What is the French and German plan to create bi-national champions really about? 3 страница

Capture it? Jeff Immelt wants to shape it, drive it, make it his own. For him, reinventing GE is the only way to make his company dominate this century, much as it led the one before.

Business Week

Exercise 7. Write a report and make a presentation on one of the Allowing topics. Use of other resources is highly recommended.

1.Jack Welch - what made him the world's best manager?

2.GE - is it the best run company?

3.Jeffrey Immelt - new strategy for GE.

4.GE and its people.

5.Practices used by GE management to improve the company's performance.

6.How is the CEO trying to shift the GE mindset?

7.Where do GE's best managers and leaders come from?

8.GE's business mix - shuffling the portfolio.

9.Six Sigma.

Exercise 8. Read the text and answer the following questions.

a)What does «bundling» mean?

b)What forms can it take?

c)Should bundling be banned by the authorities?

Translate the text orally.

A Bundle of Trouble

Behind antitrust actions against Microsoft and General Electric lie concerns about " bundling" different products together. Is bundling really so bad?

In English schools, " bundling" is what happens when boys knock a fellow pupil to the ground and then pile on top of him. Economists use the term to describe something less rough-and-tumble, yet, some fear, equally suffocating to the victim, bundling two or more products together as a package, and selling it for a single price.

In the 1940s, America's Supreme Court concluded that " tying agreements serve hardly any purpose beyond the suppression of competition." Economists have long challenged that absolutism. Many now think that, though there are exceptions, selling bundles of goods together as a package can be a source of economic efficiency.

Bundling covers many things. Two or more of the same product might be sold as a package — a " buy one, get the second at half-price" deal, say, or a railway season ticket. A camera might be sold in a box with a free film; a hotel room might come with accompanying breakfast.

A product can also be bundled together with a loan. Financial bundling has become so widespread that three economists at Morgan Stanley — Steven Galbraith, Mary Viviano and Elmer Hub — suggest in a recent report that, as manufacturers such as GE, General Motors and Lucent grow ever more involved in providing finance, so " manufacturing is becoming the loss-leader of the profit chain for many companies." In other words, give away the product; make money on the lending that is bundled with it.

Bundling can be good for consumers. It can reduce " search costs" (the bundled goods are in the same place), as well as the producer's distribution costs. There are lower " transaction costs" (because a single purchase is cheaper to carry out than multiple ones). And the producer may be a more efficient bundler than the customer: few of us choose, after all, to buy the individual parts of a car to assemble them ourselves.

Win some, lose some In perfectly competitive markets, bundling should happen only if it is more efficient than selling the products separately. Where there is less than perfect competition — that is, most markets — economic models suggest that bundling sometimes benefits consumers and sometimes producers. Nicholas Economides, of New York University, says that when firms have a measure of market power, they can engage in price discrimination, charging different prices to different customers. Bundling can play a part in price discrimination, as different bundles of goods and prices may appeal to different customers.

Price discrimination in general, and bundling in particular, is usually a profit-maximising strategy for a producer that enjoys substantial market power, says Mr Economides. But if there is a deal pf competition, two rivals selling bundled goods may see their margins fall even more readily than if they were not bundling.

Wherever there is market power, the antitrust authorities have reason to be watchful. Bundling a monopoly product with one that is competitively provided may result in the competitive market being distorted. But it would be wrong to assume that bundling is inevitably bad in those circumstances. If there is some loss of consumer choice, the cost may be outweighed by efficiencies from bundling, Each case must be judged on its merits. The merits are harder to assess where there is " pure bundling, " involving products available only as a package, than where there is " mixed bundling, " with products available both as a package and individually.

Microsoft's package of Explorer and Windows is a pure bundle. On the face of it, requiring Microsoft to sell Windows and Explorer as separate products as well as bundled ones would end the arguments — except that Microsoft claims they are not a bundle at all, rather a single product incapable of being broken into parts. In the past, such claims have been resolved by assessing whether a viable market exists for each product on its own: if it does, the product is a bundle.

Yet, as the appeals court noted, this does not work well in Microsoft's case, because any innovation that improves an integrated product might be stifled. Again, the costs and benefits of any such innovation, and whether it constitutes a genuinely new, integrated product, not a bundle, should be judged case by case.

The Economist

• Bundling Terms

Fill in the chart.

" Strategic Bundling of Products and Prices " from Journal of Marketing

Exercise 9. Translate the following text into English in writing. Use the active vocabulary. See Ex. 6, Text 2, p. 32 for prompts.

«Байер» перестраивается

Руководство германского конгломерата «Байер» (Bayer) заявило, что приступает к реструктуризации своего бизнеса. «Байер» сконцентрирует усилия исключительно на европейском рынке фармацевтической продукции, а его подразделения по производству полимеров и весь химический бизнес будут выделены в новую химическую компанию.

По словам генерального директора «Байер» Вернера Веннинга, бизнес обновленной компании будет зиждиться только на трех китах: лекарственные препараты и медицинское оборудование, сельскохозяйственная химия и промышленные материалы.

" После реструктуризации компания «Байер», оборот которой будет составлять порядка $25 млрд, сможет уделить больше внимания основному бизнесу, в котором мы располагаем прекрасными технологиями, сильными позициями и, прежде всего, перспективными направлениями", — заявил журналистам после заседания совета директоров Вернер Веннинг.

Направления, которые Веннинг назвал перспективными, обладают большими возможностями роста, но при этом требуют крупных затрат на научные исследования, из-за чего компания оказывается не в состоянии поддерживать свой бизнес по производству химических веществ.

Поэтому было принято решение выделить химический бизнес «Байер» в новую компанию «НьюКо» (NewCo). Штаб-квартира новорожденной будет располагаться по соседству со штаб-квартирой «Байер». В начале следующего года «НьюКо» уже проведет первичное размещение акций.

Решение о кардинальной реструктуризации бизнеса «Байер» было принято после двух лет безуспешных поисков партнера для фармацевтического подразделения. Многие аналитики полагают, что фармацевтический бизнес «Байер», слишком мал, чтобы составить достойную конкуренцию крупнейшим корпорациям.

Ведомости

UNIT 4

• Text

NOKIA'S NEXT ACT

Can the Finnish giant stay on top in an age of commodity phones

and stalling sales?

The get-togethers were cordial and businesslike, the agenda ambitious. There were no raised voices, no objects hurled against the wall. And above all, there was no sense of panic. But in a series of meetings starting last summer, the top five executives of Nokia Corp., the world's No. 1 maker of mobile phones, hammered out a strategy to remake the $28 billion company's handset business from top to bottom. A decade after Nokia chucked its heritage as a maker of everything from toilet paper to rubber boots and bet its future on wireless communications, it was time for the next act.

The immediate objective was to deal with the consequences of dramatic slowdown in sales both in the industry and at Nokia itself. The top brass also had to face up to resurgent competition from rivals left in the dust years earlier and the threat posed by Asian manufacturers. Then there was a challenge from software behemoth Microsoft Corp. Its push to get phone makers to adopt a stripped-down version of its Windows software threatens to erode Nokia's power.

At every meeting, Chairman and CEO Jorma Ollila would throw out a hypothetical proposal. " What if Nokia expanded from two to four business units? " he asked the group. " What if the company merged manufacturing of mobile phones and networking equipment to reap new economies of scale? Or what if it was reorganized along regional lines? " Each scenario was painstakingly picked apart — and all but one was ultimately discarded. No slick management gurus were hauled in to provide the Big Think. As with virtually everything Nokia does, the solution was homegrown.

Just before Christmas, the executives settled on a scheme that Ollila is convinced will propel his company to the next level. Few in the industry know the details of the changes, which Ollila was set to outline for analysts on June 20. But they are already in place, effective May 1, Nokia split its monolithic $21 billion mobile-phone unit into nine profit-and-loss centers, each charged with bolstering the company's position in a particular market. There's always a risk that such a massive overhaul could slow down the 53, 000-person company. But Ollila, 51, argues it will have the opposite effect. " We foresaw that being too big was a real danger, " he says. " We had to break up the company in a meaningful way to retain the entrepreneurial thmst we had in the 1990s."

It's the next stage in the maturation of the mobile industry. Nokia gets credit from analysts and rivals alike for having been the first to grasp that cell phones were becoming consumer items. In the mid-1990s, it started segmenting its product line by " styles", such as Basic, Classic, and Fashion. But the mobile-phone division remained a single, increasingly unwieldy business unit. Now that old structure is gone, replaced by a stable of mini-Nokias. Heading them up is a new generation of managers, one of whom could some day graduate to CEO.

Pretty dramatic stuff for a company that's clearly on top, with an estimated 37% global share. But nothing equals Nokia's internal reorganization for symbolic import. Gone is the unified structure of a business that grew so fast nobody had time to consider alternatives. In its place, Nokia has conjured up a complex organization of separate businesses, each with its own product, R& D and marketing. One unit, for instance, will address the particular needs of business users, while another will chase the nascent market for phones with built-in digital cameras. Perhaps the boldest gambit is a unit focused on ultracheap phones for markets such as Russia, India, and China. The very existence of such a group is a tacit admission that the old Nokia lacked the focus to win this segment. " Nokia became its own worst enemy, " says Juha Christensen, the vice-president of Microsoft's mobility group. " By having vast economies of scale, it lost the ability to deal with niche markets."

The changes at Nokia parallel those that have occurred in other industries. By the 1920s, Henry Ford had figured out that not every customer wanted a black Model T. But his rival Alfred P. Sloan Jr. gained the upper hand by building a General Motors Corp. that housed separate divisions — Chevrolet, Oldsmobile, Cadillac — targeting different classes of buyers. It even happened to the most generic of all products, the microprocessor, when Intel split its Pentium line into three price brackets to focus engineering and marketing efforts on specific customers.

But GM had decades to perfect its system, and Intel enjoyed a near-monopoly with its microprocessors. Nokia has neither of these luxuries. That's why Ollila's reorganization is fraught with risk. Nomura International analyst Richard Windsor worries it could raise fixed costs. Plus the sheer complexity of it might — instead of producing nimble, market-focused teams — simply gum up the works and confuse employees, clients, and investors.

To keep the separate units from straying too far apart, all will tap the 4, 500-person central research lab for basic-technology and product design. And to avoid diluting Nokia's efficiencies in procurement and manufacturing, each will hand off its products to a shared operations and logistics group.

Everybody who competes with Nokia will be watching its experiment with a mix of curiosity and dread. If it works, the rush to imitate will be swift and massive. If it doesn't — well. Nokia will have to work even harder to stay on top. One way or another, there's no going back to the Model T.

BusinessWeek

Note

Model T - the first best-selling car model made by Ford; smth in the past, foretime

Vocabulary

Exercise 1.Translate the following into Rusian.

to hammer out a strategy; to staff sales; a shared logistics group; resurgent competition; economies of scale; to reinvent a company; a dramatic slowdown in sales; a drastic cut in overheads; a nascent market; a fledgling industry; to become a full-fledged multinational; market-focused teams; procurement; manufacturing; R& D; to be fraught with risk; to split one's product line into three price brackets; to bolster the company's position on the market; to address the needs of business users; an increasingly unwieldy business unit; the next stage in the maturation of the industry

Exercise 2.

a) Translate the following into English.

добиться превосходства на раздробленном рынке; так или иначе; разделить конгломерат на отдельные компании; операции по снабжению; заниматься проблемой; капиталоемкий; трудосберегающий; сохранить лидерство; подрывать позиции конкурента; сбивать цены; отсутствие роста объёма продаж; провести встречу в теплой деловой атмосфере; вырабатывать стратегию перестройки; представлять угрозу; обострение конкуренции; коренная перестройка; ценовая категория товара; предельные издержки; постоянные (переменные) издержки

b) Give all possible words and word combination in English meaning:

1)проводить перестройку, рационализацию;

2)высшее руководство;

3)гибкий, проворный, динамичный (with collocating nouns);

4)неповоротливый, медлительный, отстающий (with collocating nouns).

Exercise 3. Translate the following paying attention to the underlined words and structures.

1.Companies are combining to get bigger, taking over competitors for synergy, and selling off businesses that don't make money or don't fit in with their strategy. This relentless process leaves behind dozens of corporate orphans, some of them underperforming companies in need of capital and a turnaround strategy. Enter the buyout boys. Almost a cottage industry a few years ago, leveraged buyouts are becoming big business. Financiers hope to borrow money to buy up unwanted companies, turn them around, and take them public at profits up to several times their original investment.

2.For a long time, both companies reacted by arguing that size wasn't everything. But they now seem as convinced as their peers that big companies are better able to weather the increasing volatility in oil markets.

3.So far, Europe hasn't produced a counterpart t o U. S. junk bond king Michael Milken.

4." Fads " is the four-letter word of marketing research, more so even than " hype”, " puff', " plug", and " spin".

5.The offer (P& G's offer to buy Wella's shares) formally complies with the core of the German law, which demands that it represents at least the minimum of the last three months' share price

6.The Siemens restructuring plan was announced a year ago and involved disposing of noncore businesses.

7.In 1999, Nestle shed its ground and roast coffee business in the U.S., and said it would look at outsourcing its capital-intensive cocoa- processing business. People close to Nestle say the company is also considering outsourcing some or all of its research and development, which cost the company nearly Ibn francs. Outsourcing the commodity elements of production is the right direction for Nestle, said Nic Sochorsky, an analyst for Lehman Brothers in London. " You don't value Nestle on its cocoa processing but on its brands, " he explained.

Exercise 4. Translate the text into English.

«II о к им» несет кадровые потери

В понедельник стало известно о предстоящем уходе из «Нокия» (Nokia) ее директора по стратегии Алахухты (Alahuhta). Это самая значительная кадровая потеря финской корпорации за последнее десятилетие. Наблюдатели отмечают, что новость свидетельствует о расколе в слаженной управленческой команде, которая в течение нескольких лет обеспечивала «Нокия» развитие бизнеса под руководством генерального директора Нормы Оллилы.

Алахухта, которому сейчас 52 года, проработал в «Нокия» 26 лет. После своего увольнения в конце декабря он займет должность президента финской компании «Коне» (Копе), производящей лифты и эскалаторы. Освобождающуюся с его уходом должность займет нынешний руководитель подразделения научных исследований и опытно-конструкторских разработок.

«Алахухта был одним из создателей «Нокия» в ее нынешнем виде, он очень много сделал для стремительного взлета компании в начале прошлого десятилетия, — говорит Ричард Виндзор, аналитик из лондонского отделения компании «Номура» (Nomura). — Возглавляя операционную деятельность, этот человек добивался великолепных результатов. Но перспективы «Нокия» изменились, и, возможно, стратегия, которой Алахухта следовал в прошлом, теперь уже неприменима».

«Нокия» остается ведущим мировым производителем сотовых телефонов, однако ее доля на этом рынке за последнее время снизилась, — компания слишком поздно отреагировала на изменения рыночной конъюнктуры.

Бывший директор по стратегии был членом команды Оллилы, сформировавшейся в начале 1990-х. Эта группа руководителей определила корпоративную культуру «Нокия», характеризующуюся целеустремленностью и последовательностью стратегического подхода.

В 1998 г. Алахухта возглавил подразделение сотовых телефонов. За время его пребывания на этой должности объем продаж телефонов «Нокия» утроился, в результате чего финская корпорация сумела оттеснить американскую компанию «Моторола» (Motorola) с первого места на мировом рынке мобильной телефонии.

Одно время директора по стратегии считали преемником Оллилы на посту гендиректора, но в последние годы слава его померкла. Многие возлагали на директора по стратегии вину за неспособность «Нокия» вовремя распознать важную рыночную тенденцию. Правда, в системе коллективного руководства корпорации было не принято указывать на конкретных виновников неудач. Как бы то ни было, Алахухта стал первым из команды Оллилы, решившим покинуть свою компанию.

Ведомости

Exercise 5. Translate the following texts.

Canon Cutting Edge

By trimming down to four product lines, it's making record profits

Walk through the gates of Canon Inc.'s headquarters and you might think you're back in Japan's boom days of the late '80s.

With good reason. While much of Japan Inc, is stuck in the past, Canon is busy reinventing itself as a globally focused 21st-century company. Much of the credit goes to its President Fujio Mitarai, who is at the vanguard of a new breed of CEO bent on combining Japanese quality and attention to detail with the U.S. focus on cash flow and shareholder value. Mitarai also puts a premium on providing job security as a way of keeping staff hard-working and loyal. In Japan, at least, he has managed to avoid layoffs.

That doesn't mean Mitarai, 66, shies away from the hard choices, however. He has hacked spending, closed plants, and refocused Canon on four main product lines At the same time, Mitarai is pushing into lucrative consulting work, helping corporations plan and maintain their office machine networks. " Canon is the exception in Japan, " says Satomi Ushioda, industry analyst at Nikko Salomon Smith Barney. " It's on the growth track even though its core business is mature."

Can Canon keep up the momentum? There are some concerns. For starters, it can't expect much growth in the near-and midterm in Japan, which accounts for one-third of sales. Furthermore, as the global recession deepens, orders for Canon copiers and printers could tank.

That marked the start of Canon's transformation to a more global enterprise. It became one of the first major Japanese companies to report its earnings on a consolidated basis and to emphasize shareholder value. The stock has tripled in value since Mitarai took over. He also introduced cash-flow management through better budget planning and inventory reductions. Instead of borrowing money for capital investment, as many Japanese companies do, Canon used its own cash.

Mitarai's reforms extended to Canon's factories, 70% of which are based in Japan. The company improved just-in time manufacturing, and introduced other production changes to eliminate waste, while tweaking supply chain management to increase efficiency. This enabled Canon to reduce parts inventory by a third and to cut the number of warehouses.

Business Week

Nip, tuck

One of Europe's finest conglomerates needs more radical surgery

Klaus Kleinfeld, 15 months into his tenure as boss of Siemens makes a good fist of selling his company as an " infrastructure supplier" well positioned to follow " megatrends" such as urbanisation and die growing demand for water, transport, health care, security and power. Yet he cannot disguise the fact that Siemens is for all that an unfashionable conglomerate that some analysts and investors would like to see streamlined further, or even broken up. Some Siemens divisions, such as power generation, automotive parts, or medical equipment, are world leaders. Others such as business services and communications are languishing.

Even if Mr Kleinfeld misses next year's targets, his job is unlikely to be on the line. Despite the impatience of some shareholders to see profits across all divisions — the last year that happened was 2000 — there is a counter-argument in favour of some diversification. Siemens' power generation and medical divisions, now success stories, were once problem children.

But for Siemens' worst businesses to come good — and hence for Mr Kleinfeld to meet next year's target — analysts think he will have to take drastic action: He has already shown he can be tough. Last June he sold Siemens' mobile-phone division to BenQ of Taiwan.

But investors would like to see more streamlining.

The Economist

UNIT 5 CONSOLIDATION

• Text 1. Translate the text from English into Russian in writing.

Great-Grandma Bell Is the once great telecoms company on its last legs?

Churches have altars, royalty has thrones, and AT& T has its network. For over 125 years, this was the source of the telecoms company's power and its most prized asset. Yet as telecoms capacity has become a commodity, the value of owning a network has diminished dramatically. It has forced AT& T to search for new areas of growth, but its prospects are not promising. Last week, the company's latest earnings figures included an $11.4 bn write-down of its assets, forced by a fall in prices due to competition and new technologies. The troubles which AT& T faces are severe. The company earns roughly half of its revenue by charging for long-distance calls, but these earnings are tumbling at around 20% a year and will never recover.

The company is therefore between a rock and a hard place: it must migrate to the more efficient technology without cannibalizing its existing revenue, at a time when there is a plethora of competitors. This dilemma has been predicted by telecoms pundits for a decade, but AT& T never developed a suitable strategy to cope. Its plan now is to slow its decline in income and cut debt by continuing to slash its workforce. It hopes that a better balance sheet will help as it hunts for new business, focusing on large corporate accounts, which make up about 60 % of its revenue. AT& T's foundering fortunes come amid difficulties in the telecoms industry as a whole. America's second- and third- largest long-distance companies are also suffering from the glut of telecoms capacity and the fast erosion of revenue.

The Economist

* Text 2. Translate the text from Russian into English in writing.

Вкус прибыли

«Кэдбери Швепс» (Cadbury Schweppes), по сообщению Би-Би-Си, начала реструктуризацию бизнеса, в ходе которой компания планирует закрыть несколько фабрик и уволить почти 6000 сотрудников. Необходимость в проведении реструктури­зации возникла после того, как в марте этого года компания купила за 4, 2 млрд долл. США фирму «Адаме» (Adams) — американского производителя конфет и жевательной резинки.

Теперь многие службы объединенной компании дублируют ДРУ^Г друга. По расчетам руководства Cadbury Schweppes, реструктуризация, затраты на которую оцениваются в 900 млн ф. ст., в дальнейшем позволит компании экономить до 400 млн ф. ст. ежегодно. Одновременно менеджеры компании заявили, что в связи с предстоящей реструктуризацией акционерам придется на некоторое время забыть о ежегодном увеличении прибыли.

Компания

•Text 3.Translate the text orally.

The Hard Way

If General Electric hoped to buy itself out of trouble, it may have to think again. GE had in three days showcased bold, supposedly business-transforming, deals worth over $25 billion. As investors promptly cut their valuation of GE's shares, however, it was not wholly clear whether Jeffrey Immelt, the firm's boss, was climbing out of a hole, or digging himself deeper in. Mr Immelt has had a torrid time since taking over from Jack Welch, GE's former boss, in 2001.

Waking from the dreamy 1990s, investors discovered that GE was not, after all, a smooth earnings machine that pumped out profit growth of 16-18% a year, but a collection of mature industrial assets bolted to a fast-growing, opaque and highly-leveraged finance business. Worse, thanks to the effect on profits of a bubble in GE's power business and a seemingly overfunded corporate-pension fund, the firm's best days now looked to be behind it. Last year, GE failed to grow its profits at the promised double-digit rate for the first time in ten years. Most likely, it will fail to do so again both this year and next.

The Economist

• Text 4. Translate the text orally.