Understanding the main points. 1. Decide whether the following statements are true or false.
1. Decide whether the following statements are true or false.
1. Before taking a routine decision managers
must collect a great deal of information. T/F
2. When choosing an overseas agent most
managers rely on their intuit. T/F
3. When a firm dismisses one of its junior manages
it is making a strategic decision. T/F
4. Managers cannot always wait until they have all
the necessary information before taking important
decisions. T/F
5. The first thing managers must do when solving a
problem is to collect all the facts. T/F
6. After collecting all of the necessary information
managers have to identify the various actions they
could take to solve a problem. T/F
7. When important decisions have to be made managers
need to use a systematic process of decision-making. T/F
Vocabulary focus
1. Find words or phrases in the text which mean the same as the following:
1. very important (paragraph 1)
………………………………………………..
2. immediately, without hesitation (paragraph 2)
………………………………………………..
3. occurs, appears (paragraph 5)
………………………………………………..
4. put, build, establish (paragraph 5)
………………………………………………..
5. consider carefully, assess (paragraph 5)
…………………………………………………
6. bear in mind, consider, remember (paragraph 7)
…………………………………………………
7. succeed in getting, win (paragraph 7)
…………………………………………………
8. choices, possible courses of action (paragraph 9)
………………………………………………….
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9. increased (paragraph 9)
………………………………………………….
10. take a middle course of action (paragraph 11)
………………………………………………….
LANGUAGE STUDY
1. Collocations:
make a decision
take a decision
take into account
solve a problem
The phrases above are examples of collocation. This refers to words which are frequently grouped together.
Complete the following sentences with appropriate verbs:
a) gave/expressed, come
b) run
c) made
d) bear/keep
e) take, making/taking/reading
f) given
g) reached
h) put
i) take
j) made/put forward/came up with
k) come to/reached/arrived at
l) reached/drawn
1. Although our company wants to expand rapidly, we must ……………….. in
mind that we have limited cash to do so.
2. It is important to ……………….. into account all options before
……………….. a decision.
3. The Financial Director has ……………….. the conclusion that we must
reduce costs by 10%.
4. Finally, the Chairman ……………… his option about the matter. After
we had listened to him, we were able to ……………….. to an agreement.
5. Patricia ……………….. an interesting suggestion at the meeting.
6. If we don’t come up with new products, we ……………….. the risk of
falling behind our competitors.
7. Our chairman is too old for the job. Some of the directors have ……………..
pressure on him to resign.
8. The writer has ……………….. some recommendations in his report.
9. What conclusion have you ……………….. from the facts given in his letter?
10. I have ……………….. a great deal of thought to our financial problems.
11. After five hours’ negotiation, we finally ……………….. agreement.
12. I don’t want to ……………….. action until I’ve heard everyone’s option.
2. Idiomatic uses of spot.
A. Below are some phrases each containing the word spot. Match the phrases
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with the correct definitions.
1. on the spot a) at the centre of public attention
2. in the spot b) quick, random examination
3. in the spotlight c) cash on delivery
4. spot-on d) aspect of a character, situation or organization
5. spot-check that can be criticized
6. put someone on the spot e) immediately or at the place of action
7. spot-cash f) outstanding moment
8. high spot g) ask someone a difficult question or put someone
9. weak spot in a difficult situation
10. knock spots off h) be much better than
i) in a difficult situation
j) exactly right
B. Complete the following sentences with suitable phrases from the list above.
1. We’re ……………….. at the moment because one of our biggest
customers has gone bankrupt. He owed us a lot of money.
2. Recently, The Distillers company has been ……………….. . Two
companies have been fighting to take it over, and everyone has been
talking about the takeover battle.
3. The forecasts of our Marketing Department have been ……………….. .
I don’t know how they manage to be so accurate.
4. Our terms for this consignment of rubber are ……………….. .
5. I don’t want to wait for an answer. Can’t you give me a decision ………?
6. Can we give you twenty machines for immediate delivery?
Mm … Now, you’re really ……………….. me ……………….. .
I don’t know how many we have in stock.
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7. The income tax officials often do a ……………….. on taxpayers to make
sure they are giving accurate information.
8. The ……………….. of our year is our staff party. Even the Chairman lets
his hair down.
9. Our distribution system doesn’t cover certain areas of the country. It’s the
……………….. in our business.
10. In my opinion, our computer products ……………….. those of our
competitors.
3. Complete the following passage with the correct forms of the words below:
arise (v.)
rise (v.)
rise (n.)
raise (v.)
A serious problem has ……………….. (1) in my company. Because the cost of
living ……………….. (2) by 6% last year, management decided to ……….(3)
the salaries of all the staff. For this reason, they gave everyone a …………. (4)
of $10 a week. However, later on, they had to pay for this by …………….. (5)
the prices of all our products by 10%. Such a large ……………….. (6) in prices
made our products uncompetitive. So now, management is taking of lowering
our salaries again!
4. Phrasal verbs with up.
Replace the words in italics in the following sentences with phrasal verbs below:
weigh up
bring up
take up (three meanings)
draw up
pick up
step up
1. Before preparing the contract, may I go over one or two points again, please?
…………………………………………………………………………………
2. We have to increase our work-rate if we are going to get the accounts
finished in time.
…………………………………………………………………………………
3. If I’m going to have any chance of becoming a member of the Board, I’ll have
to start playing golf.
…………………………………………………………………………………
4. I’d like to mention the subject of expense claims at our next meeting.
…………………………………………………………………………………
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5. (Chairman, at a meeting) Your point is interesting, Donna, but I’d like to
discuss it later, if I may.
………………………………………………………………………………….
6. We must consider all the possibilities before we decide which market to enter.
………………………………………………………………………………….
7. I start my new appointment next month.
…………………………………………………………………………………..
8. We didn’t get many orders last quarter but now sales have improved.
…………………………………………………………………………………..
| UNIT 5 TOP MANAGEMENT – PLANNING AND STRATEGY |
DISCUSSION
Read the following case study and then answer the questions below.
Richard Thomas, a brilliant electronics engineer, left the company he had worked with for ten years in order to set up his own business. He felt there was a gap in the market for low-priced computer components.
Richard’s bank manager was impressed by his experience and by the business plan he presented. An overdraft facility of $25,000 was quickly arranged. This, together with Richard’s savings of $15,000, provided the start-up capital for the firm, Computex.
He began by hiring another person to help him develop the components. The two of them spent the next six month producing the type of products they felt the market needed. When they had built up a good supply of components, they set about trying to sell them. To Richard’s surprise, however, this proved very difficult. Many potential customers seemed to be suspicious of the low prices of the products. Why were they so much cheaper than those of more famous, well-established competitors, they wanted to know. Other customers clearly saw Richard’s company as a newcomer not to be trusted – a cowboy outfit who would be here today and gone tomorrow.
It was over a year before Richard got his first order. By that time, he had an overdraft of $40,000 and no more money to make further supplies of components. He was spending all his time advertising the products, running round to meet customers and trying to persuade them to buy.
Three month later, a few large orders were received, but Richard realized that he would have to wait two months or so before being paid.
At that point, the bank manager lost confidence in the business. He informed Richard that he was calling in the overdraft. “Give me some time to look around for more capital,” Richard said. “All right, I’ll give you a month, but no more,” was the bank manager’s reply.
After rushing around and talking to a lot of people, Richard received firm offers from two venture capital companies. The first was prepared to invest $200,000 in return for an 80% share of Richard’s business; the second was willing to put up $250,000 for a 90% share.
This was the situation facing Richard Thomas fifteen months after he had set up his high-technology enterprise.
1. Could Richard have avoided the situation he now finds himself in? If so, how?
2. What should he do now?
3. What advice would you give him about how to run the company in the future?
4. What problems can arise when someone starts up a high-technology enterprise?
READING
The top management of a company have certain unique responsibilities. One of their key tasks is to make major decisions affecting the future of the organization. These strategic decisions determine where the company is going and how it will get there. For example, top managers must decide which markets to enter and which to pull out of; how expansion is to be financed; whether new products will be developed within the organization or acquired by buying other companies. These and other such decisions shape a company’s future.
Before doing any kind of strategic planning, the management must be sure of one thing. They must decide what is the mission and purpose of their business. They also need to decide what it should be in the future. In other words, they must know why the business exists and what its main purpose is. Deciding the mission and purpose is the foundation of any planning exercise.
Two examples will make this point clear – one British, the other American. Most people have heard of Marks and Spencer, one of the biggest and most successful retailers in the world. Michael Marks opened his first penny bazaar in 1884, in Leeds, England. Ten years later there were nine market stores, and Marks had taken into partnership Tom Spencer, the cashier of one of his suppliers. In 1926 Marks and Spencer became a public company. At that point, they could have rested on their laurels! However, around that time, they developed a clear idea of Marks and Spencer’s mission and purpose. Their later success was founded on this idea. They decided that the company was in business to provide goods of excellent quality, at reasonable prices, to customers from the working and middle classes. Providing value for money was their mission and purpose. One of the strategies they used was to concentrate on selling clothing and textiles. Later on, food products were added as a major line of business.
The second example concerns the American Telephone and Telegraph Company. They decided on their mission some sixty or so years ago. The head of the organization at that time, Theodore Vail, realized that a privately-owned telephone and telegraphic company might easily be nationalized. If the company didn’t perform well, the public would call for its nationalization. To avoid this fate, it had to give efficient service to its customers. Vail and his colleagues decided that giving service would be the mission and purpose of the organization. This became the overall objective of the company, and has remained so ever since.
Having decided on its mission and purpose, an organization will have worked out certain more specific objectives. For example, a car firm may have the objective of producing and marketing new models of cars in the medium-price range. Another objective may be to increase its market share by 10% in the next five years. As soon as it has established its more specific, medium-term objectives, the company can draw up a corporate plan. Its purpose is to indicate the strategies the management will use to achieve its objectives.
However, before deciding strategies, the planners have to look at the company’s present performance, and at any external factors which might affect its future. To do this, it carries out an analysis, sometimes called a SWOT analysis (strengths, weaknesses, opportunities and threats). First, the organization examines its current performance, assessing its strengths and weaknesses. It looks at performance indicators like market share, sales revenue, output and productivity. It also examines its resources – financial, human, products and facilities. For example, a department store chain may have stores in good locations – a strength – but sales revenue per employee may be low – a weakness. Next, the company looks at external factors, from the point of view of opportunities and threats. It is trying to assess technological, social, economic and political trends in the markets where it is competing. It also examines the activities of competitors. The department store chain, for example, may see the opportunity to increase profit by providing financial services to customers. On the other hand, increasing competition may be a threat to its very existence.
Having completed the SWOT analysis, the company can now evaluate its objectives and perhaps work out new ones. They will ask themselves questions such as: Are we producing the right products? What growth rate should we aim at in the next five years? Which new markets should we break into? The remaining task is to develop appropriate strategies to achieve the objectives. The organization decides what actions it will take and how it will provide the resources to support those actions. One strategy may be to build a new factory to increase production capacity. To finance this, the company may develop another strategy, the issuing of new shares to the public.
Company planning and strategic decision-making are key activities of top management. Once they have been carried out, objectives and targets can be set at lower levels in the organization.
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