Scarcity and Choice

The Web as a Sales Tool

There is discussion today about how beneficial the Web is as a sales tool. Many companies, even those with a tremendous presence on the Web, are not making a lot of money. They are positioning themselves for the future, with hopes that buying on-line will become an everyday event.

The question that must be answered is whether the World Wide Web will remain a place of information, or evolve into a profitable marketplace for businesses.

Actually, if you trace the history and growth of the Internet, you will realize that extraordinary progress has been made. In the last decade, the number of personal computers has multiplied to the point that potential sellers of products and services now see tens of millions of customers to whom they can market their products. As consumers become more relaxed and secure about buying on-line, market potential will rise. Because of this potential, banner ads are everywhere: on Home Pages, magazines or “webzines”. “Cyberstores” offer everything from automobiles to vacation cruise.

The most successful sellers are those that mainly transact business by phone, selling a product that does not have to be present physically. If you know the title or the author of a book you want to buy, it is easier to order it by computer than to go to the bookstore. Besides, you may get a discount, or save sales tax, even though you have to pay for shipping.

An example of growing use of Web technology is the “Extranet”, which is a company’s private link with its corporate customers. (The “Intranet” is the company’s internal network with its employees.) General Electric, the most successful example of extranets, grosses over a billion dollars a year in sales.

Notes:

to remain – оставаться

to transact – вести переговоры

link – канал связи, связующее звено

Unit 5

Demand and Supply

Import and Export

In the recent decade, the world has seen an international trade boom unlike any other in history. Most large corporations earn a great portion of their revenues from their overseas ventures. And many nations owe a large share of their gross national product to the output of firms based beyond their borders.

In the age when many business people are thinking globally, it is just as important to understand the working of the world economy as it is to understand our national economy. Fortunately, the same concepts of supply and demand, deficit and surplus also apply to international business. They just manifest themselves differently.

There are two sides to every trade relationship: buying and selling goods. In international trade, those who buy are importing goods or services from foreign sources; those who sell are exporting products to customers abroad.

The main difference between domestic trade and international trade is the use of foreign currencies to pay for the goods and services crossing international borders. Although global trade is often added up in euros and US dollars, the trading itself involves various currencies.

Whenever a country imports or exports goods and services, there is a resulting flow of funds: money returns to the exporting nation, and money flows out of the importing nation. Trade and investment is a two-way street, and with a minimum of trade barriers, international trade and investment usually makes everyone better off. The balance of trade (the import-export balance) is determined by the relationship between import and export.

In an interlinked global economy, consumers are given the opportunity to buy the best products at the best prices. By opening up markets, a government allows its citizens to produce and export those things they are best at and to import the rest, choosing from whatever the world has to offer.

Notes:

overseas ventures – иностранные компании, предприятия

domestic trade – внутренняя торговля

currency – валюта

better off – обеспеченный, состоятельный

balance of trade – торговый баланс

Unit 6

Opportunity Cost

A University Education and Opportunity Cost

Unlike most costs discussed in economics, an opportunity cost isn’t always a number. The opportunity cost of any action is simply the next best alternative to that action. Economists believe that opportunity costs play a fundamental role in people’s lives. For example, many school-leavers consider going to Universities for four or five years after finishing schools. What is the cost of acquiring a University education?

Obviously, the cost of tuition, the cost of books and other supplies, and the cost of living in a hostel represent the money cost of going to University. The other uses of this money might have been put to represent its opportunity costs. But what else is a cost of going to University? If a student didn’t go to University, then he or she would most likely find a job instead.

The money that those who choose University might have earned during their years of study is described by economists as foregone earnings. Foregone earnings represent another, very important cost of a University education.

Thus, the opportunity cost of going to University is the goods and services represented by the money cost of the education, plus the value of the foregone earnings.

Notes:

tuition – обучение

foregone earnings – упущенные заработки

Unit 7

Money

The System of Cheques in Britain

Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. So, bank-notes and coins are not the most important form of money in developed economies.

In the United Kingdom about 90% of all transactions are settled by means of cheques. But cheques themselves are not money; they are orders to bankers to transfer money from one person to another. The money transferred in this way consists of bank deposits. If there is no money in the form of a bank deposit then any cheques drawn on that account will be worthless.

Cheques were used as early as the second half of the 17^th century, but they did not come into general use until the second half of the 19^th century. The Bank Charter Act of 1844 put strict limitations on the note issue at a time when the output of goods and services was expanding rapidly. The need for an expansion of the money supply to keep pace with increasing output greatly stimulated the use of bank deposits.

This most developed form of money (bank deposit) consists of entries in the bank ledgers, or more likely nowadays, of records on computer tapes. The greater part, in value terms, of the payments made each day are carried out by adjustments made to the totals in different bank deposits. A payment from one person to another merely requires that the banker reduces the amount in one deposit and increases in another. Transferring money, therefore, has become little more than a kind of bookkeeping exercise, the money itself does not consist of some physical tangible commodity.

Notes:

to transfer – переводить (о деньгах)

to come into use – начинать употребляться

to keep pace with – не отставать от

entry – запись

ledger – главная книга (в бухгалтерии)

bookkeeping – бухгалтерия

Unit 8

Markets and Prices

Market Research

Millions of pounds are spent each year on market research. Nearly 10% of the price we pay for goods in the shops is spent on it.

What is market research? By definition, it is a systematic collection and analysis of data, which is based on the customer’s attitude, needs, opinions and motivation within the context of political, economic and social influences. Market research is always necessary, because to reduce risk, any organization needs to know about the market for a product or service it is going to launch.

Market research makes a positive contribution to business by helping in the decision-making process. There are many different types of market research. Here are the main ones:

1. Market and sales research. It estimates the size of new markets and their potential growth, identifies market segments and trends.

2. Product research. Its purpose is to investigate the customer’s attitude to new products, to find alternative uses for existing products and to generate new ideas for new products.

3. Research on promotion and advertising. It helps to choose the right advertising medium, analyses the effectiveness of advertising and evaluates present sales techniques.

The market research process is a five-step application of the scientific method that includes:

1. Defining the problem.

2. Analyzing the situation.

3. Getting the necessary data.

4. Processing the data.

5. Solving the problem.

As for the information a marketing researcher is interested in, there exist its 3 main sources:

1. Information within the company, such as sales figures, is known as internal information.

2. Information external to the company, such as government reports or published marketing reports, is known as secondary information.

3. The third information source, often characterized by market research opinion polls, is known as primary information.

Notes:

launch – выпускать на рынок (товар или услугу)

Unit 9

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