1. When the directors are discussing the problems facing the company they primarily have to consider

a) the interests of the public.

b) their own interests.

c) the interests of the shareholders.

2. When a proposal is made and a vote taken the usual arrangement is that

a) each director has one vote no matter how many shares he hold.

b) only the chairperson can vote.

c) the directors with most shares have the most votes.

3. Key members of staff will be chosen by the managing director because

a) he is more knowledgeable than the other directors.

b) he has got to answer to the board for their performance.

c) he earns more than the other directors.

4. Non-executive directors will often be appointed because

a) they have valuable contacts with potential customers.

b) they have departmental responsibilities.

c) no-one else is available.

5. Directors are usually required to have shares in the company so they can

a) be seen top have a personal stake in the business and thus be affected by their decision.

b) receive share certificates from the registrar's department.

c) take on administrative duties.

6. Strategic decisions are concerned with

a) the details of day-to-day Administration.

b) the disposition of the company's resources.

c) the payment of wages.

7. While decision-making powers are commonly delegated to senior executives

a) the directors are not responsible to the shareholders for any mistakes which might be made

b) they are not responsible for any errors of judgement.

c) the directors remain responsible to the shareholders for any mistakes which might be made.

8. The further ahead one plans

a) the more troubles there are likely to be.

b) the more one can anticipate problems and thus avoid them.

c) the less one can anticipate problems.

9. Tactical decisions are those by means of which the senior executives

a) carry out their own plans.

b) destroy the opposition.

c) carry out the plans prescribed by the board of directors.

10. The directors have to initiate long range plans with a view to ensuring

a) the achievement of the company's objectives.

b) the maintenance of good relations with the senior executives.

c) compliance with the law.

Task 7. Talking Point 3

Study the information about a situation in Rumford Engineering. It is a public limited company and its shares are quoted on the London Stock Exchange. The chart below shows the lines of communication and command between the company's senior officials.

Figure 1.

After studying a chart, discuss the following questions with your partner:

1. From whom do the Line Managers and the Chief Engineer take orders?

2. If the Managing Director and the Production Manager had a meeting, what do you think they might discuss?

3. How many executive directors are there in Romford Engineering?

4. If the Computing Manager was sending information to the Managing Director should he send it through the Financial Director? Why?

5. How many immediate subordinates do each of the Departmental heads have?

6. In what circumstances do you think the Marketing Director and the Production manager might have conflicting interests?

7. Would you expect the Chief Engineer to be paid more or less than the Production Manager? Why?

8. What sort of work would you expect the Wages Officer to do?

9. If there was a dispute between one of the line managers and the Chief Engineer, how would you expect it to be settled?

10. If there was a dispute between the Marketing Director and the Financial Director how would you expect it to be settled?

Task 8. Vocabulary 3

Fill in the blanks with appropriate words from the list below:

Nouns: accounts, board, responsibilities, directors, votes, shareholders, resolution, team.

Verbs: make, propose, elected, answers, passed, ensure, undertake, send.

1. The ________ of a company have the responsibility to ________ that the requirements are complied with.

2. The directors of a company must ________ a copy of the company's annual ________ to the Registrar of Companies.

3. The directors will ________ decisions by passing resolutions at the ________ meeting.

4. Each of the directors will normally have one vote when a ________ is ________.

5. Resolutions are ________when there are a majority of ________ cast in favour.

6. Executive directors are those who ________ departmental ________.

7. The directors are ________ by the ________ at the annual general meeting.

8. The managing director ________ to the board for the performance of his management ________.

Task 9. Reading 3

Getting started

▪ Before reading the text, discuss in small groups why planning is significant for successful work of the companies, what types ofplanning you know and what main differences are between these types.

▪ Now read the text, title it and check if your ideas are right. Consult Vocabulary p. 140.

Top management is often under heavy pressure so that immediate problems often absorb much of their efforts. Time to analyse complex data and project future trends is likely to be limited. To combat this problem a long-range planning department might be set up to act in an advisory capacity. The long-term planning team would be directly responsible to the managing director, but freed from routine duties. Such a department would be small and made up of top quality generalists, trained to see the wood as well as the trees.

It is difficult to decide how far ahead to plan. An accurate long-term forecast is most advantageous to the firm, but the further ahead one looks, the less certain one can be of the outcomes. To overcome this problem a flexible approach needs to be adopted. Long-range plans for, say, three to five years might be mapped out, but there will have to be frequent reviews and re-appraisals so that the direction of the firm can be changed as and when the need arises.

Firms may want to enter new industries, launch new products, enter new markets (perhaps overseas) or acquire new subsidiaries. Existing activities may be expanded, consolidated or cut back. Whatever the requirements, careful planning is called for. The production side of the business has to be geared to keep pace with changes in the market. At the same time stocks must be kept at just the right level. If the stock level is too high, capital is tied up unproductively. If the stock level is too low, an upsurge in demand will lead to potential customers being turned away, possibly permanently.

There is also a difficult choice to be made between a policy of diversification and short term profit maximisation. The risk of failure can be reduced by choosing to produce a range of goods and services so that if revenue from any of them contracts it represents only a small part of the whole. A policy of diversification can be equated broadly to an insurance contract, and there is a price to be paid in both cases. In the case of insurance the price is in the form of a premium, and in the case of diversification it is the cost of choosing less profitable but more diversified activities. It is also possible, indeed likely, that the expertise of top management will fall short of encompassing all the diverse skills and detailed knowledge called for in such a wide range of undertakings.

The managing director, like the conductor wielding a baton on his rostrum, has the often unenviable task of orchestrating the diverse activities into a purposeful concerto.