Choosing an Overseas Market

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ОБСУЖДАЕМ УСЛОВИЯ

МЕЖДУНАРОДНОЙ ТОРГОВЛИ

Учебно-методическое пособие

по английскому языку

Для студентов специальности

Международная торговля

Москва 2005

Авторы:

доцент Дубова О.Б.

доцент Коробова Е.В.

доцент Фролова О.А.

Рецензенты: профессор Московского государственного областного университета, к.филол.н. Золотых В.Г.

д оц. Московского государственного университета экономики, статистики и информатики (МЭСИ), к.филол.н. Назарова Н.Б.

Российский торгово-экономический университет, 2005

Предисловие.

Данное учебное пособие предназначено для студентов второго курса факультета международной торговли. Оно также может быть использовано на других факультетах экономического профиля, где необходимо усовершенствовать навыки делового общения в области коммерческой коммуникации.

Целью пособия является приобретение навыков устной речи в сфере делового общения. Главное внимание уделяется коммерческой деятельности, основным операциям, связанным с заключением и исполнением договора купли-продажи, а также сотрудничества с зарубежными странами и позволяет приобрести соответствующий необходимый лексический минимум для осуществления деловой коммуникации.

Учебное пособие состоит из восьми глав и глоссария терминов и понятий. Главы посвящены основным внешнеторговым экспортным и импортным операциям и связанной с ними коммерческой деятельности. В них дается информация по видам платежей, условиям поставки, транспортировке товара, продаже товаров через посредников, страхованию и рекламации.

Диалоги представляют собой аутентичный материал по коммерческим переговорам и связаны тематически с текстами, которые дают дополнительную информацию по тем или иным коммерческим аспектам.

Основные виды предлагаемых упражнений:

ответить на вопросы по содержанию диалога и текста,

заполнить пропуски предлогами,

перефразировать предложения, используя активную лексику,

найти и исправить неверные утверждения,

перевести предложения с русского на английский язык,

обсудить проблемные ситуации,

выполнить ролевые задания.

Упражнения рассчитаны как на выполнение их в аудитории под руководством преподавателя, так и на самостоятельную работу студентов. Последовательность выполнения упражнений может быть изменена по усмотрению преподавателя.

CONTENTS

UNIT 1. CHOOSING AN OVERSEAS MARKET……………………………

UNIT 2. MEETING WITH A POTENTIAL CUSTOMER …………………

UNIT 3. CLINCHING A DEAL………………………………………………...

UNIT 4. EXPORT-IMPORT DOCUMENTATION…………………………..

UNIT 5. METHODS OF PAYMENT…………………………………………...

UNIT 6. INSURANCE…………………………………………………………...

UNIT 7. MARKETING………………………………………………………….

UNIT 8. AN AGENCY CONTRACT…………………………………………...

GLOSSARY………………………………………………………………………

Unit 1

Choosing an Overseas Market

PART 1

DIALOGUE 1

Gourmet Ltd. is a food manufacturing and marketing company. It is well known for its ranges of spices, herbs and sauces. Its Managing Director, Dennis, is talking to two other directors of the company, Nigel and Diana.

NIGEL While you were away in Manchester, Dennis, Diana and I had a few talks together. About the way things are going here. DENNIS Good. Tell me about it.

NIGEL OK then, it's about our business strategy. We think it's time to move into the export field. We should try to break into one of the European markets.

DIANA You see, Dennis, this company can only expand by selling abroad. It would be a big gamble. We've got no exporting experience, I know. But it would be worth making the effort.

DENNIS Mm... Could you spell out why we need to look for overseas markets, in your opinion?

NIGEL There's one very good reason. The home market's saturated. We've got to start selling abroad now.

DIANA That's it. We can't expand any more here in Britain. I mean, look at our market share. It's stuck at around two per cent. And we're fighting to keep that share.

DENNIS The market's certainly become very competitive, I agree.

NIGEL Yes. We're spending a fortune on marketing and sales promotion these days. Our turnover's still going up, but our costs are rising even faster. They've shot up recently.

DENNIS So, in your view, this is the right time to market our products overseas.

NIGEL Exactly.

DIANA Yes.

DENNIS I’m not against the idea, you know. We might be able to penetrate one of the European markets – France perhaps or West Germany.

DIANA Why do you pick on those countries, Dennis?

DENNIS Well, they’ve got a lot of potential, haven’t they? Don’t forget, the French and Germans use a lot of herbs and spices in their cooking. I reckon our products would go down well there.

NIGEL That’s interesting. We also thought of France and Germany, mainly because they’re members of the EEC.

DENNIS Yes, that could be useful. There’d be no restrictions on trading, no import duties or quotas.

NIGEL And both markets are close to us. There shouldn’t be any problem shipping goods or meeting delivery dates. Also…

DENNIS Listen, you two, I’ve got to rush off now. I promised to see Bill before he leaves for the trade fair. Let’s talk about exporting at our management meeting tomorrow, mm? I’ll put it on the agenda. Is that OK?

NIGEL Fine.

DIANA Right. Make sure it’s the first item on the agenda, or we may not get round to it.

Answer the questions:

1. What kind of company is Gourmet Ltd?

2. What can you say about their business strategy?

3. How can this company expand?

4. Why is it a big gamble to sell abroad?

5. Why do they need to look for overseas markets?

6. What do they spend a fortune on?

7. What markets are they going to penetrate?

8. Why do they pick on these countries?

9. Why have they made the decision?

10. When are they going to discuss this question?

PART 2

DIALOGUE 2

It's four weeks later. Dennis, Nigel and Diana have been looking into ways of exporting to Europe. They are holding a meeting with other managers to discuss the matter.

DENNIS Right, mm. Let's get started, shall we? At our last meeting we talked about exporting. If you remember we agreed that we should identify a market with export potential, then try to break into it. That's right, isn't it, Nigel?

NIGEL Yes. We also agreed not to spend too much money, at least not at this stage. We don't want to do a lot of market research, or carry out an expensive market survey.

DENNIS Quite right, Nigel. Now we've been collecting information in the last few days. Diana has talked to a marketing consultant, Peter Collins. Nigel has visited the British Overseas Trade Board. And I've sounded out a few of my contacts. OK, Diana, would you start the ball rolling, please?

DIANA Certainly. You all know Peter Collins, I'm sure. He writes for Marketing Magazine, and runs an export consultancy service. Peter was glad to help. He advised us to start exporting to West Germany. But on a small scale at first.

DENNIS Did he recommend any particular approach?

DIANA Yes. He was definite about the sales outlets we should use. In his opinion, the speciality food shops would be ideal for distributing our goods.

DENNIS Mm, that type of retail outlet is very common in Germany.

DIANA Peter thinks we could take a stand at the trade fair in Cologne. It would be a way to make our brands known in the trade. After that, we could push our products through the speciality stores.

DENNIS Interesting. Thanks very much Diana. Now, Nigel, what about you? How did you get on?

NIGEL I went to the British Overseas Trade Board. I must say, I learned a lot about our main product areas - spices and herbs.

DENNIS Did you speak to anyone in particular?

NIGEL A Miss Jenkins. She was a mine of information. Especially about regulations. It seems there are a lot of them. Regulations about labelling bottles and packets, about colours and ingredients...

DENNIS I see. They vary from country to country, I suppose.

NIGEL Yes. For example, in Germany, they’ll only accept sauces and relishes in certain sizes of jar. And they’re not the same sizes we use.

DENNIS Mm, that's bad news for us.

NIGEL Mm, very. It means that Peter Collins’ approach may not be suitable for us. Maybe we should try to find a trading partner in Germany.

DENNIS I don't follow you.

NIGEL I'm suggesting we might manufacture here in England, then supply our products in bulk to a German food company. The Germans could do the packing, filling and labelling of the goods.

DENNIS Ah, I see what you're getting at. It would be easier for us because it would be up to the Germans to sort out the regulations. Mm, we'll think about that. Now let me tell you what I've been up to. Last week I put in a call to an old friend of mine …

Answer the questions:

1. What have Dennis, Nigel and Diana been doing for four weeks?

2. What is the purpose of their management meeting?

3. Why don’t they want to do a lot of market research?

4. How have they been collecting information?

5. What do you know about Peter Collins?

6. What approach did he recommend?

7. What did Miss Jenkins tell Nigel about regulations?

8. Why isn't Peter Collins’ approach suitable for them?

9. What should they do?

10. Why would this approach be easier for them?

PART 1

DIALOGUE 1

Jack Evans is Sales Manager of Textafabrik, a firm which manufactures textile machinery. He is talking to an American businessman, Mr. Johnston, who is visiting the factory.

JOHNSTON It was kind of you to show me round your factory, Mr. Evans. I enjoyed talking to your Production Manager, and to the shop-floor workers.

EVANS Good. Glad it was useful. I hope you found the demonstrations interesting. We wanted to give you an idea of our product range, and to show you the models in operation.

JOHNSTON I’m pleased you did that. I must say, I was impressed by the speed and quietness of your machines.

EVANS Speed's very important these days. If you’re going to sell in overseas markets, you've got to offer a product with high performance. No one can match us on that — or on quality and price for that matter.

JOHNSTON Yes, it’s true, fast machines are important in our business. They give you an edge over the competition. Now, could you give me some information about your models? Those spool-winding and stitching machines interest me a lot.

EVANS Certainly.

JOHNSTON By the way, how fast was that high-speed stitcher — the last machine we saw?

EVANS That's our рх5 model. It's our latest product. We put it on the market about six months ago. It can stitch sixty metres of fabric per minute.

JOHNSTON No kidding!

EVANS Mm, it's fast all right. You know, the PX5 took a long time to develop. We ran up against a lot of technical problems, so there were several design modifications. We got it right in the end, though.

JOHNSTON I'll say! Can you give me details of these machines? As soon as possible.

EVANS Right. I'll give you our brochures for the stitching and winding machines, if you like. They give the specifications of the models. You'll also need our price lists. They've been revised recently.

JOHNSTON Tell me, are the prices quoted firm to the end of the year?

EVANS Yes, I guarantee that.

JOHNSTON OK, let me have all the sales literature, and any other publicity material. I like to keep that sort of thing on file in my office. You never know when it'll come in useful

EVANS I'll do that. I'd also like to see some of your sales catalogues, if I may. When we have a potential customer, we like to know a bit about his company, if possible.

JOHNSTON Right then, I’ll supply you with our sales documentation. And anything else you require. I hope we'll do a lot of business together in the future.

EVANS So do I. Maybe this could be the start of a long association between our firms.

Answer the questions:

1. Who is taking part in this conversation?

2. Who did Mr. Johnston talk to?

3. What did he see at the factory?

4. What was his impression?

5. What gives firms the edge over the competition?

6. How can you characterise PX5 model?

7. What documentation did Mr. Evans promise to give?

8. What can you say about their price lists?

9. Why was Mr. Evans interested in Mr. Johnston’s sales catalogues?

10. Do you think it could be the start of a long association between their firms?

PART 2

DIALOGUE 2

After lunch, Jack Evans, Sales Manager of Textafabrik, continues his discussion with his American visitor, Mr. Johnston.

evans When we set up this visit, Mr. Johnston, I forgot to ask you how you heard about us. Did you see our goods on display at the New York exhibition?

johnston No, it was nothing like that, actually. I saw one of your machines in action when I was on a business trip to Eastern Europe.

evans Really?

johnston Yes. I was visiting a factory in Bulgaria. They were using some of your stitching machines. The Director praised them to the skies. So, I asked him who the manufacturer was.

evans Ah, it was like that, was it? We do a lot of business in Eastern Europe. One of our sales techniques there is to get a machine installed in a factory, then invite other people to see it working.

johnston The machines I saw were operating very efficiently, even though they were over ten years old.

evans That's because we offer a good after -sales service. It's important to keep machines running once they've been installed.

johnston That's true.

evans We always promise to get spare parts to customers as fast as possible. Sometimes we move heaven and earth to do it.

johnston I like to hear that. So often suppliers(поставщик) just don’t want to know as soon as one of their machines breaks down.

evans It's not the way we run our business. When we sell a machine, we offer a complete package: a high-quality product, competitive price, two-year guarantee, reliable after-sales service... and, of course, a good service manual — one that the customer can understand easily.

johnston I'm impressed by your approach to business. You know, we might be able to do a deal while I’m here.

evans Ah, that sounds interesting.

johnston It's possible I’ll place an order for your PX5 model.

evans Good.

johnston If I did, could you despatch, say, four or five immediately.

evans Yes. We've got plenty in stock at the moment. No problem.

johnston I'd like to call my office first. I’ll talk to some of my colleagues. Sound them out a little. If they agree, we could discuss the deal tomorrow, perhaps.

evans That'd suit me fine. There's no rush.

johnston Great. Before I go back to my hotel, could I ask you for a small favour?

evans Go ahead.

johnston I was wondering, would it be possible to talk to your Design Manager, or someone from that department? I'm very interested in design. When I started out in this business... many years ago …

Answer the questions:

1. How did Mr. Johnston hear about Textafabrik?

2. What can you say about their sales techniques?

3. How were Textafabrik machines operating?

4. Why were they operating efficiently?

5. What do Textafabrik offer when they sell a machine?

6. Why was Mr. Johnston impressed?

7. What model was he going to place an order for?

8. How many machines did he need immediately?

9. Why was he going to call his office?

10. What favour did he ask Mr. Evans for?

Sales documentation

When you travel by train, you need a ticket as proof that you have paid. When you send a consignment of goods by rail or road you also need a receipt to prove the transport company has taken the goods. A consignment note is both a ticket and a receipt. A consignment note for goods sent by air is called an air consignment note or an air waybill. A consignment note for goods sent by sea is a Bill of Lading. A combined transport document is for goods sent by more than one means of transport.

When companies buy goods, they send an order to the suppliers. If the buyers are regular customers, the suppliers send the goods and then send an invoice. The buyers do not always pay the invoice immediately. Usually the suppliers send a statement at the end of the month which shows all the transactions between the suppliers and the buyers in that month. The buyers then pay the amount outstanding on the statement.

Sometimes when the suppliers receive an enquiry, they send a pro-forma invoice. This is a quotation which looks like the final invoice so the buyers know how much they have to pay. If the suppliers do not know the buyers, the buyers might pay in advance against the pro-forma when placing their order.

Answer the questions:

1.Which documents are requests for payment?

2.Which documents are receipts for goods?

3. What is a pro-forma invoice?

4.Household Designs in Manchester sent goods to a customer in Liverpool by trailer. This was the first time the customer had bought anything from Household Designs. Which documents were used?

5.Household Designs sent goods by air to a regular customer in France. Which documents were used?

ROLE PLAYS.

Make up dialogues using the expressions from the dialogues in Unit 2:

1.Mr.Johnston is discussing the results of his first visit to Textafabrik with his colleagues in the U.S.A.

2.Mr.Johnston is speaking to his colleagues and they make a decision about the deal.

3.Mr Johnston is visiting a factory in Bulgaria. They are using some machines produced by Textafabrik. Mr. Johnston is interested in the machines and gets some information about them and their producers.

4.A: You are showing your potential customer round your factory. You don’t want him/her to see some machines. Try to talk him out of visiting the shop and speaking to the shop-floor workers.

B: You are visiting a factory which produces machines you are interested in. Try to find as much information about them as possible, and see the machines in operation.

Problem-solving:

On a business trip to a Third World country you see an interesting and unusual product which you are sure could be successfully marketed in your own country at a price which would be both attractive to the consumer and profitable to you. When you visit the factory which makes this product you find that the working conditions of the workforce are bad and the pay rates are low. Should you make a contract with them?

Answer the questions on the topic:

1.Prove that it is important to meet with a potential customer.

2.How can sellers attract their potential customers?

3.Why do companies produce sales literature and publicity material?

4.What sales techniques do you know?

5.Speak on the topic: Meeting with a potential customer.

Unit 3

Clinching a Deal

PART 1

DIALOGUE 1

Mr. Johnston, an American businessman, is in England. He is visiting Textafabrik, a firm which manufactures textile machinery. In this conversation he negotiates a deal with Jack Evans, Textafabrik's Sales Manager.

johnston About those stitching machines, Mr. Evans. I called my colleagues in New York last night. They’ve given me the go-ahead to purchase. We want to place a firm order for the РХ5.

EVANS Excellent. How many do you want to buy?

johnston We'd like five for immediate delivery, and thirty in two months’ time. Bу the end of June, that is.

EVANS I see! That's a very substantial order. Of course, I'm delighted.

JOHNSTON Perhaps I'd better explain. I represent a very large textile group. We've got plants in most of the major cities on the East coast. So, our buying requirements are considerable.

EVANS I’m sorry, I wasn’t aware of that. I mean, I didn’t realise you were that big.

JOHNSTON My fault. I should have made it clear. We need the stitching machines fairly urgently. Recently our factories have been working below capacity, but last week we got some big orders from a clothing store chain.

EVANS Ah, so you'll be going flat out to fulfil them.

JOHNSTON Exactly.

EVANS Well, you know the price of the machines — four thousand five hundred pounds (£ 4, 500). That's without freight and insurance. When we invoice customers, we usually quote prices f.o.b. Southampton. But perhaps you'd prefer the goods to go by air?

johnston No, air freight's too expensive. They can go by sea. But if you don’t mind, I’d like you to quote CIF New York. We prefer it that way.

evans All right, we can do that. You want us to quote for thirty-five PX5s, CIF New York, goods to be shipped by sea.

johnston Correct. There's one other thing. As this is a bulk order, I was wondering …

evans Yes?

johnston What sort of discount could you offer me? Would five percent be reasonable?

evans Uh, I don't think we could go as high as that. As a special concession... since you're a new customer, I could possibly give you two per cent (2%) off list price.

johnston Two per cent (2%)? That's not much. This order will be worth over a hundred and fifty thousand pounds (£ 150.000) to your company.

evans Yes, I realise that.

johnston And don't forget, we may place orders for some of your other machines...

evans I tell you what. I don't want to haggle with you about this. How about two-and-half per cent (2, 5 %)?

johnston (hesitates) Er... Oh, I suppose that's fair enough. OK then, agreed.

evans Good. Let's recap, shall we? We're agreed on price, delivery dates - five immediately, thirty by the end of June — and on the discount, two-and a half per cent (2, 5 %). What else is there to discuss?

Answer the questions:

1. Why did Mr. Johnston call his colleagues?

2. What did they tell him?

3. How many machines did he want to buy?

4. When should these machines be delivered?

5. Why was his order so substantial?

6. Why did he need these machines urgently?

7. What was the price for the machines?

8. Was the price quoted FOB or CIF?

9. What discount did Mr. Johnston ask for? Did they haggle for a long time?

10. What was the final discount?

11. Why was Mr. Johnston given a special concession?

12. What business matters were discussed in the dialogue?

PART 2

DIALOGUE 2

Mr. Evans and Mr. Johnston are about to conclude their deal. They discuss the method of payment for the stitching machines.

EVANS There is one other thing we've got to decide. That's how you're going to pay us.

JOHNSTON Right. Well, I'm quite happy to leave that up to you. If you want to specify a particular method, it's fine with me.

EVANS I’d like to do it this way, if you agree. First, let's take the five machines for immediate delivery. We'd appreciate it if you could pay cash for those.

johnston Certainly. That means I'll have to transfer the money from my bank in New York to your bank here. I could arrange that fairly easily.

evans Good. Now about the other thirty machines. We'd like you to pay us by Irrevocable Letter of Credit. How do you feel about that?

JOHNSTON That’d suit me fine. I was expecting you to suggest payment by L/C, or something like that.

evans Well, when we deal with a new customer, we always insist on payment by Irrevocable Letter of Credit. That way we make sure we get paid.

JOHNSTON Very sensible. You can't be too careful these days - especially with payments. But I hope that when we get to know each other better …

evans Oh, I can assure you, as soon as we're trading regularly together, we'll offer open account terms.

johnston I look forward to that time. We're going to be ordering a lot of equipment from you, so we want to establish good business relations.

EVANS I agree with you. There is one thing you could do to help in that respect.

johnston Oh, what's that?

evans Well, as you say, we know very little about your organisation. Would it be possible to provide us with some references?

johnston With pleasure. I could give you a bank reference, one from the local business bureau and some trade references.

evans That would be fine. I hope you don't mind my asking.

johnston Not at all. I quite understand. You've got to check us out, make sure we're creditworthy. I'd do the same if I were in your shoes.

evans OK. We seem to be agreed on everything now. You'll pay cash for five machines and settle by Letter of Credit for the other thirty. And you'll provide us with the references.

johnston Great! That wraps things up nicely, I'd say.

evans I think so. We've covered everything now. Look. I’d like to celebrate this deal with you. Would you be free to have dinner with me tonight?

johnston That's very kind of you. Let me see... I don't think I have anything lined up for tonight... Yes, I'd love to.

Answer the questions:

1. What was the last question Mr. Evans and Mr. Johnston discussed?

2. Who offered the method of payment?

3. How should Mr. Johnston pay for the five machines for immediate delivery? What does it mean?

4. What method of payment was offered for the other thirty machines?

5. Why is this method used when they deal with a new customer?

6. What method would they use in the future?

7. What references did Mr. Evans ask Mr. Johnston to provide him with?

8. Why did he need these references?

9. What was the end of their conversation?

ROLE PLAYS

1.Your partner is going to sell his company's product abroad, but he doesn’t know much about the terms of delivery and methods of payment used in foreign trade. Give him the information he needs and help him to choose the most suitable ones.

2. Textafabrik and the large textile group, represented by Mr. Johnston have been trading successfully for some time. Now they negotiate possible changes in the terms of delivery and methods of payment.

Problem-solving

A supplier based in a foreign country offers you goods with a well-known and prestigious logo on them at a surprisingly low price. At that price you suspect that they must be copies but they would certainly deceive the customer. Would you buy them and market them? Is there anything else you would do?

Answer the questions on the topic:

1. What questions are usually discussed before clinching a deal?

2. What quotation terms do you know? Characterise each of them and explain their pluses and minuses.

3. What methods of payment do you know? Speak about each one.

4. What method is used when:

- you don't know the customer well and the order is rather substantial?

- you don't know the client well but the order is rather urgent and not very large?

- you have been trading for a long time?

5. Which is the quickest/slowest/most reliable/least reliable method?

6. What is the difference between L/C and IL/C?

7. Why is it necessary to know a lot about a potential customer?

Unit 4

Export-Import Documentation

PART 1

DIALOGUE 1

Mr Driscoll, who works for the Freight Forwarding Agency, calls the General Manager of an explosives company. The company specialises in making dynamite for the mining industry.

brockett Hello, Brockett here.

driscoll Hello, Mr Brockett, Driscoll here again.

BROCKETT What's the problem?

DRISCOLL It’s about that consignment of NG explosives for Australia. There's a lot of paperwork involved with the shipment. I want to make sure I’m putting down the correct information on the forms.

BROCKETT Only too glad to help. We've got to comply with all the regulations, else we'll all get in a muddle. What do you want to ask me?

driscoll It's this form I’m filling in for you, the one for dangerous

cargoes...

BROCKETT Oh, you mean, the application for Special Stowage Order.

driscoll That's the one. I want to check one or two details with you — I've got the form in front of me here.

brockett Fire away!

driscoll I'm looking at the section headed: Number and description of packages. Am I right in saying it's two hundred (200) crates of NG explosives? Gross weight... erm...

brockett Gross weight: a hundred and fifteen (115) tons. Net weight: a hundred (100) tons. F.o.b. value: one hundred thousand pounds (£ 100.000)

DRISCOLL Thanks. I'll note that down. You'll be using fibre-board cases, won't you? And they'll have strong wires round them for safety.

BROCKETT That's right. There'll be twenty cases per crate. Each case weighs twenty-five kilos.

DRISCOLL Uh-huh, I presume you'll be sending the goods by road to Tilbury Docks. They'll go to the container freight station. Right?

brockett Yes. The Transworld Shipping Line can take over from there.

DRISCOLL Let me make a note of that. Place of acceptance of cargo by Transworld... erm... container freight station, Tilbury. Transworld will pack the goods into the container and unpack at destination.

BROCKETT I also want Transworld to handle the documentation. They can prepare the Bills of Lading and Customs Entry Forms on our behalf.

DRISCOLL How about insurance?

BROCKETT They can arrange our insurance cover. But try to get a low premium for us, Mr Driscoll. Twist their arm a little, if you have to.

driscoll Don't worry. I'll beat them down if possible.

BRОСКEТT That's covered about everything, I think. Oh, by the way, remember that we want extra copies of the Bill of Lading.

DRISCOLL I've already noted that. Maybe I should remind you — when you receive the Shipping Application, make sure you sign the Declaration on the back.

BROCKETT I'll do that. I've got to state the consignment's safely packed, haven't I?

driscoll Yes. That's the main purpose of the Declaration. Now, I'll let you get back to your work.

BROCKETT Thanks. I'm really up to my eyes at the moment. Still call me if you need me.

Answer the questions:

1. Where does Mr. Driscoll work?

2. What does an explosives company specialise in?

3. Why is Mr. Driscoll calling Mr. Brockett?

4. Why should they comply with all the regulations?

5. What form is Mr. Driscoll filling in?

6. What section is he interested in?

7. What kind of cases will be used?

8. Where are they going to send the goods?

9. What is the task of Transworld?

10. Who will arrange the insurance?

11. What should Mr. Driscoll try to do?

12. Who should sign the Declaration? Where? Why?

PART 2

DIALOGUE 2

This conversation takes place in an Asian country. Winston Mohabir is an import merchant. He talks to the Office Manager of his firm Grace Patel.

winston I don't believe it! I just don't believe it! Oh sorry Grace, come in and sit down. GRACE Trouble? WINSTON You can say that again.

GRACE Hope it's not about those air-conditioning units.

winston That's just what it is about, I'm afraid. What on earth are we going to do now?

grace They're not still being held up at Customs, surely?

winston Yes. I've just had a call from our shipping agent. Customs have refused to release the goods yet again.

GRACE What are they playing at, these people? I thought we'd given them every document under the sun. Don't tell me…

WINSTON We've got to start from scratch again, Grace. The Import Licence for the air conditioners has expired.

GRACE Out of date? You must be joking!

WINSTON I wish I were. The agent says there's a new government regulation — it's just come into effect. Licences for that category of goods have to be renewed.

GRACE Huh, first I’ve heard of it.

WINSTON The agent didn't know about it either until this morning. He got a shock when he presented the documents to customs.

GRACE I'm not surprised. So now we've got to apply for a new licence. It could take weeks to come through unless...

WINSTON Could you speed things up for us, Grace?

GRACE I might be able to. I have a contact in the Department of Commerce. Maybe I could pull a few strings for you.

WINSTON Please do so. If you get that licence through fast, we shall have a chance of keeping that airport contract.

GRACE OK. I'll get on to it right away. (Moves towards door.)

WINSTON Hold on, Grace! There's another problem with those documents.

GRACE Oh, no!

WINSTON I'm afraid so. It’s about the Certificate of Value and Origin.

GRACE Oh, yes?

WINSTON It’s signed by our supplier in Chicago. But now it's got to be countersigned and stamped by a Chamber of Commerce or the Consulate. The supplier must have forgotten to arrange that.

GRACE That's annoying. I’ll have to telex Chicago and get them to send another certificate.

WINSTON All these documents! This must be the worst country in Asia for red tape. Sometimes I wonder why I bother to run a business here.

GRACE Ha! There must be easier ways of making money.

WINSTON True. Listen, Grace, while you're at it, you'd better check all the documents again.

GRACE The whole lot?

WINSTON Yes. The Customs Declaration Form, the Commercial Invoice — make sure there are six copies - the Consular Invoice and the Bill of Lading. Check the Insurance Certificate as well.

grace Phew! That'll keep me busy. Still, we don't want any more snags with the shipment, I suppose.

WINSTON No. We must have customs clearance as soon as possible.

Answer the questions:

1. Where does the conversation take place?

2. Who takes part in it?

3. What is the problem with the air-conditioning units?

4. Why have the Customs refused to release the goods?

5. What did the agent tell them?

6. How can Grace help them?

7. What is another problem with the documents?

8. Who should sign the Certificate of Value and Origin?

9. What documents do they need?

10. Why are all these documents necessary in foreign trade?

ROLE PLAYS

1. Your task is to transport some dangerous cargo from Lipetsk (the RF) to East London (South Africa). Speak on the phone with a representative of the Freight Forwarding Agency and discuss any problems you have with filling in the forms and other formalities.

2. You sell your product abroad, but you have some problems with the Customs. Discuss them with your colleague and find the way(s) out.

Problem-solving

Two years ago your company, which produces food products invested in new machinery. For health reasons, the product which was made on this machinery is now banned in your country. It is not yet banned in Third World countries.

Would you continue manufacturing this product and export it or would you write off this machinery? What might be the consequences of choosing either of these possibilities?

Answer the questions on the topic:

1.Name and characterise all the export-import documents.

2.What is the difference between two types of invoices: Commercial and Consular?

3.What are the duties of the Chamber of Commerce?

4.What does a freight forwarding agency do?

5.What can happen if one of the documents is not prepared or prepared wrongly?

Unit 5

Methods of Payment

PART 1

DIALOGUE 1

Ann and Derek work in the Export Department of a large company. They are discussing two methods of securing payment from overseas customers — Banker's Transfer and Letter of Credit.

ann Something's come up, Derek, I've got to go to Madrid tonight. I’ll probably be away for the rest of the week. derek That's rather sudden.

ann Mm. It's about that deal we're negotiating with Senor Gonzalez. Our Managing Director seems to think I should be over in Spain to keep an eye on things. So, you'll be in charge here for a while.

DEREK That's OK. I can cope.

ann I'm sure you can. While I’m away, I'd like you to look after one or two matters for me.

DEREK Sure.

ann Do you remember writing to Heinz Zimmermann a week or so ago?

derek Of course. It was about the kitchen units he ordered. We advised him of shipment and asked to be paid by Banker's Transfer.

ann Exactly. It was to be a standard Bank Transfer of three thousand two hundred pounds (£ 3.200). Well, as far as I know, the money hasn't been credited to our account yet.

DEREK Are you sure?

ann Pretty sure. The bank always notify us promptly when transfers are made. We haven't heard a word from them.

DEREK You want me to check it out with them, I suppose.

ANN Yes. Could you call the bank? See if the transfer has been carried out? If not, telex Zimmermann and find out what's going on.

DEREK OK. I'll sort it all out while you're away.

ANN There's something else I want you to look into, Derek. You recall making that deal with Francisco Lopez...

DEREK Lopez? Oh, the Brazilian importer. He bought some refrigerators and cookers from us. A big order. Thirty thousand pounds (£ 30.000) worth, wasn't it?

ANN Uh-huh. He agreed to pay by Irrevocable Letter of Credit. His bank got in touch with their correspondent bank over here - that's Lloyds International — and the credit was established in our name. Lloyds advised me of this two weeks ago.

DEREK What's the problem then?

ANN The L/C is only valid until April the eighth (April 8th).

DEREK Goodness! We'll haveto get moving.

ANN Mm.

DEREK It expires in three days' time.

ANN Yes, if we want to get our money, we've got to present all the documents to Lloyds right away.

DEREK I'll get on to it immediately. Let's see, I’ll need a set of clean Bills of Lading, erm, five copies of the Commercial Invoice, a Consular Invoice, plus the Insurance Certificate.

ANN We also have to make out a Sight Draft, drawn on Lloyds for thirty thousand pounds (£ 30.000). The contract specified that.

DEREK Leave everything to me. I'll make sure all the documents are in order.

ANN Double check everything, would you? The documents must meet the terms of the Letter of Credit.

DEREK I know. If they aren't exactly as the LC requires, we don't get our money. Banks are very fussy about that sort of thing, aren't they?

Answer the questions:

1. What was the purpose of Ann’s visit to Madrid?

2. Why did the company write to Heinz Zimmerman?

3. What method of payment was proposed by the sellers?

4. What were the problems with the payment?

5. What should be done to get the money?

6. What deal was made with Francisco Lopes?

7. How did the customer agree to pay?

8. What was the problem with the L/C?

9. What documents should be presented to get the money?

10. Why must the documents meet the terms of the Letter of Credit?

PART 2

DIALOGUE 2

Ann and Robert, export executives in a large company, talk to their Managing Director about a Belgian customer.

M.D. I’d like your opinion about one of our customers, Mr. Laurier, from Brussels. How do you rate him, Ann?

ANN He's very reliable. We've been dealing with him for five years now. Our sales to his company have steadily increased. Last year, I think, they were worth about a hundred and fifty thousand (150, 000). We've never had any trouble getting payment from him.

M.D. Robert? Do you agree with that assessment?

ROBERT Up to a point, yes. But I’ve heard one or two things about Laurier lately — on the grapevine, mind you, nothing official.

M.D. Oh, what were these rumours, exactly?

ROBERT Well, he is said to be having financial problems at the moment. One of his biggest customers has gone bankrupt — right out of the blue. They owe Laurier's company a lot of money.

M.D. Are you suggesting Laurier may be having cash flow problems?

ROBERT It's certainly possible.

M.D. Mm... remind me, Ann. How has Laurier been paying us in the past? By Letter of Credit?

ANN No. By Bill of Exchange — always. In the beginning it was documents against payment. We drew on him at sight. That meant we sent the draft and other shipping documents to Brussels. And the documents were handed over to Laurier as soon as he paid for the goods.

M.D. We changed the method later on, didn't we?

ANN Yes. Later we gave him more time to pay. We drew on him at sixty days. The drafts were sent with the other documents to his Belgian bank for collection. The bank accepted our bills on Laurier’s behalf.

M.D. The bills were always met then?

ANN Yes. He always paid on the nail.

M.D. Mm, interesting. You see, I got a call from Laurier early this morning. He asked if he could deal with us on an open account basis. He'd like a hundred and eighty (180) days credit.

ANN Ah, so he wants to settle with us every six months, does he?

M.D. Mm, he'd send us a Banker's Draft drawn on a London bank. What do you think? Should we offer him open account terms?

ANN Mm... I would think so. He's never let us down before.

M.D. How do you feel about it, Robert?

ROBERT I don't like the idea. It’d be risky. If I were you, I'd put him off for a while.

M.D. I think I'll go along with you there, Robert. Perhaps we should be a little careful at this stage. When a company loses a major customer, it can get into financial difficulties. I’m not saying it'll happen with Laurier, but you never know.

Answer the questions:

1. What are Ann and Robert’s positions in the company?

2. How does Ann rate their Belgian customer, Mr. Laurier?

3. What rumours did Robert hear about Mr. Laurier?

4. What problems may Mr. Laurier be having at the moment?

5. How did Laurier use to pay?

6. Why was the method of payment changed later?

7. On what terms does Laurier want to deal with the sellers now?

8. How does he want to settle?

9. How do Ann and Robert feel about Mr. Laurie’s suggestion?

10. Why did the Managing Director agree to put Laurier off for a while?

Answer the questions.

1. How may a draft be payable?

2. How long does the exporter have to wait before he can get his money?

3. Is a B/E negotiable? What does it mean?

4. What other methods of payment do you know?

5. When are they given to a customer?

A Bill of Exchange is a sort of post-dated cheque. Look at this Bill of Exchange and answer the questions about it.

Exchange for 750 pounds London 14 July 2000 At 90 days pay this solo Bill of Exchange to the order of ourselves _____________ the sum of seven hundred and fifty pounds sterling -------------------------------------------------------------- Value goods_____________ To Dom KK Signed Sheila Baker 705 3-chome Yamaguchi for BOS Ltd. Osaka 13 Mill Street Japan Harlow Essex CM 20 2TR Accepted M Satsuma for DOM KK

1. Which company will receive the money?

2. How many copies of the Bill are there?

3. What date will the Bill be paid?

4. Which company will pay the Bill?

5. Is this transaction “documents against payment” or “documents against acceptance”?

ROLE PLAYS.

1.Discuss all pros and cons of different methods of payment used in foreign trade with your partner.

2.You have been trading with a rather reliable partner for some time. Now he is facing certain financial difficulties. Decide with your colleagues if you are going to change the method of payment or not.

Problem-solving:

The production process used in your factory is known, by your scientists, to produce pollution. At the moment it is not scientifically possible to test and prove this and so there is no legal obligation to change your process. There is an alternative process but it would make your product more expensive and therefore less competitive. What should you do?

Answer the questions on the topic:

1. Characterize all the methods of payment you know.

2. Explain when and why each one is used.

3. What problems can occur when you use them?

Unit 6

Insurance

Part 1

DIALOGUE 1

Paula Williams runs the Export Sales Department of Mercury Computers Ltd. Her assistant, Bob Seagrum, has just joined the firm. Paula talks to Bob about insuring a consignment of goods for South America.

PAULA Here's an interesting letter, Bob. It's from a customer in Colombia, Mr Carrera. Do you remember him?

BOB Yes. What does he say?

PAULA Let me put you in the picture, first. A few weeks ago Mr. Carrera bought some of our microcomputers. Now he's written to say he'll be placing regular orders with us.

BOB That's good. We don't sell much to South America at the moment, do we? It'll give us a foothold in the market.

PAULA Yes. I hope it'll be the start of something quite big. Carrera doesn't just do business in Colombia. He's got sales outlets in Venezuela and Ecuador as well.

BOB Just the kind of contact we need, then.

PAULA Definitely. The orders will be fairly large — about three to five thousand pounds (£ 3—£ 5, 000) worth a month. Carrera wants us to arrange insurance cover for the shipments.

BOB So the invoices will be made out CIF, won't they?

PAULA Yes, CIF Caracas. Mr Carrera will airfreight the goods from there to Bogota, or perhaps bring them overland.

BOB How do we go about getting insurance? Is it tricky?

PAULA Oh, not really. We'll be sending computers regularly to Colombia. So. we'll take out an all risks open policy for, say, fifty thousand pounds (£ 50.000). It’ll cover consignments from our warehouse to the port of destination - Caracas.

BOB I’m afraid 1 don't know much about insurance terms. What is an all risks open policy?

paula It's a policy that'll cover all consignments made to Mr Carrera over a twelve-month period. Up to a value of fifty thousand pounds (£ 50.000).

BOB Yes, but what about the ‘all risks’ bit? Can you explain precisely what it means?

paula It means all risks mentioned in the policy.

BOB Such as?

paula Fire, theft, damage of various kinds, like breakage.

BOB I see. To take out an open policy, I suppose we phone our insurance broker.

paula Right. We contact our broker. Then he gets in touch with a Lloyd's[1] underwriter. It's the underwriter who quotes a rate for the shipment and issues the Insurance Certificate. And it's the broker who collects the premium.

BOB If we agree to the rate, are all shipments immediately covered?

paula It works like this. While the policy is being prepared, the broker sends us a Cover Note. As soon as we get that, our consignments are insured.

BOB Mm, there are also some Declaration Forms to fill in, aren’t there?

paula Ah, so you do know something about insurance, Bob! Yes, each time we ship goods, we sign a Declaration Form and send a copy to the broker. It provides a record of each insured shipment.

BOB It sounds fairly simple, this insurance business.

paula Oh, it's dead easy, once you get the hang of it.

Answer the questions:

1. What is Paula’s position in the company?

2. What problem is she discussing with her assistant?

3. Why is Mercury Computers LTD interested in doing business with Mr. Carrera?

4. How large are the orders going to be?

5. How will Mr. Carrera deliver the goods?

6. What kind of policy are they going to take out? Explain their choice.

7. What risks are mentioned in the policy?

8. What is the procedure of taking out the policy?

9. When are the consignments insured?

10. How is the record of each insured shipment provided?

PART 2

DIALOGUE 2

An Italian importer, Mr. Mazzi, telephones Miss Scott, manager of a British firm supplying typewriters.

SCOTT Hello?

MAZZI Hello. This is Mazzi here. Gennari Import Agency. I'm calling about, the consignment of typewriters you've just sent us.

SCOTT Before you go any further, Mr Mazzi, could you tell me the order number, please?

MAZZI Oh, I'm sorry. It's PT two-six-o (260).

SCOTT Thank you. I'll just note that down. Now then, what's the problem?

MAZZI I'm afraid there's been a great deal of damage to the goods. I'd say the consignment is a complete write-off. We can’t salvage anything.

SCOTT Really? What on earth happened?

MAZZI We're not absolutely sure. When we received it, the case was badly crushed. All the machines were damaged beyond repair,

SCOTT Mm, sounds as if something heavy fell on it. Another consignment probably. You'd better get the surveyor to inspect the case right away.

MAZZI I've already done that. It didn't take him long to carry out his investigation. The machines were in a terrible state — bits and pieces everywhere.

SCOTT That's bad. Would you mind sending the surveyor's report to me personally, please? You could forward it with your claim. I’ll take the matter up with our insurers.

mazzi It's going to be a pretty big claim, you know. Well over...

SCOTT I realise that, and I assure you we'll try to speed things up for you at this end. You must be compensated without delay.

mazzi Thanks. That's very good of you. But we still need replacement machines. We can't keep our customers waiting.

scott No, of course not. We'll despatch another ten machines to you by the end of this week. I'll telex you as soon as we have shipping details.

mazzi Fine. Let's hope this consignment is handled more carefully.

scott It had better be, or else I’ll start sending our goods by air —

even if it does cost a lot more.

mazzi Oh, I'm sure it won't come to that. Let's keep our fingers crossed and hope for the best.

scott Well, sorry for all the trouble. Goodbye, Mr. Mazzi.

mazzi Ciao.

Answer the questions:

1. What is Miss Scott’s occupation?

2. What is she discussing on the phone?

3. What happened to the consignment of typewriters?

4. How were the goods damaged?

5. Why was it necessary to get the surveyor?

6. What did the investigation of the surveyor show?

7. Why was it necessary to send the surveyor’s report to Miss Scott?

8. How will the compensation be provided?

9. Why will another ten machines be despatched to Mr. Mazzi? What are they called?

10. Why is Miss Scott thinking of sending the goods by air?

Problem-solving

You are an independent insurance agent and your business has not been doing well recently. You are called to investigate the damage after a factory fire and you are not convinced that the fire was accidental. The factory owner has been talking to you about recommending a friend to take out a lucrative new policy through you. What would you say? What would be possible consequences both of speaking and keeping quiet?

Answer the questions on the topic:

1. Why do businessmen insure their goods?

2. Do you know how the insurance business started?

3. What types of insurance contracts do you know? When and why are they used?

4. What should be done to insure goods?

5. What should be done to be compensated without delay?

Unit 7

Marketing

PART 1

DIALOGUE 1

Mike and Hazel Connors manage a home and garden equipment company. For many years, one of their best customers has been a Swedish buyer, Inge Svenson. She runs a buying office located in London. The office purchases goods for many of the major Scandinavian stores.

INGE Your company's done well in Sweden this year. You must be pleased with the way things are going there.

MIKE We're fairly satisfied on the whole. Our volume of sales has been quite high — thanks to you, Inge.

INGE We've bought a lot from you, it's true. But let's face it, you've got the edge over your competitors. Your garden tools are the best on the market.

HAZEL Thanks, that's a compliment. Mike and I believe quality's important. If you've got a good product, the customer won't worry so much about the price.

INGE Uh-huh, your policy's paid off in our market. You're doing very nicely in Sweden. But you could be doing even better. If you used a different method of selling...

MIKE What's the point of changing anything? We're doing all right at the moment.

HAZEL Yes, our sales operation is working like clockwork.

INGE I know what you mean, Hazel. You've got a simple system for reaching the market. Basically, you use two methods. Either you sell to my office in London, or directly to certain stores in Stockholm and Malmo, right?

MIKE Exactly. What's wrong with that?

INGE Look, I’ d like to say something to you — off the record — if you don't mind.

MIKE I thought you were leading up to something. OK, whatever you say, it's between these four walls.

INGE I just want to say, it's time you changed your sales approach. You could be doing three times as much business as you are now.

HAZEL Oh? In what way should we change?

INGE Well, using buying offices and direct selling are OK, I suppose, but you're not reaching all your potential customers that way. You're only covering two areas in Sweden, Stockholm and Malmo.

HAZEL Are you suggesting we should set up a marketing operation in Sweden? Open up a sales office or something. I 'm sorry, we don't have the capital...

INGE Hold on, now! Of course I’m not suggesting that. It would be far too expensive.

HAZEL So?

INGE I'm suggesting you develop some kind of sales network there, or use an agent to distribute your products.

MIKE An agent, or dealer network, you mean?

INGE Let me tell you what I have in mind. Then, I'd like to make a proposal to you.

MIKE Ah! I knew you had something up your sleeve, Inge. Now, we'll find out what it is!

Answer the questions:

1. What company do Mike and Hazel manage?

2. How can you characterise their garden tools?

3. What do you know about Inge Svenson?

4. What gives the company the edge over their competitors?

5. In what case won’t the customer worry much about the price?

6. What system for reaching the market do they have?

7. How many methods of selling does the company use?

8. What are these methods?

9. What does Inge suggest?

10. Why is the suggestion reasonable?

PART 2

DIALOGUE 2

Mike and Hazel Connors have just returned from Sweden. They went there to look for a suitable agent or dealer to distribute their products in that market. Here, they are talking to their Sales Manager, Ralph Harris.

hazel The problem is, Ralph, we can't make up our minds. We made an interesting contact in Stockholm. He seems to have a lot going for him, but we're still not absolutely sure if he's the right person for us.

ralph Tell me about him. Maybe I can help you decide.

hazel OK then. We met this man Sven Johansen. Actually Inge Svenson put us on to him. She said he was the ideal person for us.

ralph Interesting. She knows about him, does she?

hazel Yes. The two of them arc close friends.

ralph Uh-huh. What about the background of this Sven Johansen?

hazel He's the manager of a large garden equipment store in the centre of Stockholm. Been in charge for over fifteen years. Extremely successful. Everyone said he's a first-rate manager. And a born salesman.

ralph Why does he want to get out of the business? Getting bored?

hazel Right. He said he wanted a change. He was looking for a real challenge. Something that would give more scope for his abilities.

ralph Obviously the ambitious type. Nothing wrong with that.

hazel Of course not. Sven Johansen made a proposal to us. I'll let Mike tell you about it. Go on, Mike.

mike All right then. Sven suggested we make him our sole distributor in both Sweden and Norway.

ralph Ah, an exclusive dealership.

mike Yes. He would be a sort of importer wholesaler, holding stock for us and distributing throughout the two countries.

ralph What about payment? The usual thing, commission on sales?

MIKE On the contrary. He wants to buy and sell on his own account. He hoped we'd give him a discount of twenty per cent (20%) off list prices on all purchases.

ralph I see. Well, there's no reason why we couldn't make that kind of arrangement with him.

MIKE You must admit, Ralph, it's an interesting offer.

ralph Mm, I'd need to know a lot more about this proposal before giving an opinion.

HAZEL Uh, like what?

RALPH Well, like … what about after-sales service? Who'll handle that? And then there's the advertising and the sales promotion. Will Sven Johansen pay for that? You didn't mention his financial contribution. Is he going to have a stake in the dealership? If so, how much will he invest in it? And what about the rest of Scandinavia? What's in this for us?

Answer the questions:

1.Why did Mike and Hazel go to Sweden?

2. Who did they meet there?

3. Who put them on to Sven Johansen? Why?

4. What can you say about Sven Johansen's background?

5. Why does Sven Johansen want to get out of his business?

6. What kind of agent does Sven want to be? Can you explain why?

7. Why does Sven want to buy and sell on his own account?

8. What does he hope to get in this case?

9. Why is his proposal interesting to the company?

10.What other points should be discussed before accepting the proposal?

ROLE PLAYS

1. Discuss with your colleagues different methods of selling your goods abroad. Listen to their ideas and choose the best.

2. You have applied for the position of an agent distributing goods of a large company. Now you are having a job interview.

Marketing problems

1. Western companies had problems selling refrigerators in Japan until they changed the design to make them quieter.

2. In Saudi Arabia newspaper adverts showed an attractive hostess serving champagne to happy passengers. A lot of passengers cancelled their flight reservations.

3. A soap powder advertisement had a picture of dirty clothes on the left, a box of soap in the middle and clean clothes on the right. The soap didn’t sell well in the Middle East.

4. An airline company called itself Emu, after the Australian bird. But Australians didn’t want to use the airline.

Answer the questions on the topic:

1.What is marketing? What does it include?

2.What sales approaches do you know? What are the advantages and disadvantages of them?

3.What should be done to develop a sales network?

4.What are the duties of an agent? Does he get a salary?

5.Why is it so important to find the right person to be your agent?

6.What kinds of agents do you know?

Unit 8

An Agency Contract

PART 1

DIALOGUE 1

Mark Boland is head of an Australian import agency. He is discussing an agency contract with an American, Clint Marsden. Marsden is President of a company producing photocopying machines.

MARSDEN Before drawing up this agreement, I’d like to go over the contract terms once more, Mark.

BOLAND I've no objection to that. Even when you take notes as we did, it's easy to miss something out.

MARSDEN As I understand it, you'll be our agent for the whole of Australia. And you'll be handling our complete range of machines.

BOLAND Agreed.

MARSDEN Now the next point was … length of contract. It'll be three years, won't it?

BOLAND Yes, and, er, renegotiable, provided we're both happy with the arrangement.

MARSDEN I'm confident it'll work out all right. Let's see, what was the next point we discussed? Ah yes, whether you wanted a sole and exclusive agency.

BOLAND Uh-huh.

MARSDEN You don't want that, do you? You'll be selling competing lines along with our product.

BOLAND Yes. We agreed it won't really matter, as long as my sales force do the job properly.

MARSDEN I'm not worried about that. Your people are very professional, I know. What next? Commission? Well, we fixed it at fifteen per cent (15%) on total sales, I believe.

boland Yes, but may I remind you that I'll be a del credere agent. I receive an extra five per cent (5%) commission for that.

marsden Ah yes, you’re bearing the risk if customers don't pay. I’d forgotten that.

boland I'm also responsible for invoicing customers and for credit control. I'll be sending you copies of all invoices for your records.

marsden We must have those because we'll be sending you a statement every three months. Your commission will be based on it. We'll settle up by transferring the money to your account in Sydney. The Bank of Australia and New Zealand. Right?

boland Mm, Victoria Street branch.

marsden The rest's fairly simple. Advertising, sales promotion — that'll be shared between us. Warehousing costs — we'll pay those, but you'll bear all office expenses. Last, but not least, after-sales service. That's your baby.

boland I promise you, Clint, we'll provide fast reliable servicing.

marsden Remember too, you've promised to keep adequate supplies of spare parts and accessories for the machines.

boland That's no problem, provided you get the parts to me when I ask for them.

marsden You can count on us for that.

Answer the questions:

1. What are Mark Boland and Clint Marsden’s positions?

2. Why do they want to go over the contract terms before drawing up the agreement?

3. What terms of the contract are being discussed?

4. What kind of agent is Mark Boland going to be? What are the advantages and disadvantages of it?

5. What will Boland be responsible for?

6. How long will the contract last?

7. Who will be responsible for invoicing customers and credit control?

8. What will the commission be based on?

9. How will they settle up?

10. Who will pay for advertising, sales promotion, warehousing, office expenses?

11. How will after-sales service be organised?

PART 2

DIALOGUE 2

It is two years later. Clint Marsden makes a special visit to Australia to talk to his agent, Mark Boland. Marsden is very dissatisfied with the agent's sales performance.

MARSDEN I'm sorry, there's no way I can break this news to you gently. I'm afraid we've decided to terminate our contract with you.

BOLAND You can't do that. There's still a year to run on it.

MARSDEN I know. But we hope you'll co-operate with us.

BOLAND Might I ask why you want to break the agreement?

MARSDEN Can't you guess?

BOLAND OK, I admit sales haven't come up to expectations. We haven't done too badly though. Three hundred grand last year. Or close to it.

MARSDEN Come on now, Mark, admit it, sales were well below target. We agreed on a market performance last January. Your sales objective was a minimum of five hundred thousand (500.000). Actually, seven hundred thousand (700.000) was a more realistic target.

BOLAND Huh! It's easy for you to talk. We're at the sharp end here. We have to fight for every dollar we make.

MARSDEN All right, it's not easy, I know. Look, it's not just that you failed to reach your sales target. Let's be honest, your after-sales service has been lousy. We've had dozens of complaints from customers...

BOLAND That's news to me.

MARSDEN Really? We wrote to you about it. People saying they waited weeks for your sub-agent to make a service call. What do you say to that, uh?

BOLAND Yeah, maybe we have slipped up there. We shouldn’t have agreed to handle servicing for you. My organisation's not really geared for that sort of work.

marsden Why take it on then? After-sales service is vital to our success — you know that.

BOLAND Hold on, Clint! I It's not all my fault now, is it? You haven't exactly backed me up. I mean, I had no real incentive to sell your goods.

marsden What are you driving at?

BOLAND Well, you've only visited me twice in the last year. Not much, is it? And I've never been invited to your factory.

marsden Mm, mm... perhaps we should have set up some kind of visit. But what with one thing and another, I...

BOLAND Wait a minute, Clint. Let me have my say now. You promised to arrange joint promotions of your products. Nothing came of it, though. No wonder sales have been disappointing.

marsden Mark, I admit there’ve been mistakes on both sides.

BOLAND All I'm saying is - can't you give me another chance? Sales are sure to pick up soon. The recession can’t go on for ever.

marsden Sorry. It's just not possible to do that.

BOLAND What if I refuse to cooperate?

marsden We can't keep you as our agent, Mark. No way!

BOLAND If I play along with you, Clint, I'll expect generous compensation.

marsden We'll look after you, don't worry. Actually, Mark. we're considering opening up our own sales office in Australia.

BOLAND Is that so? Well... you'd certainly have greater control over sales that way, I suppose.

marsden Yes. And a more committed sales force.

Answer the questions:

1. Why is Masden dissatisfied with the agent’s sales performance?

2. Why has he decided to terminate the contract?

3. How much were the sales below target? Why?

4. How well was the after-sales service organized?

5. Whose fault was it?

6. What other mistakes were made?

7. What should have been done to reach the sales target?

8. Why does Boland ask to give him another chance?

9. Who will get a generous compensation and why?

10.What is Marsden’s company planning to open in Australia?

ROLE PLAYS.

1.You are going to draw up an agency contract. Go over the terms of the contract with your partner.

2.A is a producer, B works for an import agency. They signed an agency contract some time ago.

A: You are not satisfied with your agent's sales performance and you have had dozens of complaints from customers. Discuss the problem with you agent and try to terminate the contract if necessary.

B: You realise that the sales were below the target, but it is not only your fault. Explain it to your partner and try your best in order not to terminate the contract.

Problem-solving

Your business has been going through a bad period but recently you have been negotiating for a long-term and valuable contract. At the last meeting you were taken on one side and told that the contract would be signed if you were prepared to make a payment into a numbered Swiss bank account operated by the chief negotiator on the other side. What would you do?

Answer the questions on the topic:

1.What is an agency contract?

2.What kinds of agents do you know?

3.What contract terms should be discussed before signing it?

4.Why can the contract be terminated?

5.How is it usually done?

6.Give as much information as possible on the topic: An agency contract.

GLOSSARY

IDIOMS /2.1

to give you an edge over the competition - to give you an advantage when you compete against other firms

No kidding! - You must be joking! - I find it hard to believe what you say

to run up against problems - to meet unexpected problems

to get it right - to solve/overcome the problem

PART 2 BUSINESS TERMS /2.2/

on display - being shown to potential buyers

sales technique - a method used to increase sales

to install - to put in position (a machine) ready for use

after-sales service - service provided by the manufacturer or supplier of the machine to keep that machine in good working order after it has been sold

spare parts - the parts of a machine kept ready to replace those at present in use

to break down - to stop working

competitive price - a price which is as low as or lower than that of competitors

complete package - a combination or group of sales features

guarantee - a promise given by the company that a product is of good quality and that they will be responsible for any faults

service manual - a book giving information about the care and maintenance of the machine

deal - a business arrangement, usually a sale, which has advantages for both sides

to despatch - to send

in stock - kept/stored ready for use or sale

IDIOMS /2.2/

to set up a visit - to organise a visit

to praise to the skies - to say something is wonderful, marvellous

to move heaven and earth - to make an enormous effort

UNIT 3 CLINCHING A DEAL

PART I BUSINESS TERMS /3.1/

to clinch a deal - to make a sales agreement final, to do/make a deal

to negotiate (a deal) - to discuss a deal formally

firm order - an order which is definite

delivery - carrying goods to their destination

substantial order - a large order

large textile group - a number of textile companies which are linked together to form a group. Usually the group consists of a parent company and several subsidiary or affiliate companies

to work below capacity - to produce less than the maximum output

to work at full capacity - to produce the maximum output

insurance - the business of providing protection against certain risks such as loss, damage, or theft of goods

invoice - a bill for the sale of goods. It is given by the seller to the buyer and it shows details of the goods sold.

to invoice - to make out an invoice and send it to a customer

f.o.b. /free on board/ - The seller's price includes all charges and risks up to the point where the seller delivers the goods on board the named ship at the named port of shipment. From that point, the buyer bears the charges and risks.

CIF /Cost, Insurance and Freight/ - The seller's price includes all charges and risks up to the point where the ship carrying the goods arrives at the named port of destination.

f.a.s. /free alongside ship/ - the seller's price includes all charges and risks up to the point where the goods are placed alongside the named ship ready to be taken on board

ex works /ex factory/ - The price excludes all delivery charges. The buyer has to arrange for collection of the goods at the works or factory, and pays all expenses such as loading, insurance, carriage

Franco quay - the same as f.a.s.

CF /Cost and Freight/ - the price paid to the seller includes packing and freight to the named port of destination, but does not include insurance. This must be paid by the buyer.

discount - a reduction made in the price of the goods

concession - a special right or advantage given to the buyer

list price - the supplier's invoice price before any discount is taken off

IDIOMS /3.1/

go-ahead - instructions to proceed(with a deal)

to go flat out - to work to the maximum capacity

to haggle - to bargain excessively before agreeing to buy or sell

to recap - to repeat the main points of the discussion

PART 2 BUSINESS TERMS /3.2/

method of payment - the way in which the buyer will pay the seller

to pay cash - in this context, to transfer money from one bank to another

Letter of Credit - a common method of payment in international trade. A foreign buyer transfers money to a bank in the exporter's country. This bank then informs the exporter that a sum of money is available when certain documents, e.g. a Bill of Lading and Commercial Invoice are presented. The documents prove that the goods sold have been loaded on board a ship.

Irrevocable Letter of Credit - a Letter of Credit which cannot be called back, changed or cancelled after it has been opened by the foreign buyer

open account terms - When a buyer is well known and trusted by a firm, he may be offered open account terms. This means that he can buy goods to an agreed value each month and is allowed to pay for them at the end of an agreed period, e.g. three or six months

bank reference - the name of the customer's bank, who will supply on request information about the business reputation of the customer

trade reference - the name of a member of the customer’s trade – a person or an organisation- who will supply information about the customer’s business reputation

to settle (up) - to pay for the goods

IDIOMS /3.2/

to check someone out - to make enquiries about someone to ensure he/she is reliable

if I were in your shoes - if I were in your position

to have something lined up - to have something planned

to cover everything – to discuss all the main points

UNIT 5 METHODS OF PAYMENT

PART 1 BUSINESS TERMS /5.1/

Export Department - the division in a company which deals with selling goods to overseas customers

Banker's Transfer - a system for making international money transfers. The bank is told to pay a certain sum to a named person abroad. It makes the payment through its branch, agent or correspondent bank (see below) in the payee's country. Then it debits the sum to the payer's account

Managing Director - a company director who has overall responsibility for managing the day-to-day affairs of the company. He is next in importance to the Chairman or he may be the Chairman

to advise someone of shipment - to tell/inform the buyer, usually by letter, that the goods ordered have been sent off

to credit money to someone's account - to pay money into someone's account

to notify - to inform, tell

correspondent bank - a bank which is an agent for another bank, especially one which acts as an agent in a foreign town of a bank that has no branch there

the credit was established in our name - the Letter of Credit was made out in our name, so that we have the right to be paid for the goods after producing the export documents

valid - effective, having legal force

set of clean Bills of Lading - bills which acknowledge that the goods were received by the shipowner in good condition and order

Sight Draft - a bill of exchange which is payable at sight, i.e. when it is presented to the debtor

drawn on Lloyds for & 30, 000 - the bill of exchange instructs the bank to pay & 30, 000 to the company

contract - a legally-binding agreement between two or more persons or companies

to specify - to state as a condition

to meet the terms of the Letter of Credit - to be exactly as the Letter of Credit requires

IDIOMS /5.1/

to look into - to make further enquiries/investigations

to get moving - to hurry up

to double check - to check everything carefully, then check again

to be very fussy about smth - to take special care to ensure that everything is in order

PART 2 BUSINESS TERMS /5.2/

export executives - senior members of a company concerned with the export of its products

assessment - judgement, opinion

to go bankrupt - to be unable to pay one's debts. (There are certain legal proceedings before a person can be formally declared bankrupt)

cash flow - the movement of money into and out of a business

Bill of Exchange - a written order made out by the seller telling the buyer to pay a certain sum of money to a named person on demand or at a certain time in the future. It becomes valid when it has been accepted - signed - by the buyer

documents against payment - the customer (drawee) must pay the Bill of Exchange before the bank gives him the documents he needs to get possession of the goods

to draw on him at sight - the customer (drawee) must pay for the goods as soon as the Bill of Exchange is presented to him

draft - a common way of referring to a Bill of Exchange

shipping documents - certain documents which are sent by an exporter's bank to the bank's branch or agent in the importer's country, e.g. Bill of Lading, Commercial Invoice, Insurance Certificate

to hand over to - to give to someone

to draw on him at sixty days - the company (drawer) makes out a draft which requires the customer (drawee) to pay the draft at the end of the specified term (60 days) by signing and accepting the draft

to accept a bill - to promise, by signing across the bill, that it will be paid on the due date

to meet a bill - to pay a Bill of Exchange when it is due

Banker's Draft - also known as Bank Draft, a cheque payable on demand drawn by a bank on itself, and signed by one of its responsible officials

IDIOMS /5.2/

How do you rate him? - What is your opinion of his reliability as a customer?

up to a point - to a certain extent

on the grapevine - unofficially

to pay on the nail - to pay on the specified date

to put somebody off - to delay giving somebody a decision

I go along with you - I agree with you

UNIT 6 INSURANCE

PART 1 BUSINESS TERMS /6.1/

to insure - to guarantee or protect someone against risk or loss by promising to pay that person money if such loss occurs

to place regular orders with a company - to order goods again and again at regular periods, each week or month

to do business with - to deal with

contact - a person who may be useful in getting business for you or who may wish to do business with you

insurance cover - protection by insurance against the risk of loss

to airfreight - to carry/transport goods by air

to take out a policy - to arrange an insurance contract with an insurer

all risks open policy - this policy insures against all risks named. It is an " open" (" floating" ) policy, i.e. it gives cover for a specified sum, say $ 1 million, and the holder of the policy does not have to insure each cargo separately. He/she simply declares the value of each cargo and this is set against the policy. As soon as the sums covered come near to the total value of the policy, the holder will renew the premium

theft - the stealing of goods

damage - harm or loss of value because the goods have been broken or spoilt

breakage - damage of goods caused by their being broken in transit

insurance broker - a middleman who acts as an agent for his clients and negotiates the most favourable insurance contracts for them with the insurers

Lloyd's underwriter - an insurer who is a member of the Corporation of Lloyd's. He is so called because his name is written under the insurance policy as a party to the contract. Lloyd's underwriters deal with the public only through Lloyd's brokers

to quote a rate - to state the amount charged by the insurer for different kinds of risk. The amount is usually expressed as a percentage

Cover Note - an acknowledgement in writing from an insurance company proving that a certain insurance contract exists and will be honoured (issued before the policy has been prepared)

record - a written account of the transactions

IDIOMS /6.1/

Let me put you in the picture - Let me give you the essential facts of this matter

to give us a foothold in the market - to allow us to enter the market on a small scale

tricky - difficult, complicated

dead easy - very easy

to get the hang of it - to understand how to do it

PART 2 BUSINESS TERMS /6.2/

a write-off - no longer of any value because the goods are so badly damaged

to salvage - to save goods from loss

crushed - pressed or squeezed so that the sides and top of the box are pushed inwards

surveyor - a person who examines and reports on the condition of goods on behalf of the insurer

to inspect - to examine

surveyor's report - the written account of the examination of the damaged goods supplied by the surveyor

to forward - to send on, to pass on

claim - a demand for payment made by the insured person

to take the matter up - to ask the insurer to deal with the matter

to be compensated - to be paid for loss or damage

replacement - goods sent in place of those which were damaged

shipping details - detailed information concerning the consignment

the consignment is handled - the consignment is received in one place and despatched to another

IDIOMS /6.2/

It won't come to that - It won't happen

Let's keep our fingers crossed - Let's hope we will be lucky

UNIT 7 MARKETING

PART 1 BUSINESS TERMS /7.1/

buying office - an organisation which buys goods produced in one country on behalf of businesses in another country, who then resell the goods

volume of sales - the total amount/quantity of goods sold

to reach the market - to find all the possible customers for your products

direct selling - selling directly to the customer without using an intermediary such as an agent, dealer or importer

marketing operation - an organised system for selling and promoting goods

sales office - an office doing everything necessary to sell the goods

to develop a sales network - to develop a system of selling goods in which all the sales outlets are linked

agent - a person who acts on behalf of another, called the principal, in making contracts with third parties and in buying and selling. He is usually paid a commission for his services by the principal

dealer network - an organised system of distribution using dealers

IDIOMS /7.1/

to pay off - to be successful

to work like clockwork - to work perfectly

off the record - speaking privately, unofficially

to lead up to something - to approach a topic gradually, to lead the conversation towards what you want to say

between these four walls - what you say will remain a secret

to have something in mind - to have an idea not yet expressed

to have something up your sleeve - to have some information you are hiding from other people

PART 2 BUSINESS TERMS /7.2/

sole distributor - the only distributor of the manufacturer's products in a given area

exclusive dealership - the sole right to sell the goods in a certain area

importer wholesaler - someone who imports goods, holds stock, and resells the products to retailers

to hold stock - to keep stores of the product(s)

commission on sales - payment made to an agent, usually based on the value of the goods sold. It is a percentage (%) of the sales revenue, agreed between the agent and his principal

to buy and sell on one's own account - to buy and sell at one's own risk

to have a stake in - to have a financial interest in

IDIOMS /7.2/

to make up one's mind - to decide what to do

to have a lot going for smb. - to have many qualities, and the sort of business background smb. is looking for

to put smb. on to smb. - to tell smb. about this person and help to contact him

background - previous experience

born salesman - salesman of natural talent

UNIT 8 AN AGENCY CONTRACT

PART 1 BUSINESS TERMS /8.1/

import agency - a firm with specialised knowledge of the home market, often having its own warehouses and sales organisation, which acts for foreign manufacturers and sells their goods in the home market

agency contract - an agreement between a manufacturer (the principal) and his agent, who represents the principal, and who buys and sells the principal's goods

President - the Chief Executive of a company in the U.S.A. He/she is equivalent to the Chairman of a board of directors in Britain

to draw up an agreement/contract - to write out an agreement/contract

contract terms - the rules or conditions of the contract

to handle - to sell, deal

renegotiable - the terms of the contract may be discussed again (renegotiated) after a certain, agreed period of time

sole and exclusive agency - the agent acts for one manufacturer only and will not sell similar products offered by competitors

to sell competing lines along with our product - to sell the products of competitors as well as our product

sales force - the group of men and women whose job is to sell a product or service

total sales - the value of all the goods sold in a given period

del credere agent - an agent employed by his principal on condition that the agent bears all the risk of non-payment by customers. In return for bearing that risk, the agent receives an extra commission

to bear the risk - to take responsibility for the risks involved in trying to sell the goods

credit control - keeping a check on debts and making sure the amount of overdue debts is as small as possible

statement - financial document sent regularly by a seller to a buyer (or agent) giving details of invoices sent and containing a request for payment of any money owed to the seller

to be shared - costs will be divided between manufacturer and agent

warehousing costs - the costs of storing stocks of goods in warehouses

to bear office expenses - to pay for the cost of running an office

accessories - parts which can be added to a machine to make it more useful or attractive

IDIOMS /8.1/

to go over - to examine again

to work out all right - to be successful

That's your baby - That's your responsibility

to count on smb - to rely/depend on smb

PART 2 BUSINESS TERMS /8.2/

sales performance - the sales record of the agent, the number of sales the agent has made

to terminate the contract - to end the contract

not to come up to expectations - to be less than was expected or hoped for

to be below target - to be less than has been planned or aimed at

market performance - amount of sales achieved

realistic target - a level of sales which the agent should aim at and which he should be able to achieve

sub-agent - a person who works for, or represents an agent

to make a service call - to visit a customer in order to check, and, if necessary repair, the machines he is using

incentive - encouragement, motivation

joint promotion of products - methods for increasing sales of the product are organised by both agent and manufacturer, who share any costs

recession - a reduction of business activity, not as severe as a depression or slump

committed sales force - a group of men and women who are making every effort to sell their company's products

PART 2 IDIOMS /8.2/

to break the news gently - to tell you this information in a tactful manner, without upsetting you

grand - slang for a thousand, e.g. ten grand is ten thousand dollars or pounds

to be at the sharp end - to have to fight the competition

lousy - very bad, awful

to slip up - to make a mistake

not geared for - not suited for, not equipped for

to back up - to support

to drive at - to suggest or imply

Nothing came of it - There were no useful results

to pick up - to improve or increase

No way! - It's absolutely impossible

to play along with - to agree to what someone is suggesting because it is in your interests to do so

[1] Lloyd’s of London.

Lloyd’s is a unique international insurance market, it is a society of underwriters made up of more than 26, 000 members. In the 18 century customers and underwriters used to arrange insurance in a coffee house which belonged to a man called Lloyds. Although its origin lies with marine insurance, Lloyd’s now covers almost any risk. More than three-quarters of this business originates from overseas and its premium income is approximately 24 million pounds every day.