Sudan University of Science and Technology

College of Business Studies

Departments of B A +F A+ Cost +Eco.
English For Special Purposes (ESP2)
Prepred Badereldin Adam
Asst. Prof.

August 2024

Khartoum-

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Objectives

1. Acquire new terms & words and concepts of business language.

2. Build up vocabulary in business language.

3. Improve speaking, reading, listening and writing skills.

Output

By the end of the courses, depending on efforts and participation, You

will be able to:

1. Understand ESP on business

matters effectively.

2. Use new terms, words and concepts related to ESP properly.

3. Develop yourself capacity in ESP.

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 Contents

1. Unit One: Decision Making Analysis

2. Unit Two: Stocks & Shares

3. Unit Three : Project Finance

4. Unit Four; Production Cost

5. Unit Five; Intellectual Capital

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 Unit (1)

DECISION Making ANALYSIS

Pre-reading task (oral exercise):

1. What factors should be considered when taking a decision?

2. A, B & C are three different projects that provide the same output.
Which criteria do you use as a basis for selecting the best project?

3. What sort of information do you look for when you desire to buy a
second-hand car?

4. Which one do you think profitable to produce at low cost or high

quality?

5. Which policy do you prefer to adopt a capital-intensive or labor-

intensive in clothing industry?

Read the following passage carefully, and answer the questions below it:

Division of Kern Corporation manufactures mason jars and lids used in

canning fruits and vegetables. Although the division has generally been
profitable, increased competition has recently eroded margins, and the
firm is concerned about its long - term growth potential. Management has
identified several options: maintaining operations at existing levels,
selling the division to competitor, moving operation to a location where
labor costs are lower, purchasing new machinery to increase productivity,
identifying new product lines or spinning off the operation to share
holders.

The outcomes of these different strategies will depend on the actions of

competitors, the future of canning industry, the firm’s future cost of
funds, and the resulting tax consequences, among other factors. To
determine the best course of actions, management must make projections
regarding the growth of industry, labor costs, anticipated actions of
competitors, and the availability and cost of funds. Management must
then determine the outcome of each strategy, given a particular possible
projection of future events. This information forms the basis for a
decision analysis approach to determine the optimal course of action.

Introduction to decision analysis

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Throughout our day we are faced with numerous decisions, many of
which require careful thought and analysis. In such cases, large sums of
money might be lost or other severe consequences can result from the
wrong choice. For example, you probably would do a careful analysis of
the car you are going to purchase, the house you are going to buy, or the
college you will attend.

Businesses continuously make many crucial decisions, such as

whether or not to introduce a new product or where to locate a new plant.
The outcome of these decisions can severely affect the firm’s future
profitability. The field of decision analysis provides the necessary
framework for making these types of important decisions.

Decision analysis allows an individual or organization to select a

decision from a set of possible decision alternatives when uncertainties
regarding the future exist. The goal is to optimize the resulting return or
payoff in terms of some decision criterion.

Consider an investor interested in purchasing an apartment

building. Possible decisions include the type of financing to use and the
building’s rehabilitation plan. Unknown to the investor are the future
occupancy rate of the building, the amount of rent that can be charged for
each unit, and possible modifications in the tax laws associated with real
estate ownership. Depending on the investor’s decisions and their
consequences, the investor will receive some payoff.

Although the criterion used in making a decision could be

noneconomic, most business decisions are based on economic
considerations. When probabilities can be assessed for likelihoods of the
uncertain future events, one common economic criterion is maximizing
expected profit. If probabilities for the likelihoods of the uncertain future
events cannot be assessed, the economic criterion is typically based on
the decision maker’s attitude toward life.

Oftentimes, elements of risk need to be factored into the decision-

making process. This is especially true if there is a possibility of incurring
extremely large losses or achieving exceptional gains. Utility theory can
provide a mechanism for analyzing decisions in light of these risks, as
well as evaluating situations in which the criterion is noneconomic.

While decision analysis typically focuses on situations in which the

uncertain future events are due to chance, there are business situations

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in which competition shapes these events. Game theory is a useful tool
for analyzing decision making in light of competitive action.

Q. 1: Short answer:

1. What are the options?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
……………………………………………………..

2. How could management choose the best option?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
…………………………………………….…………

3. What is the significance of information for management?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………

4. What is the effect of wrong decision taken?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………

5. Why do you think that utility theory is useful in terms of decision

making process?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………

Q. 2: Fill in the blanks with the words from the list below:

When we talk about making decisions in ………….. we tend to think of the

major …………….. which are made from time to time. That fact is that a
…………. of decisions are being made in business every day. Certainly,
there are major decisions in ………….. as the boards of directors and chief
executives in large public companies ………….. to enter new markets,
………….. millions on new plant and machinery or …………… campaigns,
and buy new buildings or make …………… bids against their most

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threatening competitors. In fact, man is a decision-making……………. . He
is continuously making decisions every moment of his life. When he /she
is ……………. with a problem, s/he then looks for the ……………… solutions
to the problem, ……………. up the advantages

and disadvantages of each and select the one which …………… him/her
………….. pleasure and …………….. pain. In business terms we are looking
for the …………. which allow us either to ……………. our objectives at the
…………… possible cost, or allow us to emerge with the …………….. profit.
There are, of course, monumental decisions, but the basic principle is the
same: the advantages and disadvantages of the various possible
alternatives are weighed up and an option is………… . That is how all our
decisions are made.

spend decide gives

achieve confronted weigh

least lowest greatest

most chosen take-over

business alternative multitude

decisions process advertising

options animal

Q.3: Make these statements T (true) or F (false) according to the

information in the passage:

1. Kern Corporation manufactures canning fruits and vegetables

( ).

2. The management has identified several options including merger with

another competitive firm. ( ).

3. Decision making process is to evaluate the advantages and

disadvantages of all options. ( ).

4. The best decision to be made by the firm is to consider the

profitability. ( ).

5. To avoid wrong choice, the decision must be made swiftly.

( ).

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6. The consequences of inappropriate decision might affect the existence
of company. ( ).

7. Game Theory is the only tool for analyzing decision-making process.

( ).

Q. 4: Explain the meaning of the following words or phrases:

1. actions of competitors ……………………………....................

2. eroded margins…………,,,,………………………….………….

3. future profitability……..……...............................................

4. payoff….……………………………………………………………

5. spinning off………………………………………….……………

Q. 5: Complete the following sentences:

1. The financial expert has analyzed…………………………………..

..……..………………………………………………………………………….

2. The competitive market of oil industry……………………………..

…………………………………………………………………………………..

3. The meeting kicks off ..…………………………………………………

…………………………………………………………………..………………

4. Consumer’s needs should be identified by

………………………………………………………………………………………………………
………………………………………………………………………

5. The stakeholders for automobile industry are interested

in……………………………………………………………………………………

………………………………………………………………………………………

6. The objective of all business corporate is to achieve profitability and

reduce ……………………………………………………………………..

……………………………………………………………………………………..

7. Last week, the shareholders of the company approved the distribution

of dividends at …………………………..............................
..……………………………………………………………………………………..

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Q. 6: Fill in the blanks with the suitable preposition (in/for/about/in spite
of/instead of):

1. Are you interested ………..working for this company?

2. I’m not very good …………….learning foreign languages.

3. She must be fed up………..studying this incomplete report.

4. What are the advantages …………. increasing competition?

5. This machine is only……………reducing waste materials.

6. How ……………discussing the new plan tomorrow?

7. We bought a new equipment ………..repairing the old machine.

8. Our company opened another branch……………..falling sales.

Q.7: Complete the table below:

Word Synonym Opposite

Increase (n)

Management (n)

Decision (n)

Organization (n)

Projection

Q. 8: write a short account about decision making process

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

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 Unit Two

Stocks and Shares

Pre-reading task (oral exercise):

1. What are stocks and shares?
2. What is the stock market?
3. Which one do you think could generate more income?
4. Do you think it is profitable to invest in stocks or shares?
5. What sort of risks related to stocks and shares at the exchange
stock market?

Read the following passage carefully, and then answer the questions below
it:

'Before a business can function two ingredients are essential: people and
money. Without either, no business could take off. For the limited
company, funds are initially provided by the shareholders. Ordinary
stocks (or shares) are commonly described as 'equities', indicating that
the holders are entitled to what is left of the assets and profits, after
certain claims have been met.

The stock is broken down in units of, say 50p each, which is then
described as nominal value. This is used for the calculation of dividends.
So, if a dividend of 10 percent is paid on a 50p stock unit, the dividend
will amount to 10 per cent of 50p, i.e. 5 per unit.

The dividends on ordinary stock will be related to the profits made by the
company. Thus, if the profits are good the ordinary stockholder can
expect to receive an attractive dividend. However, before the dividend is
paid the directors of the company may wish to recommend part of the
profits being ploughed back into the business.

The fact that dividends normally vary in line with profits gives the person
who holds ordinary stock some possible protection against the falling
value of money-another description of inflation.

This hedge against inflation operates in the following manner. In the case
of a typical manufacturing company, where there is a rise in the cost of
raw materials and wages, the company can usually compensate for this by
raising the price of the finished goods. In this way its profits can be
increased, wholly or partially, in line with the general rate of inflation.

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Ordinary stocks normally, but not invariably, carry voting power. Some
stocks units are even issued which give more than one vote per stock
unit, but multiple voting stocks, as it is called, is not common. Some
investors are willing to accept non-voting stock (usually designated 'A'
stock) on the grounds that they do not wish to exercise voting power in
any case. However, when there is a take-over in the offing, the voting
stocks will become more valuable and, for this reason, the market price of
the voting stocks would be expected to stand at a premium in relation to
the price of non-voting stocks.

Whoever owns more than 50% of the voting stocks is sure of controlling
the elections to the boards of directors. Yet many boards own much less
than this proportion of voting stock between them. They are still able to
select their own replacements for any directors who die or retire, since
other groups of shareholders will be disorganized and unaware of the
issues and personalities involved.

The existing board of directors in a large public limited company (PLC) is

likely to remain in effective control so long as the company's performance
satisfies the majority of the voting shareholders. But if the company
falters there could be a stockholders' revolt leading to the replacement of
the existing board-or at least elements of it.

Q.1: Short answer:

1. What is 'equities'?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………

2 . What is the importance of ordinary stock?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………

3 . How could a manufacturing company hedge against inflation?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………

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4 . Why do some investors accept non-voting stock?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………

5 . In what terms, a voting-stock is considered valuable?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………

Q . Explain the following phrases:

1. No business could take off?

..................................................................................................................
..................................................................................................................
....................................

2 . Nominal value

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………

3 . profits being ploughed back into the business

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………

4 . Non-voting stock

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………..………

5 . a take-over in the offing

………………………………………………………………………………………………………
………………………………………………………………………………………………………
……………………………………………………..

Q. 3: Fill in the blanks from the words below:

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1 . Ordinary stocks are usually described as ……………………….

2 . If the company's………………….rise the ordinary stockholders

can expect a good……………………………….

3 . If shares do not carry voting power they are unlikely to increase in

value as a result of a ………………….bid.

4 . If a company's profits fall drastically the ……………….might change the

board of ……………….at the next Annual General Meeting (AGM).

5 . Ordinary stocks can be expected to provide a useful …………….against

inflation.

6 . A company's board of directors is likely to retain………………..of the

company so long as they make reasonable profits.

shareholders equities hedge

dividend directors control

profits take-over

Q. 4: Write the capital letter 'T' for true or 'F' for false against each
statement:

1 . The stock Exchange is a market place for purchase and sale of stock
and shares. ( ).

2 . The purpose of a take-over bid may be to eliminate competition

( ).

3 . The directors may recommend that part of the profits should be

ploughed back into the business ( ).

4 . Non-voting shares will be of no interest to a take-over bidder

( ).

5 . Ordinary shares carry one vote each at the company's general- meeting
( ).

6 . If shares are quoted on the Stock Exchange, they will fetch a lower
price ( ).

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7 . If directors pay low dividends to the shareholders over a period of
time, take-over bidders will be discouraged ( ).

Q. 5: Make a circle around the best alternative:

1. If you own shares in a pharmaceutical company selling a wide variety of

medicines, you will be pleased to hear.

a. that the government is reducing its expenditure on the National Health

Service

b. that the birth rate is falling.

c. rumors that the company is to be taken over by an even larger German

competitor.

2. If you decide to sell shares it is best to sell them when

a. prices have reached a record low.

b. prices look as if they will not be going any higher.

c. other people are also rushing to sell.

3. If you own shares in a life assurance company with subsidiaries in the

USA, it will be bad news to hear that

a. the value of the dollar is falling in the foreign exchange.

b. that a new drug has been found to cure cancer.

c. that the government is planning to spend more on the National Health

Service.

4. You have bought shares in a commercial bank in the expectation

that the price of its shares will rise soon and you will be able to sell the
shares at a profit. When the accounts for the year are produced you
will be pleased to hear that it has

a. increased its dividend

b. increased its provision for bad debts

c. reduced its costs.

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5. Prices of shares on the International Stock Exchange in London would
be most likely to rise if

a. the rate of tax on profits (corporation tax) was to increase by 2p in the

$.

b. interest rate fell by 1%.

c. there was political unrest in the Middle East.

6. The price of equities in a UK group which was owns a number of hotels

in Eastern Europe would increase if there was

a. an enlargement of the European Community (EC).

b. a break-up of the EC.

c. a substantial increase in the price of oil.

7. A speculator on the Stock Exchange buys some British Petroleum

ordinaries. Which of the following items of news would be most welcome
to him?

a. The government increases the petrol tax.

b. The government places restrictions on the import of foreign cars.

c. Income tax is reduced by 2p in the $

Q. 6: Match the words listed below with the definitions which follow:

1. A another name for ordinary shares.

2. You can expect to receive these annually providing your company is

making good profits. ( )

3. Another name for stocks and shares ( )

4. One of the factors which will determine the price of the shares is the
degree of ( )

5. The member of the Stock Exchange who will arrange purchases or sales
of stocks on your behalf ( )

6. This is the difference between the value of the new shares and their
cost in a rights issue, assuming the difference is positive. ( )

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7. Only these shares are likely to be purchased at a take-over bidder
( )

8. In order to take over the control of a company you need to acquire

a…………………….of the voting shares. ( )

9. One way of hedging against this is to buy growth equities ( )

10. Long-term investors are usually looking for……………growth in their

portfolios. ( )

11. Deducted from the dividend before being paid over to the shareholders
( )

a) tax e) voting h) premium

b) inflation f) securities i) broker

c) risk g) majority j) dividend

d) capital k) consumer

Q. 7: Make a circle around the correct answer:

1. I was difficult to get a good job.

2. It was difficult to get a good job.

3. Would you give me some advice before I go to the interview?

4. Would you give me some advices before I go to the interview?

5. I don’t understand what is he talking about.

6. I don’t understand what he is talking about.

7. I found it very difficult to understand the financial report.

8. I felt very difficult to understand the financial report.

9. What we need is the most perfect plan.

10. What we need is a most perfect plan.

Sentence Structure: Subject+ Verb + Object; place + time

1) For example: The accountant(S) likes(V) his/her job (O) very much.

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2) Place +Time: Workers arrived at the site (P) early (Time).

Q. 8: Put the parts in the right order:

1) the chief/immediately/tom/phoned/accountant/examining /after/the

report.

……………………………………………………………………………………

……………………………………………………………………………………

2) at the top of page/please/your email/write

……………………………………………………………………………………….

……………………………………………………………………………………….

3) in the archive/ some interesting /we/reports/found/

………………………………………………………………………………………

………………………………………………………………………………………

4) kicks off/ at 9: 00 a.m./the meeting/at the conference hall/

……………………………………………………………………………………….

………………………………………………………………………………………

5) the annual report/yesterday/approved/the BoD/morning

……………………………………………………………………………………….

……………………………………………………………………………………….

Q. 9: Write a short account about shares, stocks and dividend:

..................................................................................................................
..................................................................................................................
..................................................................................................................
………………………………………………………………………….……………

Reference:

- J. Chilver, English For Business,2nd Edition 1992, Ashord Color Press,

Great Britain, pp 179-190.

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 Unit (3)

Project Finance

Pre-reading task (Oral Discussion):

a. How are large projects, such as the construction of roads or bridges,
usually financed?

b. What role does the World Bank play in project financing?

Read the following texts carefully and then answer the questions below
them:

A. Uganda “Close to Big Hydroelectric Deal”

1. AES, the US independent power company, says it is about to sign a deal

to construct a $500 for 250MW (Megawatts) hydroelectric dam at
Uganda’s Bujagali Falls, a project that would double the country’s
power supply.
2. The investment of East African Bank would show confidence in Uganda,
at a time of concern at corruption and potential cost of the military
involvement in the Democratic Republic of Congo.
3. Uganda suffers from severe power shortages, which a recent World
Bank study cited as a major implement to investment. The government
estimates that shortages reduce GDP growth by 2 per cent a year.
4. The country’ falls generates only 180MW, 100MW below demand. But the
picture is clouded by another project, a Norwegian- proposed facility at
Karuma Falls, which would have a maximum capacity of 200MW.
5. Uganda -based Norpak Power- says the Karuma Falls project would be
cheaper, more flexible and have less impact on the environment. AES
has been criticized in the local press over environment concerns.
6. Jim Adams, the World Bank country director for Uganda had been
invited to provide a report on the two projects. The report will include an
environmental assessment, and an analysis of price and future demand.
7. Initial estimates suggest that Uganda could not accommodate both
projects, and Mr. Adams said that the World Bank would not consider
any situations which would later require government subsidies.

B. Consortium To Fund Croatian Motorways

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 1. A consortium of international and domestic banks has agreed to provide
bridging finance for Croatia’s ambitious motorway construction
program to close the gaps in the highway network between the Adriatic
port of Rijeka and central and east Europe.
2. The loans totaling €68.8mn($77.7mn), open the way for work to begin on
new sections of the €614m project to complete the 148 km motorway
between Rijeka port and the capital Zagreb.
3. The new highway will also play an important role in accelerating the
recovery of tourism along Croatia’s Adriatic coast, which suffered badly
during the years of war in former Yugoslavia. The loans have been made
to Autocesta Rijeka-Zagreb (ARZ), the state-owned company responsible
for constructing the toll motorway.
4. A consortium led by Deutsche Bank is providing a €43.3 million
syndicated loan to act as bridging finance until the first stage of project
finance totaling between 200 and €300m is completed during the first
quarter of next year. An additional four year medium-term loan for
DM50m has been agreed with the German development bank.
5. The syndicated loan has been provided at 80 basis points (0.8) over
LIBOR (London Interbank Offered Rate) and up to 12 months. The terms
of loan demonstrate the increasing readiness of commercial banks to
return to lending in central Europe following the crisis in emerging
market financing last year.
6. The project expects to attract funding from the World Bank and the
European Bank for Reconstruction and Development.
 Keywords:

Consortium, Fund, recovery of tourism, syndicated loan, medium-term

loan, LIBOR, terms of loan and emerging market financing.

Test Your Understanding:

Q.1.: Short answer:

1. In which project is a state-owned company involved in the

construction?

……………………………………………………………………………………

……………………………………………………………………………………

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2. Which project will help to promote tourism?

………………………………………………………………………………………

……………………………………………………………………………………….

3. Which project is going to receive an environmental assessment?

………………………………………………………………………………………

……………………………………………………………………………………….

4. In which project will the World Bank

a.) provide inance?

……………………….......................................................................

b.) analyze the situation and prepare a report?

………………………………………………………………...........................

Q. 2. Match these terms in the box with their definitions below (put the
letter in the practice):

a. consortium b. syndicated loan c. bridging finance d. government

subsidies e. development bank f. LIBOR

1. short-term loan made by banks to cover the time between when money
is first needed and when other funding becomes available.

( )
2.combination of two or more large international companies, formed for a
special purpose for a limited period.
( )

3. bank which strengthens developing economies by supporting large

projects such as infrastructure projects. ( )

4. money provided from the nation’s current account to enable a company

(or other recipient) to operate without loss. ( )

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5. loan arranged for a large organization or government by a lead bank
with other banks participating. ( )

6. rate of interest at which funds are offered on loan the interbank

market, which may be used as the bank’s base rate. ( )

Q.3. Reading tasks: Mark these statements T (true) or F (false) according

to the information in the two texts:

1. If AES builds the new dam at Bujali Falls, the country’s power supply
(F )

2. Currently, economic growth in Uganda is restricted by inadequate

power supplies. ( )

3. Foreign investors are worried about Uganda going to war with its
neighbors. ( )

4. Norpak Power is a company which favors a Norwegian Hydroelectric

scheme. ( )

5. The Norwegian project would be smaller and less expensive than the
American one. ( )

6. It is expected that both projects will go ahead. ( )

7. The bridging loan for this project will amount to €68.8m. ( )

8. Construction of the new motorway cannot start until financing for the
whole project has been found. ( )

9. Domestic banks are leading the consortium that will provide bridging
finance. ( )

10. The rate of for the syndicated loan is above the London interbank
rate. ( )

11. There have been problems persuading banks to lend to central Europe
in the past. ( )

Q.4.: Vocabulary tasks: Replace the underlined items with words and
phrases from the texts that have a similar meaning (Word search):

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1. with the new dam, the country’s power supply will be as twice as much

(Text A).
……………Double……………………………………………………………………………

2. A study referred to power shortages as the main reasons for slow

economic growth.

(Text A)……………………….……………………………………………………………......

3. The press made negative comments about the AES project, saying it
would damage the environment.

(Text A)…………………………………………………………………………………………..

4. There will be an evaluation of the environment impact of the project.

(Text A)…………………………………………………………………………………………..

5. Estimates that were made at the start of the analysis suggest that
only one project can be supported.

(Text A)…………………………………………………………………………………………

6. Organizations that could be interested in financing the project are

waiting for the World Bank’s report.

(Text A)…………………………………………………………………………………………..

7. The new road will help to promote an upturn in the tourism industry.

(Text B)…………………………………………………………………………………………

8. The loan will be provided for a maximum of twelve months.

(Text B)………………………………………………………………………………………..

9. Investors are showing greater willingness to invest in central Europe.

(Text B)…………………………………………………………………………………………..

Q.5.: Understanding expressions:

Choose the best expressions for each of these words and phrases from the
two texts:

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1. severe power shortages

a. lack of electric power which is very serious for the country.

b. lack of electric power which doesn’t cause serious problems

2. impediment of investment

a. something that stops people wanting to invest.

b. something that encourages people to invest.

3. current energy source

a. electrical energy source

b. existing energy source.

4. ambitious

a. something that people think can’t be done

b. something that requires a special effort.

5. accelerating

a. speeding up

b. causing

Q.6.: Word building:

A facility that is proposed by a Norwegian company is Norwegian-

proposed. A company that is based in Uganda is Uganda-based. Produce
similar compounds for these ideas:

1. a company that is owned by the state. State-owned................................

2. a project that is funded by the government………………………………………

3. a program that is backed by the Swiss……………………………………………..

4. a company that is registered in Australia…………………………………………

5. a syndicated loan led by German banks…………………………………………..

6. If a loan of four years is a medium-term loan, what would you call a

loan for twelve years?................................................................................

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Q.7.: Write a short account on a project in Sudan which has attracted
foreign investment.

……………………………………………………………………………………………………..

……………………………………………………………………………………………………..

……………………………………………………………………………………………………..

……………………………………………………………………………………………………..

…………………………………………………………………………………………………….

…………………………………………………………………………………………………….

……………………………………………………………………………………………………..

…………………………………………………………………………………………………….

……………………………………………………………………………………………………..

……………………………………………………………………………………………………..

………………………………………………………………………………………………………

……………………………………………………………………………………………………..

……………………………………………………………………………………………………..

………………………………………………………………………………………………………

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 Unit (4)

Production Cost
Pre-reading task:

1. What is production cost?

2. What is the significant of cost for industrial company?

3. How could you reduce cost in a small business firm? .4

Read the following passage, and then answer the questions below it:

Production management includes responsibility for the control of the

production process. Progress management ensures the smooth running of
production in the organization. Material control ensures that materials of
the right specifications are available in the right quantities to facilitate
production. Computers are widely used in production planning and
control. Cost control is another crucial function of production
management. The control functions of an organization take as their
starting point the plans made for that organization. The framework of
control is made up of policies, procedures and rules.

Policies are general guides for conduct and decision making. The essence
of policies is that they allow some discretion- they reflect the spirit rather
than the letter of ideas on how the organization may be run. For example,
the policy of an organization may be to ensure customer satisfaction, but
the statement of the policy does not specify exactly how this is to be
achieved.

Procedures are sets of rules as how to activities should be carried out. A

procedure is a logical sequence of actions- things which people must do.
The relationship between policies and procedures can be seen if we
consider the organization whose policy is customer satisfaction-it will,
then, have set procedures to cope with, for example, customer
complaints.

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Advantages of procedures

When procedures are established, managerial discretion is severely

reduced. Specific steps are clearly set out and these have to be followed
to the letter. The main advantages of establishing strict procedures are:

 Consistency of actions from different people regardless of variations

in individual circumstances.
 Ensuring conformity with laws, for example on health and safety or
labor laws on such issues as discrimination and
redundancy/dismissal.
 Simplification of managerial functions- many people find it easier
and safer to follow set procedures and the possibilities for
inconsistent decisions are much reduced.
 Decisions can be made without having to refer to senior managerial
levels, thus speeding up the decision-making process and preserving
the authority of the lower manger.
Disadvantages of procedures

 Possible reduction in managerial morale: the more enterprising

managers prefer to be allowed to exercise discretion and show their
initiative and dislike being governed by detailed rules.
 Management is in danger of becoming administration. People with
enterprise and initiative will not work for an organization with a
reputation of stifling initiative. Managerial standards fall and the
organization becomes ossified and resistant to change.
 Procedures initially established over a limited area to ensure
compliance with the law may start to spread throughout the
organization and to the determinant of effective management.

Keywords:

Q. (1): Short answer

1. What is the function of control in terms of production in

organizations?

………………………………………………………………………………………………………
…………………………………………………………………

What is the framework of control?

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………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………

3. What is the difference between policies and procedures?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………

4. “Conformity with laws”. What does it mean?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
……………………………………………...

5. What is the most important disadvantage of procedures?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………

Q. (2): Rewrite this passage filling in the blanks from the list of words
below:

If you are considering ……………… your own business, an accountant is

the best person to give you ……………advice. It is a …………. requirement
that proper financial records are kept and the basic principle is to
………….. every single …………... One of the purposes is
to………………..whether you have made a profit or loss during a
……………….period. Profits could be described as the difference between
the ………………of the business at the start of a ………….period and the
value of the business at the ……………of the period.

record end legal given ascertain

trading setting up value financial transaction.

Q. (3): Find a word or phrase in the passage that has a similar meaning:

1. Inflexibility…...................... ….………………………………..………

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2. Effective cost……..…….......................……………………………….

3. Standards…………………………………………………………………..

4. Regulations…………………….…………………………………………..

5. Power…….………………………………………………………………….

Q. (4): Explain the following words or phrases:

1. cost control…………………………………………………………………

………………………………………………………………………………………………………
…………………………………………………………………

2. exercise discretion………………………………………………………..

………………………………………………………………………………………………………
…………………………………………………………………

3. customer satisfaction…………………………………………………....

………………………………………………………………………………………………………
…………………………………………………………………

4. material control…………… ……………….…………………………….

5. smooth running of production

……………………………………………………………………………………

Sentence Structure: Subject+ Verb + Object; place + time

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Q. (5): Rewrite the following words in order to make a meaningful
sentence:

1. lower/stock/are/inventories…………………………………………

………………………………………………………………………………….

2. capital-intensive/business/modern/likely/is/be/to/

…………………………………………………………………………………..

……………………………………………………………………………………

3. production /cost/reducing/ a key/ is/ target/ business /organizations/

for.

………………………………………………………………………………………………………
…………………………………………………………………

4. the/system/control/ensure/must/that/cost/ production/is/
monitored/closely.

..................................................................................................................
......................................................................................

5. accounting/traditional/difficulty/finds/cope/to/with/

industries/moving

………………………………………………………………………………………………………
…………………………………………………………………

Q. (6): Write a short account about production management:

……………………………………………………………………………………

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

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 Unit (5)

Intellectual Capital
Pre-reading task (oral exercise):

1. What do you know about Intellectual Capital?

2. Do you think that there is a relationship between intellectual capital

and intangible asset?

3. Is there any relationship between intellectual capital and human

capital?

4. What is the difference between them?

5. Is it possible to measure the value of intellectual capital?

Read the following passage carefully, and then answer the questions below
it:

Intellectual Capital (IC) is becoming the preeminent resource for creating

economic wealth. Tangible Asset (TA) such as property, plant, and
equipment continue to be important factors for the production of goods
and services. However, their relative importance has decreased through
time as the importance of intangible, knowledge based asset has
increased. This shift in importance has raised a number of questions
critical for managing IC. How does an organization assess the value of
such things as brand names, trade secrets, production processes,
distribution channels, and work-related competencies? What are the most
effective management processes for maximizing the yield from
intellectual assets?

The critical competitive importance of IC in today’s economy indicates a

need for high performance systems to manage them. Recent advances
associated with total quality management, reengineering, learning
organizations, and other initiatives have accomplished much. However,
the management of IC is, at best, ad hoc in most organizations. One
reason is that traditional accounting systems are not well equipped with
to measure or monitor most elements of IC. Another reason is that the
management of IC is considered by many synonymous with workforce
management. However, IC encompasses more than people and, therefore,
requires a more comprehensive approach.

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In order to arrive at the objective of valuing and measuring Intellectual
Capital, it is necessary to understand the different components that make
up IC. Intellectual Capital includes/ encompasses inventions, ideas,
general know how, design approaches, computer programs and
publications. Distinguishing between the different components of IC will
help to improve the understanding of what is IC, and will hopefully allow
us to apply the concept at a strategic and operational level. Some
components of Intellectual Capital are difficult to measure, and the cost
and benefits are difficult to quantify. For example, quantifying the value
of customer relationships is highly subjective and determining a dollar
measure would be very difficult.

One of the most popular models for classifying IC (Hubert Saint-One

model) divides Intellectual Capital into 3 parts: human capital; structural
capital; and customer capital. The director of the Institute for Intellectual
Capital Research restates customer capital as relational capital to include
relationship with suppliers and other partners and stakeholders.

Human capital is often recognized as one of the largest and most

important intangible asset in an organization. It is the capital which
ultimately provides the good or services which customers require or the
answers to their problems. Human capital includes the collective
knowledge, competency, skills and talents of people within an
organization. It also includes creativity and innovativeness of the
organization.

The effects of human capital formation are hard to determine, even how
difficulty they are to measure.

A part from the measurement difficulties, many argue against the

inclusion of human capital onto the balance sheet because (1) human
capital is not owned by the organization: it is only for rent, and (2)
ethical reasons- placing a price on individual runs the risk of making
employees appear substitutable for other form capital. However, in spite
of these shortcomings, human capital provides another approach on
training and human resources management policies, ultimately
improving the management of an organization.

Q. 1: Short Answer:

1. State the difficulties to measure intangible assets?

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………………………………………………………………………………………………………
………………………………………………………………………………………………………

2. Do you think that tangible assets would become relatively less

important?

………………………………………………………………………………………………………
………………………………………………………………………………………………………

3. What is IC?

………………………………………………………………………………………………………
……………………………………………………………………………………………………..

4. What are the main divisions of IC?

………………………………………………………………………………………………………
………………………………………………………………………………………………………

5. Why do you think that human capital is the most important intangible
asset in organization?

………………………………………………………………………………………………………
………………………………………………………………………………………………………

Q. 2: Complete the sentence.

Use an appropriate word to complete the text below:

a. intellectual capital f. profits

b. knowledge companies g. corporate value

c. competitive advantage h. innovations

d. commercialization i. intangibles

e. interaction j. structural capital

The term (1)………a………… or knowledge intensive companies is

increasingly being used to describe companies that focus or leverage
their(2)……b…………. Knowledge companies are utilizing their intellectual
capital as a key source of (3)………c……. In a knowledge company,
(4)………f………are generated primarily through the (5)………e……of new

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ideas and(6)………h….., that is through the (7)………d……….of the
company’s human capital and (8)………j………. It is the interaction
between tangible and (9)………i…………that determine the
(10)………g…………..

Q. 3: Match these words in table A with their synonymous in table B:

Table A Table B

1. preeminent a. software
2. critical b. vendor
c.
3. brand names d. important
4. workforce e. serious
5. monitor f. shareholders
6. innovations g. labor
7. know how h. trademark
8. computer programs i. control
9. suppliers i. new ideas
10. stakeholders k. expertise

Q.4: Explain the following words/phrases:

1. Wok –related competencies

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

2. Knowledge based asset

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………….………………………………………………………………………………………….
.

3. Effective management

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………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………….….
.

4. Total Quality Management

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

5. Human capital

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

Focus on grammar:

Q. 5: Make a circle around the correct answer:

1. I was difficult to get a good job.

2. It was difficult to get a good job.

3. Would you give me some advice before I go to the interview?

4. Would you give me some advices before I go to the interview?

5. I don’t understand what is he talking about.

6. I don’t understand what he is talking about.

7. I found it very difficult to understand the financial report.

8. I felt very difficult to understand the financial report

9. What we need is the most perfect plan.

10. What we need is a most perfect plan.

Q.6: Fill in the blanks with the suitable preposition (in/for/about/in spite
of/instead of):

1. Are you interested ………..working for this company?

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2. I’m not very good …………….learning foreign languages.

3. She must be fed up………..studying this incomplete report.

4. What are the advantages …………. increasing competition?

5. This machine is only……………reducing waste materials.

6. How ……………discussing the new plan tomorrow?

7. We bought a new equipment ………..repairing the old machine.

8. Our company opened another branch……………..falling sales.

Q. 7: Match the words below with the dictionary definitions which follow
(a,b,c …etc.) and put your answer in the bracket:

a. capital b. depreciation c. revenue d. security e. bankrupt

f. bankruptcy g. overheads h. investor

The situation facing persons who cannot pay their creditors. ( )

2. An asset such as a share certificate which can be offered as a safeguard

when a loan is received from a bank. ( )

3. A person whose affairs are in the hands of an Official

Receiver. ( )

4. Money received from sales ( )

5. The costs attached to maintaining fixed assets such as plant and

machinery. ( )

6. The proprietor’s stake in the business. ( )

7. The fall in value of an asset as a result of waste or usage. ( )

8. Someone who buys something in the expectation that it will rise in

value. ( )

Q. 8: Using your own words to complete these sentences below:

1. Intangible assets include…………………..……………………….……………

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…………………………………………………………………………………………….

2. Intellectual capital is a new …………………………………………………….

………………………………………………………………………....................

3. Distribution channels in super-markets ….. ……………………………….

….…………………………………………………………………………………………

4. Innovations are very ………………………………………… …………………..

…………………………………………………………………………………………

5. Suppliers provide companies with ……………..………………………………

………………………………………………………………………………………………

Q. 9: Write a short account on Intellectual Capital:

…………………………………………………………………………………………………

…………………………………………………………………………………………………

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

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