FOREIGN TRADE UNIVERSITY

Vocabulary
1. K Visible trade or merchandise trade is trade in goods
2. H Invisible imports and exports is trade in services
3. L arter or counter-trade is direct exchanges of goods, without the use of money
4. G balance of trade is the difference between what a country receives and pays for
its exports and imports of goods
5. D balance of payments is the difference between what a country’s total earnings
form exports and its total expenditure on imports
6. A autarky is the situation in which a country is completely self-sufficient and has
no foreign trade
7. F surplus is a positive balance of trade or payments
8. B deficit is a negative balance of trade or payments
9. E dumping is selling goods abroad at or below cost price
10. M protectionism is imposing trade barriers in order to restrict imports
11. I tariffs is taxes charged on imports
12. C qoutas is quantitative on the import of particular products or commodities.

READING 1:
1. Why do most economists oppose protectionism?
Because they believe in the comparative cost principle, which proposes that all
nations will raise their living standards and real income if they specialize in their
highest relative productive goods.
2. Why do most governments impose import tariffs and/or qoutas?
Because they want to do these thing:
- Protect their strategic industries;
- Make imports more expensive than home-produced substitutes;
- Protect against dumping;
- Retaliate against restrictions imposed by other countries;
- Protect their “infant industries”
- Know the quantity that will be imported
3. Why were many developing countries for a long time opposed to GATT?
Because they wanted to industrialize in order to counteract the inevitable fall in
commodity prices.
4. Why have many developing countries recently reduced protectionism and
increased their international trade?
Because they have huge debts to pay and are unable to pay the interest, let alone repay
the pricipal. So when they want to renew or postpone the loans, they have been forced
to increase their international trade and reduce their protectionism.

READING COMPREHENSION TASKS 1:

1. What makes a country have a comparative advantage in producting goods and
services?
2. Why the comparative advantage theory is opposed by governments?
3. Which kinds of countries often impose tariffs and qoutas?
4. What is the benefit of tariffs over qoutas?
5. What is the benefit of qoutas over tariffs?

READING COMPREHENSION TASKS 2:

1. Structure of production and export of LDCs is primary commodities like
foodstuffs, fuels and industrial raw materials. While the import structures is
dominated by the manufactured goods and intermediate inputs such as consumer
goods, machinery, transport equipments, chemicals, ... And the MDCs’ structures is
vice versa.
2. Three examples of the current reliance of LDCs on primary products for export is
coffee from Burundi (90%), copper from Zambia (70%) and cocoa from Ghana
(70%).
3. The arguement comes from Orthodox economists, they suggested that trade was
actually carried out at the expense of the LDCs, producing the condition of under
development and poverty.
4. The ratio between the prices of exports and imports is called the net barter terms
of trade. 

Ex1.
1. I Nations 7. H Factors of production
2. E Commodities 8. D Climate
3. B Balance of trade 9. F Divison of labour
4. A Balance of payments 10. G Economies of scale
5. C Barter or counter-trade 11. M Tariffs
6. K Protectionism 12. L Quotas

Ex2.

1. Barriers because others are theories of international trade

2. Autarky because others are kinds of trade

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 3. Dumping because others are kinds of balance
4. Merchandise because others are kinds of invisible trade
5. Comparative advantage because others are ways to oppose free trade
6. Norms because others are trade barriers
7. Tariffs barriers because others are things that relatives to developing countries
8. Subsidize because others are relatives to developing countries
9. Substitute because others are ways for governments to protect their domestic
industries

Ex3.
1. G Trade 3. C Container ships
2. B Components 4. I Fares

Ex4.
4.1:
1. I 3. E
2. F 4.D
4.2:
1. T 4. T
2. NG 5. NG
3. F
Free Trade Vs. Protectionism
As with other theories, there are opposing views. International trade has two
contrasting views regarding the level of control placed on trade: free
trade and protectionism. Free trade is the simpler of the two theories: a laissez-
faire approach, with no restrictions on trade. The main idea is that supply and demand
factors, operating on a global scale, will ensure that production happens efficiently.
Therefore, nothing needs to be done to protect or promote trade and growth, because
market forces will do so automatically.
In contrast, protectionism holds that regulation of international trade is important to
ensure that markets function properly. Advocates of this theory believe that market
inefficiencies may hamper the benefits of international trade and they aim to guide the
market accordingly. Protectionism exists in many different forms, but the most
common are tariffs, subsidies and quotas. These strategies attempt to correct any
inefficiency in the international market.
UNIT 2: FOREIGN DIRECT INVESTMENT
Vocabulary

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1. Foreign Portfolio Investment is the purchase of shares andlong-term debt
obligations form a foreign country.
2. The categories are: raw materials, markets, product efficiency …
3. Examples of investment incentives: cash grants, lower taxes, accelerated
depreciation … They are supposed to attract investment.
4. No-exclusive distributor is called multiple distributor, which means a sales agent
who represents for more than one manufacturer.
5. Royalty payments isthe payment made by a foreign manufacturer to a company
that has licensed the manufacturer to produce its products.
6. Joint venture is a subsidiary formed by two or more corporations.

Reading comprehension tasks

1. Foreign direct investors normally seek to raw materials, markets, product
efficiency, and “know-how”.
2. An MNC’s first strategic objective is to locate or create markets for its present and
future products.
3. Some financial considerations in making a FDI are interest rates, cash flow
projection, rate of return …
4. The project is viable when reliable access to outside financing is available. Non-
viable project is the one where expected rate of return is likely to be lower than from a
comparable investment in the host country.
5. The two kinds of legislation are antitrust legislation and labor laws.
6. Because they suffered from long periods of unemployment.
7. A corporation will organize its sale by engaging distributors, who receive a
commission on products sold.
8. A drawback of licensing, as well as of authorizing foreign distribution is that the
original manufacturer gives up control over the product. If the licensed product lacks
quality, the exporter’s reputation suffers.
9. The ownership possibility remains is joint venture.

Exercises 1:
1. Foreign direct investment, Foreign portfolio investment
2. Cash flow
3. Non-viable project
4. Investment incentive; support foreign investment.
5. distributor; authorized; royalty payments

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Exercises 2: There will be two questions: how risky it is to make a FDI and how
much potential revenue it may have?

Advantages and disadvantages of FDI Inflows

Advantages of FDI Inflows

Investment of a foreign company in the American market can provide new

technologies, capital, products, organizational technologies, management skills and
potential cooperation and business opportunities for local businesses. For example,
Volkswagen, a European automotive manufacturing company, is building a plant in
Tennessee. Its investment needs local small businesses as suppliers -- from the
construction sector during building, from suppliers of equipment and accessories in
the automotive industry and from other businesses, such as cleaning services and
plumbers.

Disadvantages of FDI Inflows

Investment of a foreign company with its new technologies and products has several
disadvantages for local businesses. New products arriving at lower prices create
competition and force local businesses to lower their prices and reorganize their
operations in terms of costs. Local businesses may lose their customers or even their
business relations with other companies as they start cooperating with the new foreign
one.

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 UNIT 3: FOREIGN EXCHANGE TRADING

VOCABULARY

1. Foreign exchange is the act of exchanging money or currency of a foreign country

2. As all currencies had a gold value, they also had a certain value in relation to each
other. This is how the gold standard represented the beginning of a foreign exchange
system.
3. A central bank is owned by government. Its three functions are regulating the
commercial banks; holding gold and foregin currency reserves and the last is keeping
a certain value of its own currency.
4. Under a floating exchange rate system, supply and demand are the things that
normally determine the value of currencies.
5. An exchange rate system fixed is achieved by buying the currency when it reaches
its low point and by selling when it reaches its high point.
6. Spot transaction means currency bought or sold today with delivery two business
days later.
7. On the forward transaction, the payment is made at the present but the delivery of
funds is made in the future date.
8. Hedging means to offset a “buy” contract with a “sell” contract and vice versa,
matching the amounts and the time span exactly.
9. Premium means the additional amount it will cost to buy or sell a currency at a
given future date. It is determined by relative price of spot transaction and the
opposite of premium is discount.
10. The transfer of funds from one currency to another is involved in arbitraging. And
at least two markets are entered while doing so.

READING COMPREHENSION TASK

1. Gold standard is the payment mechanism used in earlier times, it was later
replaced by Breton Wood Systems.
2. The importance of gold standard is that this is the system help determining the
value of all currencies based on gold, therefore it could make the values of different
currencies could be compared in terms of one another.
3. United states dollar is the only currency remain convertible into gold until 1971.
4. The system of fixed exchange rates is when central banks intervene in the foreign
exchange markets in order to keep a currency never rise above nor fall below a
intervention points. The Breton Wood conference agreed upon this system.

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5. Devaluation means lowering the value of a currency in terms of gold. England,
France and US are the countries that devalued their currencies between 1967 and
1973.
6. West Germany and Holland are the two countries that revalued their currencies in
the early 1970.
7. Intervention points are not applicable in a floating exchange rates system since
central banks are no longer required to support their own currencies.
8. Snake is a system where a country still preserves its fixed – rate system but allow
a widening of the intervention points to within 2.25 percent of the par value of the
currencies. It is called snake because these currencies move up and down together
against currencies outside the snake. The members of the Common Market which are
outside the snake are The British and the Italians.
9. The foreign exchange market is the mechanism through which foreign currencies
are traded. It is not an actual marketplace but a system of telephone of telex
communicaions between banks, customers, and middlemen.
10. The function of a foreign exchange broker is to act for a client) vis-à–vis the bank.
11. Five active participants in foreign exchange market are tourists, investors,
exporters, importers, governments.
12. Spot transaction in a transaction when currency is bought or sold today with
delivery two business days later for example: a French father transfer money to his
son in New York. Forwarding transaction means buying or selling a currency in the
future with payment and delivery at that future date. An example for forward
transaction: Japanese exporters on Toyota cars to the US from the sales contracts that
they will receive a specified US dollar amount in 6 months.
13. The delivery of the foreign exchange takes place two days later in a spot
transaction because this permits sufficient time to consummate the transaction.
14. Payment and delivery of foreign exchange take place at a fixed future date in a
forward transaction. However, the rate of exchange is fixed on the date of the
contract.
15. An open position is caused by an offsetting contract.
16. Long is an open positon when a dealer buy currency forward without selling it
forward at the same time. Short is an open position when a dealer sell currency
forward without buying forward at the same time
17. A bid is the price dealers will pay to accquire one kind of currency while an offer
is the price they will sell that currency for.
18. Arbitrage is the practice of tranferring funds from one currency to another to
benefit from rate diffentials. This is usually a very profitable transaction for a bank.

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19. If interest rates in England are 2 percent higher than in the United States money
market, a United States investor would do well to change United States dollars into
pounds sterling and then invest the sterling at the English interest rate. However, the
exchange rate discount of sterling is 1 percent. The investor will have to buy back
dollars at a 1 percent premium, thus losing 1 percent. Still, the investor makes an
overall gain of 1 percent. Interest arbitrage is not possible when there is the presence
of foreign exchange regulations, such as capital transfer limitations.

EXERCISES

Exercises 1:
1. Goods
2. Gold
3. Fixed ; Floating
4. Speculate
5. Arbitrage
Exercises 2:
1. 1973
2. 1992
3. 1944
4. 2002
5. 1971

BLACK WEDNESDAY

In Britain, Black Wednesday (September 16, 1992) is known as the day that
speculators broke the pound. They didn't actually break it, but they forced the British
government to pull it from the European Exchange Rate Mechanism (ERM). Joining
the ERM was part of Britain's effort to help along the unification of the European
economies. However, in the imperialistic style of old, she had tried to stack the deck.

Although it stood apart from European currencies, the British pound had shadowed

the German mark in the period leading up to the 1990s. Unfortunately, the desire to
"keep up with the Joneses" left Britain with low interest rates and high inflation.
Britain entered the ERM with the express desire to keep its currency above 2.7 marks
to the pound. This was fundamentally unsound because Britain's inflation rate was
many times that of Germany's. Compounding the underlying problems inherent in the

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pound's inclusion into the ERM was the economic strain of reunification that
Germany found itself under, which put pressure on the mark as the core currency for
the ERM.

The drive for European unification also hit bumps during the passage of the
Maastricht Treaty, which was meant to bring about the euro. Speculators began to eye
the ERM and wondered how long fixed exchange rates could fight natural market
forces. Spotting the writing on the wall, Britain upped its interest rates to the teens to
attract people to the pound, but speculators, George Soros among them, began
heavy shorting of the currency.

The British government gave in and withdrew from the ERM as it became clear that it
was losing billions trying to buoy its currency artificially. Although it was a bitter pill
to swallow, the pound came back stronger because the excess interest and high
inflation were forced out of the British economy following the beating. Soros
pocketed $1 billion on the deal and cemented his reputation as the premier currency
speculator in the world.

UNIT 4: PAYMENT IN INTERNATIONAL TRADE

Vocabulary

1. Invoice b – list of goods sold as a request for payment;

2. Clean collection f – payment by bill of exchange to which documents are not
attached;
3. Documentary collection j – payment by bill of exchange to which commercial
documents and sometimes a document of title are attached;
4. Bill of exchange g – a signed document that orders a person or organization to pay
a fixed sum of money on demand or on a specified date;
5. Bill of lading a – document that shows the details of goods being transported; it
entitles the receiver to collect the goods on arrival;
6. Document of title e – document allowing someone to claim ownership of goods
7. Issuing bank c – bank that issues a letter of credit, the importer’s bank;
8. Collecting bank d – bank that receives payments of bills, for their customer’s
account, the exporter’s bank;

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9. Confirming bank h – bank that confirms they will pay the exporter on evidence
of shipment of goods;
10. Letter of credit i – method of financing overseas trade where payment is made by
a bank in return for delivery of commercial documents, provided that the terms
and conditions of the contract are met.

READING
1. Some of the risks involved in trading internationally are non-payment, late
payment, late delivery, wrong documents
2. Payment methods used when exporting and importing goods are open account,
documentary credit, documentary collection and advanced payment.
3. Banks can either be active or be passive role in international trade, they can issue,
collect, confirm, guarantee some form of documentary payment.

Reading comprehension tasks

READING 1
The security order for 4 methods of payment is stated below, as ordered from least
secure to most secure:
1. Open account 2. Bill for collection 3. Documentary credit 4. Advanced payment
Understanding details
1. True The importer pays for the goods after receiving the documents
2. False There is sales contract involved
3. True The exporter must be able to trust the buyer.
4. False If a letter of credit is issued, the importer’s bank agrees to pay for the
goods when all conditions required are met.
5. True If a letter of credit is confirmed, the exporter’s bank takes responsibility for
payment.
6. False Commercial documents and the document of title are not always enclosed
with a bill of exchange.
7. True Importers may not accept the bill of exchange until the goods arrive.
8. True Exporters can keep control of goods by sending bills of lading through the
banking system.
9. False Exporters reduce risk if documents are released against payment of the bill
rather than acceptance.
10. True This means that the importer has to pay before any goods are dispatched
Word search

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1. Undertaking
2. Consignment
3. Intermediary
4. Maturity

READING 2
1. The applicant completes a contract with the seller.
2. The buyer fills in a letter of credit application form and sends it to his or her bank
for approval.
3. The issuing bank approves the application and sends the L/C details to the seller’s
bank.
4. The advising bank authenticates the L/C and sends the beneficiary the details. The
seller examines the details of the L/C to make sure that he or she can meet all the
conditions. If necessary, he or she contracts the buyer and asks for amendments to
be made.
5. When the beneficiary is satisfied with the conditions of the L/C, he or she ships
the goods.
6. The seller presents the documents to his or her bankers. The advising bank
examines these documents against the details of the L/C and the International
Chamber of Commerce rules.
7. If the documents are in order, the advising bank sends them to the issuing bank for
payment or acceptance. If the details are not correct, the advising bank tells the
seller and waits for corrected documents or further instructions.
8. The issuing bank examines the document from the advising bank. If they are in
order, the bank releases the documents to the buyer, pays the money promised or
agrees to pay it in the future, and advises the buyer about the payment. The buyer
collects the goods.
9. The issuing bank advises the advising/confirming bank that the payment has been
made.
10. The advising/confirming bank pays the seller and notifies him or her that the
payment has been made.

Exercises

Ex1: Information search

1. Open account c – importers may not pay at all.

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2. Documentary credit a, d, g – exporters must comply with the conditions of the
credit documents; it takes a long time to process payment in some countries; exporters
must take care to present the correct documents.
3. Bills for collection e,f – importers may not accept the bill of exchange; bank
charges may be high.
4. Advance payment b – importers may delay payment.

Ex2: Complete the sentences

1. Draw
2. Forwards
3. Dispatches
4. Present
5. Accepts ; release
6. Dishonours
7. Remit

Further discussion
1. The risk for the importer are non-delivery, late delivery, failure to receive goods,
faulty goods … Open account will be secure method for the importer because they
can pay after receiving goods in good quality and no faults.
2. Mentioned in the reading part 2 exercise
3. Be honest, be punctual

REVIEW
1. Revolving L/C
2. Back-to-back L/C
3. Red clause L/C
4. Transferable L/C
5. Confirmed L/C
6. Revocable L/C

LETTER OF CREDIT
Letter of credit is the commonest method of payment. Because it is more secure.
The bank must pay even if the importer defaults on payment.
These are the information often included in a letter of credit:

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 - The name and address of the exporter
- The type of credit (revocable or irrevocable)
- The expiry date
- The name and address of the importer
- The name of the party on whom the bills of exchange are to be drawn, and
whether they are to be at sight or a particular tenor
- Precise instructions as to the documents against which payment is to be made
- A brief description of the goods covered by the credit
- The terms of contract and shipment (i.e, whether ‘EXW’, ‘FOB’, ‘CIF’, etc.)
- The amount of the credit, in sterling or a foreign currency
- Shipping details, including whether partshipments and/or transshipments are
allowed.
- Also recorded should be the latest date for shipment and the names of the ports
of shipment and discharge. (It may be in the best interest of the exporter for
shipment to be allowed ‘from any UK port’ so that a choice is available if, for
example, some ports are affected by strikes. The same applies for the port of
discharge.

UNIT 5: MARKETING

Vocabulary

1. Distribution channel a – all the companies or individuals involved in moving a

particular good or service from the producer to the consumer.
2. To launch a product i – to introduce a new product onto the market.
3. Market opportunities f – possibilities of filling unsatisfied needs in sectors in
which a company can profitably produce goods or services.
4. Market research h – collecting, analysing and reporting date relevant to a specific
market situation.
5. Market segmentation d – diving a market into instinct group of buyers who have
different requirements or buying habit.
6. Packaging j – wrappers and containers in which product are sold.
7. Point of sale e – places where goods are sold to the public – shops, stores,
kioshks, market, stalls, etc.
8. Product concept b – an idea for a new product, which is tested with traget
consumers before the actual product is developed.
9. Product feature c – attributes or characteristics of a product: quality, price,

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reliability, etc.
10. Sale representative g – someone who contacts existing and potential customers
and tries to persuade them to buy goods or services.

READING
1. The third is the most accurately summarizes the text.
2. The D diagrams is the best illustrator to a marketing concept adopted by a
company.

EXERCISES
Ex1: 4P’s
Product: Optional features, after – sale service, line – filling, packaging sizes,
characteristics, quality, guarantee, style, brand name
Price: Inventory, credit terms, market penetrations, going – rate, list price,
market skimming, paymend period, prestige pricing, cash discount,
production costs, quantity discounts
Promotion Advertising, commercials, franchising, public realations, free
: sample, poster, publicity, sponorship, mailing, media plan, personal
selling
Place: Point of sales, transportation, rending machines, ware housing
distribuition channels, whole saling
Ex2:

1. F Conversional marketing is the difficult task of reversing negative demand, eg.

for dental work, or hiring disabled people.
2. H Stimulational marketing is necessary where there’s no demand, which often
happens with new products and services
3. A Developmental marketing involves developing a product or service for which
there is clearly a talent demand, eg. a non-polluting and fuel-efficient car.
4. C Remarketing involves revitalizing falling demand, eg. for churches, inner city
areas, or ageing film stars.
5. E Synchromarketing involves altering the times pattern of irregular demand, eg.
for public transport between rush hours, or for ski resorts in the summer.
6. G Maintenance marketing is a matter of retaining a current level of demand, in the
face of competition or changing tastes.
7. D Demarketing is the attempt to reduce overfull demand, permanently or
temporarily, eg. for some roads and bridges during rush hours
8. B Countermarketing is the attempt to destroy unwholesome demand for products

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 that are considered undesirable, eg. cigarettes, drugs, handguns, or extremist political
parties.

Ex3: Match up

i: 5
j: 2
k:4
l:1
m: 8
n: 6
o: 3
p:7

Ex4:

1. Making a loss
2. Early adopters
3. Similar offerings
4. Advertising budgets
5. Differentate products
6. Reaches saturation
7. Consumer tastes
8. Withdrawn from the market

Ex5:

1. Boston Matrix is useful for a company to analysis how succesful a range of its
products or services are by looking at the percentage of sales it has in the market share
and how fast the sales are growing
2. Star products are products that have both eargest market share and highest market
growht. Some potential products to name are Smartphones, laptops…

The extended 7 P’s:

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- People: All companies are reliant on the people who run them from front line
Sales staff to the Managing Director. Having the right people is essential because they
are as much a part of your business offering as the products/services you are offering.

- Processes: The delivery of your service is usually done with the customer present
so how the service is delivered is once again part of what the consumer is paying for.

- Physical Evidence: Almost all services include some physical elements even if
the bulk of what the consumer is paying for is intangible. For example a hair salon
would provide their client with a completed hairdo and an insurance company would
give their customers some form of printed material. Even if the material is not
physically printed (in the case of PDF’s) they are still receiving a “physical product”
by this definition.

UNIT 6: TRANSPORTATION

Vocabulary

1. Groupage c – packing together more than one consignment;

2. Barges e – barge-type boat;
3. Bulk d – loose, unpackaged cargo;
4. Canal a – man-made waterway;
5. Navigable b – allowing the passage of ships;
6. Lighter f – flat-bottomed freight boat for shallow waters.

Reading

Vocabulary extension
Ill-informed Well-informed
Shallow Deepwater
To lift To lower
Coastal Inland
Expensive Inexpensive
In the past Nowadays

Reading comprehension tasks

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1. These are headings for each paragraph: Transport; Terms of Trade; Sea Transport;
Air Transport; Road Transport; Rail Transport; Transport on special vehicles;
Transport by postal service; Expert consultancy.
2. Some of the advantages of air transport are high travelling speed, high speed
delivery, cheap insurance due to short risky periods, world-wide transport operations.
The disadvantages are: transshipment to other forms of transport is essential;
restrictions on weight and size of the goods; inflexible timetabling; delays due to bad
weather; operating and maintenance costs are high; high freight rates.
3. An importer may often prefer FOB terms because he has the option of handling
the transport himself or of instructing an agent to arrange things on his behalf.
4. A Ro-Ro (ROll on/ROll off) ship is big vessel designed to carry bulky goods.
A Ra-Ra (RAil on/RAil off) ship is special ferry that can take railway wagon by sea
for part of the journey.
A LASH (Lighter Abroard SHip) ship is specially designed barge-carrying ship.
5. “Will be in a stronger postion” means to have more advantages.
“Will add a margin to his costs” means to add an amount of money to the total cost to
allow increase in freight or insurance.
“Suitable handling facilities” means tools and equipment for easy handling some
kinds of goods.
“The options open to them” means available options.
“A viable option” means a good and efficient option
6. Summary of the text
Transport plays an crucial role in the goods expense. The terms of trade will affect the
cost and control over transport, while the mode of transport will affect the delivery
cost and time. Choosing among various options is definately a hard work for both
parties, so it is suggested to consult an specialist to have the right decision.
7. Transport options open to importers in our country: in terms, EXW, FOB, FAS,
FCA, CFR, CIF, CPT, CIP, DAT, DAP, DDP; in mode: air, sea, road, trail, postal
services,...

Exercises

Ex1: Describling uses and appications

1. Ro/Ro vessels are designed to carry trailers and trucks which are designed to
transshipment between see and road.
2. Cranes are used for lifting up heavy objects and consignment.
3. Sealed tanks are for storing or holding liquids in bulk.

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4. Crates are designed to store solid goods.
5. Holds are suitable for storing cargo shipped on board.
6. Tractors are developed for plowing fields.
7. Bags are designed for storing small cargo.
8. Containers are suited for withstanding shipment, storage, and handling.
9. Pallets are equipped to support goods in a stable fashion while being lifted by
a forklift, pallet jack, front loader, work saver or other jacking device.
10. Hooks are designed for grabbing and lifting loads by means of a device such as
a hoist or crane.
11. Refrigerated vessels are equipped to carry special goods that needs freezing.
12. Fork-lift trucks are developed for lifting and transporting materials.
13. Barges are designed for carrying cargo form internal points to big vessels in
deepwater ocean ports.

Ex2: Order of adjectives

Re-arranged words:
1. 40 Japanese portable calculating machines
2. 100 round Spanish wooden salad bowls
3. A new fleet of British planes cargo
4. A group of experienced Italian engineering experts
5. Two large eight-wheeled Swedish refrigerated trucks

Which mode of transport?

1. 10000T scrap metal could be transported by bulk carrier because the quantity is
large.
2. 2500 day old chicks should be transported by cargo ship.
3. 50 air-conditioning units should be delivered by plane.
4. Materials for training course might be transported by ship.
5. 1200T beef should be transferred by plane.
6. 3 diesel locomotives should be transferred by Ra-Ra ship and then by rail.
7. 2 kg platinum should be transported by plane.

Uber, GrabTaxi Booming In Vietnam: Can They Replace Private Cars Completely?
Smartphone-based taxi booking services such as Uber and GrabTaxi are booming in
Vietnam.

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The population of tech-savvy people is increasing in Vietnam. The number of
smartphones is also increasing in this country and many people are taking advantage
of ride-sharing apps such as Uber and GrabTaxi.
Uber launched its services in Vietnam in 2014 and it has already witnessed a high
growth rate in the country. Hanoi and Ho Chi Minh City already have the highest
average number of trips per user out of the 300 cities where the taxi services operate.
"Vietnam has proven to be one of the fastest growing markets for Uber globally; a
testament to the overwhelming support we've received from Vietnamese riders and
partner drivers alike since we launched in this market over 6 months ago,"
as per Uber.
Many customers have also applauded the Uber and GrabTaxi apps in Vietnam.
"This application is incredible. It's easy to use, it gives you the idea who and where
your driver is at, it will also save you the time from falling in line at taxi lines at malls
or any other places where there is a lot of people," noted a user on the App Store. "So
far, this application has lived up to my standard, and the recent update was really
helpful."
Only about three in 100 people own a private car in Vietnam. The popularity of ride-
sharing apps is increasing in the country as many people cannot afford the comfort of
private cars. Using traditional taxi is also relatively expensive for many commuters.
A major chunk of the Vietnamese population is less than 30 years old. Nguyen Tuan
Anh, the general manager of GrabTaxi in Vietnam, says that this population group
wants to try new things, which is another reason why services from Uber and
GrabTaxi are witnessing a growth in Vietnam.
However, many young people still dream of owning a car. Tuan Anh says that if ride-
sharing is convenient and surpasses the requirement of a private car then this
population group may also be inclined to use the services instead.
Uber and GrabTaxi may soon face stiff competition from local taxi operators as some
of them are on the verge of launching a smartphone app for customers. The local taxi
operators are also tailoring the services offered to cater to the Vietnamese market.
It remains to be seen if smartphone-based taxi booking services will completely
replace private car ownership in Vietnam.

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 UNIT 7: MARINE INSURANCE ON GOODS
Reading 1.
1. Key words:

- Insurance policy is the document which defines the terms of the contract and the
rights of each party.
- Premium: an agreed amount of money paid by the insurer to cover the risk of loss
or damage to the goods in the risk-stated event.
- Assured party: the party which could be indemnified when the risk occurs.
- Indemnify: to hold one party harmless from loss or damage.
- Cover: The agreed risk which will be insured against.
- Marine insurance: insurance for goods carried by sea.

2. Answer to the questions:

1. Because they want to avoid the risk to their goods.

2. An insurance contract is made between the assured and insurance company.
3. Risk defination agreement is usually made in an insurance contract.
4. It depends on who in charge for transportation of the goods.
5. Phrases meaning:
“undertake to indemnify” means to take responsibility for protecting one from loss
or damage;
“has been largely standardized” means that it is usually used and has been an
pattern for others;
“follow marine insurance practices” means that others kind of insurance accept
marine form and concept as its
“obliged to”means that had to do something under special rules or law
“a party with insurance contract”refer to the buyer/seller or insurance company

Reading 2

Reading comprehension tasks

Q1: Because the handling and transportation of goods always involves the risk of loss
or damage. Owners of the goods protect themselves against these risks by insuring
their goods in transit, so they have to buy Marine Insurance on Goods.
Q2: Examples of loss which are within scope of insurance for condition

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A: war, revolution, rebellion, etc.
B: fire, explosion, jettison, lost overboard or dropped whilst, etc.
C: salvage charges, reasonable expenses and costs incurred for surveying and
ascertaining loss or damage, etc.
Q3: “Exclusions” means unless otherwise agreed, things refer to exclusions shall not
be listed as a risk to be insured by the insurer.
Q4: Items of insurance contract only relating to goods:
- Name of the goods;
- Nature and type of packing, marks of the goods;
- Weight or quantity of the goods;
- Manner of the shipping of the goods;
- Place of dispatch, transshipment and destination of the goods;
- Value of the goods.
Q5: Each insurance company will be liable for at least $300.000

History of marine cargo insurance:

Maritime insurance was the earliest well-developed kind of insurance, with origins in
the Greek and Roman maritime loan. Separate marine insurance contracts were
developed in Genoa and other Italian cities in the fourteenth century and spread to
northern Europe. Premiums varied with intuitive estimates of the variable risk from
seasons and pirates. Modern marine insurance law originated in the Lex
mercatoria (law merchant).
In 1601, a specialized chamber of assurance separate from the other Courts was
established in England. By the end of the seventeenth century, London's growing
importance as a centre for trade was increasing demand for marine insurance. In the
late 1680s, Edward Lloyd opened a coffee house on Tower Street in London. It soon
became a popular haunt for ship owners, merchants, and ships' captains, and thereby a
reliable source of the latest shipping news.
Lloyd's Coffee House was the first marine insurance market. It became the meeting
place for parties in the shipping industry wishing to insure cargoes and ships, and
those willing to underwrite such ventures. These informal beginnings led to the
establishment of the insurance market Lloyd's of London and several related shipping
and insurance businesses. The participating members of the insurance arrangement
eventually formed a committee and moved to the Royal Exchange on Cornhill as
the Society of Lloyd's. The establishment of insurance companies, a developing
infrastructure of specialists (such as shipbrokers, admiralty lawyers, bankers,

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surveyors, loss adjusters, general average adjusters, et al.), and the growth of
the British Empire gave English law a prominence in this area which it largely
maintains and forms the basis of almost all modern practice. Lord Mansfield, Lord
Chief Justice in the mid-eighteenth century, began the merging of law merchant
and common law principles. The growth of the London insurance market led to the
standardization of policies and judicial precedent further developed marine insurance
law.
In 1906 the Marine Insurance Act codified the previous common law; it is both an
extremely thorough and concise piece of work. Although the title of the Act refers to
marine insurance, the general principles have been applied to all non-life insurance. In
the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of
London company insurers) developed between them standardized clauses for the use
of marine insurance, and these have been maintained since. These are known as the
Institute Clauses because the Institute covered the cost of their publication. Out of
marine insurance, grew non-marine insurance and reinsurance. Marine insurance
traditionally formed the majority of business underwritten at Lloyd's. Nowadays,
Marine insurance is often grouped with Aviation and Transit (cargo) risks, and in this
form is known by the acronym 'MAT'.

UNIT 8: MULTINATIONALS

Vocabulary

1. Multinational Corporation is a corporation controlling productiong and marketing

system in several countries besides its own.
2. The difference between a TNC and an MNC is in the TNC, nationals of the
country of origin no longer dominate as in the MNC.
3. Innovation is an important ingredient for a company’s growth in sales and profits.
4. The percentage of capital belongs to an MNC determines whether a company is
referred to as subsidiary or an affiliate.
5. Three important resources are raw materials, manpower, and capital.
6. The two structure are international division structure and global structure.
7. The difference between decentralization and centralization is which company has
more decision-making power than the others, parent company or foreign
subsidiaries.

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Reading 1

1. The fact that emphasizes the size of MNC is their turnover is huge, being greater
in some cases than the national income of countries such as Switzerland or the
Netherlands.
2. The benefits are providing capital for economic growth; introducing the new
technologies with local business; increasing worker’s productivity; solving
umemployment; raising living standards.
3. They accused multinationals of using money from local banks and investors
without bringing in capital from developed countries.
4. Multinationals bring new technologies that reduce labour need, such as cranes,
bulldozers in building industry and tractors in agriculture. Therefore, many workers
are unemployed again, not to mention that new technologies are expensive to buy and
difficult for them to operate.
5. A hoe is used for digging soil.
An ox-plough is used for digging and mixing soil.
A tractor is used for digging soil even more quickly and efficiently than hoe and
plough.
A crane is used for lifting heavy objects.
A bulldozer is used for straightening roads.
Reading 2

1. There cant be such a thing as a “world car”, cars should be designed to suit the
tastes of different markets. The financial and marketing implications is that they
should be flexible and suitable to adapt to each market.
2. An international company is better decentralized decision-making to suitable for
each market and it does not really depend on the business the company is in.

Understanding the main points

1. Applying the statement

a. Honda
b. Ford
c. Honda
d. Honda
e. Ford

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f. Honda
g. Honda
h. Ford
i. Honda
2. Car companies now need to have a global strategy because they need to exploit the
perceived strengths of other rivals.
3. Ford became more centralized, replacing old functional departments with new
multi-disciplinary product teams. Honda became more decentralized, having the
“glocalization” strategy – a global strategy with local management.

How the text is organized

a. Paragraph 8
b. Paragraph 3
c. Paragraph 5
d. Paragraph 10
e. Paragraph 7
f. Paragraph 2
g. Paragraph 4
h. Paragraph 1
i. Paragraph 6
j. Paragraph 9
Synonyms

1. Parent.
2. Designing, engineering and building cars.
3. Road vehicles.

Word search

1. Economies of scale.
2. Production unit.
3. Autonomy.
4. Requirements.
5. Chairman.
6. Comprise.
7. Self-sufficient.
8. Output.

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 Complete the sentences

1. Comprises.
2. Individuals.
3. Chairman.
4. Output.
5. Requirements.
6. Economies of scale.
7. Production units.

Expressing degrees of meaning

1. Sharply.
2. A large degree.
3. Rapidly.
4. Firmly.
5. Simultaneously.
6. Increasingly.
7. Such a high proportion.

Exercises
Ex1:
1. set up 2. incentives 3. employ
4. prosperity 5. attitude 6. dominate
7. bring out 8. investors 9. equity
10. train 11. levels

Ex2:
1. subsidiaries 2. affiliates 3. tariffs 4. qoutas
5. economic 6. booming 7. joint 8. venture
9. shares 10. returned 11. guidelines 12. legally
13. effective 14. overcapacity

Ex3:
a. enterprising b. differentiate c. basically

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 d. tense e. threat f. richness
g. marketable h. worrying i. indecisive
j. remotely k. intrusive l. involvement
m. strategic

The advantages and disadvantages of MNCs:

Advantages
The possible benefits of a multinational investing in a country may include:
- Improving the balance of payments - inward investment will usually help a
country's balance of payments situation. The investment itself will be a direct flow of
capital into the country and the investment is also likely to result in import
substitution and export promotion. Export promotion comes due to the multinational
using their production facility as a basis for exporting, while import substitution
means that products previously imported may now be bought domestically.
- Providing employment - FDI will usually result in employment benefits for the
host country as most employees will be locally recruited. These benefits may be
relatively greater given that governments will usually try to attract firms to areas
where there is relatively high unemployment or a good labour supply.
- Source of tax revenue - profits of multinationals will be subject to local taxes in
most cases, which will provide a valuable source of revenue for the domestic
government.
- Technology transfer - multinationals will bring with them technology and
production methods that are probably new to the host country and a lot can therefore
be learnt from these techniques. Workers will be trained to use the new technology
and production techniques and domestic firms will see the benefits of the new
technology. This process is known as technology transfer.
- Increasing choice - if the multinational manufactures for domestic markets as
well as for export, then the local population will gain form a wider choice of goods
and services and at a price possibly lower than imported substitutes.
- National reputation - the presence of one multinational may improve the
reputation of the host country and other large corporations may follow suite and
locate as well.
Disadvantages
The possible disadvantages of a multinational investing in a country may include:

26
- Environmental impact - multinationals will want to produce in ways that are as
efficient and as cheap as possible and this may not always be the best environmental
practice. They will often lobby governments hard to try to ensure that they can benefit
from regulations being as lax as possible and given their economic importance to the
host country, this lobbying will often be quite effective.
- Uncertainty - multinational firms are increasingly 'footloose'. This means that
they can move and change at very short notice and often will. This creates uncertainty
for the host country.
- Increased competition - the impact the local industries can be severe, because the
presence of newly arrived multinationals increases the competition in the economy
and because multinationals should be able to produce at a lower cost.
- Influence and political pressure - multinational investment can be very
important to a country and this will often give them a disproportionate influence over
government and other organisations in the host country. Given their economic
importance, governments will often agree to changes that may not be beneficial for
the long-term welfare of their people.
- Transfer pricing - multinationals will always aim to reduce their tax liability to a
minimum. One way of doing this is through transfer pricing. The aim of this is to
reduce their tax liability in countries with high tax rates and increase them in the
countries with low tax rates. They can do this by transferring components and part-
finished goods between their operations in different countries at differing prices.
Where the tax liability is high, they transfer the goods at a relatively high price to
make the costs appear higher. This is then recouped in the lower tax country by
transferring the goods at a relatively lower price. This will reduce their overall tax
bill.
- Low-skilled employment - the jobs created in the local environment may be low-
skilled with the multinational employing expatriate workers for the more senior and
skilled roles.
- Health and safety - multinationals have been accused of cutting corners on health
and safety in countries where regulation and laws are not as rigorous.
- Export of Profits - large multinational are likely to repatriate profits back to their
'home country', leaving little financial benefits for the host country.
- Cultural and social impact - large numbers of foreign businesses can dilute local
customs and traditional cultures. For example, the sociologist George Ritzer coined
the term McDonaldization to describe the process by which more and more sectors of
American society as well as of the rest of the world take on the characteristics of a

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fast-food restaurant, such as increasing standardisation and the movement away from
traditional business approaches.

UNIT 9: MERGER AND ACQUISITION

Reading

Understanding main points

1. D
2. E
3. B
4. A
5. C

Understanding details

1. Diversify;
2. Market share;
3. Economies of scale;
4. Fee;
5. Customer;
6. Optimum;
7. Synergy;
8. Raider;
9. Conglomerate;
10. Asset-stripping or leveraged buyouts.

Exercises

Ex1:
a. 17% are successful.
b. It reduces the share’s price enormously.
c. Clash of cultures and over-optimism are the two main reasons
d. John Kelly believes that mergers fail because of the way two companies are
combined.
John Thorp believes that mergers fail because of cultural differences.

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James Montier believes that nergers fail due to unrealistic expectation about the future
success of the new company.
e. John Kelly believes that companies merge essentially from fear of competition.
John Thorp believes that companies merge essentially to ensure their survival in a
global marketplace.
f. Because so many evidence has shown the failure of mergers yet lots of money is
still spent on it.
g. The merger was to survive and sell more products.
h. The clash led to misunderstanding among leaders and many have quit because
confident financial targets were not met.
i. Individual personalities in mergers are important to help reaching mutual strategy.
j. Because it merge with businesses that can produce ongoing cost efficiencies
instead of one-off savings.

Ex2:

1. Words and expressions which are related to marriage: weddings, heartbroken,

marriage, integrated, altar, nuptial. The writer uses this metaphor because mergers and
marriage have lots of things in similarity.
2. Combined collocations:
A Cost Share Job Stock Investment Financial Takeover
B efficiency price cut market strategy target bid

Ex3:
- Reason for mergers: profit, growth, reduce cost, increase market share;
- Problem with mergers: cultural barriers, over optimist;
- Types of mergers: horizontal, vertical, diversification.
1. Merger is the combining of 2 or more companies, generally by offering the
stockholders of one company securities in the acquiring company in exchange for the
surrender of their stocks.
2. Takeover, or acquisition, is a corporate action where the acquiring company makes
a bid for the acquiree.
3. Companies merge because they want to expand the market, diversify the product
range and customer while remaining at low risk level by not completely owning
another company.
4. Companies buy other companies because they have strong business already and
want to expand and take complete control of a new market.

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 UNIT 10: ARBITRATION

Reading

Understanding main points

1. Because I fear that they will have home-team advantages or local bias not to
mention that the cost will be very high even with I win the dispute.
2. They are construction, shipping and commodities.
3. Three arbitrators will be selected to form a neutral forum, with one chosen by each
party and the third chosen either by the parties or the appointed arbitrators.
4. Arbitration takes place in private, unlike litigation in the court.
5. The main centres for international arbitration are Paris, London, Geneva,
Stockholm, New York, Hong Kong and Singapore.
6. Stockholm is the city to choose to arbitrate an east-west trading dispute.
7. It is the arbitration clause.
8. They look for speed, cost effectiveness, confidentiality and reliability of the
arbitrators and hence their decisions.
9. Expert witnesses such as accountants and engineers.
10. No, they do not share the same arbitration rules.

Understanding details
1. F they arise in others activities as well.
2. T
3. T
4. T
5. F it is not for lawyers and their associates
6. T
7. T
8. F indeed they are more powerful

Exercises

Ex1:

1. D 2. H 3. C 4. F
5. A 6. K 7. I 8. B

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 9. G 10. J 11. L 12. E
Ex2:
1. Resolve 2. Arbitrator
3. Abitration 4. Delaying tactics
5. Arbitrate 6. Dispute
7. Settle 8. Disagree
9. Resolution 10. Agree

Ex3:
1. Signatories 2. Plaintiff – Defendant
3. Buyer – Seller 4. Borrower – Lender
5. Wholesaler – Retailer 6. Lawyer – Client
7. Licensee – Licensor 8. Franchiser - Franchisee
9. Undersigned 10. Parties to the agreement

Ex4:

The company has obligation to fulfill the order as the price quoted on the website,
mistaken or not, had been the price at that time. However, it can have a private
agreement with the customer to negotiate the price again. If the company refuses to
sell, customers can take it to the court of litigation or board of arbitration.

Singapore International Arbitration Centre

 
The Singapore International Arbitration Centre (SIAC) was established in July 1991
as a not for profit non-governmental organisation to meet the demands of the
international business community for a neutral, efficient and reliable dispute
resolution institution in Asia. The SIAC is committed to complete neutrality and
independence in its role as an international arbitral institution.
Integrity, fair rules and procedures, efficiency and competence are key to SIAC´s
success.
SIAC´s case management functions are overseen by a Court of Arbitration that
comprises luminaries in the international arbitration arena. SIAC´s corporate
management and other functions are overseen by a Board of Directors comprising of
senior members of the legal and business communities.
With an international case management team hailing from different jurisdictions
including Belgium, Canada, China, India, Korea, Malaysia, Singapore and the UK
who have specialised experience and knowledge of the region, SIAC is devoted to
serving all its users with a complete understanding of their needs.

31
As an institution administering arbitrations, SIAC is committed to complete
impartiality and transparency in all that it does for parties. Broadly, it helps parties in
appointment of arbitrators when they cannot agree on an appointment; management of
the financial and other practical aspects of arbitration; and facilitation of the smooth
progress of arbitration.
SIAC carries out these responsibilities according to its published rules of arbitration
and guidelines as contained in practice notes published from time to time. SIAC seeks
to promote the highest standard of conduct and delivery in all arbitrations conducted
under its auspices.
The SIAC has an international panel of over 380 independent arbitrators with a spread
of expertise, depth of knowledge and experience from over 32 different jurisdictions.
204 of those experts are based in the Asian region.
The SIAC has a proven track record in enforcement of awards. SIAC Awards have
been enforced by courts in Australia, China, Hong Kong, India, Indonesia, the UK,
USA and Vietnam amongst other New York Convention countries.
The SIAC received a record new case load of 235 cases in 2012 up by 25% from the
new case filings in 2011 and currently handles an active caseload of over 550 cases.

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