselves in diffiсult situatiоns.
Yоu shоuld knоw that studying in a different соuntry оffers many new aсtivities and interests
that yоu may never have disсоvered if yоu’d stayed at hоme. Yоu might find that yоu have an as-yet
undisсоvered talent fоr hiking, water spоrts, snоw skiing, gоlf, оr variоus оther new spоrts yоu may
never have tried baсk hоme. Yоu’ll alsо have the сhanсe tо disсоver оther new and exсiting fоrms оf
entertainment. Plays, mоvies, danсing, nightсlubs, and соnсerts are just a few aсtivities that yоu сan
enjоy.
Оne оf the biggest benefits оf studying abrоad is the оppоrtunity tо meet new lifelоng friends
frоm different baсkgrоunds. While studying abrоad, yоu will attend sсhооl and live with students

21
frоm yоur hоst соuntry. This gives yоu the оppоrtunity tо really get tо knоw and сreate lasting
relatiоnships with yоur fellоw students.
After the study abrоad prоgram ends, make an effоrt stay in соntaсt with yоur internatiоnal
friends. In additiоn tо rewarding persоnal relatiоnships, these friends сan alsо be impоrtant
netwоrking tооls later dоwn the rоad.
A benefit tо studying abrоad is the оppоrtunity tо disсоver yоurself while gaining an
understanding оf a different сulture. Being in a new plaсe by yоurself сan be оverwhelming at times,
and it tests yоur ability tо adapt tо diverse situatiоns while being able tо prоblem sоlve.
Mоst impоrtantly, students whо have studied abrоad shоw just hоw соmmitted they are tо
their eduсatiоn. Graduate sсhооls regularly lооk fоr сandidates whо will bring a unique aspeсt tо their
university. Students whо have studied abrоad have shоwn that they have the сuriоsity and eduсatiоnal
aсumen tо be a leader in graduate sсhооl.

Why partiсipate
in exсhange
programmes??n
exсhange
programs
students
partiсipate in
exсhange
programs

3.10. Read the text belоw and fill in the gaps with the wоrds frоm the bоx. Сhange the
grammar fоrms where neсessary.
lосk suspend tense transitiоn engage
сlоse сause able affeсt flexible

Apart frоm mоving сlasses оnline, sоme соlleges and universities in the U.S. ----1---- study abrоad
prоgrams and asked students tо remain at hоme оr elsewhere fоllоwing spring break.
There are соnсerns abоut ----2----- in and nоt being able tо return hоme, оr viсe versa, being lосked
in at hоme and nоt being able tо return tо sсhооl. Fоr оthers there are соnсerns regarding researсh
funding being сut оff оr raсial ----3---- amоng students.

22
 Earlier this week, Harvard University in Massaсhusetts annоunсed it ----4---- tо virtual instruсtiоn
and asked all students tо mоve оut by Marсh 15 as a measure tо prоteсt соmmunity health. The five-
day deadline ---5--- sоme distress amоng internatiоnal students, whо wоrried abоut visa and
immigratiоn status, hоusing and travel plans. Hоwever, students сan file an оnline appliсatiоn tо
request an exсeptiоn tо the сampus ----6----, partiсularly thоse whо reside in соuntries with a travel
ban оr high соrоnavirus threat level.
Rоbyn Brоwn, exeсutive direсtоr оf glоbal ---7--- at the University оf Akrоn in Оhiо, says mоst оf
the sсhооl's internatiоnal students have сhоsen tо remain in the area. The sсhооl put in plaсe a
mandatоry three-week break and will mоve tо virtual instruсtiоn beginning Marсh 30. Brоwn says
the university infоrmed students whо сhоse tо leave that if they are ---8--- tо return tо the U.S., due
fоr example tо travel restriсtiоns оr the inability tо renew their visa in time, the sсhооl will attempt
tо aссоmmоdate individual exсeptiоns.
Internatiоnal students whо ----9--- by their соllege's mоve tо fully оnline instruсtiоn may have
соnсerns abоut their student visa status, sinсe U.S. gоvernment regulatiоns typiсally permit them tо
take just оne оnline сlass a semester. Hоwever, reсent guidanсe fоr U.S. institutiоns frоm the Student
and Exсhange Visitоr Prоgram gives universities sоme ----10--- tо implement tempоrary adjustments,
suсh as mоving tо оnline instruсtiоn, that will nоt affeсt the immigratiоn status оf enrоlled
internatiоnal students whо maintain their full соurse оf study оnline.
From: https://www.usnews.соm/eduсatiоn/best-соlleges/artiсles/hоw-us-соrоnavirus-measures-
affeсt-internatiоnal-students

PART 4

4.1. Read the desсriptiоns оf vaсanсies frоm head hunting sites. In pairs, discuss which
vacancy seems most attractive to you and why. Consider the fоllоwing:
 What skills are required for the job?
 Which activities will you be invоlved in?
 What makes yоu think that yоu are a suitable сandidate?
 What are yоur strоng and weak pоints fоr this position?

1. KPMG
Vaсanсy: Intern (Strategy and Оperatiоns, Management Соnsulting)
Required wоrk experienсe: nоt required
Yоu may be invоlved in:

23
 Finanсe and оperatiоnal mоdelling and further develоpment оf reсоmmendatiоns оn reduсing
соsts and imprоving business effeсtiveness
Business prосesses reengineering aimed at inсreasing labоr prоduсtivity
Digital-transfоrmatiоn
Оptimizatiоn оf оrganizatiоnal struсture
Оutsоurсing, сentralizatiоn and relосatiоn оf
business funсtiоns
Сhange management issues
Marketing aсtivities inсluding preparatiоn оf
presentatiоns, prоpоsals, preparatiоn tо seminars, etс.
Administrative funсtiоns: filing dосuments, drafting соntraсts, fоllоwing internal risk
management prосedures, etс.
Tо fill the rоle a сandidate is expeсted tо meet the fоllоwing requirements:
High eduсatiоn оr last year student - ability tо wоrk full-time is required соnditiоn (the сurrent
graduatiоn year)
Experienсe in sоlving business сases
At least upper-intermediate English and fluent Russian
Exсellent соmputer skills (MS Exсel, MS PоwerPоint)
Mathematiсal mоdelling skills
Strоng prосess оptimizatiоn skills
Effeсtive team player
Strоng analytiсal skills and lоgiсal thinking
Willingness tо learn and develоp prоfessiоnally
Ability tо gо оn business trips
We оffer:
Соmprehensive remuneratiоn paсkage
Wоrking as part оf an experienсed team оn соmplex prоjeсts fоr majоr Russian and
multinatiоnal соmpanies - оptiоnal
Exсellent оppоrtunities fоr сareer and prоfessiоnal grоwth
A wide range оf training and develоpment prоgrams
Great prоfessiоnal team and friendly envirоnment
Соmfоrtable high-сlass оffiсe in Mоsсоw Сity
Оppоrtunities fоr further develоpment оf prоfessiоnal skills thrоugh partiсipatiоn in diverse
prоjeсts with internatiоnal fосus

24
2. PwС
Vaсanсy: Intern in Tax repоrting and strategy grоup (TLS TRS), Department оf Tax
Соnsulting
Required wоrk experienсe: nоt required
Part-time, flexible hоurs
The main serviсes that we prоvide:
Imprоving the effiсienсy оf the tax funсtiоn, оptimizing
business prосesses оf aссоunting and tax aссоunting,
fоrming a tax strategy;
Diagnоstiсs оf aсtivity оf aссоunting and tax divisiоns оf соmpanies in оrder tо build an оptimal
оrganizatiоnal struсture and effeсtive distributiоn оf rоles and respоnsibilities;
Develоpment оf sоftware prоduсts fоr autоmatiоn оf aссоunting and tax divisiоns оf соmpanies;
Autоmatiоn оf aссоunting and tax aссоunting in variоus ERP systems;
Develоpment оf methоdоlоgiсal apprоaсhes and reсоmmendatiоns, соnstruсtiоn, autоmatiоn and
imprоvement оf internal соntrоl systems and risk management systems (IСS and RMS);
Develоpment and imprоvement оf tax fоreсasting systems and tax strategy implementatiоn prоgrams;
Implementatiоn оf variоus prоjeсts in the field оf taxatiоn, inсluding the prоvisiоn оf соnsulting
serviсes оn imprоving the effiсienсy оf tax administratiоn.
Respоnsibilities:
Analysis and systematizatiоn оf соntrоl prосedures in the оrganizatiоn оf management,
aссоunting and tax aссоunting
Develоpment оf requirements fоr autоmatiоn оf соntrоl prосedures and dосumentatiоn оf the
results оf соntrоl prосedures
Develоpment оf methоdоlоgiсal dосuments fоr testing and evaluating the effeсtiveness оf
соntrоl prосedures
Perfоrming variоus tasks related tо the соnstruсtiоn оf IСS and RMS
Requirement tо сandidates:
Fоr students оf the сurrent year оf graduatiоn (full-time eduсatiоn-speсialist/baсhelоr/master);
Preferred speсializatiоn: Eсоnоmiсs, applied Infоrmatiсs, business Infоrmatiсs;
Analytiсal mindset, attentiveness, self-оrganizatiоn, соmpetent speeсh, learning ability,
ability tо wоrk independently and in a team;
English language prоfiсienсy - at least Intermediate level;
Соnfident PС-user Miсrоsоft Оffiсe (inсluding Miсrоsоft Exсel, Miсrоsоft PоwerPоint,
Miсrоsоft Aссess, Miсrоsоft Visiо, Miсrоsоft Prоjeсt);
Knоwledge оf basiс aссоunting and tax aссоunting;
25
 Basiс knоwledge оf prоgramming languages and SQL knоwledge are welсоme;
Pоssibility tо wоrk full-time (fоr graduates) оr part-time (25-40 hоurs a week – fоr students).

3. RBK.mоney
Vaсanсy: Intern in the Finanсe Department
up tо 25,000 rubles befоre taxes
Required wоrk experienсe: nоt required
Full-day internship
What tasks shоuld I perfоrm?
- Generating data оn payments made by the соmpany's сlients;
-Data соlleсtiоn fоr the fоrmatiоn оf aссоunting fоr finanсial prоduсts;
- Autоmatiоn оf data prосessing prосesses fоr uplоading infоrmatiоn tо the aссоunting system
What skills are required?
- Required MS Exсel advanсed user
Соnditiоns fоr internship
The RBK mоney соmpany invites students оf the last соurses оf higher eduсatiоn institutiоns
and pоstgraduates tо pass an internship.
The internship prоgram is held in the соmpany's Mоsсоw оffiсe and invоlves part-time
emplоyment, allоwing interns tо соmbine their studies with wоrk.
Enrоllment fоr the prоgram is оpen all year rоund. Yоu need tо сhооse a suitable jоb and
соntaсt a representative оf the HR Department.
The duratiоn оf the internship is determined individually.
The internship prоgram invоlves part-time emplоyment. The wоrk sсhedule is built
individually, taking intо aссоunt the student's wishes and sсhedule оf сlasses.
Students are seleсted fоr the internship prоgram оn a соmpetitive basis.
We соnsider graduates, pоstgraduates and undergraduates whо have the оppоrtunity tо
соmbine study and wоrk.
Students with exсellent aсademiс perfоrmanсe have an advantage when seleсting fоr an
internship.

4. EY (Ernst & Yоung)

Vaсanсy: Intern, Internatiоnal Tax Planning Advisоry Grоup, Mоsсоw

26
Required wоrk experienсe: nоt required
Full-day internship
Respоnsibilities:
Analysis оf Russian and fоreign legislatiоn
Соmmuniсatiоn with tax experts in Russia
and abrоad
Preparatiоn оf draft repоrts оn tax
legislatiоn
Preparing presentatiоns in PоwerPоint
Assistanсe in оrganizing сlient seminars and thematiс events
Preparing graphs, summary repоrts, and building finanсial mоdels.
Requirements:
Graduate (preferably with a majоr in Taxatiоn, Eсоnоmiсs, Aссоunting, Finanсe,
Mathematiсs оr Law)
Fluenсy in spоken and written English
Ability tо wоrk effeсtively in a team
Gооd analytiсal skills
Ability tо learn
Exсellent knоwledge оf PС (PоwerPоint, Wоrd, Exсel)
Ability tо wоrk full - time.
We оffer:
Extensive оppоrtunities fоr сareer grоwth
A wide range оf unique training and develоpment prоgrams
Valuable wоrk experienсe in an internatiоnal соmpany.

Delоitte
Vaсanсy: Internship in the Department оf Finanсial and Perfоrmanсe Management Grоup-
Соnsulting
Belоrusskaya, Mоsсоw, Lesnaya street,
5sb
Required wоrk experienсe: nоt required
Internship, flexible sсhedule
What yоu will dо in this rоle:
Yоu will get a great оppоrtunity tо wоrk with the finanсial management and effiсienсy team tо
implement prоjeсts tо imprоve the effiсienсy оf finanсial prосesses and repоrting, suppоrt their
27
autоmatiоn fоr сlients frоm variоus seсtоrs оf the eсоnоmy, as well as prоjeсts tо gain insight intо
the faсtоrs оf value сreatiоn within the aсtivities оf bоth the СFО and the entire enterprise.
Yоu will beсоme a full-fledged member оf the соnsulting team and will partiсipate in internships
with оther interns in the соnsulting Department. During the internship, yоu сan always соunt оn the
help оf experienсed соlleagues. Yоu will be given the оppоrtunity tо сreate a strоng netwоrk оf
business соntaсts and take advantage оf teamwоrk in an internatiоnal соmpany. Yоu will alsо be able
tо apply fоr emplоyment at Delоitte upоn соmpletiоn оf yоur studies.
Abоut the divisiоn:
Tоday, finanсial management representatives need expertise in fоur key areas: strategy develоpment,
соntrоl tооls, оperatiоnal management, and innоvatiоn. We оffer оrganizatiоns a wide range оf
serviсes that соver all the funсtiоns оf the СFО and finanсial serviсe — frоm develоping a target
mоdel оf the finanсial divisiоn and methоdоlоgiсal base tо implementing сhanges tо the existing
praсtiсe оf the соmpany. Оur team has signifiсant experienсe in suссessfully implementing prоjeсts
in mоst key seсtоrs оf the eсоnоmy thrоughоut the СIS.
Respоnsibilities:
interaсtiоn with an experienсed and highly qualified prоjeсt team;
suppоrt fоr the Delоitte knоwledge management team;
partiсipatiоn in marketing researсh and business develоpment events;
partiсipatiоn in the aсtivities оf market develоpment.
Requirements tо сandidates:
having a higher eduсatiоn (оr studying at the last соurses оf higher eduсatiоn institutiоns),
preferably in the field оf Finanсe, Aссоunting оr оther sсienсes related tо finanсial and eсоnоmiс
aсtivities;
ability tо wоrk full time;
a sharp mind and an analytiсal mindset;
ability tо take respоnsibility and perfоrm wоrk independently;
develоped analytiсal skills, ability tо generate ideas
develоped соmmuniсatiоn skills;
gооd knоwledge оf the basiсs оf finanсial management, aссоunting in aссоrdanсe with
RAS/IFRS, management aссоunting and repоrting;
the desire tо learn and develоp;
ability tо wоrk bоth independently and in a team;
high level оf mоtivatiоn and interest;
ready fоr flexible wоrk sсhedules and business trips;
exсellent оral and written соmmuniсatiоn skills in Russian and English;
28
What we оffer:
deсent remuneratiоn and a transparent system оf сareer and prоfessiоnal develоpment;
training and develоpment, suppоrt in оbtaining prоfessiоnal qualifiсatiоn сertifiсates
emplоyee inсentive prоgrams;
ability tо wоrk оn a flexible sсhedule;
a соmprehensive prоgram оf соrpоrate disсоunts.
From: https://hh.ru/vaсanсy/36444272

4.2. Work in pairs. Rоle play a job interview. One of you is an HR of a соmpany from the list
of vacancies above and the other one is a graduate frоm Finanсial University. Соnsider the list
оf jоb interview questiоns below:
Basiс interview questiоns:
Why dо yоu want this jоb?
Why shоuld we hire yоu?
What mоtivates yоu?
Desсribe yоurself.
Typiсal questiоns оn the соmpany and pоsitiоn:
Whо are оur соmpetitоrs?
What dо yоu knоw abоut оur business area?
Why dо yоu want tо wоrk with us?
Stress management questiоns:
Hоw did yоu handle a diffiсult situatiоn?
Hоw dо yоu handle pressure?
Сareer gоals questiоns:
What are yоur сareer gоals?
Why did yоu сhооse this сareer?
Where dо yоu see yоurself in five years?
Team wоrking questiоns:
Dо yоu prefer wоrking independently оr оn a team?
What are yоur experienсes with wоrking with a team?
Have yоu ever had misunderstanding with a соlleague?
Have yоu ever had diffiсulty wоrking with superiоr?
Оther interview questiоns:
What is yоur standard fоr measuring suссess?
What was yоur greatest prоfessiоnal сhallenge?
29
 Wоuld yоu wоrk hоlidays/weekends?
What questiоns dо yоu have fоr me?

PART 5
Dо the сrоsswоrd puzzle.

AСRОSS
2 соmpetent
5 sоmething existing оr happening befоre sоmething else
7 the types оf aсtivities that a persоn оr оrganizatiоn has respоnsibility fоr
10 the prосess оf giving a grоup оf peоple mоre freedоm оr rights
11 сhanging the traditiоnal way that an industry оperates
12 tо be the final result оf a prосess
DОWN
1 a series оf jоbs frоm the lоwer paid tо the highest paid
3 diffiсult tо fight against
4 sоmething that is aсhieved
6 tо make оr сhange sоmething aссоrding tо the user's needs
8 nоt сhildish
9 a platfоrm fоr prоbing theоries, tооls, and new teсhnоlоgie

30
 UNIT 2 CORPORATE IMAGE AND SUSTAINABLE DEVELOPMENT OF BUSINESS

PART 1

1.1. Discussion
The Brandtland definition of sustainable development was accepted by the UN Environment
Commission in 1987. This definition takes its name from the chair of the Commission, Gro Harlem
Brundtland. The wording of the definition is the following: Sustainable development is the
“development that meets the needs of the present without compromising the ability of future
generations to meet their own needs”. Sure, the idea is virtuous and chaste. But is it precise enough
to exclude contradictory interpretations?
Discuss the following questions in pairs.
1. Is the concept of globalization accepted as a worldwide standard? Is it a rightful decision?
2. Is sustainability about the environment only?
3. How much are we losing out now in order to “meet the needs of future generations”? Is the game
worth the candle?
4. How does sustainable development affect each particular individual?
5. How do we help implement sustainability into our every day practices?

Reading
1.2. Read the text below and give your own definition of sustainability.

Sustainability – Defining the Concept

It has been nearly three decades since the term “sustainability” “rose to the prominence of mantra.”
In 1987, the UN sponsored a publication, i.e. the World Commission on Environment and
Development’s report named “Our Common Future”. Since that time the concept of sustainability
has been exposed to a range of interpretations. For instance, 'Sustainable development’ targets at both
a better quality of life now and avoidance to use resources faster than the planet can replenish them.
Proponents of sustainable development summon us to join up economic, social and environmental
goals. There is some inherent uncertainty, ambivalence and ambiguity in the definition of the concept.
Despite that, sustainability has been highly instrumental in shaping a “global view” about the future
of the planet.
The focus is dispensed among three recurring dimensions that are interesting for various stakeholders:
 Environmental issues
 Economic progress
31
 Social viability

The idea is that economic growth and social welfare have to be balanced by the conservation of
environmental resources. Hence, the term 'sustainable development' has wide ramifications for many
professionals, e.g. architects. The blueprint of sustainable development is aimed at the architecture of
the future. The purpose is to develop a knowledge base that would underpin some sound professional
practices such as “green construction” and reduced consumption of energy resources.
In 1992, a UN conference devoted to environmental issues was held in Rio. The participants
elaborated on some of the key concepts encapsulated in the Brundtland definition. Among these was
the adoption of the 'precautionary principle’, which stipulates that no environmental action should be
taken which was not reversible and ignorance is no defense under international law for ecological
damage. The 2002 Johannesburg World Summit on Sustainable Development introduced the concept
of 'sustainable consumption and production' leading to a number of` international agreements. The
key principle was to establish a link between productivity, resource use and levels of pollution.
Climate change will have a greater impact on the daily lives of the poor nations than on those who
live in wealthy societies. The G8 (Canada, France, Germany, Italy, Japan, Russia, UK and USA)
leaders acknowledged their global responsibilities at Gleneagles in 2005 but took little meaningful
action to help poorer nations adapt to altered climates. Thanks to the UN, the concept of sustainable
development assumed a higher profile in the world economic order, which led to an inevitable
rebalancing of national priorities in European countries. Not all nations, however, accepted the new
imperatives, especially the USA, which resisted or diluted international agreements such as those
signed at Kyoto in 1997, The Hague Conference on Climate Change (2000), Johannesburg (2002),
Helsinki (2006) and Bali (2007). The USA's intransigence has been a particular problem for global
ecological health. The USA is the world's largest consumer nation and, if all of the Earth's population

32
 used energy at the rate that the USA does, the world would run out of fossil fuels in under eight years.
Although it is now recognized that an unstable climate and scarce fossil fuels add to potential conflicts
both at home and abroad, the main impetus for change has come from ordinary Americans concerned
at the price of fuel and deteriorating quality of life. Since 2009, various forms of green investment
have been under consideration – not just to create jobs for unemployed automobile workers but to
refashion economies in new sustainable ways. The new 'green collar' jobs will be in wind and solar
electricity generation, in public transport (particularly urban metro systems and high speed trains), in
upgrading water networks, building hydro-electric dams for both water storage and power production,
and in improving the energy efficiency of existing buildings. In many ways, the 2009 recession gave
society a chance to take stock and to rebalance the equation of economic, social and environmental
sustainability.
From:
 B. Edwards. Rough Guide to Sustainability.
 D. Mebratu. A review on the Concept and History of Sustainable Development.

Comprehension
1.3. Answer the questions.
1. Why is the concept of sustainability so vague?
2. What are the three dimensions of sustainable development?
3. What are the possible ramifications of sustainable development for different industries? Come up
with your own examples.
4. How important was the Rio Conference of 1992 / The 2002 Johannesburg World Summit?
5. Which countries are likely to suffer a greater impact of climate change? Why?
6. What does the text say about the US’s policies in respect of sustainable issues?
7. What are “green collar” jobs? Why are these jobs mentioned in the context of sustainable
development?
8. When did the world’s society get a new impetus for sustainable development and why?

Vocabulary
1.4. Find words in the text that match the following definitions.
1. relative importance or relevance;
2. to generate or produce;
3. ambiguity or uncertainty;
4. helpful or facilitative;
5. project or program;
33
6. consequence or offshoot;
7. complex or thorough;
8. preventive or safe;
9. illiteracy or unawareness;
10. unavoidable or certain;
11. incentive or driving force;
12. maintain or reinforce;
13. develop or prepare;
14. make unclear or dissolve.

1.5. Fill in the gaps with appropriate words from the box.
blueprint / deteriorate / encapsulate / equation / imperative /
intransigence / recur / replenish / stipulate

1. The client also has the opportunity to __________ his/her deposit account during the whole period of
contract validity.
2. The events of March must never__________.
3. Governments embrace the Program as an essential _________for realizing development goals.
4. A participant argued that the draft guidelines did not _________ the notion of debt sustainability.
5. Articles 23 and 88 of the Constitution ________remedial measures for the citizens whose rights have
been violated.
6. Prompt and effective international action is an ________.
7. He warned that Iranian ________would doom the talks to failure, raising the prospects of another
military confrontation in the Middle East.
8. The humanitarian, economic, social and security situation continues to__________.
9. There is a new ___________in the litany of peace initiatives for the Middle East.

1.6. Find equivalents for the following word combinations in the text above.
ряд дополнительных определений; относительно будущего планеты; база знаний;
сокращенное потребление энергетических ресурсов; ключевые понятия, заложенные в
определении; по международному закону о не нанесении экологического вреда; установить
взаимосвязь между продуктивностью, использованием ресурсов и уровнем загрязнения
окружающей среды; не предприняли значимых действий; неизбежный пересмотр
национальных приоритетов; приняли новые указания; противостояли или избегали
выполнения международных соглашений; нестабильный климат и нехватка природных
34
ресурсов; переорганизовать экономику в соответствии с новыми правилами устойчивого
развития; пересмотреть уравнение сочетаемости экономических, социальных и экологических
вопросов устойчивого развития.

1.7. Discussion
Choose one of the quotes below and explain its meaning in your own words.
1. “Western civilization is a loaded gun pointed at the head of this planet.” ― Terence McKenna
2. “Ending is better than mending.” ― Aldous Huxley
3. “People 'over-produce' pollution because they are not paying for the costs of dealing with it.” ―
Ha-Joon Chang
4. “We cannot hope to create a sustainable culture with any but sustainable souls.” ― Derrick Jensen
5. “Live at home” ― George Washington Carver
6. “We need to defend the interests of those whom we've never met and never will.” ― Jeffrey D.
Sachs
7. “Consume less; share better.” ― Hervé Kempf
8. “Alas, our technology has marched ahead of our spiritual and social evolution, making us, frankly,
a dangerous people.” ― Steven M. Greer
9. “There's no doomsday scheme made specifically for mankind, only higher agenda and priority
than human race preservation.” ― Toba Beta
10. “Manufacturers have long chosen plastic for their products on the basis of price and
functionality. But creating a more sustainable relationship with plastics will require a new dexterity
on our part. It will require us to think about the entire life cycle of the products we create and use.”
― Susan Freinkel

PART 2

2.1. Discussion
Read the quotation below and say what it implies. How does the idea fit into sustainable business
development?
 “If you’re a coach, your goal is to win a championship. Your system is what your team does at
practice each day”.
 “If you’re a writer, your goal is to write a book. Your system is the writing schedule that you
follow each week”.
 “If you’re a runner, your goal is to run a marathon. Your system is your training schedule for the
month”.
35
 “If you’re an entrepreneur, your goal is to build a million dollar business. Your system is your
sales and marketing process”.
 “If you completely ignored your goals and focused only on your system, would you still get
results?”
From: https://wildaboutsustainability.wordpress.com/

Reading
2.2. Read the text below and say how sustainable development goals and corporate targets
correlate.
Sustainability and corporate responsibility
There is an old joke about a man who spots his friend searching under a lamppost at night. “Hey Bob,
what are you doing?”
“Looking for my keys, I dropped them back down the road aways.”“So why don't you search for
them back there then?”
“Well, I thought I'd start here, because the light is better.”
Mindy Lubber says that age-old ways of doing things can blind companies to new environmental and
social risks and opportunities. Of course, she is right, but external pressures, too, are an imperfect
spotlight for businesses looking for the pathway towards sustainability.
Ms Lubber offers a number of examples where US companies have responded to pressure. But these
stories also highlight the limitations of looking at the relationship between business and society purely
in the light cast by ad hoc instances of external pressure:
• Pressure is reactive. Businesses survive by anticipating future trends and developing products and
services that meet demands and avoid problems. Market research, stakeholder advisory boards and
other efforts to get external knowledge and views are useful sounding boards, but they cannot be
relied upon to anticipate every innovation or every problem.
As Ms Lubber pointed out, the subprime mortgage meltdown in the US is a painful example of risks
being overlooked. But they were not only overlooked by the companies concerned. Investors,
analysts, regulators and the media also failed to highlight the risks, until it was too late.
• Pressure is not directed at the drivers of change. Short-term, shallow engagement by stakeholders
can only drive short-term, marginal responses. As Ms Lubber recognizes, long-term change that goes
beyond PR is best served when stakeholders and business decision-makers get together in long-term
constructive dialogue.
These dialogues are about more than one-way pressure. Businesses gain external knowledge and
views, yes, but outsiders also begin to understand the challenge in terms of changing the direction of

36
a huge corporation, developing new products, convincing consumers to buy them and depending on
policy-makers to be supportive.
For example, the WBCSD has partnered with SNV, the Dutch government's development agency, to
broker new business opportunities that benefit low-income communities. In Ecuador, rather than
pressuring major confectionery manufacturers to include small farmers in their supply chains, we
brought growers and processors together with development bankers and irrigation systems suppliers
to raise the quality and reliability of local supplies, enabling them to expand their export markets and
increase the price received by small farmers.
• Pressure does not aim at the most difficult targets. External pressure, whether from investors,
environmentalists, campaigners or consumers, has to be mobilized. Attention is a limited resource.
The best targets for pressure from the point of view of those doing the mobilizing are not always
those with the worst impacts, but those that are most visible, accessible and amenable to pressure.
Ms. Lubber gives the example of Nike, where consumer and civil society pressure has played a key
role in catalyzing action to improve and report on supply-chain labor standards. But US campaigners
did not choose Nike as a target because the firm had the most egregious human rights abuses in its
supply chain, but because of its iconic brand, its Californian roots and its existing commitments to
corporate responsibility.
Such pressure alone is unlikely to be effective in shifting performance across whole industries.
Instead, it allows less high-profile companies to keep their head below the parapet, confident that
attention is diverted elsewhere.
WBCSD members do not keep their heads below the parapet. Ford and GM, for example, far from
having their heads in the sand about climate change, have together with the rest of the automotive
industry led a four-year sustainable mobility project within the WBCSD. In 2004 they set out their
vision for sustainable mobility and the challenges that they and others face in achieving this goal by
2030. Their view of the challenges that the sector faces clearly goes way beyond the horizon of
quarterly earnings reports. Their conclusions, signed off by the chief executives themselves, were
informed by a very extensive program of analysis involving external experts and activists. This work
did not happen because of external pressure, it happened because the industry saw a need to together
evaluate the future and outline pathways for a sustainable mobility.
While it is true that environmentalists have for years warned automakers about the need for more
efficient vehicles, other outsiders, namely consumers and the US government, sent them equally stark
messages through energy tax policies and purchasing preferences that led to bigger and hungrier
vehicles. It may sound like passing the buck, but the reality is that no business, however large and
however far-sighted, can move much further and faster than its customers are willing to go.

37
Campaigns by activist investors, consumer groups and public-interest lobbyists are often as much
about convincing fellow investors, consumers and citizens to take these issues to heart as they are
about prodding business into action. Businesses are often represented as agents of change, as well as
on the target side, for example, WBCSD is a founding member of the CERES initiated Global
Reporting Initiative, which promotes sustainability reporting.
After all, as long as concerned voices are in a minority, viable actions will be constrained by what the
market says. The more mainstream investors, consumers, citizens and policy-makers act on long-term
sustainability concerns, the faster business can deliver solutions.
I am sure that Ms Lubber would agree that solutions to sustainable development challenges are
unlikely to be found by business, investors, governments, citizens, consumers and experts each
staying within the comfort zone of their own circle of light. New coalitions and alliances are striding
out into the dark, where it is much harder to make out who is on your side or who is putting pressure
on whom.
We believe that the proposition is not completely wrong, but it is a long way from telling the whole
story. We would say that meaningful action on sustainability can only be achieved if individuals,
governments, business and civil society work together and maintain pressure on each other.
From: https://www.economist.com/news/2008/06/20/the-oppositions-rebuttal-statement

Comprehension
2.3. Mark the statements as True or False.
1. The impetus behind the corporate drive toward sustainability is both internal and external.
2. Businesses can envisage all future challenges by relying on external knowledge.
3. These are stakeholders alone who stimulate long-term change.
4. There are two parties to the negotiations on sustainability issues.
5. Ecuador’s confectionery business is a good example of coorperation among manufacturers,
farmers, bankers and agricultural engineers.
6. External pressure towards sustainability is usually targeted at the companies with the worst
impact.
7. Nike was not chosen a target for sustainability campaigners because of its they abused human
rights.
8. Ford and GM led a five-year sustainable mobility project.
9. Ford and GM based their decision in the project on the information receaived from both house
experts and from outside.
10. US environmentalists lost their battle on the use of green vehicles to the consumers and the
government.
38
11. Long-term sustainability concerns define the rate at which business accept the change for
sustainable development.

Vocabulary
2.4. Match the verbs and the words they collocate with. Sometimes more than one collocation
is possible.
blind companies a. action
highlight b. attention
cast c. business into action
overlook d. issues to heart
broker e. light
catalyze f. limitations
keep g. opportunities
divert h. out into the dark
have i. pathways
go j. risks
outline k. the buck
pass l. the head below the parapet
take m. the head in the sand
prod n. to risks
stay o. way beyond the horizon
stride p. within the comfort zone

2.5. Match the words and their equivalents.

spotlight a. apparent
ad hoc b. available
shallow c. blatant
visible d. block
accessible e. center of attention
amenable f. offensive
egregious g. shrewd
abusive h. special
far-sighted i. superficial
alliance j. verifiable

39
 2.6. Discussion
Work in pairs. Read out a definition from your list and let your partner guess which term you
mean. Ask your partner to expand on the meaning of a term and provide a real life example of
how this notion fits into the concept of sustainability.
Card 1 Card 2
1. Accountability 1. Genetically-modified Organism (GMO)
2. Biodiversity 2. Greenhouse Gases (GHG)
3. Carbon Offsets 3. Green Revolution
4. Climate Change 4. Habitat
5. Ecological Footprint (EF) 5. Inclusive Process
6. Emissions Trading 6. Monetised Society
7. Externality 7. Organic Food
8. Fair Trade 8. Triple Bottom Line (TBL)
Сard 3 (definitions card 2) Card 4 (definitions Card 1)
1. A term used to define agricultural
1. A cost or benefit of a product or service that is
transformation designed to increase production, not included in its price.
research, and infrastructure. 2. A form of environmental accounting that
2. Developed as a term in 1997 by Sir John measures how much bio-productive land people
Elkington, the concept incorporates each of the require to support themselves in population,
social, economic, and environmental aspects of consumption, and technology.
sustainable development. 3. A system that restricts the aggregate allowable
3. No use of synthetic fertilizers, chemicals, or amount of a pollutant and allows market forces
sewage sludge, no gene modifications or to continually move the allowed emissions to the
irradiation. highest value uses. Market transactions are
4. Organisms with manipulated genes to introduce driven by relative prices of emission reduction
new, or alter existing, characteristics, used to opportunities among market participants.
increase the yield or quality of various crops. 4. Something done to reduce missions in one
5. Gases that contribute to global warming by location in order to “offset” emissions in a
trapping energy in the atmosphere. second location.
6. The places and combination of resources that
5. An economic partnership in which the
wildlife need to survive and thrive. cornerstone is dialogue, transparency, mutual

40
7. Converting or establishing something into legal respect, i.e. the principals ensuring greater
tender, like printing of banknotes by central equity.
banks. 6. Climate change caused by concentrations of
8. This term means that people who have a stake in GHG in the atmosphere, such as carbon dioxide.
the work of your organization participate in the
7. The responsibility of an organization to account
planning process in an appropriate way. for its decisions and actions to those who have a
legitimate interest in them.
8. This term denotes variety of life forms and
natural patterns on the planet.

Part 3
3.1. Discussion
Phrenology is a pseudoscience, which involves the measurement of bumps on the skull to predict
mental traits. Look at the picture below. Do you think the mental traits depicted on the skull
can help an entrepreneur behave in a more sustainable way? How?

From: https://wildaboutsustainability.files.wordpress.com/2014/01/ent.jpg

3.2. Read the text below and mark the statement as True or False.
As you learnt from the previous text, sustainability was incorporated into business agenda after Gro
Harlem Brundtland, a former prime minister of Norway, assembled a team of economists, legislators,
environmentalists and politicians to address some growing concerns about “the accelerating
41
deterioration of the human environment and natural resources, and the consequences of that
deterioration for economic and social development” in 1983. Being the chairman of the UN World
Commission on Environment and Development, Gro Harlem Brundtland called the participants to
brainstorm and define the concept that would allow to meet the needs of the present generation
without compromising on our descendants’ needs.
The commission recognized that this was a global issue which required global solutions. As the
engines of much global economic growth, corporations were inevitably at the heart of any solution.
They have a major impact on the human environment, such as the headline-grabbing accident that
occurred in India at the Union Carbide factory in Bhopal in 1984, which killed thousands and whose
horrible consequences continue to this day, but also through the way they design their office buildings
or run their fleets of vehicles. Moreover, corporations are, above all, consumers of natural resources,
ever hungry for raw materials that can be manufactured into products and profits.
As consumers have become more aware of environmental issues they have begun to put pressure on
companies to inject more sustainability into their strategic thinking. “Talent” too does not want to
work for firms that destroy forests or fisheries, so it has also put pressure on firms to change. Between
them, consumers and employees have made a strong business case for sustainability.
However, even the most visionary corporate leaders can be heard explaining that they are hitting a
wall because: “our consumers won't buy our sustainable products; our investors demand next-quarter
profits; the legislation is inconsistent and our global competitors can produce goods with little or no
regard for the environment; or there is no business case for sustainability”.
From: https://www.economist.com/news/2009/09/01/sustainability

1. The Brundtland Commission is called after the place where it was held.
2. The commission was established at the turn of the 21st century.
3. The commission was established because the society saw the damage done to environment,
economy and social stability.
4. Sustainability is about both present and future needs.
5. Corporations play the smallest role in finding solutions to sustainability challenges.
6. In 1984, the Union Carbide factory in Bhopal, India, sacrificed their produce stock in order to
help local people.
7. Corporations are the largest consumers of natural resources.
8. The more unaware consumers are the more pressure there is on companies.
9. Top specialists refuse to work for unsustainable businesses.
10. Companies are still resistant to sustainable development paths.

42
 3.3. Read the text below and match collocations.
The United Nations General Assembly will agree on Sustainable Development Goals (SDGs), the
successor arrangement to the Millennium Development Goals (MDGs), in September. An initial draft
of these goals has generated heated public discussion. Even The Economist has entered the fray,
devoting three articles to the SDGs in a recent edition. The question is whether the 17 goals and 169
targets in the draft are an ambitious response to global challenges or an unwieldy mess.
We believe that while fine-tuning can be done, it is important “not to throw the baby out with the
bathwater”. The SDGs are worthy of support.
The SDGs have been developed through an unprecedented process of stakeholder involvement. 193
governments have had their say. An online survey conducted by the United Nations, MyWorld, has
had more than 7m responses. Businesses with assets of tens of trillions of dollars have been consulted.
There have been thematic, regional and country discussions all over the world. Academics and
scientists have analyzed every goal and target, and debated the cost-effectiveness of achieving them.
Not surprisingly, the agenda that has emerged is broader than the MDGs. But at least it gives voice
to a range of different people. Developed countries tend to insist on gender equality, human rights,
climate change and actions against deforestation in any development agenda. Yet these are among
the lowest five priorities indicated in the MyWorld survey. The only way to include the priorities of
rich and poor is by adding to the agenda.
No politician would dare try and communicate the 17 goals to their constituency. But there is a simple
way of clustering the goals into themes where the purpose is clear. The SDGs aim to end poverty and
hunger, give every child an opportunity at a decent life, create an environment where business can
flourish and create jobs and growth, and to do all this within the natural boundaries set by our planet.
From: https://www.economist.com/free-exchange/2015/04/08/worthy-of-support

K. generate a. a say
L. enter b. an unwieldy mess
M. make c. fine-tuning
N. do d. goals to a constituency
O. throw e. heated discussion
P. have f. points into themes
Q. give g. the baby out with the bathwater
R. add something h. the fray

43
S. communicate i. to the agenda
T. cluster j. voice to people
3.4. Read the text below and match the words and their synonyms.
The Millennium Development Goals are about reducing poverty. The Sustainable Development
Goals are about ending poverty and building global prosperity and sustainability. Laudable as the
goals may be, they will be of little value without an effective framework for action. That is precisely
what the Financing for Development conference in Addis Ababa, Ethiopia, and the post-2015
development agenda aim to do. Each country has its own primary responsibility for the economic and
social development, the draft accord for the Addis conference suggests. At the same time it calls for
collective efforts. The draft accord prioritizes aid allocations, private investment, channeling global
savings at low interest rates to build infrastructure cheaply, and more effective contributions from
multilateral institutions. It also spells out the most important areas for global collective action—trade,
financial stability, climate change, technology transfer and even the data gathering that will be needed
to monitor the SDGs.
Of course, there is room for significant improvement in the SDGs, notably in the choice and wording
of many of the 169 targets. Some are clearly not achievable and these may undercut the overall
credibility of the package if left as it is. But there is a process underway to address the most glaring
deficiencies.
It is important to appreciate the political process that has led to this draft. Like all democratic
processes, the result may be messy and leave many dissatisfied, but it reflects compromise and a
desire for consensus. At a time when so much of the world is caught up in divisions and conflict, a
truly global effort to create a better life for all and a sustainable future for our planet is a cause to
celebrate not denigrate.
From: https://www.economist.com/free-exchange/2015/04/08/worthy-of-support
1. prosperity m. agreement
2. laudable n. among many parties
3. accord o. blinding
4. multilateral p. chaotic
5. spell out q. defame
6. wording r. form of expression
7. undercut s. lack
8. credibility t. outline
9. glaring u. praiseworthy
deficiency v. trust

44
 messy w. weaken
denigrate x. welfare
3.5. Read the text below and fill in the mind map with the notions discussed in the text.
Recent research asserts that corporate social responsibility (CSR) comprises two notions that can be
applicable for various companies. The first notion is corporate citizenship. This term applies to
accountable, liable, anticipatory and initiative behavior to meet stakeholders’ demands. Corporate
citizenship is about the company’s dedication and responsibility towards society, other organizations,
government and environment, i.e. towards all those who interact with the company. The second aspect
is sustainability. As we know from the Brundtland report, sustainability allows for coexistence of
economic growth, social empowerment and conservation of resources. The firms that work in line
with sustainability requirements are to strive for long-term goals and profits in the long run instead
of seeking short-term gains. Their long-term perspective will allow the companies to get revenue and
attain social and environmental prosperity. Thus, sustainable entrepreneurship is the term that
describes such an approach. Sustainable entrepreneurship derives from advocating a long-term value
creation model that comprises innovation, transparent collaboration with stakeholders, and a feeling
of being a part of a community. Sustainable entrepreneurship means that companies switch from a
traditional practices to more community responsible activities such as job creation, building wealth,
new technologies development, reverence for nature, and implementation of all tax obligations.
More and more companies are grasping the idea that long-term profitability is quite consistent with
social responsibility and sustainable management of both domestic and foreign markets. For example,
the ‘social license’ they obtain in a market would involve awareness, i.e. knowledge about social and
environmental peculiarities of the country where the enterprise intends to operate.
From: Ramos-González M. M., Rubio-Andrés M., Sastre-Castillo M.A. 2017. Building Corporate
Reputation through Sustainable Entrepreneurship: The Mediating Effect of Ethical Behavior.
Sustainability 9.

CSR

45
3.6. Read the text below and fill in the gaps with the words from the box. Change the grammar
forms where necessary.
pledge devastating dire unveil ramp up cheer
carbon footprint philanthropy emit amplify walkout agitate

Jeff Bezos Commits $10 Billion to Address Climate Change

Jeff Bezos, Amazon’s chief executive and the world’s richest man, said on Monday that he was
committing $10 billion to address the climate crisis. The effort will fund scientists, activists and
nongovernmental organizations. Mr. Bezos, who has been pushed by Amazon employees on climate
issues, said he expected to start issuing grants this summer.
“Climate change is the biggest threat to our planet,” he wrote. “I want to work alongside others both
to -------------1-------------- known ways and to explore new ways of fighting the -------------2---------
-- impact of climate change on this planet we all share.”
Mr. Bezos has in the past done little ---------3------------. With a net worth of $130 billion, he long
preferred to focus on Amazon and other private ventures, such as Blue Origin, which makes rockets.
Mr. Bezos also owns The Washington Post.
More recently, Mr. Bezos --------------4------------- his giving. His largest donation to date was $2
billion, ------------5----------- in September 2018, to help homeless families and build a network of
Montessori preschools, an effort that he announced with his then-wife, MacKenzie.
After the couple divorced last year, Ms. Bezos said she had signed the Giving Pledge, which asks the
world’s richest people to commit to giving away at least half their wealth during their lifetime or in
their wills. Mr. Bezos has not signed the -------------6--------------.
In September, Mr. Bezos unveiled the Climate Pledge, in which he said Amazon would meet the
goals of the Paris climate agreement 10 years ahead of schedule and would be carbon-neutral by 2040.
As part of the pledge, he said Amazon was ordering 100,000 electric delivery trucks from Rivian, a
Michigan-based company that Amazon has invested in.
At the time, Mr. Bezos said Earth’s climate was changing faster than predicted by the scientific
community five years ago. “Those predictions were bad but what is actually happening is -----------
7-------,” he said.
Mr. Bezos made that pledge after Amazon’s employees --------------8--------- on climate change. For
a year, workers pressed Amazon to be more aggressive in its climate goals, staging -------------9------
---- and talking publicly about how the company could do better.

46
With vast data centers that power cloud computing, and a global network for shipping and delivering
packages, Amazon’s own impact on the environment is substantial. In September, the company
revealed its own --------------10--------------- for the first time, disclosing it -------------11-------------
about 44.4 million metric tons of carbon dioxide in 2018 — the equivalent of burning almost 600,000
tanker trucks’ worth of gasoline.
Amazon employees -----------12------------- the company’s Climate Pledge, but continued to push
executives to stop providing cloud computing services to the oil and gas industry. They argued that
making fossil fuel exploration and extraction less expensive would make it harder for the global
economy to transition toward using more renewable energy.
From: https://www.nytimes.com/2020/02/17/technology/jeff-bezos-climate-change-earth-fund.html

PART 4
Read the case below and say why the place is special. Do people of the town prosper? What do
you think should be changed in economic, social, cultural life of the community?
Fishery Community
There is a town on the southern coast of Great Britain which holds one of the oldest ports. Some say
that this fishery port and the town that is stretching along the shingle beach are over 1000 years old.
Once it was a medieval Cinque port and now it still possesses one a fishing fleet of approximately 23
boats. This urban coastal town has a population of 86,000 people. It is rich in culture and history
connected with the 11th Century Norman Conquest. in the 19th Century the town became an affluent
Victorian spa resort. Unfortunately, from the mid-20th century on, the town stepped on the path of
decline. Now the town is the 19th on the list of most deprived districts in the UK. There is a lot of
severe social and economic deprivation intensified by government’s neglect and community
frustration.
Efforts to regenerate this economic and social decline are being made. The fishing community faces
the challenges of rising fuel, license costs, reduced quotas, the risk of reduced fishing grounds, ageing
demographics and limited number of new industry entrants. Historical sites need renovation and the
flow of tourists has nearly come to a halt. Restaurant business, food industry and hotels are trying to
survive by reducing fees. Younger people are leaving the town in search of work. The rate of
unemployment is very high. The town’s administration decides to turn to The Fisheries Fund, an
organization set up to support sustainable local development of fishing industries and their related
communities, for investment. This funding program (FF) supports small sea communities and
contributes to developing medium and small fishery business, tourism, cultural and social projects.

47
Work in pairs. One of you is a representative of The Fisheries Fund. The other person is a
representative of the local community, authorized to negotiate the amount and terms of
investment. Role-play a negotiation. Consider the sum of investment and allocation of financial
resources among community members / activities / projects. ROI can be secured through
development of the following business projects:
 tourism and cultural fisheries (e.g. fish festivals);
 a higher value for catch (through marketing and supply chain innovation);
 education and training for younger people;
 investment in port / beach infrastructure;
 investment in vehicle technologies;
 health and safety elements on the boats;
 organizing a society / club;
 provisions for historical and cultural event (museums, festival, excursions);
 raising the spiritual values within the fishing community.
You can add any other projects you think may be applicable for sustainable development of the
region. You are to think in terms of social, economic and environmental sustainable
development of the town.

PART 5
Do the crossword puzzle.

48
Across
3. The variety of living organisms comprising terrestrial and marine ecosystems.
5. The physical, social, and economic aspects that determine the quality of the world around.
6. The process by which a person or business takes advantage of the difference in price of a share or
a currency.
7. An official inspection of a company’s, or individual’s, accounts.
10. Making donations to charities in order to improve human wellbeing.
11. An organised movement enabling producers in developing countries to receive a fair price for the
items they produce.
12. This is any item which can be freely bought and sold. Examples include gold, food products and
coffee beans.
Down
1. Human, plant, animal and micro-organism communities and associated non-living environment
functioning together.
2. Individuals or entities potentially affected by development proposal, e.g., local populations,
government agencies, developers, workforce, customers and consumers, and others.
3. Checking your company’s standards by comparing them with certain criteria.
4. Socially and environmentally and financially feasible development.
8. Meaningful planning, design and implementation of decisions with the aim to reduce the
undesirable impacts.
9. The release of any waste into the environment in sufficient quantities.

49
 UNIT 3 INTERNATIONAL TAXATION

PART 1
1.1. Discussion
Logistics and supply chain management are terms that are often used interchangeably, but
they actually refer to two aspects of the process. Logistics refers to what happens within one company,
including the purchase and delivery of raw materials, packaging, shipment, and transportation of
goods to distributors, for example. While supply chain management refers to a larger network of
outside organizations that work together to deliver products to customers, including vendors,
transportation providers, call centers, warehouse providers, and others.
From: https://www.shopify.com/encyclopedia/logistics

Discuss the following questions in pairs.

1. What is the main difference between logistics and supply chain management?
2. What activities does logistics / supply management comprise?
3. Is logistics well-developed in your country?
4. Is supply chain management more of an art / a skill / a science?

Reading
1.2. Read the text below and give your definition of logistics and main determinants of
logistic performance.
International Logistic Management
According to Council of Logistics Management “Logistics is the process of planning,
implementing and controlling the efficient, effective flow and storage of goods, services and related
information from point of origin to point of consumption for the purpose of conforming the customer
requirement”. Logistical management includes the design and administration of systems to control
the flow of material, work-in–process, and finished inventory to support business unit strategy.
Logistics is the designing and managing of a system in order to control the flow of material throughout
a corporation. This is a very important part of an international company because of geographical
barriers. Logistics of an international company includes movement of raw materials, coordinating
flows into and out of different countries, choices of transportation, cost of the transportation,
packaging the product for shipment, storing the product, and managing the entire process.
Concept of Logistics. The concept of logistics is fairly new in the business world. The
theoretical development was not used until 1966. Since then, many business practices have evolved
and logistics currently costs between 10 and 25 percent of the total cost of an international
50
purchase. There are two main phases that are important in the movement of materials: material
management and physical distribution:
 Materials management is the timely movement of raw materials, parts, and supplies
 The physical distribution is the movement of the firm’s finished products to the customers.
Both phases involve every stage of the process including storage. The ultimate goal of logistics
is: “To coordinate all efforts of the company to maintain a cost effective flow of goods.”
Word, ’Logistics’ is derived from French word ‘loger’, which means art of war pertaining to
movement and supply of armies.
Importance of Logistics. Logistics has gained importance due to these trends:
 Transportation cost rose rapidly due to the rise in fuel prices
 Production efficiency was reaching a peak
 Fundamental change in inventory philosophy
 Product line proliferated
 Computer technology
 Increased use or computers
 Increased public concern of products growth of several new, large retail chains or mass
merchandise with large demands & very sophisticated logistics services, by pass traditional
channel & distribution.
 Reduction in economic regulation
 Growing power of retailers
 Globalization
The interrelation of different logistics element and their costs should be based on total cost
rather than individual costs.
Operating Objectives. In terms of logistical system design and administration, each firm must
simultaneously achieve at least six different operational objectives. These operational objectives,
which are the primary determinants of logistical performance, include rapid response, minimum
variance, minimum inventory, movement consolidation, quality and life-cycle support.
Rapid Response. Rapid response is concerned with a firm’s ability to satisfy customer service
requirements in a timely manner. Information technology has increased the capability to postpone
logistical operations to the latest possible time and then accomplish rapid delivery of required
inventory. The result is elimination of excessive inventories traditionally stocked in anticipation of
customer requirements.
Minimum Variance. Variance is any unexpected event that disrupts system performance.
Variance may result from any aspect of logistical operations. Delays in expected time of customer

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order receipt, an unexpected disruption in manufacturing, goods arriving damaged at a customer’s
location, or delivery to an incorrect location-all result in a time disruption in operations that must be
resolved. Potential reduction of variance’ relates to both internal and external operations. Operating
areas of a logistical system are subject to potential variance. The traditional solution to
accommodating variance was to establish safety stock inventory or use high-cost premium
transportation. Such practices, given their expense and associated risk, have been replaced by using
information technology to achieve positive logistics Control. To the extent that variances are
minimized, logistical productivity improves as a result of economical operations. Thus, a basic
objective of overall logistical performance is to minimize variance.
Minimum Inventory. The objective of minimum variance involves assess commitment and
relative turn velocity. Total commitment is the financial value of inventory deployed throughout the
logistical system. Turn velocity involves the rate of inventory usage over time. High turn rates,
coupled with inventory availability, means that assets devoted to inventory are being effectively
utilized. The objective is to reduce inventory deployment to the lowest level consistent with customer
service goals to achieve the lowest overall total logistics cost. To achieve the objective of minimum
inventory, the logistical system design must control commitment and turn velocity for the entire firm,
not merely for each business location.
Movement Consolidation. One of the most significant logistical costs is transportation.
Transportation cost is directly related to the type of product, size of shipment, and distance. Many
logistical systems that feature premium service depend on high-speed, small-shipment transportation.
Premium transportation is typically high-cost. To reduce transportation cost it is desirable to achieve
movement consolidation. As a general rule, the larger the overall shipment and the longer the distance
it is transported, the lower the transportation cost per unit. This requires innovative programs to group
small shipments for consolidated movement. Such programs must be facilitated by working
arrangements that transcend the overall supply chain.
Quality Improvement. A fifth logistical objective is to seek continuous quality improvement.
Total quality management (TQM) has become a major commitment throughout all facets of industry.
Overall commitment to TQM is one of the major forces contributing to the logistical renaissance. If
a product becomes defective or if service promises are not kept, little, if any, value is added by the
logistics. Logistical costs, once expended, cannot be reversed. In fact, when quality fails, the logistical
performance typically needs to be reversed and then repeated. Logistics itself must perform to
demanding quality standards. The management challenge of achieving zero defect logistical
performance is magnified by the fact that logistical operations typically must be performed across a
vast geographical area at all times of the day and night. The quality challenge is magnified by the fact

52
that most logistical work is performed out of a supervisor’s vision. Logistics is a prime part of
developing and maintaining continuous TQM improvement.
Life-Cycle Support. The final logistical design objective is life-cycle support. Few items are
sold without some guarantee that the product will perform as advertised over a specified period. In
some situations, the normal value-added inventory flow toward customers must be reversed. Product
recall is a critical competency resulting from increasingly rigid quality standards, product expiration
dating and responsibility for hazardous consequences. Return logistics requirements also result from
the increasing number of laws prohibiting disposal and encouraging recycling of beverage containers
and packaging materials. The most significant aspect of reverse logistical operations is the need for
maximum control when a potential health liability exists (i.e. a contaminated product). In this sense,
a recall program is similar to a strategy of maximum customer service that must be executed
regardless of cost. The importance of service support logistics varies directly with the product and
buyer. For firms marketing consumer durables or industrial equipment. the commitment to life-cycle
support constitutes a versatile and demanding operational requirement as well as one of the largest
costs of logistical operations. The life-cycle support capabilities of a logistical system must be
carefully designed.
From: https://studylib.net/doc/8176713/international-logistics-management

Comprehension
1.3. Answer the questions.
1. What stages in the movement of materials are most important?
2. What recent trends have made logistics so vital for today’s world?
3. What is the main idea behind the rapid response objective?
4. What can entail the variance in logistical performance?
5. How can the objective of minimum inventory be achieved?
6. How is the transportation cost per unit defined in logistic performance?
7. Why is total quality management so important in logistic performance?
8. What is the most important element of reverse logistical operations?

Vocabulary
1.4. Find words in the text that match the following definitions.
1. a new interest in something, especially a particular form of art, music etc., that has not
been popular for a long period;
2. the removal or destruction of something;
3. the speed of something that is moving in a particular direction;
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4. a factor that decides whether or how something happens;
5. a product delivered by customer to operator at the facility that contains foreign substances not
inherent in a product or that fails to meet the product specifications;
6. the amount by which something changes or is different from something else;
7. the act or process of making a position of power or success stronger so that it is more likely to
continue / the act or process of joining things together into one or of being joined into one;
8. the process of determining who has ultimate authority and responsibility for aspects of the
working process;
9. the aim that should be achieved at the end of the process;
10. the period of time during which something, for example a product, is developed and used;
11. to be or go beyond the usual limits of something;
12. a situation in which it is difficult for something to continue in the normal way.

1.5. Fill in the gaps with appropriate words and expressions from the box.
ultimate goal / variance / life-cycle / elimination / velocity / transcend / disruption /
contaminated product / determinant / consolidation
1. Companies are less likely to acknowledge the increasing costs caused by ______________
and seek to recover them through claims.
2. The need is to consider the economic ______________ of each alternative in order
to determine the optimal replacement.
3. Further ____________ in the sector is clearly necessary - there are 32 firms competing in one
town alone.
4. Tobacco consumption was the most important factor to explain the _________.
5. Purchase and consumption behaviour will be as much influenced by social groups as by any other
form of behavioural __________.
6. The placing on the market of the ___________ ________ was prevented.
7. The __________ _________ of most perceptual researchers is, or at least should be, to provide
an account for perception as it occurs in everyday life.
8. The pressure of the expanding gas gets converted to ____________.
9. Many partnerships ____________ school district boundaries because
companies operate regionally, but they all had strong community roots.
10. What the report does call for is the total ____________ of taxation on profits.

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 1.6. Find equivalents for the following word combinations in the text above.
1. загрязненный (испорченный) продукт 2. поддержка жизненного цикла 3.
демонстрировать премиум сервис 4. создать инвентарный запас безопасности 5. основные
детерминанты логистической эффективности 6. массовый товар большого спроса 7.
неожиданный сбой в производстве 8. оценка обязательств 9. координация потоков в и из
разных стран 10. основная цель общей логистической эффективности 11. сократить
использование инвентаря 12. достижение нулевого дефекта 13. универсальное и
специфическое эксплуатационное требование 14. ответственность за опасные последствия 15.
превзойти всю цепочку поставок 16. высокие показатели оборота 17. доставка в неправильное
место 18. своевременное движение сырья 19. очень сложные логистические услуги 20.
консолидированное движение

1.7. Discussion
Choose one of the quotes below and explain its meaning in your own words.
1. “The line between disorder and order lies in logistics…” - Sun Tzu
2. “Today’s leading real-world retailer, Wal-Mart, uses software to power its logistics and
distribution capabilities, which it has used to crush its competition.” - Marc Andreessen
3. “You won’t find it difficult to prove that battles, campaigns, and even wars have been won or lost
primarily because of logistics.” - General Dwight. D. Eisenhower
4. “Leaders win through logistics. Vision, sure. Strategy, yes. But when you go to war, you need to
have both toilet paper and bullets at the right place at the right time. In other words, you must win
through superior logistics.” - Tom Peters
5. “Self-driving vehicles will automatically choose the most efficient route. Artificial intelligence
will dramatically improve logistics.” - Dave Waters
6. “My logisticians are a humorless lot ... they know if my campaign fails, they are the first ones I
will slay.” - Alexander the Great
7. “Behind every great leader there was an even greater logistician.” - M. Cox
8. “The amateurs discuss tactics: the professionals discuss logistics.” - Napoleon Bonaparte
9. “Logistics comprises the means and arrangements which work out the plans of strategy and
tactics. Strategy decides where to act, logistics brings the troops to this point.” - General Antoine
Henri Jomini
10. “Cops and robbers resemble each other, so there’s not a lot to learn in terms of learning the
logistics of committing the crime or investigating the crime.” - Andre Braugher
11. “In many places, above all in the Anglo-Saxon countries, logistics is today considered the only
possible form of strict philosophy, because its result and procedures yield an assured profit for
55
 the construction of the technological universe. In America and elsewhere, logistics as the only
proper philosophy of the future is thus beginning today to seize power over the intellectual world.”
- Martin Heidegger
12. “Supermarket companies are big logistics companies, and one of the ways we’ve increased
profitability in the past is by re-evaluating how they do logistics.” - Ronald Burkle

PART 2
2.1. Discussion
For the foreign business, there is a broad dispersion of customer locations and sourcing
opportunities. The firm can only achieve a strategically advantageous role if it is able to handle
complex networks, consisting of its distributors, suppliers, other third parties, and its customers
effectively. Logistics costs vary from 10 per cent to 30% of a foreign order’s overall landed costs.
International logistics is therefore a profitable tool. Higher earnings and greater corporate productivity
can be generated through successful international logistics and supply-chain management.
From: https://ru.scribd.com/doc/271499177/Logistics-Concepts

Answer the questions:

1. What problems do international logistics companies face?
2. How much demand is there for logistics services today?
3. Is it necessary for a company to have its own logistics department?
4. Do you think it is possible to set up a successful international logistics company in the times of
crises? If yes, how?

Reading
2.2. Read the text below and comment on challenges faced by the current logistics industry.
Top Challenges Faced by the Logistics Industry Today
Cutting transportation costs has continued to be one of the greatest strategic challenges in
global logistics, but there are many more to take note of as you form your strategy for 2019. The
following list includes the top logistics challenges that businesses should be prepared to overcome
this year. If you are currently experiencing any of the following setbacks, working with a third-party
logistics (3PL) provider can help. Here’s what you need to know about the challenges faced by the
logistics industry today and where you can find effective solutions.
Fuel costs. One of the biggest logistics challenges of 2019 is the cost of fuel. Higher fuel
prices will significantly affect the cost of wages and transportation for shippers. Working with a 3PL
partner will help you deal with these changes as they have the flexibility and experience to secure
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discounted transportation rates that you may not be able to manage on your own. Their visibility
software can also help you streamline these challenges.
Business process improvement. Staying on top of new advances in business processes is
another challenge to keep an eye out for this year. As new opportunities arise, it will serve to your
advantage to adapt and implement these changes to offer better service and to increase efficiency
within your operations. However, this can be costly and challenging without the right assistance. A
3PL provider or fourth-party logistics (4PL) company will work as an extension of your business to
help you repair any broken or weak links in your supply chain. They will help you improve your
process by offering planning, strategy, and services that work in your favour.
Better customer service. Today’s customers expect certain features when they order from your
online store. They want to receive tracking information and real-time updates to keep them aware of
where their order is along the shipping and delivery journey. They also want the option to pay for
faster shipping, such as two-day or same-day shipping. Anything more than this is considered
unacceptable and may deter customers from following through with the purchase. A 3PL provider
can help you achieve full visibility throughout your supply chain so you can provide your customers
with the information they need.
Manpower management. Another challenge in today’s logistics industry is managing
manpower. Dealing with your warehouse staff, drivers, transporters, etc. are some of the most vital
requirements that should be handled in a respectful and efficient way. Your team needs to have the
ability to communicate at any point in time to ensure coordination and a smoother movement of your
goods. Logistics companies can help you manage your employees better by providing managers in
major locations, quality communication, and scheduling solutions.
Environmental issues. Reducing greenhouse gas emissions is one of the major goals for many
companies this year, especially after numerous studies have shown the negative impact big business
supply chains have on the environment. Companies that adapt and reduce their carbon footprints
succeed better because both partners and consumers are more aware than ever before. Choosing a
3PL that strives to find ways to reduce gas emissions and waste will serve you well. Solutions include
using geographical positioning systems (GPS) to find more efficient routes to ship and deliver, or
recycling materials from returned goods to put back into manufacturing, instead of disposing them as
waste.
Technology development. The cost of adapting to new technology used in the supply chain is
high, but it is a requirement to survive in the competitive industry. A 3PL partner will resolve this
issue, as many of these organizations are already equipped with the necessary technology to increase
efficiency. Some of these technologies include radiofrequency identification for barcoding and
scanning (RFID), communication tech like electronic data interchange (EDI) and GPS, and material
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handling technology. Implementing these technologies on your own is extremely expensive, which
is why you would benefit from partnering with a 3PL provider.
Reverse logistics. Reverse logistics is required by every e-commerce business. Customers
need a way to return items they’ve purchased if they are dissatisfied with them, and this process needs
to run smoothly. Without an efficient reverse logistics platform, you can turn off customers and
prevent them from ever buying from you again. However, a reverse logistics strategy can be
challenging and costly, without the right support. A 3PL provider can help you face these challenges
with their preexisting robust solutions. They can help you process returns in a timely manner to satisfy
your customers, and can help you decide what to do with returned items to prevent revenue loss.
These solutions may include repackaging unused items for resale or refurbishing items to sell at a
discounted price.
Inventory control and visibility. Knowing what inventory you have on hand, and where it is
located at any moment are the primary aspects of inventory visibility. This aspect is critical to every
e-commerce and retail business, but gaining this visibility and control can be challenging. A 3PL
provider can provide you with this visibility through their use of technology in the warehouse. They
can help you make more efficient use of your time, improve predictability of inventory movement,
increase security and quality control, and more.
Staying ahead of the growing challenges in the supply chain can seem overwhelming for a
small- to medium-sized business. Thankfully, there are organizations who make it their goal to help
your business run smoother and more efficiently. They have the tools, manpower, technology,
experience, and know-how to help you tackle every challenge in your supply chain. They will work
with you to provide a customized solution that deals with the obstacles in your way to success.
From: https://www.apsfulfillment.com/logistics-management/top-challenges-faced-by-the-logistics-
industry-today/

Comprehension
2.3. Mark the statements as True or False.
1. The cost of fuel is in direct correlation with the wages of the 3PL.
2. Flexibility and experience of 3PL can help to secure transportation rates.
3. A 3PL provider and fourth-party logistics (4PL) company can help with the problems in supply
chain.
4. Customers who prefer online commerce make high demands to such aspects as quality of goods.
5. Customers of online stores are ready to overpay for express order.
6. The team of a logistics company should have an opportunity to communicate with their clients at
any point in time.
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 7. Ecofriendliness can play an essential part in attracting new clients in logistics.
8. To reduce the costs of technology it is better to work in cooperation with a 3PL provider.
9. Efficient reverse logistics platforms can substitute online stores.
10. It is essential to gain visibility and control of inventory.

Vocabulary
2.4. Match the words that collocate. Sometimes more than one collocation is possible.
1. tracking A. solutions
2. improve B. logistics
3. same-day C. footprints
4. revenue D. items
5. turn off E. interchange
6. inventory F. identification
7. reverse G. information
8. refurbishing H. predictability
9. robust I. chain
carbon J. customers
repackaging unused K. smoothly
third-party L. shipping
supply M. visibility
to run N. loss
radiofrequency O. items
electronic data P. logistics

2.5. Match the words and their definitions.

1. inventory A. to make something such as a business, organization etc. work more simply
and effectively
2. preexisting B. to keep from
3. manpower C. a problem that delays or prevents progress, or makes things worse than
they were
4. to deter from D. the fact of being easy to see
5. barcode E. existing before a particular time or event
6. to tackle F. a list of all the things in a place
7. setback G. high frequency

59
8. streamline H. a collection of thin and thick lines written on the items you buy in a shop
that can be read by your machine. It includes details such as price.
9. radiofrequency I. to try to deal with a difficult problem
10. visibility J. all the workers available for a particular kind of work

2.6. Discussion
Work in pairs. Each of you has a list of terms from the field of international logistics.
Explain the meaning of each term to your partner. Let your partner guess the term.
Card 1 Card 2
1. Ultimate goal of logistics 1. Rapid response
2. Minimum variance 2. Minimum inventory
3. Movement consolidation 3. Quality improvement
4. Life-cycle support 4. Third-party logistics (3PL) provider
5. Fourth-party logistics (4PL) company 5. Supply chain
6. Same-day shipping 6. Carbon footprints
7. Tracking information and real-time updates 7. Reverse logistics
8. Inventory visibility 8. Inventory control

Сard 1 (definitions card 2) Сard 2 (definitions card 1)

1. Rapid response is about the willingness of a 1. The logistics’ primary goal is: “To
company to meet timely customer service organize all of the company’s activities to
requirements. ensure a cost-effective flow of products.”
2. The intention of minimizing inventory is 2. Minimum Variance. Any aspect of
to reduce inventory deployment to the lowest le organizational operations may result in
vel consistent with variance. The basic aim of logistical
customer service targets in order to achieve the performance is to minimize variance due to
lowest total logistics cost overall. To achieve such measures as using information
the minimum inventory goal, the design of the technology to achieve positive logistics
logistics system must monitor the commitment instead of traditional establishment of safety
and transform the pace for the entire company, stock inventory or usage of high-cost
not just for each location of the business. premium transportation.
3. Quality improvement. Full quality 3. Movement consolidation. Logistics
management has been a huge undertaking in all consolidation has a resounding effect on the
aspects of logistics industry. If a product is industry. Logistics consolidation is a fancy

60
faulty or way of describing the transition of shipping
service commitments are not kept, then the logi modes to accommodate available capacity.
stics adds nothing, if any, value. When spent, Unfortunately, stress in the industry
the logistics costs cannot be reversed. translates into higher logistics cost, so
In addition, the logistic output usually needs to logistics consolidation becomes more
be reversed and then replicated when quality fa commonplace throughout the years.
ils. Logistics must perform itself 4. Life-cycle support is the main goal of
to challenging quality standards. logistical design, supporting the life-cycle.
4. Third-party logistics (3PL) provider is an Consumer recall is a vital competency arising
outsourced provider that manages all or a from increasingly stringent quality
significant part of an organization’s logistics requirements, consumer expiry timing and
requirements and performs transportation, dangerous effects liability. The most critical
locating and sometimes product consolidation aspect of reverse logistical operations is the
activities. need for optimal control when there is a
5. Supply chain management is the planning and possible risk to safety. In this sense, a recall
control of all plan is analogous to a maximum customer
the processes involved in producing, selling, service policy that must be executed
and delivering a product. whatever the cost. The life-cycle support
6. Carbon footprint is capabilities of a logistical system must be
the amount of carbon dioxide that a person carefully designed.
or organization produces by the things they do, 5. Fourth-party logistics (4PL) company.
used as a way of measuring the amount International 4PL is a 4PL Company (Fourth
of harm they do to the environment. Party Logistics Provider) specializing in
7. Reverse logistics is the process of dealing global logistics solutions for companies of all
with products that have sizes. What is a 4PL
been returned by customers or shops. provider? A 4PL provider is an integrator
8. Inventory control is the process of that accumulates resources, capabilities and
making sure that supplies of materials, goods technologies to run complete supply chain
being produced, and finished goods solutions. Main difference between 3PLs and
are managed. 4PLs: the 3PL targets a single function,
whereas the 4PL manages the entire process.
6. Same-day shipping is exactly what it
sounds like — your order ships out on the

61
 same day it’s purchased. However, this does
not necessarily correspond to its transit time.
7. Tracking information and real-time
updates. Real-time tracking: IoT-enabled
GPS trackers allow companies to accurately
monitor a vehicle’s location at all times. The
data is transmitted to a central system that
sends real-time updates to an internet-
enabled mobile device. This allows for quick
responses to potential re-routes, avoiding
subsequent delays.
8. Inventory visibility simply means knowing
what inventory you have on hand, and where
that inventory is located, at any given
moment. In short, inventory visibility aims to
ensure that internal records of inventory
reflect reality. This allows for more accurate
information as it relates to stock, order
monitoring and tracking, and more.

PART 3
3.1. Discussion
Read the joke and comment on it.

A sub-Saharan African tax commissioner went to buy a bicycle for his son. The seller asked
if he would like to get a receipt and pay a 15 percent higher price, or take the bike with no receipt at
a lower price. The tax commissioner paused and thought.
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 What would you do?
From: https://blogs.worldbank.org/governance/taxing-shadow-economy

3.2. Read the text below and mark the statements as True or False.
What Is the Difference Between Tax Avoidance and Tax Evasion?
No one enjoys paying taxes. Nevertheless, taxes are the law. The terms “tax avoidance” and
“tax evasion” are often used interchangeably, but very different definitions are used. Tax avoidance
is essentially legal while tax evasion is not legal.
Tax avoidance is the legitimate minimizing of taxes and maximize after-tax income, using
methods included in the tax code. Businesses reduce taxation by taking all valid deductions and tax
credits and by sheltering tax revenue by creating retirement benefits for employees and other means,
all of which is legal and under the tax codes.
Tax shields are another strategy for avoiding taxes. A tax shield is a deliberate use of tax
expenses to offset taxable income.
A tax loophole is tax avoidance. It’s a clause in the tax laws that people creates a hole people
can go through to reduce their taxes. It’s a way to avoid paying taxes, but since it’s in the tax code
it’s not evasion.
Since the tax code is so complicated, experienced tax consultants have found ways to reduce
their clients’ taxes without breaching the law, taking advantage of parts of the legislation. If you are
tempted to use a tax loophole, be aware that the tax laws are complex and difficult to interpret. Getting
a competent, honest tax expert can save you from going over the line to tax evasion.
Tax evasion, on the other hand, is using illegal means to avoid paying taxes. Usually, tax
evasion involves hiding or misrepresenting income. This might be underreporting income, inflating
deductions without proof, hiding or not reporting cash transactions, or hiding money in offshore
accounts.
Tax evasion is a part of an overall concept of tax fraud, which is the unlawful deliberate failure
to pay tax. Fraud can be described as “an act of deceiving or misrepresenting”, and that is what anyone
who evades taxes does - deceiving the IRS (Internal Revenue Service - the revenue service of
the United States federal government) about income or expenses.
Tax evasion is more widely known in relation to income taxes, although corporations may do
tax evasion on state sales taxes and on employment taxes. One common tax avoidance technique is
refusing to pay the appropriate federal or state agency the taxes you have received from others.
These taxes are called trust fund taxes as they are turned over to a corporation in confidence,
with the assumption that they will be turned over to the applicable state or federal agency. Failure to

63
pay IRS payroll taxes and sales taxes to a state taxing authority, as well as other federal, state and
local taxes will result in high fines and penalties.
Intentional Tax Evasion vs. Mistakes. Taxpayers often make mistakes - it is considered
incompetence, not deliberate tax evasion. But the IRS will probably send you a notice of penalties
and interest due. In the case of a mistake that results in an underpayment of taxes, for example, the
IRS can still impose a penalty of 20% of the amount of underpayment, in addition to requiring
repayment.
From: https://www.thebalancesmb.com/tax-avoidance-vs-evasion-397671

1. Tax avoidance is correlated with tax evasion in the terms of legitimacy.

2. Business structures can avoid paying taxes by deducting all possible credits that they took from
the banks.
3. Tax shielding is the process of offsetting taxable revenues.
4. A tax loophole is a small mistake in the law that allows a person to escape doing anything that
the law would make him do.
5. There are some ways to lower taxes for businesses without breaking the law, taking advantage of
parts of the law.
6. Tax evasion is a legal way of hiding or misrepresenting profits.
7. Tax fraud is illegal intentional act of deceiving or misrepresenting profits.
8. Tax evasion is always related to income taxes.
9. Trust fund taxes are called so because they are taken from trust funds.
10. Intentional tax evasion should not be mistaken with real taxpayers’ mistakes - this is considered
as negligence.

3.3. Read the text below and match collocations.

Tax Havens
Tax havens can be defined as:
1. A sovereign nation, state or jurisdiction within a country with:
 Low or nil taxes
 Lack of transparent in the way offshore legislative and administrative provisions are carried out
 Ring-fenced tax structures, whereby local residents and companies are isolated or excluded from
the special tax treatments offered to non-resident nationals and corporations
 Legislation in such countries prevents or frustrates effective information exchange with regard to
foreign nationals and corporations benefiting from tax privileges, thus promoting tax avoidance
and tax evasion or is specially designed to attract foreign capital;
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 2. Any country whose taxes are lower in relation to those of another;
3. Any country with low or nil taxes that provides confidential financial and legal services to non-
resident nationals and corporations.
Tax havens include countries such as Andorra, Antigua and Barbuda, the Bahamas, Cayman
Islands, British Virgin Islands, Monaco, Isle of Man, Guernsey, Samoa, Bermuda, Cyprus, Gibraltar,
Dominica, Belize, Panama and Vanuatu. Other offshore centers such as Barbados are considered low
tax jurisdictions and not tax havens due to the taxes that are levied on the profits of offshore
companies registered in Barbados, although legislative provisions for corporate discretion and
privacy are established and regular offshore financial operations are conducted.
As financial services become more advanced and diverse as a result of trade liberalisation and
technology, the concept of tax haven shifted from the traditional emphasis of tax avoidance and has
expanded to encompass a broad spectrum of financial services, transactions and judicial entities such
as offshore companies, offshore foundations, offshore LLC’s, offshore banks and investment
practices (mutual funds, securities trading, holdings, hedge funds, etc.).
This also includes tailored and specialized financial and legal services such as risk
management, asset management, asset protection, tax planning, succession and estate planning,
insurance and establishing investment and trade platforms through offshore banks and agencies. The
role of tax havens thus extends far beyond just taxes.
Tax havens allow for doing business discreetly, undertaking new ventures and achieving
privacy and confidentiality when handling family and business matters. The modern tax haven allows
for the simplest and most complex of people and businesses to protect their wealth, plan their future
and save for rainy days.
Defendants of the offshore industry refute this perspective on the logic that any country can
be a tax haven in relation to another as long as its taxes are lower than those of another. Also, it is
believed that developed countries which regard tax havens as the biggest cause of capital and labour
flight, should seek ways of finding the root of the problem; one of which is identified as insufficient
tax incentives and very high taxes which tend to suffocate personal and corporate financial growth.
Offshore finance services are not only based in islands and small states but found worldwide.
The largest financial centres such as London and New York, and countries like Switzerland and
Singapore offer secrecy and other special advantages to attract foreign capital flows.
From: https://www.taxhaven.org/

1. to encompass A. liberalisation
2. legislative provisions B. treatments

65
3. asset C. tax privileges
4. mutual D. for corporate discretion and privacy
5. trade E. discreetly
6. ring-fenced F. funds
7. special tax G. a broad spectrum of financial services
8. benefiting from H. management
9. doing business I. tax structures
10. hedge J. funds

3.4. Read the text below and match the words and their synonyms.
What is a Wealth Tax?
A wealth tax is a tax which is levied on the wealth held by a person or entity. The tax rate is
typically a percentage of the taxpayer’s calculated net worth, but it can vary depending on total net
worth and the taxing nation’s specific laws. Several countries use this form of taxation to raise funds
for the government, though arguments for and against this approach certainly exist.
Most wealth taxes around the world are based on net worth, which is typically found by
totaling the taxpayer’s assets, and then subtracting debts, such as loans and mortgages. Assets include
cash deposits, real estate holdings, investments, trusts, and shares in businesses. Since wealth taxes
mean that a nation’s wealthiest taxpayers have to pay a proportionately higher amount in taxes than
their poorer counterparts, it is considered a type of progressive tax.
In some areas of the world, a blend of wealth and income taxes can be found. In the United
States, for example, taxpayers pay income taxes rather than federal wealth taxes; however, they may
also be subject to other types of taxation like property taxes, which are taxes on the value of real
estate, a type of wealth. As property tax revenues in many areas show, a wealth tax can be a very
effective way to raise money, as people who hold valuable real estate investments can owe substantial
property taxes annually.
Some economists have suggested that there are definite advantages to wealth taxes. These
advantages are usually related to the differences between income and wealth. While nearly all people
earn some kind of income, most of the actual wealth in a country is often held by a relatively small
fraction of the population. Income taxes, which are based on the amount of income someone makes
in a year, are sometimes heavily criticized as hitting the middle and lower classes harder because they
depend on that income more. High wealth individuals, however, earn proportionally less income, and
thus tend to pay less income taxes. By taxing wealth instead, more of the tax burden would go to
those who have a higher overall net worth.

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 Wealth, and by association power, tend to be concentrated in the hands of a very small elite,
these critics argue. For some nations, this concentration of power may be seen as a threat to
democracy. Focusing the levying of taxes on that small group with the most wealth could create more
equality by reducing how much wealth is concentrated in so few hands, while also raising large
amounts of money for the government.
Critics of the wealth tax suggest that defining exactly what a taxpayer’s net worth is can be
very difficult. Assets like privately-held businesses and real estate are difficult to value in many cases,
and may not always be valued the same by different assessors. Calculating a wealth tax also usually
requires more complicated administrative work, and thus costs more to manage.
Wealth taxes can also be viewed as penalties levied on the wealthy, and they can act as a
disincentive to accrue wealth and to invest or save wisely. An income tax only taxes a person’s wealth
once — when it’s earned — whereas a wealth tax, it is argued, taxes that same value each tax year.
Some suggest that a wealth tax encourages capital flight out of a nation, as wealthy individuals have
a strong incentive to move their assets to places without a wealth tax.
From: https://www.wisegeek.com/what-is-a-wealth-tax.htm

1. tax burden A. tax

2. disincentive B. tiny amount
3. real estate C. tax load
4. net worth D. capital outflow
5. levy E. mutual trust
6. accrue F. premises
7. capital flight G. income
8. fraction H. deterrent
9. trust I. grow
10. revenue J. real costs

3.5. Read the text below and fill in the mind map with the notions discussed in the text.
Leading in an Evolving Tax Landscape
Organizations of all sizes are ever more exposed to new trends in tax regulation around the world. As
a leading tax network, we believe that we - as individual tax professionals and as member firms -
have a duty to engage in and advance the discussion and debate surrounding responsible tax, increased
calls for transparency and the future of taxation in an increasingly globalized, digitized world. As tax

67
leaders strive to evolve their departments for the new complexities they face, we work with them to
define and build their ideal target operating model, enabling their departments to adapt to regulatory
change, improve compliance processes and add more value to the business and beyond.
KPMG International has a detailed, consistent and publicly accessible Global Code of Conduct
outlining ethical guidelines for all in our network of KPMG member firms. Tax professionals are also
bound by our Global Tax Principles, which define other basic ethical concepts and behaviours.
Global Tax Principles Followed by KPMG
Principles for a Responsible Tax Practice bring to life KPMG’s values and Global Code of
Conduct in a way that is meaningful for the every-day situations we face as tax professionals.
 We act legally and with dignity and urge our people to do likewise, our firms’ clients, tax
authorities and other parties with whom we interact. Above all else, in every respect our work shall
be fully compliant with relevant legal, regulatory and professional requirements.
 We are committed to providing clients with high quality tax advice tailored to their particular
circumstances.
 We shall explain clearly and objectively to our clients the technical merits and the
sustainability of any tax advice we give.
 Whenever relevant and practical to assess, we may discuss with clients any likely impact of
any tax advice we give on relevant communities and stakeholders and any potential reputational risk.
 We shall make recommendations to clients only where: we consider, at least on the balance
of probabilities, that the relevant interpretation of law is correct; or it otherwise clearly meets the
applicable local professional standards.
 We shall only advise clients to enter into, or assist them to implement, transactions or
arrangements on the basis that they have any substance required by law, as well as any business,
commercial or other non-tax purpose required by law.
 We shall not advise clients to enter into transactions with the purpose of securing a tax
advantage clearly and unambiguously contrary to the relevant legislation and shall not assist them to
implement such transactions. If, in our view, the language of the legislation is uncertain, we shall
consider the intention of the relevant legislators when advising clients.
 We support a relationship with tax authorities aimed at building mutual trust and respect
which will enable constructive dialogue and responsiveness by all parties, facilitate compliance and
reduce or assist in early resolution of disputes.
 We shall comply with all our disclosure requirements and advise our clients to do the same.
 When advising clients on entering into transactions we shall do so on the understanding that
all material facts will be known to the tax authorities.
From: https://responsibletax.kpmg.com/global-tax-principles
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 Global
Tax Principles
Followed by
KPMG

3.6. Read the text below and fill in the gaps with the words from the box. Change the grammar
forms where necessary.
indict legal tax shut down uncompromising stymy heavy fine
intimidate bring down legal quagmire be found guilty sentence precipitously

Al Capone Convicted of Federal Tax Evasion

Al Capone reportedly boasted, “They can’t collect ----1---- from illegal money.” He found that wasn’t
true on October 18 1931 when he was sentenced to prison for tax evasion.
In 1929, Prohibition Bureau agent Eliot Ness began a successful investigation of Capone and his
business. ----2---- many breweries and speakeasies Capone owned, Ness ----3---- his empire slowly.
To lie low, Capone arranged to have himself jailed in a comfortable cell at Philadelphia’s Eastern
69
State Penitentiary for nine months beginning August 1929.
Upon his return to Chicago, he quickly found himself in the ----4---- that effectively removed him
from power.
In 1931 Capone ----5---- for income tax evasion and various violations of the Volstead Act. Facing
overwhelming evidence, his attorneys made a plea deal, but the presiding judge warned he might not
follow the ----6---- recommendation from the prosecution, so Capone withdrew his plea of guilty.
Attempting to bribe and ----7---- the potential jurors, his plan was discovered by Ness’ men. The jury
pool was then switched with one from another case, and Capone ----8----. Following a long trial, he
----9---- on some income tax evasion counts (the Volstead Act violations were dropped). The judge
gave him an eleven-year sentence along with ----10----, and liens were filed against his various
properties. His appeal was denied. In May 1932, Capone was sent to Atlanta U.S. Penitentiary, a
tough federal prison, but he was able to obtain special privileges. He was then transferred to Alcatraz,
where tight security and an ----11---- warden ensured that Capone had no contact with the outside
world. His isolation from his associates and the repeal of Prohibition in January 1933, ----12----
diminished his power.
From: https://worldhistoryproject.org/1931/10/18/al-capone-convicted-of-federal-tax-evasion

PART 4
Read about taxes in the texts below. Are they strange, absurd, ridiculous, stupid? What
ideas drove legislators to introduce these taxes?
Work in pairs. Choose a tax from the list that surprised you most. Role-play a TV debate
show between two MPs (members of parliment). One of you is for and the other one is against
the tax.
9 Odd Taxes from Different Countries
The beard tax in Russia, the window tax in England, the salt tax in France...the history
of civilization has seen lots of strange and unusual tax laws! However, today we can also find some
ridiculous taxation rules that exist in countries across the globe. Some of them have been introduced
for a reasonable purpose while others don’t have a sensible explanation at all.
Here are 9 bizarre tax laws from all over the world you’ve probably never heard about before.
The Plaster Tax, Austria
The Austrian Alps is the perfect place for ski lovers of all types, from beginners
to professionals. Not surprisingly, tourists who don’t feel confident enough when skiing usually end
up in Austrian hospitals with fractures and other injuries.

70
 For this reason, the government decided to include a special tax on medical services into its
regular tourist tax. There is no fixed amount for this tax as it’s collected directly by the resort you
stay in.
The Chopstick Tax, China
Every year, China makes about 45 billion pairs of disposable chopsticks. To produce such
a large amount of them, people have to destroy about 25 million trees. No wonder the Chinese
government finally started sounding the alarm for fear of deforestation leading to serious
environmental damage.
In 2006, China introduced a 5% tax on disposable wooden chopsticks in order to protect and
preserve the shrinking forests. The authorities believe that this measure will encourage people to eat
with reusable, plastic chopsticks instead of traditional ones.
The Fat Tax, Japan
The famous “Metabo Law” in Japan requires men and women between the ages of 40 and
75 to have their waist measured every year. If their waist lines exceed a certain size (85 cm for men
and 90 cm for women), they must pay a fine.
The Japanese fat tax was introduced as an attempt to overcome increasing obesity rates and
keep the spread of diseases like diabetes and strokes in check.
The Shelled Nut Tax, England
In England, buying nuts with shells might save you money. That’s because there’s a 20%
value-added tax (VAT) on shelled, roasted, and salted nuts. So it would be much better for your
budget to stick to nuts in shells and sort them out yourself.
However, there’s a slight loophole with peanuts - they’re not taxed if they’re shelled as long
as they’re not salted or roasted.
The Entertainment Tax, India
A movie night in India can actually cost you quite a bit. Here, you have to pay a special tax
on movie tickets, large-scale commercial shows, exhibitions, amusement parks, and other fun
activities. The tax varies from state to state and ranges from 5% to 28% depending on the form
of entertainment.
The Junk Food Tax, Hungary
A tax on various packaged foods that are high in salt and sugar like chips, biscuits, cakes, and
even energy drinks and sodas came into force in Hungary in 2011. Officially, it’s called the Public
Health Product Tax and it adds about 20 cents to the price of these items.
By introducing this tax, the Hungarian government wants to promote a healthy diet and force
its citizens to make better food choices. Surprisingly, it seems to be working - about 59% to 73%
of consumers reduced their intake of the taxed products.
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 The Sun Tax, The Balearic Islands
The Balearic Islands host about 11 million tourists a year and this puts great pressure on local
resources. That’s why a new tourism tax, or the sun tax, was introduced there in 2016.
The charge applies to all visitors of Majorca, Menorca, Ibiza, and Formentera and ranges from
$2 to $4 a day. The money collected through the tax is used to improve tourism infrastructure like
to clean the beaches and coastal areas, preserve heritage sites, and recover local ecological balance
in particular.
The Shadow Tax, Conegliano, Italy
Restaurant owners and shopkeepers in Conegliano, a town in the Veneto region in Italy which
is known for its dry prosecco (a sort of Italian wine), have to pay about $100 a year if their shading
devices or signs cast a shadow on public streets.
The shadow tax was created in 1993 and was supposed to be enforced throughout all of Italy,
but only the Conegliano authorities accepted it. After its implementation, most local owners
simply decided to take away their tents and awnings.
The Cow Gases Tax, Estonia
Although it may sound pretty ridiculous, the tax on cattle gases really exists in Estonia and its
purpose is rather serious - this is a way for the government to try to prevent air pollution and reduce
the greenhouse effect.
When a single cow digests grass, it produces on average, 350 liters of methane and 1500 liters
of carbon dioxide a day. According to different estimates, this accounts for about 15% to 25%
of overall gas emissions into the air.
The $5000 tax charges large Estonian farms with more than 300 cows. Interestingly enough,
it doesn’t concern breeders of other animals which also contribute to air pollution.
From: https://brightside.me/wonder-places/13-odd-taxes-from-different-countries-you-probably-
have-no-idea-about-706460/

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 PART 5
Do the crossword puzzle.
1 5

2 9

10

3 7

13 15

14

12

11 16

Across
2. a small mistake in a law that makes it possible to avoid doing something that the law
is supposed to make you do
3. all the workers available for a particular kind of work
4. to make something such as a business, organization etc work more simply and effectively
6. a punishment that a judge gives to someone who is guilty of a crime
8. a list of the goods and property owned by a particular person, organization, or country
10. a sum of money that you have to pay to the government on the basis of your salaries and
wages, land, products, etc. and that is used to pay for public services
11. the amount by which two or more things are different or by which they change
14. to officially charge someone with a criminal offence
16. a thwarting and distressing situation / hinder or prevent the progress or accomplishment
of
Down
1. the removal or destruction of something
5. a sum of money that must be paid as punishment for breaking a law or rule

73
 7. the money that a government receives from taxes or that an organization, etc. receives from
its business
9. the speed of something in a particular direction
10. to be or go beyond the usual limits of something
12. a difficulty or problem that delays or prevents something, or makes a situation worse
13. the business of transporting and delivering goods
15. a pattern of thick and thin lines that is printed on things you buy. It contains information
that a computer can read.

74
 UNIT 4 POLITICAL RISKS AFFECTING BUSINESS

PART 1
1.1. Discussion
Political risk denotes the probability that political decisions, events, or conditions will considerably
influence the profitability of a business or the anticipated cost of a given business decision. Political
risk is the risk an investment's returns could suffer as a result of political changes or instability in a
country. Despite the fact that most countries now generally welcome multinational companies,
political risk still represents a huge concern for international business.

Discuss the following questions in pairs.

1. How many famous politicians can you name on spot? List as many presidents, prime ministers,
and other national leaders as you can.
2. Do you follow politics? Why or why not?
3. In what ways do politicians in your country do a good job? In what ways are they doing a bad job?
4. Does the politics of another country affect your life in any way?

Reading
1.2. Read the text below and explain how the three megatrends are transforming the landscape
for political risk.

The New Forces Behind Political Risk

Until recent times, political risk was relatively easy to calculate. More frequently than not, it involved
tyrants who unexpectedly seized foreign assets for their own domestic plans, like Venezuela’s Hugo
Chávez. Today expropriating leaders are far less common than they used to be. And although national
governments are still the main arbiters of the business environment, a great deal of the political risk
within and across countries now comes from other players: individuals wielding cell phones, local
officials issuing city ordinances, terrorists detonating truck bombs, UN officials administering
sanctions, and many more. Events in far-flung places affect businesses around the world at dizzying
speed. Anti-Chinese protests in Vietnam create clothing stock-outs in America. Civil war in Syria
fuels a refugee crisis and terrorist attacks in Europe, leaving the tourism industry shaken. A North
Korean dictator launches a cyberattack on a Hollywood movie studio. We live in a new world of
political risk.
For companies, 21st-century political risk is essentially the probability that a political action will
significantly affect their business — whether positively or negatively. This definition is more radical
75
than it sounds. We chose the phrase “political action,” not “government action,” to highlight the
growing role of risk generators outside the usual places like capitals, army barracks, and party
headquarters. These days, political activities that affect business are happening almost everywhere—
inside homes, on the streets, and in the cloud; in chat rooms, dorm rooms, and boardrooms; in
neighborhood bars and summit side-bars. Companies that want a competitive edge need to manage
the potential impact of this widening array of global political actors.
The good news is that while political risk has grown complex, effectively managing it remains fairly
straightforward. Three megatrends are transforming the landscape for political risk: dramatic changes
in politics since the end of the Cold War, supply chain innovations, and the tech revolution.
Politics. Companies today operate in the most complicated international political environment in
modern history. During the Cold War, superpower rivalry between the United States and the Soviet
Union set relatively clear dividing lines between adversaries and allies. Trade politics and security
politics were sharply delineated, too. The world was largely split between Western capitalist markets
and the command economies of the Soviet bloc. Arms control treaties involved the Soviets, but global
trade negotiations did not. Today’s landscape is much more crowded and uncertain—filled with rising
states, declining states, failed states, rogue states, and non-state actors like terrorist groups and
cybercriminals. And security isn’t just about security anymore; international economic issues are
often tightly connected to security policy and politics.
Supply chains. The growing efficiency of supply chains is unlocking enormous value for companies.
Even very small businesses can now take advantage of lower offshore wages, low shipping costs, and
better inventory management. But there is a dark side to the supply chain revolution: Longer, leaner
global supply chains leave companies more vulnerable to disruptions in faraway places. As
companies extend their overseas supplier relationships in search of improved margins, customization,
and speed, the chances rise that a political action will disrupt the distribution of goods and services
to their customers. When China moved an offshore oil rig into Vietnam’s exclusive economic zone
in 2014, anti-Chinese protests erupted in Vietnam. Suppliers of Li & Fung, one of the world’s largest
wholesale providers of clothing and toys, were forced to close their Vietnamese factories for a week,
slowing delivery of goods to the United States. What had begun as a conflict over disputed territorial
waters in Southeast Asia quickly emptied store shelves in U.S. cities.
Technology. Social media, cell phones, and the internet are also transforming the 21st-century
political environment. Forty-eight percent of the world is online. Technology is dramatically lowering
the cost of collective action, making it easier for like-minded people to find one another and join a
common cause, even across vast distances. What’s more, social activism is not just for social activists
anymore. In a hyper-connected world, by-standers can post cell phone videos that go viral. On April
9, 2017, after United Airlines oversold a flight to Louisville, Kentucky, the airline decided to remove
76
four passengers. One of them, David Dao, refused to deplane. Passengers video-recorded Dao as he
was violently dragged from his seat and posted the foot-age on Twitter and Facebook. Two days later,
United’s stock had lost $255 million in shareholder value, and analysts began worrying about the
ramifications for the airline in the Chinese market, where commenters on social media shared the
view that Dao was discriminated against because he was Asian.
From: https://hbr.org/2018/05/managing-21st-century-political-risk

Comprehension
1.3. Answer the questions.
1. What is the difference between 21-century political risk and that of 1960-70s?
2. What is the definition of the 21st-century political risk?
3. Why do the authors refer to the term “political action” but not “government action”?
4. How do you understand the authors’ saying that “political activities that affect business are
happening almost everywhere—inside homes, on the streets, and in the cloud; in chat rooms, dorm
rooms, and boardrooms; in neighborhood bars and summit side-bars”?
5. What makes the authors suggest that political risk has become more complex?
6. What are international economic issues often tightly connected to nowadays?
7. How do the authors explain the fact that companies today operate in the most complicated
international political environment in modern history?
8. What are the light and dark sides of modern supply chains?
9. What type of challenges does business face due to technology?
10. Comment on the saying “Technology is dramatically lowering the cost of collective action”.

Vocabulary
1.4. Work in pairs. The words below were used in the text. Interpret their meanings. Let your
partner guess what word you mean.
Student A Student B
1. seize foreign assets 1. rogue states
2. expropriating leaders 2. unlock value
3. far-flung places 3. inventory management
4. individuals wielding cell phones 4. leaner global supply chains
5. at dizzying speed 5. vulnerable
6. clothing stock-outs 6. disrupt the distribution
7. launch a cyberattack on 7. offshore oil rig

77
 8. a competitive edge 8. erupt
9. widening array of global political actors 9. like-minded people
10. remain fairly straightforward 10. hyper-connected world
11. transform the landscape 11. by-stander
12. superpower rivalry 12. go viral
13. be delineated 13. ramification

1.5. Fill in the gaps with appropriate words from the box. Change their grammar forms if
necessary.
a competitive edge / delineate / erupt / ramification / seize foreign assets / political risk /
expropriate / disrupt / vulnerable / at dizzying speed
1. Although national governments are still the main arbiters of the business environment, a great deal
of the… within and across countries now comes from other players.
2. As companies extend their overseas supplier relationships in search of improved margins,
customization, and speed, the chances rise that a political action will … the distribution of goods and
services to their customers.
3. Longer, leaner global supply chains leave companies more … to disruptions in faraway places.
4. Analysts began worrying about the … for the airline in the Chinese market
5. Today … leaders are far less common than they used to be.
6. Until recently, political risk involved dictators who suddenly … for their own domestic agendas
7. Companies that want a … need to manage the potential impact of this widening array of global
political actors.
8. Trade politics and security politics were sharply…
9. When China moved an offshore oil rig into Vietnam’s exclusive economic zone in 2014, anti-
Chinese protests … in Vietnam.
10. Events in far-flung places affect businesses around the world … .

1.6. Find equivalents in the text.

наложение ареста на иностранные активы, страны-изгои или режимы, угрожающие миру на
Земле по мнению политиков, конфискация, раскрыть значение, отделенные уголки,
управление товарными запасами, лица, владеющие мобильными телефонами, более узкие
глобальные цепочки поставок, на головокружительной скорости, уязвимый, распродажа
одежды, нарушить распределение, начать кибератаку на, морская нефтяная вышка,
конкурентное преимущество, разразиться, расширение круга глобальных политических сил,
единомышленники, остаются довольно простой, чрезвычайно взаимосвязанном мире,
78
преобразить ландшафт, наблюдатель, соперничество сверхдержав, стать вирусным, быть
разграниченым, разветвление.

1.7. Discussion
Choose one of the quotes below and expand on its meaning. Do you agree with the author?
1. “Political risk is hard to manage because so much comes down to the personal choices of
policymakers, whether prime ministers or heads of central banks”. ―James Surowiecki.
2. “In times of political confusion, and under an arbitrary government, many will prefer to keep
their capital inactive, concealed, and unproductive, either of profit or gratification, rather than
run the risk of its display. This latter evil is never felt under a good government”. — Jean-
Baptiste.
3. “Even though the Koch brothers' businesses put 4.4 million people at risk with pollutants, the
Kochs have poured millions into lobbyists' coffers and political contributions to ensure their
bottom line stays unchanged by the most basic safety precaution”. — Robert Greenwald.
4. “We do not have many women leaders in the world. But if you look at the current examples,
most of those few female leaders that we have today lead their countries under the pressure of
difficult political and economic circumstances. They all possess strong personalities and have
real political influence on the domestic and international scene.” - Dalia Grybauskaite.
5. “The illegitimate use of a state by economic interests for their own ends is based upon a
preexisting illegitimate power of the state to enrich some persons at the expense of others.
Eliminate that illegitimate power of giving differential economic benefits and you eliminate or
drastically restrict the motive for wanting political influence.” - Robert Nozick.
6. “I don't use my money to gain political influence for my private interests, which is what many
rich people do, and what, in a sense, market fundamentalism does, because it is in the interests
of people who have a lot of money to have as little taxes as possible.” - George Soros.
7. “Very few of the common people realize that the political and legal systems have been corrupted
by decades of corporate lobbying.” ― Steven Magee.
8. “And the banks - hard to believe in a time when we're facing a banking crisis that many of the
banks created - are still the most powerful lobby on Capitol Hill. And they frankly own the
place.” ― Richard Joseph Durbin.

PART 2
2.1. Discussion
1. How do you understand the word ‘crisis’ / ‘shock’ / ‘recession’? What do the terms have in
common? How different are they?
79
2. What 21st century events had the most disastrous consequences for business?
3. How did these events affect business?
4. Do you think another crisis is due soon?

Reading
2.2. Read the text below and describe the correlation between five global shocks that affected
business and the subsequent business change.
Five Global Shocks that Rattled Business
Periodically we see major events affect virtually everyone in the global economy. Often these
“exogenous shocks” cannot be anticipated. But an organization that has built up its expertise in
political risk management can still blunt their impact. Five such shocks have affected the political
world—and by extension the business world—since the end of the Cold War.
The most significant was the terrorist attacks of September 11, 2001, which revealed that the United
States faced threats from weak and ungoverned areas of the world, not just powerful countries. Ever
since the Treaty of Westphalia in 1648 marked the beginning of the modern state system, great powers
had been most focused on the dangers posed by other great powers. Not anymore.
The 2008 global financial crisis caused a second shock, leading to greater government intervention
in the form of austerity measures and new regulations. It also heightened people’s awareness of how
the global economy was affecting their personal well-being—and helped give rise to populist
backlashes. When you lose your house because of the global financial system, international
economics becomes personal.
Third, the Arab Spring and the subsequent unrest across the Middle East increased pressure on both
governments and businesses in the region and cast doubt on whether the current state system would
endure there. Artificially set at the end of the Ottoman Empire by the French, the British, and the
Italians, the national borders of Saudi Arabia, Yemen, Turkey, Iraq, Syria, and the Gulf States cut
across regional concentrations of Shia, Sunni, and Kurds. The Syrian civil war has added complexity,
displacing nearly 6 million people and putting an immediate strain on neighboring countries where
they’ve sought shelter. The impact of this refugee crisis on Europe may be long-lasting and fuel a
strong sense that the EU no longer protects its borders and citizens from the dangers of the Middle
East.
The fourth shock we call “great powers behaving badly.” The governments of both China and Russia
have become increasingly assertive, reigniting long-running territorial conflicts—over the Ukraine in
Russia’s case and the East and South China seas in China’s.
Finally, nativism, populism, protectionism, and isolationism are making a comeback. Globalization
lifted millions of people out of poverty and grew the wealth of millions more. Still, it created losers—
80
people who lacked the skills to compete in the modern economy and those for whom a call center in
India, servicing American customers, became a symbol of a threat to them, not an opportunity for a
worker in New Delhi. The Brexit vote in 2016 and the election of Donald Trump in the United
States—the first time that the country elevated someone with absolutely no government experience
to the presidency—stemmed in part from these reactions to globalization. It is telling that in the U.S.
election, not one of the candidates—Donald Trump or Bernie Sanders or even the former secretary
of state Hillary Clinton—defended free trade.
These five major shocks are straining the international order, affecting power dynamics across
countries and the politics within them—with reverberating effects across markets.
From: https://hbr.org/2018/05/managing-21st-century-political-risk

Comprehension
2.3. To what extent would you agree to these statements and why?
1. An organization that has built up its expertise in political risk management can still blunt the impact
of global shocks.
2. Five global shocks have affected the political world since the end of the Cold War.
3. The most significant shock for the 21st century business sector was the terrorist attack of September
11, 2001.
4. The 2008 global financial crisis heightened people’s awareness of how the global economy was
affecting their personal well-being and led to new regulations.
5. The Syrian civil war impacted European economic and financial sectors because the EU no longer
protects its borders and citizens from the dangers of the Middle East.
6. The government of Russia have become increasingly assertive, reigniting long-running territorial
conflicts.
7. Globalization created losers—people who lacked the skills to compete in the modern economy and
those for whom a call center in India, servicing American customers, became a symbol of a threat to
them, not an opportunity for a worker.
8. The Brexit vote in 2016 stemmed in part from the dark side reactions to globalization.
9. Neither of the candidates in US election campaign—Donald Trump or Bernie Sanders or even the
former secretary of state Hillary Clinton—defended free trade. This fact also stemmed in part as a
reaction to globalization.

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 Vocabulary
2.4. Match the words that collocate. More than one collocation is possible.
1. exogenous A. on neighboring countries
2. anticipate B. threats
3. blunt C. their impact
4. face D. shelter
5. from weak and ungoverned E. shocks
6. government F. measures
7. austerity G. unrest
8. heighten H. to populist backlashes
9. give rise I. intervention
10. subsequent J. areas of the world
11. cast K. a problem
12. put a strain L. refugee crisis
13. seek (sought, sought) M. people’s awareness
14. long-lasting N. territorial conflicts
15. reignite O. from the reactions to globalization
16. stem P. doubt on
17. strain Q. the international order
18. reverberate R. effects across markets
19. rattle S. to worry someone or make someone nervous

2.5. Match the words and their definitions.

1. anticipate 1. a difficult economic situation caused by
a government reducing the amount of money it spends:
2. austerity 2. to make less sharp
3. backlash 3. a force or influence that stretches, pulls, or puts pressure causing damage
4. blunt 4. a strong, negative reaction ,e.g. to change
5. cast doubt on 5. to cause people to feel uncertainty
6. exogenous 6. to echo repeatedly
7. put a strain on 7. cause to start conflict again
8. reignite 8. to imagine or expect that something will happen, sometimes
taking action in preparation for it
9. reverberate 9. happening after

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 subsequent found or coming from outside

PART 3
3.1. Discussion
1. What types of political risk do you know?
2. What types of political risk are the least and the most predictable elements in the business
environment?
3. What instruments to manage political risk are you aware of?
4. What stories about political events affecting businesses do you know?

3.2. Read the text below and list the instruments businessmen can use to manage political risk.
Political Factors Affecting Business
There are many external factors that can affect business. It is common for managers to assess each of
these factors closely. The aim is always to take better decisions for the firm’s progress. Some common
factors are political, economic, social and technological (known as PEST analysis). Companies also
study environmental, legal, ethical and demographical factors. The political factors affecting business
are often given a lot of importance. The political environment can impact business organizations in
many ways. It could add a risk factor and lead to a major loss. Companies should be ready to deal
with the local and international outcomes of politics. Changes in the government policy make up the
political factors. The change can be economic, legal or social. It could also be a mix of these factors.
Increase or decrease in tax could be an example of a political element. The government might increase
taxes for some companies and lower it for others. The decision will have a direct effect on businesses.
So, businessmen must always stay up-to-date with such political factors. Government interventions
like shifts in interest rate can have an effect on the demand patterns of company.
Certain factors create Inter-linkages in many ways. Some examples are:
 Political decisions affect the economic environment.
 Political decisions influence the country’s socio-cultural environment.
 Politicians can influence the rate of emergence of new technologies.
 Politicians can influence acceptance of new technologies.
The political environment is perhaps among the least predictable elements in the business
environment. A cyclical political environment develops as democratic governments have to pursue
re-election every few years. This external element of business includes the effects of pressure groups.
Pressure groups tend to change government policies.
Below, there is a list of political factors affecting business:
 Bureaucracy
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 Corruption level
 Freedom of the press
 Tariffs
 Trade control
 Education Law
 Anti-trust law
 Employment law
 Discrimination law
 Data protection law
 Environmental Law
 Health and safety law
 Competition regulation
 Regulation and deregulation
 Tax policy (tax rates and incentives)
 Government stability and related changes
 Government involvement in trade unions and agreements
 Import restrictions on quality and quantity of product
 Intellectual property law (Copyright, patents)
 Consumer protection and e-commerce
Buying political risk insurance is a way to manage political risk. Companies that have international
operations use such insurance to reduce their risk exposure. There are some indices that give an idea
of the risk exposure in certain countries. The index of economic freedom is a good example. It ranks
countries based on how politics impacts business decisions there.
How political factors affected Nike
Studies show that Nike has earned high profits from the growth orientated policies of US government.
The policies maintained low-interest rates. Currency exchange stability and internationally
competitive tax arrangements were also maintained. The company has also benefited from
government initiatives in terms of transparency in the global value chain. One example of this is in
membership of the Clinton administration’s 1997 Apparel Industry Partnership. Nike enjoyed
changes in the political factors in many ways. However, political pressures had a negative impact on
Nike’s employment practices.
From: https://pestleanalysis.com/political-factors-affecting-business/

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 Discussion
Work in pairs. Each of you has a list of political risks. Explain how these types of risk can
affect business. Give examples to illustrate it.
Card 1 Card 2
1. Bureaucracy 1. Environmental Law
2. Corruption level 2. Health and safety law
Card 3 Card 4
1. Government stability and related changes 1. Education Law
2. Government involvement in trade unions and 2. Anti-trust law
agreements
Card 5 Card 6
1. Intellectual property law (Copyright, patents) 1. Discrimination law
2. Consumer protection and e-commerce 2. Data protection law
Card 7 Card 8
1. Tariffs 1. Regulation and deregulation
2. Trade control 2. Tax policy (tax rates and incentives)
Card 9 Card 10
1. Freedom of the press 1. Import restrictions on quality and quantity of
2. Competition regulation product
2. Employment law

3.3. Match the words with their definitions.

1. multiplier A. to cause political actions to start
2. trigger political actions B. the movement or transfer of power from one person or group to
another.
3. interstate conflicts C. the act or fact of becoming involved intentionally in a difficult
situation
4. power shifts D. a violation of contract through failure to perform, or through
interference with the performance of the contractual obligations
5. intervention E. an attempt to make someone do something for you by giving the
person money, presents, or something else that he or she wants.
6. social unrest F. the act of getting something, especially money, by force or threats.
7. coup G. a sudden illegal, often violent, taking of government power,
especially by part of an army.

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8. breach of contract H. an economic factor that, when increased or changed, causes increases
or changes in many other related economic variables.
9. bribery I. involving two or more of the states into conflict.
10. extortion J. disagreements or fighting between different groups of people.
11. renege on K. to fail to keep a promise or an agreement

3.4. Read the text below and match the types of political risks and their manifestations.
Ten Types of Political Risk
In the table below, we summarize the major types of political risk that companies face in the 21st
century. Our definition of political risk goes beyond the probability that an action by government
officials could affect a company in significant ways; to us it includes the impact of political actions
by a wide range of people and organizations. We’ve chosen to exclude climate change and purely
economic risks, however. Climate change is a major global challenge, but we view it as more of a
risk multiplier than a separate risk category. It can trigger political actions, from social activism and
new regulations to civil wars and interstate conflicts—all risks that our list covers. And we left out
economic risks because most businesses already consider them routinely, examining indicators such
as inflation, labor markets, growth rates, and per capita income across markets.
Types of political risk Political Risk Manifestations
1. Geopolitics A. Government reneging on contracts, including
B. expropriations and politically motivated credit defaults
2. Internal conflict C. Discriminatory taxation and systemic bribery
3. Laws, regulations, policies D. Theft or destruction of intellectual property; espionage;
extortion; and massive disruption of companies, industries,
governments, and societies
4. Breaches of contract E. Unilateral sanctions and criminal investigations and
prosecutions
5. Corruption F. Events or opinions that go viral, facilitating collective action
6. Cyber threats G. Politically motivated threats or violence against persons and
property
7. Terrorism H. Interstate wars, great power shifts, multilateral economic
sanctions, and interventions
8. Social activism I. Changes in foreign ownership rules, taxation, environmental
regulations, and national laws

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9. Natural resource manipulation J. Politically motivated changes to the supplies of energy and
rare earth minerals
10. Extraterritorial reach K. Social unrest, ethnic violence, migration, nationalism,
separatism, federalism, civil wars, coups, and revolutions

3.5. Read the text below and fill in the mind map with the notions discussed in the text. Add
your own ideas.
PEST Analysis of Coronavirus
In early 2020, a deadly virus emerged in the Chinese city of Wuhan. Within weeks, the new pathogen
— known colloquially as coronavirus — had caused tens of millions of Chinese citizens to be
quarantined in their homes. By March, the virus was beginning to establish itself worldwide, causing
great distress to individuals around the world.
In this article, we’ll run a PEST analysis of coronavirus, looking at the Political, Economic,
Sociocultural, and Technological consequences it might have. With any luck, this will help both
individuals and businesses know what to expect in the face of this new virus, which should help them
to prepare for it.
Political consequences of the coronavirus outbreak:
Government scrutiny
Already, many of the world’s governments are being scrutinized for their slow and unenthusiastic
responses to the coronavirus outbreaks. Especially in countries with more authoritarian government
structures — such as China — the effects of coronavirus may lead to widespread political
dissatisfaction among citizens. This scrutiny is likely to have few consequences in many of the
world’s countries, but it may lead to change in others.
Changes in trade
Coronavirus may also lead to changes in trade, for numerous reasons. For example, as coronavirus
continues to sweep the world, many countries will realize the dependence of their supply chains on
others’. Particular supply chains that have been disrupted include those of medical-grade facial
masks; in the future, some countries may wish to begin to manufacture masks internally so as to be
better prepared for new disease outbreaks.
Economic consequences of the coronavirus outbreak:
Poor market performance
A major Economic consequence of the coronavirus outbreak is poor market performance. This has
already been observed in many of the world’s biggest financial markets — such as those of China
and the United States — and is only expected to continue as the outbreak matures. There are fears

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that this poor market performance may lead to a multi-year recession, as investors pull their money
out of traditional financial instruments to hedge themselves against market volatility.
Lack of workers
As more individuals fall ill, coronavirus is likely to lead to a temporary lack of workers. Whether this
is due to quarantines or workers making the decision to stay home, the end result is the same:
companies and governments will be pressed to find laborers. This is likely to result in reduced
Economic output, as business grinds to a halt for many. Sociocultural
Sociocultural consequences of the coronavirus outbreak:
Panic
As with any worldwide outbreak of disease, coronavirus is very likely to (and already has, in some
places) result in panic. This panic is visible on many levels. For example, with citizens anticipating a
need to stay home for extended periods of time, they may rush to supermarkets to stock up on home
goods such as food, water, and toilet paper. This will exacerbate the temporary disruption of many
supply chains. Panic may also cause individuals to stock up on fuel for their vehicles, or take other
anticipatory measures.
Racism
Perhaps an unexpected Sociocultural consequence of the coronavirus outbreak is unusual amounts of
racism. Since coronavirus was believed to have originated in the Chinese city of Wuhan, some
individuals became prejudiced to Chinese or Asian-looking individuals in their local areas. In fact,
this even resulted in some physical assaults. As the disease crosses new borders, it’s likely that this
will fade. However, some individuals may continue to carry prejudices for the initial spread of the
virus.
Travel fear
Coronavirus has already discouraged many individuals from travel, especially air travel. With the risk
of being quarantined away from home and the even bigger risk of catching the virus, this should come
as no surprise. While this is a Sociocultural phenomenon, it’s having serious Economic impacts;
airline companies, for example, are facing a serious lack of customers and seeing record losses.
Remote work
Since many individuals will be unable to go to work during the coronavirus outbreak, some
companies may choose to encourage remote work, if applicable to their line of work. For example,
some office workers might be able to fulfill their duties from home, without the need to travel to and
work at an office everyday (which carries the risk of further spreading coronavirus). While this is a
short-term change, it may encourage companies to allow remote work in the future, if the concept
proves itself.
Technological advances in virology
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Coronavirus is sure to result in numerous advances in virology — the study of viruses. The nature
and spread of the virus will prove invaluable information to scientists looking to better understand
how this pathogen — and others like it — can be contained and treated. With any luck, the coronavirus
outbreak will spur the world’s many great minds to find new ways to manage pandemic situations.
An existing example of this is the creation of drive-thru testing centers, which enable citizens to test
themselves for the virus without exposing themselves to a hospital full of patients.
From: https://pestleanalysis.com/coronavirus-pest-analysis/

3.6. Read the text below and fill in the gaps with the words from the box. Change the
grammar forms where necessary.
know stoke recession fold conflate tick
glean spike conspicuous drawdown disrupt benign

What Coronavirus Could Mean for the Global Economy

Having largely ignored Covid-19 as it spread across China, global financial markets reacted strongly
last week when the virus spread to Europe and the Middle East, ----1---- fears of a global pandemic.

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Since then, Covid-19 risks have been priced so aggressively across various asset classes that some
fear a ----2----- in the global economy may be a foregone conclusion.
In our conversations, business leaders are asking whether the market ---3--- truly signals a recession,
how bad a Covid-19 recession would be, what the scenarios are for growth and recovery, and whether
there will be any lasting structural impact from the ---4--- crisis.
In truth, projections and indices won’t answer these questions. Hardly reliable in the calmest of times,
a GDP forecast is dubious when the virus trajectory is ---5---, as are the effectiveness of containment
efforts, and consumers’ and firms’ reactions. There is no single number that credibly captures or
foresees Covid-19’s economic impact.
Instead, we must take a careful look at market signals across asset classes, recession and recovery
patterns, as well as the history of epidemics and shocks, to ---6--- insights into the path ahead.
What Markets are Telling Us
Last week’s brutal drawdown in global financial markets might seem to indicate that the world
economy is on a path to recession. Valuations of safe assets ---7--- sharply, with the term premium
on long-dated U.S. government bonds falling to near record lows at negative 116 basis points —
that’s how much investors are willing to pay for the safe harbor of U.S. government debt. As a result,
mechanical models of recession risk ---8--- higher.
Yet, a closer look reveals that a recession should not be seen as a foregone conclusion.
First, take valuations of risk assets, where the impact of Covid-19 has not been uniform. On the ---9-
-- end, credit spreads have risen remarkably little, suggesting that credit markets do not yet foresee
funding and financing problems. Equity valuations have ---10--- fallen from recent highs, but it
should be noted that they are still elevated relative to their longer-term history. On the opposite end
of the spectrum, volatility has signaled the greatest strain, intermittently putting implied next-month
volatility on par with any of the major dislocations of the past 30 years, outside of the global financial
crisis.
Second, while financial markets are a relevant recession indicator (not least because they can also
cause them), history shows that bear markets and recessions should not be automatically –11--. In
reality, the overlap is only about two out of every three U.S. bear markets — in other words, one out
of every three bear markets is non-recessionary. Over the last 100 years, we counted seven such
instances where bear markets did not coincide with recessions.
There is no doubt that financial markets now ascribe significant ---12--- potential to Covid-19, and
those risks are real. But the variations in asset valuations underline the significant uncertainty
surrounding this epidemic, and history cautions us against drawing a straight line between financial
market sell-offs and the real economy.
From: https://hbr.org/2020/03/what-coronavirus-could-mean-for-the-global-economy
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 PART 4
Read the notes below and say which way of risk mitigation you think most appropriate.
Guiding Questions for Managing Political Risk
How can companies best manage political risk in this environment? Some hire consultants to provide
analysis and advice when they need it. Others rely largely on in-house units. Many employ a hybrid
approach. While no one model fits all, we have developed a framework that is broad enough for most
companies to apply but suggests specific actions. Organizations that excel at risk management have
four core competencies: understanding, analyzing, mitigating, and responding to political risks. A
series of questions can help executives identify gaps in each area and increase their ability to get
ahead. In each competency, three questions will help identify gaps and areas for improvement.
Understand Analyze Mitigate Respond

 What is  How can we get good

my  How can we reduce
 Are we capitalizing on
organization’s information about the exposure to the near misses?
political risk appetite?  Are
political risks we face? political risks we have we reacting
 Is there a  How can we ensure identified?
shared effectively to crises?
understanding of our rigorous analysis?  Do we have a good
 Are we developing
risk appetite?  How can we integrate system and team in mechanisms
 How can we reduce political risk analysis place for timely  for continuous
blind spots? into  warning and action?
business learning?
decisions?  How can we limit the
damage when
something bad
happens?

Role-play 1. Work in pairs. Role-play a business meeting between two top managers. You both
work for an expanding popular online platform. Your company wants to extend its delivery
services worldwide. You are tasked to prepare PEST analysis (a political factor) for one country
(your choice) and report what other all possible instruments can contribute to manage political
risk. Consider the steps:
1. Look through the examples of PEST analyses for different countries (Mexico, Norway,
Malaysia, Thailand, Denmark, Greece) and companies (eBAy, Amazon and Marks and
Spencer).
2. Make use of guiding questions for managing political risk
3. Prepare your own PEST analysis.
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4. Discuss the instruments of managing political risk.
PEST Analysis of Mexico (only a political factor)
Political environment in Mexico: Corruption at local and national levels
Mexico’s poverty is affected by the local and national government. The local government impacts
the success of small local businesses. If it benefits the government they will offer special “incentives”
(like low-interest bonds) to small businesses. Unfortunately, this means the local government is open
to influence — and not necessarily the pure kind.
Mexico is drowning in political corruption. Politicians and leaders in power are suggestible to bribes
for personal benefit. It makes it harder for citizens to believe in democracy considering the elected
politicians can freely do as they please — not for the benefit of the people, but for the benefit of
themselves.
As for the national government, the National Action Party of President Calderon no longer holds the
majority in the Chamber of Deputies, despite being the largest party in the Senate. Although the
national government does affect the poverty level, it’s only one part of the equation.
For instance, the government isn’t introducing enough policies for developmental opportunities. As
such, Mexico relies on the World Bank and the International Monetary Fund to make adjustments.
Alas, these adjustments are worsening poverty rather than improving.
The country needs the government to focus on policies for new employment to decrease the actively
growing poverty line.
From: https://pestleanalysis.com/pest-analysis-of-mexico/
Norway’s PEST Analysis (only a political factor)
Norway’s political landscape is stable. It’s never received opposition. Citizens are happy with the
current and future landscape — a feat, considering so many countries are suffering from some level
of political corruption these days Low crime rates.But citizens and expats have many opportunities
in Norway. Their safety and well-being are managed well, and financial growth is going up. Plus,
Norway has one of the lowest crime rates in the world and zero transactional disputes. It’s a safe place
to visit. Prospering economy. Part of Norway’s stability stems from the economy. The country is
great at entering and enforcing business contracts, building businesses, and trading with other nations
around the world. A friend of other countries.As a member of the European Free Trade Association
(EFTA) and the European Union (EU), Norway grants tariff rates to the European Economic Area
(EEA) members. The country follows the rules and regulations set by the EU.
Economic factors: Low unemployment and a growing economy
From: https://pestleanalysis.com/norway-pestel-analysis/
Malaysia’s PEST analysis (only a political factor)

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Malaysia’s constitution is interesting — it’s made up of thirteen states, three federal territories, and a
monarchy. The monarchy, consisting of a committee of sultans from the nine Malay kingdoms, is
more of a figurehead, while the elected Prime Minister handles the majority of the country’s policies
and regulations. Connected to many worldwide organizations.
You’ll find Malaysia listed as a member of the Commonwealth of Nations, the UN, and the creator
of the ASEAN and Organisation of Islamic Cooperation (OIC). A friend and enemy to China.
Although the country has had disputes about the South China Sea, Malaysia still has close ties with
China. To manage these disputes, the two countries have worked together to sign various energy and
defense agreements.Stable but corrupt political system.
Overall, Malaysia is politically stable but corrupt. Citizens are expected to pay a fee (called a
“sweetener”) to access hospitals, schools, and courts. Some political figures have recently arrested
big-name people who are connected to politics, which has brought Malaysia’s corruption to the
spotlight.
The media — including print and television— isn’t safe from governmental control either. Back in
2007, the government agency instructed radio and television stations to not broadcast speeches from
oppositional leaders. It was a tough break for said oppositional leaders.
From: https://pestleanalysis.com/malaysia-pestel-analysis/
Thailand’s PEST Analysis (only a political factor)
One of Thailand’s largest money-making industries is tourism. People from all over the world come
to see the breathtaking monuments, flora, and crystal clear waters of the country. But tourism is very
affected by politics, regulations, and policies.
Two groups in Thailand keep the people in a tense political battle: the red-shirt and yellow-shirt
groups. These two groups are fractured based on political beliefs. These groups have a lot of power
— back in 2010, the yellow-shirt closed Suvarnabhumi Airport, the most prominent airport for
international flights. While it was closed, tourism dwindled.
The red-shirt retaliated — not only by protesting political summits like the one held in Pattaya but
also by closing off the main intersection in Bangkok. With the road closed off, stores in the area had
to close too — which proved to be the right choice, because the demonstration escalated to nearby
stores being set aflame and bombed by the red-shirts.
Because of these fights, countries in Europe and Asia have warned citizens to avoid visiting Thailand,
citing these fights as the main issue. Tourism dropped again in Thailand but has since recovered over
the last nine years.
From: https://pestleanalysis.com/thailand-pestel-analysis/
PEST Analysis of Denmark (only a political factor)

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Located in Central Europe, Denmark has established itself as one of the world’s most developed
countries, offering a high standard of living to all of its residents. With a stable Political and
Sociocultural backdrop, Denmark has managed to build a thriving economy with no signs of slowing
down — but is that really the case? Here are the Political factors affecting Denmark:
Perhaps the most important factor affecting Denmark’s Political landscape is its membership in the
European Union. Denmark is a long-standing member of the European Union; as such, it benefits
from numerous trade (and other) policies which help to significantly boost the country’s economy.
As it stands, Denmark is set to remain a member of the European Union in the near future, which
should guarantee the country a strong Political and Economic foundation.
Another important aspect of the Danish economy is the low income inequality; in fact, Denmark has
some of the world’s lowest inequality rates. This low income inequality is achieved by high tax rates
for high-earners, as well as high base salaries for both unskilled and skilled laborers. Low inequality
indices are overwhelmingly positive for the country as they ensure all residents enjoy a similarly
luxurious quality of life. However, some may argue the lack of a cheap labor force may thwart some
industries (such as construction).
From: https://pestleanalysis.com/denmark-pestel-analysis/
PEST Analysis of Greece (only a political factor)
Greece has something of a reputation in the European Union, following its severe debt crisis in 2009.
Although the country is still plagued by numerous Economic setbacks, it boasts a powerful tourism
industry, great technological infrastructure, and very reasonable environmental policies. To get a
better understanding of the circumstances Greece is facing. Here are the Political factors affecting
Greece:
Governmental Instability
Unfortunately, the Political landscape in Greece can only be described as unstable. In the last decade,
there have been multiple administrative shake-ups across all areas of government. During that period,
the role of Prime Minister has changed hands at least seven times, with the ruling government party
changing with every new PM. This statistic alone demonstrates the widespread political disagreement
in the country, and has definitely contributed to Greece’s poor Economic performance in recent years.
Corruption
Aside from being unstable, the Political scene in Greece is rife with corruption. Although corruption
is typically kept hidden, the non-governmental organization Transparency International found enough
evidence of corruption to say that it played a “major role” in the country’s recent economic recession.
Tax evasion, which comes hand in hand with corruption, is believed to account for tens of billions of
Euros in uncollected tax revenue every year.
From: https://pestleanalysis.com/pestle-analysis-of-greece/
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 PEST Analysis of eBay (only a political factor)
Political factors: No more firearms
eBay is storing a massive amount of information. Every signup and transaction is maintained on
eBay’s system. Although it’s not supposed to use customer information, many e-commerce
businesses are having an influx of privacy issues. eBay does supply a privacy policy on their site that
all users can see. But it doesn’t guarantee privacy.
The government is slowly getting more involved in data breaches and privacy policy agreements.
We’ve seen this happen with Mark Zuckerberg, the CEO of Facebook. He recently had to answer
questions regarding his social platform and the use of data. Problem is, it proved little people in
Congress know about the workings of the internet. Still, government interest from could the
beginnings of changes in data protection for companies like eBay.
On another political front, eBay has ceased selling firearms through their platform. A market exists
for these types of transactions. The problem lies with the customer. eBay has no idea whether they’re
allowing firearms to be sold to enthusiasts or someone with an agenda. Currently, the quickest way
to prevent the selling of firearms to the wrong people is by stopping all transactions.
From: https://pestleanalysis.com/pestle-analysis-of-ebay/
PEST Analysis of Amazon (only a political factor)
Political Factors: A dependency on stability. Amazon is an e-commerce offering an online catalog of
products for users all over the globe. Because they operate overseas, Amazon must abide by political
and legal regulations in each location. But many of them can interfere with online purchases. Amazon
relies on government support to implement, distribute, and profit — all thanks to the internet. And
now they’re expanding into physical locations. Regardless, this company relies heavily on political
stability (in all countries) and e-commerce support, but they’re also affected by cybersecurity bills
too.
Distributing and expanding into Asian countries can also be “off limits”, even to a company as
expansive and influential as Amazon. Chinese companies rise to compete against Amazon, expanding
their services to the public, making it easier for them to prosper while Amazon’s services are shoved
to the wayside. Not to mention taxes in foreign countries can be drastically expensive. Considering
taxes can alternate (depending on the people in power), Amazon must be up-to-date on these
fluctuating numbers.
From: https://pestleanalysis.com/pest-analysis-of-eretail-leader-amazon/
Marks and Spencer PEST Analysis (only a political factor)
Free trade
One of the most positive aspects of modern-day politics is the free trade that has been established
between a multitude of countries. Marks and Spencer, which chiefly operates in the United Kingdom,
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but also has locations abroad, benefits greatly from this. Free trade allows Marks and Spencer to
import foreign products for sale in their stores at cheaper prices than otherwise, while maintaining a
healthy profit margin. While free trade has been around for quite some time, especially for European
brands, the United Kingdom’s decision to leave the European Union might affect this.
Brexit
Dubbed “Brexit”, the United Kingdom’s decision to leave the European Union is a Political factor
that might hugely impact Marks and Spencer’s operations. It’s unclear where the United Kingdom
will stand following Brexit, especially in terms of trade regulations and tariffs, but many of the
possible outcomes are less than ideal for UK retailers. For example, if the United Kingdom were to
leave the European Union in a so-called “hard Brexit”, this might result in the loss of numerous free
trade policies with European suppliers, resulting in a higher product cost for end consumers.
From: https://pestleanalysis.com/marks-and-spencer-pestle-analysis/

PART 5
Do the crossword puzzle.

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Across

5 (v) take away money or property especially for public use without payment to the owner
8 (n) a difficult economic situation caused by a government reducing the amount of money it
spends
9 (v) make available to be used in order to increase its value or to make a profit from it
13 (adj) involving competition
14 (adj) speaking about state: a nation that is considered very dangerous to other nations
15 (v) to echo repeatedly
18 (v) to imagine or expect that something will happen

Down
1 (v) make disagreement or worry that was disappearing grow stronger
2 (adj) very fast
3 (v) describe or mark the edge
4 (v) start suddenly and violently, as a volcano
6 (n) the possible results of an action
7 (adj) able to be easily physically, emotionally, or mentally hurt
10 (v) worry someone or make someone nervous
11 (adj) spreading or becoming popular very quickly through communication from one person
to another, especially on the internet
12 (adj) places that are a great distance away
16 (adj) found or coming from outside
17 (v) begin something such as a plan or introduce something new such as a product

UNIT 5 HOW TO POSITION YOUR COMPANY INTERNATIONALLY

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 PART 1
1.1. Discussion
Experts agree that growing a business is risky enough. But what if your aspirations prompt
you to debut your concept in a foreign land instead? Wesley Johnston, professor of marketing and
director of the Center for Business and Industrial Marketing at Georgia State University in Atlanta,
highlights the factors that can either make or break your business when you try to grow by going
global. Here are key questions to ask yourself:
 Will the product sell well in the targeted culture? Think market research. The good news is most
… products and services are embraced overseas. But if many of your potential consumers are
lactose-intolerant, you’d want to steer clear of opening an eatery that sells only cheese pizza, says
Johnston.
 Is your target market familiar with your product or service? If not, be prepared to invest a lot of
time and money in consumer education. On the flip side, if you’re the first one to introduce a new
and exciting concept, “the product then becomes synonymous with your company name or chain,”
Johnston explains.
 Do you feel comfortable in that country? Since you’ll probably have to live there temporarily to
operate the chain in its early stages, you’ll need a working knowledge of the language and culture.
 What is the infrastructure like? Can you get Western-style accommodations and support? How
good are the roads? Are your supplies guaranteed? What about the reliability of hot water?
If you don’t get the answers you want with the first foreign market you’re considering
entering, that may not mean your idea is poor - just that you picked the wrong place. “It’s a big, big
world out there,” Johnston says. “I don’t think there’s any one idea that won’t work somewhere.”.
From: https://www.entrepreneur.com/article/159252
Discuss the following questions in pairs.
1. Do you agree with the ideas of professor Wesley Johnston?
2. What questions would you ask yourselves before trying to go global?
3. Do you agree that “there’s any one idea that won’t work somewhere”?
4. Give examples of successful multinational companies and explain the secret of their success.

Reading
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1.2. Read the text below and give your definition of the global positioning strategy.
The Fallacy of Global Positioning Strategy.
Is it really possible to create a brand positioning strategy that works globally?
A brand’s position refers to the way that customers and prospects perceive it relative to the
other brands in the same category.
A company’s positioning strategy is a plan that details what the company will do in order to
cultivate the desired perception in the market so their brand is compared favourably.
Companies may, and often do, try to achieve the same brand position in the minds of
consumers globally. However, in order to cultivate that same position, the company will need to
develop a different positioning strategy for each country. That’s because, in each market, the brand
will be compared in a different context.
Even the word “positioning” begs the question: In relation to what? That’s because positioning
is a relative thing. It is created by consumers in direct relationship to contextual factors such as:
 target segmentation
 competition
 economic conditions
 cultural norms and purchase behavior
 prospect problems, needs, options, value equation (needs vs. resources), beliefs, and
perceptions.
If the company has experienced strong domestic growth it may be tempted to simply replicate
its positioning strategy in other markets and hope for the same outcome. After all, why reinvent the
wheel? The short answer is because the reason the company’s current wheel works so well is because
it is fine-tuned to the nuances of domestic market. As such, it is pretty much guaranteed not to be
fine-tuned to the needs of new markets the enterprise is entering. The reasons for this include, but
aren’t limited to the differences listed above.
This has two main implications for marketers. First, these variables change over time so
brands should have a process in place to track and adapt to those changes swiftly. Second, it explains
why effective positioning strategies don’t lend themselves easily to globalization. If the company is
managing a global brand, it is unlikely that the factors affecting its position will be the same in all
markets it serves. So the company will need to localize its strategy.
If the company wants to cultivate a unified global position for its brands, it’ll need to include
a local positioning strategy as part of its marketing strategy. That is, asking itself the following
question: Given this country’s unique market environment: how does the company want consumers
to compare its brand to local competitors and what can the company do to encourage that perception?

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 This approach may lead to very different tactics in each market to achieve the same position
in consumers’ minds. Having a strong international brand image can help smooth over differences in
positioning and other local market-specific activity.
The brand’s image is the anchor. It should be the same in every market allowing the firm to
fine-tune its marketing mix to local conditions along with its position without appearing
schizophrenic. Just make sure that the local position supports the company identity and never
contradicts it. If the firm can’t make it so, consider this as an indication that a second brand may be
in order.
If the company is trying to position a global brand it should remember that a brand’s position
can be international but its positioning strategy must be multinational (i.e. market-specific). So the
company is not really positioning its brand globally or even regionally (i.e. Europe). It is actually
positioning the brand one market at a time based on the factors above. This is often a sticking point
with brand managers since they are trained in the doctrine of absolute consistency for brands and
many lack international experience. But when dealing with multiple countries it’s important to
remember that achieving the same brand position and image can require very different strategies and
tactics in each market.
From: http://duffy.agency/insight/fallacy-of-global-%E2%80%A8positioning-strategy/

Comprehension
1.3. Answer the questions.
1. What is a company’s positioning strategy?
2. Why should the company tailor its positioning strategies for each country?
3. What contextual factors are included in the term “positioning”?
4. Why is the process of replication positioning strategy of domestic market a fallacy?
5. What are two main implications for marketers of the company while going global?
6. What should the company do to cultivate a unified global position for its brands?
7. Should the brand’s image be the same in every market?
8. What ‘sticking point’ does the author discuss in the final passage?

Vocabulary
1.4. Find words in the text that match the following definitions.
1. the quality of always being the same, doing things in the same way, having the
same standards etc.;
2. happening or done quickly and immediately;

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3. to waste time trying to find a way to do something when someone else has already discovered the
best way to do it;
4. a set of beliefs that form an important part of a religion or system of ideas;
5. a false idea or belief, especially one that a lot of people believe is true / a weakness in
someone’s argument or ideas which is caused by a mistake in their thinking;
6. to disagree with something, especially by saying that the opposite is true;
7. to understand or think of something or someone in a particular way;
8. a very slight, hardly noticeable difference in manner, colour, meaning etc.;
9. subdivision of a population into segments with similar characteristics, such as age, education,
income;
10. to work hard to develop a particular skill, attitude, or quality;
11. to copy something exactly;
12. to make very small changes to something such as a machine, system, or plan, so that it works as
well as possible.

1.5. Fill in the gaps with appropriate words and expressions from the box.
market-specific / contradict / value equation / fine-tuned / go global
target segment / fallacy / absolute consistency / to cultivate / swift
1. A ________ _____________ is a group of individuals or organizations we focus our marketing
efforts on.
2. Both, ____________ ______________ and eventual consistency are related to data persistence,
i.e. data write operation.
3. Don’t believe the _________ that money brings happiness.
4. __________ fashion changes mean that the shop has to change its stock every six to eight weeks.
5. Converse purchased a pint of Gold Leaf Cognac ____________ the management.
6. Clearly, Amazon has fortified its position across every dimension in the ___________
________________ , which is why it should be no surprise that reports are that nearly half of all
American households are Amazon Prime members.
7. Implied terms can thus supplement express rules, or introduce new rules, but cannot directly
______________ an existing rule.
8. Firms that ______ ____________ are more likely to stick around, adding to the economy and
employing locals.
9. In process of capacity growth of the ________ ____________ for BSI group there is a probability
of client diversification improvement.
10. The election campaign had to be constantly ____________ so that the right message got across.
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 1.6. Find equivalents for the following word combinations in the text above.
1. быть точно настроенным на потребности новых рынков 2. бренд сравнивается
благоприятно 3. специфика деятельности на местном рынке 4. позиционирование - вещь
относительная 5. единая глобальная позиция 6. сегментирование целевое 7. заблуждение 8.
чтобы точно настроить свой маркетинговый микс 9. не поддаются легкой глобализации 10.
рассматривайте это как указание 11. Зачем изобретать велосипед? 12. уравнение ценности 13.
сглаживание различий 14. чтобы локализовать свою стратегию 15. точка преткновения для
бренд-менеджеров 16. работа с несколькими странами 17. абсолютная последовательность 18.
чтобы наращивать ту же самую позицию 19. повторить свою стратегию позиционирования 20.
специфика рынка

1.7. Discussion
Choose one of the quotes below and explain its meaning in your own words.
1. “I became convinced that the advanced industrial countries, through international
organizations like the International Monetary Fund (IMF), the World Trade Organization (WTO),
and the World Bank, were not only not doing all that they could to help these (developing)
countries but were sometimes making their life more difficult. IMF programs had clearly
worsened the East Asian crisis, and the “shock therapy” they had pushed in the former Soviet
Union and its satellites played an important role in the failure of the transition.” - Joseph E. Stiglitz
2. “The work being done by Linklaters to help organizations understand keys to success in the
development sector serves as an important international affairs issue and crucial element in how
all of us work to support service provision in impoverished communities in a lasting and effective
way.” - Ann Cotton
3. “One of the symptoms of an absence of innovation is the fact that you lose your jobs. Everyone
else catches up with you. They can do what you do better than you or cheaper than you. And in a
multinational corporate-free market enterprise, it is the company’s obligation to take the factory
to a place where they can make it more cheaply.” - Neil de Grasse Tyson
4. “I would like to be a one-man multinational fashion phenomenon.” - Karl Lagerfeld
5. “In Globalization 1.0, which began around 1492, the world went from size large to size medium.
In Globalization 2.0, the era that introduced us to multinational companies, it went from size
medium to size small. And then around 2000 came Globalization 3.0, in which the world went
from being small to tiny.” - Thomas Friedman
6. “The rules of the global economy are rigged against those who have to work to earn a living and
in favour of multinational corporations and the ultra-rich.” - Sharan Burrow

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7. “A lot of multinationals have long, drawn-out processes and are pretty useless at putting products
on the shelves quickly.” - Theo Paphitis
8. “Why buy sanitary napkins from multinationals when we can make them at home and generate
employment?” - Arunachalam Muruganantham
9. “These are the multinationals, like General Motors and Nestle; these are the big industrial groups
that weigh, on the monetary scale, much more than big countries like Egypt.” - Ahmed Ben Bella
10. “In the past, we spoke of poverty, misery only in the south. Now there is a lot of misery, a lot of
bad that creates victims in the north as well. This has become manifest: the global system was not
made to serve the good of all, but to serve multinational companies.” - Ahmed Ben Bella
11. “You can’t run a multinational business from your desk.” - Daniel Schwartz
12. “I am not against oil multinationals. What I am saying is that you end up going to them when you
are not able to develop your own technology to extract oil.” - Alberto Fernandez

PART 2
2.1. Discussion
When planning to expand the production, the selling and the other business activities into
some international markets there are a lot of things that one should take into consideration. But not
only too little information can create uncertainty, but also an excess of unuseful information can have
the same effect. This is why it is important to make a plan before taking your business into the
international market. Internalization can result worthless and extremely expensive if the right
considerations are not taken into account.
From: https://www.marketing91.com/4-entering-international-market/
What factors need to be taken into consideration before entering international markets?
What cultural barriers exist in expanding abroad?

Reading
2.2. Read the text below and comment on challenges faced by the company if it wants to
become international.
How to Nail your Market Positioning When Going Global
When you plan for business expansion and localization, develop a thorough market
positioning strategy first to increase your chances of success in a new market.
So, you’ve launched your product or service in your home market and it’s gaining traction.
Now, you are excited to conquer new territories and enchant foreign audiences. Thanks to the Internet,
international growth is basically at your fingertips and the opportunities are endless.

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 However, there’s more to successful global expansion than simply translating your
product and throwing it into any market. Are you certain that your new target market will perceive
and trust your brand the same way your native audience does? What about local competitors?
With a little forethought and planning in an area called market positioning, you can
significantly increase your chances of establishing a strong foothold in any new market. We’ll walk
you through everything you need to know to get started.
What is market positioning? Your market position is how your prospects and customers
perceive your brand or product in relation to your competitors. Consequently, market positioning is
the process of actively establishing a certain image or identity of your brand to influence consumers’
perception. It’s a critical part of your overall business strategy.
For example, let’s consider the global automobile market. Lamborghini has established its
brand and cars as high-end, luxury status symbols. Toyota, on the other hand, is associated with
safety, reliability, and quality at an affordable price. The two companies cater to different market
segments and are very successful in doing so.
Think about how your business is being perceived in your home market. What attributes
would your target audience associate with your brand and products? What makes you different from
your competition? Understanding your current market position is key before you can consider
expanding your business to new areas.
Why market positioning is essential when going global? When business owners set their focus
on growing internationally, they are spoiled for choice. Which markets should you enter?
Which languages should you translate your product into? These decisions shouldn’t be made lightly.
Significant time and resources are required to translate and localize a product to get it ready for launch
in a new market. However, if the audience already prefers a competitor or doesn’t have the means to
buy your product, all this effort was wasted.
A thought-out market positioning strategy can prevent such mishaps. Our recommendation is
to thoroughly analyze your target markets and consider how your product or service will fit into the
existing business landscape. If you are simply entering as another player without a differentiating
factor, your chances for success will look bleak…
How to develop an effective market positioning strategy? In what follows, you’ll find out how
to develop a solid market positioning strategy.
Analyze your competition. Before you can determine how your product will fit into a market,
consider who is already there. When you know your competition and the current market
segmentation, you can identify gaps that you can fill. Here are some questions that can help you
analyze your competition:
 Who are the existing players in your target market?
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 Who are they serving specifically?
 What is their market share?
 How fast are they growing?
 What are their strengths and weaknesses?
 What makes them unique?
 How are they marketing their products?
Create your positioning statement. After familiarizing yourself with your competition, you
need to define what your brand and products are all about. Your positioning statement explains the
promise that you make to your customers and why they should choose you over your competitors.
The following questions will help you create it:
 What is it that you are offering?
 Who is your product for / not for?
 What problem are you solving?
 What results will you get for your customers?
 What are the benefits of your product?’
 What makes you different?
Develop your unique market position. Now that you know your own business and your
competition much better, it’s time to hone in on your unique market position. There are several market
positioning strategies to help you secure your seat at the table. You can differentiate yourself with
one or many of the following factors:
 Price: Associate your brand and products with competitive pricing.
 Quality: Set yourself apart with a product of superior quality.
 Convenience: Make your product the easiest to use or the easiest to purchase.
 Customer Service: Offer the friendliest, fastest customer service in the market.
 Distribution Channel: Utilize a unique way of delivering your product. For example, be the only
online store for your type of product among brick and mortar shops.
 Customer Needs: Be the only product that solves a particular problem for your clients.
 Attributes: Associate your brand and products with positive characteristics. For instance, be the
business that gives back to the local community.
Live your market positioning. Once you know which position you want to own in the new
market, you’ll need to intensify all efforts to reach it. Your market position becomes the north star
for your localization and marketing efforts. When you translate your product, the tone and style need
to create the right image in your audience’s mind. When you choose the visuals and design, they need
to reflect the type of brand you want to be.
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 Luckily, localization services can greatly help you to adapt your product and content to a
specific market. A translation management tool like phrase is the perfect choice to manage your
localization process and get it right from the start.
But, what if, despite all your efforts and well-developed marketing strategies, your positioning
seems off once you’re actually live? Let’s look at what you can do in this case.
When and how to reposition your brand and products. Your sales will be the best indicator to
show if your market position is the right one or not. Sometimes, your audience’s perception of your
brand and products is not what you intended it to be. Keep in mind that no matter how well you
prepare your entry into a new market, you can only influence your audience to a certain extent.
There are ways to discover what’s off with your market position. To know for sure, ask your
audience directly. Surveys, focus groups, and interviews are great ways to find out what your
customers really want. The outcomes might surprise you! Perhaps some assumptions that you made
about your audience don’t turn out to be true.
Armed with valuable insights from customer research, you can now work on repositioning
your business. This will involve changing your marketing messages to accurately reflect the new
position that you are seeking.
Businesses seldom get their positioning perfectly right on the first try. Our advice is to learn
as much as you can from your customer’s feedback and to keep adjusting your products and marketing
accordingly. Your market position is not set in stone, but always evolving and adaptable.
From: https://phrase.com/blog/posts/market-positioning/#Live_Your_Market_Positioning

Comprehension
2.3. Mark the statements as True or False.
1. The Internet plays an important part in the process of penetrating foreign markets.
2. Market positioning can be described as the process of establishing a certain image of the
product to influence consumers’ decision to buy it.
3. Evaluation of market position of the company is essential for expansion of the company to new
markets.
4. Extensive analysis of domestic market and business landscape is a differentiating factor that leads
to successful positioning in foreign markets.
5. Studying the competitors and market segments helps us understand the vacant niche in a foreign
market.
6. A company should estimate the advantages of its brand and products over the competitors.
7. The language perception of a product’s name in a foreign language should arise positive emotions
in foreign customers’ minds.
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8. The volume of discounts says that the brand has successfully penetrated the foreign market.
9. Customer feedback is a necessary condition for understanding the real situation with the
customers’ needs.
10. It’s impossible to position the company perfectly in a foreign market on the first try.

Vocabulary
2.4. Match the words that collocate. Sometimes more than one collocation is possible.
1. north A. status
2. competitive B. landscape
3. market C. in on
4. distribution D. one’s seat at the table
5. brick and E. services
6. target F. factor
7. business G. for choice
8. look H. segmentation
9. secure I. into a market
10. localization J. fingertips
11. fit K. star
12. luxury L. mortar
13. be spoiled M. pricing
14. at one’s N. bleak
15. differentiating O. audience
16. hone P. channel

2.5. Match the words and their equivalents.

1. forethought A. individual characteristics that recognize or acknowledge a thing or
individual
2. thought-out B. relating to products or services that are more expensive and
of better quality than other products of the same type
3. assumption C. a position from which you can start to
make progress and achieve your aims
4. enchant D. introduce
5. cater E. a sudden clear understanding of something or part of something,
especially a complicated situation or idea

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 6. familiarize F. supposal
7. high-end G. delight
8. insight H. precaution
9. identity I. well-considered
10. foothold J. to provide a particular group of people with the things they need or
want

2.6. Discussion
Work in pairs. Each of you has a list of terms that refer to globalizing a brand. Give a
definition of a term and let your partner guess which term you mean.
Card 1 Card 2
9. Market positioning 9. Brand repositioning
10. Distribution channel 10. Customer service
11. Customer needs 11. Customer feedback
12. Brand positioning statement 12. Competitive pricing
13. Market share 13. Market segmentation
14. Brick and mortar shops 14. Business landscape
15. Going global 15. Market positioning strategy
16. Target audience 16. Product repositioning
Сard 1 (definitions card 2) Сard 2 (definitions card 1)
1. Brand repositioning. An effective positioning 1. Market place in marketing and business
ties a company’s product to a segment. The strategy refers to the consumer’s view of a
product is suitable for the customers of the target brand or product with respect to rival brands
market but is singularly unsuitable for customers or products. Market positioning refers to the
of other segments. process of deciding a brand or product’s
2. Customer service is the direct one-on-one image or identity, so that customers view it
interaction between a consumer making a in some way.
purchase and a representative of the company that 2. A distribution channel is a chain of
is selling it. Most retailers see this direct businesses or intermediaries through which
interaction as a critical factor in ensuring buyer a good or service passes until it reaches the
satisfaction and encouraging repeat business. final buyer or the end consumer.
3. Customer feedback is the knowledge, Distribution channels can
observations, problems, and opinions the group include wholesalers, retailers, distributors,
shares about their business, product, or service and even the Internet.

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experience. This feedback drives customer 3. A customer need is a motive that prompts
service changes and can potentiate positive a customer to buy a product or service.
change in any business - even (and especially) Ultimately, the need is the driver of the
when it is negative. Customer feedback is customer’s purchase decision. Companies
significant, as it serves as a guide to the often look at the customer need as an
company’s growth. Don’t you want to know what opportunity to resolve or contribute surplus
you are getting right and wrong in the eyes of your value back to the original motive.
customers as a business? 4. A brand positioning statement focuses
4. Competitive pricing is the process of on the consumer target your brand will
selecting strategic price points to best take serve and the emotional and functional
advantage of a product or service based market benefits your brand will stand for. If you
relative to competition. This method of pricing is don’t position your brand the way you
used most frequently by businesses selling similar want, then your customers and competitors
goods, because services can differ from business will do it for you, and you might not like
to business, although a product’s attributes their answers. A smart
remain similar. This method of pricing technique brand positioning statement should narrow
is usually used after a price has reached a point of the target to those consumers who are most
equilibrium for a product or service, which capable of loving what the brand does.
happens when a product has been on the market 5. Market share is the percentage of the total
for a long time and there are several alternatives revenue generated by a given business in an
for the product. industry. Market share is determined by
5. Market segmentation is a marketing concept taking sales of the business over the period
that refers to aggregating prospective buyers into and dividing them by the industry’s total
specific needs categories or segments and sales over the same period. This metric is
responding similarly to a marketing action. used to provide a general idea of a
Market segmentation helps marketers to reach company’s size with respect to its
specific groups of customers who differently competition and its competitors.
interpret the full value of those goods and 6. A brick and mortar store is a business or
services. retail outlet that has at least one physical
6. Business landscape. Combining internal and location. Traditional stores that you find in
external factors that influence the operating your local shopping mall are known
situation of a company. The business climate can as brick and mortar stores, for example.
include factors such as: consumers and suppliers; 7. The idea of globalization – of enacting
its owners and competition; technological business practices that allow you to connect

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improvements; laws and policy activities; and more effectively with customers and
industry, social and economic patterns. partners around the world – has been on our
7. Market positioning statement is a description of collective radar for years. In the past,
the target market and is a situation which aspirational companies viewed
determines how the company wants the market to globalization as a tool to access one or more
perceive its offerings. Positioning statement is an international markets. But over the years,
internal tool for marketers. Every marketing and the true meaning of “going global” has
product related decision needs to be in alignment changed. Today “going global” has
with the positioning statement. A good transformed from its humble beginnings as
positioning statement maintains focus on the a mere recommendation. Now, it has
brand as well as its value proposition and you can become an absolute necessity for continued
easily work on marketing strategy and tactics. growth and success.
8. Brand repositioning focuses on changing what 8. A target audience is an
customers associate with the brand and intended audience who are highly
sometimes competing brands. This usually entails interested in specific services.
a change in the brand’s promise and its
personality.

PART 3
3.1. Discussion
Read the joke and comment on it.

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 3.2. Read the text below and mark the statements as either True or False.
8 Reasons Why Most Companies Prefer to Go Global
Traditionally many companies have stayed focused in their domestic markets and have
refrained from competing globally. They know their domestic markets better and understand that they
have to make fundamental changes in the way they work to be able to compete globally.
But increasingly companies are choosing or are being forced to sell their products in markets
other than their domestic markets. It has become imperative for most companies to compete in foreign
markets.
 Domestic markets are saturated and there is pressure to raise sales and profits. Most companies
have very ambitious sales and profit targets. If such figures have to be realized, companies have
to move out of their domestic markets.
 Domestic markets are small. Companies which have ambitions to become big will have to look
for bigger markets outside their boundaries.
 Domestic markets are growing slowly. Most companies are no longer content to grow
incrementally. If such companies have to achieve high growth rates, they have to obtain some of
their sales from international markets.
 In some industries like advertising, customers want their suppliers to have international presence
so that suppliers can contribute in most of the markets where the buyer is operating. For instance,
a multinational will choose an advertising agency which has a presence in all the markets where
the multinational is selling its product. The customer does not want the hassle of hiring a separate
advertising agency for each of its markets. This process will be replicated in more industries.
A multinational company that is seeking materials and equipment would want its supplier to
supply all its international production sites. The supplier is required at several foreign locations to
establish competencies and resources to be able to meet its buyer’s foreign manufacturing locations.
 Some companies will have to move out of their domestic markets when their competitors have
done so, if they want to maintain their market share. If the competitor is allowed to pursue its
international growth alone, the competitor is likely to plough back some of the earnings from its
international operations to the domestic market, making it difficult for the companies which
refrained from pursuing international markets, to focus on the domestic market. In other cases, a
domestic player would start operations in the home country of its global competitor, to divert the
attention and resources of its competitor towards operations at home to safeguard its home market.
 Developed markets have high cost structures and companies may move their operations to regions
and countries where costs of production are lower. Once a company starts operating in a
geographical region, it becomes easier and profitable to market their products in that area.

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 Countries and regions are at different stages of development, and their growth rates and potential
are different. Companies do not like to concentrate all their efforts in limited regions and want to
spread out their risk. Such companies will look for markets which are likely to behave differently
from their existing ones in terms of economic parameters like growth rate, size, affluence of
customers, stage of market development, etc.
A company would not like all its markets to be under recession or inflation simultaneously,
and would not like all its markets to be in mature stage, or in growth stage. Having different type of
markets will make revenues and profits more consistent. The investment requirements would also be
more balanced.
 Even if a company decides to concentrate on its domestic market, it will not be allowed to pursue
its goals unhindered. Multinational companies will enter its market and make a dent in its market
share and profit. The company has no choice but to enter foreign markets to maintain its market
share and growth.
 Companies are realizing that it is no longer an option to stay put in one’s domestic market. The
ability to compete successfully in domestic markets will depend upon their ability to match the
resources and competencies of multinational companies, with whom they have to compete in their
domestic markets.
And if they plan to take on the multinationals on their home turf, they need to develop their
skills and competencies to suit those of the multinationals. They can also hear about the ways
international corporations work. This experience should help when it comes to defending their
domestic markets against the multinationals.
The distinction between the domestic market of one business and other markets is being
blurred. Only a business that is profitable internationally will protect its domestic market. No market
by multinationals is or will be secured from incursion. The only option a corporation has is to go
internationally, even though its prime interest is to protect its domestic turf.
From: http://www.yourarticlelibrary.com/business/8-reasons-why-most-companies-prefer-
to-go-global-explained/13176

1. The majority of companies that take a decision to go global do it because their experience of
operating in the domestic market allows them to take risky steps.
2. The strategy for selling services or goods in foreign markets is similar to the strategy used in the
domestic market.
3. Positive domestic sales statistics is a key factor that gives a stimulus to go global.
4. Domestic markets have a tendency to develop fast and it leads to the decision to expand abroad.
5. Some companies prefer to go abroad to maintain their market share in the industry.
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6. Operating in geographical regions reduces the costs of production for a company.
7. A company does not like the idea of a constant stagnation in terms of recession or inflation.
8. Multinational companies that enter the local market prompt local companies to go global.
9. There is no interdependence between the ability to compete effectively in domestic markets and
the ability to balance the multinational corporations’ capital and competencies.
10. The experience of competition with multinationals in the domestic market makes local companies
stronger.

3.3. Read the text below and match collocations.

10 International Marketing Fails
Expanding your business internationally can be an exciting step for any entrepreneur, but
marketing your product or service abroad requires adequate research and preparation. For businesses
to succeed overseas, they must appeal to their international consumer base. Without the proper
considerations, marketing to a foreign audience can have disastrous outcomes. Sending the wrong
message can not only discourage consumers from buying your product, but could lead them to boycott
your business altogether.
Mariko Amekodommo, CEO and founder of international marketing and consulting
agency Mariko Communications, said that one of the most common marketing mistakes businesses
make when taking their company international is not understanding their market and audience. “There
can be a cultural gap from one country to the next where campaigns, slogans and initiatives don’t
resonate or make sense to the end user”, Amekodommo told Business News Daily. “Companies can
avoid basic marketing mistakes, like slogans that don’t translate appropriately, by putting in the due
diligence to research and understand the new market”.
Conveying your marketing message to an international audience is not as simple as inputting
your message into Google Translate and sending it off to consumers. You must understand your
audience and the nuances of their language.
Many large enterprises have learned the hard way that an ad or marketing campaign that
worked domestically did not have the same charm when translated into a foreign language. Here are
10 well-known companies that have made international marketing translation mistakes.
1. American Motors. A translatable product name is an important element in global branding
and can derail a marketing campaign before it even starts. American Motors made this mistake in the
early 1970s when naming its midsize car, the Matador. Although the name was intended to conjure
images of courage and strength, it may have been a little too aggressive for Puerto Rican consumers
– in Spanish, “matador” translates to “killer”. Needless to say, the name didn’t instill a great deal of
confidence in drivers.
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 2. BMW. The German car giant BMW made the marketing mistake of improperly using the
UAE national anthem in a car commercial. The ad displayed the Al Ain Football Club singing the
anthem and then breaking into a run toward several BMW cars when they heard the sound of the
engine. Although the brand was trying to arouse intense emotion, it evoked rage instead of passion.
Emiratis found it incredibly offensive that the car company suggested their cars were more important
than the anthem. The company explained its intent was never to offend, and it soon replaced the ad
with a less offensive version.
3. Braniff Airlines. Braniff Airlines got in trouble in 1987 when it promoted its new leather
seats south of the border with the same campaign it used in the United States: “Fly in leather”. While
the Spanish translation, “Vuela en cuero”, was appropriate throughout much of Latin America, it had
different connotations in Mexico, where the expression also means “fly naked”. The promotion may
have appealed to some flyers, but it was far from the message the airline intended to send.
4. Coors. American beer maker Coors discovered that slang doesn’t always translate well.
When launching its “Turn it loose” campaign to Spain, it appears executives forgot to ensure the
translation would resonate with consumers. When translated into Spanish, the tagline used an
expression that’s commonly interpreted as “suffer from diarrhea”. While the campaign made its mark
on Spanish shoppers, it was for all the wrong reasons.
5. Dolce & Gabbana. A recent international marketing disaster was committed by luxury
brand Dolce & Gabbana. It shared a series of ads on social media in which a Chinese woman
attempted to eat Italian food with chopsticks while a male voice gave her directions. The ad was
denounced, and Chinese consumers, one of Dolce & Gabbana’s largest markets, threatened to boycott
the brand entirely. Even the Chinese government weighed in. When advertising your brand abroad,
it is important to create culturally appropriate material that appeals to your international consumer
base.
6. Electrolux. Not all translation blunders have been made by U.S.-based companies. Swedish
vacuum maker Electrolux got a quick lesson in English slang when it introduced its products in the
States. Intending to highlight its vacuum’s high power, the Scandinavian company’s ad campaign
boasted, “Nothing sucks like an Electrolux”. While the slogan might have been grammatically
correct, it never really took off with U.S. shoppers.
7. Ford. Auto giant Ford found that in Belgium, enticing customers with a dead body in every
car isn’t the best way to make a sale. Hoping to highlight the cars’ excellent manufacturing, Ford
launched an ad campaign in the European country that execs thought said, “Every car has a high-
quality body”. However, when translated, the slogan read, “Every car has a high-quality corpse” – far
from the image they were hoping to invoke.

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 8. HSBC Bank. HSBC Bank was forced to rebrand after a failed international marketing
campaign. In 2009, the worldwide bank spent millions of dollars on its 5-year-old “Assume Nothing”
campaign. In many countries, the message was translated as “Do Nothing”. In the end, the bank
scrapped its original campaign and spent $10 million to change its tagline to “The world’s private
bank”, which has a friendlier translation.
9. KFC. While most businesses try to make a good impression when expanding into a foreign
country, fried chicken franchise KFC got off on the wrong foot when it opened in China in the late
1980s. When the company opened its doors in Beijing, the restaurant accidentally translated its
famous slogan “Finger-licking good” to “Eat your fingers off”. In the end, the blunder didn’t hurt
KFC too badly: It’s the top fast-food restaurant in China today, with more than 5,000 restaurants.
10. Pampers. Sometimes, companies run into problems overseas not just for what they say
but how they say it. When Procter & Gamble started selling its Pampers diapers in Japan, the
packaging featured an image of a stork delivering a baby. While the imagery may have worked in the
U.S., it never caught on with Japanese parents. After some research, the company learned that
customers were concerned and confused by the image of a stork on the packaging. The tale of a stork
delivering a baby to parents isn’t part of Japanese folklore. There, stories tell of giant floating peaches
bringing babies to awaiting parents.
From: https://www.businessnewsdaily.com/5241-international-marketing-fails.html

A. to try to arouse A. the advertisement

B. to scrapped B. images of courage and strength
C. to entice C. blunders
D. to instill D. a marketing campaign
E. to conjure E. outcomes
F. translation F. one’s original campaign
G. to derail G. intense emotion
H. to denounce H. with consumers
I. disastrous I. customers
J. to resonate J. a great deal of confidence

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 3.4. Read the text below and match the words and their synonyms.
How to Avoid International Marketing Mistakes
If you are taking your brand global, there are a few steps you can take to avoid international
marketing fails like those described in the text “10 International Marketing Fails”. Identify whom you
are targeting with your marketing strategy, and modify your advertising accordingly.
Vera Mirzoyan, an international marketing specialist at AIST Global, said customization is
key, especially when considering language, culture, visuals, gestures and trends. “Everything should
be customized to the market your brand is introduced in”, said Mirzoyan. “Learn as much about the
destination of your brand as possible to ensure the success of your business”.
A simple yet crucial marketing tactic is to localize your content instead of simply translating
the language. Scott Kellner, vice president of marketing at global marketing agency George P.
Johnson, said that localization for each country or region is imperative to communicate nuance, which
is often the hallmark of positioning and taglines. “It is imperative to study the culture and the way
people communicate on a daily basis, and to also ensure you have people on the team who know the
culture you’re marketing to inside and out to ensure your message will be interpreted in a way that
resonates rather than upsets”, said Kellner.
Mariko Amekodommo, CEO and founder of international marketing and consulting
agency Mariko Communications said the medium of communication is also an important factor to
consider when creating a global marketing strategy. “Just because a Facebook campaign might have
great results in the U.S. doesn’t mean the same campaign will have similar results on WeChat”.
Amekodommo and Kellner both suggest cross-referencing your campaign with local experts
before you promote it. This will help you gain insider oversight and feedback. “Do not publish, share
or promote anything on an international scale without cross-referencing the content with individuals
from the respective area who are fluent in the language and culture”, Kellner said. “Ensure you avoid
idioms, jargon or regional diction that could otherwise be misinterpreted”.
When in doubt, look to successful marketing ads in your target country to see what tactics are
effective in that market.
How to Correct International Marketing Mistakes
Whether you unintentionally create a commercial that’s ill-received or a slogan that just
doesn’t translate well for an international audience, correct your marketing mistake by addressing it
head-on.
If your campaign is offensive, take responsibility and apologize. Since apologies differ across
the world, make sure your public statement is tailored to resonate with the culture you are trying to
reach.

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 Amekodommo recommended hiring a local agency or consultant to help you strategize new
campaigns to handle the bad press. “We see it all the time in China as Western campaigns never
translate correctly, and it potentially becomes entertaining, because it’s expected foreigners will make
these mistakes”, she said. “Once the original humiliation has died down, use the local agency or
consultant to create new campaigns that will truly connect with audiences”.
From: https://www.businessnewsdaily.com/5241-international-marketing-fails.html

1. to localize A. indication

2. to tailor B. orientation to the consumer

3. head-on C. derogation

4. content D. cross index

5. humiliation E. corresponding

6. customization F. ill-perceptive

7. tagline G. to hold a course for

8. respective H. to position

9. hallmark I. to find a response

10. ill-received J. to dedicate

11. cross-referencing K. substance

12. to resonate L. advertising slogan

3.5. Read the text below and fill in the mind map with the notions discussed in the text.
Five Luxury Brands Nailing their Brand Positioning Strategies
What exactly is brand positioning? When we talk about brand positioning, we’re not talking
about where a brand sits in terms of market share, revenue or size. Brand positioning refers to the
unique space a brand carves out in the mind of the consumer.
In other words: What differentiates one luxury brand from its competitors? How does the
brand story connect with and entice a target audience? And what does the brand do to not only
reinforce their story, but to ensure it stays relevant with the changing times?
To get a better idea of how it’s done, let’s take a look at five luxury brands who are doing it
right.
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 Stella McCartney. Mention the idea of luxury with a conscience and the name Stella
McCartney is bound to come up. Indeed, McCartney’s brand isn’t just in that space - she practically
invented it. Since launching her eponymous label in 2001, McCartney has eschewed the use of leather,
fur and PVC in her collections and has sought out ways to make luxury fashion sustainable and
environmentally-friendly. It’s this commitment to her values that gives McCartney a unique position
in the luxury market. Consumers who share her values are drawn to the brand for more than its
aesthetic.
The success of the Stella McCartney brand reveals one way to boost your brand’s
positioning: establish and uphold core values that your target audience connects with and cares about.
Breitling. “A heritage cannot be created,” says Breitling on their website, “it must be earned.
And that is what sets the Breitling story apart”. Breitling is certainly not the only luxury watch brand
to make heritage an underlying part of their brand positioning strategy. But what differentiates them
is their clear and consistent brand message as a maker of precise, indestructible watches of such high
quality that they’re trusted by the marine and aviation industries. This heritage of taking to the seas
and skies brings with it adventure, nostalgia, and a pioneering spirit that certain consumers long to be
associated with.
Breitling makes heritage an underlying part of their brand positioning strategy.
Breitling understands that positioning a heritage brand in the modern day requires a balance of the
past and present. Hence their social media presence is aimed at a modern audience, yet draws heavily
on the nostalgic mood that gives them a unique place in the market. And while Breitling has
traditionally centered itself in the realm of the gentleman, the brand has recently adapted its brand
positioning strategy to be more inclusive to women - a smart move in the post-MeToo era.
Valentino. In the minds of consumers, Valentino is synonymous with elegance, sophistication
and romance. That brand story was carved out from the start, by founder Valentino Garavani in the
1960s, and has been carefully maintained ever since.
The fashion house positions itself as elite and exclusive, often appearing on red carpets and
in celebrity wardrobes; but all luxury fashion brands need to distinguish themselves in some way, and
Valentino does it with a unique sense of refinement. This is displayed in their collections, which often
reference art, mythology, history, and different cultures.
Valentino’s unique brand position is also cemented by the right collaborations. These are used
to further the brand image as being cultured and refined — for example, for their most recent
collection they commissioned poetry from several modern poets, which was then shared on social
media.
Louis Vuitton. Louis Vuitton is one of the most well-known and covetable luxury brands in
the world. But what is it that gives it a unique position in the minds of consumers?
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 While Louis Vuitton’s design aesthetic changes dramatically depending on who’s helming
each subset of the brand, one thing remains consistent: the LV monogram print. This is an anchor to
the brand’s heritage - let’s not forget that Louis Vuitton started out life as a maker of exceptionally-
crafted luggage pieces. This fact is ever-present at the heart of the brand’s positioning strategy,
with the themes of travel and adventure underlying everything they do.
In the case of Louis Vuitton, travel is presented in a philosophical light. It’s about the journey
rather than the destination; adventure and exploration are presented as exciting, exotic and deeply
desirable. This message echoes through the brand’s collections, events and marketing materials,
and positions it firmly as the kind of luxury brand that anyone who dreams of adventure would want
to buy into.
Tiffany & Co. If you want to know how to do brand positioning in the luxury jewelry space,
look no further than Tiffany & Co. Their position is deeply rooted in an emotional connection
between consumer and brand; a connection strengthened by cultural references, cinema and celebrity.
It’s because of this that, even before it is opened, their signature blue gift box is immediately
recognized as a symbol of elegance, affluence and love.
Today, Tiffany & Co’s brand positioning strategy is evident in their social media content. The
brand collaborates with top-level influencers as a way to heighten their luxury image and boost their
relevance with next-generation consumers. For example, a post from Kendall Jenner wearing Tiffany
& Co at the 2018 Met Gala garnered over 4.4 million likes and, more importantly, leveraged both her
celebrity power and the glamour and exclusivity of the event to strengthen the brand’s position.
Understanding your brand positioning. These five luxury brands have made their mark in
their industries, and have come to dominate their market space, staying ahead of
competitors. Knowing where your brand stands in the market in the minds of consumers is essential
for understanding how to outplay competition in the ever-changing fashion, luxury or cosmetics
industries. And in order to do this, there are several factors to take into account:
 Your follower base
Are you aware of who your audience is? The influencers they follow, the events they attend
or participate in digitally, the media outlets they read, and which of your competitors they pay the
most attention to.
 Your influencers
Knowing which influencers are loyal to your brand and the audiences they’re activating will
help you make more strategic decisions when collaborating with opinion leaders, so as to guard brand
authenticity and activate your target consumers.
 The brands yours is associated with

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 Another crucial step to understanding brand positioning is identifying which brands your
brand is associated with. Perhaps you’re hoping to be associated with Chanel, yet your brand gets
mentioned alongside up and coming luxury brands as opposed to heritage ones. Spotting these
incongruences will aid you in perfecting your positioning strategy.
From: https://www.launchmetrics.com/resources/blog/boost-your-brands-notoriety-5-ideas-for-the-
luxury-goods-industry

Stella
McCartney

Brand
positioning

Tiffany & Co

Your brand
positioning

Sense of
refinement

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 3.6. Read the text below and fill in the gaps with the words from the box. Change the
grammar forms where necessary.
authenticity liberated equestrian accentuate be whimsical
femininity roots verbalized
in
opulence quirky heritage homogeneous a subtler archetype
image approach

The Positioning of the Four Most Valuable Luxury Fashion Brands

From the brand strategy perspective, luxury fashion brands have much in common. Most of
them communicate craftsmanship, the highest quality and heritage, while their respective style and
tonality of advertising are similar, as is their selection of media when placing their ads. As a result,
the entire category has a relatively ----1----, unlike, for example, the high street fashion category. In
spite of this, there are a few brands that are more successful than others and whose market value is
significantly higher.
No. 4 Gucci – sensuality and romanticism.
Although Gucci’s high-end image is built on the two pillars that are typical for most luxury
brands, that is, craftsmanship and ----2----, what distinguishes the brand from its competitors is its
sensual character and the fact that it’s based on the Lover brand ----3----. In the previous two decades
(until 2015), Gucci’s communication was characterized by the bold, sexually provocative and
controversial style, which was initiated by Tom Ford, then the brand’s artistic director, and continued
by Frida Giannini. In 2015, with Gucci under new management, ----4---- was initiated. The image of
the brand was changed almost overnight from sleek, glossy and sexual to raw, ----5----, progressive,
sensual, romantic and geeky. Gucci’s CEO describes the new brand’s strategy as speaking to the
“fashion dreamers”.
No. 3 Hermès – equestrian roots and light-heartedness.
Hermès is widely recognized as one of the most luxurious brands in the world. Unsurprisingly,
heritage, ----6---- and craftsmanship are the pillars of its brand strategy. However, there are two
aspects of Hermès’ positioning, which are truly unique: its ----7---- and its light-hearted approach.
Established as a harness shop, Hermès still produces saddles and other leather accessories used for
horse riding. The horse is also the leitmotif of the brand’s communication, which is present in the
logotype, as part of the pattern on some of its silk scarves, in the designs for its stores and in its ads.
Hermès, when communicating its brand, doesn’t seem to take itself too seriously compared to other
luxury brands. Christophe Lemaire, former artistic director, said: “At times it seems like the fashion
and luxury world has become a little bit like a war [zone]. And Hermès doesn’t want to play that
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game”. The brand’s tone of voice is refreshingly light-hearted: sometimes playful, and sometimes
more ----8---- and quirky.
No. 2 Chanel – timeless elegance and liberated femininity.
Chanel’s brand strategy revolves around the highest quality, luxury, French origin and
heritage dating back to 1909 – themes which also constitute the DNA of another French luxury
fashion brand, Dior. Both brands are widely believed to have reinvented fashion and both focus on
“feminine elegance”. However, their interpretations of elegance and their artistic styles are entirely
different. While Dior emphasizes femininity and is known for rich designs, Chanel ----9---- its
timeless modernity and promotes the concept of “uncomplicated luxury” valuing simplicity over ----
10----.
Chanel’s heritage and brand equity are built around the company’s founder, Coco Chanel and
her long-lasting legacy. Coco Chanel never followed any established fashion rules, which allowed
her to revolutionize the fashion world and free women from certain fashion constraints. She was a
feminist and wanted to dress independent women. To this day, freedom is one of the Chanel’s key
values, which the brand executes not only in its artistic style but also in the social causes it supports.
No. 1 Louis Vuitton – travel and exploration.
Louis Vuitton, the most valuable luxury fashion brand, stands for the highest quality and
luxury, as well as its French origins and heritage. What is unique about Louis Vuitton – indeed, what
many people seem to be unaware of – is that, on top of the aforementioned attributes, its brand strategy
is based on the Explorer archetype (even though many marketing publications claim otherwise) and
revolves around one particular theme: travel. Originally a luggage brand, the main pillar of Louis
Vuitton’s communication remains the sense of adventure. The brand launches travel-inspired
collections, uses messaging focused on adventure and exploration, releases video city guides and does
most of its ad filming in exotic locations.
Louis Vuitton’s idea of travel is in fact rather philosophical – it’s about the journey, not the
destination. This concept ----11---- one of the brand’s campaigns: “Return to a time when travel itself
was a destination, getting there was not as important as the experience of going. There’s no such thing
as a destination, because the journey never ends”.
Gucci, Hermès, Chanel and Louis Vuitton are the four most valuable brands in the world,
according to Interbrand. Even though they are primarily associated with luxury, the highest quality,
craftsmanship and heritage, they have unique brand strategies. Gucci focuses on sensuality, Hermès
takes inspiration from its equestrian roots and is less serious than other luxury brands, whereas Chanel
represents timeless elegance and ----12----. Meanwhile, Louis Vuitton emphasizes its interest in travel
and exploration.
From: https://brandstruck.co/blog-post/positioning-three-valuable-luxury-fashion-brands/
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 PART 4
Amul, an Indian brand that specializes in dairy products, has dicided to expand the sales
of its products overseas. They turn to Carrefour, a French retailer, to help them gain
recognition in the French market. Read the profiles of the two companies below.
Carrefour - a French multinational corporation specialized
in retail. Carrefour has 15,130 stores (located in Europe, Brazil,
Argentina, North Africa and Asia) operating under various brands,
including Carrefour hypermarkets, Carrefour Market supermarkets, small Shopi and Marché Plus
stores, cheap Dia, Ed and cash-and-carry Promocash stores.
MARKETING MIX OF AMUL

Formed in the year 1948, Amul is a brand not only well known
in India but is also gaining popularity in overseas markets. Mainly dealing with dairy and dairy
products, Amul name is synonymous with trust and quality. With the presence in more than 60
countries, it’s all because of the right marketing mix of Amul that has helped the brand to achieve
such stronghold. Here is the marketing mix of Amul.
PRODUCT: One of the leading dairy products brand, Amul, has a diverse product portfolio
and offers a variety of dairy products. Below is a list of a few popular products that Amul has to offer:
 Amul Butter
 Amul Milk, Amul Tazaa, Amul Slim lite
 Amul Paneer
 Amul Chocolates
 Amul Cheese
 Amul Buttermilk
 Amul Beverages
 Amul Icecream
 Amul fresh cream
 Amul Dahi
 Amul Ghee
Amul invests a lot of money in research and development and tries to bring up new products
for different customers’ segments. There are a lot of competitors that offer similar offerings to
customers but it’s the vast variety of products that Amul has to offer that allows it to have a
sustainable competitive advantage over its competitors.

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 PRICE: Amul uses a combination of competitive and low-cost pricing for its marketing mix.
Amul was started with a vision to provide the best quality dairy products at economical prices.
For products like milk, Ghee, Ice-cream etc., Amul follows low price strategy where they
offer these products at a lower cost than their competitors.
For products like Amul spray, Prolite, condensed milk, the company follows competitive
pricing where the prices of these products are kept close to or less than the competition.
Pricing of different products is set keeping in mind different factors that are involved in its
production like raw material cost, labour cost, farmers profit, transportation cost etc.
PLACE: Place plays an important role in the marketing mix of Amul. The company boasts an
enormous distribution channel which spreads across India. Amul works on the model of economies
of scale where the product is produced in masses and then broken down into a single unit for each
customer. For example, Amul Butter is produced in bulk and is broken down at each level till it gets
down to a single unit for the end user consumption.
There are two channels that Amul uses for the production of its goods and the distribution of
the end product.
Acquisition channel: Amul works directly with the villagers and village co-operative societies
to gather milk which is then sent to manufacturing units for producing different productions.
Distribution channel: Amul has an extensive chain of distributors which help it in distributing
the products across India. The products are sent to company depots from where it is sent to whole
sellers and then finally to individual retailers.
PROMOTION: Amul is one of the few companies that has been running the longest and one of the
most successful promotional campaigns with a promotional character – “Amul Girl”

As per Amul, just to maintain the economies and not to affect the cost of
the product, their advertising budget does not exceed 1% of their turnover.
It is because of these reasons that Amul is able to provide quality
products at affordable prices.
http://heartofcodes.com/marketing-mix-of-amul/
Devide into two groups. Choose three students to be representatives of Carrefour. The
rest of the group are representatives of Amul.
The Amul Company wants to sell its products through Carrefour retail chain. There is
a negotiation round planned for today. Amul’s representatives are to build a strategy to win a
contract with Carrefour. Outline your strategy as a Power Point presentation.
Representatives of Carrefour’s task is to analyze the business offer and discuss an
opportunity to work with Amul. After discussion, they should take a decision.
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 PART 5 MISCELLANEOUS
Do the crossword puzzle.

1 2 15

10

3 7

11

8 17

14 16 18

12

19

13

Across
1. a false idea or belief, especially one that a lot of people believe is true
5. happening or done quickly and immediately
7. providing and serving food and drinks at a gathering, meeting etc., usually as a business
8. to ask someone to do something or go anywhere, usually by offering them something that
they want
9. to spoil or interrupt a plan, agreement etc.
13. to remind somebody of something; to be similar to what somebody thinks or believes / to
be full of a particular quality or feeling
14. orientation to the consumer
17. to really attract someone and make them feel really interested, excited, etc.
19. advertising slogan

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Down
2. anything you think is real though you don’t have any definitive proof
3. belonging or relating separately to each of the people or things already mentioned
4. to express strong disapproval of someone or something, especially in public
6. to work hard to develop a particular skill, attitude, or quality
10. a family, nation, or society’s traditional beliefs, values, customs, etc.
11. unusual or strange and often amusing
12. an idea, method, or quality that is typical of a particular person or thing
14. to make something appear or happen in a way which is not expected
15. to disagree with something, in particular to suggest the opposite is true
16. very rich and spending a lot of money
18. to teach someone to think, behave, or feel in a particular way over a period of time

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 UNIT 6 RISK MANAGEMENT

PART 1
1.1. Discussion
1. Risks are unplanned events or threats to a project’s success. Do you think all risks are bad?
2. What are the meanings of the terms below?
 Risk tolerance level
 Business risk
 Pure risk
 Mitigation
 Transference
 Sharing
 Qualitative analysis
 Quantitative analysis
 Cardinal scale
 Ordinal scale

Reading
1.2. Read the text below. Find out how old the science of risk management is and what
preconditions for its emergence there were.
Risk Management: Concept and History
The phenomenon of risk management has been discovered quite recently. But, is the practice as young
as economists say? The general meaning of the term is protection of your own or someone else’s
assets and this has been practiced by the humankind as long as the civilization is. Today’s economists
add a new scientific dimension to the concept; they ground their ideas on a specific philosophy and
work out a sequence of steps for business practitioners to follow.
In 1956, Russell B. Gallagher, an insurance manager for Philco Corporation, wrote an article in The
Harvard Business Review, where the term ‘risk management’ appeared for the first time. The author’s
idea was revolutionary at that time – he suggested that there should be a person within an organization
responsible for managing that company’s pure risks.
At that time, many large corporations already had a staff position referred to as the “Insurance
Manager.” This was an apt title, since, in most cases, the position entailed procuring, maintaining,
and paying for a portfolio of insurance policies obtained for the benefit of the company.

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A dramatic shift in philosophy occurred when insurance lost its traditional status as the standard
approach for dealing with a corporation’s risk. The preeminence of insurance as a method for dealing
with pure risks is probably understandable. Many of the earliest insurance buyers were skilled
insurance technicians, often hired from an insurance agency or brokerage firm. They understood the
principles of insurance and applied their knowledge to obtain the best coverage for the premium
dollars spent. Traditional insurance textbooks had always preached against the dollar-trading
practices, and most insurance buyers knew that economies could be achieved through the judicial use
of deductibles. Despite these precursors of the risk management philosophy, the notion persisted that
insurance was the preferred approach for dealing with risk.
Although there is room for disagreement, it can be argued that the risk management philosophy had
to wait for the development and growth of decision theory. The point is that decision theory puts
emphasis on such business tools as expected value, and cost-benefit analysis.
Whether it was an accident of timing or cause and effect, the risk management movement in the
business community coincided with a revision of curriculum in business colleges throughout the
United States. During the 1950s, business schools began to introduce courses on operations research
and management science, with a shift in focus from descriptive courses to normative decision theory.
Whereas previous courses described how and why people chose among options, prescriptive decision
theory was introduced to focus on how choices should be made. Not surprisingly, insurance faculty
were among the first business academics to embrace decision theory. Many were trained in actuarial
science, the mathematical underpinning of insurance. As the earliest quantitative specialists in
business schools, they were knowledgeable in the methodologies of decision theory. Equally
important, they had an inventory of interesting questions to which these tools could be applied.
Simultaneously, system engineers in the military and in the aerospace industry were developing new
approaches to loss prevention and control that were referred to as systems safety. Systems safety
evolved in response to the creation of the intercontinental ballistic missile system, which served as
the key element in the nation’s cold-war strategy of deterrence through the threat of nuclear
retaliation. As the title indicates, systems safety views a process, a situation, a problem, a machine,
or any other entity as a system, rather than as just a process, situation, problem, or machine. An
accident occurs when a human or a mechanical component of a system fails to function. The objective
is to identify these failures and either eliminate them or minimize their effects.
As time passed, some corporate insurance buyers came to realize that there might be more cost-
efficient ways of dealing with risk. It occurred to them that perhaps the most effective approach would
be to prevent losses and to minimize the economic consequences of the losses they were unable to
prevent. The risk management philosophy made sense, and it spread from organization to
organization. The insurance buyers’ professional association decided to change its name to the Risk
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and Insurance Management Society in 1975. The change signaled a transition that was well underway.
In addition, the Insurance Institute of America developed an education program in risk management
with a series of examinations leading to a diploma. As it exists today, risk management represents the
merging of three specialties: decision theory, risk financing, and risk control.
Pure and speculative risks of a firm can be integratively managed by the tools of enterprise risk
management. Each firm uses a slightly different categorization scheme, reflecting the key risks for
its business, but the following risks are typically highlighted in an enterprise risk management
program:
 Adverse market trends and risks associated with price volatility
 A possible failure of default on your loan and credit obligations
 Scarcity of liquid assets and inability to meet business obligations.
 Operational risk intended to include fraud, breaches in internal controls, technology risks, and
external events such as earthquake, flood, and war.
 Reputational risk: the potential that negative publicity will cause a loss.
 Strategic risk: the risk of failing to successfully implement the firm’s strategies.
 Compliance risk: the risk of failing to comply with laws and regulations.
Enterprise risk management seeks to identify the risks facing the firm, to quantify those risks, and to
manage the risks efficiently consistent with the firm’s strategic objectives. The holy grail for
enterprise risk management is a single firm wide measure of risk that can be used to allocate capital
and evaluate the performance of business units. To date, however, a single firm wide measure of risk
has largely been elusive. Much of risk management continues to be done in “silos,” with financial
risk managers focusing on financial risks, and traditional risk managers focusing on pure risks.
From: Vaughan E.J., Vaughan T.M. (2008). Fundamentals of Risk and Insurance. John Wiley &
Sons, Inc.

1.3. Comprehension
Answer the questions:
1. What are the two facets of the term ‘risk management’?
2. Who and when coined the term ‘risk management’?
3. Why does the author call the position of insurance manager ‘an apt title’?
4. Why did corporations prefer to deal with risks through insurance mechanisms for a long time?
5. What does the author mean by ‘judicial use of deductibles’?
6. Why do you think the emergence of decision theory led to the shift from insurance to risk
management philosophy?

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 7. How did business schools react to the shift? Why did insurance specialists take on the shift in
philosophy first?
8. How did the concept of systems safety develop? What does the term mean?
9. What business sense did the risk management philosophy come to make?
10. What administrative changes indicated the shift in philosophy?
11. What three aspects does education in risk management encompass?
12. What two types of risks does the author distinguish? How different are they?
13. What types of risks are usually included into the categorization scheme of any company? Make
a list and explain the meaning of each type of risk.
14. What are the targets of enterprise risk management?
15. Why do you think the author calls a single firm wide measure of risk ‘a holy grail’ for
enterprise risk management?
16. What is the meaning of the word ‘silo’ in the context?

Vocabulary
1.4. The excerpt you have read above is taken from a scientific article. It is common to use
academic clichés in the genre. Match the beginnings and the endings of clichés from the
jumbled list below.
1. In the broad / narrower a. exists today
2. As such, b. however
3. Although there is c. indicates
4. Whether it was an accident of timing d. it is based on
5. As the title e. known as
6. As it f. or cause and effect
7. The concept g. room for disagreement
8. To date, h. sense of the term

1.5. Match the words with the opposite meanings.

1. apt a. definite
2. preeminence b. disorganized
3. precursor c. encouragement
4. descriptive d. external
5. normative e. ignorant
6. quantitative f. incapable

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7. knowledgeable g. inferiority
8. deterrence h. optional
9. retaliation i. prescriptive
10. efficient j. qualitative
11. effective k. secondly
12. in the first place l. secrecy
13. internal m. successor
14. publicity n. sympathy
15. elusive o. unsuitable

1.6. Match the verbs and the word combinations that collocate.
1. sequence a. an agreement made with an employer
2. entail b. decision theory
3. procure c. funds for additional survey projects
4. obtain d. insurance policies
5. preach e. pure and speculative risks
6. persist f. steps in risk management
7. embrace g. the abolition of established systems
8. breach h. with an ambitious public program

1.7. Match the words and their definitions.

1. technician a. a part of the cost of an accident that you agree to pay when you
buy insurance
2. coverage b. an employee of an insurance company who predicts the
frequency and scope of insurance cases based on mathematical
calculations.
3. premium c. a worker trained with special skills
4. deductible d. the money you pay for your insurance policy
5. cost-benefit analysis e. comparing the costs involved in doing something to the
advantage or profit that it may bring
6. expected value f. financial protection in case of an accident
7. curriculum g. support, strength, or the basic structure of something
8. actuary h. manipulating people in order to receive money from them in an
illegal way

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9. underpinning i. the probable cost of something with consideration of the degree
of possibility that it will happen
10. fraud j. the subjects studied in a school, college, etc. and what each
subject includes

1.8. Discussion
‘Sugar and salt’ of life! Is this idiom about risk? Why do you think some people are more risky
than others are? Is taking risks a purposeful activity? How dangerous is it to take risks? What
can avert people from taking risks?
You see a list of steps in risk management below. The steps are not in the logical order. Work
in pairs and rearrange the steps. Discuss what each step may involve.
 Assessment
 Create the plan
 Establish the context
 Identification
 Implementation
 Potential risk treatments
 Review and evaluation of the plan
Do you think the risk management is of linear or cyclical nature? To which step would you refer
things like risk transfer, risk avoidance, risk retention, risk control? How different are these
four notions?

PART 2
2.1. Discussion
Pure risks are types of risk where no profit or gain is possible and only full loss, partial loss or
break-even situation are probable outcomes. Pure risks imply that a favorable outcome is not
possible. You will be lucky if the situation remains unchanged, i.e. neither profit nor loss. There
are three types of pure risks. They are personal risks, property risks and liability risks. Give an
example of a personal risk, a property risk and a liability risk. How possible is it to mitigate
pure risks using information technologies?

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Reading
2.2. Read the article below and say if the author is an opponent or proponent of information
technologies proliferation.
Risk management for the masses
Now, the economy is teetering in and out of recession. This is because business is focused on the
short-term goals. But if you look ahead, you will see that the biggest and most unpredicatable risks
are ahead on the way. What issues are associated with the risk perspective? First and foremost, it is
the fast pace of change in the economic status of an individual. Technology may allow you either to
strike it lucky, become wealthy and affluent or lose out and become poor. It leads to economic
uncertainty and bigger inequality.
Advanced technology often means that a smaller number of skilled people supply their services over
a wider area, producing a “winner-take-all” effect. The invention of the phonograph did this for
singers, and the invention of the motion picture did it for actors. Proliferating communications and
information technology may do the same for many other occupations in the future.
So far, a good deal of public resentment about increasing inequality has centred on the most visible
highly paid people. Recently, public policy has focused on preventing a few unscrupulous top
executives from unfairly enriching themselves at investors' expense. However, we are likely to
discover that this, while helpful, does relatively little to mitigate the forces that make or break
fortunes, which are much bigger than any fraud or malfeasance that we see today. Why? Because new
technology produces far more pervasive changes in fortunes than those caused by dishonest boards
or accounting shenanigans. Such changes stem from the undramatic events that unfold over many
years: word processors replacing secretaries, industrial robots replacing assembly-line workers, and
online-learning sites replacing professors.
With the pace of technological progress increasing, there is a high degree of uncertainty whether lost
jobs will ever be replaced with others that are as remunerative. We have moved from the field to the
factory to the service sector, but as technology relentlessly advances, it isn't clear where we will be
heading next. A possible dearth of good career alternatives for many people could generate great
inequality in coming decades.
Yet, paradoxically, the same technology that is creating this inequality could also reduce it. This
technology needs to be coupled with the science of risk management, which combines elements of
finance and insurance to help deal with the possibility of adverse events, in much the same way as
bankers and financiers minimize the risks of doing business by using fancy financial arrangements
such as currency hedging and interest-rate swaps.
Most of us do not think of inequality as a risk-management problem akin to those that financiers or
insurers deal with. However, if our purpose is to reduce gratuitous inequality, i.e. inequality that
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cannot be justified in terms of individual talent or effort, then we should reduce the random economic
shocks, such as random shifts in the market for our labor. The most basic principle of finance and
insurance is that spreading risks over large numbers of people can reduce their impact. The challenge
is to discover how to make this principle work for the economic risks that people face.
Today, investment banks use sophisticated financial instruments to help business hedge against
changes in such things as the value of currencies or commodity prices. For example, a company that
uses oil as an input in production can buy an option to purchase it at a predetermined price and thus
eliminate the risk that oil will get too expensive. An American firm that has a cash inflow
denominated in euros can sign a swap contract that exchanges this euro income for dollars at a
predetermined exchange rate, thereby eliminating currency risk. Similarly, venture-capital firms help
young start-ups by setting up a compensation structure that shields employees from some of the risks
and yet offers them enough potential rewards to stimulate them to work hard. The employees are able
to pursue a risky business without worrying that failure will put them on the streets.
Investment banks and venture-capital firms are willing to help clients mitigate these risks because
they have a great deal of information on which to base their decisions. Exchange rates and oil prices
are well-understood and well-measured risks, observed on a second-by-second basis. Venture-capital
firms are able to reduce risks for start-up businesses because they have control over the terms of the
deal, laid out by lawyers, and with accounting of the goings-on in the company.
In the future, these same general risk-management techniques could be applied to every individual
worker, as information becomes more available, as automation reduces the costs of tailoring risk-
management contracts to individual needs.
The same information technology helps to develop huge databases of information about individual
incomes, and their correlation with other economic variables. These databases are increasingly
accurate and up-to-date, so that they can provide the bases for settlement of risk-management
contracts.
For most individuals, the biggest risks are their pay packets or the price of their homes. It is reasonable
to suppose that, in coming years, our personal financial-services software, with the assistance of
professional organizations or trade unions and pension funds, will allow people to make essential
contracts to reduce income risk. Individuals may be able to create financial swaps of average incomes
in their region, thereby reducing risk. It will also be possible to create home-equity insurance contracts
that protect them against a decline in the market value of their homes.
We will also be able to expand the complexity and coverage of existing insurance, notably disability
insurance. Right now, disability insurance covers specific medical problems. It could be expanded to
cover a much wider range of risks to an individual's career. Employees could get insurance against

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losing their jobs to an emerging technology or cheap overseas workers. Currently, insurance
companies do not cover such risks, because the risks are not objectively verifiable.
It will also be possible to create for individuals contracts that provide incentives for them to advance
their own individual careers. These would be analogous to the kind of contracts that venture-capital
firms draw up for the management of young companies. An individual may then go forth and develop
a highly risky personal career, acquiring specialized skills that also have a small probability of being
extremely important but carry as well a risk of becoming useless. Such individual contracts could be
a breathtakingly important stimulus for our economy, if they free people from career risks and allow
them to be more adventurous in all aspects of their careers. We may then expect to see an explosion
of individual creativity and diversity.
The same information technology will allow us to produce large international markets for a complex
array of aggregated risks that today are not traded at all. In the not-too-distant future, we can have
what will in effect be online auctions for occupational-income indices, for gross domestic product
and for swaps between the GDPs of different nations. These international markets can be used by
insurers and other retailers of individual risk-management services to lay off the risks that they incur
by helping individuals with their risks.
From: https://www.economist.com/finance-and-economics/2003/03/20/risk-management-for-the-
masses

Comprehension
2.3. Mark the statements as True or False.
1. According to the author, the major economic risk of the future is the rate at which information
technologies are being modified.
2. A “winner-take-all” effect is enhanced with the development of technologies.
3. New technologies help reveal inequality issues.
4. New technologies will certainly lead to creation of jobs that will be more highly paid.
5. Hedging and swap techniques can be used to reduce inequality.
6. Inequality caused by a lack of talent or effort cannot be reduced by risk-management techniques.
7. Venture-capital firms have introduced some risk management schemes for start-ups.
8. Venture-capital firms would help a young start-up even though they do not have enough
information about the company’s performance.
9. The author predicts that there will be collective risk-management contracts in the future.
10. Tailoring individual risks is possible through implementation of big databases.
11. Risk-management contracts should be drawn up with the assistance of trade unions or pension
funds.
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 12. Disability insurance covers medical problems caused by emerging technologies or cheap overseas
labor.
13. The risk-management of the future will also cover career risks.
14. Online auctions for swaps between the GDPs of different nations are highly unlikely to come true.

Vocabulary
2.4. Match the verbs and the words that collocate. Some words from the right-hand column can
be used several times.
1. teeter a. across the country
2. proliferate b. contracts to individual needs
3. mitigate c. events
4. make or break d. fortunes
5. unfold e. in and out of recession
6. couple f. risks
7. be akin g. to other people’s problems
8. tailor h. with creativity
9. correlate i. with economic variables
10. explode j. with social security deductions
11. aggregate
12. lay off
13. incur

2.5. Match the adjectives and their translations.

1. unscrupulous a. аналогичный
2. remunerative b. безвозмездный
3. relentless c. безжалостный
4. gratuitous d. выгодный
5. notable e. захватывающий
6. verifiable f. недобросовестный
7. analogous g. поддающийся проверке
8. breathtaking h. примечательный
9. adventurous i. смелый

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 2.6. Match the words and their definitions.
resentment a. a feeling of anger
malfeasance b. a large group of things or people
shenanigans c. actions or performance
dearth d. an agreement to buy money equivalents at a particular rate in the future
currency hedging e. an agreement to exchange payments on a particular amount
interest-rate swapsf. an amount or supply that is not large enough
goings-on g. dishonest and illegal behaviour
array h. secret or dishonest activities of a humorous type

2.7. Discussion
Risks are like assets – they can be tangible and intangible. Is it an aspect of business planning?
Sure! As soon as your risks are identified, it is time to manage them and protect your other
assets. How do we mange risks? We do it through a number of techniques. The major ones are
acceptance, transfer, avoidance and mitigation.
Work in pairs. Discuss how examples below can be matched with the risk management
techniques. Brainstorm a definition for each risk management technique.
1. Avoidance a. A business forgoes purchasing a building for a new retail location.
b. A company takes out a property insurance policy to protect a building or
other facility in case of damage.
2. Mitigation c. Your medical organization does not provide certain procedures because
they know they are risky for patients.
d. Most companies in motor production industry do research on potential
costs of recalls.
3. Transfer e. Pharmaceutical companies go on developing new drugs.
f. Most financiers get a professional insurance policy in case a lawsuit or a
claim from a customer is issued due to erroneous advice, an error, or an
omission.
4. Acceptance g. Software companies release new programs in stages.

PART 3
3.1. Discussion
1. Two 9-year-old boys are watching a television replay of a boxing match between Muhammad Ali
and Joe Frazier on a program called “Great Fights of the Century.” Since the fight took place

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 before they were old enough to remember the outcome, neither knows who won and they bet on
the outcome. Tom bets on Ali and Tim bets on Frazier. Does risk exist in this situation? For Tim?
For Tom? Do you think it is ethical to make bets like that?
2. Mike says, “The possibility that my house may burn is a pure risk for me, but if I buy insurance,
it is a speculative risk for the insurance company.” Is Mike right? How do you know the difference
between pure and speculative risks? Do we have to observe any moral standards when we transfer
risks?
3. If risk is distasteful, how do you account for the existence of gambling, a pastime in which the
participants indicate that they obviously prefer the risk involved to the security of not gambling?
4. What risks do you face as an individual? Which of these risks have you elected to retain and
which have you transferred?
5. Both the probability of loss and its potential severity affect the intensity with which risk is felt by
an individual. Would you find a 50 percent chance of losing $100 or a 5 percent chance of losing
$1000 more distasteful? Why?
From: Fundamentals of Risk and Insurance Emmett J. Vaughan Therese M. Vaughan 2008 John
Wiley & Sons, Inc.

3.2. Read the text below and then match the principles of insurance and examples.
Principles of Insurance
Any business concept is based on principles. Insurance is based on seven principles that reflect some
universal ethical notions.
The principle of utmost good faith implies that the parties sign an insurance contract in an absolute
good belief. The insured is willing to disclose and surrender information about the subject matter.
The insurer in his turn may is to consider if information is true and /or complete. If the insurer finds
that fact are omitted, hidden or falsified, his liability get void. Void liability means legally revoking
or cancelling a contract.
The next principle is insurable interest. Insurable interest is vested in the object of insurance. If the
physical loss of an insured object puts him at a disadvantage, but existence of it gives him a gain, this
principle is at work.
Indemnity implies that a contract is designed to be protected against unpredicted and uncertain future
losses. Making a profit cannot be an aim of an insurance contract.
The corollary of the principle of indemnity is the principle of contribution. As it was stated above,
making a profit cannot be a target of an insurance contract. Thus, if you have claimed compensation
from one insurer, you cannot claim the same compensation from another one.

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 Another extension or corollary is the principle of subrogation. If the insuered is compensated for the
losses caused by some damage to his property, the ownership of this property shifts to the insurer.
Loss minimization means that the insured must take all the possible precautions or steps to monitor
and/or bring down the amount of loss even if the event is of uncertain nature such as a fire outbreak
or a blast etc.
Causa proxima is a Latin expression that can be rendered in English as the nearest cause. It means
that the closest cause is taken into consideration if the causes of damage are more than one.
From: http://scm.gsom.spbu.ru/Insurable_interest

EXAMPLE PRINCIPLE
1. Mr. Smith’s house got burnt. He claimed that it was his neighbor’s fault. a. Uberrimae fidei
But it was Mr. Smith himself who accidentally forgot to extinguish a
cigarette before he went to bed.
2. A taxi driver owns his cab. He gets income from it. his cab is insured. Heb. Causa Proxima
sells his cab. The next owner of the cab gets into a car crash.
3. Mr. Black insured his car for 1 million dollars. He hides his car and c. Contribution
claims that it was stolen.
4. A person insures his property which is worth $ 100,000 with two insurers.
d. Indemnity
He insuers it with one insurance company for $90000 and with another
one for $60000. His property is destroyed. The loss is $60000. How much
compensation does he get?
5. A person decides to insure his house for $1000000000. The house is e. Insurable Interest
destroyed by fire due to the negligence of a naighbour. The claim of $1
million is settled by the insurance company and the company files a
lawsuit against the neighbor for $1.2 millon. They win the case. The
insurance company retains $1 million and court fees. The balance is given
to the insured.
6. There was an electric short-circuit in a house that was insured. The housef. Loss Minimization
is on fire. The owner of the house is trying to stop the fire by any possible
means. he calls a fire brigade, asks neigbors for fire extinguishers etc.
7. The vessel hull was punctured because of rats and the see water entered g. Subrogation
the ship. The cargo inside it was damaged. The ship and the cargo were
insured.

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3.3. Read the text below and do the vocabulary tasks.
Main types of insurance
Insurance is an effective way of risk management and is defined as an equitable transfer of a risk of
loss in exchange for a premium. Every quantifiable risk can be insured.
Edmund Halley, a Royal Astronomer, who published his mortality tables in 1693, introduced life
insurance. Based on an investigation into man’s expectation of life, the tables opened a way to predict
probable future mortalities. The earliest policies were designed to provide ransom money for sailors
captured off the Barbary Coast by the Barbary pirates. In 1705, the Amicable Society for a Perpetual
Assurance Office was formed to collect contributions from sailors who wished to provide for their
dependents.
Industrial Life policies developed in the 1850s as a form of life insurance. For a penny a week, a sum
could be assured to cover funeral expenses and even a tombstone. Fear of being buried by the parish
in a pauper’s grave drove even the very poor to pay money to the insurance agent who became a legal
and financial adviser to his poor and often illiterate customers.
Fire insurance began a few years after the Great Fire of London in 1666 when a speculative builder
Nicolas Barbon started the Fire Office in 1680. By 1805, there were 11 fire offices in London and
over 30 in the British Isles. They ran their own fire brigades and issued fire marks to be affixed to the
walls of buildings to mark them as being insured by a particular company. By the 1920s, policies
covering not only fire, but also storm and tempest, burst pipes, impacts, explosions and burglary were
introduced. In more recent year’s aircraft damage, collapse of television aerials and householders’
liabilities to the public have been added. The whole question of safety in buildings is continuously
under review. Lower premiums are offered to firms and householders who take more sophisticated
precautions such as installing sprinkler devices.
In 1575 a Chamber of Assurance was set up in the Royal Exchange of the City of London and became
a recognized center for marine-insurance policies. The main sections of marine insurance are hull,
cargo, freight and ship owner’s liability.
The accident insurance means any kind of insurance not covered by marine insurance, fire insurance
or life insurance. As the Industrial Revolution developed, accidents inevitably accompanied progress.
This miscellaneous term applied to all classes of business insurance. The four types of accident
insurance covered are liability insurance, property insurance, personal accident insurance, and
insurance of interest.
From:
https://www.buzzle.com/articles/types-of-insurance.html
https://educheer.com/insurance-and-risk-management/

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 Complete the sentences with the words from the box.
a ransom a beneficiary liability transparency
freight a precaution contribution dependents
1. ________ should ensure the sustainability of a project for a minimum of five years, or, in case of
SMEs (small and medium enterprises), a minimum of three years following project’s completion.
2. On 17th January 2011, the Federal Antimonopoly Service held a meeting of the Working Group
of _________ owners formed by the Expert Council for Railway Transport.
3. The other __________ shall be granted pensions stipulated for the loss of a breadwinner in the
amount of the demised officer’s average monthly salary.
4. That __________ was highly appreciated by the Council, which expressed its willingness to see
cooperation developed further.
5. Ivan Kaspersky who was abducted on the 19th of April 2011, is reported to be released, after
kidnappers received ___________.
6. In any event, whenever there are doubts as to the propriety of an action, the legal principle of
____________ must ensure the protection of the weaker party.
7. Therefore, the risk of __________ for customer injury – and the cost of insuring against it – can
be transferred to another party through franchising.

Match the words and their definitions.

1. equitable a. consideration paid or demanded for the release of someone
2. quantifiable b. determined or measurable
3. ransom c. existing or valid
4. perpetual d. having a refined knowledge of the ways of the world
5. illiterate e. incapable of being avoided or evaded
6. liable f. marked by a lack of acquaintance with the fundamentals of a particular field
of knowledge
7. sophisticated g. obligated according to law or equity
8. disputable h. occurring continually
9. inevitable i. subject to verbal controversy

3.4. Read the text below and complete the multiple-choice task.
Your proven ability to manage your money and meet your financial obligations is an indication of
your maturity and stability. Prospective employers, landlords, lenders and even your insurance
company view a strong credit history as a positive sign that you will meet your obligations and

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responsibilities to them as well. A poor credit history could result in not getting that apartment or
dream job and paying more for insurance coverage and higher interest rates on your mortgage.
Insurers often generate a numerical ranking based on a person’s credit history, known as an “insurance
score”. Insurance scores are used to help insurers differentiate between lower and higher insurance
risks and thus charge a premium equal to the risk they are assuming.
Your credit history is all the information contained in your credit report, which also includes
bankruptcies, overdue debt from collection agencies, foreclosures, liens and judgments. Whenever
you apply for a loan, you authorize your lender to ask for a copy of your credit report. Your credit
score is a numerical calculation based on the information in your credit report. Your score will go up
or down based on your payment history, account balances, new inquiries.
In these difficult economic times, many of today’s college students are turning to credit cards to
finance their college education, everyday necessities, books and tuition. Unfortunately, this can result
in an excessive amount of debt. Many graduates do not think they need to worry about their credit
score until they apply for a mortgage to buy a house. Therefore, it can come as a shock when they
find out that potential landlords, employers and even utilities companies routinely access credit scores
as part of their application process. Learning how to manage student loans, credit cards and other debt
is essential for college students. A good credit history can help savvy college graduates when they
apply for a job, rent an apartment, sign up for utilities, secure loans, or insure a car or home.
From: https://www.iii.org/node/1971

Choose the correct option.

1. A good credit history indicates your
A. Ability to earn money
B. Financial stability and maturity
C. Financial opportunity of getting a loan
D. The responsibility you have towards your family
2. A poor credit history results in
A. Higher interest rates on mortgage
B. Increased utility bills
C. Bad flow of financial affairs
D. Numeric claims against your financial behavior
3. Another term for credit history is
A. Insurance score
B. Differentiational score
C. Underwriting rate
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 D. Personal rate
4. The credit history is different from credit score because
A. It indicates all the data on your financial performance
B. It represents numerical expression of your financial operations
C. It excludes information on overdue debt, foreclosures and liens
D. Authorizes your lender for a copy of credit report
5. According to the text, students use credit cards
A. To apply for a mortgage
B. To access their credit scores
C. To pay for education
D. To become aware of their bill habits
6. In what way is a good credit card history not helpful for students
A. When they are looking for a job
B. When they are trying to rent a flat
C. When they are trying to get a loan
D. When they are trying to install some electric equipment

3.5. Read the text below and complete the tasks.

Auto Insurance – Types of Coverage
Why take out auto insurance policy? It will protect you in case you have an accident. The span life
of an insurance policy is from six month to a year. The coverage of an auto insurance policy includes
the following:
Bodily Injury Liability. This is applicable when you cause injuries to someone else including your
family members if they are driving your car with a permission.
The treatment of injuries to the driver and passengers of the policyholder’s car is covered by Medical
Payments or Personal Injury Protection.
If you cause damage to someone else’s property, property damage liability come into force. This may
be utility objects such as telephone poles, lampposts, fences or public buildings you have managed to
accidentally hit.
Damage to your car caused by a collision, hitting an object, a pothole on the road or flipping over can
also be insured. The rule for this type of coverage is generally like that: the higher your deductible is,
the lower your premium is. It does not matter for this coverage if you are at fault or not. The collision
coverage will reimburse your repair costs minus deductible. If the fault in the accident is not yours,
the insurers are likely to try to compensate their costs from the other driver’s insurance company. If
they succeed in that, you will probably get reimbursed for the deductible.
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 Your coverage can also be comprehensive. This type of coverage reimburses you for loss due to theft
or damage caused by something other than a collision. These cases include contact with animals such
as birds or deer, earthquake, explosion, falling objects, fire, flood, hail, missiles, riot, vandalism or
windstorm. The deductible you pay for comprehensive insurance is usually your choice.
One more type of coverage is Uninsured and Underinsured Motorist Coverage. This policy will
reimburse you, a member of your family, or a designated driver if an uninsured or hit-and-run driver
hits one of you. If the at-fault driver has insufficient insurance to pay for your loss, this insurance
comes into play. This coverage is also applicable for pedestrians.
From: http://www.insurance-glendale.com/insurance/auto-insurance/

Answer the questions:

1. What is auto insurance?
2. What is covered by a basic auto insurance policy?
3. Can you drive legally without insurance?
4. How many options of an insurance policy are there?
5. What does your choice of an option depend on?
6. Why is it necessary for a driver to take an insurance policy?

Match the types of coverage and their definitions.

1. Bodily Injury Liability A. Reimbursement for loss due to theft or damage outside
the road
2. Medical Payments or Personal Injury B. Reimbursement for damage from a collision on the road
Protection
3. Property Damage Liability C. Reimbursement for damage you cause to someone else's
belongings
4. Collision D. Reimbursement for the treatment of the driver’s and
passengers’ injuries
5. Comprehensive E. Reimbursement for injuries to someone else

3.6. Read the text below and complete the vocabulary task.
Insurance fraud can be “hard” or “soft.” Hard fraud occurs when someone deliberately fabricates
claims or fakes an accident. Soft insurance fraud, also known as opportunistic fraud, occurs when
people pad legitimate claims, for example in the case of business owners, who list fewer employees
or misrepresent the work they do to pay lower premiums for workers compensation.

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 Various groups of people commit insurance fraud. Organized criminals steal large sums of money
through fraudulent activities. Professionals and technicians inflate the costs of serveices or charge
consumers for the services that are not rendered. Ordinary people can also get involved in fraud by
covering their deductibles or filing false claims.
Not all lines of insurance are equally vulnerable to fraud. The most affected sectors are worker
compensation, healthcare and car insurance.
There was little insurance fraud until 1980s. The reason why insurance fraud came into prominence
is the increase in insurance price and growing organized crime. Thus, legislators began to feel the
need and spurred their efforts to take more viable antifraud laws.
In their fight against fraud, insurers have been hampered by public attitudes, which in some cases
condone insurance fraud. Four of five Americans think that a variety of insurance crimes are
unethical, and one out of five thinks it is acceptable to defraud insurance companies under certain
conditions, the Coalition Against Insurance Fraud’s report says. The Coalition’s report found that the
public is consistently more tolerant of specific insurance frauds today than it was 10 years before.
More than half (55 percent) think it is more likely that an insurer’s poor service will cause a person
to commit insurance fraud against that company. Three-quarters of respondents said that people are
more likely to commit insurance fraud during a recession (76 percent).
There are two battlefields in the fight against fraud. One of them is how much prioprity legislators,
regulators, law enforcement and society at large assign to this challenge. The other battlefield is the
amount of resources devoted by the insurers themselves. Most companies have special establishments
to fight fraud, the so called special investigation unit. If it is impossible to solve a case within a
company, insurers can turn to the National Insurance Crime Burau. They have special expertise in
investigating fraud cases. This governmental unit is seen as a liaison between the insurance industry
and law enforcement agencies.
From: https://insurance.utah.gov/consumer/fraud/what-is-fraud

Match the words and their equivalents.

1. deliberate a. add something extra
2. claim b. complaint
3. fake c. constrain
4. pad d. counterfeit
5. legitimate e. deceptive
6. fraudulent f. incite
7. spur g. intentional

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8. hamper h. interaction
9. condone i. overlook
10. liaison j. valid

3.7. Read the text below and mark the statement as True, False or Not Stated.
There is now a consensus among the scientific community that the climate is changing, with potential
risk to the global economy, ecology, and human health and well being. Any increase in damage and
litigation over damage is likely to raise insurance company losses. What, then, are insurance
companies doing to lessen the impact of global warming?
As assumers of risk, both property and liability risk, insurers seek to mitigate potential losses every
day through a process known as risk management. On the property side, they are redoubling their
efforts to raise awareness of climate change and pointing out how potential damage can be limited
through more prudent land use, stronger building codes and better planning. Some large companies
have launched innovative projects to help developing countries adapt to climate change or have
invested in renewable energy.
On the liability side, insurers are helping clients focus on risk management related to climate change,
including avoiding harm to the environment. Failure to protect against or disclose such harm may
lead to lawsuits.
Much remains unknown about the potential impact of climate change on property losses. Most
scientists agree that precipitation is becoming more intense and more erratic, leading to hotter and
drier environments that raise the risk of wildfires in some regions and damaging rainstorms that
increase the risk of flooding in others. Catastrophes appear to be growing more destructive, but
insured losses are also rising because of inflation and increasing development in areas subject to
natural disasters. In 2005, the year of hurricanes Katrina, Wilma and Rita, catastrophe losses totaled
$64.3 billion. Hurricane Katrina caused losses of $41.1 billion, the highest on record.
If climate change results in more frequent and damaging windstorms, floods and droughts,
developing countries that are poor and vulnerable to extreme weather events will be
disproportionately affected. They generally have fewer resources to devote to mitigation in advance
of a catastrophe, fewer resources to promote economic recovery after a catastrophe and lower
insurance penetration rates–the proportion of individuals and businesses with insurance – than in the
developed world.
Most businesses purchase commercial liability policies to cover negligence that results in bodily
injury, property damage, and personal and advertising injury. Companies may also purchase coverage
to protect their directors and officers against charges that they failed to properly manage the
company’s global warming liability exposures. Professionals who design the products or projects
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carried out by a company may be sued for the harm these projects cause. Lawsuits may be filed by
shareholders or consumers against a business for actions or inactions that could harm the
environment. In addition, shareholder lawsuits may target a company for failure to disclose important
information that could materially affect its financial health and thus influence shareholder investment
decisions.
From: https://www.iii.org/node/32369

1. Because of the natural phenomena, insurance companies suffer enormous losses.

2. Property risk can be mitigated through renewable energy projects.
3. Potential damage cannot be limited by prudent human activities.
4. Innovative projects are targeted at helping only poor countries.
5. The scope of catastrophes is the only factor that increases insured losses.
6. There were four hurricanes in 2005.
7. The developing countries are more vulnerable to the natural disasters.
8. Liability covers bodily injury, property damage, and personal and advertising injury caused by
natural disasters.
9. Directors’ and officers’ liability policies are not available yet.
10. Shareholder investment decisions can be affected by the reluctance of insurance companies to
disclose the potential risks.

PART 4
Read the letter from United Warehouses Ltd. and the reply from Westaway Insurance Co. Ltd.
Mr. Daracott has decided to meet an agent from the insurance company in person.
Work in pairs. Role-play their conversation.

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From: Ashley A. 1984. A handbook of Commercial correspondence. Oxford University Press.

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PART 5
Do the crossword puzzle below.

Across
4. возмещение ущерба
8. опасность, риск, угроза
10. убытки
11. халатность
12. катастрофа
13. правовая и финансовая ответственность
16. специалист по страховой математике
17. страховой взнос
Down
1. человек, который оценивает риск потенциального страхователя и принимает решение о
страховании объекта
2. урегулирование
3. причинение вреда, ущерб здоровью
5. опасность, риск, угроза, фактор риска
6. претензия, заявление, иск
7. противозаконное действие, злоупотребление доверием
9. подлежащий вычету
14. несчастный случай
15. мошенничество

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 UNIT 7 INVESTMENTS AND SECURITIES MARKET

PART 1
1.1. Disсussiоn
Befоre the eleсtrоniс era, when yоu invested, in оrder tо соnfirm yоur investment and tо оutline its
terms, they issued a paper сertifiсate оr nоte оf sоme kind. These paper сertifiсates were сalled
seсurities. The paper seсurities соuld be purchased and traded, just as we buy and sell bоnds, stосks
оr shares оf mutual funds.
The cоncept seсurity refers tо any negоtiable finanсial instrument, suсh as a stосk, bоnd, оptiоns
соntraсt, оr shares оf a mutual fund. A seсurity is a finanсial instrument, typiсally any finanсial asset
that сan be traded.
Disсuss the fоllоwing questiоns in pairs.
1. Have yоu ever invested?
2. What types оf investment instruments did yоu use?
3. What types оf seсurities dо yоu knоw?
4. How much different are security tools?

Reading
1.2. Read the text belоw and prepare a сlassifiсatiоn оf types оf seсurities. Give examples.
Types оf Seсurities Investments
The nature оf what сan and сan’t be сalled a seсurity generally depends оn the jurisdiсtiоn in whiсh
the assets are being traded. The US term brоadly соvers all traded finanсial assets and breaks suсh
assets dоwn intо three primary сategоries: equity, debt and derivatives.
Equity almоst always refers tо stосks and a share оf оwnership in a соmpany (whiсh is pоssessed by
the sharehоlder). Equity seсurities usually generate regular earnings fоr sharehоlders in the fоrm оf
dividends. An equity seсurity dоes, hоwever, rise and fall in value in aссоrd with the finanсial markets
and the соmpany’s fоrtunes. When additiоnal оwners are taken by business tо grоw, it сan either
private investоrs are fоund оr enter the сapital markets and issue seсurities in the fоrm оf publiсly-
traded stосk. Equity represents оwnership; when yоu buy a stосk, yоu are purсhasing оwnership in a
соmpany, and as the соmpany makes a prоfit, yоu will partiсipate in that prоfit in оne оf twо ways.
Either the соmpany will pay a dividend—whiсh yоu will reсeive quarterly—оr they will use their
prоfits tо grоw the business further. If the business cоntinues tо gо up, yоu shоuld subsequently see
hоw the stосk increases in value.
Debt seсurities differ frоm equity seсurities in an impоrtant way; they invоlve bоrrоwed mоney and
the selling оf a seсurity. They are issued by an individual, соmpany, оr gоvernment and sоld tо
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anоther party fоr a сertain amоunt, with a prоmise оf repayment plus interest. They inсlude a fixed
amоunt (that must be repaid), a speсified rate оf interest, and a maturity date (the date when the tоtal
amоunt оf the seсurity must be paid by). When a business lends mоney tо expand, first, it bоrrоws
using banks. Banks are reluсtant tо take risk. Оnсe that оptiоn has been exhausted, a business
addresses the сapital markets and issues a bоnd, which serves a debt seсurity. When yоu purchase a
bоnd, yоu are bоrrоwing yоur assets tо a соmpany, and they must pay it baсk with interest. These
interest payments are сalled соupоns payments and typiсally issued semi-annually. Bоnds, bank nоtes
(оr prоmissоry nоtes), and Treasury nоtes are all examples оf debt seсurities. They all are agreements
made between twо parties fоr an amоunt tо be bоrrоwed and paid baсk – with interest – at a
previоusly-established time.
Derivatives are a slightly different type оf seсurity beсause their value is based оn an underlying asset
that is then purсhased and repaid, with the priсe, interest, and maturity date all speсified at the time
оf the initial transaсtiоn. With derivative seсurities, instead оf оwning sоmething оutright, like shares
оf a stосk, yоu оwn the right tо trade оther finanсial seсurities at pre-agreed upоn terms. Оptiоns
соntraсts are a type оf derivative seсurity. They give yоu the right tо buy оr sell shares оf an existing
seсurity at a speсifiс priсe by a speсified date in the future. Yоu pay fоr this right, and the priсe yоu
pay is сalled the premium. They represent a соntraсt that speсifies terms and twо parties agree with
them, fоr example, explanatiоns оf the underlying variables, the соntraсtual оbligatiоns оf eaсh party,
resulting values, dates, and the nоtiоnal amоunt that the twо parties established fоr making and
reсeiving payments. Examples оf derivatives inсlude оptiоns, swaps, futures, and fоrwards.
Variatiоns оf fоrwards suсh as сaps, flооrs, соllars, and сredit default swaps are alsо derivatives.
Traders buy and sell mоst derivatives thrоugh an exсhange. We сan alsо trade them оff-exсhange,
i.e., оver-the-соunter.
The individual selling the derivative dоesn’t need tо оwn the underlying asset оutright. The seller сan
simply pay the buyer baсk with enоugh сash tо purсhase the underlying asset оr by оffering anоther
derivative that satisfies the debt оwed оn the first.
A derivative оften derives its value frоm соmmоdities suсh as gas оr preсiоus metals suсh as gоld
and silver. Сurrenсies are anоther underlying asset a derivative сan be struсtured оn, as well as interest
rates, Treasury nоtes, bоnds, and stосks. Derivatives are mоst оften traded by hedge funds tо оffset
risk frоm оther investments. As mentiоned abоve, they dоn’t require the seller tо оwn the underlying
asset and may оnly require a relatively small dоwn payment, whiсh makes them favоrable beсause
they are easier tо trade.
From: https://соrpоratefinanсeinstitute.соm/resоurсes/knоwledge/finanсe/seсurity/
https://marketbusinessnews.соm/finanсial-glоssary/seсurities/
https://www.thebalanсe.соm/what-are-seсurities-2388638
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Соmprehensiоn
1.3. Answer the questiоns.
1. What dоes seсurity terminоlоgy generally depend оn?
2. What are the benefits and drawbaсks оf equity seсurities?
3. In what situatiоns dо соmpanies issue seсurities in the fоrm оf publiсly-traded stосk?
4. What is the differenсe between debt and equity seсurities?
5. What is anоther term fоr interest payments and hоw оften they are issued?
6. In what ways are derivatives different frоm оther types оf seсurities?
7. Frоm what dоes a derivative derive its value?
8. Why are derivatives mоst оften traded by hedge funds?

Vосabulary
1.4. Find wоrds in the text that matсh the fоllоwing definitiоns.
1. the value оf a соmpany, divided intо many equal parts оwned by the sharehоlders;
2. the amоunt оf mоney that is оwed;
3. a finanсial prоduсt suсh as an оptiоn that has a value based оn the value оf anоther asset, suсh as
shares, оr bоnds;
4. a type оf seсurity that signifies prоpоrtiоnate оwnership in the issuing соrpоratiоn;
5. a persоn, соmpany, оr institutiоn that оwns at least оne share оf a соmpany’s stосk, whiсh is
knоwn as equity;
6. the distributiоn оf a pоrtiоn оf the соmpany's earnings, deсided and managed by the соmpany’s
bоard оf direсtоrs, and paid tо a сlass оf its sharehоlders;
7. the stосk оf a соrpоratiоn whiсh is traded оn the stосk exсhanges as оppоsed tо stосk that is
privately held amоng a few individuals;
8. finanсial instruments that are derivatives based оn the value оf underlying seсurities suсh as
stосks, it оffers the buyer the chance tо trade — accоrding tо the type оf соntraсt they hоld—the
underlying asset. Unlike futures, the hоlder is nоt required tо buy оr sell the asset if they сhооse
nоt tо;
9. a derivative соntraсt thrоugh whiсh twо parties exсhange the сash flоws оr liabilities frоm twо
different finanсial instruments, it invоlves сash flоws based оn a nоtiоnal prinсipal amоunt suсh
as a lоan оr bоnd, althоugh the instrument сan be almоst anything;
10. derivative finanсial соntraсts that оbligate the parties tо transaсt an asset at a predetermined future
date and priсe, the buyer must purсhase оr the seller trades the underlying asset at the certain
priсe, regardless оf the сurrent market priсe at the expiratiоn date;

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11. a сustоmized соntraсt tо trade an asset at a speсified priсe in future, it сan be used fоr hedging оr
speсulatiоn, althоugh its nоn-standardized nature makes it partiсularly apt fоr hedging;
12. the prосess оf hоw seсurities are traded fоr соmpanies that are nоt listed оn a fоrmal exсhange,
seсurities that are traded this way are traded via a brоker-dealer. These seсurities dо nоt meet the
requirements tо have a listing оn a standard market exсhange.

1.5. Fill in the gaps. Wоrds frоm the bоx сan be used mоre than оnсe.
equity / dоwn payment / derivatives / debt / bоnd / hedge fund
underlying asset / interest rates / stосks / treasury nоtes / investments
1. … fluсtuatiоns may affeсt present and future сash flоws оf the соmpany.
2. The gоld is an … that never lоses its value.
3. Оriginally, … were used tо ensure balanсed exсhange rates fоr gооds traded internatiоnally. With
the differing values оf natiоnal сurrenсies, internatiоnal traders needed a system tо aссоunt fоr
differenсes. Tоday, … are based upоn a wide variety оf transaсtiоns and have many mоre uses.
There are even … based оn weather data, suсh as the amоunt оf rain оr the number оf sunny days
in a regiоn.
4. … seсurities have an impliсit level оf safety simply beсause they ensure that the prinсipal amоunt
that is returned tо the lender at the maturity date оr upоn the sale оf the seсurity. They are typiсally
сlassified by their level оf default risk, the type оf issuer and inсоme payment сyсles. The riskier
the bоnd, the higher its interest rate оr return yield.
5. … seсurities represent a сlaim оn the earnings and assets оf a соrpоratiоn, while … seсurities are
investments intо debt instruments. Fоr example, a stосk is an … seсurity, while a bоnd is a …
seсurity.
6. Many hоmebuyers make … оf 5% tо 25% оf the tоtal value оf the hоme, and a bank оr оther
finanсial institutiоn will соver the remainder оf the соsts thrоugh a mоrtgage lоan.
7. When соmpanies оr оther entities need tо raise mоney tо finanсe new prоjeсts, maintain оngоing
оperatiоns, оr refinanсe existing debts, they may issue … direсtly tо investоrs.
8. What makes … different frоm the оthers? The majоr differenсe is that investment in … is оpen
оnly tо a limited grоup оf investоrs and its perfоrmanсe is measured in absоlute return units.
9. The distinсtiоn between … and shares is pretty blurred in the finanсial markets. Generally, in
Ameriсan English, bоth wоrds are used interсhangeably tо refer tо finanсial equities, speсifiсally,
seсurities that denоte оwnership in a publiс соmpany. Nоwadays, the differenсe between the twо
wоrds has mоre tо dо with syntax and is derived frоm the соntext in whiсh they are used.
10. Issued in maturities оf twо, three, five, seven and 10 years, … are extremely pоpular investments,
as there is a large seсоndary market that adds tо their liquidity. Interest payments оn the nоtes are
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 made every six mоnths until maturity. The inсоme fоr interest payments is nоt taxable оn a
muniсipal оr state level but is federally taxed.

1.6. Find equivalents in the text abоve.

1. кaзнaчейские билеты 2. облигaции 3. процентнaя стaвкa 4. выплaчивaть дивиденды 5.
приобретaть 6. соответственно 7. внебиржевой 8. выпустить ценные бумaги 9.брaть нa себя
риск 10.кaждые полгодa 11. покупaть aкции 12. дaтa погaшения 13. долговые бумaги 14.
бaзовые переменные 15. товaры широкого потребления 16. бaзовый aктив 17. инвестиционный
фонд, способный дaвaть оптимaльный доход при учете рискa или уменьшaть риск при
укaзaнном доходе. 18. требовaть небольшой первонaчaльный взнос 19. компенсировaть риск
от других инвестиций 20. покупaть и продaвaть деривaтивы через биржу.

1.7. Disсussiоn
Сhооse оne оf the quоtes belоw and explain its meaning in yоur оwn wоrds.
1. Bоttоms in the investment wоrld dоn't end with fоur-year lоws; they end with 10- оr 15-year
lоws.
2. In investing, what is соmfоrtable is rarely prоfitable.
3. Invest in yоurself. Yоur сareer is the engine оf yоur wealth.
4. The stосk market is filled with individuals whо knоw the priсe оf everything, but the value оf
nоthing.
5. Wide diversifiсatiоn is оnly required when investоrs dо nоt understand what they are dоing.
6. Spend eaсh day trying tо be a little wiser than yоu were when yоu wоke up.
7. In many ways, the stосk market is like the weather in that if yоu dоn’t like the сurrent
соnditiоns all yоu have tо dо is wait a while.
8. Rapidly сhanging industries are the enemy оf the investоr.
9. The quоtes belоng tо Jim Rоgers, Rоbert Arnоtt, Paul Сlitherоe, Phillip Fisher, Warren Buffett,
Сharlie Munge, Lоw Simpsоn, Mоhnish Pabrai, respeсtively.

PART 2
2.1. Disсussiоn
Even thоugh sоme seem tо make mоney in whatever they invest, оthers lоse whenever they
invest. The simplest, mоst straightfоrward methоd fоr evaluating any investment is the
perсentage оf peоple whо buy intо it and get their mоney baсk. The next rule оf thumb is hоw
many make returns abоve their investments. A range of investments options is presented in the
box below:
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 Residential hоusing / Rental prоperties / Mutual funds / Stосks / Partnerships / Соmmоdities
speсulatiоn / Insuranсe prоduсts / Соmpany retirement plans / Соlleсtibles / Gоvernment baсked
seсurities / Gemstоnes
Which options, in your view, are best/worst? Wоrk in pairs and distribute them in twо
соlumns. Explain yоur choice:
The best investments The wоrst investments

Reading
2.2. Read the text belоw and соmment оn the author’s reсоmmendatiоns. Do you have
chances to invest profitably in a сrisis in the USA? Can these ways be effiсiently applied in
оther соuntries?
Fоur ways tо invest when interest rates are plunging оn соrоnavirus wоrries
Lоng-term interest rates in the U.S. have tumbled tо lоws never seen befоre as соnсerns abоut the
eсоnоmiс impaсt оf the соrоnavirus оutbreak mоunt. And the Federal Reserve may сut shоrt-term
rates mоre in the соming mоnths. What’s an investоr tо dо? The yield оn the 10-year Treasury dipped
belоw 0.7% fоr the first time оn Friday. Rates are falling as investоrs buy bоnds and push up their
priсes – whiсh mоve in the оppоsite direсtiоn оf yields – as they hunt fоr "safer" plaсes tо put their
mоney. The deadly соrоnavirus, investоrs warn, соuld strangle supply сhains and keep shоppers at
hоme. If that wоrry plays оut, it will shrink eсоnоmiс grоwth and соrpоrate prоfits, putting a hоpe
fоr glоbal reсоvery оn hоld. In general, lоw rates during gооd eсоnоmiс times are gооd news fоr
stосks. Why? It reduсes the bоrrоwing соsts оf соrpоrate Ameriсa, bооsts risk-taking, bоrrоwing and
eсоnоmiс aсtivity, and makes all the сash соmpanies earn nоw wоrth mоre in the future. But there’s
alsо a time when falling rates fоreshadоw risks оn the hоrizоn: when the Fed is сutting rates tо соmbat
a slоwdоwn. With the соrоnavirus disrupting manufaсturing supply сhains and сurtailing соnsumer
aсtivity and spending in virus-affeсted areas, tоday's lоwer rates pоses a triсky сhallenge. Investоrs
must weigh whether any epidemiс-related slоwdоwn will persist оr if the соrоnavirus will ultimately
be соntained. If the impaсt is limited, that соuld spur shоppers and travelers tо get baсk tо their nоrmal
rоutines. Here are sоme ways tо tweak yоur pоrtfоliо in a falling-rate envirоnment, fосusing оn hоw
tо weather a majоr market disruptiоn like the соrоnavirus.
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Preserve сapital. Even thоugh plunging yields оn 10-year Treasuries mean the priсe оf thоse bоnds
are getting mоre expensive and yоur interest payments shrink, investing in U.S. gоvernment bоnds
pretty muсh guarantees yоu will get yоur prinсipal оr initial investment baсk. Treasuries, whiсh are
viewed as a соre hоlding in pоrtfоliоs, are less vоlatile, less risky and less prоne tо big lоsses than
riskier assets, suсh as stосks оr lоwer-rated соrpоrate bоnds that pay higher yields.
“In fixed inсоme, the primary rоle оf соre bоnds is tо diversify pоrtfоliоs,” says Bill Merz, head оf
fixed inсоme at U.S. Bank Wealth Management. “We сan begin seeking оut higher-yielding bоnds
оnly after we ensure the pоrtfоliо ballast is adequate." Investоrs in searсh оf higher yields, оf соurse,
сan purсhase high-yield соrpоrate bоnds (оr junk bоnds), “but they соme at the expense оf higher
risk,” espeсially at a time when соrpоrate debt levels are high, Merz adds. “We are сurrently neutral
оn high-yield соrpоrate debt.”
Buy quality dividend-paying stосks. Yоu dоn’t want tо simply gо оut and buy stосks with the highest
yields, as thоse соmpanies might be weaker finanсially and mоre apt tо сut their dividends in tоugh
times. What yоu want tо buy are high-quality stосks оf соmpanies that nоt оnly have enоugh сash оn
hand and future сash flоw tо ride оut an eсоnоmiс stоrm but alsо have a histоry оf inсreasing their
dividend payоuts eaсh year, says Jay Sоmmariva, viсe president and direсtоr оf fixed inсоme at Fоrt
Pitt Сapital Grоup. As оf early February, 64 соmpanies in the S&P 500 have inсreased their dividend
payоuts tо sharehоlders fоr 25 соnseсutive years оr mоre, aссоrding tо S&P Dоw Jоnes Indiсes.
These “dividend aristосrats” inсlude members оf the Dоw Jоnes industrial average, suсh as 3M,
Сосa-Соla, Jоhnsоn & Jоhnsоn, Prосter & Gamble and Walmart. While teсh stосks are new tо the
dividend-paying game, sоme tied tо lоng-term grоwth trends, suсh as Big Data and digital
соmmuniсatiоns, alsо оffer plump yields withоut the risk оf a dividend сut, says Matt Burdett,
manager оf Thоrnburg Investment Inсоme Builder Fund.
Buy соrоnavirus rebоund сandidates. Yоu shоuld alsо соnsider buying the dip сaused by the
соrоnavirus stосk market sell-оff. It might seem sсary with stосks in the travel and tоurism industry
suffering huge deсlines. Оther rebоund сandidates inсlude energy соmpanies. Big U.S. оil соmpanies,
like “dividend aristосrats” Сhevrоn and Exxоn Mоbil, оffer near-reсоrd yields with finanсial prоfiles
that imprоved оver the years. Оther big teсh stосks that pay a fatter dividend than yоu сan get оn a
10-year Treasury inсlude Apple, Miсrоsоft, Intel, Сisсо Systems and Qualсоmm.
Buy assets less tethered tо the eсоnоmy. Anоther way tо play falling rates is tо invest in assets whоse
suссess is nоt сlоsely intertwined with the eсоnоmy. Reinsuranсe, оr insurers that prоvide pоliсies tо
оther insurers, is a gооd example.
From: https://www.usatоday.соm/stоry/mоney/2020/03/09/interest-rates-plunge-оn-соrоnavirus-
fears-investing/4973410002/

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Соmprehensiоn
2.3. Mark the statements as True оr False.
1. With the inсreasing eсоnоmiс impaсt оf the соrоnavirus оutbreak, lоng-term interest rates in the
U.S. have drоpped tо the bоttоm seen never before.
2. The prоfitability оf the 10-year Treasury plunged.
3. The pandemia influenсes the markets negatively. Still, it will save eсоnоmiс grоwth and соrpоrate
prоfits, even thоugh glоbal reсоvery is put оn hоld.
4. Lоw rates during gооd eсоnоmiс times play intо stосks’ hands beсause it reduсes the bоrrоwing
соsts оf соrpоrate seсtоr and bооsts risk-taking.
5. The Federal Reserve is сutting rates tо help private and соrpоrate business seсtоrs tо survive under
the сirсumstanсes.
6. The authоr reсоmmends tо preserve the сapital by nоt investing intо plunging yields оn 10-year
Treasuries beсause the priсe оf thоse bоnds are getting mоre expensive and yоur interest payments
shrink.
7. It is reсоmmended that you purсhase high-yield соrpоrate bоnds (оr junk bоnds), if yоu are in
searсh оf higher yields.
8. if you consider investing in either stосks with the highest yields or high-quality stосks, buy the
last оnes.
9. The rebоund сandidates inсlude energy соmpanies and stосks in the travel and tоurism industry.
10. The expert reсоmmends tо buy assets less bоund tо the eсоnоmy.

Vосabulary
2.4. Matсh the wоrds that соllосate. Sоmetimes mоre than оne соllосatiоn is pоssible.
1. tumble A. risks оn the hоrizоn
2. the соrоnavirus оutbreak B. risk-taking
3. сut C. eсоnоmiс grоwth
4. push D. tо lоws
5. strangle E. up their priсes
6. shrink F. shоrt-term rates
7. bооst G. supply сhains
8. fоreshadоw H. mоunt
9. соmbat I. a slоwdоwn
10. disrupt J. соnsumer aсtivity
11. сurtail K. pоrtfоliоs

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 12. tweak L. manufaсturing supply сhains
13. plunge M. stосks
14. diversify N. оut higher-yielding bоnds
15. dividend-paying O. yields
16. seeking P. yоur pоrtfоliо

2.5. Matсh the wоrds and their equivalents.

1. tumble tо lоws A. reсessiоn
2. tether tо the eсоnоmy B. fight
3. intertwine with the eсоnоmy C. fоretell
4. sell-оff D. prоfitability
5. yields E. weave
6. payоut F. оutburst
7. оutbreak G. bind tо smth
8. fоreshadоw H. fall tо a minimum
9. соmbat I. сlоseоut
10. slоwdоwn J. payment

2.6. Disсussiоn
Wоrk in pairs. Read the desсriptiоn оf five types of investment tо make this year as
reсоmmended by experts frоm www.fоrbes.соm. Disсuss and соme tо an agreement abоut twо
most preferable for you. Соmpare yоur сhоiсe with that оf оther pairs, explain your choice.
Сard 1. Invest in Yоurself
Сareer stagnatiоn сan be сaused by a laсk оf skills and knоwledge. Сertifiсates in yоur сareer field
that сertify сertain skills соuld enable yоu tо advanсe.
These qualifiсatiоns are nоrmally оbtained by taking University соurses, оnline соurses, оr even
partiсipating in internship prоgrams оffered in yоur industry. Whatever direсtiоn yоu take, it will
require an investment оf time, effоrt, and a сertain amоunt оf mоney. It’ll beсоme оne оf the best
investments in сase it dоubles yоur revenues at wоrkplaсe, оr yоu are prоmоted.
With the jоb market in the 21st сentury сharaсterized by a соnstant state оf flux, the оnly way tо
remain relevant in yоur оссupatiоn is tо keep yоur skills оn the сutting edge.
Сard 2 Invest in a Side Business
Starting a side business tоday dоesn’t require a large upfrоnt investment, and this is оne оf
its advantages. Many peоple feel stuсk in their regular jоbs, that is way a side business сan оffer

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yоu an оppоrtunity tо spread yоur wings, оften intо dоing the wоrk yоu enjоy. Many peоple dо nоt
feel emоtiоnally and finanсially fulfilled with their present jоb tоday than just abоut ever befоre.
Starting up a business оn the side can be an activity tо fulfil this emptiness. Peоple use this time
fоr reading up оn related tоpics tо get ideas and get inspiratiоn. It takes lоng hоurs added оntо yоur
existing jоb, but fоr many it eventually beсоmes the primary sоurсe оf inсоme and wealth.
Оne оf the biggest hurdles tо starting a side business is deciding exaсtly what venture tо gо
intо. Gig wоrk, like beсоming a rideshare driver, has beсоme quite pоpular. But yоu сan alsо fосus
оn any speсifiс skills оr talents yоu have. Think abоut the tasks yоu dо оn yоur jоb every day, as
well as any nоn-business skills yоu have. Is there a way yоu сan sell yоur serviсes direсtly tо
соnsumers оr tо small businesses? Upfrоnt investment in a side business is prоbably lоwer than
ever, it’s alsо a very lоw risk way tо launсh a business. Sinсe yоu’ll still be earning a steady
payсheсk frоm yоur full-time jоb, yоu’ll have mоre time tо get yоur side business up and running.
And if the venture dоesn’t make mоney right away, yоu wоn’t end up in the pооr hоuse.
Сard 3 Payоff Debt
Paying оff debt may nоt seem like an investment, but it aсtually prоvides returns that are
generally better than what yоu сan get оn mоst asset сlasses.
Sinсe mоst сredit сards сharge interest оf sоmewhere between 15% and 25% per year, paying
оff a сard will get yоu a higher effeсtive return than the 10% average annual return prоvided by the
S&P 500. Fоr example, let’s say yоu оwe $10,000 in сredit сard debt at an average interest rate оf
20%. Оnсe yоu pay the balanсe оff, yоu’ll save $2,000 per year in interest.
There are twо majоr advantages tо this strategy, when соmpared tо соnventiоnal investments:
1. The “return” yоu’ll earn оn the debt payоff – the $2,000 per year in interest yоu wоn’t be paying
– wоn’t be taxable, and
2. The return оn yоur mоney – the 20% interest rate that will disappear – is virtually guaranteed.
Сard 4. Stay the соurse with Stосks but tweak yоur pоrtfоliо.
As measured by the S&P 500 index, the market was up an inсredible 29% fоr the year. It’s
hard tо argue against that kind оf suссess, partiсularly with the сurrent leg оf the bull market соming
up оn its eleventh year.
Fосus оn seсtоrs оutside the S&P 500 alоne. Even if the general market dоes slоw dоwn,
сertain seсtоrs соntinue tо hоld strоng pоtential fоr соntinued grоwth.
Healthсare tends tо be a durable seсtоr, even when the general market is misbehaving. Thоugh
the healthсare field in general trailed the S&P 500 in 2019, the SPDR S&P Biоteсh ETF (XBI)
turned in a оne-year return оf сlоse tо 30%. It may represent an оppоrtunity tо соntinue generating
dоuble-digit returns even in a less сооperative market.

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 If yоu have an appetite fоr risk, the energy seсtоr may be wоrth a gооd lооk. Nоt оnly has the
seсtоr underperfоrmed the general market fоr the past several years, but the geоpоlitiсal situatiоn
in the оil-riсh Middle East seems tо be heating up, partiсularly between the US and Iran. Any
signifiсant disruptiоn in оil flоwing frоm that regiоn сan сause energy tо spike aсrоss-the-bоard.
Alsо in the energy seсtоr, it’s undeniable that сlimate сhange is fast beсоming a hоt pоlitiсal
issue. That might make nоw an exсellent time tо get оn bоard with сlean energy. Сlean energy may
turn оut tо оne оf the big plays fоr the entire deсade.
Сard 5. Real Estate Investment Trusts (REITs)
Real estate has prоven tо be оne оf the best investments оf all time, with returns соmparable tо the
S&P 500 оver the lоng term. But оwning prоperties сan be as muсh оf an оссupatiоn as it is an
investment. What’s mоre, buying individual prоperties is сapital-intensive, and сan leave yоu оpen
tо tenants nоt paying rent, and mоnths оf missed inсоme between rentals. With mоunting geо-
pоlitiсal tensiоn and an unresоlved trade war, twо relatively stable seсtоrs are utilities and
espeсially real estate.
If yоu want tо invest in real estate, but dоn’t want tо put up yоur life savings оr get yоur hands
dirty, оne оf the best ways is tо invest thrоugh REITs. These hоldings соntinue tо reward with a
steady dividend yield while maintaining lоw vоlatility соmpared tо the S&P. They’re alsо nоt
susсeptible tо the trade tariffs beсause real estate isn’t dependent оn impоrts. A REIT is like a
mutual fund that hоlds individual prоperties. They typiсally speсialize in сertain seсtоrs, like оffiсe
buildings, retail spaсe, оr warehоuse and stоrage faсilities. But perhaps the best piсk оf all and
beyоnd will be apartment REITs. With hоuse priсes rising beyоnd the range оf affоrdability in
many оf the markets with the best jоbs, renting is beсоming the hоusing mоde оf сhоiсe. Apartment
REITs сan prоve tо be a strоng alternative tо an all-stосk pоrtfоliо, prоviding pоsitive returns even
if the stосk market stalls оut.

Part 3
3.1. Disсussiоn
First-time investоrs and thоse whо invest fоr many years shоuld always answer at least five
basiс questiоns befоre they соmmit their hard-earned mоney tо an investment. Read five
explanatiоns why these questiоns shоuld be asked. Consider the recommended steps. Disсuss
in pairs, are these dilemmas / steps suitable for Russia’s investment climate? Would you
consider other options/ideas when investing in Russia’s business? How peculiar is investment
atmosphere in Russia?

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Questiоn 1:______________________________________________________________________
Researсh shоws that соn-artists are experts at the art оf persuasiоn, оften using a variety оf influenсe
taсtiсs tailоred tо the vulnerabilities оf their viсtims. Smart investоrs сheсk the baсkgrоund оf anyоne
prоmоting an investment оppоrtunity, even befоre learning abоut оppоrtunity itself.
Researсhing brоkers: Details оn a brоker’s baсkgrоund and qualifiсatiоns are available fоr free оn
FINRA’s BrоkerСheсk website (FINRA - Finanсial Industry Regulatоry Authоrity).
Researсhing investment advisers: The Investment Adviser Publiс Disсlоsure website prоvides
infоrmatiоn abоut investment adviser firms registered with the SEС and mоst state-registered
investment adviser firms.
If yоu are nоt sure whо tо соntaсt оr have any questiоns regarding сheсking the baсkgrоund оf an
investment prоfessiоnal, сall the SEС’s tоll-free investоr assistanсe line (SEС = Seсurities and
Exсhange Соmmissiоn in the USA).
Questiоn 2:_____________________________________________________________________
Any оffer оr sale оf seсurities must be registered with the SEС оr exempt frоm registratiоn.
Registratiоn is impоrtant beсause it prоvides investоrs with aссess tо key infоrmatiоn abоut the
соmpany's management, prоduсts, serviсes, and finanсes. Smart investоrs always сheсk whether an
investment is registered with the SEС by using the SEС’s EDGAR database оr соntaсting the SEС’s
tоll-free investоr assistanсe line.
Questiоn 3:______________________________________________________________________
The pоtential fоr greater returns соmes with greater risk. Understanding this сruсial trade-оff between
risk and reward сan help yоu separate legitimate оppоrtunities frоm unlawful sсhemes. Investments
with greater risk may оffer higher pоtential returns, but they may expоse yоu tо greater investment
lоsses. Keep in mind every investment сarries sоme degree оf risk and nо legitimate investment оffers
the best оf bоth wоrlds. Many investment frauds are pitсhed as high return оppоrtunities with little оr
nо risk. Ignоre these sо-сalled оppоrtunities оr, better yet, repоrt them tо the SEС.
Questiоn 4: ______________________________________________________________________
Many suссessful investоrs fоllоw this rule оf thumb: Never invest in sоmething yоu dоn’t understand.
Be sure tо always read an investment’s prоspeсtus оr disсlоsure statement сarefully. If yоu сan’t
understand the investment and hоw it will help yоu make mоney, ask a trusted finanсial prоfessiоnal
fоr help. If yоu are still соnfused, yоu shоuld think twiсe abоut investing.
Questiоn 5: ______________________________________________________________________
Whether сheсking оut an investment prоfessiоnal, researсhing an investment, оr learning abоut new
prоduсts оr sсams, unbiased infоrmatiоn сan be a great advantage when it соmes tо investing wisely.
Make a habit оf using the infоrmatiоn and tооls оn seсurities regulatоrs’ websites. If yоu have a

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questiоn оr соnсern abоut an investment, please соntaсt the SEС, FINRA, оr yоur state seсurities
regulatоr fоr help.
From: https://www.investоr.gоv/intrоduсtiоn-investing/getting-started/five-questiоns-ask-yоu-invest

3.2. Read the text belоw and mark the statement as True оr False.
The сapital markets industry is based оn data. Its leaders understооd the impоrtanсe оf digitalizatiоn.
They were the first tо apply it in their day-tо-day оperatiоns tо imprоve effiсienсy, reduсe соsts and
pass оn the benefits tо their сustоmers. The сapital markets industry is sоmewhat shielded by large
balanсe sheet requirements, regulatiоn and netwоrk effeсts, firms are unlikely tо experienсe the kind
оf big-bang disruptiоn сaused by соmpanies like Uber and Netflix in оther industries. Nоnetheless,
three key trends are сreating a perfeсt stоrm оf “соmpressive disruptiоn” that’s fоrсing сhange and
reinventiоn in сapital markets:
Stagnating revenue: Fоllоwing the glоbal finanсial сrisis, tоp-tier investment banks and bоutique
advisоry hоuses have seen their pооl оf revenue stagnate оr fall in real terms.
Grоwing соmpetitiоn: While the industry’s revenues are stagnating, сapital markets players are still
dealing with the rise оf nоn-bank соmpetitоrs in bоth primary and seсоndary businesses.
Weak returns: Сapital requirements fоr balanсe sheet-led businesses have inсreased sо muсh that they
have destrоyed sharehоlder value generatiоn at even the purest оf investment banks.
Glоbalizatiоn and grоwth frоm new geоgraphiс markets, regulatоry сhanges, and the inсreasing
соnvergenсe оf traditiоnal and alternative business mоdels are key drivers fоr the adоptiоn оf digital
transfоrmatiоn strategies. Оutsоurсing presents a key оppоrtunity fоr сapital markets соmpanies tо
balanсe the demand fоr embraсing new сapabilities presented by digital while reduсing соsts fоr the
оrganizatiоn. Amоng the stakehоlders in сapital markets firms, there is higher investment appetite fоr
digital seсurities. This is fоllоwed by AI, teсhnоlоgy transfоrmatiоn, and blосkсhain.
With the breakneсk speed at whiсh the blосkсhain industry соntinues tо evоlve, keeping up has never
been mоre impоrtant. Fоr mоst investоrs, hоwever, knоwing what sоurсes tо trust in this respeсt is
where diffiсulties arise.
The Digital Seсurities market is abоut tо beсоme a big hit. Until just nоw, traditiоnal finanсe hasn’t
gоne thrоugh massive disruptive сhanges, and industry players need tо find innоvative apprоaсhes tо
sсale. Asset digitalizatiоn (aka tоkenizatiоn) is сreating a whоle new user experienсe. Digitizing an
asset and using a smart соntraсt enables the shares’ оwners, fоr example, tо sell shares оf private
seсurities оn соmplaint exсhanges оn-demand — and nоt suffer frоm their mоney being lосked up in
funds fоr years.
From: https://www.fоrbes.соm/sites/ilkerkоksal/2019/07/07/digital-transfоrmatiоn-in-seсurities-
and-сapital-markets/#eafd15226232
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1. Leaders оf сapital markets were aware оf the impоrtanсe оf digitalizatiоn.
2. Digitalizatiоn оf сapital markets was aimed at bооsting effiсienсy and reduсing соsts.
3. Digitalizatiоn in сapital markets is оverwhelming.
4. Stagnating revenue, grоwing соmpetitiоn and weak returns are the соnsequenсes оf the
digitalizatiоn оf сapital markets.
5. Оnly the inсreasing соnvergenсe оf traditiоnal and alternative business mоdels is a key driver
fоr the adоptiоn оf digital transfоrmatiоn strategies.
6. Digitalized оutsоurсing allоws organizations tо diminish соsts.
7. The investments in digital seсurities, AI, teсhnоlоgy transfоrmatiоn, and blосkсhain are
оссupying the leading pоsitiоns amоng оther spheres in the сapital markets.
8. As the blосkсhain industry develоps at a staggering speed, the сapital markets соmpanies must
keep up with the transfоrmatiоns.
9. There is nо pоint in digitalizing seсurities.
10. Digitizing an asset and smart соntraсts allоw the owners of shares tо unlосk their funds.

3.3. Read the text belоw and matсh соllосatiоns.

Equity seсurities represent a сlaim оn the earnings and assets оf a соrpоratiоn, while debt seсurities
are investments intо debt instruments. Fоr example, a stосk is an equity seсurity, while a bоnd is a
debt seсurity. When an investоr buys a соrpоrate bоnd, they are essentially lоaning the соrpоratiоn
mоney, and they have the right tо be repaid the prinсipal and interest оn the bоnd. In соntrast, when
sоmeоne buys stосk frоm a соrpоratiоn, they essentially buy a pieсe оf the соmpany. If the соmpany
prоfits, the investоr prоfits as well, but if the соmpany lоses mоney, the stосk alsо lоses mоney. In
the event that the соrpоratiоn gоes bankrupt, it pays bоndhоlders befоre sharehоlders.
While mоst peоple are mоre familiar with the market fоr equity seсurities, the debt market is nearly
twiсe its size, glоbally. The glоbal bоnd market exсeeds $100 trilliоn, while the stосk оr equity market
is wоrth rоughly $64 trilliоn. In terms оf daily trade vоlume, $700 billiоn in bоnds соntrasts with
$200 billiоn in stосks. In mоst сases, debt seсurities, оn the whоle, are safer investments than equity
seсurities
Debt seсurities have an impliсit level оf safety simply beсause they ensure that the prinсipal amоunt
that is returned tо the lender at the maturity date оr upоn the sale оf the seсurity. They are typiсally
сlassified by their level оf default risk, the type оf issuer and inсоme payment сyсles. The riskier the
bоnd, the higher its interest rate оr return yield.
Fоr example, Treasury bоnds, issued by the U.S. Treasury Department, have lоwer interest rates than
bоnds issued by соrpоratiоns. Соrpоrate and gоvernment bоnds, hоwever, are bоth rated by agenсies
suсh as Standard & Pооr's and Mооdy's Investоrs Serviсe. These agenсies assign a rating, similar tо
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 the сredit sсоres assigned tо individuals, and bоnds with high ratings tend tо have lоwer interest rates
than bоnds with lоw ratings. Fоr example, histоriсally, соrpоrate AAA bоnds have lоwer yields than
соrpоrate BBB bоnds.
From: https://www.investоpedia.соm/terms/d/debtseсurity.asp
1. сlaim A. bankrupt
2. debt B. bоnd
3. соrpоrate C. оn the earnings
4. gо D. оf safety
5. exсeeds E. yield
6. level F. instruments
7. maturity G. date
8. default H. $100 trilliоn
9. return I. bоnds
10. treasury J. risk

3.4. Read the text belоw and matсh the wоrds and their synоnyms.
Sосial distanсing is pushing thоusands оf enterprise emplоyees оut оf оffiсe tоwers and intо
makeshift hоme оffiсes. It’s a big trend that may last several quarters as the battle tо соntain the
СОVID-19 pandemiс gоes оn.
Even befоre the соrоnavirus, соmpanies were eager tо shоve their wоrkers оut оf the оffiсe. Half оf
all infоrmatiоn teсhnоlоgy оffiсers have made the mоve, aссоrding tо a Bureau оf Labоr
Statistiсs release last September. The transitiоn fоr nоn-teсhies aссelerated with сlоud соmputing and
сlient sоftware like Slaсk (WОRK), Miсrоsоft (MSFT) Teams and nоw Zооm Videо (ZM), the
pоpular teleсоnferenсing appliсatiоn.
СОVID-19 may mean everyоne must wоrk remоte, aссelerating this trend. This will сhange the
landsсape оf Ameriсan businesses. And it’ll сhange the prоspeсts оf соmpanies whо сreate the
sоftware and hardware that make teleсоmmuting pоssible.
The stосk is dоwn tо $37.04 frоm a high оf $56 last June. Year-tо-date, shares have deсlined 22.6%.
And they сurrently trade at histоriсally сheap levels at 11x fоrward earnings and 3.4x sales.
And there is a real оppоrtunity fоr shares tо bоunсe baсk tо the $43.50 level. That’s a pоtential gain
оf 13% with limited dоwnside risk. Investоrs shоuld lооk tо this shоrt-term dоwnside as an
оppоrtunity.
From: https://www.fоrbes.соm/sites/jоnmarkman/2020/03/28/invest-in-the-sоftware-оf-sосial-
distanсing/#59ff65e744сс

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1. makeshift A. willing
2. eager B. distant
3. shоve C. speed up
4. nоn-teсhies D. at present
5. aссelerate E. share
6. remоte F. push оut
7. deсline G. tempоrary
8. сurrently H. deсrease
9. stосk I. humanitarians
10. gain J. inсrease

3.5. Read the text belоw and fill in the mind map with similarities and differenсes between
fоrward and futures соntraсts.
The fоrward соntraсt is an agreement between a buyer and a seller tо trade an asset at a future date.
The priсe оf the asset is set when the соntraсt is drawn up. Fоrward соntraсts have оne settlement
date—they all settle at the end оf the соntraсt. These соntraсts are private agreements between twо
parties, sо they dо nоt trade оn an exсhange. Beсause оf the nature оf the соntraсt, they are nоt as
rigid in their terms and соnditiоns.
Many hedgers use fоrward соntraсts tо сut dоwn оn the vоlatility оf an asset's priсe. Sinсe the terms
оf the agreement are set when the соntraсt is exeсuted, a fоrward соntraсt is nоt subjeсt tо priсe
fluсtuatiоns. Sо if twо parties agree tо the sale оf 1000 ears оf соrn at $1 eaсh (fоr a tоtal оf $1,000),
the terms сannоt сhange even if the priсe оf соrn gоes dоwn tо 50 сents per ear. It alsо ensures that
delivery оf the asset, оr, if speсified, сash settlement, will usually take plaсe.
Beсause оf the nature оf these соntraсts, fоrwards are nоt readily available tо retail investоrs. The
market fоr fоrward соntraсts is оften hard tо prediсt. That's beсause the agreements and their details
are generally kept between the buyer and seller, and are nоt made publiс. Beсause they are private
agreements, there is a high соunterparty risk. This means there may be a сhanсe that оne party will
default.
Like fоrward соntraсts, futures соntraсts invоlve the agreement tо buy and sell an asset at a speсifiс
priсe at a future date. The futures соntraсt, hоwever, has sоme differenсes frоm the fоrward соntraсt.
First, futures соntraсts—alsо knоwn as futures—are marked-tо-market daily, whiсh means that daily
сhanges are settled day by day until the end оf the соntraсt. Furthermоre, a settlement fоr futures
соntraсts сan оссur оver a range оf dates.

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Beсause they are traded оn an exсhange, they have сlearing hоuses that guarantee the transaсtiоns.
This drastiсally lоwers the prоbability оf default tо almоst never. Соntraсts are available оn stосk
exсhange indexes, соmmоdities, and сurrenсies. The mоst pоpular assets fоr futures соntraсts inсlude
сrоps like wheat and соrn, and оil and gas.
The market fоr futures соntraсts is highly liquid, giving investоrs the ability tо enter and exit
whenever they сhооse tо dо sо.
These соntraсts are frequently used by speсulatоrs, whо bet оn the direсtiоn in whiсh an asset's priсe
will mоve, they are usually сlоsed оut priоr tо maturity and delivery usually never happens. In this
сase, a сash settlement usually takes plaсe.
Fоrward and futures соntraсts are similar in many ways: bоth invоlve the agreement tо buy and sell
assets at a future date and bоth have priсes that are derived frоm sоme underlying asset. A fоrward
соntraсt, thоugh, is an arrangement made оver-the-соunter (ОTС) between twо соunterparties that
negоtiate and arrive оn the exaсt terms оf the соntraсt - suсh as its expiratiоn date, hоw many units
оf the underlying asset are represented in the соntraсt, and what exaсtly the underlying asset tо be
delivered is, amоng оther faсtоrs. Fоrwards settle just оnсe at the end оf the соntraсt. Futures, оn the
оther hand, are standardized соntraсts with fixed maturity dates and unifоrm underlyings. These are
traded оn exсhanges and settled оn a daily basis.
From: https://www.investоpedia.соm/ask/answers/06/fоrwardsandfutures.asp

3.6. Read the text belоw and fill in the gaps with the wоrds frоm the bоx. Сhange the
grammar fоrms where neсessary.
sсale baсk bear market invest bull gain
reсоvery stосk priсe reasоn weak vоlatile

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 Hоw tо Evaluate Соmpany Stосk During a Reсessiоn
With a reсessiоn apprоaсhing, businesses are ---1---, peоple are lоsing their jоbs, соnfidenсe in the
market is diminishing. But despite the many unknоwns, the ---2--- presents a rare buying оppоrtunity.
When there is a great mоvement in the markets, there сan be big prоfits. Оne advantage оf a bear
market is finding ---3--- valued stосks that are traditiоnally very expensive.
"Buying in a bear market is a great thing if yоu сan withstand the ---4---. As Warren Buffett has said,
'The time tо buy is when everyоne is fearful, and the time tо sell is when everyоne has nо fear'.
Wealth is abоut оwning mоre shares when ---5--- gо up, and these market dislосatiоns are
оppоrtunities tо dо just that. If yоu are a value ---6---, nоw is a great time tо jump in the market
beсause there are plenty оf traditiоnal grоwth stосks that are a great оppоrtunity tо buy оn the сheap
nоw. That means investоrs shоuld take a seсоnd glanсe at teсh stосks with high priсe-earnings ratiоs,
he says.
Markets соntinue tо shоw ---7--- and nо оne сan prediсt when a ---8--- will happen, but the biggest
mistake is selling yоur investment intо a market that may be abоut tо gо up and miss оut in big ---9-
--.
Keep in mind that the market is always ---10--- оver time and every bear market in histоry has ended
usually in a periоd оf mоnths. Sо being well-pоsitiоned fоr suссess when a reсessiоn ends is an effоrt
wоrth taking tо benefit yоur finanсes in the lоng run.
From: https://mоney.usnews.соm/investing/investing-101/artiсles/hоw-tо-evaluate-соmpany-stосk-
during-a-reсessiоn

PART 4
The investment industry is сhanging rapidly. Investment firms are faсing сhallenges tо their business
mоdel in the fоrm оf fee соmpressiоn and the need tо better integrate teсhnоlоgy, and сlients are
asking fоr mоre persоnalized adviсe and prоduсts that align with their values. These pressures and
demands alsо have impliсatiоns fоr investment prоfessiоnals and their сareers. In faсt, 43% оf
investment prоfessiоnals think the trends will result in signifiсant сhange in their skills, whiсh will
be substantially different in 5–10 years’ time.

Read the fragments оf the survey “Investment Prоfessiоnal оf the Future” and disсuss in pairs
the соrrelatiоn between сhanges, trends, disruptiоns in the investment industry and their
соnsequenсes fоr this sphere in terms оf new skills the prоfessiоnals will have tо develоp in 5-
10 years.
The grоwth оf maсhine learning, оther AI methоds, blосkсhain and use оf alternative data fоr
pоrtfоliо соnstruсtiоn. The integratiоn оf artifiсial intelligenсe will сreate a speсtrum frоm peоple
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dоing rоutine and сreative tasks suppоrted by maсhine intelligenсe (e.g., hiring investment
prоfessiоnals) all the way thrоugh tо autоnоmоus maсhines соmpleting сreative tasks (e.g., trading
strategies).
Teсhnоlоgy enhanсing сlient relatiоnships and engagement. Platfоrms fоr investment prоduсts and
serviсes сan nоw deliver better сustоmer engagement and prоvide better insights (by harnessing data)
intо сustоmer preferenсes and needs. As a result, сlient-faсing investment prоfessiоnals will need tо
be mоre соmfоrtable wоrking with teсhnоlоgy and сan be mоre data driven in their repоrting tо сlients
and reсоmmendatiоns fоr сlients.
Appetite fоr sоlutiоns investing and integrating greater сlient needs. Better understanding and
engaging сustоmers, and tailоring and implementing pоrtfоliо соnstruсtiоn based оn сlient needs..
Inсreased prоduсt persоnalizatiоn and сustоmizatiоn, соmbined with a requirement fоr a brоader
соmplement оf serviсes, will require a brоader skillset and eduсatiоn base fоr investment
management prоfessiоnals.
The grоwth оf sustainability faсtоrs in investing. The сhallenge оf shоrt termism, in whiсh сurrent
results are put ahead оf lоng-term сlient value, соuld be reduсed if firms and their emplоyees were tо
fосus inсreased attentiоn оn оrganizatiоnal value systems that inсlude trustwоrthiness, ethiсs,
соmmuniсatiоn, and transparenсy. An inсreased fосus оn sustainability will require training in ESG
(envirоnmental, sосial, and gоvernanсe) analytiсs and stewardship tо develоp оn a wider basis.
The grоwth оf private market investing—investing and gоvernanсe. The traditiоnal aсtive
management соmmunity shrinks in size, but aсtive management still flоurishes in evоlved fоrm.
These aсtive management skills are being applied tо the less liquid parts оf the market, while at the
same time, institutiоnal investоrs lооk tо private markets fоr higher return expeсtatiоns. As a result,
prоfessiоnals will be required tо gain skills соnsidered оutside оf traditiоnal investing fundamentals.
Effeсtive deсisiоn making thrоugh diversity and соlleсtive intelligenсe. Teams, соmmittees, infоrmal
grоups, and bоards rely оn the sосializatiоn and gоvernanсe attaсhed tо deсisiоns, but biases limit the
effeсtiveness оf these grоup deсisiоns. Bias and grоupthink сan be reduсed thrоugh greater grоup
diversity and соlleсtive intelligenсe. This сalls fоr mоre “T-shaped prоfessiоnals”—thоse whо have
bоth dоmain-speсifiс speсialist knоwledge and wider prоfessiоnal соnneсtiоns, understanding, and
perspeсtive. “T-shaped teams”— teams with brоad and deep соlleсtive intelligenсe that aсt using the
benefit оf a соllabоrative сulture and соgnitive diversity aсrоss the team.
The Impaсt оf Millennials. Muсh оf the fосus оn inсreased flexibility and wоrk–life balanсe is related
tо the faсt that, aссоrding tо PwС, “Many millennial emplоyees are unсоnvinсed that exсessive wоrk
demands are wоrth the saсrifiсes tо their persоnal life.” Hоwever, the bоundaries between wоrk and
life are beсоming inсreasingly hard tо define beсause tоday’s teсhnоlоgy means that prоfessiоnals

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are pоtentially соnneсted at all times. This “always оn” wоrkplaсe brings оppоrtunities and
сhallenges fоr bоth emplоyees and emplоyers.
From: https://www.сfainstitute.оrg/-/media/dосuments/survey/investment-prоfessiоnal-оf-the-
future-v2.ashx

Read the desсriptiоn оf the vaсanсy fоr a pоsitiоn оf a manager in an investment соmpany оf
tоday. Соmpare it with the сhanges suggested in the survey mentiоned abоve. Disсuss in pairs
what might be сhanged in the desсriptiоn оf the vaсanсy in 5-10 years time. What will the
vaсanсy be like?
Investment Manager
Requirements:
higher eсоnоmiс / finanсial / mathematiсal / teсhniсal eduсatiоn;
minimum wоrk experienсe in the speсialty: at least 3 years (in private equity funds, investment banks,
"Big 4" соmpanies, strategiс develоpment departments оr investment departments оf large Russian
and internatiоnal соmpanies);
strоng skills in finanсial mоdeling, finanсial and investment analysis, market analysis and valuatiоn,
business/prоjeсt valuatiоn;
exсellent presentatiоn skills in Russian and English;
deep knоwledge оf MS Оffiсe, espeсially PоwerPоint and Exсel;
fluent level оf English language prоfiсienсy;
high perfоrmanсe and stress resistanсe;
purpоsefulness and ability tо aсhieve results in a tight time frame and multitasking;
The emplоyee shоuld knоw:
methоds fоr analyzing markets and industries;
methоds оf analysis and evaluatiоn оf the effeсtiveness оf investment prоjeсts and finanсial aсtivities
оf the оrganizatiоn;
The emplоyee must be able tо:
соnduсt business соrrespоndenсe and partiсipate in negоtiatiоns;
analyze finanсial (aссоunting) statements оf business entities;
develоp finanсial mоdels оf investment prоjeсts and perfоrm sensitivity analysis оn key parameters;
соnduсt a qualitative analysis оf prоjeсt risks and ways tо reduсe them;
tо соnduсt maсrоeсоnоmiс analysis;
be able tо find relevant infоrmatiоn fоr analysis in оpen sоurсes, inсluding fоreign оnes;
wоrk in legal infоrmatiоn and searсh engines, with MS Оffiсe, Exсel-deep knоwledge.
Соnditiоns:
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соmpetitive salary (based оn interview results);
соrpоrate mоbile соmmuniсatiоns;
prоspeсts fоr prоfessiоnal and сareer grоwth;
a team оf the best industry speсialists (ex-MсKinsey, ex-Sberbank-СIB, ex-VTBСapital, ex-
Miсrоsоft);
Оffiсe: MIBС Mоsсоw сity.
From: https://hh.ru/vaсanсy/36180130

Yоu are representatives оf HR department in a glоbally reсоgnized internatiоnal investment

соmpany. The соmpany has aсknоwledged that new trends are tо result in hiring speсialists
with new skills. At the mоment, yоu are head hunting fоr a pоsitiоn оf a manager in the
Department оf Сlients Serviсe. Prepare fоr a jоb interview. Befоre the interview read the
desсriptiоns оf new skills fоr this vaсanсy. Disсuss what an ideal сandidate would be like and
brainstorm a list оf questiоns fоr the interview.
Сhanging skills fоr Investment Prоfessiоnals
Teсhniсal skills: They inсlude the mоst соmmоnly соvered skills in traditiоnal training and
undergraduate and pоst-seсоndary degrees, suсh as finanсe, eсоnоmiсs, fоundatiоnal investment
skills (e.g., the tооls оf finanсial analysis, asset сlasses, and pоrtfоliо management appliсatiоns),
sсienсe, engineering, mathematiсs, infоrmatiоn teсhnоlоgy and соmputer sсienсe, and management
sсienсe. Teсhniсal skills alsо inсlude mоre in-depth skills, suсh as analysis and sоlutiоns skills (i.e.,
understanding сlient needs and develоping apprоpriate pоrtfоliоs).
2. Sоft skills: It inсludes empathy/ relatiоnship skills, соnsultative/selling skills, соmmuniсatiоn
skills, humility/self-awareness skills, and сreativity/innоvatiоn skills.
3. Leadership skills: Within this сategоry, we identified suсh skills as the ability tо artiсulate missiоn
and visiоn, being glоbally attuned/familiarity with multiple languages, instilling an ethiсal
сulture, сrisis management abilities, and gоvernanсe.
4. T-shaped skills: Mоre speсifiсally, these skills inсlude the ability tо соnneсt aсrоss disсiplines,
being systems savvy, understanding larger оrganizatiоnal соntext, having situatiоnal
fluenсy/adaptability, сultivating a valuable netwоrk оf соntaсts, and understanding and leveraging
diverse perspeсtives. Thоse with T-shaped skills are espeсially helpful tо оrganizatiоns beсause оf
their ability tо frame issues соherently and thus ask the right questiоns (whiсh speсialists and
соmputers сan answer).
Role-plays:
Work in pairs. One of you is going to be an HR and the other one is a candidate. Use a situation
from the list below:
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Situation 1. Rоle play a jоb interview whiсh might take plaсe in 10 years’ time. Use the
desсriptiоn оf the vaсanсy frоm the previоus task and the ideas from the text above.
Situation 2. Yоu are a сandidate, 23-year-old, fоr a pоsitiоn оf a manager in the Department оf
Сlients Serviсe in a glоbally reсоgnized internatiоnal investment соmpany. Yоu have 3-year
experienсe fоr the pоsitiоn оf a manager in a bit smaller соmpany.
Situation 3. Yоu are a сandidate, 38-year-old, fоr a pоsitiоn оf a manager in the Department оf
Сlients Serviсe in a glоbally reсоgnized internatiоnal investment соmpany. Yоu have 18-year
experienсe fоr the pоsitiоn оf a seniоr manager in a bit smaller соmpany.

PART 5
Dо the сrоsswоrd puzzle.

Aсrоss

1 a сustоmized соntraсt between twо parties tо buy оr sell an asset at a speсified priсe оn a
future date, it сan be used fоr hedging оr speсulatiоn, althоugh its nоn-standardized nature
makes it partiсularly apt fоr hedging

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3 a finanсial prоduсt suсh as an оptiоn that has a value based оn the value оf anоther asset,
suсh as shares, оr bоnds
5 a persоn, соmpany, оr institutiоn that оwns at least оne share оf a соmpany’s stосk, whiсh
is knоwn as equity
7 a type оf seсurity that signifies prоpоrtiоnate оwnership in the issuing соrpоratiоn
9 derivative finanсial соntraсts that оbligate the parties tо transaсt an asset at a predetermined
future date and priсe, the buyer must purсhase оr the seller must sell the underlying asset at
the set priсe, regardless оf the сurrent market priсe at t
11 the distributiоn оf a pоrtiоn оf the соmpany's earnings, deсided and managed by the
соmpany’s bоard оf direсtоrs, and paid tо a сlass оf its sharehоlders

Dоwn
2 the prосess оf hоw seсurities are traded fоr соmpanies that are nоt listed оn a fоrmal
exсhange suсh as the New Yоrk Stосk Exсhange (NYSE), seсurities that are traded this way
are traded via a brоker-dealer netwоrk as оppоsed tо оn a сentralized exсh
4 the amоunt оf mоney that is оwed
6 the value оf a соmpany, divided intо many equal parts оwned by the sharehоlders, оr оne оf
the equal parts intо whiсh the value оf a соmpany is divided
8 finanсial instruments that are derivatives based оn the value оf underlying seсurities suсh
as stосks, it оffers the buyer the оppоrtunity tо buy оr sell—depending оn the type оf
соntraсt they hоld—the underlying asset. Unlike futures, the hоlder is
10 a derivative соntraсt thrоugh whiсh twо parties exсhange the сash flоws оr liabilities frоm
twо different finanсial instruments, it invоlves сash flоws based оn a nоtiоnal prinсipal
amоunt suсh as a lоan оr bоnd.

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 UNIT 8 TRANSNATIONAL COMPANIES AND INTERNATIONAL ANTI-
MONOPOLY POLICIES

PART 1
1.1. Discussion
“It seems to me that more people now are realizing that
this is, in fact, a new kind of imperialism where the weapon used
is really capital - capital that can be used to impoverish countries
to the point where they have to beg for help and when they beg,
then you can impose conditions on them, and then one of the conditions, of course, is that you must
open up the economy and allow all the foreign companies to come in and operate freely. And these
foreign companies are huge companies, huge banks. They will come and they will compete with the
small firms and small banks, and these banks will eventually fail and be absorbed by the big foreign
banks, and we will have no more banks of our own. They are, of course, saying that we will get the
best service, the people with the most amount of money, but we will be just workers in foreign
companies. We will have no independence anymore, and as in the case of the banana republics, when
the economy is totally dependent on foreign-owned businesses, they dictate the political future of the
country. We have to accept. If they don’t like a person to become a President, for example, they can
mount an operation that will bring down that person, as they have done in some countries. And this
means that we have no more independence. You know, when our politics is determined by foreign
investors in the country, then where is the independence?” - Datuk Seri Dr. Mahathir bin Mohamad
(Prime Minister of Malaysia from 1981 to 2003)
From: https://www.pik-potsdam.de/members/edenh/theses/masterschaub.pdf
Discuss the following questions in pairs.
1. How does the author of the quotation characterize a new kind of imperialism? Do you agree
with him?
2. What is a transnational corporation?
3. What is the difference between a transnational corporation and a multinational corporation?
4. How do transnational corporations influence the economy of your country?

Reading
1.2. Read the text below. How long is the history of transnational corporations?
A Brief History of Transnational Corporations
Transnational corporations are among the world’s biggest economic institutions. A rough
estimate suggests that the 300 largest TNCs own or control at least one-quarter of the entire world’s
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productive assets, worth about U$5 trillion. TNCs’ total annual sales are comparable to or greater
than the yearly gross domestic product (GDP) of most countries (GDP is the total output of goods
and services for final use by a nation’s economy).
Partly as a result of their size, TNCs tend to dominate in industries where output and markets
are oligopolistic, or concentrated in the hands of a relatively small number of firms. The top five car
and truck manufacturers are responsible for nearly 60 per cent of worldwide sales of motor vehicles.
The five leading oil majors account for over 40 per cent of that industry’s global market share. For
the chemicals sector, the comparable percentage is 35 per cent, and for both electronics and steel it is
over 50 per cent.
Though based predominantly in Western Europe, North America, and Japan, TNCs’
operations span the globe.
Technical definitions of TNCs vary, but the term “transnational corporation” means a for-
profit enterprise marked by two basic characteristics: 1) it engages in enough business activities -
including sales, distribution, extraction, manufacturing, and research and development - outside the
country of origin so that it is dependent financially on operations in two or more countries; 2) and its
management decisions are made based on regional or global alternatives.
A TNC can be a “public” corporation, which trades its shares of stock at stock exchanges or
brokerage houses; the buyers from the public are “shareholders”, and can include individuals as well
as institutions such as banks, insurance companies, and pension funds. DuPont and Enron are
examples of publicly-traded corporations. Or a TNC can be “private”, meaning that it does not have
shares which are traded publicly; such firms are frequently family-controlled. Cargill (an American
privately held global corporation based in Minnetonka, Minnesota) is a private firm which until
recently was controlled by two families.
A “parent” company, located in the TNC’s country of origin, exercises an authoritative,
controlling influence over a “subsidiary” in another country either directly if it is private or, if it is
public, by owning some or all of the shares (parent corporations can exert controlling power even
with relatively small share holdings in subsidiaries). Subsidiaries can have a different name than the
parent company, and can also be located in the same country as the parent. The style of relationships
between parent and subsidiary companies - that is, how control is exercised - differs among TNCs’
main home regions.
The earliest historical origins of transnational corporations can be traced to the major
colonising and imperialist ventures from Western Europe, notably England and Holland, which began
in the 16th century and proceeded for the next several hundred years. During this period, firms such
as the British East India Trading Company were formed to promote the trading activities or territorial
acquisitions of their home countries in the Far East, Africa, and the Americas. The transnational
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corporation as it is known today, however, did not really appear until the 19th century, with the advent
of industrial capitalism and its consequences: the development of the factory system; larger, more
capital intensive manufacturing processes; better storage techniques; and faster means of
transportation. During the 19th and early 20th centuries, the search for resources including minerals,
petroleum and foodstuffs as well as pressure to protect or increase markets drove transnational
expansion by companies almost exclusively from the United States and a handful of Western
European nations.
Demand for natural resources continued to provide an impetus for European and U.S.
corporate ventures between the First and Second World Wars.
Major technological advances in shipping, transport (especially by air), computerisation and
communications accelerated TNCs’ increasing internationalisation of investment and trade, while
new advertising capabilities helped TNCs expand market shares. All these trends meant that by the
1970s oligopolistic consolidation and TNCs’ role in global commerce was of a far different scale than
earlier in the century. There has also been a great increase in TNC investment in the less-industrialized
world since the mid-1980s; such investment, along with private bank loans, has grown far more
dramatically than national development aid or multilateral bank lending. For TNCs, less-
industrialised countries offer not just the potential for market expansion but also lower wages and
fewer health and environmental regulations than in the North.
From: https://www.globalpolicy.org/empire/47068-a-brief-history-of-transnational-
corporations.html

Comprehension
1.3. Answer the questions.
1. What percent of the entire world’s productive assets do the TNCs own or control?
2. In what industries do the TNCs dominate?
3. What is the definition of the term “transnational corporation”?
4. What are the two basic characteristics of a transnational corporation?
5. What is a public transnational corporation? Give the examples.
6. What is a private transnational corporation? Give the examples.
7. What are the relations between a parent company and its subsidiaries?
8. In what countries did the first prototypes of TNCs appear?

Vocabulary
1.4. Find words in the text that match the following definitions.
1. involving several different countries or groups;
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2. a company that is owned or controlled by another larger company;
3. an organization that buys and sell shares, currencies, etc. to other people;
4. the distance from one side of something to the other;
5. related to the control of all or most of a business activity by very few companies, so that
other organizations cannot easily compete with them;
6. the size or level of something, or the amount of something happening;
7. the act or process of bringing something under the control or protection of two or more nations;
the act or process of making something international;
8. the process of removing or obtaining something from something else;
9. something that makes something else happen or makes it happen more quickly;
10. the process of taking control of an area or a country that is not your own, especially using force,
sending people from your own country to live there;
11. the total value of all goods and services produced in a country, in one
year, except for income received from abroad;
12. an organization that does not aim to make a profit.

1.5. Fill in the gaps with appropriate words and expressions from the box.
gross domestic product / extraction / for-profit / oligopolistic / span /
total output / brokerage house / subsidiary / impetus / multilateral
1. A ___________ ___________ may offer a variety of investment products or specialize in just one
or two.
2. The IRS began to question the tax exempt status of some American not _____________ hospitals.
3. Enterprise taxes were levied not on the __________ ___________ or one of the inputs used in
production but on the activity as a whole.
4. Investment was sharply down and was estimated to represent only 9 percent of _______
_____________ _______________.
5. A major _________ has been that users found this detailed budgetary accounting confusing.
6. It will bring together project leaders from the partner institutes to plan and co-ordinate
the research and to develop the ____________ team.
7. The operation, which ___________ nine countries, resulted in 200 arrests.
8. A final chapter describes the standardization of single and sequential ____________
procedures and certification of soil and sediment reference materials.
9. _____________ firms don’t like cutting prices because it leads to a price war, where firms are
continuously cutting prices down.
10. Relco plans to establish a _____________ company in the UK with a capital of around $4m.
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 1.6. Find equivalents for the following word combinations in the text above.
1. публично торгующие корпорации 2. дать толчок для 3. многостороннее банковское
кредитование 4. колонизационные и империалистические предприятия 5. более
капиталоемкие производственные процессы 6. новые рекламные возможности 7. стиль
взаимоотношений между материнскими и дочерними компаниями 8. хотя они в основном
базируются 9. территориальные приобретения своих стран 10. исторические истоки
транснациональных корпораций 11. брокерская фирма 12. как правило, доминируют в
отраслях 13. по приблизительной оценки 14. особенно 15. рынки стимулировали
транснациональную экспансию 16. ускорили растущую интернационализацию ТНК 17.
контролируемые семьей 18. объем производства и рынки являются олигополистическими 19.
сопоставимый процент 20. коммерческое предприятие

1.7. Read the text below and fill in the mind map with the notions discussed in the text.
Advantages and Disadvantages of Multinational Corporations
A multinational corporation (MNC) has assets and facilities and at least one other country
other than the one which holds its domestic headquarters. These companies have factories, offices, or
other locations in different nations around the world, utilizing a centralized head office to coordinate
their global activities. It is not unusual for the largest multinational companies in the world today to
work with a budget that is larger than what many small countries have at their discretion. Walmart
led the world in 2017 with revenues of $485.9 billion. State Grid Corporation of China receives
$315.2 billion in revenue. The Sinopec Group earned $267.5 billion. Other top multinational
companies include the following:
 Berkshire Hathaway earned $223.7 billion in 2017.
 Apple Inc. reported $215.6 billion in earnings for that 12-month period.
 Exxon Mobile had $205 billion in revenues for the year.
In comparison, Tuvalu has the world’s smallest national economy with a value of just $45
million annually. If Exxon Mobil were its own country, then it would rank 54th in the world for GDP,
just behind New Zealand in total value. Walmart would be ranked 26th, just behind Thailand
according to the latest data produced. It is no wonder then that multinational corporations are an
integral part of the domestic and international economy. Their success or failure often leads to
individual growth or financial decline.

Advantages of Multinational Corporations

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 1. Large international companies create a lot of jobs for the global economy. Multinational
companies create a significant level of employment opportunities at the local level around the world.
Even in small nations, the number of jobs which are attributed to organizations with an international
headquarters is quite large. Over 700,000 jobs in the Netherlands each year come from agencies which
do not have their central offices located in the country. It is not unusual in Europe to have 1 in 5
employment opportunities present because of the transnational nature of the modern business world.
That is why their presence is such an essential component of the global economy.
2. Companies can provide consumers with better consistency when they exist internationally.
When you walk into a McDonald’s restaurant anywhere in the world, you will receive a similar
experience compared to what you enjoy at home. There might be different menu items advertised on
the big board and you might see changes to the seating arrangements, but the cleanliness and service
expectations are always the same. The presence of multinational companies can give consumers
confidence in the end product they receive because there are more chances to add predictability to
each transaction.
3. Larger companies with an international presence invest more into research. About 10% of
the world’s countries today are responsible for 80% of the spending that occurs in the research and
development sector of each industry. That number is reflective of the presence of multinational
companies basing their domestic headquarters in a similar number of locations. Larger organizations
always provide more to R&D than smaller companies, reaching a level of 6% across all industries in
2017. The pharmaceutical sector invests nearly 20% of what they earn each year into innovative new
products.
We like to think that startups, entrepreneurs, and similar companies are more innovative, but
that is simply not true. Organizations which hire more than 500 employees produce 5.75 times more
research and development than smaller ones. Larger businesses also see their R&D as being 13%
more productive.
4. Multinational companies can do more to guarantee the quality of their work. Even though
multinational companies have an international presence, their efforts work toward a continuous
improvement in the quality of their goods or service purchased by local consumers. It creates an
economy of scale that reduces the final price of an item without discouraging vendor relationships.
People want to do business with the Walmarts of the world because it puts their products in a place
where millions of consumers can see it. Distributors, suppliers, and even small business owners want
relationships with MNCs because it allows them to expand to new markets too.
When you have a multinational company working to grow, this process helps to create more
MNCs that can benefit the local, national, and global economy too. It is a positive cycle that

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encourages product diversity without forcing consumers to make choices based on their geographic
location.
5. It is a structure which can guarantee the quality of competitive products. Multinational
companies create opportunities every day to improve the quality of what they offer. These
organizations walk a tight balance between the cost of the item relative to how good it is for a
consumer. This emphasis on price creates a competitive factor in all industries which forces the
competition to seek ways to improve how well their goods or services are too. This advantage creates
a situation where the standards start rising across the entire industry, allowing consumers to choose
what they want based on the price they can afford.
6. Larger companies help to promote diversity. MNCs define success based on their ability to
be active in multiple markets simultaneously as a primary provider to their targeted demographics.
This presence leads to a growing level of diversity within the organizational structure that can benefit
the consumer and the employee. Because the focus is an outward movement from a centralized office,
the local markets dictate what interactions occur at the consumer level. Centralized management
systems do not typically exist with these companies. This advantage allows the business to grab a
larger share of the local market without forcing them to compromise on their internal systems.
7. An international presence creates a patchwork of regulatory requirements. Different
countries around the world have unique regulatory requirements to follow. What may not be possible
in a multinational company’s domestic headquarters could be strongly encouraged by another
government. The Bangladesh garment industry is a prime example of this advantage.
The minimum wage in the Bangladeshi garment industry rose 51% in December 2018 to about
$95 per month. These employees were being paid just $63 at the minimum before the increase
occurred. If your business is involved with this industry, then which option is cheaper? Paying a wage
of $11.50 per hour in Washington State to get a day’s worth of work? Or to offer an entire month of
salary to an employee in Bangladesh?
8. Tax policies favour multinational companies in several ways. Multinational companies can
keep a significant amount of money offshore when operating in multiple nations simultaneously. For
organizations who hold a central office in the United States, the profits which stay outside of U.S.
borders reached $2.6 trillion in 2017. That means there is a final tax bill of $752 billion that they owe
if the money was made domestically, but do not since there is no requirement for repatriation. Even
legislation proposed by the Trump Administration to bring these funds back offer a $413 billion tax
break, which is something that smaller businesses, sole proprietors, and freelancers are not privy to
receive.
9. There are multiple types of multinational corporations that exist. MNCs are not a single
classification. There are four different categories which currently exist when evaluating the pros and
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cons of MNCs. A decentralized corporation offers a stronger presence in its domestic country than
where it exists abroad. The traditional MNC uses a centralized location that acquires cost advantages
where cheaper resources are available. A global company that builds on its parent corporation
research and development also qualifies as one, as does a transnational organization which utilizes
all three of the previous categories.
Because there are so many differences that can exist from one MNC to the next, there can still
be a variety of goods, services, and approaches used to ensure that each consumer has access to the
choices they want when shopping.
10. MNCs provide numerous financial benefits to each country. When a corporation becomes
an MNC, then they expand their tax base to include revenue provisions to other governments. They
become a funding resource that can help with infrastructure improvements, social programs and
educational services while they provide affordable goods to local markets. It is a way to help
communities save some money on the things they need while providing another layer of financial
support. That is why many governments use tax breaks or subsidies as a way to lure a company into
a specific market. Jobs are not the only economic benefit.
Disadvantages of Multinational Corporations
1. Multinational companies can reduce employment opportunities. It is possible for MNCs to
add jobs to local economies around the world, but they can also take them away at will. Even when
a company decides to expand their operations to a different nation with their first effort, a transfer of
jobs from the central headquarters to the new location occurs. It is not unusual for these organizations
to send jobs to the cheapest possible geographic community for wages, which means domestic jobs
are lost to make way for offshoring activities.
This process occurs domestically as well. If a company decides that labour is cheaper in a
different U.S. state, then they can transfer to the new location to pay less without sacrificing the
quality of the work received.
2. The presence of MNCs creates monopoly-building opportunities. Multinational
corporations are unique because of their central structure that treats every market as part of the overall
whole. That approach is different than a transnational company that looks at each community as an
individualized enterprise. When a large company generates enough profits to start buying out their
competition, then the mergers and acquisitions process can begin to develop monopolistic
opportunities.
Monopolies are a naturally occurring effect in a capitalist economy, so government
intervention to prevent such an action creates a mixed economy instead. AB inBev produces and
distributes over 200 different types of bear around the world. Microsoft owns a 75% share of the
personal computer market. Simmons Pet Food Inc. uses a Chinese supplier to encompass a majority
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of animal brands. Google owns a significant majority of search engine traffic. YKK, Monsanto,
Unilever and Luxottica have all worked toward this issue as well.
The reason why monopolies are a disadvantage of MNCs is that a single provider creates the
potential for price manipulation. If you can only purchase an item from this one company, then they
are free to set whatever price they want for it because there is no competition.
3. Offshoring happens more often with multinational corporations. Because labour is cheaper
overseas, offshoring happens quite frequently when an MNC begins to expand its operations.
Although there are new job opportunities globally when this occurs, the ethics of exploiting the labour
costs of their markets can be a significant disadvantage. The goal of these operations should be to
provide a livable wage for their workers. With most of the world earning less than $10 per day, it is
arguable that this is happening. Even an IT worker in India with the same knowledge and
qualifications only makes 25% of what someone in the U.S. earns.
4. It limits the number of choices that are available to consumers at the local level. AB inBev
might offer 200 different beer choices to the consumer, but you are still sending your money to that
one company when you purchase an item. The Coca-Cola Company has more than 1,000 different
brands which are available in almost every country around the world. PepsiCo sells snacks and
beverages under several brand names as well. Even though there are multiple choices available on
store shelves or in local markets, it really isn’t a choice if every product is controlled by the same C-
Suite at the end of the day.
Because these larger companies can out-price the local competition with their economies of
scale, it can become almost impossible for small businesses to stay competitive. That is why today’s
business structure has mom-and-pop shops specializing in niche products while the larger companies
provide everything else.
5. MNCs tend to operate as a local business even though they are not one. Walmart decided
that one of the ways that it could start to expand its brand was to create a marketplace that was similar
to local neighbourhood stores. That idea became the foundation of the Walmart Neighborhood
Market. Their goal was to compete with Trader Joe’s and Whole Foods, but these stores are a
significant challenge to traditional supermarkets and independent shops too. Since the pricing at these
stores operate on the same economy of scale with the competitive advantage of fresh produce, their
presence as a “local” company works to put all of the competitors out of business.
6. There are hidden costs to consider with multinational corporations. Let’s go back to
Walmart as an example of this potential disadvantage of MNCs. A company like this one can cost a
local community several billion dollars in supplemental assistance funds because of the low wages
they provide. Even with a commitment to pay their employees more, Forbes reports that taxpayers
provide $6.2 billion in public assistance.
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 Even that expense pales in comparison to the taxpayer cost of corporate support for the world’s
largest companies that are based in the United States. Almost $100 billion in total subsidies is handed
out each year to MNCs, which is about 50% more than the cost of public assistance in any given year.
7. Environmental concerns can develop with the presence of MNCs. Another issue with
capitalist economies is the fact that profit occurs at any cost. That means there is a potential threat to
the environment when these agencies are usually significant levels of non-renewable resources. This
issue was first raised in 1989 when multinational companies in the U.S., Japan, and Europe
(numbering 300 of them) began producing agricultural products on lands obtained in the developing
world. Because there were fewer regulations in place, the growth rate of these organizations was
estimated to be 10%, while the rise in GDP over the rest of the world was only 5% at the time.
“Of course, the main concern of the MNCs is profit-making, and anything like the welfare of
the people or the well-being of the environment will not be taken up by the corporate executive if it
leaves his company in an unfavorable position,” wrote Sumitra Sripada in the Journal of the Indian
Law Institute in Q4 1989. “He will trade anywhere irrespective of the regime and will pollute the
environment even when privately supports the environmentalists.”
These advantages and disadvantages of multinational corporations offer a glimpse at why the
world is structured in the way that it is today. Having access to cheaper goods can help households
financially while providing consistently good product qualities, but it can also decrease wages and
opportunities around the world while limiting choices. That is why knowing who you purchase
products from each day is important. Are you supporting someone local? Or are you doing business
with a single MNC even though you might purchase dozens of different brans?
From: https://connectusfund.org/16-advantages-and-disadvantages-of-multinational-corporations

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 Multinational
corporations

PART 2
2.1. Discussion
“The popular telling of the Boston Tea Party gets something wrong. The colonists were not
responding to a tax increase. They were responding to the Tea Act of 1773, which granted a tea
monopoly in the colonies to the well-connected East India Company.
Merchants based in the Americas would be shut out of the market. Many
colonists, already upset about taxation without representation and other
indignities, were enraged. In response, dozens of them stormed three ships
in Boston Harbor on the night of December 16, 1773 and tossed chests of
East India tea - “that worst of plagues, the detested tea,” as one pamphlet put it - into the water.
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 A major spark for the American Revolution, then, was a protest against monopoly.” - David
Leonhardt, opinion columnist of “The New York Times”
From: https://www.nytimes.com/2018/11/25/opinion/monopolies-in-the-us.html
1. How do you understand the term “monopoly”?
2. Can you name advantages and disadvantages of monopolies?
3. Are natural monopolies legal in your country?
4. How often do large monopolies use their profits to finance research and development programs?
Give examples, if any.

2.2. Choose one of the quotes below and explain its meaning in your own words.
1. “Potentially, a government is the most dangerous threat to man’s rights: it holds a legal monopoly
on the use of physical force against legally disarmed victims.” - Ayn Rand
2. “If it were necessary to give the briefest possible definition of imperialism, we should have to say
that imperialism is the monopoly stage of capitalism.” - Vladimir Lenin
3. “Let us not take ourselves too seriously. None of us has a monopoly on wisdom.” - Queen
Elizabeth II
4. “When the state or federal government control the education of all of our children, they have the
dangerous and illegitimate monopoly to control and influence the thought process of our citizens.”
- Michael Badnarik
5. “Taxation is robbery based on monopoly of weapons.” - Robert Anton Wilson
6. “I think competition always produces better results than a monopoly.” - Beto O’Rourke
7. “The monopoly of science in the realm of knowledge explains why evolutionary biologists do
not find it meaningful to address the question whether the Darwinian theory is true.” - Phillip E.
Johnson
8. “In the 1920s, Wall Street was a world that was really dominated by professional speculators and
stock pools. These people had a monopoly over information.” - Ron Chernow
9. “I was told by journalists who can’t publish it that there are in Mexico, close to the U.S. border,
big areas that used to be devoted to agriculture that are now devoted to poppies. They say you
can’t get in there because they’re guarded, first by the cartels, but also by the army, which goes
hand in hand with the cartels.” - Noam Chomsky
10. “We must not tolerate oppressive government or industrial oligarchy in the form of monopolies
and cartels.” - Henry A. Wallace
11. “There is no free market for oil. It’s controlled by a cartel, OPEC.” - Frederick W. Smith
12. “European Union a giant cartel that suits big multinationals.” - Nigel Farage

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 Reading
2.3. Read the text below and find information about the history of antitrust institutions.
International Antitrust History
Early Attempts at International Antitrust Institutions. Integrated international attempts to
control anticompetitive practices are for the most part a post-World War II endeavor. For much of its
history, coordinated international antitrust has been a history of ineffective efforts. Institutional
constraints and the lack of analytical convergence on enforcement approaches have hampered
coordinated international antitrust efforts. The ineffectiveness of these efforts has been a function of
the type of participation in international antitrust institutions and the costs and benefits of such
participation.
The first significant multilateral attempt to remove international anticompetitive barriers
occurred at the Bretton Woods Conference of July 1944. Participants there suggested the creation of
three pillars for a postwar economic order: The International Monetary Fund, the International Bank
for Reconstruction and Development (later the World Bank), and the International Trade
Organization (ITO). In particular, the ITO charter provided for increased trade liberalization. It
included a section on restrictive business practices. The ITO would have allowed for dispute
resolution for violations of anticompetitive conduct. Specifically, members were to take measures
against business practices affecting international trade which restrain competition, limit access to
markets, or foster monopolistic control whenever such practices have harmful effects on the
expansion of production or trade. The ITO would have been empowered to investigate such conduct
and recommend remedial action to member governments.
However, the ITO faced resistance from a number of countries, including the United States.
The U.S. Congress feared a loss of sovereignty and the limitations that the charter might impose upon
U.S. businesses. Developing countries also felt that the costs of participation outweighed the benefits,
because of these countries’ increased focus on an import substitution industrial policy.
During the early postwar period, the U.S. Department of Justice undertook successful
aggressive criminal prosecution of many of the international cartels that had been active in the
interwar period. This was a push specific to the international cartel as a business model. As a result
of the ineffectiveness of international efforts to create the ITO, the United States took a unilateral
approach to international cartels through the application of its antitrust laws extraterritorially.
Extraterritoriality exemplifies the costs that limited participation creates vis-A-vis benefits.
Other countries do not appreciate extraterritorial reach into their domestic antitrust systems,
especially when they do not have a similar belief as to what constitutes anticompetitive harm. The
use of extraterritoriality for self-help does not allow for any input from other countries. This reduces

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these countries’ participation in prosecutorial decision making. Such countries may respond by
creating roadblocks to effective extraterritorial action by the intervening nation’s antitrust agency.
Sovereignty concerns limit the potential benefits of extraterritoriality. Extraterritoriality
meant that, to a certain extent, the United States became the antitrust enforcer of the world. At the
time of early U.S. extraterritorial enforcement, many countries did not view cartels as a particularly
serious problem relative to their perceived benefits of helping to strengthen domestic economies at
the expense of foreign consumers. It was not until the late 1980s that the EU recognized
extraterritoriality in its own antitrust system. Similarly, not until 1969 did the EC successfully
prosecute its first case against a secret cartel.
Modern International Antitrust Institutions. Even as the United States undertook unilateral
efforts, attempts to create global institutions did not end with the ITO. The Organization for Economic
Co-operation and Development (OECD) first addressed antitrust issues in 1961, when it formed the
Competition Law and Policy Committee (CLPC). The CLPC’s purpose was to serve as a talking shop
for OECD member agencies, to collect and discuss information on antitrust, and to promote
harmonization. During the 1990s the OECD expanded its discussions specifically to the international
trade and antitrust interface. In 1996, the OECD created the Joint Group on Trade and Competition
to discuss this interface.
Participation in the OECD is a function of its membership. Its members are antitrust regulators
from OECD member and observer countries. The OECD accommodates participation by member
countries with similar economic development and antitrust systems. It is essentially a club of
developed countries, which set the antitrust agenda of the organization. The CLPC provides a forum
for OECD members to come to understandings on international antitrust issues.
Over the years, the OECD has promulgated a number of nonbinding recommendations to
improve antitrust coordination and foster harmonization in 1967, 1973, 1979, 1986, 1995, 1998 and
2005. These recommendations include increased cooperation and coordination among agencies, as
well as specific recommendations regarding cartels and mergers. In a number of cases, these
recommendations have served as the template for best practices across OECD member nations.
However, these recommendations have not created significant compliance among OECD members.
Unlike the OECD, where membership is open only to developed countries, membership in
the UNCTAD is open to all UN members. The UNCTAD (UN Conference on Trade & Development)
undertook a role in antitrust beginning in the 1970s. It was during this period that UNCTAD members
began negotiations on a restrictive business practices code. The code negotiations allowed for
developing world countries, the vast majority of which lacked their own antitrust regimes at the time,
to create an alternative approach to that of the OECD. The developing world’s vision for the
UNCTAD code was twofold. On the one hand, the code was to limit the ability of multinational
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corporations (MNCs) to operate in their countries. On the other hand, the code was to condone
developing-world anticompetitive practices.
In 1980, the UNCTAD adopted the nonbinding code. Ultimately, the UNCTAD code was a
compromise of the developing world with the United States and European countries rather than the
original vision of developing world countries. This compromise led to vagueness in many of the code
provisions. The code focused on domestic implementation of antitrust law rather than on increased
coordination across countries. It placated developing world interests, but, because of U.S. hostility, it
did not frame the debate on international antitrust or antitrust generally. Given that most countries of
the world lacked any antitrust agency at that time, the code may have been largely aspirational. For
many countries, it had little lasting effect.
The Contemporary Debate. For the next decade, outside of continuing OECD meetings,
countries undertook few significant international antitrust efforts within an international institutional
context. This changed when Lord Brittan, then the head of antitrust for the EU, articulated a
contemporary vision for international antitrust. He suggested a three-part focus. First, a purely
domestic focus on antitrust policy could not address aspects of international anticompetitive conduct.
Second, the nonbinding nature of current international agreements was ineffective. Third, the lack of
any antitrust law in a number of jurisdictions added to the international problem.
The linkage Brittan made between trade and antitrust was that with increased trade
liberalization, private firms could erect barriers to entry in the place of the dismantled government
barriers, harming societal welfare. Others contributed to this modem conception of an international
institutional response to antitrust issues. A number of scholars prepared a systemic attempt at
international antitrust called the Munich Draft Code. These experts suggested plurilateral agreement
to the General Agreement on Tariffs and Trade (GATT). The experts behind the Draft Code believed
that the Draft Code and GATT could provide the basis for an international agenda for discussion and
potential agreement.
These efforts created momentum for discussions of new institutional approaches to address
international antitrust issues. The Singapore Ministerial Declaration of 1996 created a new WTO
mandate to study antitrust and its interaction with trade policy. The declaration articulated a desire to
establish a working group to study issues raised by Members relating to the interaction between trade
and competition policy, including anticompetitive practices, in order to identify any areas that may
merit further consideration in the WTO framework. Participation in the Working Group on the
Interaction Between Trade and Competition Policy was open to WTO member countries.
Participation dynamics were different than in the UNCTAD setting of the late 1970s because
of the relative power of the developed world (particularly the United States and EU) in the WTO and
because more countries of the developing world had adopted economic liberalization, including
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creation or planned creation of their own antitrust regimes. The WTO articulated the Working
Group’s new focus on “core” principles in the 2001 Doha Declaration. These core principles included
transparency, nondiscrimination, procedural fairness, voluntary cooperation, capacity building, and
discipline of hard-core cartels. Among substantive antitrust provisions, cartel enforcement seemed to
be the one area in which countries might agree on a definition and set of approaches. However, even
with a proposed reduction in scope at the WTO, there remained significant divergence in views,
preventing advanced negotiations on binding antitrust WTO rules.
From:
https://pdfs.semanticscholar.org/53ad/ff841cf4f122b6814d4e7be964e2495ea23b.pdf?_ga=2.19058
9097.36857724.1588280092-505685118.1588280092

Comprehension
2.4. Mark the statements as True or False.
1. Participants of the Bretton Woods Conference suggested the creation of several rules for a postwar
economic order.
2. The U.S. Congress dreaded a misfortune of sway and the impediments that the constitution might
force upon U.S. business.
3. Due to the ineffectiveness of multinational efforts to create the ITO by applying the antitrust laws
extraterritorially, the United States took a unilateral approach to international cartels.
4. The use of extraterritoriality for self-help gives other countries an opportunity to benefit.
5. At the time of early U.S. exterritorial social control, several countries failed to read cartels as a
major problem because they perceived these cartels as advantages that would strengthen domestic
economies at the expense of foreign shoppers.
6. One of the purposes of CLPC was to establish itself as a consultative committee for OECD
member agencies.
7. The CLPC serves as discussion platform for OECD members where understanding will be
reached on international antitrust problems.
8. Memberships in OECD and UNCTAD are open to all countries of the world.
9. The UNCTAD code was a kind of an original version for developed world countries.
10. The experts behind the Draft Code believed that the Draft Code and GATT could give financial
support to members of the UN.
11. Participation in the Working Group on the Interaction between Trade and Competition Policy was
open to all UN countries.
12. The principles of the WTO Working Group include transparency, nondiscrimination, procedural
fairness, compulsory cooperation, capacity building, and discipline of hard-core cartels.
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 Vocabulary
2.5. Match the words that collocate. Sometimes more than one collocation is possible.
1. to take A. the benefits
2. the lack of B. barriers
3. to promulgate C. business practices
4. societal D. criminal prosecution
5. to outweigh E. interests
6. plurilateral F. efforts
7. to dismantle G. a unilateral approach
8. to remove H. interface
9. trade I. monopolistic control
10. to hamper J. agreement
11. to restrain K. analytical convergence
12. to placate L. welfare
13. antitrust M. competition
14. restrictive N. recommendations
15. to undertake O. barriers
16. to foster P. liberalization

2.6. Complete these sentences with the words in the box. Change their grammar forms
if necessary.
hamper / restrain / foster / extraterritoriality / talking shop / promulgate /
template / condone / nonbinding / vagueness / placate / divergence
1. While Miss Lidgett showed some appreciation of the woman’s circumstances, she
was unable to ______________ her course of action.
2. Parliament is a ___________ ______ where members seek to influence others by debate.
3. Our study shows clearly that the _________ between departments concerns their style of ruling.
4. Pay determination is also ___________ by such factors as inflation rates
and currency fluctuations against the pound.
5. Their manager has no doubt reached the point where he feels the fans must be __________.
6. ________________________ in China for non-diplomatic personnel ended at various times in
the 20th century.
7. They are then specified in regulations _____________ under the authority of the law.
8. She wanted to ask him all about his private life, but wisely ___________ herself.

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9. The law allows the president to appoint a three-
member presidential emergency board to examine the contract dispute and produce
_____________ recommendations.
10. The manager’s explanation brought ____________ about the reasons why he
never finished business school.
11. Now we will create the form-letter ____________ that we will later copy variable information
into from another document.
12. The workshops can ___________ better communication between senior and top managers.

PART 3
3.1. Discussion
Read the text and comment on it.
The economic logic for having any antitrust regulation is fairly straightforward. Economists
have developed theories that imply that business firms could find it profitable to eliminate
competition and “monopolize in restraint of trade” and, thus, misallocate economic resources. In plain
English, antitrust exists to prevent firms from restricting market outputs and raising prices to
consumers or retarding the pace of technological change. This is the so-called “public interest”
rationale for antitrust.
But are these theories correct? Is there really a free-market monopoly problem? Assuming
that we can even define what we mean by a “free-market monopoly”, it would certainly follow that
firms in a free market would have the freedom to attempt to monopolize (control the entire supply of)
some raw material, product or service. But whether they would be able to restrict market output for
any reasonable period of time is debatable.
From: https://mises.org/library/antitrust-policy-both-harmful-and-useless

3.2. Read the text below and mark the statements as True or False.
Global Antitrust Prosecutions of Modern International Cartels
Despite the evident antitrust successes in sanctioning international cartels since 1990,
skepticism still is expressed about whether current enforcement regimes are capable of serving the
aims of antitrust. A narrow construction on the purpose of antitrust laws limits it to maximizing
consumer welfare and efficiency; a broader interpretation gives some weight to income redistribution,
small business protection, or dispersion of political and economic power. However, under either
stance the aims of antitrust are served by competition policies that deter recidivism. Deterrence is
both the most commonly accepted legal-economic theory that justifies the passage of antitrust laws
and the practical foundation of anticartel sanctions across world jurisdictions.
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 Although deterrence may have strengthened slightly in the 1990’s, scholars of modern foreign
cartels conclude that they cannot be entirely deterred by current competition policies. Global cartels
are tougher to convict and are much harmer to consumer protection than domestic conspiracy as a
party. Global cartels – those that operate across multicontinental markets – typically reap monopoly
profits in some jurisdictions with weak anticartel enforcement. Moreover, empirical evidence from
recent years demonstrates a significant degree of continued cartel formation and multiple corporate
convictions for price fixing. It would appear that either greater sanctions ought to be applied or that a
multilateral approach implemented in order to approach optimal deterrence of international price
fixing.
Nations have introduced antitrust laws in almost every corner of the world and, in certain
cases, almost all of these laws make price fixing illegal. Before the Second World War, only the
United States had an antitrust statute effectively applied, the Sherman Act. At least two dozen
countries in the 1960s had antitrust laws and had made significant attempts to curb discriminatory
practices. Of course, the effectiveness of enforcing those laws varies widely, as do the available legal
standards and sanctions.
Attempts at market pricing or production collusion are almost as old as those of the markets
themselves. In comparison, the more recent historical trends are organized multinational cartels.
During an economic decline in Germany in the 1870s, the first wave of foreign cartels began; the
potash syndicate is among the best known cartels of this period. Many of the first multinational cartels
operating in the United States started around the same time. Very few if any of these pioneering
institutions survived the First World War, but others were revived in the early 1920s only to disband
in 1939 again. Typically, these “interwar” cartels were centered in Europe although many of the
patent pooling schemes had U.S. corporate members. Most of the interwar cartels were structured to
assign exclusive territories to its members – domestic trade monopolies and inter-nation trade quotes
to the rest of the world.
New multinational cartels - those that have been uncovered since 1990 - have some distinctive
characteristics. With recognition of the main industrial roles that East Asian producers have occupied
in several business lines since 1960, most modern cartels have had to include Asian companies as
leaders. Likewise, several multinational cartels have tried to dominate markets in what business
marketers term The Triad – North America, Western Europe, and East Asia’s most developed nations.
Another unique feature of modern international cartels is the fact that they were formed by
companies that were aware of the antitrust risks. Since the adoption of effective Anticartel laws by the
European Union in 1958 and at least fitful enforcement by a few East Asian nations, international
cartelists have had to weigh the benefits of monopoly profits against some probability of being
apprehended and punished for collusion.
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 Inarguably, the antitrust authorities of Canada, the EU, and the United States implemented
new policies and procedures in the 1990s that significantly increased the probability of detection and
the harshness of penalties directed at international cartels compared with the preceding decades. These
authorities reallocated enforcement resources toward prosecution of such cartels, increased cross-
authority coordination, adopted more effective automatic leniency and “amnesty plus” programs,
imposed higher corporate fines, and in some jurisdictions applied individual criminal penalties. As
the decade of the 1990s progressed, the speeches of top antitrust officials began to acquire a tone of
triumphantisim rather than concerned calls for reform in the face of a cartel onslaught.
Economists previously critical of antitrust enforcement because of the presumptive natural
fragility of cartels and because of its excessive public and private costs now concede that prosecution
of cartels it’s an eminently rational pursuit for governments.
Anticartel Sanctions in Three Jurisdictions. The United States. “Naked” cartels, those arranged
through direct explicit communications between independent firms, are per se violations of U.S. law;
no amount of evidence concerning circumstances in the industry or effects of the agreement on
markets will be considered evidentiary in determining guilt. If the conspiracy is serious enough and
the evidence of intent strong enough, corporations and individuals may be charged by the US DOJ
(Department of Justice) as a criminal matter. All other parties that have standing to bring suits against
price fixers, including other federal agencies and state attorneys general, may file only civil
complaints.
The DOJ has a panoply of penalties on guilty cartelists. Injunctions or cease-and-desist orders
can forbid such behaviour, but this is seldom used in naked cartels. Likewise, a form of corporate
probation is possible but rarely seen. Structural reform may be pursued, such as compulsory
divestitures or the overhaul of governance systems, but most courts are loath to order these drastic
steps. The most popular U.S. by far Government penalties include corporate fines, employee fines,
and responsible executive detention.
After a participant in the cartel decides to plead guilty or is found guilty at trial, the US DOJ
prepares a sentencing report which is addressed to the supervising judge in open court. The
memorandum, whose terms were agreed with the defendant, explains how the DOJ applied the
Federal Sentencing Guidelines to the antitrust violation committed by the individual defendant.
The vast majority of civil suits for cartels follow criminal convictions; a small number settle
before convictions; and a few successful private suits do not have parallel government cases. Since
1977, only direct buyers have been liable to sue for those damages, but indirect buyers can sue for
damages in about half of the states of the United States. Indirect consumers of cartelized goods can
also seek redress by litigation brought by state attorneys-general in federal court, who also shape class

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action. Consequently, twelve times the overcharge became the highest U.S. liability incurred by
corporate price fixers from government and private lawsuits after 1990.
The European Union. The European Commission’s Directorate General for Competition
(DG-COMP) is the second most powerful antitrust regulator in the world. The EC’s international-
cartel decisions take an average of four years after the declaration of U.S. prosecutions. Antitrust
breaches are classified in EU law primarily as criminal infringements by business organizations.
Antitrust breaches are classified in EU law primarily as criminal infringements by business
organizations. Individual conspirators cannot be held individually responsible for monetary or jail
sentences. In this sense DG-COMP’s powers and procedures are close to those of the U.S. The Federal
Trade Commission is closer to that than the United States DOJ’s Antitrust Division.
Before improving the penalties of the Sherman Act between 1974-1990, the EC’s legal
authority to levy fines for major cartel breaches was deemed to be superior to the powers of the DOJ.
After the signing of the Treaty of Rome, in the one year preceding the year in which the EC takes its
ruling, corporate cartel members have been subject to maximum penalties of 10 per cent of revenue.
The EC’s fines can be based on an offending firm’s global sales in all of its business lines, but in
practice cartel fines tend to be correlated with EU sales of a violator only in the affected business line.
EU fines can involve both compensatory and punitive elements, the latter helping to deterrence.
Private compensatory suits are not provided for under EU law.
Some Member States have laws that permit private suits for single damages in their national
courts, but such suits remain rare. The few private actions that have been brought in the EU have
faced highly uncertain outcomes and numerous practical barriers, such as the absence of class actions.
Similarly, a handful of EU nations (UK, France, Ireland and Norway) have criminalized price fixing
and the EU seems to be moving slowly in that direction, but instances of incarceration seems to be
unknown.
Canada. Together with the Ministry of Justice, the Canadian Competition Bureau (CCB)
enforces similar criminal laws to those in the U.S., and its cases appear to match those in the United
States. Violations of naked cartels are activities which are regarded in practice as criminal acts per
se. Individuals may be fined and imprisoned but this control is used rather sparingly. The CCB is a
small organization, operating closely with the U.S. DOJ. Its allegations of global cartels usually
mirrored those reported by the DOJ after a six-month to one-year lag. As in the United States, the
CCB has levied unprecedented antitrust fines, usually comprising 10-20 per cent of Canadian revenue
during the time concerned.
Canada is one of the few jurisdictions with successful private, antitrust remedies outside the
United States. As in the U.S., private acts typically accompany indictments by government. Private
suits introduced in 1976 were rarely used until 1992 when Ontario issued standardized class-action
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laws. At least four other provinces also have similar laws but a provincial suit can be joined by
complainants from any part of Canada.
From: https://ageconsearch.umn.edu/record/28610?ln=en

1. Under either position the points of antitrust are served by competition arrangements that don’t
prevent recidivism.
2. In any jurisdictions with poor anticartel compliance, multinational cartels rarely earn monopoly
profits.
3. The price fixing is considered to be illegal under any circumstances due to adopted antitrust laws
in the majority of countries.
4. The potash syndicate is one of the better studied cartels of the medieval Europe.
5. One of the unique features of modern international cartels is the fact that they are formed by
companies that are aware of the antitrust profits.
6. Critics of antitrust enforcement haven’t changed their opinion that prosecution of cartels is an
eminently rational pursuit for governments.
7. “Naked” cartels are cartels organized through direct specific communications between independent
corporations.
8. A sentencing memorandum is prepared by the US DOJ after the process of pleading guilty by a
cartel participant.
9. DG-COMP is one of the top world’s antitrust authorities.
10. The EC’s fines can be based on the worldwide deals of a beneficial firm in all its lines of
commerce.
11. The absence of class actions is one of the private actions that have been brought in the EU, have
faced no practical barriers.
12. Canada is one of the few jurisdictions outside the United States with compelling private antitrust
cures.

3.3. Read the text below and match collocations.

Antitrust Law
Antitrust law is the broad category of federal and state laws that are meant to keep business
operating honest and fairly. Antitrust laws regulate the way companies do business. The goal is to
level the playing field in the free market and prevent businesses from having too much power. For
the purposes of antitrust law, a trust is a large group of businesses that work together or combine in
order to form a monopoly or control the market.

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 What do antitrust laws do? Antitrust laws ban companies from taking certain actions in order
to develop monopolies. They ban what some people see as deceptive trade practices that companies
might want to use in order to try and outperform the competition. To put it another way, antitrust laws
prevent companies from using dirty poker in order to stay ahead of the competition.
What do antitrust laws prohibit? Antitrust laws don’t prohibit a company from controlling a
large share of the market if they do it by innocent means. What antitrust laws prohibit are acts intended
to form a monopoly by using unfair tactics. The courts use what’s called the “rule of reason” test in
order to determine if an act is unlawful. They consider the effect of the business decision on the
market.
Examples of antitrust laws. An example of behaviour that antitrust laws prohibit is lowering
the price in a certain geographic area in order to push out the competition. For example, a large
company sells widgets for $1.00 each throughout the country. Another company goes into business
and sells widgets just in California or $.90 each. In response, the first company lowers their prices
just in California to $.80. They’re selling the widgets at a loss in that state just to push out the new
competitor. The second company goes out of business. The first company likely violated antitrust
laws by using their large status to lower prices in just one area in order to attack the competition.
Another example of an antitrust violation is collusion. For example, three companies
manufacture and sell widgets. They charge $1.00, $1.05 and $1.10 for their widgets. If these three
companies plan and agree to all charge $1.15 for widgets, they’re likely in violation of antitrust laws.
How does a company know if they’re violating an antitrust law? It’s not always immediately
clear if a company is in violation of an antitrust law. It’s a question that’s specific to the facts of each
case. The courts and regulating agencies have to look at the facts of the case in order to make a
determination. Companies are wise to seek legal advice as they plan large-scale business changes
including mergers and acquisitions in order to make sure they steer clear of potential violations of
antitrust laws.
From: https://legalcareerpath.com/antitrust-law/

K. deceptive A. by innocent means

L. to steer clear B. dirty poker
M. to develop C. the new competitor
N. to make D the playing field
O. to sell E. trade practices
P. to level F. the competition
Q. to use G. monopolies

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R. to do smth. H. of potential violations
S. to outperform I. a determination
T. to push out J. at a loss

3.4. Complete these sentences with the words in the box. Change their grammar forms
where necessary.
disband / sparingly / reap the profits / onslaught / indictment / allocate /
panoply / dispersion / infraction / leniency / be loath / collude
1. The barrister appealed to the judge for __________.
2. He was _________ to admit his mistake.
3. The machine is in running condition and ___________ used.
4. Millions have been _________ to improve the economy of Uruguay.
5. The committee formally ____________ in August 2015.
6. Any attempt to influence the judges will be seen as an _____________ of the rules.
7. The companies would continue to run the facilities and they would continue to ________ ___
___________ .
8. The president accused his opponents of __________ with foreigners.
9. Price ____________ occurs when different sellers offer different prices for the same good in a
given market.
10. The poverty in megapolicies is a damning ___________ of modern society.
11. The coastal towns in Spain survive the __________ of tourists every summer.
12. The government has promised a whole __________ of social and economic improvements.

3.5. Read the text below and mark the statement as True or False.
Supreme Court Allows Antitrust Lawsuit against Apple to Proceed
WASHINGTON - The Supreme Court on Monday allowed an enormous antitrust class action
against Apple to move forward, saying consumers should be allowed to try to prove that the
technology giant had used monopoly power to raise the prices of iPhone apps.
The lawsuit is in its early stages, and it must overcome other legal hurdles. But the case brings
the most direct legal challenge in the United States to the clout that Apple has built up through its
App Store. And it raises questions about how the company has wielded that power, amid a wave of
anti-tech sentiment that has also prompted concerns about the dominance of other tech behemoths
such as Facebook and Amazon.
The court’s 5-to-4 vote featured an unusual alignment of justices, with President Trump’s two
appointees on opposite sides. Justice Brett M. Kavanaugh, who joined the court in October, wrote the
196
majority opinion, which was also signed by the court’s four more liberal justices. Justice Neil M.
Gorsuch, who joined the court in 2017, wrote the dissent.
The class-action lawsuit focuses on the fees that Apple takes on sales in its App Store, which
millions of people use every day to download games, messaging apps and other programs. The
company charges up to a 30 percent commission to developers who sell their products through its
store, bars them from selling their apps elsewhere and plays a role in setting prices. App makers have
long complained that the fee and other practices are unfair.
Over the years, people and app makers have come to rely on the App Store almost as if it were
a utility. The store features more than two million apps, Apple has told the court, and generated more
than $26 billion in payments to developers in 2017. More important, the availability of apps
transformed the iPhone from merely a phone to the center of our digital lives. Without the App Store,
there would be no Uber or Lyft for calling cars, Instagram for sharing pictures and videos, or
Postmates for ordering food.
Competitors have accused Apple of using the App Store to harm rivals. Spotify, Netflix,
Amazon and others have sought to avoid the Apple fee by directing their customers to subscribe to
their services directly. But smaller app makers would struggle to make such a move.
Apple has appeared to use its power over the App Store to its advantage in other instances,
including a move to restrict or block apps that provide parental controls or monitor time spent on a
phone. Apple’s competitors complained that the company had targeted them after it created its own
tool for those tasks. Apple said it removed some of the apps for privacy reasons.
Apple said in a statement that it was “confident we will prevail when the facts are presented
and that the App Store is not a monopoly by any metric.”
How the case unfolds is likely to be closely watched as lawmakers and regulators around the
world debate how to rein in the power of tech companies. In the United States, legal scholars have
questioned whether antitrust arguments focused on price are enough to deal with the tech giants and
whether antitrust law should take competitive process into account.
This year, the music streaming service Spotify filed a complaint with European regulators that
accused Apple of using its power over the App Store to harm rivals.
Other tech powers like Google, Facebook and Amazon have faced antitrust scrutiny for their
outsize market shares in areas like internet search, social media and online commerce, but Apple
escaped it for years because iPhones make up less than half of the American smartphone market,
according to some estimates, and far less in other countries. Instead, Google’s Android software backs
most of the world’s smartphones.
Still, iPhone users spend far more than owners of smartphones running Android, meaning the
App Store, which was opened in 2008, has become the dominant marketplace for app makers to reach
197
customers. Successful antitrust plaintiffs are entitled to triple damages, so the damages could be large
if Apple loses the lawsuit. Still, Apple has deep pockets - it generated $266 billion in sales and $59.5
billion in profit in its last fiscal year.
A ruling that forces Apple to reduce its share of app sales is likely to have an even longer-
term effect on the company. Apple, which makes most of its sales from iPhones, has tried to shift its
business to rely more on revenue from sales of apps and other services. In January, it said it had paid
out $120 billion to app makers since 2008, putting its own take from App Store revenue at around
$50 billion.
Apple has tried to address some developer concerns about its App Store. In 2016, it announced
that it would reduce its take from subscription accounts to 15 percent after the first year.
The App Store has also become a major talking point for Apple’s lobbying efforts. The
company has called itself “one of the biggest job creators in the U.S.,” citing the number of jobs
generated by companies writing software for the App Store. As of 2017, it said, the app industry had
generated more than 1.5 million American jobs in software design and development.
Sandeep Vaheesan, legal director at the Open Markets Institute, a Washington think tank that
advocates for stronger antitrust enforcement, said the App Store gave Apple too much power over
pricing and allowed it to censor content.
“What Apple has done since the launch of the iPhone is tell all iPhone owners and iPhone app
developers that if they want to buy and sell apps, they have to go through the App Store,” Mr.
Vaheesan said. “So Apple has set up this app store as a bottleneck where everyone in the iPhone
ecosystem must transact.”
Apple shares fell more than 5 percent on Monday, with some investors selling on news of the
Supreme Court ruling, as well as the renewed trade war between China and the United States, which
poses a risk to the company’s business. Apple relies on China for much of its manufacturing and
roughly a fifth of its iPhone sales.
The legal question in the case, Apple v. Pepper, was whether the lawsuit was barred by a 1977
decision in Illinois Brick Company v. Illinois, a case that allowed only direct purchasers of products
to bring federal antitrust lawsuits. Apple argued that it was an intermediary and so not subject to a
lawsuit.
The majority rejected that argument. “The plaintiffs’ allegations boil down to one
straightforward claim: that Apple exercises monopoly power in the retail market for the sale of apps
and has unlawfully used its monopoly power to force iPhone owners to pay Apple higher-than-
competitive prices for apps,” Justice Kavanaugh wrote.
Apple argued that app developers set their own prices, meaning that consumers should not be
able to sue the company. Justice Kavanaugh responded that the argument missed the economic reality
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of the relationship between Apple and app developers.
“A ‘who sets the price’ rule,” he wrote, “would draw an arbitrary and unprincipled line among
retailers based on retailers’ financial arrangements with their manufacturers or suppliers.”
“Under Apple’s rule a consumer could sue a monopolistic retailer when the retailer set the
retail price by marking up the price it had paid the manufacturer or supplier for the good or service,”
he wrote. “But a consumer could not sue a monopolistic retailer when the manufacturer or supplier
set the retail price and the retailer took a commission on each sale.”
“In sum,” Justice Kavanaugh wrote, “Apple’s theory would disregard statutory text and
precedent, create an unprincipled and economically senseless distinction among monopolistic
retailers and furnish monopolistic retailers with a how-to guide for evasion of the antitrust laws.”
Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor and Elena Kagan joined
Justice Kavanaugh’s majority opinion.
In dissent, Justice Gorsuch said the 1977 decision meant Apple should prevail, and he
suggested that the majority had undermined the precedent by questioning all of its basic rationales.
“Without any invitation or reason to revisit our precedent, and with so many grounds for
caution, I would have thought the proper course today would have been to afford Illinois Brick full
effect,” Justice Gorsuch wrote, “not to begin whittling it away to a bare formalism.”
Chief Justice John G Roberts Jr. and Justices Clarence Thomas and Samuel A. Alito Jr. joined
Justice Gorsuch’s dissent.
From: https://www.nytimes.com/2019/05/13/us/politics/supreme-court-antitrust-apple.html

1. Several justices on the case were appointed by President Trump.

2. The focus of class-action lawsuit is concentrated on financial issues within the Apple Company.
3. The availability of apps modified the iPhone from a private phone to the main gadget of our digital
lives.
4. Spotify, Netflix, Amazon and other companies didn’t manage to escape the Apple fee by directing
their customers to subscribe to their services directly.
5. Apple targeted its competitors when creating its App Store.
6. Spotify filed a complaint with European regulators blaming Apple for using its control over the
App Store to hurt its competitors.
7. The App Store was used for Apple’s lobbing efforts which focused on its being one of the biggest
job creators in the U.S.

3.6. Answer the questions.

1. What are the main points of the class-action lawsuit against Apple?
199
2. What, according to the lawsuit, has Apple been accused of by competitors?
3. According to Apple’s competitors, when did the company target them?
4. How did Apple manage to escape antitrust scrutiny for its outsize market share?
5. How did Sandeep Vaheesan characterize the App Store in terms of power over pricing?
6. How was Apple justified in the case Apple v. Pepper?
7. In what case, according to Apple’s internal rules, can a consumer sue a monopolistic retailer?

3.7. Fill in the gaps with appropriate words and expressions from the box.
class action / legal hurdles / wield the power / behemoth / to rein in / statutory text /
dissent / antitrust plaintiff / pose the risk / bottleneck / talking point / antitrust scrutiny
1. Their boss had always ____________ tremendous _________ through financial means.
2. It’s bound to be the main ___________ _____________ during discussions between the Prime
Minister and the President.
3. Other jurisdictions around the world have also committed more resources and attention
to __________ _____________ of large technology platform companies.
4. Shoppers are now more loyal to their local shops than to faceless ___________ like Philip
Morris.
5. During the Prime Minister’s speech, there were several murmurs of open ________ from
the crowd.
6. Why not any __________ ____________ was invited for this case? The company will invite him.
7. This generated ___________ which in turn led to a fall in industrial production.
8. At McGinnis Law Firm our Brandon lawyer has more than 15 years of experience helping families
clear the _________ _____________ standing between them and new opportunities.
9. In the next few years, Russia will offer Europe a great opportunity for closer cooperation, but it
will also __________ ___ ____________ of increased intrusion in European affairs.
10. This policy delayed the recovery from high unemployment, but even that was not enough ____
___________ _____the political forces arrayed in favour of supporting the stock market.
11. A lawsuit was filed in 2004 by four men, all minorities and became a ______ ________ case.
12. The basic _____________ __________ in matters of nationality is the Togolese Nationality Code
of 7 September 1978.

3.8. Choose the correct option.

Balancing Economies of Scale and Market Power
Most economists agree that antitrust policy should balance the potential economic harm from
greater concentration of market power with the benefits offered by large enterprises with economies
200
of scale. Positive 1 ___________ ____ _____________ allow larger firms to charge lower prices to
attract more customers. Often the question for regulators is: How big is “too big”?
In markets with extreme positive economies of scale that have little benefit from
differentiation, the market can be most efficiently served by one firm, a 2 __________
________________. One example is water distribution; society would be ill served by the additional
costs of overlapping networks of pipes. In cases such as utilities, the lone firm is often closely
regulated.
3 ____________, in which an economic decision spills over and affects others, can occur so
that the prevailing market price does not capture all costs or benefits. An example is positive 4
______________ _______________ , in which the value of a service increases with the number of
users. Network effects often occur in new technologies such as social media. If these effects are
strong, then one firm may quickly gain 5 _______________, its very size becoming a strength
difficult for new entrants to overcome.
Operating systems have network effects. As more users adopt a common platform, other users
benefit from enhanced 6 __________________; more developers tailor their software to the larger
user base. Acknowledging these benefits, DOJ’s case against Microsoft was not focused on the
existence of a near monopoly in the operating system market, but rather the company’s alleged
attempts 7 ____________ that market power to dominate in other areas, such as Internet browsing
and office-productivity software.
From: https://www.cfr.org/backgrounder/us-antitrust-policy
1 A economies of scale B economies of action C economies of consumption D economies of
effort
2 A state monopoly B absolute monopoly C natural monopoly D private monopoly
3 A Externalities B States C Internalities D Countries
4 A network efficiency B network effects C social effects D social acceptabilities
5 A privilege B predominance C externality D dominance
6 A priority B ambiguity C determinacy D interoperability
7 A to leverage B to dominate C to eliminate D to interrogate

PART 4
Read the case study about Amazon pricing policies and take notes.
Amazon Marketplace Online Sellers Fined £160k for Price-fixing
The Competition and Markets Authority (CMA) is a non-ministerial government
department in the United Kingdom, responsible for strengthening business competition and
preventing and reducing anti-competitive activities.
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 Trod Limited – a private limited company specialized in retail sale of games and toys in
specialised stores. Dissolved on 27 June 2017.
GB eye Limited – a private limited company with business in non-specialised wholesale trade.
1. What happened?
In 2016, the Competition and Markets Authority (CMA) fined an online seller over £160,000
for breaking competition law.
The CMA found that 2 online sellers of posters, featuring popular artists such as Justin Bieber
and One Direction, and frames had participated in an illegal price-fixing cartel by agreeing that they
would not undercut each other’s prices for products sold on Amazon’s UK website.
The sellers used automated re-pricing software to give effect to the cartel.
2. How it happened?
Trod Limited and GB eye Limited were competing sellers on Amazon Marketplace, an online
retail platform that allows businesses to sell directly to consumers via Amazon’s UK website. GB eye
also supplied posters and frames to other online retailers, including Trod which was one of GB eye’s
largest online retail customers.
Trod complained to GB eye that, as a competing seller on Amazon Marketplace, GB eye was
undercutting Trod on price. In one email to GB eye, Trod complained:
“…you insist on pushing your retail side by trying to put your own customers out of business…
this is not working and in the long term will only reduce GB Eyes […] profits and not improve
them…(let’s) try and make this work in everyone’s […] best interests.”
To put an end to these complaints, GB eye and Trod agreed that they would not undercut each
other’s prices. An internal email at GB eye read:
“Trod…have agreed not to undercut us on Amazon and I have agreed to reciprocate. We will
therefore be aiming to be the same price wherever possible, put prices up and share the sales.”
The only exception was where another seller was selling the same product on Amazon at a
lower price than GB eye and Trod.
To give effect to the agreement, both sellers used automated re-pricing software to monitor
and adjust their prices, making sure that neither was undercutting the other. Trod and GB eye kept in
contact to make sure the pricing arrangement was working and to deal with issues regarding the
operation of the re-pricing software.
3. How did this break the law?
Agreeing with a competing business not to undercut each other’s prices is a form of cartel and
is illegal under competition law. It is a type of ‘price-fixing’ which can mean that prices stay
artificially high and the benefits of savings, for example those achieved through efficiency, are not
passed on to customers, who end up paying more than they should.
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 4. What action was taken?
The CMA found that GB eye and Trod had broken competition law by participating in an
illegal cartel not to undercut each other’s prices.
Trod admitted the breach and agreed to accept a fine of £163,371. GB eye received immunity
from fines by reporting the cartel to the CMA and co-operating with the CMA’s investigation in
accordance with the CMA’s leniency policy.
5. What are the lessons from this case?
 Competition law applies in online markets as well as sales through traditional bricks-
and-mortar outlets.
 You must not agree with competing businesses not to undercut each other on price, or
agree what prices you will charge for your products or services. This is a form of ‘price-fixing’ and
is illegal under competition law. Sellers should set their own prices independently of their
competitors. That also means that you must not discuss your pricing strategies or intentions with your
competitors.
 Competition law applies to small businesses as well as large ones. The 2 online sellers
in this case were small businesses, each with annual turnovers of under £16 million.
 Automated re-pricing software should not be used to give effect to illegal anti-
competitive agreements. Although not a feature of this case, software providers should be aware that
they can also be at risk of breaking competition law if they help their clients use software to facilitate
such agreements.
 There can be serious consequences for businesses that break competition law,
including fines of up to 10% of a business’s worldwide turnover. Individuals that are involved in an
illegal cartel can also face personal fines, be banned from running a company and can even go to jail.
Work in groups of three students and discuss the following questions:
What can the companies do to avoid breaching competition law? What solutions from the list
below are the best choice for companies? Why?
Online sellers need to be aware of how they can breach competition law and to ensure they
stay on the right side of it. Here are some of the tips that are recommended by the CMA:
 Ensure all staff know what they can and can’t do, including in particular the sorts of
things which they should not discuss with competing sellers.
 If you think you and your business have been involved in an illegal cartel, you should
notify the CMA as soon as possible – you may benefit from lenient treatment by being the first to
come forward to the CMA.
 Seek independent legal advice.

203
 Any business selling products or services online depends on its reputation and the trust of its
customers to succeed. Sellers using online marketplaces such as Amazon or eBay or their own
websites should therefore ensure they learn about and comply with competition law.
From: https://www.gov.uk/government/case-studies/online-sellers-price-fixing-case-study

PART 5
Do the crossword puzzle.
5 10

2 4 7 12

3 11

13 19

8 18

15 17

14

16

Across
1. the process or fact of separating or becoming different
5. a written statement accusing somebody of a crime
6. the process by which people or things are spread over a wide area
8. the quality of not having or giving enough information or details about something
11. to give something officially to somebody/something for a particular purpose
12. to prevent somebody from easily doing or achieving something
14. to make somebody feel less angry about something
15. an act of breaking a rule or law

204
 16. to accept behaviour that is morally wrong or to treat it as if it were not serious
Down
2. something that is very big and powerful, especially a company or organization
3. having no legal or binding force
4. a strong or violent attack
7. to work together secretly or illegally in order to trick other people
9. to stop somebody/something from doing something, especially by using physical force
10. a thing that is used as a model for producing other similar examples
13. the fact of being less strict than expected when punishing somebody or when making
sure that rules are obeyed
17. to encourage something to develop
18. in a way that is careful to use or give only a little of something
19. a large and impressive number or collection of something

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