C o p y rig h t ОАО « ЦКБ « БИБКОМ» & ООО « A ге н тствоK н ига- C е рвис»

МИНИСТЕРСТВО ОБРАЗОВАНИЯ И НАУКИ РФ

ФЕДЕРАЛЬНОЕ ГОСУДАРСТВЕННОЕ
БЮДЖЕТНОЕ ОБРАЗОВАТЕЛЬНОЕ УЧРЕЖДЕНИЕ
ВЫСШЕГО ПРОФЕССИОНАЛЬНОГО ОБРАЗОВАНИЯ
«ВОРОНЕЖСКИЙ ГОСУДАРСТВЕННЫЙ
УНИВЕРСИТЕТ»

BANKING AND MANAGEMENT

Учебно-методическое пособие

Составитель
Е.В. Ушакова

Воронеж
Издательский Дом ВГУ
2014
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Утверждено научно-методическим советом факультета романо-германской

филологии 23 сентября 2014 г., протокол № 7

Рецензент: профессор, зав. каф. английского языка А.П. Бабушкин

Учебно-методическое пособие подготовлено на кафедре английского языка

факультета романо-германской филологии Воронежского государственного
университета.

Рекомендовано магистрам первого курса заочного отделения экономиче-

ского факультета.

Для направлений: 080100 – Экономика,

080200 – Менеджмент,
080300 – Финансы и кредит
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Содержание

Unit 1. Profitable banks......................................................................................... 4

Unit 2. Bank mergers ............................................................................................ 8
Unit 3. Companies and their banks ..................................................................... 12
Unit 4. The work of a fund manager ................................................................... 15
Unit 5. The profile of an effective manager ........................................................ 19

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UNIT 1. Profitable banks

LEAD IN

1. Discuss these questions.

1. How do banks make their profits?
2. What factors determine the profitability of a bank?

Easy money
Britain's high street banks are extremely profitable - and widely criti-
cized for their poor performance. What's going on? asks George Graham.
Andrew Buxton, chairman of Barclays, ought to have looked a troubled
man as he presented his 5 bank's annual results last week. In the last year, Bar-
clays had lost a chief executive, dropped £205 m on rash trading in the bond
markets, another £153 m on bad loans to 10 Russian customers, and had let its
operating costs run out of control. Yet Barclays somehow managed to make prof-
its of £1.9 bn. In the same year, Lloyds TSB 15 reported a 14 per cent increase in
its pre-tax profits to £3.29 bn, equivalent to an after-tax return on shareholders'
equity of 33 per cent. And other British banks made similar profits.
So where do these profits come from? And why have they not been lost to
the competition from other institutions? The first part of the answer lies in the
condition of the UK economy at large. In principle, bank profits are built for the
most part on the volumes of loans they make and the deposits they collect; the
margins between the interest rates for these two sides of their balance sheet gives
them their profits (or losses). But in a mature market such as the UK, it is hard for
a very large bank to expand loan and deposit volumes much beyond the level of
the economy as a whole, and even harder to widen net interest margins.
The biggest factor in bank profits has therefore been the level of bad debts.
In 1992, when banks' accounts showed the worst of the effects of the last UK re-
cession, the seven principal banks set aside £6.45bn of bad debt provisions be-
tween them. Last year, the total for the same group is estimated to have been
around £2.6 bn.
The other side of British banks' profitability reflects an interplay between
technology-based efficiency gains and customer inertia. Banks have become
more efficient over the past decade, stripping out costs as new computer systems
and telecommunications networks have enabled them to set up industrial-scale
processing plants for tasks that used to be handled by clerks in the back of each
branch. Branches are expensive to run, and the network has been whittled down
from a peak of 21,800 branches in 1985 to around 15,000 today. Each branch,
too, has fewer staff.
One of the most frequent complaints is the disappearance of the human
touch in the bank branch. Yet customers have reaped most of the benefits of the
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banks' efficiency gains - cash dispensed at the touch of a button by machines, in-
stant account balances, transfers and even loans available over the telephone.
However, British banks remain years behind their French rivals in electron-
ic banking. Nor is the UK's money transmission system the most consumer-
friendly in the world. Customers in New Zealand and Canada get deposits cre-
dited instantaneously, while in the UK they must wait days. Competition in fi-
nancial services has been steadily increasing since the 1980s. Yet the British con-
sumer is more likely to swap a wife (or husband) than a bank. With such unde-
manding customers, leading banks could have years of fat profits ahead of them.
(Financial times. – 2009. – 14 Oct.)

COMPREHENSION

1. Answer the following question. Then compare your answers with the class.
Which of the following examples of improved banking technology are mentioned
either directly indirectly in the text?
a) ATMs
b) smart cards
c) credit cards
d) telephone banking
e) electronic banking

2. Look quickly at the text and find the answers to these questions.
Which of the following reasons are given in the text to explain the British banks'
profitability?
a) trading in bond markets;
b) reduction in the number of branches;
c) effective management;
d) reduction in the level of bad debts;
e) interest from loans to overseas customers;
f) large-scale processing of transactions;
g) competitive interest rates attracting more customers;
h) British customers preferring to stay with the same bank;
i) the strength of the economy.

3. Mark these statements T (true) or F (false) according to the information in

the text. Find the part of the text that gives the correct information.
1. Barclays' profits were higher than those of Lloyds TSB. F
2. Banks in the UK can make more profit by charging higher interest on loans.
3. The provision for bad debts for the main UK banks was much higher in 1992.
4. The banks do not employ as many clerks as they did in the 1980s.
5. Customers prefer to deal with machines rather than talk to bank staff.
6. British banks are the most advanced in the world.
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7. British banks face a lot of competition from other institutions offering finan-
cial services.
8. The British don't complain very much about the service they receive from their
banks.

LANGUAGE PRACTICE

1. Match these terms with their definitions

1. net interest margin
2. provisions
3. return on equity
4. money transmission system

a) money reserved to cover bad debts

b) profit as a percentage of shareholders' capital
c) difference between interest income and interest payments
d) method of transferring funds from one person to another

2. Replace the underlined items with words or phrases from the text that
have a similar meaning.
1. Banks are affected by the state of the UK economy in general.
At large
2. The UK has a very established, loan market.
3. It's difficult for a large bank to increase loan and deposit volumes.
4. The UK's seven principal banks set aside about £6.5 bn of bad debt provision.
5. Banks have closed thousands of branches over the last ten years.
6. Many routine banking tasks are dealt with by computer.
7. A bank branch is expensive to operate.
8. Technologically, British banks are behind their French competitors.
9. Few people change banks in Britain.
10. Most UK banks still make huge profits.

3. Choose the best explanation for each of these words or phrases from the
text.
1. troubled
a) worried
b) pleased
2. rash trading
a) trading without enough care and consideration
b) trading in large volumes
3. let its operating costs run out of control
a) allowed its costs to go over the budget
b) allowed its costs to be checked by external auditors
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4. customer inertia
a) customers don't want to move or change anything
b) customers expect a lot of improvements in service
5. stripping out costs
a) adding to costs
b) removing costs
6. reaped most of the benefits
a) collected most of the benefits
b) lost most of the benefits

4. Find a word or phrase in the text that has a similar meaning.

1 total amounts or quantities
volumes…………………………….
2 system of local offices spread around the country
b………… ...................n ..................
3 highest level recorded over a period
P ...................................
4 designed so as to be of maximum benefit to the
consumer
c………… .................. -f .................
5 when the value of a deposit is added to an account
balance
c……………….. ........
6 banks with the biggest share of the market
l……………… ........... b ..................

5. Match the first half of each sentence with the most appropriate second
half. Notice the words that are used in each sentence to mark a contrasting
idea. (These words are in italics.)
1. Barclays Bank had a troubled year.
2. Banks make a profit on their net interest margin.
3. British banks have introduced a range of technically-advanced services.
4. Canadian customers get deposits credited instantaneously.

a) while UK customers have to wait a few days.

b) yet it managed to make a lot of profit.
c) but it is difficult for them to widen their margins.
d) but they are still behind the French in electronic banking

FOLLOW UP

1. If possible, find the annual results of a bank in your country and report on
its profitability.
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2. Discuss with your colleague from Great Britain how British banks differ
from banks in your country in the way they make their profits?

UNIT 2. Bank mergers

LEAD IN

1. Answer these questions.

a) Which is the correct description of a merger?
When one company gains control of another by buying the majority of its shares.
When two companies, often equal in size, combine to form one new company.
b) What word or words fit the other description above?

2. Discuss these questions.

a) What kinds of banks and financial institutions are there in your country?
b) Is there a trend in your country for smaller banks to merge or be taken over by
larger ones?

Survival of the biggest

By George Graham
A wave of M&A has reshaped the industry, but stuck largely to national
deals.
How big is big? A wave of mergers and acquisitions has completely re-
shaped the face of the international finance industry.
Across a range of financial sectors, the tables are being cleared for a hand-
ful of giants, with room still for niche players but little space for the middle-
sized.
1. The most dramatic changes came in the investment banking area, where
a range of specialized or regional investment banks found new commercial bank-
ing parents. Many investments bankers now believe the battle for membership of
dominant firms is reaching its closing stages.
'In a lot of industries - telecoms, pharmaceuticals, for example - it is not
unusual to see five global giants survive. Five seems to be the magic number,'
says Hans de Gier, head of Warburg Dillon Read investment bank. 'In investment
banking, too, you will see a handful of global firms which have the cost base but
also have the revenue base to support this vision.'
Some banks have already reached the conclusion that they cannot realisti-
cally hope to be part of that select group, and have scaled back their investment
banking ambitions. In the UK, both Barclays and National Westminster have sold
most of their equity operations and now concentrate solely on debt - more closely
linked to their traditional banking business.

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Spiralling pay packets for traders and investment bankers have made it dif-
ficult for the midsized contenders to stay in the race. They have to pay people just
as much or more, but don't get as much revenue out of them as a global firm.
2. In the retail banking sector, some of the talk sounds familiar. Edward
Crutchfield, chairman of First Union, recently warned smaller traditional banks
that they were a 'declining, dying business. Merger mania will last until there are
10 or 12 or maybe 15 dominant financial services.'
But with very few exceptions, consolidation in the retail banking sector
remains national in character. ING's takeover of Banq Bruxelles Lambert in Bel-
gium represents one example of a cross-border deal. But most efforts to cross na-
tional boundaries have not worked.
In the US, there remains plenty of room for consolidation without stret-
ching overseas. The number of commercial banks has shrunk from 11,462 in
1992 to 9,215 this year, but that still leaves the US with far more financial institu-
tions in proportion to its population than comparable countries.
In countries such as the UK and France there may be room for further con-
solidation, but banks in the Netherlands and Ireland already have to look abroad
for a second home market.
Retail banking has proved resistant to economies of scale. In specific activ-
ities such as credit card processing, unit costs fall rapidly with size. In banking
more generally, however, the complexity of operations reduces the benefits re-
sulting from size. That may be changing with increasing IT use in banking. The
cost of software development is one of the biggest factors with 14 banks esti-
mated to be spending more than $1 billion a year on IT.
(Financial Times. – 2009. – 20 Jan.)

COMPREHENSION

1. Mark these statements T (true) or F (false) according to the information in

the text. Find the part of the text that gives the correct information.
a) In investment banking, it is important to be very big in order to be competi-
tive. T
b) Middle-sized banks may survive, but small ones have no chance.
c) Barclays, a UK bank, has increased its investment banking activities.
d) It is difficult for middle-sized banks to pay the high salaries demanded by
stock traders.
e) Edward Crutchfield's comments were about retail banking.
f) Mergers between retail banks are mostly international.
g) There are more financial institutions in relation to the population in France than
in the USA. h) Irish banks need to become international if they want to expand.
i) In retail banking it is difficult to save costs by increasing size. j) Credit card
processing is cheaper when done on a large scale. k) One of the biggest costs for
banks nowadays is software development.
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2 .The article can be divided into two sections, each dealing with a different
aspect. These are marked 1 and 2 in the text. What is each section about?

3. Find three kinds of bank which are mentioned in the article.

LANGUAGE PRACTICE

1. Match these terms with their definitions

1. consolidation
2. equity operations
3. unit cost
4. cost base
5. niche
6. parent company
7. retail banking
8. investment bank
9. commercial bank

a) division of a bank that deals with share issues and share trading;
b) bank that acts as an intermediary between companies and the investing public;
c) bringing together of two or more companies, as in a merger;
d) provision of basic banking services to individuals and companies;
e) place in the market for a specialized product or service;
f) company which owns more than 50% of another company;
g) total cost divided by the number of items that are handled;
h) large size providing the means for costs to be minimized;
i) bank involved in international trade and corporate banking.

2. Find a word or phrase in the text that has similar meaning.

1. people or companies who compete to win something
contenders ........
2. temporary phase when everybody wants to merge
m…………… .... m ..................
3. merger or takeover between companies in different countries
c………….. ...... b ................... d ..................
4. principle that the larger a company is, the lower its average costs are
e………. ........... of s……………………………..

3. Write these words or phrases in the appropriate columns.

expand reduce scale back shrink stretch spiral decline fall
Words meaning to get bigger
expand
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Words meaning to get smaller

reduce

4. Choose the best explanation for each of these words or phrases from the
text.
1. wave of mergers
a) large number of mergers taking place all at once
b) tendency for a few mergers to take place
2. reshaped the face of the international financial industry
a) changed it completely
b) improved it
3. tables are being cleared
a) new game is about to start with different players taking part
b) the game is over
4. reaching its closing stages
a) has finished
b) nearly at an end
5. handful
a) five
b) small number
6. vision
a) view of the future
b) plan or policy
7. concentrate solely on
a) concentrate mainly on
b) concentrate only on
8. comparable countries
a) countries that are similar in size
b) countries that have a similar level of economic development
9. has proved resistant to
a) has benefited from
b) has been unaffected by
10. unit costs fall rapidly with size
a) unit costs fall rapidly as size increases
b) unit costs fall rapidly as size decreases

FOLLOW UP

1. Discuss what changes have taken place since 1997 regarding the shape of
the financial industry.
2. What do you think the financial industry will look like in ten years' time?
Will there be many more changes? Give your opinion.
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UNIT 3. Companies and their banks

LEAD IN

1. Discuss these questions.

1. What services does a company expect from its bank?
2. What are some of the differences between a loan and an overdraft? Compare
your ideas with the definitions in the Key.
3. When offering a loan or an overdraft, a bank usually demands security. What
can a customer offer as security?
2. Read these two letters from banks to their corporate customer
Letter A
Dear Mrs Phipps
Re: Retail Banking
On the attached you will find the Bank's proposed Schedule of Charges
which will take effect as from 1st January, and will be reviewed annually.
We very much regret that we are unable to continue offering 'free banking'
to our customers. This recent change of policy is due to increasing costs, and we
feel that if we are to continue to maintain the professional level of personal ser-
vice that we have always provided to our customers, we must now obtain a con-
tribution to our expenses.
You will note that our charges are below the average levied by other UK
banks, as we wish to remain competitive in this market.
The charges will be debited to your account monthly in arrears.
The minimum balance requirement for those accounts which are interest
bearing has been reduced from USD 100,000.00 to USD 50,000.00 or currency
equivalent. This reduction in the minimum balance requirement will therefore
compensate for some of the charges which will have to be paid by yourselves.
If you have any questions concerning the new charges, would you please
telephone either myself or my colleague, James Samuel.
Yours sincerely,

Wendy Bracewell, Account Manager

Letter B
Dear Sirs
Re: Banking facilities
The Bank is pleased to offer John Best Ltd (The Company) banking facilities on
the terms referred to below but otherwise subject to normal banking terms and
conditions.
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Facilities
Withdrawals may be made under the following facilities provided that the total
amount of withdrawals at any time shall not exceed the limit. Overdraft limit:
£35,000
Availability
The Bank may at any time discontinue all or any of the facilities and/or may de-
mand repayment of all sums owing. The facilities are due for review in twelve
months' time.
Interest rate
Interest on the overdraft facility is to be charged at 2.25% per annum over the
Bank's Base Rate as published from time to time.
Fees
An arrangement fee of £120 will be payable.
Security
The repayment of all monies owed in respect of the facilities will be secured by:
Business Premises at 44 Park Road, Bristol.
All costs and expenses, as mentioned in the General Terms and Conditions at-
tached to this letter, shall be payable by The Company.
To accept this offer, please arrange for the enclosed copy of this letter to be
signed and returned

Yours faithfully,
Graham Collins
BRANCH MANAGER

COMPREHENSION

1. Mark these statements T (true) or F (false) according to the information in

Letter A. Find the part of the letter that gives the correct information.
a) The new charges will remain the same for 12 months. T
b) The company didn't have to pay bank charges before.
c) The bank's policy has changed because the bank wants to be more competitive.
d) Other UK banks make lower charges.
e) The company will have to pay the charges in advance.
f) If the company's account balance is USD 55,000, they will be able to earn in-
terest on this.
g) The company will be better off than before because of the extra interest they
will earn.

2. Mark these statements T (true) or F (false) according to the information in

Letter B. Find the part of the letter that gives the correct information.
a) According to the letter, the company can overdraw up to a maximum of
£35,000. T
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b) The period for which the terms of this letter are valid is three years.
c) The bank has the right to stop the overdraft facility and ask for the money to be
paid back before the end of this period.
d) Other than interest, there will be no charges to pay.
e) The overdraft facility will be secured by a property.
f) The contract which the company should sign wilt be sent at a later date.

LANGUAGE PRACTICE
1. Find a word or phrase from Letter A that has a similar meaning.
a) each year or every year
annually. ..............................
b) keep something at the same level m…………………………….
c) amount that partly meets costs but does not cover them completely
c……………………….. .....
d) having the same value
e………………………. ......
2. Find a word or phrase from Letter B that has a similar meaning.
a) go above a specified maximum level
exeed. a limit ........
b) by the year
P .......................................... a ...................
c) fixed amount that has to be paid for a service
f………………………………
d) place where a company carries out its business activities
p…………………………………
2. Choose the best explanation for each of these phrases from the text.
1. monthly in arrears (Letter A)
a) payable at the end of the month
b) payable at the beginning of the month
2. interest bearing accounts (Letter A)
a) accounts which are free of interest
b) accounts which earn interest
3. facilities are due for review (Letter B)
a) the money borrowed must be repaid
b) the bank is going to reconsider the contract
4. Bank's Base Rate (Letter B)
a) the key lending rate of banks in Britain
b) a rate fixed by the bank itself
3. Word study: contract language
subject to
This phrase is used to show which rules, regulations or laws have to be followed
by the people
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signing the contract, e.g. This guarantee is subject to the laws of the State of New
York.
provided that
This means the same as if, but is very strong, and is common in contracts and
means if and only if.
shall
Shall is often used instead of will in contracts. It is very strong and means that the
person signing must do what the contract says.
Match the modal verbs (1-5) with their meanings (a-e). (Note: not all the an-
swers will be used; one will be used twice)
1. shall a) It is allowed under the contract.
2. shall not b) It is not allowed under the contract.
3. may c) It is an obligation.
4. may not d) It is not an obligation.
5. will e) This shows what will be done in the future.

FOLLOW UP
1. Imagine you are Mrs. Phipps. Write a letter in reply to Letter A, saying
that your company is not happy about having to pay charges and you have
decided to switch your account to another bank which does not make
charges.
2. Imagine you are the Managing Director of John Best Ltd, a company
which makes office furniture. Your company has just won a new contract
worth £400,000, but in order to carry out the work you need to buy new
equipment and recruit extra staff. Write a letter to the bank and ask if you
can increase the overdraft facility to £50,000.

UNIT 4. The work of a fund manager

LEAD IN
1. Discuss these questions.
1.What do you think a fund manager does? Make a list of job activities.
2. Explain what Wall Street is and what it does to someone who knows nothing
about stock markets.

Trading on Teamwork
Team decision-making is fundamental to Schroders' investment philosophy. Fund
manager Chris Rodgers explains how this helps him to select the right stocks for
his portfolios.
Schroder fund managers such as Chris Rodgers are ultimately responsible
for their funds' performance, but Schroders' framework of team decision-making
ensures that all fund managers have access to the best research and ideas. Econ-
omists and analysts from our offices worldwide contribute research and recom-
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mendations to investment committees, who set guidelines which are adhered to

by all fund managers.
Rodgers sits on the International Asset Allocation Committee, which de-
termines global targets for exposure to equities, bonds and cash. He is also on the
UK Equity Strategy Team that sets specific guidelines that assist UK fund man-
agers.
He explains: 'These include ways to control risk, and targets for investing
in specific sectors, such as construction or pharmaceuticals. 'Within the guide-
lines, Rodgers has discretion in choosing stocks for his own portfolios.
In the UK, two stock teams focusing on FTSE 100 and 250 companies,
meet weekly. A Schroder equity analyst will present their unique research on a
specific company before the team considers information and recommendations
from external brokers. They subsequently discuss and grade stocks.
Rodgers' daily activities include studying research notes and writing fund
performance reports for clients. Monitoring stock market movements and news is
a continuous process — the UK dominates the morning while Wall Street tends
to govern the afternoon's trends.
'The daily team meeting at 12.15 provides an opportunity to discuss the
morning's events and share ideas. Analysts also give expert assessment of com-
pany results published that morning.' When Schroders is interested in a specific
stock, the relevant analyst will be asked to prepare a more in-depth note on the
company. Rodgers adds: 'We may also arrange a meeting with the Managing Di-
rector or Finance Director of the company.
'As Schroders is a large fund manager, we benefit from ready access to
most of the companies that we wish to see. We discuss the changes directors are
putting in place and how they will affect the performance of the company in the
medium to long term.' If Rodgers decides to buy or sell a stock, he'll talk to
Schroders' dealing room: 'I don't execute the market business myself; that's a spe-
cialist and time-consuming role. 'The dealers liaise closely, ensuring that so the
prices and quantities available are acceptable to him.
Like many of Schroders' fund managers, Rodgers trained with the company
as an analyst, giving him invaluable experience in researching and assessing
stocks. He says: 'It taught me to trust my own judgment. Now, as a fund manager,
I have the confidence to take positions with certain stocks, even when the market
consensus is less optimistic.
'It's only by going against the grain from time to time that you can add ex-
tra value to a client's portfolio over the long term.
(Financial times. – 2009. – 11 Feb.)

COMPREHENSION
1. Read the text about the work of a Schroder fund manager. Which of these
statements best describes Schroders' investment philosophy?
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1. Fund managers work alone to select the right stocks.

2. Investment decisions are best made by groups.
3. Competition between fund managers is the best way to get results.

2. Look quickly at the text and answer these questions.

1.How many...
a) committees does Chris Rodgers sit on? two
b) teams meet in the UK to discuss stocks?
c) daily meetings does Chris Rodgers attend?
d) other companies has Chris Rodgers worked for?

2. Write down three activities that Rodgers carries out each day.
3. If Schroders is interested in a stock, what two steps do they usually take to find
out more about it?

3. Mark these statements true (T) or false (F) according to the information in
the text. Find the part of the text that gives the correct information.
1. Rodgers can make his own decisions on which stocks to buy or sell.
2. He buys and sells stocks himself.
3. He was fully trained as an equity analyst before he joined Schroders.
4. He always follows market trends when selecting a stock.

LANGUAGE PRACTICE
1. Match these terms with their definitions.
1. fund
2. portfolio
3. equities
4. bond

a) collection of investments in different companies

b) large amount of money collected from different investors and managed by an
investment company or bank
c) long-term investment traded on the stock market, which usually has a fixed
rate of interest for a fixed period
d) shares in a company which can be traded on the stock market

2. Find a word or phrase in the text that has a similar meaning.

1. amount of risk the company is open to exposure
2. areas of industry or business
s…………. .......
3. someone who studies the performance of shares
e………... ..........a ...................
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4. middlemen between clients and stock traders or dealers

b………………………
5. something that fund managers have to write to inform clients about their in-
vestments
f......................... P ...................r ...................
6. someone who is responsible for the financial control of a company
F…………........ D ..................
7. name of the place where stocks are traded
d………….. ....... r ...................

3. Replace the underlined items with words and phrases from the text that
have a similar meaning.
1. Rodgers is a member of the International Asset Allocation Committee.
Sits on
2. The guidelines include ways to keep risk to a minimum.
3. The team considers recommendations from external brokers. They then discuss
and grade stocks.
4. Checking stock market movements and news is a continuous process.
5. Analysts prepare a more detailed note on the company Schroders is interested
in.
6. Schroders discuss the changes which company directors are implementing.
7.'I don't carry out the market business myself.'

4. Choose the best explanation for each of these words or phrases from the
text:
1. ultimately
a) completely
b) in the end
2. global targets
a) overall
b) international
3. ready access to
a) limited access to
b) fast access to
4. going against the grain
a) doing something which the company disapproves of
b) doing something differently from what everyone else is doing

5. Match the first half of each sentence with the most appropriate second
half.
1 Fund managers are responsible
2 Fund managers must adhere
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3 Fund managers have access

4 Fund managers have discretion
5 Fund managers liaise closely with dealers to ensure

a) to the best research and ideas.

b) to guidelines set by the investment committee.
c) in choosing stocks for their own portfolios.
d) for their funds' performance.
e) that prices and quantities are acceptable.

FOLLOW UP
1. Either orally or in writing, describe your own job responsibilities
and daily activities.
Or (if you are not yet in a job): Find out about a job specialization in
the field of investments and draw up a description of that job.
3. If you work in investments, compare the way of working in Schrod-
ers with the way you work in your company or bank.
4. Draw up your own curriculum vitae in writing and then describe it
as if talking to a potential employer. Role-play the conversation with an em-
ployer.

UNIT 5. The profile of an effective manager

LEAD IN

1. Discuss these questions.

1. What is manager’s role in an organization?
2. What activities a manager is responsible for?
The manager
Managers work in an organization. Therefore, before we can identify who
managers are, it is important to clarify the term organization. Robbins S.P.
(1991) defines an organization as: «a systematic arrangement of people to ac-
complish some specific purpose». We can divide organizational members into
two categories: operatives or managers. Managers differ from operatives by the
fact that they direct the activities of others.
There are two big classifications of managers: the horizontal classification
only looks at the responsibilities. We can distinguish the functional manager and
the general manager. The functional manager is responsible for a whole of similar
activities, for example, financial director, commercial director... While the gener-
al manager is responsible for different functional areas, he is often concentrated
on one business activity and acts as a product manager or a division manager. In
the vertical classification, we need to differentiate first-line managers, middle
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managers, and top managers. The difference between these three groups is based
on the statute of subordinates.
Furthermore, we should pay attention to the difference between a success-
ful and an effective manager. As Luthans F. (1988) proved, a successful manager
is not necessary an effective manager. The former is a manager who has been
promoted relatively quickly while the latter has satisfied, committed subordinates
and high performing units. In general, we could say that an effective manager is
one who attains the organizational goals.
Manager's job
It was Henry Fayol, in the early part of this century, who was the first to
give a global view about the job of manager. He observed that managers per-
formed 5 management functions: they plan, organize, command, coordinate and
control. In the mid-1950s, these management functions were reduced to the basic
four known as the management process.
The planning component encompasses defining the goals, establishing ap-
propriate strategies and developing different plans to coordinate the activities.
Furthermore, managers are responsible for designing an organization's structure,
which clarifies what must be done and by whom. As the job of manager implies
directing activities of others, the leading function is very important. It consists of
motivating subordinates, resolving conflicts and selecting effective communica-
tion channels. Eventually, a manager has a controlling function. He has to ensure
that the assumed goals will be achieved. Therefore the manager has to monitor
the different activities. Also keep in mind that an effective manager must be able
to perform all four activities simultaneously.
― Conceptual skills: the ability to analyze complex situations and to pro-
vide the necessary knowledge to facilitate the decision-making.
― Interpersonal skill: as a manager you should be able to direct others, so
motivation, communication and delegation skills are absolutely needed.
― Technical skills: the ability to apply specialized knowledge or exper-
tise.
― Political skills: the ability to build the right relationships with the right
persons. Those connections result in higher chances of getting additional re-
sources and power.
― Controlling the organization's environment and its resources.
― Organizing and coordinating.
― Handling information.
― Providing for growth and development.
― Motivating employees and handling conflicts.
― Strategic problem solving.
The main characteristics of the effective manager
In the following part we will discuss some of the main manager's characte-
ristics based on the theories which were discussed in the first part of our paper.
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We have summarized different visions and found out that all theories named the
following important characteristics:
― decision making skills;
― conflict Management skills;
― flexibility and creativity;
― developing of managerial knowledge and manager's teaching role;
― motivation of employees;
― communication skills;
― developing trust inside the organization.
Operations Management
Operations management consists of all the activities that managers are en-
gaged into creating products (goods, services and ideas). Operations are as rele-
vant to service organizations as to manufacturing firms. In fact, production is the
conversion of resources into goods or services.
1. A technology is the knowledge and process the firm uses to convert input
resources into output goods or services. Conversion processes vary in their major
input, the degree to which inputs are changed and the number of technologies
employed in the conversion.
2. Operations management often begins with the research and product de-
velopment activities. The results of R&D may be entirely new products or exten-
sions and refinements of existing products. The limited life cycle of every prod-
uct spurs companies to invest continuously in R&D.
3. Operations planning is planning for production. First, design planning is
needed to solve problems related to the product line, required production capaci-
ty, the technology to be used, the design of production facilities, and human re-
sources. Next, operations planning focuses on the use of production facilities and
resources. The steps in this periodic planning are (1) selecting the appropriate
planning horizon, (2) estimating market demand, (3) comparing demand and ca-
pacity, and (4) adjusting output to demand.
4. The major areas of operations control are purchasing, inventory
control, scheduling, and quality control. Purchasing involves selecting
suppliers and planning purchases. Inventory control is the management of stocks
of raw materials, work process and finished goods to minimize the total inventory
cost. Scheduling ensures that materials are at the right place at the right time —
for use within the facility or for shipment to customers. Quality control ensures
that products meet their design specifications.
5. Automation, the total or near-total use of machines to do work, is rapidly
changing the way work is done in factories and offices. A growing number of in-
dustries are using programmable machines called robots to perform tasks that are
tedious or hazardous to human beings. The flexible manufacturing system
combines robotics and computer-aided manufacturing to produce smaller batches
of products more efficiently than the traditional assembly line.
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COMPREHENSION
1. Answer the following question. Then compare your answers with the class.
1. What is a manager?
2. Where does a manager work?
3. What types of managers can be named?
4. What is an effective manager?
5. What is a successful manager?
6. What is the difference between successful and effective manager?
7. What are the main characteristics of the effective manager?
8. What are the functions of a manager?
9. What is operations management?
10. What role do managers play in the organization?

2. Insert the necessary word or word combination

1. Managers work in an ....
2. We can divide organizational members into two categories: ... or ... .
3. Managers differ from operatives, by the fact that they ... the activities of others.
4. We can distinguish the functional manager and the ... manager.
5. Eventually, a manager has a ... function.
6. The planning component encompasses ... the goals, ... appropriate strategies
and ... different plans to coordinate the activities.
7. As the job of manager implies ... activities of others, the leading function is
very important.
8. Operations planning is planning for ....
9. The major areas of operations control are purchasing, inventory control ... and
quality control.
10. A technology is the knowledge and process the firm uses to convert ... re-
sources into output goods or services.

LANGUAGE PRACTICE
1. Match these terms with their Russian equivalents.
identify работник
clarify планировка
accomplish совершать, выполнять
operatives вовлекать
imply соответствующий
direct одновременно
subordinate стимул
resolve решать
scheduling прояснять
appropriate подразумевать
assume принимать на себя
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simultaneously направлять
employee определять
engage исполнители
spur подчиняться
encompass окружать

3. Refer the sentences into English

1. Одна из важнейших функций менеджера — управление исполнителями.
2. Организация — объединение людей, выполняющих конкретные цели.
3. Менеджер обязан контролировать процесс исполнения.
4. Гибкость и творческий подход важны в каждом работнике.
5. Менеджер должен уметь принимать решения самостоятельно.
6. Мотивация работников — важный элемент здоровой работы предпри-
ятия.
7. Менеджер выполняет пять основных функций.

FOLLOW UP

1. Analyze the role of a manager in a company.

2. Discuss the functions of a manager.
3. Discuss the skills managers have to posses.

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Учебное издание

BANKING AND MANAGEMENT

Учебно-методическое пособие

Составитель
Ушакова Елена Валентиновна

В авторской редакции

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