Reading / comprehension activities

Date: 2015-10-07; view: 462.

Task 1. Read, translate and retell the following text. Match up the following words with the underlined words in the text:

Business objectives and values

One definition of a company is that it is nothing more than a sum of other people's money invested in productive capacity or services which produce a profit greater than (1) the opportunity cost of the capital involved. From this definition follows the belief that the role of a company is to maximize its value for the shareholders. The managers must be permanently concerned with maximizing value, and not only if there's the threat of a (2) raid. They have to concentrate exclusively on activities that create value, so that the company will regularly (3) divest less profitable operations, acquire other profitable businesses, and restructure itself.

According to the logic of "value-based management", it is not enough to (4) launch a successful new product occasionally, and to revitalize existing mature products by effective marketing programmes. The company has to develop structures that allow it consistently to create added value. These structures will include the way in which it (5) allocates financial and human resources, measures performance, and (6) pays its top managers. One problem with this approach is that it is unlikely to motivate employees who know that they could at any time be (7) dismissed to reduce costs, or that their section could be sold or "restructured" out of existence if it is considered to be producing insufficient value. Financial objectives will probably only motivate a few people in the head office, and only then if they are (8) paid in proportion to the company's value.

Other management theorists argue that profit is not an objective in itself, but a natural (9) consequence of doing something well. Profit is like health: you need it, and the more the better, but it is not why you exist. You exist to provide a product or service. Employees are more likely to be motivated by qualitative corporate purposes than quantified ones. A company which declares that its central values include a commitment to produce high quality goods or reliable services, while respecting each individual employee, is more likely to inspire everybody, from middle managers down to shop-floor production workers. These are values that everybody in the (10) organization can share.

An alternative to value-based management is the "stakeholder" model, which suggests that a business organization has responsibilities to everyone with a stake in, or an interest in, or a claim on the firm, including employees, suppliers, customers, and the local community. According to this view, a company has to balance the interests of (11) its owners with those of the other groups of people concerned by its existence.