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A course for Business Studies and Economics students Third Edition Student's Book Ian MacKenzie CAMBRIDGE UNIVERSITY PRESSCAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madri

English for

Business Studies

A course for Business Studies

and Economics students

Third dition

Student's Book Ian MacKenzie

English for

Business Studies

Appendix

A course for Business Studies

and Economics students

Third Edition

Student's Book Ian MacKenzie

CAMBRIDGE

UNIVERSITY PRESSCAMBRIDGE UNIVERSITY PRESS

Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore,

Paulo, Delhi , Dubai, Tokyo

Cambridge University Press

The Edinburgh Building, Cambridge CB2 8RU, UK

www.cambridge.org

Information on this title: www.cambridge.org/9780521743419

C) Cambridge University Press 2010

This publication is in copyright Subject to statutory exception and

to the provisions of relevant collective licensing agreements, no

reproduction of any part may take place without the written

permission of Cambridge University Press

Appendix

First published 1997

Second Edition 2002

Third Edition 2010

Printed in the United Kingdom at the University Press, Cambridge A

catalogue recordfor this publication is availablefrom the British Library

ISBN 978-0-521-74341-9 Student's Book

ISBN 978-0-521-74342-6 Teacher's Book

ISBN 978-0-521-74343-3 Audio CD Set

Cambridge University Press has no responsibility for the persistence or

accuracy of URLs for external or third-party internet websites referred to in

this publication, and does not guarantee that any content on such websites is,

or will remain, accurate or appropriate Information regarding prices, travel

timetables and other factual information given in this work is correct at the

time of first printing but Cambridge University Press does not guarantee the

accuracy of such information thereafter

2

Thanks

Although only one name appears on the cover of this

book, I need to thank a great many people for their help

and hard work, beginning with Cambridge University Press

commissioning editor Chris Capper

Stephanie Ashford, Helen Bicknell, Anna Glinska, Joy Godwin,

Graham Jones and Dominique Macabies gave helpful feedback on the

previous edition The outline of this edition was worked out with

Chris Capper, Will Capel and Chris Willis

Will Capel was the development editor, while Chris Willis also

made suggestions for the first half of the book and Joy Godwin

for the second Alison Silver also provided ideas throughout, and

expertly and good-humouredly prepared the manuscripts for

production Martin Crowdy's expertise was tapped for the units on

accounting and finance All of the editors will find some of

their ideas in the book—though I probably scoffed at them at

Appendix

first before managing to convince myself they'd been my ideas all

along!

Will Capel set up most of the UK interviews, and Pete Kyle

expertly recorded them, with an extraordinarily large microphone

on the end of a pole One other recording was produced by James

Richardson Pete Kyle also produced and edited the CDs My thanks

go to all the interviewees, who graciously gave us their time and

shared their expertise with us: John Antonakis, Olga Babakina,

Richard Barker, Martin Beniston, Charles Cotton, Carlo de

Stefanis Denis Frucot, Janine George, Melissa Glass, Alan

Goodfellow, Anna-Kim Hyun-Seung, Lakshmi

Jaya, Michael Kitson, Teresa La Thangue, Alison Maitland,

Tony Ramos, Chris Smart, Krishna Srinivasan, Saktiandi

Supaat and Rory Taylor Thanks also go to the writers whose

texts I have used, and the cartoonists whose work (mostly

from The New Yorker) brightens up the pages

Thanks are also due to Chris Doggett for dealing with

permissions, Hilary Luckcock for finding the photographs,

Linda Matthews at Cambridge University Press for arranging

the production schedule, Wild Apple Design who can and do

turn sows' ears into silk purses (as the saying doesn't

go), and Kevin Doherty for porof-raeding Prospective

thanks go out to all of Cambridge University Press's sales

and marketing people

I've dedicated previous books to my children, but this time I

have to revert to the equally traditional apology-to-partner

paragraph: sorry, Kirsten, for the surliness that went with many

months of writing a book while also working full-time and taking

on too many other commitments (Oddly, she doesn't believe my

assurances that this will never happen again!)

Introduction to the learner 6

Map of the book 7

Management

Economics

1 Management 10 22 Government and taxation 109

2 Work and motivation 15 23 The business cycle 1 14

3 Company structure 21 24 Corporate social

responsibility 119

4 Managing across cultures 26 25 Efficiency and

5 Recruitment 30 26 Exchange rates 128

6 Women in business 38 27 International trade 132

Production

28 Economics and ecology 136

7 The different sectors of the

9 Logistics 51 Appendix 1: How to give

Introduction to the learner

English for Business Studies is a reading, listening, speaking

and writing course for learners with at least an

upper-intermediate level of English (Common European Framework for

Languages level B2) who need to understand and express the key

concepts of business and economics It covers the most important

areas of management, production, marketing, finance and

macroeconomics

Appendix

This course aims to:

present you with the language and concepts ofbusiness and economics found in books journals,newspapers and magazines, and on websites develop your comprehension of business and economics texts

develop your listening skills in the fields of business and

economics provide you with opportunities to express

business concepts both verbally and in writing, by

reformulating them in your own words while summarizing,

analysing, criticizing and discussing ideas

Most of the units contain four components

1 An informative reading text giving an overview of a

particular topic, introducing key concepts, and

including a lot of relevant technical vocabulary, plus

a variety of comprehension and vocabulary exercises and

discussion activities Some of the texts come from

newspapers and books about business or economics

2 Listening activities, mostly based on interviews with

business people, economists and other experts The

listening material includes British, American,

Australian and South African voices, but also speakers

from several European and Asian countries Listening to

non-native speakers of English is important as much of

the English you will hear in your professional life

will be spoken by people who don't have English as

their first language

3 Speaking activities including discussions, case studies, role

plays and presentations 4 Writing activities including

summaries, emails, memos and reports

If you are using this book in a class with a teacher, it will

give you lots of opportunities to discuss ideas and issues with

other learners (in pairs or small groups), and to develop and

defend your own point of view

If you are using this course on your own, you will still be able

to do the reading and listening exercises You will find the

answers to the exercises in the English for Business Studies

Teacher's Book

I hope you enjoy using this book

Appendix

6 Introduction to the learner

Map of the book

Reading Listening Speaking Writing

1 Management What is

management? MBA

students:

What makes agood

manager?

Case study.

Selecting a Chief

Operating Officer

'motivators'

MBA students:

Managers and motivation

Case study: Acar

Notes for apresentation

4 Managing

across

cultures

Managing acrosscultures MBA students:Managers,

authority, andcultural diversity

Role play:

Welcoming American colleagues

Autobiographical text

5 Recruitmen

t Filling a vacancy; Job

applications

JohnAntonakis(management

professor): Jobinterviews

Role play: A job interview Curriculumvitae or

resume

6 Women in

business

You'refired! (TheGuardian)

AlisonMaitland(writer andjournalist):

Women inbusiness — astrategicissue

Role play: Do

we need more women

managers?

Memo or email

(David Lodge:

Nice Work);

Manufacturing and services

The business news

(radio)

Discussion:

Your place inthe economy

Business news item

Appendix

8 Production Capacity and

inventory;

'The DellTheory of ConflictPrevention' (Thomas

Friedman: The World

Is Flat)

AlanGoodfellow(IT

director):

Purchasingand low-costmanufacturing

Role play:

Choosing suppliers

Email

9 Logistics Pull and

pushstrategies;

Supplychaining (ThomasFriedman: TheWorld IsFlat); Supplychain workflow

AlanGoodfellow:

Inventory,Kanban andMRP;

Leica'ssupplychain

Case study:

Risk analysis Summary; report

Map of the book 7

Unit Reading Listening Speaking Writing

1

0

Quality Total Quality

Management Denis Frucot(hotel

manager):

Customer careand quality

in a hotel

Role play: Ahotel chain

Casestudy:

Researchin

productconcept

everything

(Regis McKenna:

Harvard BusinessReview)

Melissa Glass:

Promoting a juice bar

Casestudy:

commercial

Summaries;

radio commercial

1

4

Banking Banks and

financial institutions;

The subprime crisis and thecredit crunch

Tony Ramos (HSBC):

Commercial banking;

Anna-Kim HyunSeung

Role play:

Microfinance Minutes of

a meeting

Appendix

(expert on business ethics):

Role play:

Investing instart-ups

Independent)

Teresa LaThangue(FinancialServicesAuthority):

Bonds andsubprimemortgages

Case study:

Investing in funds

Cityboy)

A financialnews report(radio)

Role play:

Investing aclient'smoney

Hedge fundsand

structuredproducts

Role play:

Financial instruments

Training memo

RichardBarker(seniorlecturer inaccounting):

Valuingassets

Role play:

Presenting

a company'sresults

Appendix

Companiesand

clusters

21 Takeovers Takeovers,

mergers and buyouts

Rory Taylor(CompetitionCommission):

Market investigations

22 Government

and

taxation

The role ofgovernment(Milton andRose

Friedman:

Free to Choose)

MichaelKitson(seniorlecturer ininternational

macroeconomics):

Governmentintervention

businesscycle? •Keynesianis

monetarism

MichaelKitson:

Consumptionand thebusinesscycle;

Keynesianism

Anna-Kim HyunSeung:

Socially responsible investment;

Stakeholder groups

25 Efficiencyand

employment

Reorganizingthe postalservice

Anna-KimHyunSeung:Efficiency,the numberof

employees,training andproductivity

26 Exchange rates Exchange rates MichaelKitson:

Currencyflows andthe TobinTax;

DevelopingAfrica

27 International trade Educationand

protection(Ha-JoonChang,economist)

MichaelKitson: Freetrade andexceptions

28 Economics and

ecology

Theeconomics

of climatechange

(ChristianGollier,economist)

MartinBeniston(professor ofclimate

science):ClimatepolicyAppendix 2: Writing emails, lettersand reports 142

156181

11

?

•Domanagershaveagoodreputation

?

"Hey, this is brilliant! Where do you get my

ideas?"

•Whichofthefivefamousmanagers

13

AkioMoritaco-foundedacompanyinTo

15

Walkman

and

the

videocassette

recorder

S

onyacquiredmusicandfilmcompanies,anddevelopedvi

games

17

firsttheco-founderand

later

t

heCEOofApple

He

wasfiredfromhis

owncomp

Applein1997,

andhel

19

develop

theiPodandtheiPhone

1

In 1998, Meg Whitman joined a start-up

company called eBay in Silicon Valley as

President and CEO She resigned ten years

later, when it was a hugely successful

business, planning to run for Governor of

California

Carlos Ghosn, born in Brazil,

but a French and Lebanese

citizen, became the CEO of

the Nissan car company in

2001 In 2005, he also

became CEO of Renault At

Nissan, he converted huge

debts into huge profits

Unit 21

(from Russia)

Discussion: What makes a good manager?

What do you think are the three most important

characteristics of a good manager? Are there any

qualities or characteristics you would add to the

ones mentioned by the MBA students?

Unit 22

Reading: What is management?

Read the text summarizing the different functions of management Which of the qualities mentioned in the Listening exercise do you think are particularly

necessary for the five tasks described by

do managers do? One known classification of the tasks of a manager comes from Peter Drucker.

well-Drucker was an American business professor and consultant who is often called things like 'The

measuring performance, and

their organization can achieve or accomplish them This involves developing

allocating resources of people and money • Secondly, managers organize They analyse and classify the activities of the

relations among them They divide the work into manageable activities and then into individual tasks They select people to perform these tasks.

Thirdly, managers practise the social skills of motivation and communication They also have to communicate objectives to the people responsible for attaining them They have to make the people

Writing

who are responsible for performing individual tasks form teams They make decisions about pay and promotion As well as organizing and supervising the work of their

subordinates, they have to work with people in other areas and functions.

Fourthly, managers have to measure the performance of their staff,

to see whether the objectives or targets set for the organization

as a whole and for each

Lastly, managers develop people — both their subordinates and themselves.

A company's top managers also have to consider the future, and modify or change the organization's obiectives when necessary, and introduce the innovations that will allow the business to continue Top managers also have to manage a business's relations with customers,

public authorities, and so

on, as well as deal with any crisis that arises.

Although the tasks of a manager can be analysed and classified in this fashion, management is not entirely

management skills that have

to be learnt, hut management

is also a human skill Some people are good at it, and others are not Some people will be unable to put management techniques into practice Others will have lots of technique, but few

managers are quite rare.

Write a brief summary of each of the five tasks listed by Drucker.

1

a plan for achieving success

a new idea or method

a person with a less important position in an organization

a person who provides expert advice to a company

a situation of danger or difficulty

something you plan to do or achieve

the section of the economy under government control

when someone is raised to a higher or more important position

2The text contains a number of common verb—noun combinations Use the word combinations in the box to complete the sentences below.

allocate resources deal with crises make decisions perform tasks measure

performance set objectives supervise subordinates

1 After an organization has it has to make sure

that it achieves them

2 Managers have to find the best way to all

the human, physical and capital available

to them

3 Some people better on their own while others work

better in teams

4 Managers the work of their and try

to develop their abilities

5 Managers the of their staff to

see whether they are reaching their targets

6 Top managers have to be prepared to if they

occur and then have to quick

Case study: Selecting a Chief Operating Officer

Three companies are looking for a senior manager — a

Chief Operating Officer who will be responsible for

Unit 25

managing the company's day-to-day operations, and making

sure that all operations are efficient and effective.

Company C is a private

television channel whose objective is tobroadcast programmes thatget as big an audience as possible, in order to maximize advertising revenue

Unit 26

Which of the following candidates might be the most

suitable for the positions on page 13? Here are

some extracts from their letters.

Candidate I My skills involve helping businesses

achieve their objectives Throughout my career I have ensured that my subordinates successfully executed the strategies developed by senior management, delivered results and maximized revenue.

Candidate 2

I see my main skills as being able to communicatewith and motivate people, to help them develop andaccomplish their objectives, while also workingeffectively in teams

Candidate 3

At this stage in my career, I see myself in a challenging new position that involves setting objectives and deciding how the organization can achieve them, I would then concentrate on measuring the performance of the staff.

Candidate 4 My career demonstrates an ability to analyse

problems, find solutions and implement them Ialso have strong communication skills andexperience in explaining difficult decisions toemployees, investors, journalists, and so on

Writing

Imagine you work for a recruitment agency or a headhunting firm Write an email of 50—100 words

to your boss recommending your choice of candidates for the positions above and outlining the reasons.

I

Work and motivation

Q Discuss the importance of motivation

Q Compare and then summarize various theories of motivation O Consider the best way to

motivate people in specific situations

Lead-in

One of the most important responsibilities of a

manager is to motivate the people who report to

him/her But how? What kind of things motivate you?

Which of these motivators would be important for you

in your choice of a job? Classify them in order of

importance

good remuneration (salary,

commission, bonuses, perks) good

working relations with your line

manager and colleagues good working

conditions (a large, light, quiet

office; efficient secretaries)

job security the possibility of

promotion a challenging job

responsibility contact with

people a belief in what the organization does a job in which you can

make a difference don't offer bonuses, but the size of"your

"We desk will beadjusted quarterly opportunities to travel (business class!)

C) The NewYorker long holidays/vacations

What other important motivators would you add to this list?

Discussion: Attitudes to work

Which of the following statements do you agree with?

1 People dislike work and avoid it if they can

2 Work is necessary to people's psychological well-being

3 People avoid responsibility and would rather be told what to do

4 People are motivated mainly by money

5 Most people are far more creative than their employers realize

6 People are motivated by fear of losing their job

7 People want to be interested in their work and, given the right conditions, theywill enjoy it

8 Under the right conditions, most people will accept responsibility and will want

to realize their own potential

Aims

Reading: Theory X and Theory Y

The statements on the previous page can be separated into two groups reflecting two very different ways in which employers can treat their employees Douglas McGregor, an American expert on the psychology of work, summarized these two approaches and named them Theory X and Theory Y Read the text below and classify the statements according to which theory they support.

1 4 1 5 1 6 1 7

1 8

in The Human Side of Enterprise, Douglas

McGregor outlined two opposing theories of

work and motivation What he calls Theory X

is the rather pessimistic approach to workers

and working which assumes that people are

lazy and will avoid work and responsibility

if they can Consequently, workers have to he

closely supervised and controlled, and told

what to do They have to be both threatened,

far example with losing their job, and

rewarded with incentives, probably monetary

ones such as a pay rise or bonuses Theory X

assumes that most people are incapable of

taking responsibility for themselves and have

to be looked after It has traditionally been

applied, for example, by managers of factory

workers in large-scale manufacturing.

Theory on the contrary, assumes that most

people have a psychological need to work, and

given the right conditions — job security,

financial

rewards — they will be creative, ambitious

and self-motivated by the satisfaction of

doing a

good job Theory Y is probably more applicable to

skilled professionals and what Peter Drucker

called 'knowledge workers' — managers,

specialists, programmers, scientists, engineers —

than people in unskilled jobs.

McGregor's two theories are based on Abraham

Maslow's famous 'hierarchy of needs' Theory

X relates to the basic, 'lower order needs

at the bottom of the hierarchy, such as

financial security, while Theory Y relates

McGregor is widely considered to have laid the foundations for the modern people- centred view of management However, Maslow spent a year studying a Californian company that used Theory Y and concluded that there are many people who are not looking for responsibility and achievement at work There will always be people with little self-discipline, who need security and certainty and protection against the burden

of responsibility, so it is impossible to simply replace the 'authoritañan r Theory X with the 'progressive' Theory Y.

Selfactualizat ion needs Personal growth and fulfilment

Esteem needs

Achievement, status, recognition, reputation, etc.

Love and belonging needs Family, friendships, relationships,

work groups, etc.

30 Unit 2 Work and motivation

What would you do to try to motivate subordinates who did not want to take responsibilities at work, and who had uninteresting, repetitive jobs?

Reading: 'Satisfiers' and 'motivators'

Another well-known theorist of the psychology of work, Frederick Herzberg, has argued that good working conditions are not sufficient

to motivate people Read the text and find out why.

It is logical to suppose that things like

good labour relations, good working

conditions, job security, good wages, and

benefits such as sick pay, paid holidays and

a pension are incentives that motivate

workers But in The Motivation to Work,

Frederick Herzberg argued that such

conditions — or 'hygiene factors' — do not in

fact motivate workers They are merely

'satisfiers' or, more importantly,

'dissatisfiers' where they do not exist

Workers who have them take them for granted

As Herzberg put it, 'A reward once given

becomes a right! 'Motivators', on the

contrary, include things such as having a

challenging and interesting job, recognition

and responsibility, promotion, and so on

Unless people are motivated, and want to do a

good job, they will not perform well.

However, there are and always will be

plenty of boring, repetitive and mechanical

jobs, and lots

can managers motivate people in such jobs?

One solution is to give them some responsibilities, not as individuals but as part of a team For example, some

supermarkets combine office staff, the people who fill the shelves, and the people who work

on the checkout tills into a team and let them decide what product lines to stock, how

to display them, and so on Other employers encourage job rotation, as doing four different repetitive jobs a day is better than doing only one Many people now talk about the importance of a companys shared values or corporate culture, with which all the staff can identify: for example being the best hotel chain, or hamburger restaurant chain, or airline, or making the best, safest, most user-friendly, most ecological

or most reliable products in a particular field.

Unfortunately, not all the competing companies in an industry can seriously claim

Are these sentences true or false?

1 Herzberg argued that 'hygiene factors' motivate workers

2 Challenging jobs and responsibility are hygiene factors

3 Some unskilled jobs will always be boring and repetitive

4 Workers might be motivated by having responsibilities as part of a team

5 Job rotation can make a day's work more interesting

6 You can always motivate workers by telling them that they work for the bestcompany in the field

VocabularyFind the words in the text that mean the following.

1 interactions between employers and employees, or managers and workers

2 knowing that there is little risk of losing one's employment

3 money paid (per hour or day or week) to manual workers

4 advantages that come with a job, apart from pay

5 things that encourage people to do something

6 to be raised to a higher rank or better job

7 without any particular abilities acquired by training

8 regularly switching between different tasks

9 a company's shared attitudes, beliefs, practices and work relationships

1 According to Krishna, what is the disadvantage ofworking in auditing compared to banking?

Krishna Srinivasan

3 According to Carlo, what is the main reason why people leave their jobs?

4 According to Carlo, does a company need a set of

motivational incentives?

5 What does Carlo say a manager needs to do to engage his/her

team?

6 According to Saktiandi, do the staff have to do what the

organization wants, or vice versa?

7 What does Saktiandi say about the importance of influencing andconvincing people?

Discussion

Carlo de

Stefanis(from Italy)

• Would you stay in a job for the reason Krishna suggests?

• Would you leave (or have you left) a company for the

reason that Carlo says is the most common?

34 Unit 2 Work and motivation

• Would working for a manager who has influence within the organization motivate you?

Saktiandi Supaat

(from Singapore)

Management

Listening 2: Out-of-work activities

Listen to Janine George, another MBA student at

Cambridge, talking about motivation, and answer

these questions.

1 How long had some of Janine's operational team been working in their jobs?

2 What kind of company is Janine talking about?

3 How long are the working days?

4 How did she find the workers when she arrived at the company?

7 What examples does she give of out-of-work activities that

the company was able to draw on to motivate staff?

8 What was the lesson of this experience for Janine?

9 Janine talks about activities that are not 'related to the

bottom line' What does this mean?

10Janine says managers should 'think outside of the

box' What does she mean by this and why do you think

she apologizes for using this expression?

5What did she do to rectify the situation? Janine George

6 What did she find out at the meetings? (from South Africa)

"I'll start thinking outside the box when the box is empty.

© The New Yorker

Case study: A car manufacturer

The senior managers of a car manufacturer sense an increasing level of dissatisfaction among most of the different categories of

staff The company has the following groups of employees,

with different benefits:

• senior management (high salaries, free company cars,company restaurant, 25 days annual holiday) designers(high salaries, free company cars, company canteen, 20 daysholiday)

• production-line workers (fixed salary, company canteen, 20days holiday)

• secretarial and administrative staff (salary according toexperience, company canteen, 20 days holiday)

• sales representatives (low fixed salary pluscommission on sales, 20 days holiday)

• canteen and restaurant staff (20 days holiday, free meals

in canteen) cleaners (hourly wages, plus 8.33% extra asholiday pay, no other benefits)

The managers meet to consider ways of increasing staff motivation They have to decide whether any

of the following suggestions would be appropriate for different groups of employees:

• building sports facilities (e.g a gymnasium, tenniscourts)

36 Unit 2 Work and motivation

• establishing a profit-sharing programme

• giving longer paid holidays (such as an extra day forevery year worked over ten years)

• offering cars at discount prices

• offering career training

• offering early retirement

• paying a higher salary paying productivity bonuses

• reducing the working week (e.g to 35 hours)

• setting up a crèche for employees' pre-school-age children

• spending some money on decorating the organization'spremises (e.g with plants, pictures)

• subsidizing the staff canteen

In small groups, decide whether to implement any

of these suggestions.

Writing

Write an email of no more than 100 words to the CEO, outlining and justifying your choice of improved benefits.

Company structure

Q Consider the different ways of organizing work

Q Discuss potential conflicts between different departments in a company O

Compare the differences between large and small companies

Lead-in

• Which department— production, finance, accounting, marketing, sales,

human resources, etc — of an organization do you think is the most

interesting to work in?

• What reasons can you think of for why departments get into conflict

with each other?

• Is it better to have one immediate boss or to work for more

than one manager?

• Do you prefer to work alone or in a team?

• Is it more motivating to be responsible to someone for your

work, or responsible for people who report to you?

Internet and the 'wikinomics' principle (from wiki, the Hawaiian

for 'quick', and economics) This means collaborating with people

Wikinomicsthe The International Bestseller

Reading: Wikinomics and the future of

companies

Read the text below and answer this question.

How is the world of organized work changing?

Experts are forecasting that in the future companies will use the word

cooperate to improve an operation or solve a problem, and paying

them for their ideas This is an extension of the trend of

outsourcing: transferring some of the company's internal functions

or operations or jobs to outside suppliers, rather than performing

them 'in-house' In other words, companies will no longer need to

get all their knowledge from their own full-time employees.

Here are two examples from Don Tapscott and Anthony D Williams'

book Wikinomics: How Mass Collaboration Changes Everything:

Company structure Unit 3 38

Aims

Red Lake, a Canadian gold mine, wasn't

finding enough gold and was in danger of

closing down Then its chief executive heard

a talk about Linus Torvalds, the inventor of

Linux, the open-source computer operating

system He decided to put the company's

secret geological data on the

Internet, and offered prize money to experts outside the company who could suggest where undiscovered gold might lie People around the world recommended 110 targets, and 80% of them turned out to contain gold The companys value has risen from $ 100 m to $9 bn.

If Procter & Gamble is looking for a new

molecule to clean red wine off a shirt, it

can use its own scientists But there are 1.5

million other

scientists around the world The company can offer

a payment for a successful solution, and see if a scientist somewhere comes up with one.

• In what ways could your organization, company or business school use

the wikinomics principle?

• What do you think are the disadvantages of the wikinomics principle?

Company structure Unit 3 39

Before reading about traditional company organization, check your understanding of some basic terms by matching up the following words and definitions.

a system of authority with different levels, one above the other, e.g a series of management positions, whose

holders can make decisions, or give orders and instructions

2 a specific activity in a company, e.g production, marketing, finance

3 independent, able to take decisions without consulting someone atthe same level or higher in the chain of command

4 the power to give instructions to people at the level below in the chain ofcommand

5 to be responsible to someone and to take instructions from them 6

to give someone else responsibility for doing something instead ofyou

Reading: Company structure

Read the text below

The chain of command

Traditionally, organizations have had 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 This is sometimes called line

structure There is a clear chain of command running down

the pyramid All the people in the organization know what

decisions they are able to make, who their line manager (or

boss) is (to whom they report), and who their immediate

subordinates are (over whom they have line authority, and

can give instructions to).

Functional structure

40 Unit