- Câu hỏi phần lead-in

- Định nghĩa, tính chất, phân biệt terms trong mấy bài reading.
- Multiple choice.
- Essay theo các topic đã học
Gap filling: lấy mấy bài đã học + terms trong slide: mấy bài matching

Unit 1: Management
Five Functions of Management:

● Planning: Setting objectives and determining courses of action

● Organizing: Structuring and allocating work
● Staffing: Recruiting, hiring, training, and firing employees
● Leading: Motivating, guiding and inspiring team members
● Controlling: Monitoring and evaluating performance, making adjustments

Reading
The work of a manager can be divided into 5 tasks: planning (setting objectives), organizing,
integrating (motivating and communicating), measuring performance, and developing people.

● Setting Objectives: Senior managers establish goals and decide how to achieve them,
developing strategies, planning tactics, and allocating resources.
● Organizing: Managers break down the organization’s activities into manageable tasks,
assign roles, and select the right people for each task.
● Motivating and Communicating: Managers use social skills to motivate staff,
communicate goals, form teams, and make decisions about pay and promotion.
● Measuring Performance: Managers assess staff performance to ensure that
organizational and individual goals are being met.
● Developing People: Managers focus on the growth of both their subordinates and
themselves.

Additionally, top managers plan for the future, adapt objectives when needed, foster external
relationships, and handle crises. While management involves learned techniques, it also
requires innate human skill, making excellent managers rare.

Manager vs. Leader

Leaders are different from managers in the sense that leaders do not have to hold the
management position, which means a person can become leader without a formal title.
People follow a leader for the personal qualities of the leader, not because of the authority
bestowed onto him/her by the organization.
Managers have subordinates while leaders have followers. A leader has no formal, tangible
power over their followers. Power is awarded to the leader on a temporary basis and is
contingent upon the ability to maintain motivation and inspiration, following is a voluntary
choice.

* What is needed to be a good manager?

- Good interpersonal communication skills: managers have to be good at
communication and motivation → deliver the company’s objectives to the people
responsible for attaining them → motivate staff to work well, be productive and contribute
to the org.
- Visionary, change-savvy, adaptive → essentially associated with the planning and
organizing function of a manager. They have to set objectives for the org figure the best
strategies to accomplish the goals.
- Ability to assess and reflex → control over hiring, awarding, discipling and firing
employees; measure the performance of their staff → ensure that the target objectives
are met by individual staff and the organization as a whole → vicious cycle of learning
and developing method to train and guide employees → self-discipline → reflect

Unit 2: Work and motivation

Reading 1: Theory X and Theory Y
1. According to Theory X, why do employees have to be closely controlled?
Because they are lazy and try to avoid work and responsibility.

2. According to Theory Y, why should employers give their workers responsibilities?

Because a responsible job is necessary to people’s psychological well-being.

3. Why did Maslow criticize Theory Y?

Because there are people who are unable to take responsibility and be self-disciplined.

Maslow’s hierarchy of needs

From highest to lowest
1. Self-actualization needs: personal growth and fulfillment
2. Esteem needs: Achievement, status, recognition, reputation, etc.
3. Love and belonging needs: family, friendships, relationships, work groups, etc.
4. Safety needs: security, protection, stability, etc.
5. Physiological needs: air, food, drink, clothing, shelter, sleep, warmth, etc.

Writing: Theory X and Theory Y

Theory X assumes that people are lazy and will avoid work and responsibility if they can, so
workers have to be closely supervised and controlled, and told what to do. They have to be
both threatened and rewarded with financial incentives.
Theory Y assumes that most people have a psychological need to work, are motivated by the
satisfaction of doing a good job. They are ambitious, and want to take responsibilities and be
creative in their work.

Reading 2: ‘Satisfiers’ and ‘motivators’

1. Main Theory:
Frederick Herzberg’s motivation theory: Humans have 2 sets of needs:
- Hygiene factors and needs: basic needs.
- Motivational needs/motivators: for humans to grow psychologically.

2. Solutions for Boring Jobs:

There are 3 ways that companies can enhance job satisfaction of their employees:
- Job rotation: swapping workers around and doing 1 job in a limited period before
swapping again
- Job enlargement: adding more tasks to make job more interesting
- Job enrichment: adding tasks requires more skills and/or responsibilities

=> The core insight is that preventing dissatisfaction through good conditions is different from
creating actual motivation. Real motivation comes from meaningful work and growth
opportunities, not just comfortable conditions.

Unit 3: Company structure

Reading: Company structure
● Hierarchies/Chain of commands/Pyramid structure: have a clear chain of
command, so everybody knows what decisions they are able to make, and who their
superiors and their immediate subordinates are. But people at lower levels are
unable to make important decisions, and have to pass on responsibility to their boss.
● Functional Structure: Specialized functional departments are generally efficient, but
people sometimes feel a responsibility to their department rather than to the company
as a whole. People in functional departments are unlikely to think of innovations
concerning the whole company. (functional conflicts, i.e. between finance and
marketing, marketing and production).
● Matrix management allows people to report to more than one superiors, without
passing everything through their line superior. But matrices involving several
departments can become quite complex. Solution: prioritize one department in
decision-making.
● Flattening hierarchy and delegating responsibilities: Modern organizations are
moving away from rigid hierarchies toward flatter structures, empowering employees
at all levels to make decisions directly instead of sending everything to management
for approval. This shift, thanks to advanced technology, helps reduce administrative
layers. While larger companies embrace this change, small business owners
usually prefer maintaining direct and tighter control.
 ● Projects can be carried out by autonomous, temporary teams, but teams are not
always very good at decision-making, and usually require a strong leader.

1. What is the main advantage of a chain of command?

Everyone knows what decisions they are able to make, and who they can give instructions to.

2. Why is it not usually possible to organize a large organization in a single

hierarchy?
Because their activities are too complicated.

3. In what ways can dividing a business functionally cause problems?

People may be more concerned about the success of their department than that of the
company.

4. What factors might lead companies to flatten their hierarchies?

The desire to save money and make decision-making easier; the use of IT (information
technology) systems; and the need to reduce costs during a recession.

5. According to the text, what kind of managers might not want to delegate decision
making?
The owners of small businesses, because they want to control as much as possible.

6. What is the potential disadvantage of matrix management systems?

They can become quite complex, making decision-making difficult.

7. Under what circumstances might teams not be effective?

If they do not have a strong leader, and need to make a lot of decisions.

Unit 4: Managing across culture

Lead-in
1. Adapting to local culture?
It is generally agreed that it is more efficient for multinational companies to adapt their methods
to the local cultures in which their subsidiaries are situated.

2. What are the advantages and disadvantages of a multinational company adapting

its management methods to the local culture in each country in which it operates?
Advantages:
● Better employee relations
● Increased efficiency
● Improved customer connection
● Better brand image
Disadvantages:
 ● Higher costs
● Inconsistency risks
● Slower decision-making
● Loss of scale

Reading
● Linear-Active Cultures: Britain, the USA, Germany.

● These cultures are organized, rational, and prioritize logical thinking over emotions. They
plan ahead and prefer to focus on one task at a time. They tend to adhere to rules,
regulations, and contracts, following what Fons Trompenaars calls “universalist”
principles.

● Multi-Active Cultures: Southern Europe, Latin America, Africa.

People in these cultures value feelings, emotions, and intuition. They are flexible,
capable of handling multiple tasks simultaneously, and comfortable with changing plans
and improvisation. Social hierarchy and relationships hold significant importance. They
are collectivist and 'particularist,' prioritizing personal relationships over rules and
regulations.

● Reactive Cultures: Asian countries such as China, Korea, and Japan.

Reactive cultures emphasize listening and understanding the other party’s position
before responding. They avoid confrontation, value “saving face,” and often refrain from
interrupting others. Maintaining harmony and compromise are central to their approach.

● It’s important to note that some cultures may exhibit a combination of traits from two of
these poles, resulting in a more complex cultural profile. Lewis’s model provides a
framework for understanding and navigating cultural differences in international business
and communication. Recognizing these cultural traits can help multinational companies
adapt their strategies and interactions to be more effective in diverse cultural contexts.

Comprehension
1. Why is it important for companies to be aware of local cultures?
Because local cultural habits, beliefs and principles can easily affect the performance of their
business in each country

2. What are the differences between individualists and collectivists?

An individualist is someone who believes that personal goals, desires and interests are more
important than those of a group of people; a collectivist is someone who believes in the
importance of a group of people rather than separate individuals.

3. Who is more likely to think: “I’ll let them speak first”?

People in reactive cultures.
 4. Who is more likely to say, about other people: “They can’t be trusted because they
will always help their friends or family” - universalists or particularists?
Universalists.

5. Who is more likely to say: “Oh, you can’t trust them; they wouldn’t even help a
friend”?
Particularists.

Unit 5: Recruitment
Lead-in
1. How long do you think recruiters in a Human Resources department spend
looking at the average CV or resume for a junior position?
Less than a minute, and sometimes much less.

2. If 100 young people with very similar experience and qualifications apply for a job,
which elements in a CV or resume make a difference, and might lead to a job
interview?
What recruiters like most is professional experience. Relevant experience is obviously the most
desirable, but not everyone has the opportunity to do traineeships or internships. Failing that,
work experience of any kind is a definite advantage.
Discussion
1. Why is it normal in some countries not to include photos or personal details on a
CV/ resume?
The reason not to include a photo with a CV is that employers might be instantly prejudiced
against the way applicants look. This could be because they do not match the employer's
stereotype of a competent person, or because of prejudices against ethnic or religious groups,
candidates of a certain age, etc. In some countries employers want to know personal details
age, marital status, whether the candidate has children, etc.. in other countries it is not normal to
offer this information (although nothing stops interviewers asking this in an interview).

2. Should a CV really be totally honest? Do you think most people are completely
honest?
Ideally CVs should be totally honest, although most people probably exaggerate, or phrase
things in an extremely positive way, where they think they can get away with it. It is not a good
idea to tell lies that could be uncovered in an interview (such as I speak fluent Russian, Arabic,
and Chinese).

3. Why might an employer want to know about your hobbies and interests?
Because hobbies and interests can reveal candidates' skills and motivations.

4. Would you want to work for someone who might be prejudiced against your
country or origin or religion?
Although most people would presumably prefer not to work for someone who was prejudiced
against their origin or religion, not everybody has the luxury of choosing their employer along
these lines, especially in situations where employment is scarce.

5. Would you target each covering letter if you were applying to 30 companies?
Targeting 30 different covering letters clearly takes time, but if untargeted letters are instantly
rejected, it is time well spent.

Unit 7: The different sectors of the economy

Reading: Manufacturing and services
Examples of the three sectors?
Fields (the primary), factories (the secondary sector), shops, offices and schools (the tertiary
sector).

Summary
● The economy is divided into five economic sectors referred to as the primary sector,
the secondary sector, the tertiary sector, the quaternary sector, and the quinary sector.
 Each sector plays an important role in contributing to the goods and services that make
up the economy.
● The primary sector is responsible for securing raw materials such as wood, coal, and
iron that are needed as inputs for production.
● The secondary sector is responsible for the processing of raw materials and utilizing
raw materials to produce manufactured goods.
● The tertiary (service) sector is responsible for providing basic services to consumers
and businesses, including services such as transportation, travel, and retail sales.
Employment in the tertiary sector requires basic training in processes related to
customer service.
● The quaternary sector is an extension of the tertiary sector and is responsible for
providing more sophisticated and advanced services to consumers and businesses. The
services provided by the quaternary sector differ from those of the tertiary sector by
including services that require advanced training, such as software development,
research and development, and informational technology support services.
● The quinary sector is also an extension of the tertiary sector and is responsible for
services provided by the highest levels of organization in society, including publicly
supported services such as government, military, education, and healthcare.
Domestically–based services, which are services that were once done by someone
in-home, such as childcare and home cleaning services, are also included in the quinary
sector.

Unit 8: Production
Lead-in
1. What do production and quality managers do?
Production managers coordinate all the people and equipment involved in the manufacturing
process, and try to ensure that production runs smoothly. Quality managers have to assure the
quality of the products they make or the services they are responsible for, and also try to
improve it.

2. What particular skills do you think production and operations managers require?
Production and operations managers should presumably be interested in making products or
providing services. They usually need a lot of technical knowledge (about manufacturing
processes) and mathematical abilities.

3. What do you think the objectives of a production department usually are?

The objectives of the production department are usually to produce a specific product, on
schedule, at minimum cost. But there may be other criteria, such as concentrating on quality
and product reliability; producing the maximum possible volume of output; fully utilizing the plant
or the workforce; reducing lead time; generating the maximum return on assets, and so on.
Some of these objectives are clearly incompatible, and most companies have to choose
between price, quality and flexibility. There is an elementary trade-off between low cost and
quality, and another between low cost and the flexibility to customize products or to deliver in a
very short lead time.

Reading 1: Capacity and inventory

1. The consequences of insufficient capacity:
● A long lead time may allow competitors to enter the market.
● If lead time increase, some customers may go to other suppliers.
● Lost sales and market share are usually permanent.

2. The consequences of excess capacity:

● You may be under-utilizing your workforce.
● You may be forced to produce additional, less profitable products.
● You may have to reduce prices to stimulate demand.

3. The advantages of large facilities:

● As production volume increases, you get economies of scale (the average fixed cost per
unit produced decreases).
● You can be more flexible in product scheduling, and have longer lead times and lower
costs.
● You can meet variation in product demand.

4. The disadvantages of large facilities:

● Finding enough workers and coordinating material flows can become difficult.
● The working environment might get worse and industrial relations could deteriorate.

5. The advantages of having a large inventory:

● You have protection against variation in raw material delivery time
● You can take advantage of quantity discounts in purchasing.

6. The disadvantages of having a large inventory:

● There are costs of storage, handling, insurance, depreciation, the opportunity cost of
capital, and so on.
● There is always a risk of obsolescence, theft, breakage, and so on.

Reading 2: The Dell Theory of “Conflict Prevention”

1. Why are countries involved in a major global supply chain unlikely to start a war?
Because people in these countries work to provide goods and services for international
companies, which increases their standards of living.

2. Why does the computer industry deserves more praises than it get?
Because it has been active in sourcing products from suppliers in many countries.

3. What would be the consequences if a country in a major supply chain did start a
war?
They would probably lose their place in that supply chain for a long time.

4. What consequences has the evolution of supply chains had?

It has brought prosperity and stability to a number of countries.

Unit 9: Logistics
Lead-in
In a manufacturing or retail business, what are the advantages and disadvantages of:
● Simply satisfying current demand: Satisfying current demand while holding the
minimum of inventory is financially efficient, but does not allow organizations to
meet an unexpected increase in demand.
● Planning to meet (possible) future demand: Holding a large inventory in case of
increased demand allows a business to satisfy all potential customers, but comes at a
cost – cash tied up in unsold goods.

Reading 1: Pull and Push strategies

1. Pull strategies are based on current demand.
2. Push strategies are based on estimated future demand.
3. Pull systems only buy or produce things when they are needed.
4. Push strategies often allow for safety stock and lead times.
5. Kanban systems signal that items need to be replaced.

Reading 3: Manufacturing supply chain workflow

1. The sales department identifies a need for a product and tells the marketing department
about it.
2. The marketing department researches the project, and forwards a detailed business plan
to the Business Manager.
3. The senior business managers make a decision on the project.
4. The plan is approved and passed to the analysts to prepare and implement the
manufacturing process.
5. The analysts pass details of raw materials and components to purchasing.
6. The purchasing, logistics and transport departments plan the purchase of materials and
their delivery to the manufacturing plant.
7. Suppliers receive orders and despatch raw materials and components to the
manufacturing site on agreed dates.
8. The product is manufactured.
9. Finished goods are put into inventory in a warehouse awaiting orders, and the company
computer system is updated.
10. Customers place orders through customer services.
11. Customer services take orders and input them to the computer system.
12. The order is sent to the warehouse.
 13. The transport company collects the consignment and delivers it to the customer.
14. As stock has now been used, the computer system generates a request for new stock.
15. The re-order process generates a request to the purchasing department to place new
orders with the suppliers

Unit 10: Quality

Lead-in
Quality can mean a lot of different things. If you were talking about quality in relation to
these products and services, what would you mean?
● A small car: A small car is probably a relatively cheap one. It will not perform like an
expensive sports car, but it should be reliable and durable. It may not have as many
features as larger cars, but should still have a good appearance.
● A raincoat: A raincoat should keep you dry, i.e., be waterproof, and also last a
reasonable length of time, and look good. 'Serviceability' might also be important: can
you just put it in the washing machine, or does it have to be dry-cleaned?
● A laptop computer: A good laptop computer should probably be sturdy but light, come
with a good quality screen, good quality sound, a lot of memory, and so on. It should be
durable, i.e., last a number of years without needing to be repaired, even though people
tend not to use the same computer for many years because of rapid advances in
technology.
● A mobile phone or internet provider: A mobile phone or internet provider should
provide non-stop service, without breaks because of technical problems. Mobile or cell
phones should work almost everywhere, except perhaps on the top of a high mountain
or in the middle of the ocean. And their prices should be competitive.
● An insurance company: A good insurance company offers policies that are easy to
understand, and deals with claims quickly and efficiently.

Reading
Why do you think some organizations has not done things to improve product and
service?
There are presumably evident reasons why the organization is not offering higher quality,
probably related to cost, or a perceived price-quality ratio. Or perhaps because they have a
dominant market position and can get away with poor quality.
Notwithstanding the statement about quality being free, and a lack of quality costing money, it is
unlikely that significant quality improvements could be made to most products or services
without a corresponding increase in costs and prices.

Unit 12: Marketing

Lead-in
What is the definition of marketing?

“Marketing means the right product, in the right place, at the right price, and at the right time.”

Reading 1: The product life cycle

Discussion: Pricing
1. Under what circumstances would manufacturers either set prices that try to
maximize profits, or deliberately charge a low price?
Companies with a new high-tech or high-quality product can use a price-skimming strategy to
make maximum revenue before competing products appear on the market. Any company with
anything approaching a monopoly can also charge high prices. Apart from that, companies with
new products can also charge a low price (a market penetration strategy) to get a large market
share before competitors appear on the market.

2. Give examples of products for which demand is elastic, and which you would only
buy
(or buy more of) if the price went down.
Books, for academic work or for leisure reading may fall into this category, they are often
available in libraries, so it is not essential to buy them. There are many other products that
people buy more if the price is reduced like CDs, computer games, clothes, etc.

3. Which products are for you not price sensitive, so that you would buy them even if
the price increased significantly?
Food of some kind is usually necessary, whatever its price. There are also high-quality goods for
which producers can charge very high prices, as there are a sufficient number of consumers
who think possessing the product gives them high status. This is called premium pricing or
prestige pricing

4. If you see a price that is a little less than a round number, e.g. $1.99 or €99.95,
does it make you think of the lower number, e.g. $1 instead of nearly $2, and
encourage you to buy the product? If not, why do you think most retailers use
'psychological pricing' or 'odd prices' like this?
I tend to perceive prices like $1.99 or €99.95 as being closer to the lower round number – $1
instead of $2, or €99 instead of €100. This also happens for other people because we often
read prices from left to right and focus more on the left-most digits.
The main reason retailers use odd pricing is that it has a subtle but significant impact on
consumer behavior, encouraging people to see the price as a "deal" and to complete the
purchase.

5. When, as a consumer, have you benefited from a price war when competitors
continually lowered prices, trying to get more business? What kind of companies
win price wars?
As a consumer, I’ve benefited from price wars in groceries, tech, streaming services, and flights.
It's usually established market leaders with large amounts of cash that win price wars, and
competitors with smaller market shares that lose them. However, while consumers might benefit
in the short term, price wars can sometimes hurt smaller companies that can't afford to lower
their prices as much, potentially reducing competition in the long run.

Reading 2: Marketing is everything

1. What did sales-driven companies try to do?
They tried to change customers’ minds and make them like the products they produced.

2. Why did some companies become customer-driven?

Because there was more competition, and because technology developed and allowed
companies to change products to match what customers asked for.

3. What does he say market-driven companies do?

Market-driven companies work with customers to understand their strategies and adapt their
products to fit them, and in this way try to create a new market.
 4. What does McKenna mean when he describes the old approach as
'unresponsive'?
The old approach is all about testing and marketing a company’s idea, rather than responding to
a demand that comes from customers.

5. Why has the main focus of companies moved first from finance to engineering,
and then from engineering to marketing?
Because the main demand on companies first changed from controlling costs to competing
with other companies with similar products, and then to serving customers.

6. What are two negative descriptions of marketing that need rejected?

Fooling the customer and falsifying the company’s image.

7. What role do customers play in product design for market-driven companies?

Market-driven companies integrate the customer into the design of the product.

8. What is wrong with focusing on R&D (research and development) and creating
new products?
If you focus on your R&D you forget about the customer, the market, and the competition.

9. What is wrong with focusing on increasing market share?

Trying to increase your market share is like fighting over crumbs rather than trying to own the
whole pie (or the whole market).

10. Explain in your own words what he describes as the real job or goal of marketing.
The real job or goal of marketing is to produce what customers need so well that you control (or
own, or lead) the entire market for your products.

Summary
● Sales-Driven Companies: These companies focus on persuading customers to buy
their products, often following the philosophy of "any color as long as it's black." Instead
of adapting products to meet customer needs, they expect customers to adapt to the
product.
● Customer-Driven Companies: With the development of technology and increased
competition, some companies began shifting their focus to better respond to customer
requests. Following the "tell us what color you want" approach, these companies
demonstrate a willingness to modify their products based on specific customer demands.
● Market-Driven Companies: Successful companies today follow a market-driven
approach, adapting their products to align with customers' strategies and collaborating to
best serve their broader goals. This approach focuses on creating a market, not just
controlling it.
● The article emphasizes that marketing is no longer just a department within a company
but a fundamental way of doing business. It’s no longer just about promotions but about
 incorporating the customer directly into the product's design, with the goal of achieving
market leadership and "owning" the entire market rather than just a fraction of it.
● The article warns against two common mistakes: companies losing sight of the
customer by focusing too heavily on product development, and companies becoming too
preoccupied with market share, which can lead to inefficiency and missed opportunities.

Unit 13: Advertising

Reading
1. What are the two functions of advertising?
To inform consumers about products and services, and to persuade them to buy.

2. What is the role of advertising agencies?

To create advertisements and develop a media plan.

3. What three different methods of determining advertising spending are mentioned?

Spending a fixed percentage of current sales revenue, spending as much as competitors, and
increasing current spending in order to increase sales.

4. What does the text describe as the disadvantages of traditional advertising?

It is expensive, it doesn't always reach the target customers, and it isn't always welcome as it
interrupts people when they are trying to do something else.

5. What ways of using the Internet to advertise are mentioned?

Blogs, online forums, commenting on blogs and social networking sites, podcasts, viral videos.

Writing:
The disadvantages of traditional advertising and the advantages of viral marketing:
Traditional advertising is expensive and doesn't always reach the target audience. If it does
reach the intended customers, it might interrupt them while they're trying to do something else,
and so annoy them.
Viral marketing allows companies to inform and persuade consumers, quickly and at very little
cost. If people share videos, etc., with their friends, the company reaches lots of potential
consumers at no extra cost, like with word-of-mouth advertising.

Unit 14: Banking

(Học terms thôi chứ chắc ko ra tự luận) (dm nó ra thật, nhiều vl t chếc đây)
● The text discusses the 2007 housing market crisis in the United States, highlighting how
it led to a global financial meltdown. When American house prices began to decline,
subprime borrowers (those with poor credit ratings and a high risk of default) stopped
 paying their mortgages as their debt exceeded their home's value. Financial institutions
had bundled these mortgages into mortgage-backed securities (MBS) and collateralized
debt obligations (CDOs), which were bought by various financial entities.
● The process of securitization involved converting mortgages into securities sold to
investors. MBSs and CDOs gave buyers the right to receive payments from underlying
mortgages. Banks invested heavily in these securities, believing in the continuous rise of
house prices and mortgage payments. However, when subprime borrowers defaulted,
the value of these securities plummeted. As a result, numerous banks in the USA, UK,
and elsewhere incurred massive losses, leading to bankruptcies and government
bailouts.
● The total losses on subprime MBSs, often referred to as 'toxic debt,' are estimated at
$1.5 trillion, severely impacting the global banking system's capital. This resulted in a
credit crisis, or 'credit crunch,' causing a significant reduction in the availability of credit
for lending between banks, businesses, and households.

Unit 19: Accounting and financial statements

Lead-in
1. What is accounting?
Preparing financial statements showing income and expenditure, assets and liabilities.

2. What skills do you think accountants need?

The skills required for bookkeeping are probably accuracy, concentration, and some
mathematical ability. Managerial or management and cost accounting require analytical ability
and mathematical competence. Tax accounting requires a thorough knowledge of tax laws and
accounting combined with a desire to help clients reduce their tax liabilities. Auditing requires
strong analytical skills and honesty; 'creative accounting' presumably requires the same, with
the substitution of dishonesty for honesty.

Discussion
● How would you put a value on your college or university? What are its major
assets - buildings and equipment, or people and their skills, knowledge and
reputations?
A university’s land and buildings could be valued, though this is rarely done if the institution is an
ongoing entity and not for sale. Many older universities also have large endowments,
investment portfolios, or cash reserves that are easy to assess. However, what truly makes
renowned universities stand out is the quality of their teaching and research staff.

● In most countries, companies record the historical cost of their assets - their
original purchase price, and not their (estimated) current selling price or
replacement cost. Why?
For a company, recording assets at their historical cost is simpler and more objective. In many
countries, buildings can be depreciated on the balance sheet down to a nominal amount, such
as €1, meaning no realistic value is recorded. However, in countries with very high inflation,
using current or replacement cost accounting likely provides a more accurate view of a
business’s value.

● Should companies record raw materials, work-in-progress, and their inventory of

products ready for sale at their cost price, or their current market price (the price
at which they could be sold)?
Accounting normally follows the principle of conservatism: one understates rather than
overstates values or profits. Consequently, raw materials, work-in-progress, and inventories are
often recorded at 'the lower of cost or value’.

● Give some examples of companies whose value largely derives from intangible
assets such as their well-known brands, or their good reputation.
Examples of companies whose value is largely based on brands or reputation include
Coca-Cola, number one in the ranking of the best global brands (Interbrand). Similarly,
Microsoft's value is far greater than its tangible assets.

Unit 23: The business cycle

Lead-in
What are the main causes of the alternate periods of growth and contraction of the
business cycle?
The main causes include changes in aggregate demand, monetary policy, inflationary
pressures, and external shocks. The most important one seems to be the level of consumption:
the decisions of millions of people whether to spend their money and borrow more, when the
economic outlook is good, or spend less and save more, when the economic outlook is bad or
when interest rates rise.

Comprehension
1. A downturn begins when the demand for goods and services declines
2. People spend, and borrow money when economic times are good and they feel
confident about the future.
3. People tend to spend less when they are afraid of losing their jobs/ becoming
unemployed.
4. When interest rates rise, people have to pay more on their mortgage or rent (and
consume less).
5. Companies only invest while consumption is increasing.
6. Creative destruction means that innovations destroy established companies or
industries.

Discussion
1. What example can you give of ‘creative destruction’ occurring at the moment?
An example is the way free news on the internet threaten traditional newspapers, and
possibilities to download music and films threaten the 'old-fashioned CD and DVD industry.
Similarly free internet telephone services such as Skype threaten "traditional”
telecommunications companies.

2. During a downturn, to what extent should the government intervene in the

economy by creating demand or jobs? How could it do these things?

During economic downturns, governments can stimulate demand and create jobs through fiscal
and monetary policies. They might invest in public works, like roads and schools, or enact tax
cuts, lower interest rates, and increase the money supply to boost consumer spending.

Supporters of public works argue it’s better to pay people to create infrastructure than to pay
unemployment benefits, though critics claim that government spending can reduce private
investment by limiting available money or credit.

In many countries, central banks — not governments — now control interest rates and the
money supply. Central banks set the base rate, affecting all other interest rates, and manage the
money supply by buying or selling short-term bonds (treasury bills) to adjust money in
circulation.

3. What are the economic arguments against such governmental spending?

Monetarists argue that increasing the money supply without a rise in goods and services will
simply raise prices, leading to inflation. Meanwhile, critics say fiscal measures often take effect
too late, after the economy has already started to recover, which may only amplify the next
economic swing.

Unit 24: Corporate Social Responsibility

Reading
1. Why should business executives only seek to maximize profits?
Because this is generally what the owners of the business want, and what they employ
executives to do.

2. Who are the employers of corporate executives?

The corporation’s owners, the stockholders.

3. In what negative way do ‘socially responsible’ actions affect stockholders,

customers, and employees?
The cost of socially responsible actions has to be paid in the form of lower dividends, higher
prices, or lower wages.

4. In what way are ‘socially responsible’ actions by business ‘undemocratic’?

Because they involve doing things that should be done by governments, and if a government is
not doing these things, it is because the electors chose a government that did not say it was
going to do them.

5. What other desires might stockholders have, apart from making as much money
as possible?
A society with less polution or less unemployment and fewer social problems.

6. What is a ‘stakeholder’?
Any group of people with a stake or in an interest in or a claim on the business.

Unit 27: International trade

Lead-in
Restrict imports?
Many countries would like to restrict imports, to protect their balance of trade, and their own
producers, but in a customs union such as the EU (European Union) or NAFTA (the North
American Free Trade Agreement), this is impossible. Furthermore, most countries are members
of the WTO (World Trade Organization), which tries to remove obstacles or barriers to
international trade.

Reading 1:
1. Explain in details the analogy Chang made between child labour and free trade (or
between education and protectionism)
The analogy is that although children could start unskilled work at a very young age, they need
many years of education if they are ever going to get a good, well-paid job; similarly, to develop
advanced industries which give a high return, it is necessary to protect them while they grow up
and increase their efficiency and productivity.

2. What is the short-term disadvantage of protecting growing industries?

The short-term disadvantage is that consumers have to use expensive, inferior products from
inefficient domestic producers, rather than be free to buy superior imported goods.