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III. Which of the following three paragraphs most accurately summarizes the

Text, and why?


First summary:

Although most organizations are hierarchical, with a number of levels, and a line of command running from the top to the bottom, hierarchies should be avoided because they make decision-making slow and difficult. A solution to this problem is matrix management, which allows people from the traditional functional departments of production, finance, marketing, sales, etc. to work together in teams. Another solution is decentralization: the separation of the organization into competing autonomous divisions.


Second summary:

Most business organizations have a hierarchy consisting of several levels and a clear line of command. There may also be staff positions that are not integrated into hierarchy. The organization might also be divided into functional departments, such as production, finance, marketing, sales and personnel. Larger organizations are often further divided into autonomous divisions, each with its own functional sections. More recent organizational systems include matrix management and teams, both of which combine people from different functions and keep decision-making at lower level.


Third summary:

Most businesses are organized as hierarchies, with a clear chain of command: a boss who has subordinates, who in turn have their own subordinates, and so on. The hierarchy might be internally divided into functional departments. A company offering a large number of products or services might also be subdivided into autonomous divisions. Communication among divisions can be improved by the introduction of matrix management or teams.


V. Study the organization chart, then complete the description of the organization:

Executive Management

Mr. Richard Baldwin

President and Chief Executive Officer


Dr. Kevin Higgins – Research and Development Mr. David Eitingam – Production Mrs. Petra Cusimano – Finance, Personnel, and Administration Mrs. June Heskesh – Marketing and Sales
Mr. Patrick Amos – Multiplex Systems Mr. Emma Wood – Cable Systems Mr. Roger Carter – Microwave Systems Ms. Vera Roberts – Space Systems Mr. Robert Shaw – Mobile Radio Systems Mrs. Sileen Nardo – Teleflex Ltd


The h…………of the company is Chief Executive Officer. He is also the P…………….and am………….of the Board of Directors. U……….him there are four e……….managers, responsible for research and d………., production, f………., personnel and administration and m……….and sales.

The company’s activities are d……….into six business areas, headed by different d……….managers. These managers r………directly to the Chief Executive Officer.


VI. Role-play. Work in group of four. Imagine that you and your partners have just organized the company and now you discuss the best way of company organization. Student A is in favour of line structure, Student B is in favour of matrix structure, Student C is in favour of functional structure and Student D is in favour of staff structure. List the advantages and disadvantages and defend your point of view.

Text C

A Loan Agreement

Article 5 Overdue Payments

If the Borrower falls to make any required payment with respect the repayment of the loan, payment of the Interest, payment of the Management Fee, or any other items payable under this Agreement on the date(s) due, from and including the due date to and including the date of actual payment, at the rate of 2.375% per annum over and above the week, one month, three month or six month LIBOR determined on the due date(s) and from time to time thereafter for successive interest periods for so long as such amount remains unpaid, hereinafter called ‘the Overdue Interest’.

The applicable LIBOR shall be the arithmetic mean, rounded upwards, if necessary to the nearest whole multiple of 1/16 of 1% of the relevant LIBOR for deposits in the United States Dollars as quoted on the Renter’s monitor page ‘LIBO’ as or about 11: 00 a.m., London time on the due date(s) and thereafter for each successive Overdue Interest Period as defined below, on the second business day in London, England prior to the first day of each such Overdue Interest Period.

The Lender shall in its discretion determine the interest period with respect to any overdue amount. Overdue Interest Period. The Overdue Interest shall be calculated on a 360 day year basis, by counting the actual number of days elapsed in that period.

Any payment made by the Borrower after such a failure shall be applied first to the Expenses and the Management Fee, then to the Overdue Interest, then to accrued Interest and then to repayments of the Loan overdue.


Article 6. Method of payment

All amounts payable by the Borrower to the Lender under this Agreement, including, but not limited to, repayments of the Loan, payments of the Interest, the Overdue Interest, the Expenses, the Management Fee, shall be payable in the United States Dollars in net amounts receivable by the Lender and shall be paid by the Borrower in the full amount stated under this Agreement, without deduction or offset of any present or future income or other taxes, levies, charges or other with holdings or impositions of any nature whatsoever. If the Borrower is required to withhold income or other taxes or levies imposed on repayment of the Loan, payment of the Interest, the Overdue Interest, or other payments due to the Lender by or within Russia under this Agreement, the Borrower shall bear the taxes and/or levies regardless of their nature, and pay them to the relevant authorities.

Unless otherwise provided under this Agreement, all payments by the Borrower to the Lender under this Agreement, including, but not limited to repayments of the Loan, payments of the Interest, the Overdue Interest, the Expenses and the Management Fee, shall be made by telegraphic transfer, for good value, in the United States Dollars to the Lender’s account No. 15012 with the Chase Manhattan Bank N.A, London, Wallgate House, Coleman Street, London EC 2, England not later than 10: 00a.m. London time on the date each payment is due.

The Borrower shall sent pre-payment order by telex which provides amount with its value date to be paid, two business days before each due date to the Lender’s Bank as described above.



Unit 5

Text A



To assemble products Производить сборку продукции
Batch production Серийное производство
Capacity Производительность
Capital intensive Капиталоемкий
Component Компонент
Continuous production Непрерывный процесс производства
Conveyer belt Конвейерная лента
Credit facilities Возможность получения кредита
Declining sales Снижение спроса
Equipment Оборудование
Formulation Разработка
Growing sales Растущий спрос
Guarantee Гарантия
Half-finished items Полуфабрикат
Inventory Инвентарь
Job (unit) production Мелкосерийное производство
Just-in-time production Производство точно в срок
Labour intensive Трудоемкий
Lead time Время выполнения заказа
Maintenance Эксплуатация
Make-or-buy decision Решение о собственном производстве
Manufacture (v) Производить
Manufacturer Промышленник
Mass (flow-line) production Массовое производство
Outsourcing (contracting out) Получение заказов от других предприятий
Overproduction Перепроизводство
Plant Завод
Product defects Брак продукции
Product life-cycle Жизненный цикл продукта
Product line Производственная специализация
Product mix Ассортимент изделий
Productivity Производительность
Setback in production Спад производства
Stable sales Устойчивы спрос
Stock-piling Складирование
Subcontractor Субподрядчик


I. Read the text and translate it into Russian:

Types of production

Production methods are conventionally divided into three types: job or unit production, mass or flow-line production, and batch production.

a) Job production

- In this type jobs are carried out individually and usually to the specific order of a customer. Job production can range from small units such as the production of individually designed piece of pottery to the building of a large cargo ship, from made-to-measure clothing to bridge-building.

- Job production is usually very labour intensive since it does easily lend itself to mechanization. Further, the labour employed has to be highly skilled for the most part, and supervision must be constant and very technically competent. There is little opportunity for the use of highly specialized machinery, and the machinery that is used must be able to cope with varying work.

- It is unusual for an organization to be able to make for stock as each order will be different from previous orders and from future ones. In many cases, such as bridge building or in road construction, there can be no question of making for stock.

- Where jobs of high value and extended time-span are the rule problems are often experienced with financing the projects, especially in view of the high labour content which means that large sums for wages have to be regularly found.


b) Mass production

- This method, which is also known as flow-line production, is a process of continuous production where large numbers of more or less identical units are manufactured continuously. It is the exact opposite of job production. Little or no individuality can be introduced into the product, and the processes are extremely capital intensive. The labour content is relatively small compared to the capital investment, and most of it is unskilled or semi-skilled. Highly specialized machinery is used and in the most modern mass-production plants practically all of the work and machines are controlled by computer. The small proportion of skilled labour required is employed to set up the machines for production, and is highly paid. This small, very skilled, work-force is a vital element in continuing production and disruption of their operations normally causes severe setbacks in manufacturing volume, and can cause production to cease altogether.

- Mass-produced products which, range from such items as breakfast cereals and paper products to motor-cars, are manufactured in advance of sales, and sales forecasting and marketing of a high order are essential for the success of the manufacturing enterprise.

- A distinction is usually made between two aspects of this method of production. The term ‘mass production’ (or flow-line production) is used for the continuous production of manufactured goods such as those just mentioned. Where the nature of the product is the result of formulations such as petrol-chemical products, adhesives and jams, process production or continuous flow process production are the terms normally used.

- In order to remain profitable it is necessary for enterprises employing mass-production methods to utilise machinery to virtually full capacity. When orders fall short of full capacity it is often more advantageous to keep the plant running and to produce for stock rather than to reduce the volume of output. An example of this is a stock-piling of motor-cars when sales are low. This situation cannot, of course, continue indefinitely. In the case of domestic consumables, such as washing-powders, attempts are made to stimulate sales by variety of means including ‘special offers’, competitions and free gifts.


c) Batch production

- This is a method that falls between job and mass production, and may be said to be repeated production but not continuous production. It is employed where orders consist of a significant number of similar items but these orders are not sufficient to justify continuous manufacture.

- Industries offering choices of design or sophistication in their products make use of batch production, a notable one being the furniture industry. A batch of one design will be made and then a batch of another, and then perhaps the first will be run again. Labour is more skilled in this method of production than in mass production because of the variety of the work entailed, and machines are more versatile. It uses more labour, proportionately, than mass production and less machinery.

- Whether goods are made in advance of orders or subsequent to them depends not so much on the type of production method as on the situation in the market. A manufacturer using batch production will set a production run when orders for a particular item are received, but has the problem of making the run economically viable; in other words producing sufficient quantity to make the run profitable. He does this by adding a stock quantity to the ordered quantity. One of the most difficult problems in batch production is, in fact, this one of the deciding what is the economic batch size.

- Batch production can offer some of the cost saving advantages of mass production, but also allows the manufacturer to satisfy individual job orders if necessary because of his more versatile machinery and skilled workers. At no time, however, can the user of batch production methods compete in price with mass-production items.


II. Match the equivalents:

1. Batch production a) Капиталоемкий
2. Capital intensive b) Конвейерная лента
3. Continuous production c) Массовое производство
4. Conveyer belt d) Мелкосерийное производство
5. Equipment e) Непрерывный процесс производства
6. Formulation f) Оборудование
7. Job (unit) production g) Промышленник
8. Labour intensive h) Разработка
9. Manufacturer i) Серийное производство
10. Mass (flow-line) production j) Складирование
11. Setback in production k) Спад производства
12. Stock-piling l) Трудоемкий


III. Answer the questions:

  1. Which types of production do you know?
  2. What can job production range from?
  3. What kind of labour is used in job production?
  4. Is machinery widely used in job production? Why?
  5. Does an organization make goods for stock in job production? Why?
  6. What problems does job production have?
  7. Does mass production have any individuality? Why?
  8. What kind of labour is used in mass production? Why?
  9. What kind of machinery is used in mass production? Why?
  10. Why is skilled labour required in mass production?
  11. What mass-produced products can you name?
  12. When can mass production be profitable?
  13. Does an organization make goods for stock in mass production? Why?
  14. What is usually done to increase profits in mass production?
  15. How batch production can be characterized?
  16. In what industries is it used?
  17. What kind of labour is used in batch production?
  18. Does an organization make goods for stock in batch production? Why?


IV. Match up these words with the definitions which follow:

Capacity, component, inventory, lead time, location, outsourcing or contracting out, plant, subcontractor


  1. Any company that provides goods or services for another one.
  2. Any of the pieces or parts that make up a product, machine, etc.
  3. Buying products or processed materials from other companies rather than manufacturing them.
  4. The (maximum) rate of output that can be achieved from a production process.
  5. The buildings, machines, equipment and other facilities used in the production process.
  6. The geographical situation of a factory or other facility.
  7. The stock of any item or resource used in an organization (including raw materials, pans, supplies, work in process and finished products).
  8. The time needed to perform an activity (i.e. to manufacture or deliver something).


V. After it has been decided what to manufacture, operations managers have to decide where to manufacture the different products, how much productive capacity their factories and plants should have, and how much inventory to maintain. Read 15 sentences below, and classify them under the following six headings. Some sentences may fall under two headings:

  1. The consequences of insufficient capacity
  2. The consequences of excess capacity
  3. The advantages of large facilities
  4. The disadvantages of large facilities
  5. The advantages of having a large inventory
  6. The disadvantages of having a large inventory


    1. A long lead time may allow competitors to enter the market.
    2. Average fixed cost per unit drops as volume increases because each succeeding unit absorbs part of the fixed costs, giving economies of scale.
    3. Finding staff and coordinating material flow become expensive and difficult
    4. If lead time increases, some customers may go to other suppliers.
    5. Lost sales and market share are usually permanent
    6. The working environment might worsen and industrial relations deteriorate
    7. There are costs of storage, handling, insurance, depreciation, the opportunity cost of capital, and so on.
    8. You can be more flexible in product scheduling, and have longer lead times and lower cost operation through larger production runs with fewer set-ups.
    9. There is always the risk of obsolescence, theft, breakage, and so on.
    10. You can meet variation in product demand
    11. You may be under-utilizing your work force.
    12. You have protection against variation in raw material delivery time (due to storages, strikes, lost orders, incorrect or defective shipments, etc).
    13. You may be forced to produce additional less profitable products.
    14. You can take advantage of quantity discounts in purchasing.
    15. You may have to reduce prices to stimulate demand.


VI. Read the text below, and insert the words in the gaps:

Capacity, component, inventory, lead times, location, outsourcing, plants, subcontractor


Just-in-time production

Manufacturing companies are faced with a ‘make-or-buy decision’ for every item or (1)………. they use (as well as for every process and service). Do they make it themselves or do they outsource, and buy from a (2)……….? If a company assembles products supplied by a large number of subcontractors, they face the problem of how much (3)………..they require.

In Just-In-Time (JIT) production – also called lean production, stockless production, and continuous flow manufacture – nothing is bought or produced until it is needed. Each section of the production process makes the necessary quantity of the necessary units at the necessary time – which is when it is required by the next stage of the manufacturing process, or by distributors or customers.

The JIT system is usually credited to Taiichi Ohno, who was a vice-president for manufacturing with Toyota in Japan in the early 1950s – although he stated that he got the idea from American supermarkets! JIT is wholly contrary to the European and American logic of encouraging greater productivity, and welcoming production that exceeds the agreed schedule or quota, and stocking extras in case of future problems. JIT minimizes the cost of holding inventories, which are regarded negatively, as avoidable costs, rather than assets. The large Japanese manufacturing companies have long practiced (4)………., and generally use extensive networks of small subcontractors. Of course, if a single subcontractor fails to deliver a component on time, the whole production process is sabotaged, but the Japanese industrial system relies on mutual trust and long-term relationships. Small supplies often attempt to situate their facilities close to the (5)……….of a larger company with which they work.

The Japanese also prefer small, specialized production (6)……….with a limited (7)………., in which, wherever possible, all the machines required for a certain job are grouped together. This avoids all the waiting and moving time involved in sending half-finished items from one department to another, although it often requires flexible, multi-skilled employees.

JIT thus greatly reduces transportation and inventory costs, and should ensure that there is no waste from overproduction, or from idle workers waiting for parts. It allows increased productivity because of shortened throughput time. If factories are equipped so that set-up times are short, very small production runs are possible. Any quality problems or product defects should be noticed more quickly, production (8)……….are reduced, and the firm can react more rapidly to demand changes.


VII. Translate into English:

1. Существует три основных вида производства: мелкосерийное, серийное и массовое.

2. Мелкосерийное производство является самым трудоемким.

3. Массовое производство является самым капиталоемким из-за большого количества инвестиций в оборудование для обеспечения непрерывного процесса производства.

4. Самым сложным является производство, связанное с различными разработками, такое как нефтехимическое производство.

5. В случае перепроизводства промышленники занимаются складированием продукции.

6. Производительность предприятий зависит от ряда факторов, среди которых производственная мощность.

7. На предприятиях массового производства используется конвейерная лента.

8. При создании предприятия необходимо принять решение о создании собственного производства.

9. Некоторые компании производят сборку изделий из компонентов или полуфабрикатов, поставляемых другими компаниями.

10. Иногда завод получает заказы от других предприятий, которые являются субподрядчиками.



Text B

Products and brands

I. Read the following text, and write a brief heading for each paragraph:


Marketing theorists tend to give the word product a very broad meaning, using it to refer to anything capable of satisfying a need or want. Thus, services, activities, people (politicians, athletes, film stars), places (holiday resorts), organizations (hospitals, colleges, political parties), and ideas, as well as physical objects offered for sale by retailers, can be considered as products. Physical products can usually be augmented by benefits such as customer advice, delivery, credit facilities, a warranty or guarantee, maintenance, after-sale service, and so on.



Some manufacturers use their name (the ‘family name’) for all their products, e.g. Philips, Colgate, and Yamaha. Others, including Unilever and Procter& Gamble, market various products under individual brand names, with the result that many customers are unfamiliar with the name of the manufacturing company. The major producers of soap powders, for example, are famous for their multi-brand strategy which allows them to compete in various market segments, and to fill shelf space in shops, thereby leaving less room for competitors. It also gives them a greater chance of getting some of the custom of brand-switchers.



Most manufacturers produce a large number of products, often divided into product lines. Most product lines consist of several products, often distinguished by brand names, e.g. a range of soap powders, or of toothpastes. Several different items (different sizes or models) may share the same brand name. Together, company’s items, brand names and products constitute its product mix. Since different products are always at different stages of their life cycles, with growing, stable or declining sales and profitability, and because markets, opportunities and resources are in constant evolution, companies are always looking to the future, and re-evaluating their product mix.



Companies whose objectives include high market share and market growth generally have long product lines, i.e. a large number of items. Companies whose objective is high profitability will have shorter lines, including only profitable items. Yet most product lines have a tendency to lengthen over time, as companies produce variations on existing items, or add additional items to cover further market segments. Additions to product lines can be the result of either line stretching or line filling. Line-stretching means lengthening a product line by moving either up-market or down-market, i.e. making items of higher or lower quality. This can be carried out in order to reach new customers, to enter growing or more profitable market segments, to react to competitors’ initiatives, and so on. Yet such moves may cause image problems: moving to the lower end of a market dilutes a company’s image for quality, while a company at the bottom of a range may not convince dealers and customers that it can produce quality products for the high end. Line-filling – adding further items in that part of a product range which a line already covers – might be done in order to compete in competitors’ niches, or simply to utilize excess production capacity.


II. Answer these questions:

  1. What meaning does the word product have?
  2. What things does it include?
  3. How do manufacturers create their brand names?
  4. What do most product lines consist of?
  5. What can be called a product mix?
  6. Why are companies always looking to the future?
  7. What product lines do companies whose aims are high market share have?
  8. What product lines do companies whose aims are high profitability?
  9. Describe line-stretching
  10. Why do companies use it?
  11. Describe line-filling
  12. Why do companies use it?


III Find words or expressions in the text which mean the following:

  1. the possibility of paying for a product over an extended period
  2. a promise by a manufacturer or seller to repair or replace defective goods during a certain period of time.
  3. a surface in a store on which goods are displayed
  4. consumers who buy various competing products rather than being loyal to a particular brand
  5. the standard pattern of sales of a product over the period that it is marketed
  6. the extend to which an activity provides financial gain
  7. possibilities of filling unsatisfied needs in sectors in which the company can produce goods or services effectively
  8. the sales of a company expressed as a percentage of total sales in a given market
  9. the set of beliefs that the public at large holds of an organization
  10. a small, specialized, but profitable segment of a market


IV.Preparing a report

Imagine that an international vending machine operator is hoping to increase its activities in your country, and has hired you to report on the existing market and to suggest new products that could be distributed via vending machines.

First you have to prepare a report outlining:

- which products are currently sold in vending machines in your country

- where such machines are usually situated

- what kind of customers generally use them and in what circumstances

Then you have to suggest further products that could perhaps be distributed in this way.


V. Read and complete the gaps using the following words:

Assembled, costs, defects, expenditure, implications, investment, pretest, recall, resultant, share, suppliers, unchanged


Management of quality control

Perhaps low warranty (1)……….mean spending a lot of money on quality control and the prevention of (2)……….? Not at all. It appears that (3)……….on prevention and inspection is much less than the cost of failure, and the (4)……….need to rework, scrap, recall, and service. On average it appears the cost of quality is less than one half the cost of failure. Obviously, failures must be more expensive to put right after a unit has been (5)………. The cost of the extra hours used to (6)……….a design is cheap compared to the cost of product (7)……….Field service costs are higher than the cost of inspection.

But quality has even wider (8)………..: for example, for market (9)……….and return on (10)……….Thus, businesses with a high product quality have a return three or four times greater than businesses with a low product quality. And businesses which improve their quality increase their market five to six times faster than those whose quality remains (11)……….

It would appear that counterattack is possible. According to the Harvard Business Review, in 1980, Hewlett-Packard tested 300, 000 semiconductors from three American and three Japanese (12)………. At that time, the Japanese chips had a failure rate one-six that of the American chips. When the test was repeated two years later, the American companies had virtually closed the gap. In cars and trucks, the gap is also rapidly closing.


VI Look at the words which can be used with the word ‘investment’ to make word partnerships, for example ‘capital investment’.

capital equity real
tax-free investment net
speculative fixed-interest gross

‘Capital investment’ is investment in capital goods, such as machinery or buildings needed for the production process.

Which of the other ‘investment’ word partnerships have the following meanings?


11. Investment in goods and services needed for the benefit of the community, not for financial gain investment.

12. The use of money to buy a security or commodity with the intention of selling it at profit.

13. An investment which earns interest at an agreed fixed rate.

14. The gross investment reduced by the amount of capital consumption.

15. An investment which gives the holder a right to receive a share in the profits, usually in the form of dividend.




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