Business English 1 - reading

text 1: Drinks groups lose some fizz in Indonesia

With a fast-growing middle class and half its population of 250m under 30 years of age, Indonesia has
become a crucial emerging market for the world’s leading soft drink makers. But a surge in competition
and a slowdown in the economy are taking their toll on market leaders from Coca-Cola, the world’s
biggest beverage company, to Danone, the French group that dominates Indonesia’s bottled water market.

5 Profit margins are being squeezed in a fierce battle for market share involving a diverse group of rivals
including AJE, a Peruvian cola producer with ambitious Asian expansion plans, Japan’s Asahi and Suntory
and local consumer goods powerhouses such as Indofood, Wings and Sosro.

At the same time, Indonesia’s economy is growing at the slowest pace for five years, consumers are
contending with a large increase in the price of subsidised fuel and production costs are rising sharply
10 because of higher wages and a depreciating currency that makes imported packaging and ingredients more
expensive.

The cost and competition challenges facing the soft drink makers illustrate the wider issues for consumer
goods companies in Indonesia. Long-healthy profit margins are under pressure at companies ranging from
Astra International, which produces and distributes Toyota cars in Indonesia, to the local subsidiary of
15 Unilever, the shampoo-to-ice cream group. Coke, which is struggling in many increasingly health-
conscious developed nations, has singled out Indonesia as a key contributor to chief executive Muhtar
Kent’s plan to double revenues, known as “Vision 2020”.

But Coca-Cola Amatil (CCA), the Australia-listed company that bottles Coke in Indonesia, has been badly
hit by rising costs and competition from cut-price rival AJE. The Peruvian company, which sells its Big
20 Cola for around 25 per cent less than Coke, has grabbed more than a third of the $1bn carbonated drinks
market just four years since entering Indonesia.

In Indonesia CCA saw its operating margin, based on earnings before interest and tax, fall to just 1.2 per
cent in the first half of this year, from 7.3 per cent a year earlier. In response CCA has turned to Coke for
a $500m equity injection into the Indonesian business.

25 “Indonesia is a tremendously important market for The Coca-Cola Company and they regularly refer to it
in the same breath as China and India,” says Alison Watkins, CCA managing director.

Danone, which dominates the soft drink market in Indonesia through its sprawling Danone Aqua water
business, is also pumping in hundreds of millions of dollars over the next few years to build new bottling
plants as it tries to fend off competition, according to Jakarta-based executive Charlie Cappetti.

30 Indonesia is vital for Danone, contributing 6 per cent of €21.3bn global sales last year at a time when
other markets were underperforming. The company generates more sales from its Aqua brand water in
Indonesia than it does globally from its better-known Evian. Coke, Nestlé and many small local players
offer their own bottled water but the big threat is Indofood, the conglomerate controlled by the powerful
Salim family, which has teamed with Asahi and acquired the second most popular Indonesian water brand,
35 called Club.

Elvira Tjandrawinata, the head of research for Nomura in Indonesia, warns that another fuel price
increase could further dent purchasing power and predicts that revenue growth for consumer goods

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 companies, which was averaging around 20 per cent in the last couple of years, will slow to 10 per cent
over the next three years.

40 But John Kurtz, head of Asia-Pacific for management consultancy AT Kearney, says that despite slower
growth and pressure on profits, global companies will continue to invest in Indonesia to tap into rising
consumption over coming decades.

Questions 1-6
Match the words and expressions with the definitions a-j.

1. crucial (line 2) D a) stay ahead of

2. surge (line 2) G b) more general concerns
3. sprawl (line 27) I c) take advantage of and use
4. fend off (line 29) A d) extremely important
5. dent (line 37) E e) damage
6. tap into (line 41) C f) have a bad effect on something
g) sudden large increase
h) have to deal with something difficult
i) become large and widespread
j) chosen one thing over another because of certain qualities

Questions 7-16
Read the article and decide if the following statements are True (T) or FaIse (F) or Not Given (NG)

7. The leading bottled-water supplier is Danone. NG

8. AJE has overtaken Coca Cola’s market share. F
9. There are several different companies fighting for a share of the soft drink market.F
10. The subsidised fuel price has helped Indonesia’s economy. NG
11. The soft drink market is the only market which is suffering. F
12. Coke realises that Indonesia is a vital market for the future. T
13. Over the past year, Danone invested a lot of money in Indonesian bottling plants.T
14. Evian is Danone’s biggest global revenue earner. T
15. Many of the current companies see their market share threatened by a local conglomerate.T
16. It is predicted that sales over the next three years are likely to increase by ten percent. F

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 text 2: The default mode for managers needs a reset
Grayson Perry, the artist, took aim last month at “default man”: the group of white, middle-class,
heterosexual, middle-aged males who run the British establishment. His acid article touched on their
domination of boardrooms. But I think there is a group that has a more dangerous influence on modern
business: default managers.

5 Default managers are still, mostly, men. But it is not their gender, but the agenda they follow that often
prevents businesses improving and innovating. They are holding back the “great transformation” of
management that academics, executives, entrepreneurs and commentators will discuss at this week’s
Global Peter Drucker Forum in Vienna. The premise of the conference is that such change is essential to
restore growth and prosperity.

10 Default managers fit easily into a recognisable and established corporate hierarchy, run on a basis of old-
fashioned command and control and governed by title and status. They are usually passive, carrying out
instructions that are either explicit in orders from the top or implicit in budgets, accounting timetables,
and short-term targets and incentive plans.

Default managers prefer to stay within divisions, suspicious of ideas that are “not invented here”. They
15 may as a result become detached from the purpose, and even values, of their company. Employers,
meanwhile, find it easier to treat them as “collections of human resources” rather than “communities of
human beings”, according to Henry Mintzberg, the management expert.

I do not blame people who squeeze themselves into this template of default management. It is the destiny
of many of those who fight for promotion. They work hard, have good intentions, and may have no
20 ambition to change the framework they inhabit. Revolution, even achieved peacefully, takes time and
effort and puts at risk predictable, comfortable routines. But as Prof Mintzberg says, east Europeans were
able to bring about the collapse of communist regimes 25 years ago in part because they always
“understood full well how enslaved they were by their system of governance”. Many default managers, by
contrast, have lost sight of the fact that they are cogs in a misfiring machine. More worryingly, they fail to
25 recognise they have the potential to change it.

The alternative is not to install in their place a new set of flamboyant, revolutionary leaders. Organisations
will continue to need people who can run them efficiently including a few who are inert or merely
reactive.

So the priority is not to tear down the organisations themselves, but to remove the largest obstacles that
30 are preventing good managers from becoming more active, more engaged, more collaborative, more open,
and more far-sighted. The barriers include over-detailed monetary incentives geared towards short-term
performance. Shareholder-owned companies are only focused on institutional investors, motivated by
similar bonus plans based on even shorter timescales. Old corporate hierarchies assign importance to
people with the correct title, rather than those who have the right skills or greatest influence. They are
35 geared to owners’ demands more than to customers’ needs.

Lack of public trust in business generally, and managers specifically, is a final problem. Since 2008, many
defenders of shareholder capitalism have analysed the causes of the financial crisis by paraphrasing
Winston Churchill’s comment on democracy and arguing that it is the worst form of economic system
apart from all the others. That is too easy a conclusion.

40 But it is also facile to presume that all managers are part of the problem – a view heard depressingly often.
Julia Kirby and Richard Straub launched an online debate ahead of this week’s Drucker Forum saying: “If
managers have the power to drive an economy into a ditch, they also have the power to drive it forward.”
But if businesses continue to put default managers in the driving seat, they will never reach their
destination.

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Questions 17-25
Match the words and expressions 1-16 with the definitions a-o.
17. default (title) N
18. acid (line 2) J
19. premise (line 8) B
20. prosperity (line 9) D
21. incentive (line 13) G
22. template (line 18) L
23. enslaved (line 23) I
24. flamboyant (line 26) A
25. facile (line 40) C
a) confident and exciting
b) basic argument
c) too simple
d) ideas
e) not stated directly
f) usual and expected
g) motivation
h) not working properly
i) controlled or strongly influenced by
j) sharp and critical
k) wealth
l) small group of people who make secret plans
m) expressing in a shorter or different way
n) a model for something
o) very clear and direct

Questions 26-37
Complete the summary with words from the box. There are more words than you need.

such / believe / trapped / problems / which / capable / take / blame / proscribed / simple / regard /
strategies / give / isolated / fault / complex / minimum / so

The article explains that default managers are one of the biggest 26 __________
problem in business today.
These are managers who work within organisations doing the 27 __________
simple required of them
and following 28 __________
proscribed actions. They do not have to think for themselves and tend to remain
in divisions that are 29 __________
isolated from the outside world. Their employers don’t
regard
30 __________ them as human beings, but rather as collections of human resources.

The writer says it is not necessarily the managers’ 31 __________

fault . The organisation itself is set up
in 32 __________
such a way that whatever good intentions managers might have, they are soon
forgotten. They work hard within the organisational framework in order to achieve their promotions
trapped
but without realising that they are 33 __________ in a system that stifles their personal growth and
desires for change. However, even if massive change takes place, you will always find those who are
give
reactive rather than proactive. In order to bring about change, companies need to 34 __________
proscribed financial incentives and short-term 36 __________
away the obstacles such as 35__________ strategies that
keep managers in a reactive role. Nevertheless, it’s worth bearing in mind that if managers are
37 __________
cabaple of destroying a company, they should also be able to put it back on track, unless of
course they are default managers.

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 text 3: Cookies, anyone?
The idea that a sales team can learn something from Girl Scouts will come as a surprise to many. What has
this out-dated organisation got to do with the fast-moving, corporate world of today? But in the girl
scouts’ annual cookie drive, two hundred million units are sold per year, and their revenues exceed $700
million. And these figures are achieved only in a three-month period in the spring.

5 True, the organization has changed greatly in latter years, ever since the appointment of CEO Kathy
Cloninger in 2003. Her mission was to revitalize a 95-year tradition-bound icon, famous only for camping,
crafts and cookies. She has worked on instilling leadership qualities in the girls, developing new funding
opportunities, creating an efficient organisational structure and developing a reinvigorated brand which is
relevant to the modern world.

10 And nowhere are these changes more noticeable than in the annual cookie sale. No longer relying on
neighbourhood door-to-door sales to obtain a meagre revenue, the organisation now utilises a wide range
of savvy, modern methods which businesses worldwide can learn from.

Firstly, the girl scouts organization focuses on providing the girls with life skills. By investing in the girls,
the organization creates a team with strong leadership and communication skills. ‘Cookie College’ training
15 courses develop the scouts’ business acumen, providing them with presentation, marketing and money
management skills; skills which will be invaluable in their future lives. Through role-playing, case studies
and tasks, the girls become inspired and passionate about their role as a salesperson.

And the proof of the pudding – or should I say cookie – is in the eating. These well-trained salesgirls can
turn out exceptional results. Scout Markita Andrews sold over $80,000 dollars' worth of cookies in the
20 twelve years she was a girl scout. Her success is for the most part due to the incentive. By selling the
greatest number of cookies, Markita won a trip around the world. Rewards are not only given to the lucky
winners, however. Scouts earn reward points as they sell more cookies. 1,500 cookies gets the scout a Wii
game system.

But Girl scouts are not only training and motivating their workforce, but they are also changing their
25 tactics. Gone are the days when girls went door-to-door around the neighbourhood selling to family and
friends. They now go in for the bulk sales strategy. They sell to large organisations and businesses, where
cookies can be offered as sales incentives or part of corporate gift baskets. This way, girls are able to shift
a greater number of cookies and maximise their sales time.

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Questions 38-45
Choose the correct answer.

38. Why might the notion that a sales team can learn something from Girl Scouts come as a
surprise to many? Because ...
A. this youth club is not primarily associated with the business world
B. girl scouts are famously reluctant to accept large orders
C. boys are not eligible to become members
D. they are a non-profit organisation after all

39. When do the Girl Scouts sell cookies?

A. all year round
B. for three months per year
C. every three years
D. every spring since 2003

40. What was the view of the girl scouts organisation before Kathy Cloninger became CEO?
A. not well-known
B. old-fashioned
C. efficient
D. surprising

41. Which of these is among the ‘life skills’ that the organization focuses on?
A. the knowhow needed to cope with an economic crisis
B. reviving someone from unconsciousness or near death after an accident
C. the ability to do well in a survival expedition
D. reinforcing management competence

42. Which of the following is NOT taught at ‘Cookie College’?

A. how to look after finances
B. how to promote your products
C. how to bake cookies
D. how to speak in front of other people

43. A girl scout can get a trip round the world if she ...
A. gets a certain number of reward points
B. sells cookies for twelve years in a row
C. sells $80,000 worth of cookies
D. sells more cookies than anyone else

44. A new selling strategy used by girl scouts is ...

A. selling cookies outside local businesses
B. giving scouts free cookies as an incentive
C. selling from door to door
D. selling large amounts of cookies at once

45. Which of the following sales techniques is NOT mentioned in the passage?
A. motivating the sales team
B. finding new avenues for sales
C. offering discounts for bulk orders
D. training the sales team

END OF TEST