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spective franchisees should ask the franchiser to be realistic when explaining what is required to operate the business.

Managing the Business

Some individuals are more prepared to manage a business than others. They have some business experience and have learned to get along well with people. Others may find that managing a franchise is a burden. Prospective franchisees must honestly assess their ability to run a business. If they find they have little or no experience, they can seek special help from the franchiser in business management.

Answer the questions:

1.Where can you come across the operation of franchising?

2.What does the word “franchise” mean (literally)? What do you understand under this meaning?

3.What are two types of franchise arrangements?

4.What are the roles of franchisee and franchiser? (Give as much information as possible).

TOPIC 7. COMPANY STRUCTURE

TEXT 1

Most organizations have a hierarchical or pyramidal structure, with one person or a group of people at the top, and an increasing number of people below them at each successive level. There is a clear line or chain of command running down the pyramid. All the people in the organization know what decisions they are able to make, who their superior (or boss) is (to whom they report), and who their immediate subordinates are (to whom they can give instructions).

Some people in an organization have colleagues who help them: for example, there might be an Assistant to the Marketing Manager. This is known as a staff position.

Yet the activities of most companies are too complicated to be organized in a single hierarchy. Today, most large manufacturing organizations have a functional structure, including (among others) production, finance, marketing, sales, and personnel or staff departments. This means, for example, that the production and marketing depart-

ments cannot take financial decisions without consulting the finance department.

Functional organization is efficient, but there are two standard criticisms. Firstly, people are usually more concerned with the success of their department than that of the company, so there are permanent battles between, for example, finance and marketing, or marketing and production, which have incompatible goals. Secondly, separating functions is unlikely to encourage innovation.

Yet for a large organization manufacturing a range of products, having a single production department is generally inefficient. Consequently, most large companies are decentralized, following the model of Alfred Sloan, who divided General Motors into separate operating divisions in 1920. Each division had its own engineering, production and sales departments, made a different category of car (but with some overlap, to encourage internal competition), and was expected to make a profit.

Businesses that cannot be divided into autonomous divisions with their own markets can simulate decentralization, setting up divisions that deal with each other using internally determined transfer prices. Many banks, for example, have established commercial, corporate, private banking, international and investment divisions.

An inherent problem of hierarchies is that people at lower levels are unable to make important decisions, but have to pass on responsibility to their boss. One solution to this is matrix management, in which people report to more than one superior. For example, a product manager with an idea might be able to deal directly with managers responsible for a certain market segment and for a geographical region, as well as the managers responsible for the traditional functions of finance, sales and production. This is one way of keeping authority at lower levels, but it is not necessarily a very efficient one. Thomas Peters and Robert Waterman, in their well-known book In Search of Excellence, insist on the necessity of pushing authority and autonomy down the line, but they argue that one element – probably the product

– must have priority; four-dimensional matrices are far too complex. A further possibility is to have wholly autonomous, temporary

groups or teams that are responsible for an entire project, and are split up as soon as it is successfully completed. Teams are often not very

good for decision-making, and they run the risk of relational problems, unless they are small and have a lot of self-discipline. In fact they still require a definite leader, on whom their success probably depends.

COMPREHENSION CHECK

Which of the following paragraphs most accurately summarizes the text, and why?

First summary:

Although most organizations are hierarchical, with a number of levels, and a line of command running from the top to the bottom, hierarchies should be avoided because they make decision-making slow and difficult. A solution to this problem is matrix management, which allows people from the traditional functional departments of production, finance, marketing, sales, etc. to work together in teams. Another solution is decentralization: the separation of the organization into competing autonomous divisions.

Second summary:

Most business organizations have a hierarchy consisting of several levels and a clear line of command. There may also be staff positions that are not integrated into the hierarchy. The organization might also be divided into functional departments, such as production, finance, marketing, sales and personnel. Larger organizations are often further divided into autonomous divisions, each with its own functional sections. More recent organizational systems include matrix management and teams, both of which combine people from different functions and keep decision-making at lower levels.

TEXT 2

Read the text about the different ways in which companies are organized and answer these questions.

1.Four main kinds of organisational structure are described in the article. What are they?

2.Is one kind of organisational structure more common than the

others?

3.When did 'delayering' take place?

4. What were the reasons for delayering and what were the re-

sults?

5. How does Julia MacLauchlan describe Microsoft's organisational structure?

Doing the Business

Roisin Ingle hears how efficient management structures are vital for success.

The need for a solid structure within all business entities is 'absolutely fundamental', according to Ms Angela Tripoli, a lecturer in Business Administration at University College Dublin. 'Organisational structure concerns who reports to whom in the company and how different elements are grouped together. A new company cannot go forward without this and established companies must ensure their structure reflects their target markets, goals and available technology.'

Depending on their size and needs there are several organisational structures companies can choose from. Increasingly though, in the constantly evolving business environment, 'many firms are opting for a kind of hybrid of all of them'.

The most recognisable set up is called the functional structure where a fairly traditional chain of command (incorporating senior management, middle management and junior management) is put in place. The main benefit of this system is clear lines of communication from top to bottom but it is generally accepted that it can also be a bureaucratic set up which does not favour speedy decision-making.

More and more companies are organising themselves along produсt lines where companies have separate divisions according to the product that is being worked on. 'In this case the focus is always on the product and how it can be improved.'

The importance for multinational companies of a good geographic structure, said Ms Tripoli, could be seen when one electrical products manufacturer produced an innovative rice cooker which made perfect rice – according to western standards. When they tried to sell it on the Asian market the product flopped because there were no country managers informing them of the changes that would need to be made in order to satisfy this more demanding market.

The matrix structure first evolved during a project developed by NASA when they needed to pool together different skills from a vari-

ety of functional areas. Essentially the matrix structure organises a business into project teams, led by project leaders, to carry out certain objectives. Training is vitally important here in order to avoid conflict between the various members of the teams.

During the 1980s a wave of restructuring went through industry around the globe. This process, known as delayering, saw a change in the traditional hierarchical structures with layers of middle management being removed. This development was driven by new technology and by the need to reduce costs. The overall result was organisations that were less bureaucratic.

The delayering process has run its course now. Among the trends that currently influence how a company organises itself is the move towards centralisation and outsourcing. Restructuring has evolved along with a more 'customercentric' approach that can be seen to good effect in the banks. They now categorise their customers and their complex borrowing needs into groups instead of along rigid product lines.

Another development can be seen in larger companies, which are giving their employees more freedom-to innovate in order to maintain a competitive edge.

Ms Julia MacLauchlan, Director of Microsoft's European Product Development Centre in Dublin, said the leading software company had a very flat organisational structure. ‘There would not be more than around seven levels between the average software tester and Bill Gates,’ she said.

Microsoft is a good example of a company that is structured along product lines. In Ireland, where 1,000 employees work on localisation of the software for all Microsoft's markets, the company is split up into seven business units. Each unit controls the localisation of their specific products while working closely with the designers in Microsoft's Seattle Headquarters.

It works, said Ms Maclauchlan, because everyone who works in the unit is ‘incredibly empowered’.

‘Without a huge bureaucratic infrastructure people can react a lot more quickly to any challenges and work towards the company's objectives.'

(From The Irish Times)

TASKS

I. Match these definitions with the four organisational structures described in the text:

1.A cross-functional structure where people are organised into project teams.

2.A structure rather like the army, where each person has their place in a fixed hierarchy.

3.A structure that enables a company to operate internationally, country by country.

4.A structure organised around different products.

II. Match these nouns as they occur together in the text:

III. Use an appropriate phrase from Exercise II to complete the sentence:

1.Banks need to be fully aware of their customers’ __ borrowing needs____.

2.Silicon Valley is full of ___________ .

3.Many companies are now organised along ___________, in which each division is responsible for a group of products.

4.A matrix organisation groups people into ___________ .

5.Some companies are divided into different _____________, often also called profit centers.

6.A multinational company will often have a number of

_____________, in charge of activities in different parts of the world.

IV. Discuss within the class.

1.The functional organizational structure has clear lines of communication. In contrast, where things are organized along product lines or with a matrix structure, people often report to two people at the same time – their boss in the functional structure and their manager or team leader in the other structure. What, if any, problems could you imagine in the second case?

2.Do you think people from certain cultures would favour one kind of organizational structure over another? Can you think of some examples and give some reasons.

TOPIC 8. MANAGEMENT

TEXT 1

Types of Management Structure

The management structure of a business can be shown using an organisation chart.

Figure 1 demonstrates the most widely used charts. Remember that pyramid, horizontal and concentric charts all indicate hierarchical structures. There are clear lines of authority in each of these charts. The only difference is in the emphasis each gives to the different levels of authority. The pyramid chart makes the hierarchy very clear, the horizontal chart less so, and the concentric chart least of all. If you want to play down differences in status and authority within the firm, you might well choose the horizontal or concentric charts.

Fig. 1. The pyramid, horizontal and concentric charts

47

Fig. 2. Matrix management chart

The matrix management organisational chart in Fig. 2 is quite different. This shows both official and actual lines of accountability. For example suppose a major project is to develop a new chocolate bar. The head of the design department may have to report to the project manager for all aspects involving the chocolate bar, rather than to his or her formal superior, the head of engineering. The authority in this case is not hierarchical.

Types of Leadership

Another important issue on which questions are frequently set is the leadership style within the company. There are three main types of leadership:

•the autocratic style, with little or no communication between leaders and the staff they are responsible for;

•the democratic style, where every effort is made to foster a friendly, co-operative working relationship between management and staff;

•the laissez-faire style, which leaves the workers to their own devices, with little attempt to exercise formal control.

48

TEXT 2

Management

Part 1. Managing a business

Management is the art or practice of managing a business, money, products, and all the people employed by a company. In other words management is a set of activities directed at an organization's human, financial, physical, and information resources, with the aim of achieving organizational goals in an efficient and effective manner. In this case "efficient" means "using resources wisely and without unnecessary waste" while "effective" means "doing the right things". The chart functions of management.

Planning and decision making

Determining the organization's goals and deciding how best to achieve them, delegating responsibilities to subordinates.

Controlling

Monitoring and correcting ongoing activities, receiving reports from subordinates and helping subordinates handle exceptions.

Organizing

Determining how best to group activities and resources. Getting all employees to work together.

Leading

Motivating members of the organization to work in the best interests of the organization.

Fig. 3

The golden rule of successful management can be summed up in the following words: "The system works well as long as we don't have any exceptions." Successful management is getting things done through "others", that is through the manager's immediate subordinates.

The word "management" is also used to denote the people who are in charge of a company or an organization. Although large organizations typically have a number of levels of management, the most common view considers three basic levels: top, middle and first-line managers.

Top managers (president, vice president, chief executive officer (CEO), managing director) make up the relatively small group of executives who control the organization.

Middle managers (plant manager, operations manager, division head) make up the largest group of managers in most organizations. The company usually requires that a middle manager (should) implement the policies and plans developed by top management.

First-line managers (foreman, supervisor, office manager) typically spend a large portion of their time supervising the work of operating employees.

Managers of different levels may work in various areas within a company. In any given firm, there may be marketing, operations, administrative, and other kinds of managers at all three levels. The diagram below indicates how managers within an organization can be differentiated by level and area.

Fig. 4. Areas of management

Part 2. Product Management (marketing)

No business firm can do without product management which is actually marketing and marketing management. The manager has to draw up his marketing plan before his business plan and product development. Marketing is concerned with foreseeing and expecting the needs of customers and directing the flow of goods and services from producers to customers. Marketing is much broader than selling, it includes a wide range of business activities. Marketing is the management function which organizes and directs the presentation and distribution of goods and services in the manner best designed to benefit the producer, the distributor, and the public.

The marketing manager of a company is responsible for product management, i.e. for various ways products are sold to customers.

These ways for getting the products to customers who will buy and use them are usually known as distribution channels (or channels of distribution): 1) direct distribution or selling, 2) catalog(ue) sales, 3) wholesaling, 4) selling through sales representatives (reps), 5) selling to retailers, 6) selling through computer systems.

Marketing consists of the four Ps: providing the customer with the right PRODUCT at the right PRICE, presented in the most attractive way (PROMOTION) and available in the easiest way (PLACE). The four Ps are called "marketing mix".

The key concept of marketing is PROMOTION. A marketing manager can choose from several promotion methods – personal selling, mass selling and sales promotion. The basic Promotion Methods and Strategy Planning are given in the chart below.

Fig. 5

Since 1960s, most firms have developed at least some staff with marketing management outlook. Nowadays it is always necessary that the whole company effort (should) be guided by the marketing concept. The marketing concept means that a company directs all its efforts at satisfying its customers – at a profit.

Most firms are marketing-oriented, they focus on customers' interests in their planning. But there are firms which are still production-

oriented, they focus on production of a few specific products – perhaps few of these products are available on the market and competition is not intense.

The marketing concept was first accepted by consumer products companies such as General Electric and Procter & Gamble. Competition was intense in some of their markets and trying to satisfy customers' needs more fully was a way to compete effectively with rival products.

"Service" industries – including airlines, banks, investment firms, lawyers, physicians, accountants, and insurance companies – were slow to adopt the marketing concept. But this has changed dramatically in the last decade.

Banks used to be open for limited hours that were convenient for bankers – not customers. Many closed during lunch hour. But now financial services are less regulated, and banks compete with companies like AMERICAN EXPRESS for checking accounts and retirement investments. The banks stay open longer, often during evenings and on Sundays. They also offer more services for their customers – automatic banking machines that take credit cards or a "personal banker" to give financial advice. Most banks now aggressively advertise their special services and even interest rates, so customers can compare bank offerings.

_____________________________

1. (no business firm) can do without – ... не может обойтись

без...

2.marketing management outlook – взгляд на управление с позиций маркетинга

3.retirement investments – пенсионные вклады

4. ... aggressively advertise ... – энергично и решительно рек-

ламируют...

Part 3. Marketing information systems (MIS) and marketing research

Successful planning of marketing strategies requires that marketing managers (should) gather and analyze information they need to make decisions. In some companies a marketing information system (MIS) is set up by marketing specialists. To get better decisions some

MIS systems provide marketing managers with a decision support system (DSS).

A DSS system is a computer program(me) that makes it easy for a marketing manager to get and use information as he is making a decision. Typically the DSS helps change raw data – like product sales for the previous day – into more useful information. For example, it may draw graphs on the computer monitor to show relationships in data – perhaps comparing yesterday's sales to the sales on the same day in the last four weeks.

Marketing information systems will become more widespread as managers become more sensitive to the possibilities of these systems and computer costs continue to drop.

Many marketing managers are usually isolated in company offices from potential customers. It is just not possible for managers to keep up with all the changes taking place in their markets. It is really important that they (should) rely on help from marketing research. In fact, continued improvements in research methods are making marketing research information more dependable. Most large companies have a separate marketing research department to plan and carry out research projects.

Marketing research should be distinguished from market research. The latter deals with the pattern of a market, it means studying places or ways in which a company can sell a group of products of a similar kind, what customers and prospects need or want from a company and its products. Marketing research deals with problems involved in marketing a particular product.

Marketing research is very often based on getting information by using surveys and interviews which are done by talking to respondents. Another way of getting information from customers and prospects is a questionnaire with questions written or printed on it. People have to fill in (fill out – AmE) questionnaires.

When doing marketing research marketing specialists use computers to draw graphs called "supply and demand curves" showing the relation between the supply of a product (or a service) and its price on the one hand and the relation between the demand for a product (or a service) and its price on the other. These curves explain the very simple idea that when prices change, producers and consumers change

their behavio(u)r. The basic idea of supply and demand is the following: when prices go up, more goods, and services are supplied, but there is less demand from consumers. When prices go down, demand goes up but the supply is reduced. At a certain price level there will be an equilibrium of supply and demand.

(From "Introduction to Economics" by John Craven)

____________________________

1.raw data – необработанные данные

2.to keep up with all the changes... – не отставать от любых изменений

3.to make ... more dependable = to make ... more reliable

4.the pattern of a market – структура рынка

5.problems involved in (marketing a particular product) = problems connected with (...)

6.to draw graphs – вычерчивать графики / кривые

COMPREHENSION CHECK

I. Mark the following statements true (T) or false (F). (Parts 1 and 2 of the text 2)

1.Different levels of management include planning and decision making, controlling, organizing, and leading.____

2.Management means "practice of managing" and "the people who are responsible for achieving organizational goals."________

3.Middle managers develop plans and policies for top managers. ___________

4.Marketing managers belong to the middle level management.________

5.Marketing is the selling of goods and services.__________

6.Methods of promoting goods and services include advertising and publicity._____

7.The marketing concept was first adopted to compete effectively with rival companies._____

8."Service" industries are not marketing-oriented because it is difficult for them to adopt the marketing concept.____

II. Complete the following sentences joining the suitable part (the exercise is based on Part 3 of the text 2):

1.Various computer programmes help marketing managers… a) carry out marketing research,

b) find potential customers,

c) analyze information they need and make better decisions.

2.Marketing research is concerned with…

a)the pattern of a market,

b)marketing a particular product,

c)comparing yesterday's sales to the sales on the same day in the last four weeks.

3. When prices go up…

a)the demand goes up,

b)the supply is reduced,

c)the supply is increased.

Management Across Cultures

1.Management style depends on both individual and cultural factors. Each manager has a different way of managing the people who work for him or her, but at the same time, many cultures have a dominant management style. Can you give any examples of management styles in different cultures?

2.In order to be successful in working with people from other countries you should be acquainted with some cultural differences that may cause the principal problems. Read the text below. What do you agree/disagree with? What can you add?

MISUNDERSTANDINGS EMERGING FROM THE DIFFERENCES IN THE PERCEPTION OF TIME

MISUNDERSTANDING EMERGING FROM

THE DIFFERENCES IN CULTURE CONTEXT

TOPIC 9. MARKETING

Read the text:

Marketing Strategies Nowadays

Originally marketing was meant to help to avoid overproduction. Now marketing is considered to be a system of all business activities of a company in respect of coordinating supply and demand for the goods produced.

Before producing and selling the goods, one must do a lot of market research1. Useful information for this purpose can be obtained from embassies, consulates and foreign trade representatives, from trade magazines or from specialized consultant agencies, which will do a professional market research job for a certain fee.

The information needed is whether there is any demand for your goods, what is the market potential2, what sort of competition is to be met (that is what price of the goods, including those produced locally, is considered to be competitive), what domestic preferences, local trading customs and seasonal factors should be taken into account. Actually, marketing covers not only market research, out also planning the assessment of goods, price policy, advertising and promotion of sales3, controlling the sales and post-sales servicing4. So nowadays general marketing strategy includes such essential elements as planning, market research, new product development, sales, communications5 and advertising.

Planning. While speaking of marketing planning, one should think first of all of the so-called controllable and uncontrollable factors. The controllable factors are the following: product, price, place and promotion; the uncontrollable ones – environmental factors. Both these types are very important when one starts analysing the market situation.

Research. Market research is concerned first of all with product choice study and the study of competitors' interests and their claims6. The most popular methods of conducting marketing research are observation, survey, experiment and public opinion polls through different channels.