1 PRACTICE TESTS FOR THE LINGUA EXAMINATION (Business English) Author: Emilia Plăcintar CONTENTS To the Candidate 2 1. Professional Communication 3 2. Management 9 3. Business Meetings 15 4. Professional Presentations 20 5. Recruitment 24 6. Marketing 28 7. Advertising 32 8. Finance and Accounting 36 9. Banking 42 10. Insurance 50 11. International Trade 54 12. Information Technology in Business 59 13. Business Travel 64 14. Business Ethics 69 15. Intercultural Awareness 73 Writing Reference 78 Answer Key 100
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1
PRACTICE TESTS FOR THE LINGUA EXAMINATION
(Business English)
Author: Emilia Plăcintar
CONTENTS
To the Candidate 2
1. Professional Communication 3
2. Management 9
3. Business Meetings 15
4. Professional Presentations 20
5. Recruitment 24
6. Marketing 28
7. Advertising 32
8. Finance and Accounting 36
9. Banking 42
10. Insurance 50
11. International Trade 54
12. Information Technology in Business 59
13. Business Travel 64
14. Business Ethics 69
15. Intercultural Awareness 73
Writing Reference 78
Answer Key 100
2
TO THE CANDIDATE
The idea of this collection of tests originates in the questions asked by many final-year students about
the structure and content of the LINGUA graduation exam in English, which is a prerequisite for the
BA exam proper. The book is therefore grounded realistically in the requirements of this exam and is
targeted principally at students in Economics and Business Administration, International Relations
and European Studies, Management of European Institutions, and Public Administration of ‘Babeş-
Bolyai’ University.
The LINGUA exam for language proficiency is made up of the written and the oral
components. In the interview, you will have to speak about two topics, each of which is marked with
6 points. For the first speaking task, you have to make a personal comment on a business-related
situation or a more general issue. Examples of this question could be: What government service would
you like to see improved in Romania? or Supposing you wanted to set up your own business, what
aspects would you consider in your business plan? or Should the state subsidise higher education / the
arts? For this first topic, you are given some thinking time to prepare a very brief answer that should
address exactly the points in the question. The second subject is related to one of the themes included
herein. This time, you will have to respond spontaneously to the examiner’s specific questions. For
example, if you pick the subject Management, the examiner may ask you: What are the key tasks of
managers? or Mention some attributes of an effective manager.
The exam paper comprises four sections, and the different types of question that may be included
in each section are described below.
- Listening (6 points)
- Note making and blank filling: Complete the notes with an appropriate word or short phrase.
- Multiple-choice questions: Decide which of the choices (A, B, C or D) is the correct answer.
- True/False statements: Are these statements true or false, according to the recording?
There is a sample listening task in Test 15.
- Reading (6 points)
- Gapped text: Choose the best sentence from the list to complete each gap in the text.
- Multiple-choice questions: Answer the questions by choosing the appropriate answer (A, B, C
or D).
- True / False statements: Decide whether the following statements are true or false, according to
the text.
- Use of English (30 items – 6 points) – All these four task types are included.
- Open-vocabulary cloze: For each blank, think of the word that best fits in the context.
- Multiple-choice vocabulary cloze: Decide which of the options (A, B, C or D) best completes
each gap.
- Error correction: For each sentence, find the underlined part (A, B, C or D) that contains a
mistake.
- Word formation/derivation: Use the word given in CAPITALS at the end of each gapped line to
derive a word that fits in the space.
- Writing (6 points) tasks may include the production of formal letters for various purposes,
memos, reports or essays. The two main aspects taken into account in the assessment of your
answer are use of language (accuracy of language, range of vocabulary and structure), and task
achievement (inclusion of all the points given in the input, logical transition between ideas, and
appropriate register). Tests 1 and 2 contain a sample writing task each.
The 18 theme-based tests in this new edition are designed with a double purpose in mind, namely to
familiarise you with the exam format and to provide you with thematic content and vocabulary for the
interview. The extensive writing reference section attached to the collection is intended to help you
with the special characteristics of the various text types you are asked to produce.
Good luck!
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TEST 1 – PROFESSIONAL COMMUNICATION
INTRODUCTION
To communicate is to convey a message (information, thoughts or feelings) so that it is satisfactorily received
and understood by the receiver.
Professional communication covers the use of written and spoken language in work-related contexts,
between professionals, as representatives of an institution, or between professionals and lay persons, both parties
being interested in fulfilling their practical tasks and goals. It follows that institutional communication is
primarily purpose oriented. That is why whatever communication task is undertaken, asking the following six
questions before we start will give our communication a better chance of success and make the task easier:
- Why? (purpose) – Why am I communicating? What am I hoping to achieve?
- Who? (audience) – Who exactly is my audience (personality, age, status)? What do they need to
know? How are they likely to react to my message?
- Where and When?
The answers to these questions will help us find answers to
- What? (content) – What exactly do I want to say? What do I need to say? What do they need to
know? What information can I omit? What information must I include in order be clear, concise,
correct, and complete?
- How? – What tone and style should I engage to sound courteous and constructive?
Business communication comprises four areas of competencies: (i) oral interpersonal skills, (ii) business
writing skills, (iii) basic English skills, and (iv) other business communication abilities. The skills involved in
effective business communication are specified in this table.
Oral interpersonal skills Writing skills - analyse the audience before, during, and after the
interaction
- listen effectively
- maintain eye contact
- use voice effectively and strategically for emphasis
- establish rapport with the audience
- use appropriate body actions in interpersonal
communication
- ask appropriate questions and give appropriate
responses
- use appropriate register – conversational or formal
- present information objectively
- organise presentations, conduct and participate in
meetings, interviews, and negotiations
- use audio-visual aids professionally
- write well – clearly, concisely, correctly, completely
- write naturally and on the reader’s level
- organise info into effective sentences and paragraphs
- provide effective transition between ideas
- use subordination and emphasis techniques
- write persuasively
- use psychological factors in writing – positive words,
“you” concept, service attitude, goodwill
- select an indirect or direct approach based on the
situation
- use jargon in appropriate situations
- write routine letters – order, acknowledgement,
inquiry, etc.
- write special types of letter – sales, applications,
complaints/grievances, business proposals, etc.
- word process/compose at the keyboard
Basic English skills Other business communication skills - spell and punctuate documents correctly
- use correct grammar
- use appropriate/correct business vocabulary
- apply ethics, and values in business situations to
determine sociable responsible actions
- understand personal values and show sensitivity to
the values of others
- assess own needs and behaviour
- use principles of time management to organise work
efficiently
- locate outside sources of information to improve
knowledge and skills
- collect, classify, and analyse information about
business situations
- use creative thinking in developing solutions; select
effective solutions
- exhibit leadership by influencing and persuading
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- know the importance of feedback in the
communication cycle
- apply knowledge of intercultural differences to
communication situations
Oral versus written communication
The most evident differences between speech and writing derive from the fact that they use different channels of
communication. In general, by comparison with spoken style, written style is
- less colloquial, with less slang, fewer shortened forms, interjections, etc.;
- more correct, in terms of grammar and syntax;
- more concentrated, with fewer ‘fillers’ and roundabout ways of expressing things;
- more complete, with more complex sentences including subordinate clauses;
- less complex, with no non-verbal signals (tone of voice, gestures, facial expression) to help in the
interpretation of the message.
Writing also involves the following elements that are not relevant to spoken style: spelling, abbreviations,
punctuation, visual and tactile elements, such as neatness, signals for emphasis and reference, paper quality,
use of colour and design, etc., which are important in establishing a professional and congenial look.
Oral business communications include interviews, presentations, negotiations, and meetings, while
written communications comprise letters, proposals, reports, memos, faxes, emails, questionnaires, CVs, etc.
READING
Read this extract from “How to Steer Clear of Pitfalls in Cross-Cultural Negotiation” by Andrew
Rosembaum. Decide whether the following statements (1-6) are true (T) or false (F).
1) The negotiation discussion between Henry and Hiroshi came to a deadlock because the
negotiators had different expectations of the negotiation process.
2) A negotiation between an American and a Japanese manager may be a long process because
the Japanese manager is less resolute than his American counterpart.
3) It is crucial for the first stage of the negotiation that the partners engage the problem-solving
style with caution.
4) Experts say that some cultures some cultures follow a certain protocol in the initial stage of a
negotiation in order to develop some rapport with the partner.
5) Western negotiators engage a more indirect and expressive communicative style than Asians
negotiators.
6) The author contends that while our partner’s culture cannot possibly be avoided, we should
ultimately adapt to the specific communicative style of each negotiating partner.
Tips for Avoiding Misunderstandings when Negotiating Cross-Border Deals by Andrew Rosenbaum
Henry in Los Angeles and Hiroshi in Tokyo both like Armani suits, baseball, Mozart, and good
Bordeaux. But Henry recently spoke for days with Hiroshi, his potential business partner, and yet the
barriers between them were never broached—and the deal didn’t get inked.
The problem had to do with different conceptions of the negotiation process itself and
misinterpretations of the other’s behavior. For Henry, negotiation is about pushing through a deal,
period. When Henry didn’t think their discussion was moving forward as quickly as he thought it
should, his arguments became increasingly forceful. Because Hiroshi read this as disrespect, the
negotiation essentially ended days before their talks did.
Although globalized communications and marketing have made the world smaller in many ways,
deep differences between cultures remain. Despite similar tastes, Henry and Hiroshi each approach
negotiation in a way heavily conditioned by his national culture. Because they sat down at the table
without understanding the other’s assumptions about the negotiation process, all they ended up with
was an impasse.
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Negotiation is always a delicate business, requiring determination and diplomacy in equal
measure. But finessing a cross-cultural negotiation is a particular challenge. Here are some tips that
can help you put together a deal with a foreign partner.
Understand expectations
Your negotiating partner’s expectations of the negotiation may well be very different from yours. Like
you, he will want to succeed, but success may not mean the same thing to him and his co-nationals as
it does to you.
Decision-making styles may be different, too. American managers usually make decisions by
themselves, while Japanese managers tend to make decisions by consensus, a practice that can add
time to the negotiation process. Americans place a high value on flexibility, whereas once a Japanese
manager has reached a decision, he believes it is shameful to change it, says Tokyo-based
management consultant Mitsugu Iwashita, director of the Intercultural and Business Communication
Center. Understanding these underlying attitudes helps you see what your potential partner’s priorities
are, and you can then adapt your strategy accordingly.
Establish common ground and choose your style
Find anything that will allow your foreign colleague to share something with you. This can help you
get past “people” problems—ego wars, saving face, and so on—which is a good tactic because these
problems can crop up where you may least expect them.
Now the real work can begin. You’ll need to choose which of the two classic negotiating styles
you’ll adopt: contentious or problem-solving. The contentious negotiator, a tough, demanding guy
who makes few compromises, can be a great success given the right conditions. He either wins or
loses, but never comes to a conditional agreement. The problem-solving negotiator takes a broader
view, attempting to get as much as he can without handing out a deal breaker. He establishes common
ground wherever he can find it and approaches negotiations on a step-by-step basis.
While one has to be careful about generalizing across cultures, experts agree that a problem-
solving approach to cross-cultural negotiations is prudent. (Indeed, many would say it’s the right
choice for almost any negotiation.) The problem-solving approach helps to avoid blunders, says
Elaine Winters, co-author of Cultural Issues in Business Communication. But there are limits to this
approach. In many cultures, negotiation is ritualized, especially in its early stages. It is obviously
important to learn these negotiating rituals for a given culture, even if your foreign partner turns out
not to require them. Germans, for example, often need to spend a large part of the initial negotiations
in number crunching. All the facts and figures must be agreed upon, and woe betide* the negotiator
who makes a mistake! This German trait is not really about number crunching, however; it is a
confidence-building ritual in which two potential partners run through a series of routine checks just
to display trustworthiness. So the problem-solving approach, which would try to find common ground
quickly, could prove threatening for the ritual negotiators.
“When confronted with cultural differences in negotiating styles, we need to be aware of the
potentially adverse effects of a flexible, mixed style,” says Willem Mastenbroek, director of the
Holland Consulting Group (Amsterdam) and professor of organizational culture and communication
at the Free University of Amsterdam. “If it is not understood, people may perceive it as smooth and
suave behavior and resent it. Because they are not able to counter it with equal flexibility, they may
feel clumsy and awkward, in some way even inferior. It may also become difficult for them to believe
in the sincerity of the other side. They may see it as an effort to lure them into a game defined by
established groups which will put them at a disadvantage.”
Manage the negotiation
Let’s assume that you have passed successfully through the initial stages of the negotiation and that
you have agreed upon common ground with your prospective partner. The game of tactics now
broadens. It is at this stage, in which the actual issues go back and forth between participants, that
your awareness of negotiating behavior typical to your potential partner’s culture can be put to use.
6
Italian negotiators, for example, will often try to push through this stage quite quickly, repeatedly
insisting on their terms to tire out their opponents. Knowing this, a foreign negotiator may find a good
tactic is to display no great hurry to deal—change the subject, digress, etc.
On the other hand, Chinese negotiators usually make one offer after another at this point to test
the limits of a possible deal. According to Winters, nonverbal communication in negotiations with a
Chinese businessman can be quite important. He may say little in response to your questions, and
expect you to garner what you need to know from his gestures and from the context of whatever he
does say. More demonstrative Western cultures can find this conduct very difficult to work with, but
the application here of patience and deductive reasoning can take you a long way.
Most Europeans won’t break off discussions unless they are deeply offended, but Asian
negotiators are often happy to drop the project if they are uncomfortable with some aspect of the
negotiations. If this happens, try to backtrack and fix the problem.
But in focusing on your potential partner’s culture, don’t lose sight of him as an individual. It’s
always best to learn as much as you can about his personality and communication style. “Personalize
to treat it as background; focus on the capabilities of the specific individuals at the table. This is
frequently successful because a new, mutually agreed-upon culture is being created just for this
effort.” (http://www.mce.be/knowledge/315/46)
*woe betide – (used in making threats) there will be trouble for
USE OF ENGLISH
Questions 1-10
For each blank (1-10), think of the word that best fits in the context. Use only one word in each space.
Confused messages cause operational chaos. If we don’t listen to our people and our customers, and
__1__ not sensitive to their feelings and expectations, there’s not __2__ hope for constructive
dialogue. In __3__ case, more than 60% of our time __4__ spent communicating. The need __5__
good communications is a classic motherhood statement!
Perhaps the first clue for improvement is to understand __6__ the sender-receiver relationship.
There’s an ancient riddle __7__ goes “Is there sound in the forest if a tree crashes down but no one is
present to hear __8__?” Certainly there are measurable sound waves but there is no meaningful sound
__9__ a listener. Take the case of a finance director casually referring to debt/equity ratios and
discounted cash flows when talking to junior managers. The words are clearly expressed but no
meaning is conveyed __10__ they are outside the vocabulary of the listeners.
Questions 11-20
For each blank (11-20), decide which of the options A, B, C or D is best. Only one answer is correct.
The essence of good communications is the __11__ of meaning. The language must be __12__ and
the receiver switched on. Positive listening is crucial. Too many managers are __13__ anxiously
waiting to make their own brilliant __14__ that they don’t hear what is said to them. The sender-
receiver __15__ is also influenced by __16__ of trust. If I have no trust in you as a person I may
__17__ what you communicate, no matter how well that is __18__ technically.
Confusion often __19__ because of dissonance between body language and words. A scowling
expression with friendly words __20__ the clarity of communication.
11 A change B shift C transaction D exchange
12 A conceivable B apprehensive C comprehensible D comprehensive
13 A so B much C too D such
14 A participation B control C contribution D part
15 A connection B correlation C association D relationship
16 A layers B levels C heights D planes
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17 A refuse B reject C resist D refute
18 A done B made C told D said
19 A rises B raises C arises D arouses
20 A imparts B impairs C impacts D impeaches
Questions 21-25
In each of the following (groups of) sentences (21-25), find the underlined part – A, B, C or D – that
contains a mistake. There is always one incorrect segment in each paragraph.
21) It is essential (A) to get feedback to know if messages (B) are both received and understood. Most
actors prefer the immediate response from a live audience (C) to performing before a camera. We tend
to be preoccupied with sending messages (D) as clear and as well as we can.
22) Commendable though that (A) it is, the same creativity (B) should have been addressed to finding
out if (C) the desired change or response to the message (D) has taken place.
23) Systematic questions, (A) careful listening and observation have (B) its part. A genuine “open
door” policy (C) encourages feedback. Small group briefings (D) remove misunderstandings and
generate common purpose.
24) That is true (A) for our own staff and (B) equally true for our customers. (C) Overzealous sellings
may lead to the neglect of listening to (D) customer dissatisfactions and new needs.
25) The communication gap (A) is often only recognised when a customer is lost. In both cases, (B)
the most successful communication style is participative rather than commanding and directive. “We
have this quality problem with product A. What (C) we can do together to overcome it?” gives
everyone a chance (D) to openly communicate their views and experience. When an action plan
follows, everyone owns it.
Questions 26-30
Use the word given in CAPITALS at the end of each gapped line (26-30) to derive a word that fits in
the space.
The most important influence of communications within an
organisation is that of information technology. Computers,
telecommunications, graphics and more combine to produce
radically new communications __26__. CAPABLE
Speed, relevance, __27__ and exciting visual presentation ACCESS
are typical __28__. If there is a down side it is the reduction of COME
one-to-one human contact. __29__ success will go to companies COMPETE
who understand how to reshape their organisation to these new
communications and information developments and yet retain the
__30__ of human interchange, with all its rich and subtle STRONG
potential for understanding and motivation.
(http://www.mce.be/knowledge/315/46)
WRITING
Write a letter to be sent to a number of local employment agencies informing them about your company’s one-
day courses and self-help training packs on business communication skills. The list of business communication
competencies in the introduction above and the following extracts from recent newspaper articles will give you
some ideas. Make up any further appropriate details. (See suggested solution in the Answer Key section.)
- According to a survey published yesterday, recent school-leavers are worse at spelling than any age
group educated since the war.
8
- Many young people are ruling themselves out of the labour market through their poor spelling. The
unemployed are 50% more likely to make mistakes than those in work.
Under the slogan “Language is Power”, the Ministry of Education and Research has initiated and funded the
“Be a Better Communicator” campaign, which aims to emphasise the link between communication skills and
job prospects.
9
TEST 2 – MANAGEMENT
INTRODUCTION
Management refers to the process of leading and directing all or part of an organisation, often a business,
through the deployment and manipulation of resources (human, financial, material, intellectual or intangible).
One can also think of management functionally, as the action of measuring a quantity on a regular basis and of
adjusting some initial plan, and as the actions taken to reach one’s intended goal.
Peter Drucker, the éminence grise of management theory, speaks about five main tasks of a manager:
- to set objectives
- to organise the activities by delegating responsibilities among employees
- to motivate and communicate
- to measure the performance of employees
- to develop people
Modern management as a discipline began as a branch of economics in the 19th century. Classical
economists such as Adam Smith and John Stuart Mill provided a theoretical background to resource allocation,
production, and pricing issues. About the same time, innovators like Eli Whitney, James Watt, and Matthew
Boulton developed technical production elements such as standardisation, quality control procedures, cost
accounting, interchangeability of parts, and work planning.
By the middle of the 19th century, Robert Owen, Henry Poor, and M. Laughlin introduced the human
element with theories of worker training, motivation, organisational structure and span of control.
The first comprehensive theories of management appeared around 1920 when Henri Fayol and
Alexander Church described the various branches of management and their inter-relationships. In the early 20th
century, Ordwat Tead, Walter Scott and J. Mooney applied the principles of psychology to management, while
other writers, such as Elton Mayo, Mary Parker Follett, Chester Barnard, and Max Weber approached the
phenomenon of management from a sociological perspective.
In 1946, Peter Drucker wrote Concept of the Corporation, a book on applied management. He went
on to write 32 books, many in the same vein.
Some of the more recent developments include the theory of constraints, reengineering, and various
information-technology driven theories, such as software development.
The theory of constraints approach describes management decision-making as a continuous cycle of
the following three basic questions: What to change? To what to change? How to make the change happen?
Towards the end of the 20th century, management came to consist of a number of separate branches, including:
- Human resource management
- Operations or production management
- Strategic management (see below)
- Marketing management
- Financial management
- Information Technology management
In the 21st century, we find it increasingly difficult to subdivide management into categories in this way,
as more and more processes simultaneously involve several categories.
Strategic management is the process of specifying an organisation’s objectives, developing policies and
plans to achieve these objectives (i.e. strategy formulation), and allocating resources so as to implement the
plans (i.e. strategy implementation). It is the highest level of managerial activity, usually performed by the
company’s Chief Executive Officer (CEO) and executive team. It provides overall direction to the whole
enterprise.
Strategy formulation involves (i) doing a situation analysis, (ii) setting objectives, and (iii) suggesting a
strategic plan in line with the situation assessment.
Strategy implementation includes (i) allocating sufficient resources, (ii) establishing a chain of command, (iii)
assigning responsibility of specific tasks or processes to individuals or groups, (iv) managing the process of
monitoring results, and (v) making adjustments to the process as necessary.
An organisation’s strategy must be appropriate for its resources, circumstances, and objectives. The
process involves matching the companies’ strategic advantages to the business environment the organisation
faces. One objective of an overall corporate strategy is to put the organisation into a position to carry out its
mission effectively and efficiently. A good corporate strategy should integrate an organisation’s goals, policies,
and action sequences / tactics into a cohesive whole. (adapted from http://en.wikipedia.org/wiki/Management)
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READING
Read the article about the importance of interpersonal skills in management. The topic sentence (i.e.
the sentence that introduces the main idea/thought) in each paragraph has been removed. Choose
from the list (A-N) the best sentence to fill each of the blanks (1-12). There is one extra sentence,
which does not belong in any gap. There is an example at the beginning (0 J).
A At its core, this dimension is about forging connections with groups of people through visual
and verbal imagery.
B Individuals who score high in this dimension need to see and interact with other people very
frequently to feel satisfied.
C While people who score high in influence can be found in any function and any industry,
we’ve discovered that individuals with deal-intensive roles in financial services and sales tend
to stand out in this dimension.
D It’s important to note that the four relational dimensions are not discrete types.
E Although relational creativity in business is most commonly used for persuading customers to
buy and investors to invest, it is different from the influence dimension.
F This is the dimension many people first think of when they think “people person.”
G We’ve analyzed psychological tests of more than 7,000 business professionals, and our
findings challenge the limited traditional notion of who “people” people are.
H Clearly, “people” people are not interchangeable.
I Consider Alicia DiGiavonni, the internal medicine unit manager at a Boston-area HMO.
J The truth, however, is much more nuanced than that.
K Most of us don’t have much occasion to interact with people who stand out in this dimension,
although chances are we have coworkers with this strength that we don't know about because
it has no outlet in their daily jobs.
L Professionals who earn a high score in this dimension enjoy developing and extending their
sphere of interpersonal influence.
M The skill of resolving conflict in a department or company (as a leader, a manager and a
visionary) is invaluable in maintaining work processes, meeting deadlines, staying profitable
and, ultimately, keeping morale in check.
N The difference between individuals who score high in team leadership and those who do so in
the influence dimension is their interest in managing people.
Leveraging Your Team’s Interpersonal Skills by Timothy Butler and James Waldroop
What does it really mean to be good with people? This Harvard Business Review excerpt examines
the “relational” aspect of business.
Most executives assume they know who their “people” people are. They’re the team players, the ones
who know what’s going on in their colleagues’ personal lives, the ones who can smooth over
interpersonal conflicts. They’re usually found in human resources or sales.
[___0 J___]
Interpersonal savvy is critical in almost every area of business, not just sales and HR. In fact, it
comprises aptitudes that are more varied than a lot of people might think. Recently, we’ve conducted
extensive research on the people side of doing business - what we call the relational factor. After more
than eighteen years of studying how the deeply embedded life interests of business professionals
develop into career roles, we know that individuals do their best work when it most closely matches
their underlying interests. Managers, therefore, can boost productivity by using their employees’
relational interests and skills to guide personnel choices, project assignments, and career development.
[___1___] Using factor analysis, a method of statistical analysis, we have identified four distinct
dimensions of relational work: influence, interpersonal facilitation, relational creativity, and team
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leadership. In this article, we’ll explain each component and show how knowledge of all four can help
managers hire the right employees, make the best work assignments, reward performance, and
promote career development (others’ and their own).
The four dimensions To maximize the interpersonal capacity of your organization, you must understand all four areas of
relational work - because when you match employees’ interests and skills to their responsibilities,
everybody gains.
Influence [___2___] They take pleasure in persuasion, negotiation, and the power of holding valuable
information and ideas. This dimension of relational work is all about changing the point of view or the
behavior of others. An old expression, “He could talk a dog off a meat truck,” aptly describes high
scorers here. Whether to a customer or to a colleague - and whether they're talking about a product, a
service, or an idea - these people live to sell. Think of the manager in your firm who is always able to
get more resources for his projects than anyone else can. Or picture that former boss of yours who
could always get people fired up for the next challenge, regardless of how tired they were from the
last one.
[___3___] Jeffrey Manning (all names of people cited as examples in this article are
pseudonyms), for instance, the managing partner of a very successful venture capital firm,
was running his own fund at age thirty-one. Some would argue that his success was a
function of good timing - he entered the world of high-technology investing in the mid-1990s
- but those who have done business with him have a different explanation: Jeff is a natural at
deal-intensive finance. He's a born networker. Whether he's on the golf course or at the
annual dinner for a prominent charitable organization, his talent for meeting people and
inspiring their confidence is indisputable. Jeff is not a salesperson, nor is he a team-focused
manager. He's an alliance builder and negotiator. He can locate and gather key players to
participate in deals that optimize value for all parties involved.
Interpersonal facilitation [___4___] Individuals with high scores here are keenly attuned to the interpersonal aspects of a work
situation. They intuitively focus on others’ experiences and usually work quietly behind the scenes to
keep their colleagues committed and engaged so that projects don't get derailed. They naturally ask
themselves questions like “What group will work together best to get this job done?” and “Why is Joe
being overcritical in meetings and underperforming in general?” and “What sort of assignment does
Miriam need to grow and feel more competent?” These types of issues rarely show up in reports, but
as every seasoned manager knows, handling them effectively is essential to organizational success.
[___5___] She has an MBA and is a focused, task-oriented operating manager, but
her success comes from her effectiveness as the organization's unofficial psychologist. Alicia
has done more in the way of counseling, conflict resolution, coaching, and informal
personality assessment than many of the therapists who work in the mental health unit. Staff
members frequently confide in her when there is disabling friction within a work team, when
they need career advice, or when they’re struggling with personal issues. She is an expert at
recognizing hidden agendas at meetings and identifying the problems that workers are
reluctant to share with senior managers. She knows which combinations of people on a
project team would yield great synergy and which would be disastrous. On countless
occasions, Alicia has kept projects on track through skillful, behind-the-scenes interventions.
Relational Creativity [___6___] This is the relational work being done when an advertising account team conceives of a
campaign, when a marketing brand manager develops a strategy to reach a particular consumer
segment, when a speechwriter crafts the president’s next address, and when a senior manager
12
develops a motivational theme that will focus and inspire her employees.
[___7__] Professionals skilled in influence convince others on a person-to-person
basis, whereas people talented at relational creativity use images and words to arouse
emotions and create relationships with groups. This dimension is not a measure of creativity
in general—only in the interpersonal realm. Someone who’s creative in an analytical area of
business work (such as designing new investment instruments) can still have low interest in
relational creativity; similarly, an artist (such as a composer or a painter) can lack skill in this
domain. [___8___] For an example of someone with outstanding skills in relational creativity, look at
Diane Weiss, a senior editor for a major magazine. Whether the question is which illustration to use,
how best to express data graphically, what title to give an article, or what image to put on the cover,
Diane is the one to ask: She has an unerring sense of what will pull readers in. But she is not known
for her easy management style or her ability to "read" people. In fact, even her most ardent fans will
agree that she can be exceedingly difficult to work with. For understanding the masses, though, Diane
is as good as you can get. She is a bona fide people person - with the emphasis on the plural.
Team leadership [___9___] Conversely, the more time they spend in front of a computer screen, the worse they feel -
and perform. Professionals with a high level of interest in team leadership love managing high-energy
teams in busy service environments and enjoy working both with the team and with the customer.
Their ideal job might be overseeing a busy resort or a retail store.
[___10___] High scorers in team leadership always want to work through a group. They’re
the embodiment of the player-coach role. People who score high in influence are interested in the
outcome of an interaction – the closed deal - whereas those scoring high in team leadership focus
more on the interpersonal and managerial processes. Compare the managing director of mergers and
acquisitions at an investment bank (excelling in influence) with the sales manager at a large
automobile dealership (strong in team leadership). Not all team leaders - even effective ones - have
high scores in this dimension, however. It is quite possible for team leaders in areas such as
production, research and development, and information technology to show little interest in this
particular relational skill. But we consistently see high scores here for leaders of teams that have a
strong customer focus. […]
[___11___] A person can have great interest and skill in two or more of these areas or in none
of them. And scoring high in more dimensions isn’t necessarily better; some are irrelevant or even
detrimental to certain types of work. Above, we’ve offered examples of people who are stars in one
dimension, but some of them score high in other areas as well.
[___12___] Put Diane where you should have Alicia, and the results will be disastrous. That’s
why it’s so important to align your employees’ relational talents with their job responsibilities. Keep
the four dimensions in mind when you’re hiring new employees, assigning tasks, rewarding
employees for their contributions, and developing the people in your organization, including yourself. (from “Understanding ‘People’ People,” Harvard Business Review, June 2004
“This is the age of the multichannel customer”, says John Hayes, president, J. Jill Direct,
the catalog and Web division of The J. Jill Group (Nasdaq: JILL). The J. Jill Group is a
leading specialty retailer of high-quality women’s apparel, accessories and footwear that
markets its products through catalogs, stores and an e-commerce Web site. [___1___] “For
example, we knew we had multiple customer segments with varying profitability. This
provided us an opportunity to improve overall profitability by marketing through additional
channels. But to do it effectively – as well as to maximize profits for each of our customers –
we would need to manage both the marketing channels and sales channels.”
For many years, J. Jill marketed its products – which are designed to appeal to active, affluent
women age 35 and older – exclusively through direct mail catalogs. However, in 1999 the company
shifted from being a catalog-only company with multiple catalog titles to being a single-brand
specialty retailer with multiple distribution channels. [___2___] There are currently about 30 retail
stores nationwide, and the company has announced plans to open another 17 this year.
“We believe that the combination of ‘mail, mall and Web’ is the most powerful formula in
specialty retailing today,” Hayes says. “Our goal is to enhance J. Jill’s brand identity by developing
strong relationships with our customers that foster loyalty and increase repeat purchases. [___3___]
Rather than try to manage its customer interaction data in-house, J. Jill outsourced its CRM
needs to EDS, a recognized global leader in providing e-business and information technology services
to 9,000 business and government clients in 55 countries around the world. EDS quickly helped the
company identify unprofitable customer segments, eliminate duplicate mailings and optimize the
catalog contact strategy, and reduce the number of catalog titles mailed from four to two – while
improving profitability.
[___4___] EDS will use sophisticated techniques such as segment profiling; predictive modeling
using behavioral and demographic information; affinity modeling; and lifetime customer value
analysis. Executive-level reports will continue to be generated and improve in an effort to identify the
interaction of the channels employed by J. Jill.
“The results have been nothing short of extraordinary,” says Hayes. “We recorded revenues of
more than $246 million in 2000 – up from $136 million in 1997 – and experienced a 510% increase in
e-commerce sales over 1999. We greatly improved the quality and integrity of our database and the
customer information it contains, and maximized our contact strategy. [___5___] (from FORBES, July 23, 2001)
USE OF ENGLISH
Questions 1-10
For each blank (1-10), think of the word that best fits in the context. Use only one word in each space.
For every prominent ‘Internet marketing’ success story (e.g. Amazon, Dell, e-Bay or Yahoo), __1__
are dozens or __2__ hundreds of organisations that __3__ failed in their efforts to build effective
marketing and sales capabilities on the Internet. There are many potentially valuable lessons in __4__
successes and failures, including the fundamental importance of recognising that the Internet brings
yet __5__ set of tools and a further degree of complexity __6__ the vast and sophisticated marketing
and sales toolbox that many companies __7__ employ.
‘Internet marketing’ successes, including __8__ just mentioned, have relied heavily on other, __9__
traditional marketing and sales channels: brand advertising in broadcast media, demand generation
and promotional communications in print media, direct mail and email channels, and sales and service
support __10__ field sales, telesales and business partners.
Questions 11-20
For each blank (11-20), decide which of the options A, B, C or D is best. Only one answer is correct.
30
There is a __11__ business aphorism that marketing is the __12__ of the whole organisation. This
aphorism is equally __13__ for Internet marketing. Companies that have achieved the greatest
successes also have defined and __14__ Internet marketing strategies from a cross-functional
perspective and leveraged the __15__ of multiple marketing and sales channels. In these companies,
customer-facing marketing, sales and service activities have not __16__ been automated or moved to
the Internet. __17__, they firstly have been freshly re-designed to provide greater __18__, reliability,
responsiveness and service quality to customers, and, secondly, to provide improved transaction
economics to the company. Such a re-design, of course, suggests that the company has already gained
a __19__ understanding of customers’ buying behaviours and their channel __20__.
11 A worn-out B well-worn C outworn D well-kept
12 A responsibility B obligation C commitment D liability
13 A authentic B true C fair D actual
14 A deployed B undertaken C involved D spread
15 A force B intensity C strength D validity
16 A actually B practically C absolutely D simply
17 A Mostly B Instead C Alternatively D Rather
18 A significance B price C value D worth
19 A meticulous B clear C pure D thorough
20 A preferences B favourites C tendencies D inclinations
Questions 21-25
In each of the following (groups of) sentences (21-25), find the underlined part – A, B, C or D – that
contains a mistake. There is always one incorrect segment in each paragraph.
21) The Internet (A) has been an integrated element of the marketing mix, not an isolated or stand-
alone marketing activity. Moreover, the Internet (B) has been deployed as both an “enabling” channel
that provides support and leverage to (C) others selling channels as well as an “end-to-end” channel
(D) that transacts or closes deals.
22) (A) In both instances, (B) throughout the sales cycle, from learning, to shopping, to closing the
deal and gaining (C) post-sale support, customers benefit from (D) greater choice and conveniences.
23) And, companies gain (A) by shifting low-complexity marketing and sales tasks (B) to lower-cost
channels, (C) while freeing the capacity of high-cost marketing and channels (D) to targeting and
pursuing higher-value opportunities.
24) And, finally, the company’s (A) re-designed “Internet marketing” strategy (B) driving the design
and (C) deployment of Internet and CRM capabilities and the selection and implementation of (D)
underlying technologies. Not vice versa.
25) Years of management research and (A) practical experiences have demonstrated that changing
customers’ buying behaviours and motivating them (B) to accept and adopt innovations, like Internet
marketing, can be difficult and costly. The most successful ‘Internet marketing’ companies have
recognised that integrating new e-channel capabilities (C) with traditional marketing and sales
channels can accelerate the innovation process (D) for customers and themselves. (from Internet Marketing: Lessons for Success by Gordon Swartz http://www.insightexec.com/cgi-
bin/item.cgi?id=130983&d=pndpr&h=pnhpr&f=pnfpr)
Questions 26-30
Use the word given in CAPITALS at the end of each gapped line (26-30) to derive a word that fits in
the space.
Dr Gordon Swartz has more that 20 years of high-level __26__ and SELL
marketing consulting experience and has been vice president of
31
MarketBridge since 1998. Swartz’s areas of __27__ include rapid EXPERT
deployment of teleweb technologies, marketing and sales __28__ AUTOMATE
systems, design and management of complex channel systems, sales
and marketing performance __29__, database marketing and MEASURE
__30__ modeling. QUANTITY
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TEST 7 – ADVERTISING
INTRODUCTION
Advertising is one component of the promotional mix, which also includes publicity / public relations,
personal selling and sales promotion.
Advertising is the most visible industry of our days. It comprises any paid form of impersonal
presentation of products, services or ideas through various media. Below are the main categories of advertising
media and the corresponding advertising products.
Print media:
direct mailing (advertising materials sent by post to people’s homes)
advertorial (advert + editorial – a positive article written about a company that buys advertising space
in a publication)
leaflet (a folded piece of paper advertising a product, service or company)
brochure (a small magazine containing information about a product or service)
Broadcast media
commercial (radio or TV advertisement)
informecial (a long commercial that gives a lot of information about a product)
jingle (a short tune that is easy to remember, often with words, used for radio or TV ads)
teaser (a very short TV ad that prepares the viewer for a longer ad that appears later)
Point of sale / point of purchase advertising
freebie (something given away free, like a pen, key ring, T-shirt, sticker, bag, etc. with the logo or
name of a company or product)
window display (arranging products in a shop window for public view)
aisle interrupter (a sign that juts into the aisle from the shelf)
glorifier (a small stage that elevates a product above other products)
Outdoor media
billboard (BE: hoarding) (a large board on which paper adverts are stuck, especially at the side of the
road)
neon board / sign (the name of a company or product in neon or other bright lights)
skywriting (the use of special smoke released from an aircraft to write words in the sky)
poster (a large printed ad that appears on a wall)
spectacular (a lighted board, where illuminated moving adverts are run in succession)
transport advertising (signs on taxis, trams, buses, trains, etc.)
The Internet’s World Wide Web
READING
Read the following text about the role of greed in advertising. Choose the best sentence from the list
below (A-H) to fill each gap (1-6). There is one sentence that you do not need. There is an example at
the beginning (0 - ).
A Although these products have a reduced emphasis on the individual amassing property, they
still show the possible effects on the individual who doesn’t take advantage of the offers.
B If an ad can make a product, or more usually a service, appear that it will help the individual
get a bigger piece of the pie, then it will attract attention and generate sales.
C A person dominated by greed will often ignore the harm their actions can cause others.
D They then sing the praises of the product or service that showed them how to get out of their
ruts and into their Rolls Royces.
E Advertisers often attempt to associate their product with desirable things, in order to make it
seem more desirable.
F However, personal enjoyment is a factor that often comes into play as people decide what
they want to do: how much effort do I want to expend to accomplish something?
33
G The “greed” of American farmers has allowed them to grow food for the world, since the
more they produce, the more money they make.
H It also reduces the dissonance some people may feel when the greedy impulse runs up against
the social disapproval of greed.
Greed
by Richard F. Taflinger
Greed, no matter what anybody says, is a part of the human psychological make-up. Everybody wants
more. Thus, as an advertising tool, greed (or acquisition of property, to make it sound better) works
well. [___0 B___] Bank, financial service and broker, franchiser, magazine subscription service, state
lottery, etc., ads, and memory improvement, grade improvement, and “make a fortune in real estate”
informecials all depend on convincing people that what they sell will make possible the purchaser
getting more.
How does advertising convince people that they can get more if the customer buys the product?
By making vague promises. Please note that the ads never state unequivocally that the purchase of the
product or service will result in an increase in material goods. What the ad promises is a chance, a
possibility.
The most common approach is the testimonial. In this type of ad, someone who has purchased
the product or service tells the audience how rich they have gotten. They will often explain how they
were in dead end or low paying jobs (the better to relate to the targeted audience of these products).
[___1___]
They also emphasize how easy it was to get so rich using the product. The acquisition of
property, unless you inherit it, is often extremely hard work. The examination of problems and
solutions, the discovery and evaluation of new and effective approaches and techniques, the
“wheeling and dealing” involved requires 26 hours a day and gallons of skull sweat (ask any
successful executive). [___2___] The easier something is to do, the more likely someone will be
willing to do it: watching TV is easier than reading a book, driving your own car is easier than taking
mass transit, going home and relaxing at the end of an 8- or 9-hour day is easier than working 16 to 20
hours a day. Thus, the ads emphasize the ease with which it is possible for someone to amass a
fortune using the product.
Other ads, such as those for business machines, computers, and phone systems, show how their
products provide greater speed, convenience, and/or savings than their competitors’ products.
[___3___] The so-called “slice of death” commercials use this approach: they show how a person may
possibly be demoted or even lose her job if she chooses the wrong product – that produced by a
competitor of the commercial’s sponsor.
Note that all these ads depend on the concept, not of taking resources from another individual,
but of providing a “competitive edge”: the products are available to all – you were simply smart
enough to take advantage of the offer. This approach can increase sales by making potential
purchasers wish to get their “edge” before someone else can beat them to it. [___4___] By making it
appear that the product purchaser wins, but no individual loses (wiping out your corporate
competition is socially acceptable), then there is no social stigma to acquiring a larger piece of the pie.
The thing to bear in mind is that “greed is good”. That is, it’s good for the individual, but perhaps
not for the society in which that individual lives. Unrestrained greed in an individual can lead to
callousness, arrogance, and even megalomania. [___5___] Sweatshops, unsafe working conditions
and destruction of livelihoods are all consequences of people whose personal greed overcame their
social consciences.
However, even a society that bans individual greed can suffer. It is greed that makes people want
to do things since they will be rewarded for their efforts. Remove that reward, and you remove the
incentive to work. The Soviet Union provided an example of this: the collective farms provided no
individual incentive to strive, and thus produced an insufficient supply of food. The individual-owned
and run truck farms, however, with the possibility of selling their produce and keeping the proceeds,
grew a far greater harvest per acre than the collective farms. [___6___]
34
Unrestrained greed is detrimental to society; unrestrained disapproval of greed is detrimental to
society. Advertising that takes advantage of this biologically favorable impulse in people attempts
In each of the following (groups of) sentences (21-25), find the underlined part – A, B, C or D – that
contains a mistake. There is always one incorrect segment in each paragraph.
PARIS (Reuters), August 13, 2004
21) Actress Charlize Theron (A) has signed a contract with Christian Dior to be the face of (B) it’s
best-selling perfume J’adore, pitting her (C) against fellow Oscar winner Nicole Kidman, (D) who
will launch a similar campaign for Chanel.
22) Theron (A) is due to star in (B) print and television advertisements for J’adore (C) is starting in
this fall, a spokeswoman for Parfums Christian Dior (D) said Friday.
23) She (A) could not have provided details of the contract, but (B) trade publication Women’s Wear
Daily quoted Friday industry sources (C) as saying the South African actress (D) had signed a three-
year deal worth between $3 million and $5 million.
24) Theron (A) won this year’s Oscar for Best Actress (B) for her performance as serial killer Aileen
Wuornos in “Monster,” a role which required her to put on weight and (C) wearing heavy make-up
that rendered her (D) almost unrecognizable.
25) The former model is (A) the latest celebrity to sign (B) an advertising deal with a major fashion
label, a trend (C) whose industry watchers say reflects public fascination with (D) the lifestyles of the
rich and famous.
Questions 26-30
Use the word given in CAPITALS at the end of each gapped line (26-30) to derive a word that fits in
the space.
Hilary Swank, another Oscar __26__, headlines underwear ads WIN
for Calvin Klein, while Scarlett Johansson, Diane Kruger and
Chloe Sevigny star in Louis Vuitton’s fall campaign. Kidman
earlier this year signed a contract reported to be worth millions
to become the face of Chanel’s __27__ No. 5 perfume. LEGEND
The advertisements were shot by fellow Australian Baz Luhrmann,
who directed Kidman in the hit musical “Moulin Rouge.”
The Dior campaign starring Theron was a __28__ between COLLABORATE
photographer Nick Knight and rebel British designer John Galliano,
who has __29__ the image of the label with extravagant REVOLUTION
and __30__ catwalk. PROVOKE
36
TEST 8 – FINANCE AND ACCOUNTING
INTRODUCTION
Financial management is broadly about the administration of finances to secure a positive cash flow, whether
it is at the individual or the corporate levels.
Management of personal finances involves adapting expenses to the financial resources of an individual.
Individuals who own surplus money or have access to funding may choose to invest it to cover the impact of
taxation and/or inflation or to spend it on discretionary items. They need to make those financial decisions that
will benefit them in the long run and help them meet their financial goals.
At the corporate/organisational level, financial management refers to financial planning and financial
control. The former seeks to identify and assess the resources available and plan the size and timing of
expenditures. The latter involves supervising cash flow – that is, the inflow and outflow of funds – in relation to
the budget. The main task of corporate finance management is to attain the goals set by a company for a given
period of time. Efficient financial management ensures that investments generate returns so that a company’s
resources are increased.
Financial managers are expected to be able to (1) interpret financial reports (see below), (2) improve the
allocation of working capital within business operations, (3) review and fine tune financial budgeting, and
revenue and cost forecasting, (4) evaluate the funding options for business expansion, including both long and
short term financing, (5) review the financial health of the company or business, and (6) apply critical financial
decision making techniques to assess whether to proceed with an investment.
Financial accounting is concerned with keeping track of a company’s financial transactions, that is,
recording, summarising and presenting them in financial reports or financial statements. These statements are
considered external, as they are at the disposal of various stakeholders, such as owners, stockholders,
customers, suppliers, employees and so forth. As a rule, the financial documents of publicly traded companies
are widely circulated so that competitors, investment analysts and labour organizations can access the
information.
Below is the description of the financial documents generated by financial accounting.
(1) The income statement (BE: Profit and loss account) reports on a company’s profitability during a
specified period of time; it covers revenues, expenses, gains and losses.
(2) The balance sheet displays what a company owns and owes by reporting its assets*, liabilities* and
stockholders equity* at a specified date, commonly the last day of an accounting period.
(3) The statement of cash flows explains the change in a company’s cash during a time interval in terms of
operating activities, investing activities and financing activities.
(4) The statement of stockholders’/shareholders’/owners’ equity lists such items as net income, other
comprehensive income, dividends, stock repurchase and the exercise of stock options.
Given that external financial statements need to be credible, transparent and comparable, financial
accounting follows some rules, now officially called International Financial Reporting Standards (IFRS).
These international common standards are based on such fundamental accounting concepts as cost principle,
matching principle, full disclosure, going concern, conservatism, relevance and reliability.
*assets – what a company uses to operate its business; any possession that has value or the power to earn money, such as
cash, accounts receivable, inventory, prepaid insurance, buildings, land, and equipment
*liabilities (pl.) – obligations due at the date of the balance sheet; payable items like notes, accounts, wages, interest, etc.
*stockholders’ equity – the difference between the amount of assets and the amount of liabilities; the amount of money
invested into a business plus any retained earnings
READING
This article describes the financial crisis of 2008. Some sentences have been removed from the text.
Choose from the list (A-P) the best sentence to fill each blank (1-14). There is one extra sentence that
does not belong in any gap. There is an example at the beginning (0 H ).
A There were competing theories on how so many pillars of finance in the U.S. crumbled so
quickly.
B The two periods of hard times had little else in common, however; the Depression started in
the manufacturing sector, while the current crisis had its origins in the financial sector.
37
C Japan and China largely avoided that pitfall, but their export-oriented manufacturers suffered
as recessions in their major markets – the U.S. and Europe – cut deep into demand for their
products.
D Credit Suisse declined an offer of government aid and, going the way of Barclays, raised
funds instead from the government of Qatar and private investors.
E A week later the Swiss National Bank cut its benchmark rate to a range of 0–1%.
F It began with mortgage dealers who issued mortgages with terms unfavourable to borrowers,
who were often families that did not qualify for ordinary home loans.
G Even in China, car sales growth turned negative.
H Share prices plunged throughout the world – the Dow Jones Industrial Average in the U.S.
lost 33.8% of its value in 2008 – and by the end of the year, a deep recession had enveloped
most of the globe.
I It was doubtful that the worldwide economic picture would grow brighter anytime soon.
J What began as insurance, however, turned quickly into speculation as financial institutions
bought or sold credit default swaps on assets that they did not own.
K Barclays, telling the government “thanks but no thanks,” instead accepted $11.7 billion from
wealthy investors in Qatar and Abu Dhabi, U.A.E.
L Compounding the damage, exporters could not find loans in the West to finance their sales.
M Mortgage lenders did not merely hold the loans, content to receive a monthly check from the
mortgage holder.
N The most spectacular troubles broke out in the far corners of Europe.
O Another 7% of homeowners with a mortgage were at least one month past due on their
payments, up from 5.6% a year earlier.
P The G-20’s deliberations were necessarily tentative in light of the U.S. presidential transition
in progress.
The Financial Crisis of 2008: Year In Review 2008 by Joel Havemann
In 2008 the world economy faced its most dangerous crisis since the Great Depression of the 1930s.
The contagion, which began in 2007 when sky-high home prices in the United States finally turned
decisively downward, spread quickly, first to the entire U.S. financial sector and then to financial
markets overseas. The casualties in the United States included a) the entire investment banking
industry, b) the biggest insurance company, c) the two enterprises chartered by the government to
facilitate mortgage lending, d) the largest mortgage lender, e) the largest savings and loan, and f) two
of the largest commercial banks. The carnage was not limited to the financial sector, however, as
companies that normally rely on credit suffered heavily. The American auto industry, which pleaded
for a federal bailout, found itself at the edge of an abyss. Still more ominously, banks, trusting no one
to pay them back, simply stopped making the loans that most businesses need to regulate their cash
flows and without which they cannot do business. [___0 H___] In December the National Bureau of
Economic Research, the private group recognized as the official arbiter of such things, determined
that a recession had begun in the United States in December 2007, which made this already the third
longest recession in the U.S. since World War II.
Each in its own way, economies abroad marched to the American drummer. By the end of the
year, Germany, Japan, and China were locked in recession, as were many smaller countries. Many in
Europe paid the price for having dabbled in American real estate securities. [___1___] Less-
developed countries likewise lost markets abroad, and their foreign investment, on which they had
depended for growth capital, withered. With none of the biggest economies prospering, there was no
obvious engine to pull the world out of its recession, and both government and private economists
predicted a rough recovery.
Origins
How did a crisis in the American housing market threaten to drag down the entire global economy?
[___2___] Some of these so-called subprime mortgages carried low “teaser” interest rates in the early
38
years that ballooned to double-digit rates in later years. Some included prepayment penalties that
made it prohibitively expensive to refinance. These features were easy to miss for first-time home
buyers, many of them unsophisticated in such matters, who were beguiled by the prospect that, no
matter what their income or their ability to make a down payment, they could own a home.
[___3___] Frequently they sold these loans to a bank or to Fannie Mae or Freddie Mac, two
government-chartered institutions created to buy up mortgages and provide mortgage lenders with
more money to lend. Fannie Mae and Freddie Mac might then sell the mortgages to investment banks
that would bundle them with hundreds or thousands of others into a “mortgage-backed security” that
would provide an income stream comprising the sum of all of the monthly mortgage payments. Then
the security would be sliced into perhaps 1,000 smaller pieces that would be sold to investors, often
misidentified as low-risk investments.
The insurance industry got into the game by trading in “credit default swaps” – in effect,
insurance policies stipulating that, in return for a fee, the insurers would assume any losses caused by
mortgage-holder defaults. [___4___] As early as 2003, Warren Buffett, the renowned American
investor and CEO of Berkshire Hathaway, called them “financial weapons of mass destruction.”
About $900 billion in credit was insured by these derivatives in 2001, but the total soared to an
astounding $62 trillion by the beginning of 2008.
As long as housing prices kept rising, everyone profited. Mortgage holders with inadequate
sources of regular income could borrow against their rising home equity. The agencies that rank
securities according to their safety (which are paid by the issuers of those securities, not by the
buyers) generally rated mortgage-backed securities relatively safe – they were not. When the housing
bubble burst, more and more mortgage holders defaulted on their loans. At the end of September,
about 3% of home loans were in the foreclosure process, an increase of 76% in just a year. [___5___]
By 2008 the mild slump in housing prices that had begun in 2006 had become a free fall in some
places. What ensued was a crisis in confidence: a classic case of what happens in a market economy
when the players – from giant companies to individual investors – do not trust one another or the
institutions that they have built.
……………………………………………………………………………………………………….
International Repercussions Although the financial crisis wore a distinct “Made in the U.S.A.” label, it did not stop at the water’s
edge. The U.K. government provided $88 billion to buy banks completely or partially and promised to
guarantee $438 billion in bank loans. The government began buying up to $64 billion worth of shares
in the Royal Bank of Scotland and Lloyds TSB Group after brokering Lloyds’ purchase of the
troubled HBOS bank group. The U.K. government’s hefty stake in the country’s banking system
raised the spectre of an active role in the boardrooms. [___6___]
Variations played out all through Europe. The governments of the three Benelux countries –
Belgium, The Netherlands, and Luxembourg – initially bought a 49% share in Fortis NV within their
respective countries for $16.6 billion, though Belgium later sold most of its shares and The
Netherlands nationalized the bank’s Dutch holdings. Germany’s federal government rescued a series
of state-owned banks and approved a $10.9 billion recapitalization of Commerzbank. In the banking
centre of Switzerland, the government took a 9% ownership stake in UBS. [___7___]
[___8___] In Greece street riots in December reflected, among other things, anger with economic
stagnation. Iceland found itself essentially bankrupt, with Hungary and Latvia moving in the same
direction. Iceland’s three largest banks, privatized in the early 1990s, had grown too large for their
own good, with assets worth 10 times the entire country’s annual economic output. When the global
crisis reached Iceland in October, the three banks collapsed under their own weight. The national
government managed to take over their domestic branches, but it could not afford their foreign ones.
As in the U.S., the financial crisis spilled into Europe’s overall economy. Germany’s economic
output, the largest in Europe, contracted at annual rates of 0.4% in the second quarter and 0.5% in the
third quarter. Output in the 15 euro zone countries shrank by 0.2% in each of the second and third
quarters, marking the first recession since the euro’s debut in 1999.
In an atmosphere that bordered on panic, governments throughout Europe adopted policies aimed
at keeping the recession short and shallow. On monetary policy, the central banks of Europe
coordinated their interest-rate reductions. On December 4 the European Central Bank, the steward of
39
monetary policy for the euro zone, engineered simultaneous rate cuts with the Bank of England and
Sweden’s Riksbank. [___9___] On fiscal policy, European governments for the most part scrambled
to approve public-spending programs designed to pump money into the economy. The EU drew up a
list of $258 billion worth of public spending that it hoped would be adopted by its 27 member
countries. The French government said that it would spend $33 billion over the next two years. Most
other countries followed suit, though Germany hung back as Chancellor Angela Merkel argued for
fiscal restraint.
Asia’s major economies were swept up by the financial crisis, even though most of them suffered
only indirect blows. Japan’s and China’s export-oriented industries suffered from consumer
retrenchment in the U.S. and Europe. [___10___] Japan hit the skids in the second quarter of 2008
with a 3.7% contraction at an annual rate, followed by 0.5% in the third quarter. Its all-important
exports plunged 27% in November from 12 months earlier. The government announced a $250 billion
package of fiscal stimulus in December on top of $50 billion earlier in the year. Unlike so many
others, China’s economy continued to grow but not at the double-digit rates of recent years. Exports
were actually lower in November than in the same month a year earlier, quite a change from
October’s 19% increase. The government prepared a two-year $586 billion economic stimulus plan,
and the central bank repeatedly cut interest rates.
The U.S., Europe, and Asia had this in common – car makers were at the head of the line of
industries pleading for help. The U.S. Senate turned down $14 billion in emergency loans; the car
companies got into this mess, senators argued, and it was up to them to get out of it. President Bush,
rather than risk the demise of General Motors (GM) and Chrysler, tapped the $700 billion financial
sector bailout fund to provide $17 billion in loans – enough to keep the two companies afloat until
safely after the Obama administration took over in early 2009. In addition, the Treasury invested in a
$5 billion equity position with GMAC, GM’s financing company, and loaned it another $1 billion. In
Europe, Audi, BMW, Daimler, GM, Peugeot, and Renault announced production cuts, but European
government officials were reluctant to aid a particular industry for fear that others would soon be on
their doorstep. [___11___] As elsewhere, the industry held out its tin cup, but the government left it
empty.
The pressures of the financial crisis seemed to be forging more new alliances. Officials from
Washington to Beijing coordinated interest rate cuts and fiscal stimulus packages. Top officials from
China, Japan, and South Korea – longtime adversaries – met in China and promised a cooperative
response to the crisis. Top-level representatives of the Group of 20 (G-20) – a combination of the
world’s richest countries and some of its fastest-growing – met in Washington in November to lay the
groundwork for global collaboration. [___12___]
By year’s end, all of the world’s major economies were in recession or struggling to stay out of
one. In the final four months of 2008, the U.S. lost nearly two million jobs. The unemployment rate
shot up to 7.2% in December from its recent low of 4.4% in March 2007, and it was almost certain to
continue rising into 2009. Economic output shrank by 0.5% in the third quarter, and announced
layoffs and severe cutbacks in consumer spending suggested that the fourth quarter saw a sharper
contraction. [___13___] Forecast after forecast showed lethargic global economic growth for at least
2009. “Virtually no country, developing or industrial, has escaped the impact of the widening crisis,”
the World Bank reported in a typical year-end assessment. It forecast an increase in global economic
output of just 0.9% in 2009, the most tepid growth rate since records became available in 1970.
Measured by its impact on global economic output, the recession that had engulfed the world by
the end of 2008 figured to be sharper than any other since the Great Depression. [___14___] Perhaps
a more apt comparison could be found in the Panic of 1873. Then, as in 2008, a real estate boom (in
Paris, Berlin, and Vienna, rather than in the U.S.) went sour, loosing a cascade of misfortune. The
ensuing collapse lasted four years. (selected from Encyclopaedia Britannica Online http://www.britannica.com/EBchecked/topic/1484264/Financial-Crisis-of-2008)
USE OF ENGLISH
The four excerpts below are selected from the official communiqué issued at the close of the G20
Leaders’ Summit on Financial Markets and the World Economy held in London on 2 April 2009.
21) American policymakers should beware (A) claims of globalization’s axiomatic pacifying effects.
Trade creates vested interests in peace, but (B) these interests affects policy only to the extent they
wield political clout. In many of the states (C) whose behaviour we most wish to alter, such sectors –
internationalist, export-oriented, (D) reliant on global markets – lack a privileged place at the political
table.
22) Until and unless (A) these groups gain a greater voice within their own political system, attempts
to rely on the presumed constraining effects of global trade carry (B) substantial greater risk than
commonly thought. A few examples tell much. Quasi-democratic Russia is a state (C) whose principal
exposure to global markets lies in oil, a commodity whose considerable strategic coercive power (D)
the Putin regime freely invokes.
23) The oil sector (A) has effectively merged with the state, making (B) Russia’s deepening ties to the
global economy a would-be weapon (C) rather then an avenue of restraint. Russian economic
liberalization without political liberalization is unlikely to pay (D) the strong cooperative dividends
many expect.
24) (A) China (A) will prove perhaps the ultimate test of the Pax Mercatoria. (B) The increasing
international China’s presence in the oil and raw materials extraction sectors (C) would seem to bode
ill, given such sectors’ consistent history elsewhere (D) of urging state use of threats and force to
secure these interests.
25) Much will come down to the relative political influence of export-oriented sectors (A) heavily
reliable on foreign direct investment and easy access to the vast Western market versus (B) the
political power of their sectoral opposites: uncompetitive state-owned enterprises, energy and mineral
complexes with important holdings in the global periphery, and a Chinese military that increasingly
has become (C) a de facto multi-sectoral economic-industrial conglomerate. Actions to bolster the
former groups at the expense of the latter (D) would be effort well spent. (from Does Globalization bring war or Peace? by P. R. Goldstone, Sept. 24, 2007, http://www.globalpolicy.org/social-and-economic-
H They will accentuate the need for talented and inventive people, who will have an even
sharper idea of their financial worth on the world market for human capital.
Making Your Company Ready for the Next Twenty-Five Years
by Frances Cairncross, Management Editor at The Economist
How will the Internet transform your company over the next twenty-five years? Subtly, but
profoundly, argues Frances Cairncross in this excerpt from The Company of the Future.
Most people overestimate the effects of change in the short term, underestimate them in the long
term and fail to spot where change will be greatest. [___0E___] The Internet stock-market bubble*,
like the bubble in railway stocks in the nineteenth century, reflected overestimates and misjudgments
of the potential impact of new communications. And as with railways, the bubble burst, leaving lots of
empty hands but an infrastructure that survived—and changed the world. There will be evolution,
rather than revolution and it will take many years to work through. Recall that even though the
telephone was first used commercially in the 1870s, telephone banking did not spring up until the
1980s. Consider that the Internet had been in commercial use for a mere seven years by the time
recession struck. Profound change rarely comes fast.
Over the next quarter century, though, the Internet will help to transform companies, although
the transformation may be too subtle for people to notice much while it happens. [___1___]
Many manufacturing businesses will grow more like service industries: They will cater to the
individual customer's tastes, for instance, and create a continuing relationship to ensure they
get repeat purchases. These changes will occur in established companies as they build the Internet into their existing
processes. Largely gone is the view of the late 1990s, which saw the Internet as a free-standing
technology and a basis for free-standing businesses; so has the thought that the Internet, in and of
itself, may be a technology that generates lavish profits. [___2___] The main revolution will involve
enabling established companies to do familiar tasks in new ways, and then to do new tasks in
increasingly familiar ways. These changes may or may not prove profitable—they will certainly raise
productivity and sharpen competition—but companies will have no more choice over whether to
deploy the Internet than they had over whether to deploy the telephone. Internet technologies will
offer managers much more scope to define their company in the most efficient way; they will not,
however, undertake that job on managers' behalf.
The biggest changes will inevitably be those that go with the grain of what is already happening.
Internet technologies will thus reinforce outsourcing, a trend that has been in progress for at least two
61
decades. They will further reduce inventory, a move that began long ago with just-in-time lean
production. They will bolster globalization, allowing companies to manage overseas operations and
connect with foreign suppliers in more intricate ways. They will highlight the emphasis on the
customer that so many companies strive to achieve. [___3___] They will enable the flat structures of
modern businesses to operate more effectively and make them even less hierarchical.
Indeed, one of the truly remarkable things about these technologies is the extent to which they
reinforce trends already under way. This reflects the fact that many of the things they do are not
entirely new: Proprietary electronic networks have long allowed large companies to do what smaller
firms can now emulate. [___4___] By comparison, the Internet is flexible, accessible, inexpensive,
and ubiquitous.
And there is more to come. Some Internet technologies that promise profound changes are
only in the early stages of application. They include peer-to-peer applications (variants of Napster);
applications that rate the relevance of information by the frequency with which others use it (as
Google, the search engine, does); or, indeed, XML and its variations, which allow seamless document
exchange. [___5___]
As this book has argued, the astonishing fall in the cost of communicating knowledge and
information has the power to transform knowledge management. So has the development of new tools
for collaboration, giving people new ways to share ideas and information. However, not only must
access to knowledge be as free and open as possible but senior managers must decide how to filter
and structure that knowledge. [___6___] If the center does not first impose structure, the true benefits
of an open culture will be lost. Here, as in many other applications of Internet technologies, the
center's power to set standards and structure grows more important, not less: the Internet may be a
tool of democracy, but in knowledge management, effective democracy requires self-restraint. (http://hbsworkingknowledge.hbs.edu/item.jhtml?id=2839&t=innovation)
USE OF ENGLISH
Questions 1-10 For each blank (1-10), think of the word that best fits in the context. Use only one word in each space.
In the future, Internet technologies will give companies new control __1__ their relations with their
customers. The Internet will not __2__ widen reach, allowing companies to reach new markets; __3_
important, it will provide ways to deepen existing relationships. Here, as in many __4__ areas, the
development of a culture of trust will __5__ the most to deepen the relationship. In __6__, companies
will develop more sophisticated tools to identify their __7__ profitable customers, to retain them, and
to sell them extra products. They will find subtle ways to price discriminate, for example, __8__
developing two familiar concepts, loyalty schemes and clubs.
Given the importance of creativity and new ideas to corporate success, companies must work harder
than __9__ to recruit and retain the right staff and to create a corporate culture that encourages loyalty
and effective collaboration. With recruitment, as with customer management, identifying __10__
people likely to contribute most to corporate profitability and concentrate on retaining and developing
them will be critical.
Questions 11-20 For each blank (11-20), decide which of the options A, B, C or D is best. Only one answer is correct.
One of the earliest and most visible __11__ of Internet technologies is on purchasing. Here, a __12__
new business model has __13__: the electronic exchange, which will __14__ several different forms,
but will be built around a single standard that will __15__ different industries and different companies
within an industry to __16__ freely with one another. In networks and in marketplaces, __17__
determined standards is one of the __18__ to realizing value. In purchasing within individual
companies, central __19__ will also be essential if companies are to benefit __20__ savings and new
suppliers.
11 A outcomes B results C effects D consequences
62
12 A genuinely B factually C naturally D legitimately
13 A aroused B risen C raised D arisen
14 A take B grow C receive D be
15 A consent B concede C allow D admit
16 A function B transact C operate D exercise
17 A practising B applying C employing D referring
18 A methods B ways C means D keys
19 A discipline B regulation C order D rule
20 A of B on C from D with
Questions 21-25 In each of the following (groups of) sentences (21-25), find the underlined part – A, B, C or D – that
contains a mistake. There is always one incorrect segment in each paragraph.
21) (A) More far-reaching will be the impact on the management of supplier networks. Here, (B) the
key will be the power of Internet technologies (C) to making information available simultaneously to
many different points (D) in a system.
22) The transformation of the supply chain into an ecosystem will bring the biggest rewards when the
whole production process (A) can become more modular, so that different stages (B) that once took
place sequentially (C) could now occur simultaneously. That change will speed production, reduce
output, and increase the flexibility with which companies can respond (D) to changing customer
tastes.
23) In the past, the costs of transferring information (A) has been one of the main factors (B)
determining the structure of the company. Now, that is (C) far less true, and the consequence
is that companies can make decisions about (D) whether or not to outsource some process or
to decentralize some authority in terms of the business case alone.
24) (A) The pressure to outsource will grow, partly because (B) it will leave companies free
to concentrate on what they do best rather than on what they merely do well. They will grow,
too, because talent (C) is scarcely: some of the brightest and best may choose to be free
agents (D) rather than wage slaves.
25) However, when business (A) will be slack, employees may be less enthusiastic (B) about
going it alone; and outsourcing (C) will have drawbacks when companies are keen (D) to
keep direct control over their quality of service and the reputation of their brands.
Questions 26-30 Use the word given in CAPITALS at the end of each gapped line (26-30) to derive a word that fits in
the space.
The benefits of Internet technologies depend not on their wizardry
alone, which in coming years will seem __26__ ordinary and REMARK
natural, just as the phone does now. Companies will reap the full
benefits only if they have appropriate structures and cultures.
Creating those calls for __27__ leadership. Leaders must be able SKILL
to cope not only with change, __28__ and continuous, but also DISRUPT
with the pressures on decision makers to digest a __29__ torrent CEASE
of new data—a task that the next generation of managers will be
better able to do. Leaders must be good at communicating both
with the outside world and with their own people, and able to
63
__30__ the sense of managing in a fishbowl, visible to all. STAND
They must be as adept at making business decisions as at managing
public opinion and issues, such as the environment and corporate
social responsibility. Running a big company will remain one of
the world’s most complex and demanding tasks. (http://hbsworkingknowledge.hbs.edu/item.jhtml?id=2839&t=innovation)
*bubble – unreasonable and excited buying of shares in a company that is financially weak, with the effect of raising the
market price of the shares far higher than their true value
64
TEST 13 – BUSINESS TRAVEL
INTRODUCTION
With business communities expanding across the globe, business travellers find an array of useful new services
on the road. Hotels are better, remote communications are easier, better car rentals are available, and airlines and
airports have improved.
Here are some questions that one needs to consider when going on a business trip:
Do I need a visa for my destination?
Do I have my credit cards or the correct currency?
Have I booked my hotel?
How am I going to get to and from the airport?
What is my schedule?
What business documents do I need?
What do I need to do when I get to my destination?
READING
Read the article about female business travellers and decide whether the following statements (1-5)
are true (T) or false (F).
1) Women business travellers are a consumer segment whose needs and expectations are distinct
from men’s.
2) Travel industry services should make a distinction between business travellers and tourists as they exclude each other. 3) According to Travel and Leisures’s Begley, 50% of the business travellers who fly are men. 4) Compared to men, female hotel guests are more sensitive to the social and aesthetic environment in a hotel. 5) Female business travellers prefer more active and diversified ways of spending their free time than men.
The Hidden Market of Female Travellers by Martha Lagace
Women are a rising force among frequent business travellers. They also make a majority of decisions
for their families’ personal trips. So can the travel business get in gear?
Try this on for size: A female executive recently changing planes at one of the world’s busiest
passenger airports, Hartsfield-Jackson Atlanta, suddenly realized she’d forgotten to pack her extra
pair of shoes. With luck she found a shoe store at the airport, but its selection was limited to men’s
footwear. When she asked where she could buy women’s shoes, the clerk told her, “Sorry, not
anywhere here.”
It’s a real experience and a metaphor for a larger quest that women as a segment of the
travelling population frequently endure. Despite their numbers as a growing force in the marketplace,
women business travellers are still often shoehorned into a model designed for men. Hotel rooms for
business travellers offer downcast décor and so-so amenities; the hotel’s social area may consist of a
bar that is at best uninviting or at worst, vaguely creepy. In addition, women travellers often perceive
that airline employees treat them more grudgingly than the guys.
As a result, a valuable market is still waiting to be served; that goes double when one
considers women’s substantial role in organizing their families’ leisure vacations. So said five travel
professionals who spoke at a panel session of the Harvard Business School Dynamic Women in
Business Conference, held January 22. Laura Begley, style director for Travel & Leisure magazine,
moderated the session, whose theme was “Women Exploring the World.”
65
The two identifiable market segments – business and recreational travellers – are not even
mutually exclusive, panellists agreed. “There is a trend for incorporating family: taking a business trip
and adding a family component,” said Jenifer Ziegler, senior vice president of brand management for
Holiday Inn Express.
Any company that understands its female travellers’ experiences and wisdom is likely to
succeed, everyone agreed. Rewards for the travel and hospitality industry overall will come when
women occupy more senior management positions, added Kathy Stewart, a program director for
Butterfield & Robinson, a company based in Canada that runs high-end, active trips. “The more we
talk about women as travellers, the more it will be clear that these positions need women,” she said.
Females are estimated to comprise 50 percent of frequent fliers, according to Travel & Leisure’s
Begley. If a woman has a family, she may make 70 percent of all her family’s personal travel
decisions, Begley continued. Forty percent of business travellers today are women, while just thirty
years ago female executives comprised only one percent. A glance around any airport or train station
confirms that things have changed.
What do women want compared to men? On the one hand, both genders expect the same high
quality of service and efficiency. Peggy E. Stirling, vice president of the Safety, Security and
Environmental division of American Airlines, said female travellers – particularly women with
children – complain to American that flight attendants are not responsive enough to their needs
compared to men. “Flight attendants should be more responsive”, Stirling said. “We spend a lot of
time with our flight attendants educating them about this issue. “As professionals, we are obliged to
meet all expectations,” she continued. “By and large, the airline industry has come a long way.
American Airlines will be focusing on women and travel. Women who travel are clearly a rising
population and all the statistics show it.”
As travellers, women do seem to distinguish themselves from men in several important ways,
so it makes business sense to spend more to attract them, said the panellists.
Holiday Inn Express (and the segment in which it competes) estimates that male guests make
up 70 percent of all stays in its hotels, said Ziegler. But when her company conducts consumer
research on how to ‘enhance the guest experience’ in order to learn why customers would visit the
hotel more often and spend more money, it found that women often provide the best insights.
“The men indicate that they are already quite satisfied with what they’re getting from the
hotel,” said Ziegler. “But we know there’s so much more we could do, so that’s a little frustrating.
Women respondents see a lot more opportunity in improving the guest experience. Hotels have been
very much a male-designed experience, I would say. There are sports magazines in the lobby, et
cetera. When we wanted to update all of our bathrooms, the men said the bathrooms were just fine.
The women pointed out that we could do a much better job with the towels.” Holiday Inn Express
ended up overhauling 100,000 guest rooms, “and now all the bathrooms have larger, white (with the
sense of clean), fluffier, more absorbent towels. There are now better amenities with an upscale scent
and quality.” Men reported that they like these changes, too, and research indicates they would
consider prolonging their stay.
Ziegler’s parent company, InterContinental Hotels Group, recently launched a new brand that
is more female-focused called Hotel Indigo. The first Hotel Indigo is in Atlanta. “We didn’t want to
abandon men, but we wanted to give more attention to the things many women appreciate. So instead
of enlarging the space of a guestroom, we enlarged the space of the bath area. We decided to bring
some colour rather than stick with ‘hotel beige’ and to rotate some of the designs regularly. And we
have created a guest area where women can congregate and feel safe and comfortable. Instead of
going to the hotel bar, maybe they’d like a place where they can grab a salad and a glass of wine; a
place where they can do some business or read a book. Hotels can focus on some simple
improvements like that,” she said.
Panellists acknowledged that a sense of personal security can be more important to women
than men. In certain hotels, women business travellers may be offered the option of a room on a floor
just for female executives. Travel & Leisure advises women travelling alone to never accept a room
on the first floor of a hotel, nor one too close to (nor too far from) the elevator, added Begley.
Among the leisure-travel crowd, “we find that women solo travellers take comfort from going
in a group,” said Stewart. “Women want to go to exotic places, they want to have exotic experiences,
66
but they feel much more comfortable when there’s a guide or an experienced person there to make
them feel safe in a foreign country.”
With that caveat* in mind, women are even more adventurous than men in terms of the
destinations they want to go to and the experiences they want to have, but they like to know there is a
security backup, she continued. When her company designed women-only group trips, they were not
big sellers. Mixed groups are much more popular, she said. ‘Women want a fantastic experience and it
doesn’t matter who else is there. There might be women there, there might not. We say, ‘Bring your
partner, spouse, your children; or come by yourself, and you’ll all have a great time.”
There also seems to be a trend for learning while on vacations, Stewart said. Women express
an interest in gaining new skills, such as how to mountain bike, ski, or kayak; or learning languages.
Stewart’s impression is that women in particular love how foreign travel enriches and expands their
minds. Women also seem to enjoy getting closer to another culture by joining such activities as
helping to build a bridge in Costa Rica or visiting an orphanage in Sri Lanka. There’s been
“astronomic growth” in the area of such volunteer vacations, she said.
When the panellists were asked where they prefer to journey in their downtime, everyone
enthused about their favourite destinations, from South Africa to Thailand, Vietnam, France, and
Italy. “I definitely could go to Italy every year for the rest of my life,” said Stewart. “But where I
would like to go is somewhere I’ve never been before, and for me that would be South America.”
“When you’re a business traveller, really try to take advantage of personal time in a
foreign country,” Ziegler advised the audience. “It’s hard because you’re busy and have lots
of work to do. But it’s so worth it.” (http://hbsworkingknowledge.hbs.edu/item.jhtml?id=4611&t=marketing)
*caveat – a statement or warning intended to prevent misunderstanding
USE OF ENGLISH
Questions 1-10 For each blank (1-10), think of the word that best fits in the context. Use only one word in each space.
As airports improve, so __1__ the services available to business travellers. In 2000 AT&T rolled out a
new generation of public phones __2__ combine voice calling with high-speed connectivity to the
Internet, Web surfing and e-mail. The device is a travelling executive’s dream. __3__ it includes a
full-size keyboard, a touch pad, speakers and a 12-inch video screen, travellers __4__ surf the Web or
connect to their e-mail __5__ as they do from their desktop computer. The usage charge is just 25
cents per minute, __6__ a four-minute minimum. The phone accepts calling cards, credit cards and
even one-, five-, ten- or twenty-dollar __7__.
“Travellers spend a lot of ‘dwell time’ at airports __8__ they want to or not,” says Jim Agliata,
marketing director of the AT&T Public Markets division. “We think there’s a need and a demand to
__9__ that time productive and a public phone that surfs the Web and does e-mail __10__ a terrific
productivity tool.”
Questions 11-20 For each blank (11-20), decide which of the options A, B, C or D is best. Only one answer is correct.
The AT7T WorldConnect service __11__ corporate executives to keep their wireless phone number
while travelling to nearly 100 countries in Europe, Asia, Australia, Latin America and the Middle
East. With a SIM card and an international phone, a traveller’s U.S. number, voice mail and call
waiting also can travel.
AT&T Wireless is also in the vanguard of __12__ the Internet and wireless phones. The AT&T
Digital PocketNet service offers business travellers with Internet-ready phones access to a wide range
of Web information: real-time flight data, flight reservations, frequent-flyer account updates, taxi and
car-service reservations, __13__ and maps, and restaurant __14__ and reservations.
67
The trend toward wireless travel tools, first evident with cell phones, then refined by personal digital
assistants, is now __15__ back to portable computers, the mother of all high-tech business travel
products.
The new Compaq Evo family offers a wide range of computing products, but most __16__ is the
Compaq Evo Notebook 400c. It incorporates Multiport, a(n) __17__ modular wireless data solution
that __18__ travellers from the need for communication cables. The Multiport module itself is a
mobile __19__ it integrates the wireless technology and the antenna into a single assembly, which
then inserts and __20__ flush against the notebook’s display panel.
11 A empowers B sustains C enables D approves
12 A absorbing B joining C blending D merging
13 A directions B prescriptions C directives D orders
14 A inspections B reviews C re-examinations D criticisms
15 A reaching B spreading C extending D enlarging
16 A noticeable B distinct C distinguishable D notable
17 A optional B selective C voluntary D free
18 A releases B saves C discharges D frees
19 A marvel B wonder C miracle D curiosity
20 A matches B fits C goes D suits
Questions 21-25 In each of the following (groups of) sentences (21-25), find the underlined part – A, B, C or D – that
contains a mistake. There is always one incorrect segment in each paragraph.
21) This technology (A) not only offers (B) better performances and greater wireless coverage, it also
contributes to the sleek, stylish look of the Evo Notebook N400c. (C) The unit weighs just 3.5 pounds
and measures (D) less than an inch thick.
22) Within (A) that thin package, however, is (B) incredible mobile computing power: an Intel
Pentium III 700 MHz processor, a bright 12.1-inch color display, a 20-gigabyte hard drive, 128 MB of
memory and a unique, (C) full-sized keyboard. An optional mobile expansion (D) permits the addition
of a floppy drive and CD, CD-RW and DVD drive.
23) (A) For all the emphases on new and (B) better technology tools, however, productive business
travel (C) still rests on, well, (D) a place to rest.
24) There is an oversupply of (A) economy and limited-service hotels (B) in the most major cities
around the U.S. but full-service and luxury hoteliers (C) are finding that there is a continuing strong
demand for their product (D) from discerning business travelers.
25) (A) The rush to operate top-notch* properties (B) in key business destinations also (C) have led
several grande dame hotels to embark (D) on aggressive renovations and restorations.
* top-notch – of highest rank or quality; being one of the best possible
Questions 26-30 Use the word given in CAPITALS at the end of each gapped line (26-30) to derive a word that fits in
the space.
In the end, __26__ of improvements on the ground, REGARD
__27__ business travelers most need better airline CORPORATION
service. Major carriers are sparing no __28__ to coddle SPEND
executives willing to pay for premium-class service.
Many of the world’s leading __29__ have eliminated CARRY
68
international first class altogether and switched to a
“super” business class service. Along with its ally KLM
Royal Dutch, the U.S. airline Northwest has just completed
its World Business Class service. It includes seats with sixty
inches of legroom and a recline of 150 degrees. There have
also been a host of service __30__, including pre-departure GRADE
service and cocktail snacks, upgraded main meals and a new
digital audio system. (adapted from FORBES, 23 July, 2001)
69
TEST 14 – BUSINES ETHICS
INTRODUCTION
Generally speaking, ethics refer to moral rules or principles of behaviour governing a person or group.
Business ethics are the branch of ethics that examines the various moral or ethical issues that can arise in a
business setting and the special duties or obligations that apply to persons who are engaged in business
activities.
Today’s heightened interest in the proper role of businesses in society has been promoted by increased
sensitivity to ethical issues. Issues like environmental damage, improper treatment of workers, and faulty
production leading to customers’ inconvenience or danger, are highlighted in the media. Government
regulation regarding environmental and social issues has increased. Investors and investment fund managers
have begun to make investment decisions based on social sustainability as well as pure economics. Consumers
have become increasingly sensitive to the social performance of the companies from which they buy their goods
and services.
Some typical issues addressed in business ethics include:
“creative accounting”*
advertising deception
black market sales
bribery / kickbacks
business intelligence and industrial espionage
political contributions
hostile take-overs
fiduciary responsibility*
shareholder rights issues
insider trading*
price fixing and price discrimination
competitive misinformation
discrimination, affirmative action*
sexual harassment
violation of employees’ rights
illicit drug testing
environmental issues, animal rights, pollution
labour issues, such as union strikes and union busting
infringement / breach of patent or copyright
planned obsolescence*, product liability* and product defects (adapted from http://en.wikipedia.org/wiki/Business_ethics)
*creative accounting (also window-dressing) – the use of accounting policies and practices that make the figures appear
better than they might otherwise
*fiduciary – esp. of a loan, backed by good faith instead of being backed by the security of valuable assets
*insider trading – unfair secret buying and selling of shares by company directors and high officials based on their special
knowledge of the affairs of their companies, which other investors do not receive until later
*affirmative action (also positive discrimination) – the practice or principle of favouring people who are often treated
unfairly, esp. because of their sex or race
*planned obsolescence – making a product with a feature that will become unfashionable or unusable in a short time, so that
the person who bought the product will soon have to replace it
*product liability – the liability of manufacturers and traders to pay claims made against them for damages caused by faults
in their products
READING
Read the article about differences in ethnic values across borders and decide whether the following
statements (1-5) are true (T) or false (F).
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1) Professor Paine’s interest in global cultural differences in business ethics originated in the
questions asked by her American business students.
2) The case studies included in professor Paine’s research project are representative of four
continental cultures.
3) Professor Paine selected both national companies and multinational corporations with a
complex mission that surpasses the mere achievement of profits.
4) The two case studies presented speak about religion as a primary cultural factor that shapes
and influences work-related behaviour.
5) Professor Paine’s course Globalization, Culture, and Management is intended to provide
future global managers with a set of prescriptions for how to handle differences in ethical
values across cultures.
Value Judgments: Business Ethics across Borders by Judith A. Ross
“As different cultural traditions meet in the marketplace and inside organizations, managers face
tough choices about the values that they and their organizations will live by,” Harvard Business
School (HBS) professor Lynn Sharp Paine told participants at a research conference in Hong Kong
last winter that was part of the inauguration of the HBS Asia-Pacific Research Office. “In order to be
effective, they must find ways to deal with differences in how people think about matters such as
authority, fairness, responsibility, and even the very purpose of business.”
In her previous work regarding organizational values and business ethics, Paine focused on U.S.
companies engaged in business principally at home. But faced with an increasing number of questions
from international students about whether U.S. standards and values applied in their home countries,
she began searching for answers in a much broader setting. “Students would ask me about the
possibility of establishing a global system of business ethics,” Paine says, “and whether cultural
clashes of one degree or another were inevitable. I needed a systematic way to study the values and
standards of high-aspiration companies around the globe in order to find out where and how much
they differ.”
With a research agenda organized around eight major world cultures — African, Confucian,
Hindu/Buddhist, Islamic, Japanese, Latin American, Slavic-Orthodox, and Western — Paine
embarked upon an ambitious course-development project in 1997. Writing cases on firms in China,
Japan, Thailand, Argentina, Nigeria, and Russia, she focused on businesses indigenous to each culture
as well as multinationals moving between cultures. In addition, she chose companies that aspire to
excellence along multiple dimensions — in terms of not only financial performance but also
management practices and reputation in the community.
The result of her efforts is the MBA elective course Globalization, Culture, and Management.
According to Paine, as students examine the values and beliefs embraced by companies striving for
excellence from different points of cultural reference, they learn to anticipate and deal with the kinds
of value conflicts they are likely to face as global managers. Paine points out that students taking her
course also develop a business philosophy and a set of values that will help them lead effectively
when crossing cultural borders.
Two of the seventeen case sequences she has developed for the course so far — “Siam Cement
Group: Corporate Philosophy” and “The Haier Group” — take place in Thailand and China,
respectively. Named Asia's most ethical company by Asian executives polled several years ago in
Asian Business magazine’s annual most admired companies survey, Siam Cement Group (SCG) was
one of the first firms in Thailand to develop its own written code of ethics. SCG’s philosophy is
rooted in the Buddhist concept of fairness and also stresses product quality, the value of the
individual, and concern for social responsibility.
As Siam Cement expanded beyond Thailand, however, managers felt pressured to compromise
the corporate code of ethics. The company’s standards regarding improper payments, for example,
made it difficult to compete in places where such transactions are a way of life. The case illustrates a
classic dilemma: should organizations conform to the environment they’re in, or should they export
71
their ethical standards to other lands? In Paine’s view, framing the issue as “my way or your way”
tends to heighten the dilemma and limit the possibilities for an effective resolution. Instead, she urges
managers to look beyond differences in practice to underlying principles. In many instances, this
approach can help managers find a strategy that honors the company’s values and also works in a
particular environment. “One firm that had built its reputation by being environmentally responsible
ran into trouble when it expanded its business into India,” she explains, “because people there were
not willing to pay for the world-class technology necessary to maintain the stringent emission
standards of the company’s U.S. plants. After much debate around the choice of technology,” she
continues, “the company re-examined its concerns about the environment and realized they originated
in a broader commitment to social responsibility. Managers then began working with the local
community to find meaningful ways – such as support for schools, health centers, sewage disposal,
and forest preservation – to be socially responsible within that setting.”
A series of cases on the Haier Group describes a Chinese refrigerator and white goods maker
aspiring to become a global brand. Among other challenges facing the CEO of this collective
enterprise was the need to focus the attention of the work force on performance issues. “His task was
to create a value system that favors personal accountability, emphasizes product quality, and centers
on serving the market and the customer rather than being responsive to the central planner,” Paine
notes.
In addition, the chief executive found himself torn between, on the one hand, a deep-seated
cultural code of ethics emphasizing loyalty to family and friends and, on the other, a desire to do what
was needed to build a world-class company. “Going back to the time of Confucius,” says Paine, “the
primacy of personal relationships and interpersonal reciprocity has been paramount in China. This
poses a problem for those who want to use strictly market criteria when choosing suppliers and
employees and entering into contracts.”
While there are no easy answers to these predicaments*, Paine views the challenges she is
uncovering as a beginning for coping with cross-cultural conflict. “Astute managers learn about
cultures in order to build bridges and bring about changes that will make their organization more
effective and responsible,” she concludes. “In any successful change process, an understanding of the
starting point is as important as a vision of the ultimate objective.” (http://hbsworkingknowledge.hbs.edu/item.jhtml?id=86&t=corporate_governance)
*predicament – difficult or unpleasant situation in which one does not know what to do, or must make a difficult choice
USE OF ENGLISH
Questions 1-10
For each blank (1-10), think of the word that best fits in the context. Use only one word in each space.
Codes of conduct or guidelines for multinational corporations __1__ not have any fixed definition.
However, it is important to __2__ a distinction between corporate codes of conduct and codes of
conduct for multinational corporations. Corporate codes of conduct are individual company policy
statements __3__ define a company’s own ethical standards, __4__ codes of conduct for
multinationals are externally generated and to __5__ degree imposed on multinationals. These codes
are not of the companies’ own making, __6__ are they agreements between companies and the
entities which create the codes. In some cases, __7__, multinationals are involved in the drafting
process. The fact that __8__ codes are externally established standards while __9__ corporate codes
of conduct are of a voluntary and internal nature has important implications __10__ considering their
implementation in corporate practice.
Questions 11-20
For each blank (11-20), decide which of the options A, B, C or D is best. . Only one answer is correct.
Codes of conduct for multinational corporations must also be __11__ from framework agreements,
which are __12__ between trade union organizations and individual companies __13__ the
companies’ international activities. There are two types of framework agreements. First, __14__ are
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written understandings between multinational corporations and international trade union
organizations, which __15__ cover any subject. Examples of such agreements include those __16__
information and consultation arrangements, as __17__ by the European Works Council Directive.
Second, there are framework agreements between trade unions and companies concerning the labour
__18__ of the company or of its suppliers and subcontractors in other countries. Such __19__ may
also be included in collective agreements that are recognized __20__ national law.
11 A parted B contrasted C separated D distinguished
12 A determined B resulted C concluded D finished
13 A regarding B relating C connecting D viewing
14 A these B there C they D some
15 A may B must C should D would
16 A fixing B settling C regulating D establishing
17 A advanced B mandated C proposed D forwarded
18 A practices B actions C habits D methods
19 A orders B obligations C provisions D arrangements
20 A within B in C under D by
Questions 21-24
In each of the following (groups of) sentences (21-25), find the underlined part – A, B, C or D – that
contains a mistake. There is always one incorrect segment in each paragraph
21) (A) In relation to multinationals, codes of conduct for multinationals are recommendations. Even if the
codes have been agreed by (B) a number of sovereign state, or such other entities as (C) have been granted
international personality by sovereign states, they do not have a status of international law, (D) which would set
a binding effect on multinationals operating in those states which have adopted or joined the code.
22) Hence, codes of conduct for multinationals (A) impose no legal, but only moral, (B) obligations on
companies, and they (C) are not capable of enforcement by the application of external sanctions. For
multinationals, the commitment to the codes (D) are voluntary.
23) Anyone (A) may introduce codes of conduct for multinational corporations. (B) Besides governments and
intergovernmental organizations, codes (C) have introduced by trade union organizations, employers’
organizations, various environmental, consumer, investor, religious, ethical and other organizations, and by
various groups (D) protesting certain international phenomena. Some of the codes have been adopted
multilaterally, some unilaterally.
24) Codes of conduct for multinationals may address any issue (A) relevant to their activities. Codes (B) have in
fact been addressed a wide variety of issues, including: relations between multinationals in world markets (e.g.
with regard to advertizing, marketing, sponsorship, and competition in general); (C) labour matters (e.g. terms
and conditions of work and equality); environmental standards (e.g. emissions, waste or safety in production and
transportation); and (D) health and safety issues related to individual products (e.g. toys, baby milk substitutes,
and other products).
Questions 25-30
Use the word given in CAPITALS at the end of each gapped line (25-30) to derive a word that fits in
the space.
Codes of conduct for multinationals can take __25__ forms. VARY
Their __26__ depends on three main factors – the CREDIBLE
__27__ that have adopted them or companies that have GOVERN
subscribed to them (e.g. in number, size or internationality);
the nature of the __28__ provisions of the code; SUBSTANCE
and any related monitoring __29__, such as MECHANISE
investigation methods, reporting of investigation results,
and __30__ of reports. DISSEMINATE (adapted from International Labour Office, Bureau for Workers’ Activities, Geneva, http://www.ilo.org/actrav)
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TEST 15 – INTERCULTURAL AWARENESS
INTRODUCTION
There are two main perspectives on the concept of culture: high culture and anthropological culture.
The first use of culture focuses on cultural elitism, civilisation, or the refinement of the mind, i.e. being
acquainted with the best intellectual and artistic accomplishments of humankind. This is culture in the narrow
sense, which Hofstede in Cultures and Organisations (1994) calls ‘culture one’.
Anthropological culture is seen as a collective phenomenon that comprises any aspect of the ideas,
communications, or behaviours of a group of people, and is used to organise their internal sense of cohesion and
membership. Hofstede terms this broader concept of culture, which is more tied up with ordinary ways of being,
‘culture two’, or ‘software of the mind’.
Hofstede explains that, because almost everyone belongs to a number of different groups at the same time,
people unavoidably carry several layers of ‘mental programming’ within themselves, corresponding to various
levels of culture. Some examples are:
- a national level according to one’s country
- a regional and/or ethnic and/or religious and/or linguistic affiliation level
- a gender level
- a generation level
- a social class level, associated with educational opportunities and with a person’s profession
- an organisational or corporate level for those who are employed
In intercultural (professional) communication situations, behaviour is appropriate when it meets
contextual and relational standards or expectations, and effective when it is functional in achieving desirable
ends or in satisfying participants’ needs.
Cultural competence is about more than understanding the intricacies of bowing in Japan or the
inappropriateness of accepting food with the left hand in Saudi Arabia. Cultural competence is the ability to
recognise the primary cultural orientations of ourselves and others and to be conscious of the potential impact of
these differences on working relationships. It involves going beyond the explicit components of a culture, and
working with the implicit value orientations that shape and motivate behaviour.
A key question is value orientation towards what? Anthropologists, psychologists, communication experts
and business consultants have chosen the following 10 variables that are of practical value to international
professional communicators in distinguishing between cultures and guiding key decisions: environment, time,
action, communication, space, power, individualism, competitiveness, structure, and thinking. For example,
there are seven possible ways to describe cultures in relation to their orientation to time: single focus,
multifocus, fixed, fluid, past, present, and future. Every culture contains each of these orientations; the key
difference among cultures being in emphasis.
Fons Trompenaars in Riding the Waves of Culture – Understanding Cultural Diversity in Business (1993)
explores four types of corporate culture: the Eiffel Tower, the Family, the guided missile, and the incubator.
The dimensions he uses to distinguish them are equality – hierarchy and orientation to the person –
orientation to the task. The metaphorical labels illustrate the relationship of employees to their notion of the
organisation. Below are the descriptions of these types of corporate culture in terms of the following
characteristics: (i) ways of thinking and learning; (ii) criticism and conflict; (iii) attitude to authority; (iv) ways
of changing; (v) relationships between employees; (vi) ways of motivating and rewarding; (vii) attitudes to
people.
The Family is at the same time personal, with close face-to-face relationships, but also hierarchical, in
the sense that the ‘father’ of a family has experience and authority greatly exceeding those of his ‘children’,
especially where these are young. The result is a power-oriented culture with the leader regarded as a caring
father, who knows better than his subordinates what should be done and what is good for them. Rather than
being threatening, this type of power is essentially intimate and (hopefully) benign. The work of the corporation
is usually carried forward in an atmosphere that in many respects mimics the home. Power and differential
status are seen as natural, a characteristic of the leaders themselves, and not related to the tasks they succeed or
fail in doing, any more than a parent ceases to be a parent by neglecting certain duties.
The Eiffel Tower stands for a bureaucratic division of labour with various roles and functions
prescribed in advance. These allocations are co-ordinated at the top by a hierarchy. If each role is acted out as
envisaged by the system, then tasks will be completed as planned. One supervisor can oversee the completion of
several tasks; one manager can oversee the job of several supervisors; and so on up the hierarchy. Each role at
each level of the hierarchy is described and rated for its difficulty, complexity and responsibility, and has a
salary attached to it. In considering applicants for the role, the personnel department will treat everyone equally
74
and neutrally, will match the person’s skills and aptitudes with the job requirements and will award the job to
the best fit between role and person. The same procedure is followed in evaluations and promotions.
The guided missile differs from both the family and the Eiffel Tower cultures by being egalitarian, but
differs also from the family and resembles the Eiffel Tower in being impersonal and task-oriented. While the
rationale of the Eiffel Tower culture is means, this culture has a rationale of ends. Its ultimate criterion of
human value is how you perform and to what extent you contribute to the jointly desired outcome. In effect,
each member shares in problem solving. The relative contribution of any one person may not be as clear as in
the Eiffel Tower culture, where each role is described and outputs can be quantified.
The incubator is based on the existential idea that organisations are secondary to the fulfilment of
individuals. If organisations are to be tolerated at all, they should be there to serve as incubators for self-
expression and self-fulfilment. This corporate type is both personal and egalitarian with minimal structure
and minimal hierarchy. The roles of other people in the incubator are crucial. They are there to confirm,
criticise, develop, find resources for and help to complete the innovative product or service. The companies are
usually entrepreneurial or founded by a creative team that quit a larger employer just before the pay-off.
Being individualist, employees are not constrained by loyalties and may deliberately ‘free ride’ until their eggs
are close to hatching. In this way, larger organisations find themselves successively undermined. (from Hofstede, G. Cultures and Organisations; Trompenaars, F. Riding the Waves of Culture)
READING
Read the article about global leadership competences and answer the questions (1-4) by choosing the
appropriate answer (A, B, or C).
Developing Global Leaders with Coaching across Cultures
by Philippe Rosinski, MCE Faculty Member
In their special issue ‘Leadership in a Changed World’ (August 2003), the Harvard Business Review
editors (Stephen Green, Fred Hassan, Jeffrey Immelt, Michael Marks and Daniel Meiland) observe
that, “for all the talk about global organisations and executives, there’s no definite answer to the
question of what, exactly, we mean by global.” There is some consensus, however. First, the five top
executives interviewed all agree that “the shift from a local to a global marketplace is irreversible and
gaining momentum”. Second, they all insist on what Fred Hassan (Chairman and CEO, Schering-
Plough) calls a ‘global attitude’: “an attitude which involves a real passion and curiosity about the
world, a willingness to accept good ideas no matter where they come from, and collaboration around
geographies”.
Beyond cultural sensitivity, which is characterised by openness, understanding and respect,
some of these top executives emphasise the value in cultural differences. Stephen Green (Group CEO,
HSBC) declares: “If, for example, my French colleagues lost their French-ness or my Brazilian
colleagues lost their Brazilian-ness, life would be a lot duller, and HSBC would be a lot less
profitable. We prize our diversity. That’s all part of the richness and fun of working together, and it’s
what makes us so creative and responsive to our clients’ needs”.
Unfortunately, as Daniel Meiland (Executive Chairman, Egon Zehnder International)
explains: “Many companies haven’t been all that successful at developing global executives… The
intentions are good, but the fact is, practice hasn’t caught up with intent”.
This is where global leadership development comes in. Strangely, many companies still
assume that global leadership competences will somehow either come naturally or through superficial
training. On the contrary, excellent international companies (including Unilever, Chubb Insurance,
Baxter Healthcare and IBM, which I had the chance to serve over the past several years) have found
that developing global leaders requires a rigorous and systematic approach.
They discovered that the unique combination of coaching and intercultural skills (which is the
essence of my book Coaching Across Cultures (2003) is key for effective global leadership, which
operates in a complex and multidimensional environment. It is in essence a more creative form of
coaching. Whereas traditional coaching tends to operate within the confines of your own cultural
norms, values and beliefs, coaching across cultures seeks to challenge these cultural assumptions and
discover solutions that lie ‘outside-the-box’.
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Coaching is an effective leadership practice that develops people while getting results.
Coaching is about facilitating the unleashing of people’s potential to achieve important, meaningful
objectives. Coaching across cultures makes it possible to deploy even more potential by tapping into
different possible worldviews: alternative ways of thinking, communicating, organising, dealing with
power and responsibility, defining identity and purpose, and viewing time.
Beyond tolerating or adapting to differences, the goal is to pro-actively learn from other
cultures and make the most of various perspectives, that is, leverage the richness that lies in cultural
diversity.
For example, Chubb Asia Pacific’s executives learned to blend Western directness and Asian
indirectness, retaining the best about each communication pattern: clear and firm on the content,
sensitive on the process. This attitude has played a significant role in fostering harmony and unity at
the top, which in turn has allowed these senior executives to mobilise the entire workforce and
achieve record growth in Asia Pacific.
Similarly, leaders at Baxter Renal in the United Kingdom became skilled at reconciling
profit-driven and people-driven values. Used to impersonal marketing plans, business professionals
learned to better hold patients’ needs to heart. They developed the values of caring and empathy. They
found a new pride and inspiration knowing that their work would make a real difference for patients.
The leadership team set out to make renal patients’ lives as easy as possible. Baxter offered to take
care of various tasks that patients would normally have to worry about, such as the disposal of dialysis
bags, water purification, or the update of prescriptions. From a business standpoint, this approach
further reinforced Baxter’s market position and success.
Developing global leadership typically involves a combination of consulting, training and
coaching. The approach should consider the company’s context and build on its current leadership
development initiatives. It should promote alignment and consistency with other levers of progress
such as the company’s vision, strategy, culture, performance appraisal and reward system. Ideally, the
levers should reinforce each other rather than send confusing signals (for example, employees are our
main asset – but the company does not seem to care about its employees, or corporate social
responsibility – without a genuine intention to make the world a better place).
In any event, I suggest incorporating the following (non-exhaustive list of) leadership
competences into your company’s leadership model:
Empowering leadership
Intercultural coaching: being able to adopt a coaching style enhanced with a global and intercultural
perspective
Intercultural excellence: having a capacity to work effectively across cultures through an appreciation
of cultural differences augmented by an ability to leverage these differences
Integrity: being true to oneself and genuinely committed to serve others
Visionary leadership
Dialectic/synthetic leadership: uniting and interconnecting (‘and’) rather than dividing and excluding
Creative leadership: being curious and able to see reality from multiple perspectives, particularly for
addressing leadership challenges
Farsighted leadership: framing organisational goals in the broader context of improving the world
Effective communication
Intercultural communication: being able to rely on various forms of communication: explicit and
implicit, direct and indirect, affective and neutral, formal and informal. (http://www.mce.be/knowledge/400/27)
1) A global attitude is about
A adapting to differences.
B enriching one’s potential for performing successfully.
C tolerating differences.
2) Development of global leadership competencies is facilitated by
A an awareness of your own cultural values.
B an innate sensitivity for cultural differences.
C working in an international context.
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3) Chubb Asia Pacific and Baxter Renal are two positive examples of how to
A reconcile different approaches in an intercultural working context with a view to
increasing profits.
B identify negative business practices.
C accept cultural differences.
4) The competencies included in the global leadership model speak about attaining
A harmony of opposites / unity in diversity.
B a consideration of a situation from multiple angles for the creation of pro-active
solutions.
C a positive attitude towards cultural diversity in a company.
USE OF ENGLISH
Questions 1-10
For each blank (1-10), think of the word that best fits in the context. Use only one word in each space.
When an American executive goes abroad, it’s very easy __1__ cultural assumptions to slip into
his/her suitcase. “When negotiations are prolonged, or frustrating, __2__ cultural assumptions tend to
jump out of the suitcase, onto the negotiating table,” Bengtsson points __3__. The point to remember
at times __4__ this is that you are in someone else’s culture and, for the time __5__, you need to play
by __6__ rules.
Because of tighter budgets, companies are sending __7__ executives abroad these days, so the
executive who is sent to a foreign country has mission-critical work to __8__. Thus it’s essential that
the executive adapt to a different culture’s rules: for communication, interaction, and negotiation. If
he __9__ not, if he acts the proverbial “Ugly American,” his chances for success __10__ small. (from Harvard Management Communication Letter, December 2002)
Questions 11-20
For each blank (11-20), decide which of the options A, B, C or D is best. Only one answer is correct.
At the individual level, leaders discover new cultural __11__ for dealing with challenging situations
and for making the most of a diverse __12__.
At the team level, they learn how leveraging diversity can lead, somewhat paradoxically, to increased
team unity and __13__.
At the organisational level, leaders find out how to integrate __14__ cultures during mergers,
acquisitions and alliances. They also __15__ their ability to define the new company’s culture and to
make it become real. In today’s global, multicultural, dynamic and competitive world, organisations
have to achieve greater results with scarcer __16__. Furthermore, they need the creativity and
farsightedness to __17__ the new ideas and aspirations that are also __18__ in our turbulent and
changing __19__. Effective global leadership is necessary to address both the threats and the
opportunities, thereby enabling sustainable business success. Therefore, global leadership
development is becoming vital to attract, develop and __20__ the human talent necessary to achieve
this success. (http://www.mce.be/knowledge/400/27)
11 A selections B versions C choices D preferences
12 A staff B workforce C employment D personnel
13 A performance B operation C production D accomplishment
14 A unlike B disparate C unequal D separate
15 A heighten B emphasise C intensify D sharpen
16 A reserves B assets C resources D supplies
17 A capture B captivate C seize D catch
18 A inherent B internal C characteristic D existent
19 A condition B medium C situation D environment
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20 A reserve B retain C hold D continue
Questions 21-25
In each of the following (groups of) sentences (21-25), find the underlined part – A, B, C or D – that
contains a mistake. There is always one incorrect segment in each paragraph.
21) To develop (A) cross-cultural communicative competences, the following (B) global leadership
tools (C) have been proven to be (D) particularly useful: the Cultural Orientations Framework, the
Global Coaching Process, and the Global Scorecard.
22) The Cultural Orientations Framework (COF) (A) allows leaders (B) deciphering individual and
collective cultural orientations. An orientation is (C) an inclination to think, feel or act in a way (D)
that is determined - or at least influenced - by culture.
23) When (A) several cultures are involved, the COF gives leaders a systematic approach for
clarifying the nature of cultural differences (B) as well as similarities. (C) The emphases is to use (D)
dialectics rather than binary thinking for bridging cultural gaps: synthesising differences, achieving
unity in diversity.
24) The Global Coaching Process is (A) a three-steps process to facilitate a high-performance and
high-fulfilment journey with individuals and teams. Finally, the Global Scorecard is (B) a tool for
setting objectives that promote business success (C) while encouraging leaders to take care of
themselves, nurture relationships and (D) serve society at large.
25) (A) Coaching across cultures apply at various levels: (B) for leading diverse individuals (C)
creatively, cross-cultural teams and (D) across organisations.
Questions 26-30
Use the word given in CAPITALS at the end of each gapped line (26-30) to derive a word that fits in
the space.
Cultural differences do exist, but I think it is important to
recognise that all cultural differences are __26__ stereotypes. ESSENCE
For every person who conforms to the stereotype there are
Many others who are the exact __27__. Yes, there may well OPPOSE
be __28__ or preferences but should we allow them to shape TEND
our whole approach to a people? Indeed, __29__ may CONCEIVE
at times do more harm than good. Whilst it is critical to be
aware of such preferences and to respect them, I sometimes
fear that we focus too much on the differences - and not on
what we have in common. Maybe an __30__ approach is ALTERNATE
to comment more on what we have in common rather than
what we see as different. In all my years working in this area
I have often been asked to speak about cultural differences
but never about commonalities. Perhaps it is time to start? (Mark Thomas, MCE Faculty Member – Cultural differences – So do they matter?)
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WRITING REFERENCE
A THE BASIC BUSINESS LETTER
A letter is an extremely versatile medium and format, which can be adapted to almost any purpose.
Here are some of the purposes to which we might put a letter:
- requesting or providing information
- ordering goods or services or acknowledging the order
- confirming information or arrangements
- notifying of some changes
- complaining about a product or service or adjusting a complaint
- introducing or explaining the contents of a package (a ‘cover’/’covering’ letter)
- applying for a specific vacancy
- conveying the benefits of a product or service
- persuading the recipient to do something
- giving instructions, etc.
Whatever the specific purpose of a business letter, there is always the general purpose of creating
a positive image. The written word being highly exposed, inaccuracy, error and lack of planning,
information, expertise, logic, and professionalism are visible in black and white and cannot be
immediately adjusted or amended as they might be in spoken communication.
Standard elements
Letterhead: the basic information (i.e. organisation’s name and status, address, telephone, fax and
telex numbers) that the recipient will need in order to reply*
References (Our ref. or Ref. / Your ref.): – the originator’s initials in cap(ital)s and the typist’s
initials in lower case
Date: 27th March, 2005 (the fullest form); 27 March 2005 (increasingly used); March 27(,) 2005
(American date format)
The recipient / Inside address: an organisation (Vitrina Advertising Ltd.); a department (Accounts
Department, Vitrina Advertising); a designated individual (Accounts Manager, Accounts
Department, Vitrina Advertising); a named individual (Mr/Mrs/Miss/Ms/Dr. X, Accounts
Manager, Vitrina Advertising) + the address
Salutation / Opening greeting: conventionally paired with an appropriate complimentary close,
as shown in the following table
GREETING CLOSE CONTEXT
Dear Sir/Madam/Sirs/Sir or Madam
To Whom It May Concern
(Name not used)
Yours faithfully
Formal situations
Recipient not personally known
Recipient senior in years, position
Dear Dr / Mr / Mrs / Miss Ford
Dear Sir Keith / Lady Diana
Dear Lord Elton
(Name used)
Dear colleague / student / customer
Yours sincerely
Friendly (or would-be friendly, e.g.
for selling or conciliatory letters)
Established relationships
Implied relationships
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Dear Daniel / Alicia
Yours
Yours sincerely
Yours truly
Kind regards
Best wishes
Affectionately
Close, informal relationships
More various, because more
personal
Subject heading: an indication of the main subject of the letter
Main body: divided logically into paragraphs, separated by double spacing for clarity
Complimentary close: dealt with under Salutation, above
Writer’s signature, name and designation: the signature being often illegible, the addresser’s name is
printed below the signature together with his / her department and position in the company
Enclosure (Enc. / enc. or Encs. / encs. for more than one item): to indicate that other documents
accompany the letter, such as a cheque, a price list, a leaflet, a CV / résumé, etc.
*In a personal letter, you would put your address, phone number (if appropriate), and date at the top
right-hand side, but you would not put your name above the address, as this goes at the bottom of the
letter, under the signature.
Alternative layouts
Besides the designer letterhead and good quality print, the overall impact of a business letter depends
on the layout of text on the page. Below are the three most commonly used layout styles.
- Fully blocked / Block format: all the elements start at the left-hand margin.
- Semi-blocked / Modified block format: the body of the letter is left justified as in the
block format, but the date is against the right-hand margin and the subject heading are
centralised.
- Semi-indented format: is similar to semi-blocked, except that the first line of each
Many people find it difficult to write complaints because they have to control their negative feelings.
In this case, it is important to distinguish between being assertive, that is, asking for your rights, and
being aggressive, that is, being pushy and angry. So you should decide, honestly and realistically, how
you want the reader to rectify your problem, and then calmly, ‘go for it’.
Purpose Audience
To identify problem
To express the inconvenience caused by
problem to you
To notify recipient of your wishes
To convince the recipient that your demand is
honest and realistic
Will want details for investigation.
Will weigh cost of fulfilling your demand with
cost of leaving you disappointed.
Will be resistant to implied failure and loss.
May or may not be concerned to secure your
goodwill and benefit.
STRUCTURE AND STYLE
Opening paragraph Main body Closing paragraph
Context: what you are
complaining about;
background events (product /
service, date and place of
purchase, salesperson, invoice
number).
Exact nature of complaint:
details of fault, damage,
omission, incompetence
Adverse results: inconvenience,
delay, injury, etc.
Request and justification
How and when you expect the
mistake to be redressed: money
back, replacement, apology,
payment of damages, by a
certain date
Provide concise, accurate
details
Give clear details of faults
Try to sound dispassionate
Be polite, but firm.
Be assertive not aggressive
Adopt a conciliatory tone
Sample complaint
Dear Director
Waveport 5000: purchase and return charges
I am writing you concerning the purchase and subsequent return of a Waveport 5000 I made on 10
August 2004 in the amount of $225.
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On 10 August 2004, I purchased a Waveport 5000 from your company in the amount of $225. This
price included a two-day delivery and a 60-day money-back trial offer. The $225 was immediately
charged to my Ritz card. However, this product did not perform satisfactorily, and, on 15 August, I
decided to return the Waveport 5000 to your company. When I spoke to one of your company’s
representatives by phone, I was informed that the shipping and handling charges, as well as the price
of the Waveport 5000, would be credited to my account. I shipped the item by UPX and was notified
19 August of its receipt. Today, October 7, I received a statement for my Ritz card. And as of today,
no credit has been applied to my account for either the Waveport 5000 or the shipping and handling
charges.
If the Waveport 5000 was charged to my account immediately when I ordered it, I fail to understand
why the same promptness was not used in crediting my account immediately upon receipt of the
returned item. There is no real excuse for this delay other than someone not wanting to take the
necessary time in crediting my account. These finance charges*, as well as this letter, could have been
avoided if your employees had been as prompt in crediting my account as they were in charging to it.
It is not my responsibility to pay for your company’s lack of promptness and I rightfully deserve a
refund to any and all finance charges that may be applied during this time period.
Your company’s quick detection products have greatly helped me in the past, and I would like nothing
more than to have my account credited with the respective amount by October 15 so that I may be a
customer of yours in the future.
Sincerely yours,
John A. Smithson
Encs.: Copies of sales receipt and credit card statement (http://www.io.com/~hcexres/cgi-bin/color0.cgi?frameset=on¬er=../tcm1603/acchtml/complaintx1a.html)
*Note that the writer does not include any specific amounts as to shipping and finance charges; details like these should be
included.
Adjustment letter
An adjustment letter is one that answers a complaint letter. It is also called a compensation letter.
Such a letter must be seen to address directly the circumstances and stated wishes of the complainant.
Consider the guidelines in the following table.
Purpose Audience
To show you have considered the complaint
seriously
To attenuate the complainant’s anger,
disappointment
To offer a solution that will be acceptable to
both parties
To keep a positive relationship
Will want to have been taken seriously.
Will be resistant to denial of responsibility.
May be cynical about ‘sincere’ apologies.
Will have to be persuaded to accept the redress
you offer.
STRUCTURE AND STYLE
Opening paragraph Main body Closing paragraph
Context: acknowledgement of
previous correspondence and
Explanation: results of an
investigation
Assurance that the matter will
be resolved: restatement of
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understanding of the
complaint; expression of regret
for the problem
Indication of arrangements
being made to put things right
apology;
assurance of non-recurrence;
hope that good relations will
continue
Briefly reconfirm the details
Apologise gratefully but simply
Don’t make excuses or try to
blame other people
Show that you were concerned
to find out why the matter
occurred
Don’t sound reluctant: show
that you are making amends
gladly, and swiftly
Be conciliatory, as you do not
want to lose customers
Smooth things over, but don’t
exaggerate
Sample adjustment letter
Dear Mrs. Hughes
March 24 letter about damaged freight
I have just received your March 24 letter about the damaged shipment you received through Green
Tree Freight and regret the inconvenience that it has caused you.
From your account of the problem, I am quite sure that your request for the $240 adjustment on the
damage to the 2 crates of Valjean Cristal stemware will be granted. A certain amount of breakage of
this sort does unavoidably occur in cross-country shipping; I am sorry that it was your company that
had to be the one to suffer the delay.
I must remind you to keep the damaged crates in the same condition in which you received them until
one of our representatives can inspect them. That inspection should take place within 2 weeks.
If all is in order, as it sounds to be in your letter, you can expect the full reimbursement within 2
weeks after our representative’s inspection. I hope this unfortunate accident will not keep you from
having merchandise shipped by Green Tree Freight in the future.