Discussing profitability

Your operating costs are the day-to-day expenses of running your business. Fixed costs include such items as rent, insurance, basic advertising, heat and light, property taxes, license fees, and so on.

Variable costs fluctuate according to the volume of your business. They are such costs as salespeople commissions, shipping and delivery expenses; some wages, and the cost of goods sold increase when you are busy and decrease when your business is slow.

Calculating Break-Even by Units sold:

Let BE = break-even point in units of products.

FC = total fixed costs.

SP = selling price of one unit.

VC = variable costs for one unit.

Your formula is

FC

BE =

^{SP - VC}

Break-even is an accounting tool that can take a great deal of the guess-work. By using a mathematical formula based on your fixed and variable costs you can determine how many units (hours, products) to sell in order to break-even-that is to recover your expenses.

Exercise 12. Your company starts producing cans for marinating. Read the text and solve the tasks:

Here are a few early figures for the can project. On production we've got fixed costs of $ lm dollars, more or less, before we even make anything. That's just the equipment! Now, somebody told me that they think that to make 200,000 units would cost us another $500,000 in labour and materials and other variable costs. Now, as things are at the minute we don't really know what the selling price will be. The market research boys are working on it; but my guess is that it should sell at about $10. About. I haven't worked out how many of the things we'd have to sell to make a profit, but it won't take a minute … You know, a project like …

1. If the can's selling price is $10, how many will have to be sold to make a profit?

2. If 1,000,000 cans are sold, what will be the minimum selling price?

Exercise 13. Read the balance sheet of Newsland company and compare balance figures in 1998 and 1999.

Compare the figures in 1998 and 1999 using the expressions: above/up and below/down. Express variance using by. e.g. The current assets in 1999 are above (up) the current assets in 1998 by 150 000.

Balance Sheet
ASSETS 1999 1998	LIABILITIES 1999 1998
Current Assets Cash $450 000 $300 000 Marketable securities at cost market value: 850 000 460 000 Accounts receivable Less: allowance for bad debt: 2 000 000 1 900 000 Inventories 2 700 0003 000 000 Total current assets $6 000 000 5 660 000 Fixed assets (property, plant and equipment) Land $450 000 $450 000 Building $3 800 000 3 600 000 Machinery 950 000 850 000 Office equipment 100 000 95 000 $5 300 000 $4 995 000 Less: accumulated depreciation 1 800 0001 500 000 Net fixed assets $3 500 000 $3 495 000 Prepayments and deferred charges 100 000 90 000 Intangibles (goodwill, patent, 100 000 100 000 trademarks) Total assets $9 700 000 $9 345 000	Current liabilities Accounts payable $1 000 000 940 000 Notes payable 850 000 1 000 000 Accrued expenses payable 330 000 300 000 Federal income tax payable 320 000290 000 Total current liabilities $2 500 000 $2 530 000 Long-term liabilities First mortgage bonds; 5% interest, due 1985 2 700 0002 700 000 Total liabilities $5 200 000 $5 230 000 STOCKHOLDERS' EQUITY Capital stock Preferred stock, 5% cumulative, $100 par value each; authorized, and outstanding 6 000 shares 600 000 600 000 Common stock, $5 par value each; authorized, issued and outstanding 300 000 shares 1 500 000 1 500 000 Capital surplus 700 000 700 000 Accumulated retained earnings 1 700 0001 315 000 Total stockholders' equity $4 500 000 $4 115 000 Total liabilities and stockholders' equity $9 700 000 $9 345 000

Exercise 14. Imagine that your company needs financing. Prepare your business plan, using the questions:

1. How will this finance be obtained?

a) debt-from whom and under what condition?

b) equity-from whom and what percentage of total equity?

c) combination of debt and equity

d) sale of assets-what assets and their expected value?

e) from existing sales revenue.

2. What institution have or will be approached for finance?

3. Why have these institutions been considered?

4. What are the terms of this financing?

5. What effect will it have upon firm's cash flow?

6. What collateral will be offered to support any loans?

7. Are these financial plans is accordance with the company's stated objectives?

8. Will these financial plans provide the resources needed by your firm?

Keys

Exercise 3.

– al: critical, financial, industrial, international, national;

– tion: allocation, contribution, disinflation, inflation, maximization, operation, production;

– ment: environment, management, statement, unemployment.

Exercise 9.

1.000.000

a) 133.334; BE= =133.334;

10 - 2,5

F - 1.000.000

b) $ 3,5; 1.000.000 = .

^{X - 2,5}

1.000.000 x - 2.500.000 = 1.000.000.

1.000.000 x = 1.000.000 + 2.500.000.

1.000.000 x = 3.500.000.

x = 3.5.

4. HUMAN RESOURCE MANAGEMENT

Exercise 1. Expand on the statement:

1. The best time to start thinking about your retirement is before the boss does (Anonymous).

2. When you hire people that are smarter then you are, you prove that you are smarter than they are (Anonymous).

3. Pride goes before a fall (Proverb).

Exercise 2. Look through the text, find the nouns with the suffixes – tion, or –sion. Try to guess the meaning of the words; if you can’t, consult the dictionary. Think of your own sentences with the given words.

Exercise 3. Find in the text the derivations of the roots “manage”, “employ”, translate the sentences with these words into Russian.

Exercise 4. Think of the synonyms for the following words:

1)to hire; 2) to achieve; 3) to specify; 4) staff; 5) supervision; 6) business;

7) job.

Exercise 5. Look through the text and divide it into logical parts. Think of the title for each part.

Exercise 6. Read the text and find out:

1. What is human resource management?

2. What are the main areas of the human resource management?

3. What does staffing involve?

4. What do you conduct to identify what you need in staff?

5. Where and how can you find an employee?

6. Why is training and development important?

7. What are the main principles of supervision?

8. What are the main motivators?

Human resource management

Human resource management is a function performed in organizations which facilitates the most effective use of employees to achieve an organization’s goals.

Human resource management issues in small businesses are usually not very complex, but very important. You may be able to hide a poor personnel decision in a large company. But it is almost impossible to hide it in a small business. Managing people is not an easy task.

The main areas of human resource management for the manager are staffing (recruitment), training and development, supervision and motivation.

Staffing involves such things as:

– know how many people you will need with what skills and attributes;

– know how to attract staff to your business;

– know where suitable applicants can be found;

– know what things to ask about when interviewing prospective staff.

In order to identify what you need in staff you are to conduct “job analysis” – an assessment of the personal requirements for the job for which you are going to hire someone. These requirements (or “job specifications”) could be specified in terms of qualifications, general ability, specific aptitudes, interests and disposition.

In order to attract applicants you, as employer, can advertise in the newspaper or magazine, on TV or radio, get information from the State Employment Service, or private agencies, or get referrals from existing staff members.

There are four main factors which most people look for in a job, they are:

– convenience;

– money;

– attractiveness of the work;

– environment.

At the interview you are to find out if the applicant possesses the qualities required for this job.

Training and development involves giving staff the skills and knowledge they need to do their work effectively.

There are three things you should know:

– how to identify a training need;

– how to conduct learning;

– what to do after training.

Supervision. The three principles of “firm, fair and friendly” provide a useful way to approach staff supervision. People expect managers to give clear directions to what is required in the job. They expect to be rewarded when they have done a good job. At first, close supervision is required. When the personnel becomes more experienced, you may allow it to use their initiative. When giving negative feedback try to be descriptive rather than evaluative.

Motivation. There can be different motivators, such as interests and development, monetary rewards, sociability, convenience. Money can be a powerful motivator, but it is often not as powerful as people think.

Exercise 7. Give a presentation of your work as a HR manager.

Exercise 8. Here are some requirements for rewarding and satisfying job. Classify each of the elements of the ideal job under the following four headings:

“ESSENTIAL” “UNIMPORTANT” “DESIRABLE” “UNDESIRABLE”

Exercise 9. As a manager you must use the incentives to encourage the desired behaviour from your team members who are looking to satisfy their own needs. Think of the list of “incentives” and “behavior”.

INCENTIVES BEHAVIOUR NEEDS

3. · 3. ·

4. · 4. ·

5. · 5. · 1.· to buy basics (car, TV)

2.· to stop worrying about job security

3.· to keep up with the Jones

4.· to build a reputation

(to shine among peers)

5.· to grow and fulfill one’s

potential

Exercise 10. Nowadays many companies cut their workforce, so career experts developed the strategies for holding on to job. Read the text and discuss the following questions:

1. Are the strategies given in the article useful for places, where you have worked?

1. Which of the strategies seems most important? Which seems least important?

2. What other strategies can you think of for keeping a job?

Strategies for Keeping Your Job

– Make sure everyone knows you. Being a good worker is sometimes less important than making sure that people know you’re a good worker. Volunteer for new responsibilities, push your ideas, and generally make yourself visible.

– Learn everything that could help you do your job better. If the company buys new computers, learn how to use them. If learning more about marketing could help you, take a short course in marketing.

– Make sure you know everything about the company. And use this knowledge. If you find out that sales is becoming the most important department, try making a move to sales.

– Be positive. People who find things to complain about are a lot less popular than people who find things to praise.

– Improve your speaking and writing skills. Having good ideas isn’t enough. You need to be able to communicate your ideas.

– Impress your boss. You can often impress a boss by arriving early and working late and by dressing in a businesslike way even if others dress casually.

In the end, it all comes down to one basic strategy. Make yourself so valuable that the company won’t want to lose you.

Exercise 11. Read the manager’s account of the working day. Why is he studying English? What methods does he use to improve his English?

My name is Akira Mishima. I am a Human Resource Manager and I work for a big company in Japan. Our company is a multinational one and we have many subsidiaries in different countries of the world. We work together with people of different nations and nationalities, so I have to speak English in order to communicate with them. I study English in my company. Although I am a busy manager, I try to squeeze English lessons in my busy schedule. We have classes twice a week in the evening. After classes I get home later than usual. But as a rule I look through English newspapers, such as Financial Times and Independent. If I am not tired, I watch English films or listen to English radio. I have even hired a private tutor and I speak English with him every Saturday.

Next September I am going to participate in the conference on the problems of the Human Resources management and I hope to make a report about my work.

Exercise 12. Some interviewers give candidates a hard time by asking them difficult questions – like the 10 questions below. Can you think of four more questions you might be asked at an interview? Add them to the list.

1. Tell me about yourself.

2. What do you think are your strengths and weaknesses?

3. We have a lot of applicants for the job, why should we appoint you?

4. Which is more important to you: status or money?

5. Why do you want to leave your present job?

6. What are you most proud of having done recently?

7. What is your best quality?

8. Don’t you think you’re a little young/old for this job?

9. What are your long-range goals?

10. What excites you about the job you are doing now?

Keys:

Exercise 2. Function, decision, organization, supervision, specification, qualification, disposition, information, directions.

Exercise 3. 1) management; manager; managing;

2) employee; employer, employment.

Exercise 4. 1) to employ; 2) to reach; 3) to define, to establish; 4) personnel, workforce; 5) control; 6) a company, a firm, an enterprise; 7) work.

Exercise 5. Incentives Behavior

3) promotion; 3) be punctual;

4) special projects; 4) do a little extra;

5) fear. 5) agree with the boss.

Date: 2015-01-02; view: 884